Business Outlook Global Electronics Industry - TTI, Inc

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20160218

Business Outlook Global Electronics Industry

Custer Consulting Group www.custerconsulting.com February 2016

Setting Expectations

Leading Indicators

20160201

Global "Purchasing Managers" Index Diffusion Index, >50 = Growth 60 55

PMI

50 45 40

30

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

35

2003

Markit Economics

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015 2016

20160201

U.S "Purchasing Managers" Index Markit Economics Diffusion Index, >50 = Growth

70 65 60

PMI

55 50 45

Markit zero growth

40

30

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan

35

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Markit Economics & ISM

20160201

China "Purchasing Managers" Index Diffusion Index, >50 = Growth 60

PMI

55

50

40

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

45

2004

Markit Economics

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015 2016

20160222

Purchasing Managers' Indices February (preliminary) vs. January 2016 52.4

USA

51.0 52.3

Europe

Above 50 = Growth Below 50 = Contraction

51.0 52.3

Germany

50.2 50.1 49.6

France

January February 52.3

Japan

46.0

50.2

48.0

Markit Economics

50.0

52.0 PMI

54.0

56.0

58.0

60.0

PMIs are a 2 to 6 month leading indicator of electronics growth

CCG Semiconductor Leading Indicator vs. Global Semiconductor Shipments 20160201

3/12 rate of growth

1.7 1.5

2-Month Lead

1.3 1.1 0.9 0.7 CCG Semiconductor Leading Indicator

0.5

0 Growth Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

0.3

SIA Semiconductor Shipments

2000

2001

2002

2003

2004

2005

2006

2007

http://www.census.gov/indicator/www/m3/

2008

2009

2010

2011

2012

2013

2014

20152016

Currency Exchange Rates vs U.S. Dollar

Exchange Rates vs. U.S. Dollar Trade weighted value of US$

Euro

140

1.70

130 Strong dollar

120

Strong Euro

1.50 1.40

110

1.30

100

1.20

90

2015 average 12.5% greater Than 2014 average

80

1.10 1.00

Weak

0.90

70 60

1.60

0.80 1 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 7101 4 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016

Canada 1.70

20.0

1.60 1.50

Weak

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2

18.0

Mexico Weak

16.0

1.40 1.30

14.0

1.20 1.10

12.0

1.00

10.0

0.90 0.80

8.0 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016

1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 7 1 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016

20160217

Exchange Rate Impact on US$ Denominated Consolidated World Electronic Equipment Sales Quarterly Revenue Growth Converted to US$ @ Fixed 2014 vs Fluctuating Exchange 25 Impact of strong US$ Global growth @ constant exchange but loss @ fluctuating exchange

20

% Growth

15 10 5 0 -5

Fixed

Fluctuating

-10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010

2011

2012

Global model based on regional shipment indices

2013

2014

2015

Electronic Equipment

Global Electronics 2015 - Production Including Components 20160205 3% 1% 11% 38% 18%

7% 22%

Total US$ 1,861 Billion Reed Electronics Research 2/16

China Asia Pacific (excl China) Japan Americas W Europe Central & E Europe ROW

20151212

20150308

IC Insights 12/15

End-Use Markets Size ($B) & Growth Rates

Methods to Measure Electronic Industry Growth Sector composites based upon financial reports of similar companies - Typically quarterly, semiannually or monthly Government and trade organization statistics - Typically monthly

- TIMELY DATA REPORTED ON A CONSISTENT BASIS IS KEY

Sector composites based upon financial reports of similar companies

20160219

Electronic Equipment Suppliers Composite of 175 Public Companies Revenue, Net Income & Inventory

800

US $ (billions) converted @ fluctuating exchange rates

700

Revenue

600

Income

500

Inventory

-6.6%

preliminary 4Q’15 data

400 300 200 100 0 -100 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Computer 13, Internet 12, Storage 10, Communication 20, SEMI 37, Medical 21, Instruments 12, Military 21, Business & Office 6, Consumer 13, Automotive 11

World Electronic Equipment Production by Type @2014 Exchange Rates 20150912 2.2% 12.2% 21.3% 9.9% 8.5% 12.0%

25.9%

Electronic Outlook 9/15

8.1%

Business Communication Consumer Auto Computer Military Industrial Instrument

World Electronic Equipment Production 20160219 By Type (preliminary 4Q’15 results) Annual Rate $B (converted @ fluctuating exchange rates)

-6.6%

industr+instru

2000

gov/mil Computer & Peripherals automotive consumer

1500

Telecom/Datacom Business

1000

500

0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Regional Data U.S. Europe Japan China/Taiwan S Korea

20150225

U.S. Electronic Equipment Orders & Shipments Computer, Communications, Measurement & Control and Military 34

