Business Outlook Global Electronics Industry (with emphasis on - - PowerPoint PPT Presentation

Business Outlook Global Electronics Industry

(with emphasis on Europe)

Custer Consulting Group www.custerconsulting.com February 2019

Walt

On the Internet no one knows I am a dog

Custer Presentation given by Alun

Brace yourself for some sobering news

2019 Situation

Global manufacturing growth is slowing based on PMI data. Most sectors of the world electronic supply chain are now expanding slower or contracting. Inflation, tariffs, trade disputes and Brexit are key issues Geopolitical concerns remain very significant. European electronics sectors except instruments, medical electronics & aerospace declined in 4Q’18

Industrial Production – Europe Manufacturing

Index (2015 Avg. Month = 100, Seasonally Adjusted) 70 80 90 100 110 120 130 140

Jan/05 Jul/05 Jan/06 Jul/06 Jan/07 Jul/07 Jan/08 Jul/08 Jan/09 Jul/09 Jan/10 Jul/10 Jan/11 Jul/11 Jan/12 Jul/12 Jan/13 Jul/13 Jan/14 Jul/14 Jan/15 Jul/15 Jan/16 Jul/16 Jan/17 Jul/17 Jan/18 Jul/18 Jan/19

Eur28 Germany France Italy UK

Eurostat

20190213

Index Slowing Industrial Production

Purchasing Managers Indices Useful but Sobering Leading Indicators

Global "Purchasing Managers" Index

Diffusion Index, >50 = Growth

Markit Economics

30 35 40 45 50 55 60

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 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

PMI

20190203

Expansion Contraction

Eurozone Manufacturing "Purchasing Managers" Index

Diffusion Index, >50 = Growth

Markit Economics

30 35 40 45 50 55 60 65

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 Feb 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

PMI

20190203

50,9 49,0 51,8 52,4 47,8 51,2 52,8 49,7 50,5 51,7 49,7 51,5 51,1 49,2 49,7 54,2 51,5 51,4

46,0 48,0 50,0 52,0 54,0 56,0

Russia Czech Sweden Spain Italy France UK Germany Europe

PMI December January

European Purchasing Managers' Indices January 2019 vs December 2018

Markit Economics Above 50 = Growth Below 50 = Contraction

20190203

Electronic Equipment World

World Electronic Equipment Production By Type

20190208

500 1000 1500 2000 2500

Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 industr+instru gov/mil Computer & Peripherals automotive consumer Telecom/Datacom Business

4Q’18 Prelim estimate Weighted avg For total El Eq +2.8%

Annual Rate $B (converted @ fluctuating exchange rates)

Two Measures of Electronic Equipment Growth Composite company sales by sector from quarterly financial reports Monthly regional data

Electronic Equipment Sales

Weighted Average vs. Regional Model @ Fluctuating Exchange

Quarterly Revenue Growth

213 OEM company sales composite (converted to weighted average by product sector)

• vs. Regional electronic equipment shipment model

20190208

• 25
• 20
• 15
• 10
• 5

5 10 15 20 25

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 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

% Growth Company Composites Regional Data

European Computer, Electronic & Optical Products Production

Eurostat, C26 category, EU 28 countries

201900214

80 90 100 110 120 130

1 2 3 4 5 6 7 8 9 1011 12 1 2 3 4 5 6 7 8 9 1011 12 1 2 3 4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9 10 1112 1 2015 2016 2017 2018 2019

Index (2015=100), Seasonally Adjusted

World Electronic Equipment Monthly Shipments

Converted @ Fluctuating Exchange Rates

Source: Custer Consulting Group

20 40 60 80 100 120

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 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 USA Europe Japan China Taiwan Korea ROA ROW

US$ B

20190213

World Electronic Equipment Monthly Shipments

Converted @ Fluctuating Exchange Rates

Source: Custer Consulting Group

20190213

80 100 120 140 160 180 200 220

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 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

December 2018 down 4.3% vs December 2017 and down 2.2% sequentially vs. November 2018

