#A3NETWORK January 22-24, 2014 | Hilton Orlando Bonnet Creek | Orlando, Florida USA#A3NETWORK

2014 North American Machine Vision Market Update

Alex ShikanyDirector of Market Analysis

AIA

#A3NETWORK

I. U.S. Economic Indicators

II. Manufacturing Trends

III. 2013 Machine Vision Results

IV. What to Expect in 2014

V. Summary and Conclusion

Agenda

#A3NETWORK

I. U.S. Economic Indicators

U.S. Real Gross Domestic Product (GDP) – Year-Over-Year Percent Change

2.5%

3.5%3.1%

2.7%1.9%

‐0.3%

‐3.1%

2.4%1.8%

2.8%

1.6%

2.6%

‐4.0%

‐3.0%

‐2.0%

‐1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(p)

2014(p)

Growth continued in the U.S. economy in 2013 but weaker than initial expectations. Economists are forecasting 2.6% growth for 2014.

Source: IMF

#A3NETWORK

30

35

40

45

50

55

60

65

Expa

nsio

nC

ontr

actio

n

2009 20112010 2012 2013

II. Manufacturing Trends

U.S. Purchasing Manager’s Index (PMI)

U.S. Manufacturing PMI was very strong in 2013, never posting a month of contraction.

Source: Markit & HSBC

#A3NETWORK

II. Manufacturing Trends

707580859095100105

2007

 Q1

2007

 Q2

2007

 Q3

2007

 Q4

2008

 Q1

2008

 Q2

2008

 Q3

2008

 Q4

2009

 Q1

2009

 Q2

2009

 Q3

2009

 Q4

2010

 Q1

2010

 Q2

2010

 Q3

2010

 Q4

2011

 Q1

2011

 Q2

2011

 Q3

2011

 Q4

2012

 Q1

2012

 Q2

2012

 Q3

2012

 Q4

2013

 Q1

2013

 Q2

2013

 Q3

2013

 Q4

U.S. Industrial Production continued its ascent back to pre-recessionary levels throughout the year.

Index of U.S. Industrial Production (Quarterly Data – 2007 to 2013, Manufacturing Only –2007 = 100)

2007 20092008 2010 2011 2012 2013

Source: Federal Reserve

#A3NETWORK

II. Manufacturing Trends

60

65

70

75

80

85

2007

 Q1

2007

 Q2

2007

 Q3

2007

 Q4

2008

 Q1

2008

 Q2

2008

 Q3

2008

 Q4

2009

 Q1

2009

 Q2

2009

 Q3

2009

 Q4

2010

 Q1

2010

 Q2

2010

 Q3

2010

 Q4

2011

 Q1

2011

 Q2

2011

 Q3

2011

 Q4

2012

 Q1

2012

 Q2

2012

 Q3

2012

 Q4

2013

 Q1

2013

 Q2

2013

 Q3

2013

 Q4

2007 20092008 2010 2011 2012 2013

Percent U.S. Manufacturing Capacity Utilization

U.S. Capacity Utilization also remained at healthy levels in 2013, increasing a bit toward the end of the year.

Source: Federal Reserve

#A3NETWORK

II. Manufacturing Trends

NAICS Code Industry Industrial Production (Average)321 Wood products 75.7327 Nonmetallic mineral product 73.1331 Primary metal 98.5332 Fabricated metal product 94.6333 Machinery 103.6334 Computer and electronic product 135.7335 Electrical equipment, appliance, and components 87.2

3361-3 Motor vehicles and parts 105.23364-9 Aerospace and misc. transportation equip. 103.7

337 Furniture and related product 71.9311-312 Food, beverage, and tobacco 100.7313-314 Textiles and products 73.0315-316 Apparel and leather goods 57.9

322 Paper 85.3323 Printing and related support activities 75.9324 Petroleum and coal products 97.0325 Chemical 87.2326 Plastics and rubber products 90.1

31-33 Total Manufacturing 97.0

Top Performing Industries in 2013

#A3NETWORK

II. Manufacturing Trends

Semiconductor Market Billings – Americas (Thousands $, 3-Month Moving Averages)

 $‐

 $1,000,000

 $2,000,000

 $3,000,000

 $4,000,000

 $5,000,000

 $6,000,000

 $7,000,000

Jan‐07

Jul‐0

7

Jan‐08

Jul‐0

8

Jan‐09

Jul‐0

9

Jan‐10

Jul‐1

0

Jan‐11

Jul‐1

1

Jan‐12

Jul‐1

2

Jan‐13

Jul‐1

3

2007 20092008 2010 2011 2012 2013

The semiconductor market in the Americas was very strong in 2013.