$ Billions (monthly, seasonally adjusted) Orders

32

Shipments

30 28 26 24 22 20 18 14

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

16

1998

1999

2000

2001

www.census.gov/indicator/www/m3/

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015 2016

20160212

120

European Computer, Electronic & Optical Products Production

Index (2010=100), Seasonally Adjusted

115 110 105 100 95 90 85 80

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 1998

1999

2000

2001

2002

Eurostat, C26 category, EU 27 countries

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

20152016

20160219

Japan Electronic Equipment Production by Month 2000 to Present

Yen Billion

800

Elec Application Equip Electronic Measuring Instrumentation Communications Equipment Computers & Related Equipment Electronic Business Machines Consumer Electronic Equipment

700 600 500 400 300 200 100 0

1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 4 9 2 7 12 5 10 3 8 1 6 11 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016

JEITA www.jeita.or.jp/

Taiwan/China Electronic Equipment Producers Composite of 101 Manufacturers Consolidated Revenue

20160216

1200

NT$ Billions

1000 800 600 400 January 2016 down 14% compared to January 2015 and down sequentially 21% compared to December 2015

200 0

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 2002

2003

2004

2005

2006

2007

2008

Taiwan listed companies, often with significant manufacturing in China

2009

2010

2011

2012

2013

2014

2015 2016

20160223

85

S Korea Electronic Equipment Producers Composite of 7 Manufacturers

KRW Trillions

Very preliminary 4Q’15 estimate

80 75 70 65 60 55 50 45 40

1

2

3

2009

4

1

2

3

2010

4

1

2

3

2011

4

1

2

3

2012

4

1

2

3

2013

4

1

2

3

2014

4

1

2

3

2015

Samsung Electronics, LG Electronics, Daewoo Electronic Components, Samsung SDI, Dongbu Hitek, SK Hynix, KEC Corp

4

Regional Electronic Equipment Shipment Growth

20160225

1.6

3/12 Rate of Growth (in local currency) USA Europe

1.5

Japan

1.4

China/Taiwan Korea

1.3

Zero Growth

1.2 1.1 1.0 0.9 0.8

0.6

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

0.7

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

Calendar Year

Sources: IPC, JPCA, Taiwan/China composite; S Korea composite; Eurostat "wiring devices" for Europe

World Electronic Equipment Monthly Shipments

20160225

Converted @ Fluctuating Exchange Rates Europe Japan China Taiwan Korea ROA ROW

Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar

100 90 80 70 60 50 40 30 20 10 0

USA

US$ B

2002

2003

2004

2005

2006

2007

Source: Custer Consulting Group & Electronic Outlook Corp

2008

2009

2010

2011

2012

2013

2014

20152016

World Electronic Equipment Monthly Shipments

20160225

Converted @ Constant 2014 vs Fluctuating Exchange Rates

220

US$ M

Constant 2014

200

Fluctuating 180 8.3% Differ ence

160 140 120

80

Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar

100

2002

2003

2004

2005

2006

2007

Source: Custer Consulting Group & Electronic Outlook Corp

2008

2009

2010

2011

2012

2013

2014

20152016

Conclusion: Demand has weakened but also the strong dollar has significantly impacted global growth rates consolidated into US$

U.S. Electronic Equipment Orders, Shipments & Inventories

20160225

U.S. Electronic Equipment Order & Shipment Growth Computer, Communications, Measurement & Control and Military

1.30

3/12 Rate of Change Shipments Orders Zero Growth

1.20 1.10 1.00 0.90

0.70

Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan

0.80

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

www.census.gov/indicator/www/m3/

20160204

U.S. Electronic Equipment Orders Monthly Data 100%

$ Billions (monthly, seasonally adjusted)

Medical, Measuring & Control Search & Navigation - non Military

90%

Communication- non Military Computer & Related

80%

Military-Search & Navigation Military-Communications

70% 60% 50% 40% 30% 20% 0%

Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 www.census.gov/indicator/www/m3/

20160225

U.S. Electronic Equipment Inventories vs. Orders 2.40

Ratio Inventories/Orders

2.20 2.00 1.80 1.60 1.40

1.00

Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar

1.20

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152016

www.census.gov/indicator/www/m3/

Market Segments Volume (Shift to Low Cost Areas) Personal Computers Mobile Phones Other Consumer Electronics Datacom/Telecom Automotive "Protected" Military Medical Instruments & Controls High IP Content Prototype, Quick Response, Short Run, Need for Local Support

Global Electronic Supply Chain Growth 20160223 4Q'15 vs. 4Q'14 (preliminary) -15 Electronic Equipment Military Business & Office Instruments & Controls Medical Communication Internet Computer Data Storage Automotive Consumer SEMI Equip Semiconductors (SIA) Passive Components PCBs Component Distributors Large EMS (excl Foxconn) ODM Process Equipment Materials Rigid & Flex Laminate