US$ M

Electronic Supply Chain Growth Europe & World

European Electronic Supply Chain Growth 4Q’17 vs 4Q’18

• 1

9 8

• 7
• 6
• 6

3 6

• 6
• 4

5

• 5
• 10
• 5

5 10 Electronic Equipment Instruments & Controls Medical electronics Communication Equipment Domestic Electric Appliances Motor Vehicles Airplane/Aerospace Semiconductors (SIA in euros) Electronic components Electronic components & boards Loaded electronic boards Wiring devices

% Change

20190213 Euro denominated growth rates; Eurostat, SIA & Custer Consulting Group

Global Electronic Supply Chain Growth 4Q'18 vs. 4Q'17 (preliminary)

3 4 1 1 6

• 4

7 10

• 9

10 1 10 7 21 6 7

• 2
• 5
• 20
• 10

10 20 30

Electronic Equipment Military Business & Office Instruments & Controls Medical Communication Internet (Datacom) Computer Data Storage Automotive Consumer SEMI Equip (SEMI) Semiconductors (SIA) Passive Components PCBs Large EMS (excl Foxconn) ODM Process Equipment Materials Rigid & Flex Laminate

Equip Tot=Weighted avg by product sector

% US$ Change

20190203 US$ equivalent at fluctuating exchange; based upon industry composites including acquisitions

Markets of European Focus

Automotive Equipment Suppliers Composite of 15 Public Companies

Revenue, Net Income & Inventory

Autoliv, Borg Warner, Continental AG, Delphi, Denso, Federal Mogul, Gentex, Hella, Johnson Controls, Lear, Magna, TRW Automotive, Valeo, Visteon, ZF Friedrichshafen

20190208

• 20,0

0,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0

Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Billions

Revenue Income Inventory

+9.9%

European Motor Vehicle Production

Eurostat, C291 category, EU 27 countries

20190213

40 50 60 70 80 90 100 110 120

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 7 12 5 10 3 8 1 6 11 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Index (2015=100), Seasonally Adjusted

Military & Aerospace Composite of 22 Public Companies

Revenue, Net Income & Inventory

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

20190202

• 20

20 40 60 80 100 120 140 160 180

Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Billions

Millions

Revenue Income Inventory

• 0.7%

European Production - Aircraft, Spacecraft & Related Equipment

Eurostat, C303 category, EU 27 countries

20190213

40 50 60 70 80 90 100 110 120

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 7 12 5 10 3 8 1 6 11 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Index (2015=100), Seasonally Adjusted

Instruments & Control Equipment Composite of 16 Public Companies

Revenue, Net Income & Inventory

ABB, Agilent, Ametek, Emerson, Itron, Keysight, National Instruments, PerkinElmer, Rockwell Automation, Rotork, Teledyne, ThermoFisher, Woodward Govenor 20190208

• 10

10 20 30 40 50 60

Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Billions

Millions

Revenue Income Inventory

• 1.1%

European Production - Instruments & Appliances for Measuring, Testing & Navigation

Eurostat, C2651 category, EU 27 countries

20190213

60 70 80 90 100 110 120 130

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 7 12 5 10 3 8 1 6 11 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Index (2015=100), Seasonally Adjusted

Medical Equipment Composite of 21 Public Companies

Revenue, Net Income & Inventory

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 20190208

• 5

5 10 15 20 25 30

Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Billions

Millions

Revenue Income Inventory

+5.9%

European Production - Irradiation, Electromedical & Electrotherapeutic Equipment

Eurostat, C266 category, EU 27 countries

20190213

70 75 80 85 90 95 100 105 110 115 120

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 1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Index 3-Mon Avg

Index, Seasonally Adjusted

Volume Markets are Flat

50 100 150 200 250 300 350 400 450

Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Thousands Smartphones PCs Tablets Digital Still Cameras

World Units (Millions) 20190112 www.gartner.com; www.cipa.jp/; www.icinsights.com; www.idc.com; www.digitimes.com

Declining units but increasing average price

Communication Equipment Suppliers Composite of 30 Companies

10 mobile phone makers, 20 other telecom equipment makers plus estimate of other mobile makers

Revenue, Net Income & Inventory

3COM, ADC Telecom, Alcatel+Lucent, Ciena, Ericsson, Motorola Solutions,, Nokia, Polycom, TellLabs, Palm, Adva Optical Networking,Arris Group,AudioCodes,Broadsoft,Fabrinet,Gigamon,Infinera,Ixia,Neophotonics,Radware ; 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

