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Arcadyan Technology Corp. (3596.TW)Company Profile
September 9, 2010
1
Welcome & Introduction
1H10 Financial Results
Market Trend & Strategy
Q & A
Agenda
2
This presentation may contain forward-looking statements and is subject to significant risks and uncertainties.
Actual results may differ materially from those contained in the forward-looking statements.
Safe Harbor Notice
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© Arcadyan Technology Corporation
About Arcadyan
Established in summer of 2003A subsidiary of Compal Electronics (www.compal.com)Brings the best of:
Quad-Play solution wireless infrastructure expertiseoptimized Mfg/SCM with economy of scale
Headquarter in Hsinchu, Taiwan
Employee: 4400 worldwide
(270 R&D)
2008 sales revenue: US$337M
2009 sales revenue: US$348M
2010 1H sales revenue: US$256M
About Arcadyan
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Year-08 Year-09 Year-10 1H
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Qty
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Arcadyan building( CNC)
Arcadyan Production Site
23,185m2 shop floor
4000 employees on-site
Capacity : over 3M units/month
ISO9001 / TL9001 / ISO14001 / OHSAS 18001 certified
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© Arcadyan Proprietary & Confidential
Targeted Market Segment
ISP Solutions PC & ConsumerRetail Networking
mini-PCI / mini card
(11n/11g single/dual band)
DECT IAD (ADSL)
VDSL/ADSLModem
Combo card
(bluetooth + 11n)
ADSL, VDSL, IAD, GPON, Femtocell
AP/Gateway WiFi Client
Antenna
(11n/11g single/dual band)
3G/LTERouter
VDSL/ADSL IAD with PBX functions
VDSL/ADSL IAD
3G/LTEIAD
GPON IAD
Femtocell AP
VDSL/ADSLRouter
IP STB
11n/11g Router
11n dual band concurrent router
with USB applications
3x3 11n Router with USB
applications
Cable modem
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© Arcadyan Technology Corporation
Business overview
Steady growth in broadband marketUSB applications as main driver for retail router market growthIncreasing WiFi bundle rate on TV and Blu-ray players
2008
12%
18%70%
Broadband AP/GW Client
2009
13%
18%69%
Broadband AP/GW Client
2010 1H
17%
25%58%
Broadband AP/GW Client
Rev: US$337MQty: 11M
Rev: US$348MQty: 19M
Rev: US$256MQty: 24M
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1H10 Financial Results
82Q10 Income Statements_nonconsolidated
NT$ Million QoQ % YoY %AMT % AMT % AMT % Change Change
Net Sales 4,237 100.0 3,945 100.0 2,582 100.0 7.4% 64.1%Cost of Goods Sold 3,715 87.7 3,393 86.0 2,215 85.8 9.5% 67.7%Gross Profit 522 12.3 552 14.0 367 14.2 -5.4% 42.2%Operating Exp. 261 6.2 255 6.5 222 8.6 2.4% 17.6%Operating Income 261 6.1 297 7.5 145 5.6 -12.1% 80.0%Net Non-operating Income (26) -0.6 (126) -3.2 13 0.5 79.4% -300.0%Pre-tax Income 235 5.5 171 4.3 158 6.1 37.4% 48.7%Income Tax 57 1.3 29 0.7 43 1.7 96.6% 32.6%Net Income 178 4.2 142 3.6 115 4.4 25.4% 54.8%EPS 1.45 1.15 1.05
2Q10 2Q091Q10
91H10 Income Statements_nonconsolidated
NT$ Million YoY %AMT % AMT % Change
Net Sales 8,182 100.0 4,421 100.0 85.1%Cost of Goods Sold 7,108 86.9 3,761 85.1 89.0%Gross Profit 1,074 13.1 660 14.9 62.7%Operating Exp. 516 6.3 457 10.3 12.9%Operating Income 558 6.8 203 4.6 174.9%Net Non-operating Income (152) -1.8 112 2.5 -235.7%Pre-tax Income 406 5.0 315 7.1 28.9%Income Tax 86 1.1 69 1.6 24.6%Net Income 320 3.9 246 5.5 30.1%EPS 2.60 2.36