-10

-5

0

5

-7 -14 -7 -6 2 -3 1 -7 -10 -7 -9 -5 -5 -2 -2 -2 1 -1 -10 -7 -7

% US$ Change US$ equivalent at fluctuating exchange; based upon industry composites including acquisitions

High Volume Consumer Driven Markets

Changing Electronic Equipment Markets

20160219

Communication Equipment Suppliers Composite of 20 Companies

10 mobile phone makers, 10 other telecom equipment makers plus estimate of other mobile makers

Millions

Revenue, Net Income & Inventory 200

$ Billions -2.6% Revenue

150

Preliminary 4Q’15 estimate

Income Inventory

100 50 0 -50 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

3COM, ADC Telecom, Alcatel+Lucent, Ciena, Ericsson, Motorola Solutions,, Nokia, Polycom, TellLabs, Palm ; Apple iPhone, HTC, Huawei Device, LG, Motorola Mobility, Nokia, RIM, Samsung, Sony Mobility, ZTE; Euros & Krona converted at fluctuating exchange; mobile phone volumes from company reports & Gartner Dataquest quarterly unit shipment estimates; historical data included for acquired companies

20160218

Smartphone Unit Shipments to End Users

Thousands

World 450

Units (Millions)

400 350 300 250 200 150 100 50 0 Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2007

2008

2009

Gartner Dataquest 2/16 & prior reports

2010

2011

2012

2013

2014

2015

20151031

Apple Inc. Revenue, Net Income & Inventory 90

$ Billions + 22%

80 Revenue

70 60

Income

50

Inventory

40 30 20 10 0

75.5-77.5 10/27/15

-10

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

CY FY ends September

2008

2009

2010

2011

2012

2013

2014

2015

AAPL

Apple Product Mix

20151028

100%

Quarterly Revenues $B

90% 80% 70% 60%

Software Service Peripherals/Oth Hardware

50% Music iPod

40% Desktop/Notebook iPad

30% iPhone 20% 10% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007

2008

2009

2010

2011

2012

2013

2014

2015

Millions

Computer Equipment Suppliers Composite of 13 Public Companies Revenue, Net Income & Inventory

20160219

140

$ Billions Revenue

120

Apple iPhone financials reported in Communication sector Media tablets from all vendors included with "Computer Equipment“

-7.3%

Income

100

Inventory

Preliminary 4Q’15 estimate

80 60 40 20 0 -20 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Acer+Gateway, Apple, Creative Tech, Cray, Dell, HP, IBM, Lenovo, Mercury, NCR, Sun Micro, Unisys Other vendors media tablet sales estimated from unit shipments

20150904

Total Personal Computer Unit Growth

IC Insights 9/15

20160206

90 80 70 60 50 40 30 20 10 0

Units (millions)

2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Others 5.5 RCA Barnes & Noble 1.4 Microsoft Amazon 4.7 LG Electronics Huawei Acer Lenovo Asus 0.6 Samsung 2.2 Apple 15.1

IDC 1/16 & earlier

Media Tablets World Top 5 Vendors

4.9

7.4

13.5

11.6 15.5

16.4 16.0 0.9

24.6 16.6

19.1 23.0 33.1 2.6

18.6 20.4

23.9 30.2

1.0 0.0 0.7

0.4 0.3 0.4 0.4 0.6 0.9 2.3 2.3 2.1 4.3 11.8 17.0 14.0

5.9

0.9 1.8

0.8 0.6 3.1 2.6 7.8 8.5 22.9 19.5

5.8

1.5 1.2 1.5 2.3 2.0 3.6 8.4 9.3 14.6 14.1

1.0

1.1 0.7 3.4 2.0 4.0 2.6 13.5 10.8 26.0 16.4

1.9 1.3 1.0

0.5 0.7 0.8 0.7 1.0 2.4 3.1 3.7 2.3 3.4 3.0 8.6 9.7 11.0 13.3 12.3 21.4

5.2 1.4 1.1

1.6 1.6

2.5 2.5 1.8 8.4 7.6 12.6 10.9

1.8

2.2

3.1 1.9 8.0 9.9

3.2 9.0 16.1

20160218

Digital Still Cameras Built-in & Interchangeable Lens Global Shipment Units (000)

10000

SLR non-SLR Built-in Lens Interchangeable Lens

9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1

3

5

7 2012

www.cipa.jp/

9

11

1

3

5

7 2013

9

11

1

3

5

7 2014

9

11

1

3

5

7 2015

9

11

20160218

Thousands

Smartphones Cannibalize PCs, Tablets & Digital Cameras 450

World Units (Millions)

Smartphones

PCs

Tablets

Digital Still Cameras

400 350 300 250 200 150 100 50 0 Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 2007

2008

2009

2010

2011

2012

2013

2014

www.gartner.com; www.cipa.jp/; www.icinsights.com; www.idc.com; www.digitimes.com

2015

20160211

Data Storage Equipment Suppliers Composite of 12 Public Companies Revenue, Net Income & Inventory

