Arima Communications Company Profile

1
Sep. 2007

Content
Company Profile Manufacturing Competency IT System Business Strategy

Section One

Company Profile

Manufacturing Competency
IT System Business Strategy

Arima Group
Founded : Registered Capital : June, 1989 ( Arima Computer ) US$ 682 Million ( Group in 2005 )

Chairman :
Employee : RD Engineers : Space : Global Operations : Revenue :

Mr. Stephen Lee

13,500 worldwide ( Group ) 2,000 worldwide ( Group ) 4 M ft2 worldwide ( Group ) Taiwan, China, Japan, USA, Europe US$ 2 billions in 2005 ( Arima Group ) 4

Arima Group and Subsidiaries

Arima Communications
GSM / GPRS Handset Wireless Module Smart Phone EDGE Handset WCDMA Handset HSDPA Handset

Arima Computer
Notebook PC Server LCD TV DVD Player / Recorder LCD Monitor Digital Audio / Video Digital Radio

Arima Optoelectronics
LED / LD :

Edart
Tooling Plastic Injection Metal Stamping Painting Cable / Harness Connector

Arima Display
Color Filter Color LCD

- Epiwafers - Chip - Device

Lighting

IPO in 1998

IPO in 2004

IPO in 2003

Thermal Module

Arima Device
DVD OPU :

Dynapack
Battery Pack Mobile Phone

Acme
Image Sensor Camera Module Flash Memory Card

Axon
Optical Lens :

Avio Avalend
Digital TV tuna

- H / H Player - Slim Combo - Dual RW

DVD Traverse /

- Class / Plastic - Spherical / A spherical

Prism / Collimator

controller
Camera

Accessory

Controller

Drive for IT / CE

IPO in 2004

Diversification Deployment
PDA DSC/DVC Smart Phone LCD TV/Monitor Notebook PC/LCD PC Server/Workstation DVD Player DAB/DVB Color Filter LCD Display Optical Parts DVD Pickup Head GSM / GPRS/EDGE WCDMA/HSDPA Handset

Computer

Communications

Wireless Data Module /Smartphone

Optoelectronic

LED Laser Diode Image Sensor Camera Module Photonics

Tooling Painting Plastic Injection / Metal Stamping Cable / Harness Connector FPC

Arima Communications Profile

Founded in Aug 1999 Capital USD 110 Millions
President Owen Chen

Chairman Stephen Lee

Employee 2500 persons

Arima YK Taiwan

Arima WJ China

RD

250K ft2

828K ft2

Taiwan China

Milestone
Started to establish factory Got FTA certification for Tri-band mobile phone. Started Mass Production for the 1st Generation Tri-band Mobile Phone 1999 2000 2001 2002 2003 Nanjing R&D established in China Started to build Wujaing Factory ISO 14001, ISO 9001 certificated Arima Yingko : BABT certificated Shipment over 1 million units / month

2004 Single model shipment reached 12 million units ( accumulated ) 2006 2005 IPO on 1st July in Taiwan. Stock code 8101 Smartphone RD established in Taipei Taiwan 3G RD established in ShingChu Taiwan

Start to build 3rd factory in China

Wujiang Map (China)

2hrs Driving Distance from Shanghai;

100 Universities/Colleges within 4hrs Drive.

Arima Office Location in Taiwan

Airport

20min
25 min 25min

40min

Arima Group HQ

Jhong-Jheng RD Center Ying-Ge Factory

30 min

Da-Shu Factory

Shin-chu RD Center

10

Company Vision
To be a first class mobile device solution company to serve our worldwide partners.

Production Capability

Best class in
Quality Delivery Cost Service

R&D Competence

Supply Chain Management

Cost Management

11

Company Mission

Cost effective
technologies

Great quality

12

Company Organization
Chairman
Stephen Lee

Quality Assurance

President
Owen Chen

Strategic Planning

Finance

Creative Design Center

Manufacture Engineering

BU 1

BU 2
Paul Wang SVP

BU 3

R&D Center

Operation Center

Administration

Information Management

13

Shipment record
Mobile phone quantity shipment #2 in Taiwan ODM companies from 2003 to 2006

Shipment
1.4%

1.5%

1.3% 1.4%

13M 12M

15M
Shipment Unit: Million

2%
SoM

10M

11M

Sales

23,591,430 15,851,729

23,538,487

Sales Unit: NTD thousand

2003

2004

2005

2006

2007(e)

