UNIFLEX — Interim / Quarterly Report 2018

Aug 14, 2018

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2018.08.14

Disclaimer

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• Except for statements in respect of historical matters, the statements in this release are orwar f d - oo l ki ng s a emen s. uc t t t S h f orwar d - oo l ki ng s a emen s nvo ve nown an t t t i l k d unknown risks, uncertainties and other factors which may cause the actual performance, financial condition or results of operations of Uniflex Technology Inc. to be materiall y different from what ma y be im p lied b y such forward-lookin g statements.

The financial forecasts and forward-looking statements in this release reflect the current belief of Uniflex Technology Inc. as of the date of this release and Uniflex - Inc . u u for w ard Technolog y ndertakes no obligation to pdate these forecasts and looking statements for events or circumstances that occur subsequent to such date.

• The statements in res p ect of historical matters ma y contain unaudited information , which may have certain deficiency or weakness so as not to fairly present financial condition or the result of operations of Uniflex Technology Inc.

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Company Information

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Company Information

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Yangzhou Plant
NTD890 , 000 , 000
NO.77 HuaYang West Roard,
Yangzhou, Jiangsu Province, China
Capacity- 60,000 m²/mth
： Substrate 、 FPC 、 Main products -Single-sided FPC,
bl y Double - sided FPC , Multi - Layer FPC
Daejeon Office, Korea
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Taoyuan
Head Office
6F., No.1351, Zhongzheng Rd.,
Taoyuan Dist., Taoyuan City 33071,
Taiwan
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• Established- 19.11.1990

• Initial Public Offering-15.12.2015

• Capital NTD890 , 000 , 000

• Chairman- TJ Tseng

• CEO-Steve Lee

• Main products： Substrate 、 FPC 、 A ssem bl y

• Employee- 1,700

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Taichung Qingnian Plant
Daejeon Office, Korea
No. 123 Qingnian Road, Dajia Dist.,
Taichung City
Capacity- 20,000m²/mth
Main products - IC - Substrate
Taichung East Second Plant
No.28, E. 2nd St., Dajia Dist.,
Taichung City
Capacity- 20,000m²/mth
Main products -Single-sided FPC,
Double-sided FPC, Rigid-flex board, Rigid-flex board Rigid-flex board
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Taichung East Second Plant No.28, E. 2nd St., Dajia Dist., Taichung City Capacity- 20,000m²/mth Main products -Single-sided FPC, Double-sided FPC, Rigid-flex board, Rigid-flex board Rigid-flex board

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Products Application -FPC

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Automotive 3C

Mobile

Wearable

• 4K/8K TV

• • High speed/High frequency connector

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• LCM&TP • LCM(PMOLED), (AMOLED, TFT connector LCD, Flex OLED), Side key, Camera, Speaker, WLC, Antenna, Fingerprint ID

• LCM, Light bar, • IR camera, SD connector, car Card Reader, light High speed connector, Optical communication products

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Products Application - Substrate

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Optics Memory card

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• Image Sensor、 • Micro SD 、SD Finger Print Sensor

LED Display

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• Mini LED

Internet of LED Things

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• Embedded Nand • Chip LED Flash Substrate

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Consolidated Statements of Comprehensive Income - QoQ

- QoQ
			NTD:Thousand dollars
Net Sales	Q1-2018	%	Q2-2018		QoQ % (0)
	585,028 100 (Reviewed)
C f S l ost o a es Gross Loss Operating Expenses Oti L	(609 457) , (24,429) (94,804) 119233	(104) (4) (16) 20	(598 161) , (14,148) (113,290) 127438	(103) (3) (19) 22	(2) (42) 19 7
perang oss ( ) , Net Non-operating Income an (23,019) Loss before tax (142,252) Income Tax Benefits 7539		() (4) (24) 1	( ) , 42,455 (84,983) 4313	() 7 (15) 1	(284) (40) (43)
Net Loss EPS(Basic)	, (134,713)	(23)	, (80,670)	(14)	(40)
	(1.54)		(0.92)

Description ： 1. Operating costs and expenses have increased due to the investment in technology, equipment transformation and Mini LED research and development expenses by the Substrate Division.