25.0

$ Billions Revenue

20.0

-9.5%

Preliminary 4Q’15 estimate

Income

15.0

Inventory

10.0 5.0 0.0 -5.0 -10.0

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Brocade, EMC, Iomega, Lexar, Maxtor, Network Appliance, Netlist, Qlogic, Quantum, Seagate, Storage Technology, Western Digital, SanDisk. Companies now no longer operating were included in historical data until they shut down

Local Markets

Automotive Electronics

20160219

Automotive Equipment Suppliers Composite of 11 Public Companies Revenue, Net Income & Inventory

60.0

$ Billions Revenue Income Inventory

50.0

-6.9%

Preliminary 4Q’15 estimate

40.0 30.0 20.0 10.0 0.0 -10.0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Autoliv, Borg Warner, Continental AG, Delphi, Federal Mogul, Gentex, Johnson Controls, Lear, TRW Automotive, Valeo, Visteon

20160204

U.S. Vehicle Shipments US$ Billion Lt Trucks & Utility Vehicles

30

Heavy Duty Trucks

Automobiles

25 20 15 10 5 0

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 2000

2001

2002

2003

www.census.gov/indicator/www/m3

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

20160222

Tesla Revenue, Net Income & Inventory 1600

$ Millions

Revenue Income

+27%

Inventory

1100

600

100

-400

-900 Q3

Q4 2013

Q1

Q2

Q3 2014

Q4

Q1

Q2

Q3

Q4

2015

CY

TSLA

Aviation, Government & Military Electronics

20160219

Military Equipment Composite of 21 Public Companies

Millions

Revenue, Net Income & Inventory 120

$ Billions Revenue

-13.7%

Preliminary 4Q’15 estimate

100 Income

80

Inventory

60 40 20 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Boeing (military portion), EADS (military portion), Finmeccinica,General Dynamics, Halliburton, Harris, Honeywell (military portion), L-3 Communications, Lockheed, Moog, Northrop Grumman, Raytheon, Rockwell Collins, Textron, Thales, United Technology

20160204

U.S. Military Electronics Orders & Shipments

Thousands

Defense Communication & Search & Navigation Equipment

6

$ Billions (monthly, seasonally adjusted) Orders

5

Shipments

4 3 2

0

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

1

2000

2001

2002

2003

www.census.gov/indicator/www/m3/

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015 2016

U.S. Aircraft & Parts Shipments

20160225

US$ Billion Non-Defense

25

Defense

20 15 10 5 0

1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 1 5 9 2000

2001

2002

2003

www.census.gov/indicator/www/m3

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Instruments & Control Equipment

U.S. Electromedical, Measurement & Control Equipment Orders & Shipments 20160204 11

$ Billions (monthly, seasonally adjusted) Orders

10

Shipments

9 8 7 6

4

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan

5

1999

2000

2001

2002

www.census.gov/indicator/www/m3/

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015 2016

20160219

Medical Equipment Composite of 21 Public Companies

Millions

Revenue, Net Income & Inventory 25

$ Billions +2.3% Revenue

Preliminary 4Q’15 estimate

20 Income

15

Inventory

10 5 0 -5 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Analogic, Bio-Rad Laboratories, Boston Scientific, Bruker, CareFusion, Covidien, Draeger, Guidant, Hill-Rom, Intuitive Surgical, Invacare, Medtronic, ResMed, St Jude Medical, Smith & Nephew, STERIS, Stryker, Varian Medical, Waters, Zimmer

Future High Volume Markets

Autonomous cars Internet of Things Drones Robots Wearables

20160224

Internet of Things Installed Base by Category Units (millions)

30,000 25,000 20,797 20,000 15,000 10,000 5,000 0 Total Business Vertical-Specific Business Cross-industry Consumer Gartner 11/15

3,807

2014 3,807 898 632 2,277

4,903

2015 4,903 1,065 815 3,023

6,392

2016 6,392 1,276 1,092 4,024

2020 20,797 2,880 4,408 13,509

20140906

World Spending on Robots 80

US$ (Billions)

70

66.9

60 50 42.9

40 30

26.9

20

15.1 10.8

10 0 Total Military Industrial Commercial Personal

7.4

2000 7.4 2.4 3.9 1.1 0.0

2005 10.8 3.5 5.2 1.7 0.4

2010 15.1 5.1 5.8 3.2 1.0

2015 26.9 7.5 11.0 5.9 2.5

2020 42.9 11.2 16.4 10.8 4.5

2025 66.9 16.5 24.4 17.0 9.0

BCG Analysis 9/14, International Federation of Robots, Japan Robot Assoc, Japan Ministry of Economy, Trade & Industry, euRobotics, company filings

N American Robot Orders Shipments by N American Companies to N America 20160221

10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0

US$ (Millions)

Units (000)

Units

600

$ 500

Automotive industry was primary growth driver in 2015

400 300 200 100 0 Q1

Q2

Q3

2011

www.robotics.org

Q4

Q1

Q2

Q3

2012

Q4

Q1

Q2

Q3

2013

Q4

Q1

Q2

Q3

Q4

2014

Fastest growing applications for robot orders in N America in 2015 were Coating and Dispensing (+49%), Material Handling (+24%), and Spot Welding (+22%).

