gemtek : a leader in wireless broadband access
TRANSCRIPT
Gemtek :
A Leader in Wireless Broadband Access
Kevin Yang
Exec. Board & Spokesperson
Gemtek Technology Co., Ltd.
Date: Mar., 2011
2011 Outlook
• Gemtek in a nutshell
• 2010 review
• Product and business strategies
• 2011 drivers, outlook and sales distribution
Agenda Agenda Agenda
Headquartered at Hsinchu Industrial Park, Total Employee: ≈ 4,500 (TWN: 1200; China: 3300)
• R&D and Engineering: ≒ 20%
• Production & QC: ≒ 50%
• Sales, Financial, Adm.: ≒ 30%
Capital: NT$2.84B (US$97.9 Million)
Market Cap: ≈ US$353 Million (Feb. 2011)
Production Capacity3 SMT Lines, 12 DIP Lines, 45 Assembly Lines and 15 Packing Lines
Corporate Facts
120
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400 393
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713
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2002 2003 2004 2005 2006 2007 2008 2009 2010
Million dollars (USD)
Annual Sales
TAIWAN
Shanghai
SUZHOU
Hong Kong
Hsinchu
KuShan
Czech Site
Plant Size: 172,000 SQF
Hsinchu Headquarter
Floor Space: 162,000 SQFLand Area: 215,000 SQF
Suzhou Plant
Prod. Floor: 66,000 SQF Land Area: 150,000 SQF
Facilities
Sites Certified for:ISO 9001, ISO 14001
OHSAS 18001, TL9000, C-TPAT
KunShan Plant
Plant Size: 330,000 SQF
Czech RepublicPrague
Votice
Changshu
Chang-Shu site
Floor Space: 441,160 SQFLand Area: 1,635,520 SQF
● Production pilot run June , 2010.
● Mass Production July . 2010.
● 30-50% capacity boost for new products & new customers
Global Facilities Expansion
As of September 30, 2009 As of September 30, 2010
Sales Revenue (k) 13,098,761 14,703,852
Gross Margin (k) 1,644,778 1,645,260
Gross Margin (%) 12.56% 11.19%
Operating Income (k) 608,444 178,023
Operating Profit (%) 4.65% 1.21%
Net Profit After Tax (k) 448,125 315,120
EPS after tax 1.76 1.27
Units: NT$ Thousands; Consolidated
*Stock based on 284Million shares
’10 Q3 Financial Performance
Cash & Equiv 2,266,127 1,598,139
Total Current Assets 7,034,140 13,098,282
A/R 2,911,311 6,025,316
Inventory 1,544,237 3,055,823
Net PPE 3,956,674 4,062,431
L/T Investment 1,514,849 1,021,741
Total Assets 12,852,724 1 8,661,994
L/T Debts 417,291 38 8,584
Total Liabilities 5,476,796 11,566,756
Shareholder Equities 7,305,219 7,095,238
2009200920092009200920092009200920102010201020102010201020102010
Ending September 30Ending September 30Ending September 30Ending September 30Ending September 30Ending September 30Ending September 30Ending September 30In NT$000In NT$000’’
Source: Gemtek
Balance SheetBalance Sheet
’10 Q3 B.S.
Sales Expansion for New Products and New Markets
RD Expansion for New Technologies
Structural Salary Adjustment
OPEX
Site Expansion Phase 2
SMT Line Expansion
Other Investments
CAPEXGM
NT$ Appreciation
Competitive Landscape
Product Life Cycle
Early-mover advantage
Self-Owned Capacity+
Cost-Down
Product Mix Shift
Expand OpMwith
Better Execution
Deliver Stronger P&L
Winning Strategies
� Expand New Customers Basis
� Provide Total Solutions
� Lead Product Innovation
What we have been doing amid & post the crisis —
Sustained Development of Business Winning Strategies
WANLAN
Application Processing
Media Processing
Wired
Wireless
ASSP
ConsumerElectronics Networking
Enterprise Networking
Green Life Networking
Wireless SystemsLocal Networking
Broadband Access
SeamlessCommunication
GreenLife
Entertainment& Social Effective
Work
Fast Access
EasyConnectivity
Product Vision
SMB UTM
Femto
HomeNet
SmartGrid
Emerging
Current Mature
MID
DriveMarket Share
Cost Down
Differentiation
LTE
3G+Data
WiFi
Innovation
Add Customer Value
Invest Future
BackHaul
STB
GPON
DSL WiMAX
Tablet
20122011 2010
Innovator
Product Strategy Synergy to Emerge
� Emerging countries will be a large market with positive market factors.
— Underlying demand remains healthy amid noises.
— Governmental broadband initiatives.
— Greenfield deployments just kiked off or awaiting in Indonesia, Philippine, Eastern-EU, and south Asia.