1H10 1H09
101H10 Non-operating Income (Loss)_nonconsolidated
Note : the amount of FX Gain (loss) included in financial instrument valuation gain (loss)
2Q10 1Q10 2Q09 1H10 1H09AMT AMT AMT AMT AMT
Investment Gain (Loss) (24) (49) 64 (73) 70FX Gain (Loss) (14) (92) (53) (106) 32Other 12 15 2 27 10Total (26) (126) 13 (152) 112
NT$ Million
111H10 Income Statements_consolidated
ConsolidatedNT$ Million
AMT % AMT % AMT % AMT % AMT %
Net Sales 4,239 100.0 3,945 100.0 2,598 100.0 8,184 100.0 4,446 100.0Cost of Goods Sold 3,692 87.1 3,429 86.9 2,151 82.8 7,121 87.0 3,684 82.9Gross Profit 547 12.9 516 13.1 447 17.2 1,063 13.0 762 17.1Operating Exp. 298 7.0 293 7.4 249 9.6 591 7.2 506 11.4Operating Income 249 5.9 223 5.7 198 7.6 472 5.8 256 5.7Net Non-operating Income (12) -0.3 (53) -1.3 (41) -1.6 (65) -0.8 60 1.3Pre-tax Income 237 5.6 170 4.4 157 6.0 407 5.0 316 7.0Income Tax 58 1.4 29 0.7 43 1.7 87 1.1 70 1.6Net Income 179 4.2 141 3.7 114 4.3 320 3.9 246 5.4EPS 1.45 1.15 1.05 2.60 2.36
1Q10 1H102Q09 1H092Q10
121H10 Balance Sheets_nonconsolidated
NT$ MillionAMT % AMT % AMT % AMT %
Cash/Cash equivalents 533 6.9 596 8.7 596 9.0 592 9.9AR 3,789 48.8 3,224 47.0 3,072 46.6 2,593 43.4Inventory 2,089 26.9 1,769 25.8 1,766 26.8 1,663 27.8Investment 868 11.2 821 12.0 722 10.9 684 11.4Fixed Assets 223 2.8 238 3.5 249 3.8 268 4.5Other 264 3.4 208 3.0 192 2.9 181 3.0Total Assets 7,766 100.0 6,856 100.0 6,597 100.0 5,981 100.0
Bank loan 787 10.2 0 0.0 93 1.4 153 2.6AP 1,632 21.0 1,664 24.3 1,448 21.9 1,595 26.7Other Current Liabilities 1,164 15.0 912 13.3 911 13.8 1,151 19.2Long-Term and other Liabilities 2 0.0 2 0.0 5 0.1 6 0.1Total Liabilities 3,585 46.2 2,578 37.6 2,457 37.2 2,905 48.6Common Shares 1,255 16.2 1,231 18.0 1,229 18.6 1,122 18.8Shareholder's Equity 4,181 53.8 4,278 62.4 4,140 62.8 3,076 51.4
Jun. 30, 2009Dec. 31, 2009Mar. 31, 2010Jun. 30, 2010
131H10 Balance Sheets_consolidated
ConsolidatedNT$ Million
AMT % AMT % AMT % AMT %
Cash/Cash equivalents 819 8.3 714 8.4 723 9.3 943 13.3A/R 3,791 38.5 3,236 38.0 3,133 40.4 2,667 37.5Inventory 3,503 35.6 3,018 35.5 2,705 34.9 2,442 34.3Fixed Assets 1,084 11.0 1,000 11.7 777 10.0 763 10.7Other 645 6.6 549 6.4 415 5.4 299 4.2Total Assets 9,842 100.0 8,517 100.0 7,753 100.0 7,114 100.0
Bank loan 1,315 13.4 523 6.2 93 1.2 153 2.1AP 2,971 30.2 2,579 30.3 2,389 30.8 2,366 33.3Other Current Liabilities 1,366 13.9 1,127 13.2 961 12.4 1,346 18.9Long-Term and other Liabilities 9 0.0 10 0.1 12 0.2 12 0.2Total Liabilities 5,661 57.5 4,239 49.8 3,455 44.6 3,877 54.5Common Shares 1,255 12.8 1,231 14.5 1,229 15.9 1,122 15.8Shareholder's Equity 4,181 42.5 4,278 50.2 4,298 55.4 3,237 45.5
Mar. 31, 2010 June 30, 2009Dec. 31, 2009Jun. 30, 2010
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Market Trend & Strategy
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© Arcadyan Technology Corporation
Broadband CPE Market Overview
The Global broadband services continue with MSOs upgrading to Docsis3.0, while Telcom operators push fiber closer to customers with VDSL2, PON and FTTH/B.
The request for the service with high bandwidth rate, mainly driven by different VASs.
Source: Infonetics, Q4/09
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© Arcadyan Technology Corporation
DSL Market Trend
The bandwidth for new service, features and capability on High-end CPE drive the VDSL CPE market forward.