20160221

Wearable Devices 2015-2017 Millions of Devices

Device Smartwatch Head-mounted Display Body-worn Camera Bluetooth Headset Wristband Smart Garment Chest Strap Sports Watch Other Fitnes Monitor Total Gartner 2/2016

2015 30.3 0.1 0.1 116.3 30.2 0.1 12.9 21.0 21.1 232.0

2016 50.4 1.4 0.2 128.5 35.0 1.0 13.0 24.0 21.1 274.6

2017 66.7 6.3 1.1 139.2 44.1 5.3 8.0 26.9 25.1 322.7

Semiconductor Fab, Assembly, Packaging,Test & Measurement Equipment

Semiconductor Fab, Test & Measurement 10`60219 Composite of 37 Public Companies Revenue, Net Income & Inventory 25.0 20.0

Revenue

US$ Billions @ fluctuating exchange

Chart Title -4.5%

Preliminary 4Q’15 estimate

Income Inventory

15.0 10.0 5.0 0.0 -5.0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Advantest, Applied Materials, ASM Intl, ASML, Brooks Automation, BTU, CollabRx, Dainippon Screen, Disco, Electroglas, Entegris, FEI, FSI, Hitachi Hi Tech, Hitachi Kokosai, KLA-Tencor, Ibis, Intervac, Kulicke & Soffa, Lam Research, Mattson,MKS Instrument, Novellus Systems, Photon Dynamics, Rudolph Technologies, Teradyne, Tokyo Electron, Ultra Clear, Ultratech Stepper, Varian Semiconductor, Veeco, Xcerra (LTX-Credence)

Semiconductor Capital Equipment Shipments by Area 14.0

$ Billions ROW

12.0

China

+9.4%

Taiwan

10.0

S Korea N America

8.0

Japan Europe

6.0 4.0 2.0 0.0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001 2002

2003 2004

2005 2006

www.semi.org, www.seaj.or.jp/ 12/15

2007 2008

2009

2010 2011

2012 2013

2014 2015

Global Semiconductor & Semiconductor Capital Equipment 3-Month Shipment Growth Rates on $ Basis 20160205 4.0 3.5

3/12 Rate of Change Semiconductors SEMI Capital Equip

3.0

Zero Growth

2.5 2.0 1.5 1.0

0.0

Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan

0.5

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Sources: SIA; Semiconductor Equipment Association of Japan, www.semi.org, Custer Consulting Group SEMI equipment sector composite growth

Component Distributors

20160219

Electronic Component Distributors Composite of 9 US Public Companies Revenue, Net Income & Inventory

16.0

$ Billions

14.0

Revenue

12.0

Income

10.0

Inventory

-2.4%

Preliminary 4Q’15 estimate

8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Arrow, Avnet, EACO (Bisco), Electrocomponents, Excelpoint, Nu Horizons (historical), Richardson, WPG Holdings, WT Microelectronics

2015

20160218

2000

DMASS - European Semiconductor Distribution Industry $ Millions Other

France

UK

Italy

Germany

1500

1000

500

0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2003

2004

2005

http://dmass.com/ 2/16

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

20160218

DMASS

European Semiconductor Distribution Industry 2,500

2,000

Euros (Millions)

2009

DMASS estimates that 60% of the increase in 2015 was due to the exchange rate swing, in other words, the organic growth lay between 6 and 7%.

2200

Germany Italy UK France

1,500

1596

E Europe

1400

Other

958

1,000

500

594 536 500

735

667 605 561

0 2014

2015

"As predicted, we enjoyed record business in distribution in 2015, at least from a sales perspective. What is different to previous years is the fact that no shortages accompanied this double-digit growth, product availability was never an issue. A big part of the success story is a purely technical effect that will disappear in 2016, unless the exchange rates run riot again. All signs - currency effects, economy, and Chinese downturn - would lead to conclude that we will encounter a far more solemn business environment in 2016."

