TXC — Investor Presentation 2019

May 21, 2019

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Investor Conference May 21[st] , 2019

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TXC Confidential and Proprietary

Disclaimer

• Except for statements in respect of historical matters, the statements in this release are forwardlooking statements. Such 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 TXC to be materially different form what may be implied by such forwardlooking statements.

• The financial forecasts and forward-looking statements in the release reflect the current belief of TXC as of the date of this release and TXC undertakes no obligation to update these forecasts and forward-looking statements for events or circumstances that occur subsequent to such date.

• The statements in respect of historical matters may contain unaudited information, which may have certain deficiency or weakness so as not to fairly present financial condition or the results of operations of TXC.

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TXC Confidential and Proprietary

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Agenda 14:00~15:00

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Topic
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Presenter

Introduction Financial Performance Market Outlook & Growth Potential Business Summary Q & A

Peter Lin, President Vivien Hung, Chief Financial Officer Kevin Guo, Vice President Kevin Guo, Vice President

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Financial Performance P&L, EPS, DPS, CAPEX

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Sales & Shipping Records

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Quarterly Performance

Unit: $NT in Million

2017 2018 NT$ 8,782M NT$ 8,156M (yoy -8.9%) (yoy -7.1%)

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Gross Margin (%)

Gross Profit (NT$ Million)

Quarterly Performance

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800
2018
2017
700 NT$ 1,828M
NT$ 2,186M
603 (yoy -14.4%) (yoy -16.4%)
600
535 534
513 513
486
500
415 415
400
339
300
200
100
0
17.Q1 17.Q2 17.Q3 17.Q4 18.Q1 18.Q2 18.Q3 18.Q4 19.Q1
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Net Margin
(%)
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Net Profit (NT$ Million)

Quarterly Performance

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2017 2018
NT$ 963M NT$ 644M
(yoy -5.3%) (yoy -33.1%)
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Income Statement

Unit：$NT in Million	2016	2017	2018	2019 Q1
Net Revenue	9,637	8,782	8,156	1,623
Gross Profit	2,554	2,186	1,828	339
Operating Profit	1,114	802	533	58
Non-Operating Items	78	273	200	29
Income before Tax Profit	1,192	1,075	733	86
Net Incom to Shareholders of the Parent Company	1,016	963	644	78
Basic EPS (NT$)	3.28	3.11	2.08	0.25
Gross Margin(%)	26.5%	24.9%	22.4%	20.9%
Operating Margin(%)	11.6%	9.1%	6.5%	3.6%
OPEX(%)	14.9%	15.8%	15.9%	17.4%
Income before Tax Profit(%)	12.4%	12.2%	9.0%	5.3%
Net Profit Margin(%)	10.5%	11.0%	7.9%	4.8%

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Balance Sheet

Unit：$NT Million	2016	2017	2018	2019 Q1
Cash & Marketable Securities	2,093	2,331	1,426	1,771
NR+AR	3,085	2,651	2,726	2,221
Inventories	1,520	1,504	1,817	1,853
Current Assets	8,818	7,983	7,117	6,956
PP&E	4,278	4,370	4,111	4,070
Total Assets	14,842	13,403	12,562	12,409
Current Liabilities	3,156	2,277	2,089	1,947
Non-curent Liabilities	1,913	1,961	1,722	1,478
Total Liabilities	5,069	4,238	3,811	3,425
Total Shareholders' Equity	9,773	9,165	8,751	8,984
A/R Turnover Days	114	119	120	139
Inventory Turnover Days	79	84	96	130
A/P Turnover Days	65	73	74	79
Current Ratio(%)	279.4%	350.6%	340.7%	357.4%
Debt Ratio(%)	34.2%	31.6%	30.3%	27.6%
Book Value Per Share($NT)	31.55	29.59	28.25	29.00

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EPS and DPS

Unit: $NT

0 0.5 1 1.5 2 2.5 3 3.5 4	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share
	2.2 2.2 2.2 2.5 2.5 2.8 2.5 2.0 Earnings Per Share Cash Dividends Per Share
YEAR 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017															2018 2018
Earnings Per Share		3.48		3.79		3.02		3.21		3.03		3.28		3.11	2.08
Cash Dividends Per Share		2.2		2.2		2.2		2.5		2.5		2.8		2.5	2.0
Stock Price(Apr. end)		43.6		46.0		43.6		39.9		41.1		44.5		39.0	36.0
Payout Ratio(%)		63.2		58.0		72.8		77.9		82.5		85.4		80.4	96.2
Yields(%)		5.1		4.8		5.1		6.3		6.1		6.3		6.4	5.6

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2019 Capital Expenditure Expand the Economy of Scale Capacity expansion for new products, and to satisfy market demands