20190203

• 50

50 100 150 200

Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Billions

Revenue Income Inventory

• 4.4%

World Smartphone Sales 4Q’18

IDC 2/19

4Q’18 TOTAL: 375.4 Units

18.7% 16,1% 18,2% 7.6% 7,8% 31.5% Samsung Huawei Apple Xiaomi OPPO Others 4Q’17 394.6M 20190203

Apple Product Mix

20190201

10 20 30 40 50 60 70 80 90 100

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Software Service Oth Prodsucts Services iPod Desktop/Notebook iPad iPhone

Quarterly Revenues $B Apple growth slowdown affecting its broad global supply chain

Autonomous cars Internet of Things (IoT) Industrial Internet of Things (IIoT) Cloud storage 5G Handsets & Infrastructure Virtual & Augmented Reality AI/Machine Learning Smart Cities, Smart Agriculture Drones Robots Wearables 3D Printing Health Care

Emerging Volume Markets

Semiconductors

12/17 12/18 % CH Americas 8.95 8.40

• 6.2%

Europe 3.37 3.47 + 2.8% Japan 3.24 3.32 + 2.3% China 12.01 12.71 + 5.8% Asia Pacific / All Other 10.41 10.33

• 0.7%

Total 37.99 38.22 + 0.6%

Monthly Semiconductor Shipments $ Billions (3-month avg in US$)

SIA www.semiconductors.org/

20190204

Semiconductor Growth Rates

Total $ Shipments to an Area

Total $ Shipments from All Countries to an Area SIA website: www.semiconductors.org/

20190213

0,3 0,5 0,7 0,9 1,1 1,3 1,5 1,7 1,9

Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar 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 17 18 19

N America Europe Japan Asia-Pac

3/12 rate of change

Growth has slowed in all regions

Total Semiconductor Shipments to an Area

Monthly Shipments - Reporting Firms (showing China)

SIA website: www.semiconductors.org/

20190203

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar Oct May Dec Jul Feb Sep Apr Nov Jun Jan Aug Mar Oct May 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Japan Europe N America Asia/Pac ex China China Asia-Pacific

12/18 9.7% 9.3% 21.4% 34.5% 26.7%

Semiconductor Shipments to Europe vs. European Electronic Equipment Production

Total $ Semiconductor Shipments from All Countries to Europe www.sia-online.org/, Eurostat class C26, EU27, European Computer, Electronic & Optical products Production 20190204

0,3 0,5 0,7 0,9 1,1 1,3 1,5 1,7 1,9

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 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Semiconductors Equipment

3/12 Rate of Change (Euros converted at fluctuating exchange)

Semiconductor Capital Equipment

Semiconductor Capital Equipment Shipments by Area

SEMI

0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0 Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Column1 ROW China Taiwan S Korea N America Japan Europe

$ Billions

• 1.6%

Europe Supply Chain

European Computer, Electronic and Optical Products, Semiconductors, & SEMI Equipment Shipments

Total $ Semiconductor Shipments from All Countries to Europe www.sia-online.org/, Eurostat class C26 & SEMI, CCG Extrapolation of SEMI growth 20190204

0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5

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 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Semiconductor shipments to Europe Computer, electronic and optical products SEMI equipment shipments to Europe DMASS-electronic component distribution Zero growth

Euro 3/12 Rate of Change

European Component Shipments by Country

DMASS - European Semiconductor Distribution Industry

http://dmass.com/ 11/18

20181111

500 1000 1500 2000 2500

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 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017 Other France UK Italy Germany

Euro Millions

+6.3%

DMASS

European Semiconductor Distribution Industry

20180820

684 700 184 193 152 166 142 155 183 189 324 375 495 522

100 200 300 400 500 600 700 800 900 1.000 3Q'17 3Q'18

Euros (Millions) Germany Italy UK France Nordic E Europe Other

DMASS 11/18; http://dmass.com/

“Compared to the double-digit projections we keep seeing for the total European semiconductor market from WSTS and others, European distribution does not seem to enjoy the same dynamics. However, most of their total projections are in US Dollars. Stated in US Dollars as well, DMASS grew by 14% in the first nine months

• f 2018.”