Operators are constructing fiber infrastructure into their network to deliver premium service for competition, which will require upgrade to VDSL CPE
Source: Infonetics, Q4/09
17Arcadyan VDSL Market Overview
VDSL shipment will keep growth, especially on high-end models
New platform will be mass-production in Q4/2010
Double the shipping Qty in 2011
High-end VDSL Shipping Qty Growth Rate
0%
50%
100%
150%
200%
2009 2010 2011(f)
(YoY)
18Arcadyan UMTS/LTE Product status
2010-2011 ramp up2014-2015 large scale launch
Challenge
Technical maturity : Interoperation/fallback/New 3GPP Release…. Lab/Field testing will still take a period The backbone traffic capability for annul data volume growth of 50~80%Cost effective way in developing new service/apps
Arcadyan Status:
Start to co-work with selective operators on 3G router/IAD developingKeep working on promoting the existing UMTS IAD/Router products before LTE service ready in Market Arcadyan LTE integrated router/IAD will be ready for M.P. on 2011/H2
LTE Market
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© Arcadyan Technology Corporation
Arcadyan PC OEM Market Overview
Notebook PCs Shipping Qty (M units)
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100
200
300
Notebook PCs
Notebook PCs 115 121 126 144 167 198 240
2007 2008 2009 2010 2011 2012 2013
Source: InStat 06/09
Arcadyan Market Share
0.0%
3.0%
6.0%
2008 2009 2010
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© Arcadyan Technology Corporation
Arcadyan TV & Consumer Market Overview
Source: InStat 06/09
DTV Shipping Qty (M units)
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DTVWith WiFi
DTV 103 119 138 150 160 166 175With WiFi 0.5 1.5 3.9 7.2 11.0 14.3 20.2
2007 2008 2009 2010 2011 2012 2013
Arcadyan Shipping Qty Growth Rate
0.0%200.0%400.0%600.0%800.0%
2008 2009 2010
(YoY)
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© Arcadyan Technology Corporation
Arcadyan AP/GW Market Overview
Source: Digitimes 1Q10
Arcadyan Market Share
0.0%
5.0%
10.0%
2008 2009 2010
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By 2014, revenue will hit $3.5B, a 21% 2009 – 2014 CAGR, as more expensive wideband CPE ships in volumes to replace DOCSIS 1.1-2.0 CPE out in the field.
In 2009, standard EMTAs accounted for 55% of overall revenue, and wideband EMTAs with 4%
By 2014, standard EMTAs shrink to 11%, while wideband EMTAs account for 33%
Cable CPE Market Overview
Source: Infornetics Q4/09
Arcadyan Shipping Qty Growth Rate
0%
40%
80%
120%
2009 2010(e) 2011(e)
(YoY)
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The STB market Crests in 2009 at nearly 164.5M units worldwide, with a gradual decline to roughly 131.9M units by 2014 (-2% CAGR).
IP STB Market Overview
IPTV STB Shipments by TypeWorld Market: 2008 to 2014
Source: ABI Research
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Shipm
ents
(Million
s)
Basic HD-Only PVR-Only HD & PVR
06/09
The IP STB market continue to grow from 10.4M units in 2009 to 16.2M units in 2014 (5% CAGR)
Arcadyan Shipping Qty Grwoth Rate
0%100%200%
2009 2010(e) 2011(e)
(YoY)
24Femtocell Market Forecast
Rapid growth in Mobile Data Traffic and Femtocell could offer Data OffloadPortable Device embedded mobile broadband as Handset, Tablet, Pad…etc all require High Speed and Volume of Data Transfer.
Femtocell could Off-Load the Data Traffic in Core Network System.
High Speed Mobile Data Traffic Demand IncreasingVariety of Mobile Content Platform as Apple Store, Android Market come out and push forward the Mobile Broadband data Traffic.
Femtocell could offer the Higher guarantee Data Traffic than Macrocell.
CAPEX & OPEX SavingFemtocell will be more Cost-Effective than Macrocell and Operators could save the cost on infrastructure.
Femtocell Market DriversFemtocell Market Forecast
Source: Informa Telecom, ABI Research, 2010
$BM
Global Mobile Data Traffic
Source: Cisco, 2010
25The Booming GPON ONT Market
Key Success Factors Arcadyan Has Now:Proven professional Telco CPE provider (e.g. VoIP IOP, ACS IOP, USB, WLAN, 3G/Femto integration)Guaranteed Interoperability to OLTs/GPON Head-End (Arcadyan owns 100% OMCI source codes) The most cost effective hardware platforms (Arcadyan has now BOSA, Triplexer OSA on board designsand the most integrated SoC ONT designs)
ITU PON TAM forecast – Infonetics 1Q10
26Arcadyan Cloud@Home Strategy
27Cloud@Home Technology Blueprint
28Summary
Complete CPE solutions for ISP market – DSL, GPON, 3G/LTE, IP-STB, Cable modem and video distributing
Continue to leverage Compal on PC OEM market
Expand broadband customer base in Europe/North America/Emerging countries
Gaining more market share on retail router market by creating new applications
Continue to grow TV & consumer WiFi modules market share
Start to ship GPON & Femtocell products in 2011