Unit: $NT M

Amount: $340M

• MEMS

• Oscillators

Amount: $150M

• SMD Crystal

• • Facility

Amount: $230M

• SMD Crystal

• ACAP Crystal

Total Amount: $720M

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Market Outlook TAM, Ranking, Sales segment breakdown

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’ Worldwide X tal & Oscillator Market

Revenue

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WW Revenue(Millions of USD) YoY
3,500 4.05% 5.00%
3,000 1.35% 0.00% 2.04%
0.00%
2,500
2,000
-5.00%
2.9B
1,500
-10.12%
1,000
-10.00%
500
0 -15.00%
2016 2017 2018 2019(e) 2020(f)
Shipment
WW Shipments(Millions of pcs) YoY
20,000 8.00%
5.88%
6.00%
15,000
4.00%
2.15%
1.24% 0.59% 2.00%
10,000
16.9B 0.00%
-2.00%
5,000 -4.51%
-4.00%
- -6.00%
2016 2017 2018 2019(e) 2020(f)
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Source: 2019/5 CS&A

Think of Frequency, Think of TXC

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Worldwide Crystal & Oscillator Market Ranking

2017 Rank	2018 Rank	Company Name	Revenue(M)	Revenue(M)	Revenue(M)	Market Share(%)	Market Share(%)
			2017	2018	Percent Change	2017	2018
1	1	Seiko Epson	$382	$365	-4.5%	11.7%	12.4%
2	2	NDK	$354	$358	1.1%	10.8%	12.2%
3	3	KCD	$344	$285	-17.1%	10.5%	9.7%
4	4	TXC	$294	$272	-7.5%	9.0%	9.3%
5	5	KDS	$205	$191	-6.8%	6.3%	6.5%
7	6	SIWARD	$104	$95	-8.7%	3.2%	3.2%
9	7	Hosonic	$98	$94	-4.4%	3.0%	3.2%
10	8	Harmony	$98	$90	-8.2%	3.0%	3.1%
n/a	9	Diode - Pericom / Saronix	n/a	$90	n/a	n/a	3.1%
8	10	MegaChips (SiTime)	$103	$85	-17.4%	3.7%	2.9%
Other Companies $1,289 $1,015					-21.3%	38.8%	34.5%
Sorce 2019/5 CS&A Total Revenue $3,271 $2,940

Source: 2019/5 CS&A

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TXC’s Revenue by Market Segments Actual and Forecast (F)

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IoT OTHERS
Crystal, XO,
TCXO 9% 7% AUTOMOTIVE
Crystal, XO
5%
AUTOMOTIVE
OTHERS 5%
9% IoT
8%
2019
MOBILE
MOBILE
NETWORKING COMMUNICATION
COMMUNICATION
34% 2018 (F) 24%
24%
NETWORKING
37% Sensors, TSX ,
TCXO
Stratum 3 TCXO
HF VCXO
OCXO
MOBILE
MOBILE
COMPUTING
COMPUTING
18%
20%
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TXC’s Sales by Products

Actual and Forecast (F)

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OTHERS
7%
XO
5G
Others 13%
10%
XO GNSS, TSX
12% 3G/4G/5G 10%
2019
TSX
GNSS/GPS
7% 2018 Small Cell TCXO (F)
Networking 4%
TCXO
CRYSTAL
4%
CRYSTAL 61%
PS,
SENSOR SENSOR
64% ALS+PS
3% 5%
Color+PS
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Growth Potential

• The development of new product lines

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5G NR Standards Development 3 Main Types of Usage Scenario – eMBB, mMTC & uRRLC

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5G use cases develop the driving power

WiFi - 6

Network Infrastructure XTAL & OSC Usage: Base Station(BBU/RRU) 1-2pcs Small Cell Optical Module

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5G Smartphone
XTAL & OSC Usage:
5-10pcs
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XTAL & OSC Usage: 10-100pcs

NB-IoT AP Router LoRa HUB IoT M2M Automotive XTAL & OSC Usage: 2-6pcs

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Worldwide Leading Company to Develop 5G

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As of December 2018 Source: IPlytics

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High Performance SMD SC-Cut OCXO

5G Small Cell and Base Station

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In mass production 9775 OCXO

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WiFi Continue to dominate 5G World

AP Router ◆

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Gateway-Carrier ◆
STB/OTT ◆
Gaming ◆
Smart TV ◆
Smart Phone ◆
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3.2x2.5mm/2.5x2.0mm/2.0x1.6mm Ceramic Package

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• Small

• High Frequency

• High Temperature

◆ NB-IoT

◆ M2M ◆ Smart Speaker

◆ Wearable ◆ Automotive ◆ AI/Robotics

Source: WiFi Forum

TXC Confidential and Proprietary

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IoT Rising demand between now and future

Intelligent

Connected

Things

Worldwide Worldwide Crystals and Sensors Oscillators CAGR 11.3% CAGR 1.4% (2016 to 2021) (2016 to 2020) Forecasted Forecasted U$241B U$3.5B by 2021 (AMR) by 2020 (CS&A)

