Integrated Manufacturing for Inclusive Growth

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1 Your Innovative EMS Partner ‹ ›

Strictly Confidential. All right reserved by Integrated Micro-Electronics, Inc. (IMI) – including any disposal, exploitation, reproduction, editing, distribution, as well as in the event of application for industrial property rights. Feb 2013

1 Integrated Manufacturing for Inclusive Growth

Arthur Tan

President and CEO, IMI

PCIERRD Technical Forum

June 30, 2015

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2 A Brief Intro to IMI

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3 Your Innovative EMS Partner ‹ ›

Strictly Confidential. All rights reserved by Integrated Micro-Electronics, Inc. (IMI) – including any disposal, exploitation, reproduction, editing, distribution, as well as in the event of application for industrial property rights. March 2015

3  Founded in the Philippines in 1980

 Publicly listed; majority owned by Ayala

 Manufacturing space of 232,000sq.m.

with 13 factory sites in 6 countries

 18,700 employees worldwide

 Low cost manufacturing across all major regions

 18th in Top 50 EMS companies globally in 2014

 8th in Top Automotive EMS companies globally in 2013

 Preferred supplier of global OEMs, including Assa Abloy and Bosch

 Electronics Manufacturing Services (EMS) and Power Semiconductor assembly

Integrated Micro-Electronics, Inc (IMI)

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4 Your Innovative EMS Partner ‹ ›

4 BY CUSTOMER

NATIONALITY

Diversified Growing Global Business

BY MARKET SEGMENT

0 100 200 300 400 500 600 700 800 900

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

IN MILLION USD’s

by Nationality

US$ 844M

2014 REVENUE

P 37.5 B ^Europe

50%

Americas 25%

Japan 8%

Rest of Asia 17%

Automotive 38%

Industrial 12%

Communication 21%

Consumer 12%

Multiple Markets Computing 11%

6%

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5 Your Innovative EMS Partner ‹ ›

5 Guadalajara, Mexico

Philippines

Laguna

Cavite

USA California

Tustin Nagoya

Japan

Singapore China Jiaxing

Shenzhen (Liantang)

Shenzhen (Kuichong)

Chengdu

Manufacturing Engineering Botevgrad Bulgaria Třemošná Czech Republic

Taguig

Global Footprint

Support only

Hong Kong France

Lyon Germany Munich

Michigan (Detroit)

Mexico

Guadalajara

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6 A Peek Into Manufacturing

in the Philippines

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7 Your Innovative EMS Partner ‹ ›

7 Philippine Electronics Export

2012 2013 2014

Non-Semicon 5.3 6.5 8.1

Semicon 17.5 17.4 17.8

$17.5 $17.4 $17.8

$5.3 $6.5 $8.1

Source: National Statistics Office

In Billion US$

Growth Rate % 8.1% 5.3%

Total Export 22.7 23.9 25.9

8.4%

2015

Outlook

5~7 %

growth

Still predominantly semiconductor assembly;

electronics manufacturing (OEM or EMS) has room

for growth

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8 Your Innovative EMS Partner ‹ ›

8  From PCB and FPCB Assembly Services to Complete Box Build

 High-Volume Manufacturing

 Low-Volume, High-Mix Manufacturing

 Complex Equipment Manufacturing

 Precision Metals/ Machining

 Power Semiconductor Assembly and Test Solutions

 Plastic Injection

 Materials Sourcing

 Logistics Solutions

 Product Reliability and Failure Analysis

 Calibration

 Product Repair Services OEMs:

Brand Marketing OEMs:

Technology R&D

IMI GROUP

NPI Support and

Fulfillment Manufacturing

Typical EMS Activities

 Design and Development

 Advanced Manufacturing Engineering

 Test and System Development

 Custom Automation

 EMC Pre-certification Solutions

Design and

Engineering

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9 Source: Strategic Business Economic Program of UA&P

Automotive Sales Volume

0 50 100 150 200 250

2002 2003 2007 2008 2009 2010 2011

79 103

61 61 64 74

67 7

20 57 63 68

94 98

113 73 68 53 50

52 57

CKD CBU Informal Sector

V o lu m e in ‘0 0 0 u n it s

CKD (completely knocked down) - Fully disassembled item required to be assembled here CBU (completely built-in) - Completely built out of the country

Number of vehicles assembled in

the

Philippines (CKDs) is going down;

More and more CBUs are imported

due to low

tariffs

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10 Opportunities in Manufacturing

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11 Your Innovative EMS Partner ‹ ›

11 New Kinpo announced they are setting up operations in Batangas

There’s a resurgence of Japanese investments– below are examples

Manufacturing Opportunities in the Philippines

Company Details Status

Bandai Toys Done

Murata Electronic Components Done

Fujifilm Corporation Optical Lens Assembly Done

Citizen Watch 2015

Epson Printer 2015-16

Sources: Associated Press, Manila; Speech of Pres. Aquino June 3, 2015

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12 Your Innovative EMS Partner ‹ ›

12 Car ownership in ASEAN will rise to nearly 40M by 2015 and around 55M by 2050

Car sales will have growth of over 10% in average in the coming years

There will be rise of regional vehicle manufacturing and assembly industry due to competitive labour costs (Viet Nam and the

Philippines) and availability of huge number of auto components suppliers and strong engineering support, especially in Thailand and Malaysia.

ASEAN will become the 6th biggest automotive market globally by 2018

Shift of ownership from motor bikes to cars will drive the market

Automotive Market in ASEAN

Source: Deutsche Bank, Frost & Sullivan

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Strictly Confidential. All rights reserved by Integrated Micro-Electronics, Inc. (IMI) -- including any disposal, exploitation, reproduction, editing, distribution, as well as in the event of applications for industrial property rights. April 2013

Your Innovative EMS Partner --- < > ¹³

Opportunities with the ASEAN Integration

• As China shifts from being export driven to a consumption-driven one and with wages rising, there are opportunities for ASEAN to gain

manufacturing businesses

• Due the market potential, the region will attract more global

manufacturers that will want to set up a regional footprint in ASEAN

Source: McKinsey, BDG Asia

Large regional consumer base: 650 million population

More complementation, less

competition within ASEAN-- more trade in products within the same industries (intra-industry trade)

Opportunities for finished goods manufactured in the Philippines for ASEAN

AEC is not “coming in 2016”-- 99% of all

tariff lines were already brought down to

zero since 2010

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14 Your Innovative EMS Partner ‹ ›

14 Improve infrastructure

Subsidize energy cost and lower the minimum wage for the growing

manufacturing sectors

Change its mindset: Provide integrated

incentives and subsidies for complementary manufacturing industries to entice more

investors into these industries

What Government Can Do

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15 Your Innovative EMS Partner ‹ ›

15 For example, the integrated industries of Electronics and Automotive (and this can be expanded to include Plastics, Metals and others)

Today’s car is a PC with 4 wheels, not a car with radio and a few other electronics-- electronic content of a car is at 40% for traditional,

internal combustion engine cars and jumps as high as 75% for electric or hybrid electric vehicles; these %’s continue to increase. Leverage the strengths of the country in electronics manufacturing to boost automotive manufacturing.

There are plenty of opportunities for ADAS or Advanced Driver Assistance Systems (this segment has the highest CAGR within automotive electronics at 18%); IMI is poised to increase its local electronics manufacturing capabilities for ADAS and other car electronics.

Integrated Manufacturing for Inclusive Growth

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