DMASS 2/2016; http://dmass.com/

EMS & ODM Companies

Millions

20160211

Global EMS & ODM Companies Composite of 52 Public Companies Revenue

140 120

US $ Billions US$ Sales @ fluctuating exchange

-5.9%

Very preliminary 4Q’15 estimate

100 80 60 40 20 0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

20160211

Large Global EMS Providers 2014 vs. 2015 Sales ($M)

Hon Hai (Foxconn) Flextronics Jabil Circuit Sanmina-SCI Celestica Benchmark Elec Plexus Venture Mfg Sypris Total

Taiwan Singapore USA USA Canada USA USA Singapore USA

2014 138,765 26,920 15,969 6,439 5,631 2,797 2,509 1,945 355

2015 141,717 24,598 18,557 6,238 5,639 2,541 2,606 1,928 153

2015/2014 Growth % +2% -9% +16% -3% 0% -9% +4% -1% -57%

201,331

204,291

+1.5%

Sources: Company data Local currency converted at fluctuating exchange

20160211

Large U.S EMS Providers Composite of 6 Public Companies Revenue, Net Income & Inventory Revenue

25.0

Income

20.0

+1.0%

Very preliminary 4Q’15 estimate & 1Q’16 projection

Inventory

15.0 10.0 5.0 0.0 -5.0 -10.0

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Benchmark+Pemstar, Celestica, Flex+Solectron, Jabil, Plexus, Sanmina

2012

2013

2014

2015 2016

20160111

Large Taiwan ODM Providers 2014 vs. 2015 Sales ($M)

Foxconn (Hon Hai) Pegatron Quanta Computer Compal Electronics Wistron Asustek Computer Inventec Chimei Innolux Lite On Technology Total

2014 139,032 33,632 30,566 27,909 19,534 15,747 14,376 14,145 7,611 302,551

2015 141,202 38,224 31,726 26,685 19,631 14,875 12,456 11,469 6,828 303,094

2015/2014 Growth % +1.6% +13.7% +3.8% -4.4% +0.5% -5.5% -13.4% -18.9% -10.3% +0.2%

Source: Company data, NT$ converted at constant avg 2015 exchange (31.75 NT$ = 1US$) Consolidated company sales

Taiwan ODM Companies Composite Sales of 11 Large Manufacturers 1,200

NT$ (Billions)

1,000 800 600 400 Jan 2016 down 15% vs. Jan 2015 and down 21% sequentially from Dec 2015

0

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

200

98

99

00

01

02

Company Financial Releases

03

04

05

06

07

08

09

10

11

12

13

14

15 16

Calendar Year

Asustek Computer, Chei Mei, Compal Electronics, Foxconn, Chimei Innolux , Inventec, Inventec Appliance, Lite On Technology, Mitac International, Pegatron, Quanta Computer, Wistron, Chei Mei Display replacing Chei Mei & Innolux Display 3/10 & later

20160111

Large ODM Companies Composite of 10 Public Manufacturers Quarterly Revenue Growth

120 100 80 60 40 20 0 -20 -40 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Asustek Computer, Compal Electronics, Foxconn, Chimei Innolux, Inventec, Inventec Appliance, Lite On Technology, Mitac International, Pegatron, Quanta Computer, Wistron

20160224

140

IPC Small & Medium N American EMS Company Revenue Index

Index 2010 avg month = 100

120 100 80 60 40 20 0 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 2007

2008

2009

2010

2011

2012

2013

2014

2015

20160224

IPC Small/Medium EMS vs Composite of 53 Public EMS/ODM Companies Revenue 140

US $ Billions 20000

120 100 80

53 Company IPC Small/Medium

15000 10000

60 40

5000 20

0

0 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S PMI Leading Index vs IPC N American EMS Shipments

20160224

3/12 Growth

1.70

US PMI Is a 1-year leading Indicator for US EMS shipments

1.60 1.50 1.40

U.S. PMI Leading Indicator IPC N Amer EMS Shipments Zero Growth

1 year Lead

1.30 1.20 1.10 1.00 0.90

2007

ISM & IPC

2008

2009

2010

2011

2012

2013

2014

2015

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

0.70

Jan

0.80

2016

PCB Fabrication

20150930

Thousands

World PCB Production 1980-2014 70.0

US$ Note: Each year was calculated independently using exchange rates for that year.

60.0 50.0 40.0 30.0

Because each year involved an independent evaluation and because exchange rates can fluctuate significantly, year-to-year growth rates may not be meaningful. "Fluctuating exchange" growth rates can be significantly different vs. those calculated using constant exchange rates.

20.0 10.0 0.0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Calendar Year IPC: World PCB Production Report 2014, Custer estimate for 2015

20150728

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

World’s Top PCB Companies – 2014 1-25 Company Nippon Mektron* ZDT* Unimicron SEMCO Young Poong Grp* Ibiden TTM Technologies Sumitomo Denko* Tripod Viasystems Daeduck Group Nanya PCB Compeq PSA PCB Group KG PCB Group AT&S Meiko Kinsus LG Innotek T.P.T. Multek WUS Group Chin Poon CMK Nitto Denko*

Nationality Japan Taiwan Taiwan S. Korea S. Korea Japan USA Japan Taiwan USA S. Korea Taiwan Taiwan Taiwan China Austria Japan Taiwan S. Korea Taiwan USA Taiwan Taiwan Japan Japan