Georg Steinberger, chairman of DMASS:“So far, 2018 has proved to be a healthy mid-single-digit growth year for the European semiconductor distribution industry. With product shortages and price increases continuing through the summer, Q3/2018 ended, according to DMASS Ltd., with 2.3 Billion Euro of sales, an increase of 6.3% compared to 2017. The first nine months of 2018 showed exactly the same increase of 6.3%, to 6.91 Billion Euro of sales.

EMS & ODM Companies

Large EMS Providers Composite of 9 Public Companies

Revenue, Net Income & Inventory

Benchmark+Pemstar, Celestica, Flextronics+Solectron, Foxconn, Jabil, Plexus, Sanmina, Sypris, Venture Mfg

• 20,0
• 10,0

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0

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 Q3 Q1 Q3 Q1 Q3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

US$ Billions @ fluctuating exchange

Revenue Income Inventory

20190208

Preliminary 4’18 estimate

+3.7%

Taiwan ODM Companies Composite Sales of 11 Large Manufacturers

200 400 600 800 1.000 1.200 1.400

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 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

December 2018 up 7.0% vs. December 2017 and down 1.5% sequentially from November 2018

Total 2018 up 8.3% in NT$ vs. total 2017 Up 9.3% in fluctuating exchange 2018 vs 2017 US$

NT$ (Billions)

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

Calendar Year Company Financial Releases

Large ODM Companies

Composite of 11 Taiwan-listed Manufacturers

Quarterly Revenue Growth in NT$

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

• 40
• 20

20 40 60 80 100 120

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 Q1 Q3 Q1 Q3 Q1 Q3 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

growth % vs. same quarter a year earlier

European EMS Market Western Europe and Eastern Europe

Source: In4ma d.g.weiss@gmx.de

20180125 16,4 17,0 17,2 17,9 18,5 15,5 16,9 17,1 18,2 19,3 31,9 33,9 34,3 36,1 37,8

5 10 15 20 25 30 35 40 45

2014 2015 2016 2017F 2018F

W Europe E Europe Total Europe

Euros B Summary of 1,576 individual EMS entities plus 2.9% added to estimate to bring Europe 35.5 billion Euro for 2016. MENA not included

EIPC Thoughts

EIPC & its Members have Matured

Trump is not too popular

Europeans are strong

Walt Cursiter supports Europe

PCB Market

World PCB Production 1980-2018

IPC: World PCB Production Report 2016 + Nakahara estimates for 2017 & 2018 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0

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 16 17 18

Thousands

Includes assembled boards by Flex & rigid-flex PCB makers

US$

Calendar Year

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

2017 World Total PCB Production by Geographical Area

IPC 11/18

4.2% 3.1% 8.0% 52,8% 10,9% 10,2% 10,5% 0,2%

N America Europe Japan China/HK Taiwan S Korea Rest of Asia ROW 20181121

Total: $70.5 Billion

Taiwan Listed Vendor Shipments 42 Rigid PCB & 8 Laminate Manufacturers

20190112

1.000 2.000 3.000 4.000 5.000 6.000 7.000 5 10 15 20 25 30 35 40 45 50 55

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 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

PCB Laminate

PCB – NT$ (Billions) Calendar Year Company Financial Releases Laminate – NT$ (Millions)

S Korean Companies’ Global PCB Production

Private communication from industry source

20180729

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 2018 Total 1.980 1.890 2.035 2.000 1.937 1.844 1.972 1.961 1.939 1.965 2.206 2.634 2.043 1.977 IC Substrate 530 510 540 530 518 504 545 537 512 496 541 538 533 524 Flex 440 410 470 460 401 364 420 425 421 489 650 1138 529 476 Rigid 1010 970 1025 1010 1018 976 1007 999 1006 980 1015 958 981 977

1.980 1.890 2.035 2.000 1.937 1.844 1.972 1.961 1.939 1.965 2.206 2.634 2.043 1.977

500 1.000 1.500 2.000 2.500 3.000 3.500

US$ millions (converted at 1150 won/$)

• Continuous slowdown in FPCB sector makes the second quarter the same as the last year’s. However

things are picking up as we enter third quarter.

• Others sectors were flat during the quarter as the previous.
• Includes offshore production by S. Korean companies.

