Derived Demand: ACC Technologies Holdings, Inc.

STORY FLOWACC Technologies Holdings

Background of industry

Challenges in the market

Introduction of AAC Technologies

Financial Challenges

1 2

3 4

Potential areas to enter5 Outlook for the Future6

PART ONETHE

INDUSTRY

02AmphenolFoxconnBYDLiteOnFlextronicsLaird

01

NokiaAppleSamsungHTCMotorola

Apple

03AACNXPBujeonGoertekBSE

Segmentation of the Industry

1st tier: Smartphone/Tablet OEMs

2nd Tier: Assembly in Taiwan

3rd Tier: Components Supplier

2012 2013 2014 2015 2016 2018

10400

Shipment of Wearable Device

2012-2018 (in 10K units)

Shipment of Laptops 2010-2017 (in mil-lion units)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

1873

Global Smartphone shipments from 2010to 2018(in million

units)

2012 2013 2014 2015 2016 2017

416

Shipment of Tablets 2012-2017

(in million Units)

Strong Demand of Smartphone, Tablet and Wearable Device

Mobile Technology Trend

Smartphone

Screen size Smart Watches and glassesthinner and

thinnerbigger and bigger

PART TWOTHE

COMPANY

AAC Technologies

Company founded

1993

Employees 30000+

Total Asset

USD 9.3 billion (2014)

Headquarters Shenzhen,

China

Annual Revenue USD 1.4 billion (2014)

Index Membership

HKSE:02018

Listed on HK stock; qualified by Sony-Ericson

2005

单击此处添加标题

RF solution: Antenna, NFC, WP

2013

Shipment for Samsung

2011

Qualified by HTC& Google

2008

2010Automated production for speaker and earpiece

2002

Mass production of multi-functional device

19981993Transducer

s for Motorol

a

Company

founded

PART THREEMARKET

CHALLENGES

01

02

Decreasing sales income in major business

Declining market growth in mature marketsNewly electronic products introduced were highly depended on replacement purchase.

Challenges of AAC Company

Sales Income in Billion Dollars

6.4

6

2013

2014

12

6.3%

More debt

ROA 44%ROE 25%

7.4%

A C C Te c h n o l o g i e s

Gross Profit growth of 6.3%Average 3 previous years: 33%

TOP LINE

Average 3 previous years: 65% and 32% resp.

Profitabil ity

A/R and inventories increasing.More debt

CASH

2014: 7.4%2015 and 2016:6.8%6.3%Respectively

CHINA’S growth

Financial Situation/Challenges - 2014

单击编辑标题

How to face the challenges?

Smartphone

Tablets

Wearbles

Acoustics

Antenna/RF

Optics

Sensor

Accessoriesetc.

Product Line Diversification

Focus on SmartphoneTablet

20141450

patents in total

2014263

patents87 non-acoustic

2012 202

patents

Building Strong Barrier to Entry

Strategic Acquisitions and Investments

TOTAL SOLUTION

Components

Committed to STRATEGIC ACQUISITIONS AND INVESTMENTS

• In 2010,More portable devices(smartphones and tablets)

The increasing demand for rechargeable batteries in Asia(China, India, Indonesia)

Lithium-ion Batteries

• Strong economic growth, increasing per capita income and continued industrialization efforts

• Substituting MP3 players, cameras and laptops

China being largest and fastest growing market

Decreasing demand of rechargeable batteries and less revenue throughout the following years.

Lithium-ion Batteries

Con-sumer 60.3%

Indus-trial

14.5%

Auto-mo-

tive18.3%

Grid and Renewable

Energy Storage6.9% Con-

sumer 23.9%

Indus-trial 8.5%Automo-

tive30.0%

Grid and Renew-able En-

ergy Storage 37.6%

Total LithiumPercent Revenue breakdown by application, global 2013 & 2020 forecast-ion battery market Source: Frost & Sullivan

Investing in lithium-ion batteries

Searching for higher growth

potential alternatives

DECISION

• second biggest MEMS microphone supplier 13%

• supplier for the third type microphones

• solution provider

• Goertek 7% $ 61,9 million

• BSE 5% $ 37,2 million

MEMS Technology: Microphones

AAC

Direct competitors

Forecast a continuing growth $785M in 2013 to $1.65B by 2019

Main client

• Apple & Sumsung

A promising market in semiconductor industry

• RF MEMS tech academic research

→mass application areas • Demandhigher signal quality for thinner mobile phones

• Market

2014 -2018, CAGR 16.7% expected2018, $500 million expected

01

03

02

MEMS Technology: Radio frequency(RF)

Optics-Lens

Acquired Kaleido

Aquired ISQR in Japan

Collaboration with sensor supply, eg Omnivision

Strategic move:

• Camera lens cost=30% of the total cost of the smart phone camera

• In 2014, the total market of lens industry is about 3,300 Million and have been predicted to be 7,500 million USD in 2020

Current player: Heptagon; Seiko

PART SIXOUTLOOK

Outlook for the Future

Patents

Technology Barriers to entry

Intensively filing patents

Explore technologies areas

Building High Barriers to Entry

Non-acoustic 20% 2014 Non-acoustic 38% 2015 Non-acoustic >38% 2016…

OUTLOOK

Financials after Acquisition

TOP LINE RF contribution

CASH

32.5%Avg (3 years prior 2014):33%

7.8% lowerHealthier A/R

SUCCESSFUL!

38%of total revenue

THANKS