14

Technology & Product Proven Record

Technology & Product

A3618

GC75

T100

Z200

J200

J210

J220

J230

K300 KG300 KG200

DB8000

2850

N710

2860

Z300

N411i 2716

2890

3300

3000

3600

B/W Phone

GPRS+ SMS + EMS GPRS+ i-mode GPRS+ DSC

Symbian OS EDGE Slider phone Touch panel phone

Windows Mobile MP3 / MPEG4 1.3 MP/2MP CCM 3G / Smartphone 1st MM feature phone for LGE 1st Smartphone w/WM

Proven Record

SEMCs 1st ODM model T100 : Good result(10M shipment ) SEMCs 1stClamshell OEM&ODM models for NEC 1st VGA camera phone for NEC

1st Smartphone w/Simbian 1st 1.3 MPx camera phone w/EDGEb for NEC 1st VGA camera phone for SEMC

Before 2004

2005

2006

15

The business with LGE

3.2M Camera Multimedia Phone KP320 2.0M Camera Multimedia Phone KG300

3 Products Launched

300K

(~300K
KP220

1.3M Camera Multimedia Phone

300K
1.3M Camera Multimedia Phone KG200

(~600K)
0.3M Camera Multimedia Phone KG195/KG198

(~1M

2006

2007

2008

2009

16

Achievement & Award

Cellular phone 2710 G-Mark Good Design Award

Appreciation Certificate (FROM NEC, 2003)

SEMC T100 10 Million units record

Excellent ODM partnership 17 for LGE

Quality System

ISO 9001
Assessed & registered as meeting the requirements of ISO 9001: 1994 - - - 16 April 2001 (issue 1) - - - Authorization by SGS U.K Ltd. Assessed & registered as meeting the requirements of ISO 9001: 2000 - - - 08 Jan. 2004 (issue 2) (To remain valid subject to satisfactory maintenance of the system for 3 years from the above certificate issue date)

18

Environmental Management System

ISO 14001
Assessed & registered as meeting the requirements of ISO 14001 - - - 10 August 2001 (issue 1) - - - 15 August 2004 (issue 2) Authorization by SGS U.K Ltd. (To remain valid subject to satisfactory maintenance of the system for 3 years from the above certificate issue date)

19

Section Two

Company Profile

Manufacturing Competency
IT system

Business Strategy

20

Global Manufacture Center Customers

Arima LAM (MX/BZ)

Arima YK

HUB

Taiwan
China MFG Center

Supply Chain Management

21

Factory Location
Arima Yingge Taiwan & Wujiang China factories can be the manufacture site
for customer products.

Founded: September 8, 2000 Location: Wujiang, China Employees: 8,600 persons (Arima Group) Products: Notebook, Server,Cellular Phone, Tooling,Optical Pick-up Head, Battery Pack

Founded: Location: Products:

March, 2001 Yingko, Taiwan Mobile Phone

Employees: 1,800 persons

22

Arima Wujiang Science Park & Community (China) Total Area: 1,296,200 meter2
Arima Computer

Edart
Dorm8,9 Dorm1,2

Buld No.2 Buld No.3

Dynapac k New Building

Buld No.1
Arima Comm Current Building

Arima Comm New Building

23

New Factory View

Maximum Capacity:

4 million units per month

77K Meter2 Opening Date: In Q1 of 2008 Nearby Edart, Plastics 24 can be just in time delivery

New Factory Layout

3 4
2

There are 4 independent terminals.

1
25

Manufacture Capability Summary

Multiple Manufacturing sites

China and Taiwan and Latin America Make Different Product type in Finished Foods, CKD or SKD

Well Supply Chain Management Infrastructure

Arima subsidiaries can supply key component with competitive cost Lower risk in material shortage On Time Delivery (Vender Inventory Management System)

Experienced Manufacturing Engineering

SMT, RF test engineering, and in-house test system design, Test & Assembly process development

Fast Ramp-up Manufacturing Capability

From Pilot Production to over 2M units shipment within two months

Global Logistic Service

Global delivery service with different customization to more than 2,000 locations in 88 countries

26

Section Three

Company Profile
Manufacturing Competency

IT System
Business Strategy

27

Manufacture System Integration

SFC
Shop Floor Control

SCM
High Efficiency High Speed Global Supply Chain
Supply Chain Management

ERP
Enterprise Resources Planning

EDI
Electronic Data Interchange

PDM
Product Development Management

Achievement
2 M units per month > 95% 1st pass yield rate Door to door delivery service to 2000 locations 28