2013 2,209 2,106 2,009 1,795 2,100 1,315 1,326 1,121 1,337 1,171 1,297 1,016 1,013 957 922 784 692 757 581 684 730 658 634 621 485

2014 3,176 2,483 2,130 1,562 1,523 1,493 1,422 1,414 1,391 1,204 1,159 1,146 1,110 970 963 886 850 818 791 784 750 698 697 689 684

Dr Hayao Nakahara, N.T. Information Ltd 7/2015

Growth 43.78% 17.90% 6.02% -12.98% -27.48% 13.54% 7.24% 26.14% 4.08% 2.82% -10.64% 8.09% 9.55% 1.36% 4.45% 13.01% 22.83% 7.97% 36.14% 14.60% 2.74% 6.08% 9.93% 10.95% 41.03%

Brief Comments A big Apple supplier A big Apple supplier Building PCB plants in Huangxi Building plants in Vietnam Interflex & YPE poor in 2014 Boosting growth from Malaysia Purchased Viasystems on 5/'15 A big Apple supplier Pushing into automotive PCB Purchased by TTM 5/31/2015 Careful investment IC substrates seem to grow Chongqing plant contributing NB mortherboards reduced Elec& Eltek is the largest CKG plant starts business soon #3 automotive PCB maker Flip-Chip CSP strong LGE & Qualcomm NB motherboards increasing Profitable since Oct 2013 Kunshan & Huangxi new plants #1 automotive PCB maker #2 automotive PCB maker FPC for HDD among others

20160219

Japan PCB Shipments 100

Yen (Billions)

90 80 70 60 50 40

2015/2014 +6.1%

30 20

0

Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan Sep May Jan

10

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 1516

Calendar Year www.jpca.org/kikaitoukei/kikai2013.xls

20160220

Taiwan Rigid & Flex PCB Shipments Broad Composite of 46 Taiwan-listed Manufacturers 60

NT$ (Billions)

50 40 30 20 2015 down 1.9% vs. 2014 in NT$ and down 6.3% at fluctuating exchange in U.S. dollars

0

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

10

01

02

03

04

05

06

07

08

09

Calendar Year Company Financial Releases

10

11

12

13

14

15

16

20151117

Millions

S. Korean PCB Revenues Composite of 11 Publicly Traded Manufacturers Quarterly Revenue 7

KRW Billion Very preliminary 4Q’15 estimate

6 5 4 3 2 1 0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009

2010

2011

2012

2013

2014

2015

Samsung EM, Young Poong, Daeduck, Simm Tech, Isu Petasys, Flexcom, DAP, BH, Samsung Techwin, Korea Circuit

20160129

N American Rigid & Flexible PCB Shipments & Orders

$M (statistical sample of about 50% of producers) 250

2015/2014 Rigid & Flex PCB Shipment Growth: +0.5%

Shipments Orders

200 150 100 50 0

1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 1 3 5 7 9 11 2008

2009

2010

2011

2012

2013

2014

Note: IPC survey captures "market" not domestic production. About 15% of the above represents imported boards resold by N American PCB producers in survey.

IPC

2015

20160204

U.S Electronic Supply Chain Shipment Growth 4Q’15 vs. 4Q’14 -10 -5 Electronic Equipment Electromedical, Measurement & Control Search & Navigation Computer Related Communication Defense Automotive Airplane/Aerospace - non Defense Airplane/Aerospace - Defense Semiconductors to N America PCBs Passive components Industrial Production

0

5

10 15

20 25

2 7 5 -3 8 0 6 4 4 15 1 34 -1

% Change Custer Consulting Group

30 35

40

World PCB Model

20150930

2014 World Total PCB Production by Geographical Area (US$ M @ Average 2014 Exchange)

12.6%

0.4%

8.0%

5.0% 13.0%

4.3%

9.8%

46.8%

Total: $60.2 Billion IPC 9/15

N America Europe Japan China/HK Taiwan S Korea Rest of Asia ROW

20160219

Regional PCB Shipment Growth 2.0 3/12 Rate of Growth (in local currency)

Taiwan/China S Korea

1.8

Japan N America

1.6

Europe Zero Growth

1.4 1.2 1.0 0.8

0.4

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

0.6

00

01

02

03

04

05

06

07

08

09

10

11

12

13

Calendar Year Sources: IPC, JPCA, Taiwan/China composite; Eurostat "wiring devices" for Europe