2 . The increase in external income and expenses was mainly due to the impact of exchange income.

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Consolidated Statements of Comprehensive Income - YoY

			NTD:Thousand dollars
Net Sales	Q1~Q2-2017 %		Q1~Q2-2018 % YoY% 1,169,041 100 (5) (Reviewed)
	1,225,703 100 (Reviewed)
Cost of Sales Gross Profit Operating Expenses	(1,175,412) 50,291	(96) 4	(1,207,618) (103) 3 (38,577) (3) (177) (205,556) (18) 22
	(168,567)	(13)
Operating Loss (118,276) Net Non-operating Income an (38,645) Loss before tax (156,921)		(9) (3)	(244,133) (21) 106 16,898 1 (144) (227,235) (20) 45
	(156,921)	(12)
I T B fit (E 1 943 ncome ax ene s xpense , Net Loss (154,978)		- (12)	11 852 1 510 , (215,383) (19) 39
EPS(Basic)	(1 77) .		(2 46) .

Description ： 1. Operating costs and expenses have increased due to the investment in technology, equipment transformation and Mini LED research and development expenses by the Substrate Division.

1. The increase in external income and expenses was mainly due to the impact of exchange income.

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Consolidated Balance Sheets

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NTD:Thousand dollars Q1-2018 % (Reviewed) Cash and Cash Equivalents 554,877 15 Accounts Receivable 942,844 26 Inventories 286,904 8 Other Current Assets 72,205 2 - Funds and Investments 11 442 , Property, Plant and Equipment 1,506,510 41 Total Assets 3,645,701 100 Current Liabilities 1,221,496 34 Long-term Liabilities 1,689,539 46 Stockholders' Equity 734,621 20

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Sales Breakdown by Technology

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100%
2%
99%
98%
4%
97%
Substrat
96%
FPC
98%
95%
96%
94%
93%
2017 2018H1
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Future product application adjustment

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100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
‐
2017Q1 Q4 2018Q1 2018Q2 2018H2(F)
LED Light Bar 41% 42% 45% 42%
LCD & OLED module 30% 25% 22% 22%
A utomot ve i 23 % 23 % 24 % 24 %
Substrate 2% 5% 4% 7%
Other 4% 5% 5% 5%
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Estimated Capital Expenditure

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NTD:Thousand dollars

Plant Estimated Capital Expenditure T a c i h ung as E t Second Plant43,000 FPC Yangzhou Plant59,900 FPC Taichung Qin nian Plant- g 73,500 Substrat T o t a l 176 400 ,

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Capacity utilization

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• Plant 2018 JUL Taichung East 80% - Second Plant FPC Y a n g zh ou Pl a nt-FP C 84% Taichung Qingnian 12% - Plant Substrat

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Technology roadmap

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 First RTR pico laser in 2018Q4
FPC industry new
technology MP  Metalized FPC new 2019Q1
(CVL pattern) material introduction
 RTR LDI fine line new  5G high speed/freq.  Metal Mesh new 2019Q2
technology new material technology
development development development(3~8um)  Fine line new FPC 2019Q3‐Q4
(30/30um)  OLED FPC new product  Silver nanowire new technology
 Vacuum + Hybrid fluid MP technology development  Fine line new FPC
etching fine line new development(3~8um) (25/25um) technology
technology  5G high speed/freq.  Under glass development
development new material fingerprint new (30/30um)
(30/30um) introduction product MP  Meta l Mesh new
 Wireless charge  Ultra‐thin FPC technology
receiver FPC new introduction MP(3~8um)
product MP  Transparent PI new  Silver nanowire new
 material development technology
Under glass fingerprint
MP(3~8um)
new product
development
 Mini LED new product
continual development
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Display technology trends and prospect