Production Quality

SMT 99.65 %

RF Calibration

Producible

Customization

98.74 %

98.09 %

100 %

First Pass Yield Rate

96.52%

Z300i (W641) 29

MES/SFCS Network Architecture

Office Network
Work Order Shipping QA Report system ME

ERP Data Base

eRMA Data Base

Internet

Firewall
Anti-Virus Software Release ( Linux FTP )

SFIS Data Base

Backup Data Base

SPC Data Base

RS-485 Network

BCR

SMO

Input

BCR Function

TMO

Test result Server

KanBan Display

Production

FQC /OQC

Repair

Rework

Production Network

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IT System for Manufacture & Logistics

B2B system (eSkyLink)
eProcurement

ERP

APS (i2 FP) / SCP

Scheduling ATP

B2B system
Web
(Arima Customization)

Forecasting Planning

Web

Suppliers

Sales Order /Response

Customers
RosettaNet (CA/eBizArch)

Shipping eShipment

RosettaNet (CA/eBizArch)

Forwarders

ERP
ePayment

ERP
MES (Arima Customization)

Invoicing eExport Track & Trace /DDU DIS PSI/iRuGo

eBanking

Brokers
EDI (custom made)

ERP (Oracle R11i)

Brokers

eHUB

IQC/OLAP

FTP

FTP

Banks

eImport

eRMA QI-Tools

Forwarders

Suppliers (System Integrated)

Arima EAI

Customers (System Integrated)

Version date: 2006/03/01

31

IT application for Product Life Cycle Management

User Interface and Security

Main Functions

Other System I/F and Supporting Tools Viewer

Suppliers Customer Product Data Management Product Portfolio Management Access Control Product Quality Management Product Governance & Compliance Management Product Integration & Collaboration Management PM Planning Product Life Cost Management Workflows CAD Interface (Pro-E, Mentor, AutoCAD, Orcad, ) MS-Office Interface

SCM CRM
Management

Role Based Portal

Notes Interface

PLM Agile
Workflows

ERP Interface

ERP

Overseas R&D

Full Text Search

Development & Manufacturing engineer

MES (SFC) PVCS

32

Arima Communications Strengths 1 2 3 4 5

The worldwide best class in quality level and cost management.

Well infrastructure for global logistic service; offers door to door delivery service to 88 countries covering 2000 locations by DDU term. The highest industrial class for more than 95% first pass yield rate in product line.

Shipped more than 40M mobile phones to Worldwide market in the past four years. Strategic Partner with LGE in ODM business

Purely ODM policy , avoiding conflict with customer.

33

Section Four

Company Profile Manufacturing Competency R&D Capability Business Strategy

34

Why Arima?

35

36

Arimacomms Intention
Arimacomm will be LGEs best partner

How to deploy on the next step?

37

EMS and ODM s Strength

Strength Global Presence

Supply Chain Management

Strength Design Capability

Customer Relationship Management

Supply Planning

Supply Management

Order Fulfillment Management

Demand Planning

38

Value Chain in EMS and ODM

Handset industry value chain
New Product Introduce Purchasing Inbound Logistics Manufacturing (Global sites In EMS)

Product Development

Sourcing

Global Distribution Outbound Logistics

After Sales Service

ODM EMS

Even though traditional EMS s delivery is better than ODM

,Arima can delivery extra value to customers! 39

JDM business model

EMS

JDM

ODM

ID/MECH

HW

Validation Certification

+ SW

Design Involvement level: 0%~100%

40

How ODM delivers extra value to Customer?

Support Capability
ID: color & materials approval Product verification / validation Quality assurance Product development process support
Cost Delivery Quality Service

41

Manufacturing production capability- Multi-platform

In-House (ODM+JDM) Arima Comm. is excellent in manufacturing engineering skill

Made by customer (OEM)

Arima Comm. can make fast ramp up production, no matter what kind of platform!

Agere

42

Value added: Experience with Customer A Arima and Customer A have collaborated for product development in OEM business model !