30 Billion Connected Devices by 2020 (Statista)

Growing usage of all sorts of sensors and AI

Increasing usage, decreasing in price

Massive number of devices are being embedded with sensors and connectivity

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Development of new product lines

Intelligent

Miniature and Slim Color Sensor High Accuracy Thermal Sensor High Resolution uBolometer Sensor

Connected

Active EMI Integrated Oscillator Module Ultra Stability SMD OCXO

High Freq, Miniature Crystal and Oscillator

Things

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IoT
5G
ACAP Sensor
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Industry 1[st]

Industry 1[st]

Target Markets

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New Products Development

Crystal

• Miniaturization

• High Freq

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Light Sensor
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• Under Display Color Sensor

• High Drive Level

• Wide OTR

Oscillator

• High Freq

• Ultra Stability

• Ultra Low Noise

• Wide OTR

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IR Thermal Sensor
(Thermopile)
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Diversification & Strategic alliance

• Ceramic Package Solutions, Assembly & Contract Manufacturing

EMI Oscillator Module

• EMI IC Integration

IR Thermal Image Sensor (uBolometer)

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Miniature & Low Profile Crystal & Oscillator

Miniature and low profile 1.0x0.8x0.3mm Crystals for Compact size module applications

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GNSS/GPS WiFi, BT/BLE, ZigBee
Source: ublox, OriginGPS Module Module
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Module
Applications
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Miniature and low profile 1.6x1.2mmx0.6mm Oscillators

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Miniature, Slim, and Under Display Color Sensor

In mass production Miniature 2.0x1.6mm

In mass production In development Slim Bezel Under Display 3.4x1.2mm

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TXC Automotive Application Focus & Solutions

Infotainment & Telematics System Crystal/XO: 5-10 units

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Multimedia V2X
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Safety Electronic System
Crystal/XO: 8-14 units
BMS/OBC/Inverter EPS
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Tire Pressure Monitoring System
Crystal: 5 units (4T & 1R)
TPMS
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Security Electronic System Crystal/XO: 7-12 units Cluster Smart Key

Advanced Driver Assistance System Crystal/XO: 10-16 units

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77/79G
ADAS Camera Radar
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Crystal (AEC-Q200 Compliant)

Glass (G0)

Seam (G1)

TSX (G2)

AX(8.0x4.5mm, 2pad) AB(5.0x3.2mm, 4pad) AA(5.0x3.2mm, 2pad) AM(3.2x2.5mm, 4pad) AV(3.2x2.5mm, 2/4 pad) AZ(2.5x2.0mm, 4pad) AR(2.0x1.6mm, 2pad) AY(2.0x1.6mm, 4 pad) AJ(1.6x1.2mm, 4 pad)

AE(2.5x2.0mm, 4pad) AF(2.0x1.6mm, 4pad) AG(1.6x1.2mm, 4pad)

[Oscillator (AEC-Q100 ] Compliant) XO (G1)

TCXO (G2)

AU(3.2x2.5mm, CMOS) AQ(3.2x2.5mm, CS) AW(2.5x2.0mm, AL(2.5x2.0mm, CS) CMOS) AK(2.0x1.6mm, CS) AN(2.0x1.6mm, CMOS) A5(1.6x1.2mm, CMOS)

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

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Automotive Imaging Solutions

Automotive

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Active Low EMI OSC Module
Automotive G1
2.5x2.0mm
2.0x1.6mm
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Source: Yole, Tesla, Sony
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New Sensors under development

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Automotive Night Vision by Thermal Image (uBolometer Solution)

Source: FLIR

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320x240 QVGA
uBolometer Sensor
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Non-contact temperature measurement solutions – by TO5 package

Non-contact temperature measurement solutions – by ceramic package

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Source: Panasonic, Heiman

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Ceramic Package Solutions Ceramic Package Assembly & Contract Manufacturing

Type of Ceramic Packages

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Advantages of Ceramic Packaging

• Excellent mechanical stiffness, hardness and wear resistance

• Excellent isolators

• Coefficient of thermal expansion

• Good thermal conductivity, good thermal resistance

• High processing temperatures

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Source: Kyocera

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Summary

• Market competition is always at intense

• • Competitors keeps Price going down with unreasonable negative margin

• Product specifications getting rigorous

• Exchange rate fluctuations in the dollar, Yen, CNY

• Risk and impact of US protectionism - Slowing down global productivity and trends – would likely to hit Asia, and China in particular

• Speed up the development of new revenuegenerating product lines for Automotive, 5G, IoT, Sensor

• Accelerate business strategy on product diversification and strategic alliance

• Continue to review vendors to lower the cost of goods sold and localized

• Continue to drive lean management in all aspects to maintain healthy business and increase competitiveness

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Q & A Investor Conference

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