� Developed markets see WiMAX as a valuable auxiliary.
— WiMAX is one of the major “offload network” in broadband offering in developed countries.
— The only currently available broadband access solution with exiting networks.
— Fastest migration to LTE among all exsitingtechnologies.
— Long-awaited embedded devices arrived with increasing volume, signaling WiMAX ecosystem taking shape.
WiMAX Equipment Revenues (US$ million)
Source: Infonetics, 2010 Q1
Worldwide WiMAX Infrastructure: A Growth Story
Source: IEK, 2010
WiMAX Market Overview
Femtocell ecosystem is growing
Source: Airvana, Apr, 2010
Femtocell Volume fcst (,000 units)
Source: iSupply, 2010
� Commercially, the femtocell market has taken some strides forward recently, with a notable increase in live services numbers.
— Lauched by AT&T & Vodafone in 2h ’09, StarHubin late ’08, and Japan’s KDDI, France’s Free & China Unicom have all committed to femtocell.
— The indoor coverage journey quickly turned into a data offload story.
� Femtocell unit prices is approaching a magic mark.
— Price comes down once adoption accelerates.
— Cheap flat rate broadband package bundling helps deliver FMC and other integrated CPE like functions.
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2009200920092009 2010201020102010 2011201120112011 2012201220122012 2013201320132013
Femtocell Market Overview
Source: iSupply, March, 2010
� With demand skyrocketing, every player in the STB industry is throwing their elbows to get a share of the market.
— STB has transformed into a combination of residential gateway+ home networking+ STB.
— Telco operators hope to reduce churn and enhance “stickiness” by becoming the sole provider of bundled information and entertainment services within home, creating an entirely new home entertainment experience.
� Open platform, like Android, enables all embedded devices.
— Home gateways will be the hub of seamless communication & remote smart home controller (home Security, power consumption monitoring, alert system, and tracking etc)
IPTV Subscriber fcst (Million of subscribers)
IPTV Subscriber by region (Million of subscribers)
Source: iSupply, March, 2010
IPSTB Market Overview
Total Wireless Wide Area Networking Market fcst (,00 0 units)
Source: iSupply, 2Q, 2010
Tablet TAM & CAGR
Source: CLSA
� Everyone’s rushing to have tablets/MIDs ready for holiday season. Bigger screen and higher-end features enable new set of applications.
� Tablets or MIDs will also be major conduits for premium push services from telco operators.
� Corporate customers are also climbing on board this tablet/MID train.
MID Market Overview
Retail Market
• WiFi client and AP/Router revenue share percentage diluted as embedded& integrated devices take the lead.
• Wireless HDMI shipment to ramp up as new customers added in and new products coming through.
2011 Outlook
PC OEM (Modules)
• WiFi becomes the standard connectivity in mobile devices. 11n well placed to boom.
• WiFi+WiMAX dual mode module shipment expands as more notebook/netbook built-in.
• WiFi direct likely to increase application and trigger replacement cycle.
2011 Outlook
Telecom Products- Wired • Booming data demand generates wired IAD advancement.
• GPON product starts shipment to new customer.
• Technology upgrade as VDSL to begin replacing ADSL.
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2011 Outlook
Telecom Products- Wireless • Overloading data traffic and fixed mobile convergence
continue to generate 3G femtocell demand throughout all markets. Shipment booms. New customers join.
• WiMAX footprint gain in emerging markets and some part of developed markets. High-end CPEs continue to have a niche share. Volume grows steadily.
• Close relationship with LTE chipset vendors. LTE small volume shipment starts.
2011 Outlook
Telecom Products- IPSTB• STB momentum still strong as carriers continue to focus
on triple/quadruple customized play to generate ARPU.
• Open platform, or smart TV, aims at telecom operators with highly customized functions.
2011 Outlook
Customized Mobile Devices• Highly customized mobile devices pushed for vertical
market and offer multi-media features that enhance digital home performances.
• Shipment starts to teleco/SI/content provider customers aimed at vertical markets.
2011 Outlook
IntegratedIntegratedIntegratedIntegratedProduc tsProduc tsProduc tsProduc ts40~45%40~45%40~45%40~45%
WiFiWiFiWiFiWiFiClientClientClientClient
ProductsProductsProductsProducts20~25%20~25%20~25%20~25%
Wimax Wimax Wimax Wimax~15%~15%~15%~15%
AP/RouterAP/RouterAP/RouterAP/Router15~20%15~20%15~20%15~20%
Integrated Products WiFi Client Products
Wimax AP/Router
IntegratedProducts
~50%
WiFi ClientProducts15~20%
Wimax~20%
AP/Router15~20%
Integrated Products WiFi Client Products
Wimax AP/Router
2010 Status 2011 Forecast
Sales Distribution Projection