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Mini LED

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LCD OLED Mini LED Micro LED
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Mini LED is a transitional solution before the maturity of Micro LED technology. Compared with OLED, mini LED has longer lifespan, higher brightness, lower power consumption, and wider tolerance of temperature range. Its biggest difference with Micro LED is the chip size

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830
750um 59 225um 22 <50um
200um 125um <50um
Normal LED Mini LED Micro LED
Items Normal BLU OLED Mini LED BLU
Larger thn
normal BLU
Brightness 200-400 cd/m2 200-600 cd/m2
Equivalent to
OLED
- ~
NTSC 72% 90 120% 110%
Approach
Contrast 1000:1 1000000:1 Replace traditional BLU module
OLED
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• . Mini LED is currently mainly used as a BLU, there are also a small number of RGB applications

•The Mini LED can replace the BLU in the existing LCD and is suitable for applications such as mobile phones, televisions, car panels, gaming monitors, laptops, and outdoor displays .

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Display Panel Structure

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Display Panel Structure
TFT LCD OLED Micro LED
Polarizer Polarizer Polarizer
Glass Substrate Substrate
Color filter OLED Micro LED
TFT TFT
Liquid crystal
Substrate
Substrate
TFT
Glass
Polarizer
BLU
Mini LED Application
Mini LED BLU Mini LED RGB Application
Polarizer Polarizer
Glass
Substrate RGB Mini LED
Color filter
Mini LED (1 pixel)
Liquid crystal
Substrate
TFT
Glass
QDEF
Diffuser •Able to be applied on BLU module and RGB
dis la Similar to micro LED but lar er chi size
Blue Mini LED p y( g p
Mini LED
and pixel size)
Substrate BLU
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Mini LED BLU VS Normal LCD BLU

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Edge-Lit BLU Direct-Lit BLU

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• LED number of edge‐lit BLU is about 10‐25.

• Mini LED direct‐lit BLU is not like the direct‐lit BLU that normal large screen adopted, it has smaller LED and higher LED density .

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Mini LED Direct-Lit BLU Advantages

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Edge‐Lit LED with
Local Dimming
Edge-Lit Direct-Lit
OLED,
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,
Full‐Array Local Dimming
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• •Mini LED achieves finer Local dimming area than normal BLU and also more power saving •Mini LED has better contrast, color gamut and brightness than normal BLU and longer life than OLED

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Mini LED Supply Chain

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Uniflex

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Chip Substrate SMT Module Panel End
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Quantum IC Design SMT Technology Focus: Dot Film • Accuracy, Efficiency and Yield Rate of Equipment

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Mini LED Market

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、 、 Niche Market(Auto Gaming monitor High-end laptop)

、 •Gaming monitor High-end laptop :Cost is not major consideration. With the main purpose of introducing high-margin and high-priced products, mini LED has a high chance to be introduced.

•Auto : Mini LED heat endurance and brightness are better than OLED.

Large Size TV

•Mini LED+QDEF’s color gamut performance is better than current WRGB OLED TV. • P ro d uc ti on cos t i s s m i il ar o t OLED .

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White light composition analysis
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Mobile

Opportunity : OLED production capacity are not yet open. Mini LED is expected to enter the market with brightness, color gamut and contrast close to or even exceeding OLED performance.

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Mini LED End Products

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-
High end Auto
laptop Display
Gaming
Mobile
Monitor
Large
Screen
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• .

• End products of mini LED will be presented after 2018Q4

• •Mini LED has more advantages in automotive compared with OLED.