Source: BEA

#A3NETWORK

II. Manufacturing Trends

0

1,000

2,000

3,000

4,000

5,000

6,000

-1.7%

-12.0%2.9%

-10.1%-6.2% 2.2% 1.1%

-10.1%

-3.8%

-40.5%

8.6%

33.1%

26.4%

8.3%

Source: BEA

U.S. car sales continued to increase in 2013, albeit at a slower rate than 2012.

U.S. Car Sales

#A3NETWORK

III. 2013 Machine Vision Results

AIA Survey – Percentage of Respondants who Expect Positive Growth in 4Q 2013

#A3NETWORK

III. 2013 Machine Vision Results

Markets1st Quarter 2nd Quarter 3rd Quarter 4th Quarter (Proj.)

Millions $ YoYGrowth Millions $ YoY 

Growth Millions $ YoYGrowth Millions $ YoY

Growth

MV Components $60.5  ‐1.1% $69.9  ‐6.8% $74.7 4.9% $68.4  4.9%

MV Systems $406.6  12.6% $445.2  5.1% $454.0  25.6% $435.3  15.5%

Other MV $3.3  6.6% $2.3 ‐27.8% $2.0 ‐26.6% $2.5 ‐17.4%

Total MV Financial Transactions $470.4  10.6% $517.3  3.1% $530.7 21.9% $506.1 13.7%

2013 was a very strong year for Machine Vision in North America. Growth was driven mainly by the large increase in MV System sales.

MV Components = Cameras + Optics + Lighting + Imaging Boards + Software

MV Systems = Smart Cameras + ASMV Systems

Other MV = All Other MV Transactions Including Resale

Total MV Financial Transactions = MV Components + MV Systems + Other MV

North America – Actual 2013 Results by Quarter in Millions $

#A3NETWORK

III. 2013 Machine Vision Results

After contracting in 2012, the Machine Vision market in North America rebounded strongly in 2013.

North America – Actual Results by Year in Millions $

MV Components = Cameras + Optics + Lighting + Imaging Boards + Software

MV Systems = Smart Cameras + ASMV Systems

Other MV = All Other MV Transactions Including Resale

Total MV Financial Transactions = MV Components + MV Systems + Other MV

Markets2010 2011 2012 2013 (Proj.)

Millions $ YoYGrowth Millions $ YoY

Growth Millions $ YoYGrowth Millions $ YoY

Growth

MV Components $230.7 60.5% $280.3  21.5% $272.5  ‐2.8% $273.4  0.3%

MV Systems $1,562.5  59.7% $1,603.4  2.6% $1,522.8  ‐5.0% $1,741.0  14.3%

Other MV $5.0  ‐ $11.0  ‐ $12.0  9.9% $10.1  ‐16.2%

Total MV Financial Transactions $1,798.2  60.2% $1,894.7  5.4% $1,807.4  ‐4.6% $2,024.6 12.0%

#A3NETWORK

III. 2013 Machine Vision Results

‐14.8% ‐0.2%

+12.6%+6.2%

+4.6%+2.1% +1.2%

‐29.2%

+60.2%+5.4%

‐4.6%

+12.0%

$1,000.0

$1,200.0

$1,400.0

$1,600.0

$1,800.0

$2,000.0

$2,200.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

MV Impact of Great

Recession

MV Impact of 2001

Recession

2013 Results – MV Financial Transactions in Millions (USD)

* Projected

In 2013 we saw more growth than expected, primarily driven by a strong increase in Machine Vision System sales.

#A3NETWORK

IV. What to Expect in 2014

Manufacturing is expected to see a net increase in hiring, with the sector expected to add 252,000 jobs in 2014.

2014 Forecasted Annual Percentage Change in Real GDP

#A3NETWORK

IV. What to Expect in 2014

2014 Forecast – MV Financial Transactions in Millions (USD)

* Projected

‐14.8% ‐0.2%

+12.6%+6.2%

+4.6%+2.1% +1.2%

‐29.2%

+60.2%+5.4%

‐4.6%

+12.0%+4.8%

$1,000.0

$1,200.0

$1,400.0

$1,600.0

$1,800.0

$2,000.0

$2,200.0

$2,400.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*2014*

MV Impact of Great

Recession

MV Impact of 2001

Recession

Expect the strong performance to continue through the first half of 2014, then eventually cooling in the second half of the year.

#A3NETWORK

V. Summary and Conclusion

2013 was a strong year for manufacturing worldwide

Policy has eased some concern over Eurozone crisis; Mild growth expected for 2014

2013 was a strong year for Machine Vision

Expect a 2014 to be better than 2013, although some industries may cool later in the year

Machine Vision Financial Transactions in North America are forecasted to grow 4.8% in 2014

#A3NETWORK

Contact Information

Alex ShikanyDirector of Market Analysis900 Victors Way, Suite 140Ann Arbor, MI 48108, USA

Phone: (734) 994-6088

Email: ashikany@visiononline.org

Twitter: @AlexShikany

Web: www.visiononline.org