Europe

Special thanks to Michael Gasch

European PCB Production

Data4PCB 4/18 & prior

20171030

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Other 601 577 422 408 410 346 309 264 221 169 170 155 157 151 158 170 172 202 UK 641 478 368 340 330 278 252 197 177 137 165 161 158 153 165 173 163 149 Scandanavia 351 309 260 201 200 198 169 137 103 64 64 64 50 40 42 40 40 Austria/Switzerland 561 575 463 447 427 427 447 427 378 258 341 343 325 323 312 315 299 332 Italy 619 530 444 338 324 281 284 248 212 156 181 186 174 168 174 181 188 206 France 541 465 287 244 266 240 234 231 206 165 170 166 147 148 148 157 168 156 Germany 1461 1300 1006 1027 1044 981 1054 1039 970 676 883 902 835 828 825 796 740 788

1000 2000 3000 4000 5000 6000

Euros (Millions) Russia & FSU not included

+5%

4,8 4,8 5,4 4,4 3,8 3,9 3,1 3,3 22,9 22,1 21,2 20,6 20,2 21,1 19,7 18,6 47,5 45,0 44,3 41,1 42,3 42,9 41,1 41,0 9,0 10,4 9,3 11,0 11,6 11,5 12,4 12,6 6,9 7,9 10,1 11,3 9,5 9,3 10,5 10,7 5,2 6,1 5,6 6,9 7,7 7,9 7,9 8,1 3,6 3,7 4,1 4,8 4,9 3,4 5,3 5,7

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2010 2011 2012 2013 2014 2015 2016 2017

Others Flex-Rigid Flex HDI ML PTH n-PTH

European PCB Production by Technology

Data4PCB 4/18

20180426

18,3 17,6 17,7 16,7 19,4 20,4 21,0 21,8 2,6 2,5 2,0 2,1 1,7 1,5 1,6 1,4 10,9 8,4 10,4 8,2 7,0 6,9 5,6 5,2 3,3 2,8 1,9 3,0 2,9 2,9 2,6 2,1 8,2 9,7 6,7 7,1 7,3 7,8 7,9 8,2 3,9 4,2 4,4 4,8 5,3 5,6 37,5 41,8 43,2 43,8 42,9 40,8 40,3 39,8 7,6 7,2 7,1 7,8 8,2 8,8 9,6 8,3 11,6 9,9 7,1 7,1 6,2 6,1 6,1 7,5

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2010 2011 2012 2013 2014 2015 2016 2017

Other Medical Industrial Aeronautics Defense Consumer Communication Computer Automotive

European PCB Production by End Market

Data4PCB 4/18

20180426

PCB industry in Europe 2000 – 2017

revenues and number of manufacturers

4.775 4.233 3.250 2.937 3.004 3.001 2.750 2.748 2.543 2.267 1.625 1.969 1.972 1.846 1.807 1.831 1.815 1.747 1.833 555 488 457 405 478 426 379 374 359 333 314 304 299 284 272252 247 230 223

100 200 300 400 500 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2000 2002 2003+ 2005 2007 2009 2011 2013 2015 2017

Revenues in million EUR Number of manufacturers

* 2003+ = incl. Central Europe

Data4PCB 4/18 & earlier

Europe’s Top 41 PCB Companies Ranked by 2017 Revenues

20160502

Rank Company Rank Company 1 AT&S / A 22 Cicor Group / CH 2 Würth Gruppe / D 23 Schaltungsdruck Storz / D 3 Schweizer Electronic / D 24 Aspocomp Oy –Gruppe / Fin 4 KSG GmbH + Co KG / D 25 ACB N.V. / B 5 Elvia Group / F 26 Eleprint srl / I 6 Mektec Europa / D 27 Europrint Eger Kft / B 7 Unimicron Germany / D 28 Tecnomaster SpA / I 8 SoMaCis / I 29 Graphic plc / GB 9 hmp Macroprint / D 30 Spirit Group / GB 10 Elco Group / I + NL 31 Silga SpA / I 11 European Electronic Systems / D 32 TW Elektronik Horst Muller / D 12 GS SwissPCB AG /CH 33 Ilfa / D 13 Dyconex AG / CH 34 Elekonta Marek GmbH / D 14 Varioprint AG Electronic / CH 35 OMR Italia SpA / I 15 Hausermann GmbH / A 36 Merlin (Falcon) Group / GB 16 Amphenol-Invotec /GB 37 Precoplat / D 17 Cimulec Group / F 38 Asetronic AG / CH 18 Optiprint AG / CH 39 Jenaer Leiterplatten / D 19 Cistelaier-Group / I 40 LAB Circuits S.A. / E 20 Polytron Print GmbH / D 41 Techno Service / PL 21 Rohde & Schwarz Data4PCB 4/17