•Speculative presented sequence of end products: Gaming Monitor/High-end 22 laptop>Large Screen/Mobile>Auto Display

Uniflex Mini LED Product Specification

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	Sec	FPC	FPC+PI stiffener	FR4	Uniflex
	p .
	Thickness	≦0.1mm	0.1-0.2mm	≧0.3mm	≧0.1mm
	Dimension Stability	±0.08%	±0.08%	±0.05%	±0.03%
	Warae
	pg Rate	<3%	<1.5%	<0.75%	<0.75%
	Surface	±8um	±8um	±5um	±2um
	Uniformity

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Technology Challenges on Mini LED Substrate

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 Surface Uniformity

Exposure Alignment Accuracy

Thinner Thickness

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Surface Uniformity

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UNIFLEX TECHNOLOGY INC. Other Company

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Solder Short Prevention Surface Uniformity

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With Leveling
Stencil
clearance
Board
Pad
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Open Pad On Pad
Pad Pad
High risk of solder short
Pad Pad
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Without Leveling
Stencil
H1
Board H2
Pad
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H1>H2

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•Clearance between stencil and pads will affect solder thickness , the larger the clearance, the thicker the solder •Rough surface raises the risk of solder short

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Surface Uniformity Bonding Issue Prevention

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Mold pressure Die Pad Die crack

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•Poor flatness results in over stress on partial part of chip, which may cause die crack.

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Unequal thickness of printed solder due to rough surface , which results in tombstone defect.

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Surface Uniformity Copper Plating Control

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Surface Plated Copper Uniformity: ±2um

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•Plated copper thickness uniformit control y

•Thickness uniformity control within ± 2um

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Wyko Results of Surface Roughness

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Other Company

UNIFLEX TECHNOLOGY INC.

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Exposure Alignment Accuracy

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• 、 、 。

• •Usual mini LED chip size:100150um 125225um 200*300um

•Mini LEDs are small and numerous, exposure alignment accuracy affects a lot on LED bonding yield rate of post process

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300um
59 225um 812
46 150 um
100um 125um 200um
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Use laser light directly on ink(no mask needed), reduce alignment deviation due to size difference between mask and substrate and raise the ali g nment accurac y

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Parallel light Laser light
Mask Use specific alignment
Ink Ink method to reach
Cu Cu
Dielectric Dielectric Accuracy ±30um
l ayer layer
Mask Alignment Normal Alignment
(Accuracy± 75um) (Accuracy± 50um)
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Thinner Thickness

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Super Large Display

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Auto display, VR, Laptop

0.6 mm Mini LED BLU substrate thickness 0.4 mm

0.2 mm 0.1 mm

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TV , Gamin g monitor

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• Uniflex thinnest thickness 0.1 mm(double side)

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Mobile Devices
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• FR4 thinnest thickness 0 . 3 mm(do u ble side)

• • FPC thinnest thickness <0.1 mm(double side)

• *FPC+PI stiffener thickness about 0.1-0.2mm

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Uniflex Advantages

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Experience

• •Has developed MiniLED products for two years, the lead in industry

• •Customized design capability and specific modification

• •Posses both FPC and substrate experiences

Advanced Technology

• Possess high flatness of copper plating and ink printing processes, surface

• uniformity can reach ±2um

• Achieve high exposure alignment accuracy and small ink opening

• •Able to provide thin substrate down to 0.1mm

Quality Assurance

• •Certified by international standards : UL certification, ISO 9001, ISO14001, OHSAS 18000, TS16949, QC 080000 and SONY GP

• •Completely internal quality system • S ta bl e qua li ty

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Conclusion

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•Mini LED is expected to become the mainstream trend in recent years.

• A u o sp ay, am ng mon t di l G i it or, Hi g h -en d l ap op are n c t i h e mar k e t for mini LED which OLED hasn’t been involved.

•Mini LED is expected to be introduced into smart phone due to its brightness, color gamut and contrast ratio are competitive compared with OLED, and the cost is lower than OLED.

•Gaming monitor will be the first end product of mini LED , according to customer’s schedule, shipment happens in 2018Q4.

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Q & A

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THANK YOU

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