C1 Planning Phase

C2 Design Phase

C3 Engineering Prototype EP

C4 Factory Prototype FP

C5
Pilot Pun

C6

Mass Production MP

prototype

PP

Cost Delivery Quality Service

Early involvement

Fast Ramp up
43

Reduce ID lead time

Cost Delivery Quality Service Kick off ID & Mech. EP 0 Color Design C&M and Target sample Final Product Presample process approval sample approval Process sample approval EP 1 - - - - - - EP3 FP PP MP

Arima is capable to involve full ID design procedure.

ID concept

Design 3D discussio Final 2D image n & 3D model

Arima

3D model ,Mock up fabrication, feasibility study, 2nd vendor sample approved

44

Offer Qualified Verifications

Cost Delivery Quality Service

Arima has set up synchronized facility and capability Arima do full product verification and validation Arima save customers resource and shorten the time to market Our equipment and skill can offer TRR (Trial Run Request) service and save the time of component running change

45

Global SCM arrangement

Supply chain management Order fulfillment Global SCM issue Create Global HUB Concept Brazil factory will start to operate in 2008

46

Global SCM Model Critical factor: Global SCM

Component Source Type

Consign part

In House

Alliance

Strength Depend on business model Synergy efficiency

Strength
Flexible Reduce overhead Weakness The component influence 47

Weakness Overhead loading

In House source

Plastics
Strategic Partner

Lens
Axon

CCM
Acme

LCM
Arima Display

Auto Focus
Arima Device

Light Guide

LED Chip

LED Pack
3rd Party 48

Arima Optoelectronics

Alliance: Key Components

SII Wintek() LGE(Innotech) TPO () (for VGA)
Memory LCD

Skyworks

PA

Anadgics

Spansion Intel Samsung

Saw Filter Panasonic () Murata () Samsung() BB/PMU/TxRx

ABICO LiteOn Chicony ACME

CCM

TI ( General Feature Phone) EMP (3G and Above) MTK (Multimedia Feature
Phone)

VCO/TCXO/Xtl

Epson NDK Taisaw

Intel Samsung

AP

49

Alliance: Other Components

Shielding case JinChya() Heyang() Keypad SiliTech Ichia () Taibound Connector Murata Yokowo Accoustic AAC/CST /NXP

Housing Green Point YuanJin() A-Tek GAEUAL()

FPC

Ichia () Adv. Tech () PI Surtec () Mildex() PCB Unitech UniMicron

Lens

Charger

ANT

Perlos Auden
Dome

Printec ()

50

Current equipment and capacity plan

Production lines today
SMD WJ China YK Taiwan Total 14 8 22
Others 50

Final Assembly 23 7 30
YK(Taiwan) WJ(China)

Customization & Packing 24 11 35 53

42 31

40 30 20 10 0 18 10 3 2006 10 5 2007 10 8 2008 27 25

51

Production Facility Update

A. For YK Factory from 8 to10 SMT lines in 2007.
Add two new SMT lines in YK factory to increase SMT capacity for new order from new customer and smart phones. This factory is dedicated for high-end product and smart phone (Certified: KDDI/Vodafone/BABT/Telefonica)

B.For WJ Factory from 14 to 17 SMT lines in 2007.

Will increase 3 SMT lines and assembly lines for feature phone order from BU1 and BU2 customers in September,2007. Will add another five SMT lines in 2008 so the total SMT lines in WJ in 2008 will be 22 lines at least.

52

Expansion plan for manufacture site

South American The Brazil factory ( Manaus ) will start to operate in 2008 Q1 to support local production and customers.
The initial production capacity will be 2M units annually and will expand capacity following customers requirements.

53

Create Global HUB Concept

Now
By air

DDU service
Delivery

SMD

PCBA

Assembly

Package

Rolling FCST

( WIP stock )

P O

( 5-7 days)

Over 2000 delivery points in over 88 countries

To-Be
By sea

HUB A

Package

Delivery

( WIP stock )
HUB B ( WIP stock ) HUB C Package Delivery Package Delivery

SMD

PCBA

Assembly
By sea

DDU service

( WIP stock ) P

54
( 1-2 days)

EDI flow for Door to Door shipment by DDU term

Customers
ORDERS ORDRSP Delivery Note Flight information VPN Invoice and Packing List Clearance Document VPN DESADV

Arima

Forwarder

End Customers Invoice

FINANCIAL INVOICE Cargo tracking POD POD

55

Key Performance Indicators of Efficiency

Traditional EMS Traditional ODM

Synergy Efficiency Quality

innovative ODM model

Cost

Delivery Service
56

57