2017 European PCB Production

Data4PCB 4/18

EUR 1832 million

43,0% 18,1% 11,2% 8,5% 8,2% 6,9% 4,1%

Germany Austria/Switzerland Italy France UK Belgium/Netherlands/Scandanavia Central Europe 20160502

Europe Comments

There has been a change in the reporting system, ZVEI will not release monthly numbers to the press, quarterly results only. Quarterly revenues are still at their usual level but growth rates are slowing. Compared to the 3Q’17 sales rose by 1.9% and by 0.5% compared to the 2Q’18. However, last year already was a very good one and insofar the gauge was lying high. Quarterly bookings were a catastrophe, especially September which suffered a severe cave-in. The 3Q’18 was 16% below last year’s and 12% below the 2Q’18. The reshoring of orders last year (because of copper foil and laminate shortages in Asia) has provided a high base from which a certain decline was to be expected however, not to this extent. Michael Gasch, Data4PCB 10/2018

Europe Comments

For the time being one can only speculate about the reasons (further data are needed) but some things are for sure already: The shortage of key components caused cancellations or – in the lucky case – deferments (without components no PCBs are needed) The fraud of most of the companies in the German automotive industry (diesel-gate) provoked more severe type approval tests (WLTP) but most of the manufacturers reacted too late and many approvals are still missing. The consequence? They can’t sell cars without approval; therefore, production shifts are cancelled = no PCBs needed.

Michael Gasch, Data4PCB 10/2018

Europe Comments

In addition to this the looming Brexit may create another wave

• f consumer refusal to buy new cars.

Insofar the old Chinese curse (“may you live in interesting times”) seems to become reality. Let’s hope to best and prepare for the worst.

Michael Gasch, Data4PCB 10/2018

DACH PCB Bookings, Billings & Book/Bill

1,07 1.06 0,92 1,06 0,97 0,97 1,01 0,99 1,11 1,00 0.93 1,06 1,03 0,96 0,85 50,00 60,00 70,00 80,00 90,00 100,00 110,00 120,00 130,00 0,70 0,80 0,90 1,00 1,10 1,20 1,30 1,40 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 2015 2016 2017 2018

Billings Bookings B/B

Book/Bill Booking & Billing Indices Base = Average of Sales in 2015

M Gasch based on ZVEI data 10/18 20181111

Process Equipment, Laminate & Materials Suppliers

Process Equipment Related Suppliers Composite of 12 Companies

Revenue

C-Sun,Tailing Technology, Camtek, Cadence, ESI, GSI Group, Mentor Graphics, Nordson, Rofin-Sinar, Coherent, Orbotech, Data I/O 20190208

500 1000 1500 2000 2500 3000 3500

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 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Millions

Preliminary estimate

• 1.4%

PCB Flat Panel Displays Touch Screens Photovoltaic

Material Suppliers (excluding laminate) Composite of 14 Companies

Revenue

Momentive, OM Group, Taiwan Glass, Baotech, Glotech, Shenmao, Wahlee,Topoint, Cabot Micro, Cookson Elec, Eternal Chemical, Hexcel, Chang Wah, Platform Specialty Products NT$ & GBP converted to US$ at fluctuating exchange 20190208

500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500

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 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Millions

Preliminary estimate +3.3%

Rigid & Flex Laminate Suppliers Composite of 13 Companies

Revenue

Arisawa, Arlon Electronic Materials, Elite Materials, Hwa Woei, Iteq, Microcosm, Park Electrochemical, Rogers, Shinemore, Taiflex, Thinflex, Top Union, Uniplus NT$ converted at fluctuating exchange 20190208

100 200 300 400 500 600 700 800 900 1000

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 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