14

15

16

20160219

World PCB Monthly Shipments Converted @ Fluctuating Exchange Rates 3.5

$ Billions N America

3.0

Europe Japan Taiwan/China

2.5

Rest of Asia Korea

2.0 1.5 1.0

0.0

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan

0.5

00

01

02

03

04

05

06

07

08

Calendar Year Source: Custer Consulting Group

09

10

11

12

13

14

15

16

Outlook

Walt

Global PMI, Electronic Equipment, PCB & 20160216 Semiconductor Shipments 1.8

3/12 Rate of Change PCB Semiconductor

1.6

Elec Equip Global PMI

1.4

Zero Growth

1.2 1.0 0.8

0.4

Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar Jul Nov Mar

0.6

00

01

02

03

04

05

06

07

08

Calendar Year Source: Custer Consulting Group

09

10

11

12

13

14

15

16

20160225

Worldwide Semiconductor Market by Geography WSTS Forecast 400 350

336 335 336 298 300 292 306

300 248 256 249

250

213

204

200 150

346

227

226

166

149

139 141

100 50 0

1999 Total 149. Asia Pacific 37.2 Japan 32.8 Europe 31.9 Americas 47.5

2000 204. 51.3 46.7 42.3 64.1

WSTS 2/16

2001 138. 39.8 33.1 30.2 35.8

2002 140. 51.2 30.5 27.8 31.3

2003 166. 62.8 38.9 32.3 32.3

2004 213. 88.8 45.8 39.4 39.1

2005 227. 103. 44.1 39.1 40.7

2006 247. 116. 46.4 39.9 44.9

2007 255. 123. 48.8 41.0 42.3

2008 248. 124. 48.5 38.2 37.9

2009 226. 119. 38.3 29.9 38.5

2010 298. 160. 46.6 38.1 53.7

2011 299. 164. 42.9 37.4 55.2

2012 291. 163. 41.1 33.2 54.4

2013 305. 174. 34.8 34.9 61.5

2014 335. 194. 34.8 37.5 69.3

2015 335. 201. 31.1 34.3 68.7

2016 336. 201. 31.3 33.7 69.7

2017 346. 207. 32.1 34.5 72.0

20160223

Global Growth Rates Process Equipment, Materials & Laminate

1.8

3/12 Rate of Change Process Eq

1.6

Materials Laminate

1.4

Zero Growth

1.2 1.0 0.8 0.6 0.4

Q1

Q3

2003

Q1

Q3

2004

Q1

Q3 2005

Q1

Q3 2006

Q1

Q3

2007

Q1

Q3

2008

Q1

Q3 2009

Q1

Q3 2010

Q1

Q3 2011

Q1

Q3

2012

Q1

Q3

2013

Q1

Q3 2014

Q1

Q3

Q1

2015

Calendar Year Company Financials of 12 Laminate suppliers, 13 material suppliers & 8 Process Equipment Suppliers

U.S PMI Leading Index vs

20160224

N American Small-Medium Company EMS Shipments 3/12 Growth

1.70

US PMI Is a 1-year leading Indicator for US EMS shipments

1.60 1.50 1.40

U.S. PMI Leading Indicator IPC N Amer EMS Shipments Zero Growth

1 year Lead

1.30 1.20 1.10 1.00 0.90

2007

ISM & IPC

2008

2009

2010

2011

2012

2013

2014

2015

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

Jan

Oct

Jul

Apr

0.70

Jan

0.80

2016

20160219

World PCB Shipments (with forecast) Converted @ Fluctuating Exchange Rates 6.0 5.5 5.0 4.5

$ Billions -0.6% +0.5%

Growth calculations: Europe = Eurostat “Wiring Device” Japan & N. America from JPCA & IPC data Taiwan/China:46 rigid & flex company composite Rest of Asia growth = Taiwan/China 44 company composite Includes S Korea data for 2011-2014

-1.2%

4.0 3.5 3.0 Actual

2.5

Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep Jan May Sep

2.0

Forecast

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

Calendar Year Source: Custer Consulting Group - 2010 base year expanded by monthly growth of N. American, European, Japanese, Korean & Taiwan/China monthly PCB shipments

16

20151004

World Rigid & Flex PCB Production Converted @ 10/15 Exchange Rates 80

$ Billion Americas

Germany

Other Europe

China

Japan

Taiwan

S Korea

70 60

59.9

59.8

59.8

60.2

59.8

2011

2012

2013

2014

2015

Other Asia

61.6

61.9

2016

2017

50 40 30 20 10 0

Custer Consulting Group 2/16

20160111

Conclusions 2015 global growth slowed vs 2014 with many Asia/Pacific produced consumer driven products seeing weakened demand 2016 is off to a modest start Personal computer, media tablet and digital camera sales have declined and smartphone growth has slowed New high volume products are emerging but are not yet contributing significantly to global volumes Strong dollar is negatively impacting US$ denominated global growth calculations Leading indicators are useful for tracking the recovery regionally

Don’t Shoot the Messenger

20111007

Custer Consulting Group Products Daily News Services (6 days/week) - Global electronics supply chain - Solar/Photovoltaic supply chain Business Outlook - Market charts & data Global market OEMs Components, EMS, ODM, materials & process equip Solar/Photovoltaic - Weekly Market Comments with latest charts

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