$ Millions

Preliminary estimate

• 4.5%

Global Growth Rates Process Equipment, Materials & Laminate

20190208

0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8

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 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Process Eq Materials Laminate Zero Growth

3/12 Rate of Change

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

Calendar Year

World PCB Model

World PCB Monthly Shipments

Converted @ Fluctuating Exchange Rates

20190125

0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5

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 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Thousands

N America Europe Japan Taiwan/China Rest of Asia Korea

$ Billions Source: Custer Consulting Group Calendar Year

Note: harmonization with 2016 IPC World Market report

Forecasts

Business Conditions

6,3 4,7 0,8 1,7 2,0 3,0 6,5 4,5 1,0 2,1 2,2 3,1 6,9 4,3 1,7 2,4 2,3 3,1

2 4 6 8

China Emerging Markets Japan Euro area USA World

% Annual Growth 2017 2018F 2019F

Real GDP Growth

Growth rates calculated using constant 2010 US$ weights

World Bank 6/18, www.worldbank.org

20180609

Worldwide Semiconductor Market by Geography WSTS Forecast

WSTS 12/18

20180606

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total 149,4 204,4 138,9 140,8 166,3 213,1 227,4 247,7 255,6 248,6 226,3 298,3 299,5 291,6 305,6 335,8 335,2 338,9 412,2 477,9 490,1 Asia Pacific 37,2 51,3 39,8 51,2 62,8 88,8 103,5 116,5 123,5 124,0 119,6 160,0 164,0 163,0 174,4 194,2 201,1 208,4 248,8 288,6 297,5 Japan 32,8 46,7 33,1 30,5 38,9 45,8 44,1 46,4 48,8 48,5 38,3 46,6 42,9 41,1 34,8 34,8 31,1 32,3 36,6 40,1 41,1 Europe 31,9 42,3 30,2 27,8 32,3 39,4 39,1 39,9 41,0 38,2 29,9 38,1 37,4 33,2 34,9 37,5 34,3 32,7 38,3 43,4 44,2 Americas 47,5 64,1 35,8 31,3 32,3 39,1 40,7 44,9 42,3 37,9 38,5 53,7 55,2 54,4 61,5 69,3 68,7 65,5 88,5 105,8 107,3

149 204 139 141 166 213 227 248 256 249 226 298 300 292 306 336 335 339 412 478 490

100 200 300 400 500

+21.6% +15.9% +2.6%

$ B

World PCB Monthly Shipments

Converted @ Fluctuating Exchange Rates

20190211

0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5

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 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Thousands

N America Europe Japan Taiwan/China Rest of Asia Korea

$ Billions Source: Custer Consulting Group Calendar Year

Note: harmonization with 2016 IPC World Market report

World PCB Shipments (with forecast)

Converted @ Fluctuating Exchange Rates

20190211

2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5

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 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Actual Forecast

• 2.8%

$ Billions Source: Custer Consulting Group - 2010 base year expanded by monthly growth of

• N. American, European, Japanese, Korean & Taiwan/China monthly PCB shipments

Calendar Year

Growth calculations: Europe = Eurostat “Wiring Device” Japan & N. America from JPCA & IPC data Taiwan/China:46 rigid & flex company composite S Korea from NT Information, company composites & KPCA +.2%

Note: Historical data harmonized with IPC World Market reports 10/30/17

+8.0% +5.4%

Global Electronic Supply Chain Forecast

2018 vs. 2017

5 10 15 20 SEMI Capital Equipment Semiconductors PCBs Electronic Equipment Combined GDP SEMI

Custer Consulting Group

IMF SIA

Custer Consulting Group

% Change in US$

20180211

Global Electronic Supply Chain Forecast

2019 vs. 2018 (Very preliminary)

• 30
• 20
• 10

10 SEMI Capital Equipment Semiconductors PCBs Electronic Equipment Combined GDP Custer Custer IMF SEMI Custer % Change in US%

20181009

Summary

Slowing growth especially in Europe Trade disputes impact long standing regional alliances Electronic assembly may shift globally to countries less affected by tariffs Many exciting new electronic products are on the horizon but no large ones are imminent 5G offers exciting opportunities for next decade

20111007

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20111007