Electronics System Design and Manufacturing in India 24

Electronics System Design and Manufacturing in India 24 February 2021

Accelerated Growth in India Cumulative FDI Nominal GDP 800 3, 5 3 years to $3 Tn 3 600 2, 5 4 years to $500 Bn 7 years to $2 Tn 2 400 1, 5 1 2 years to $681 Bn 14 years to $300 Bn 63 years to $1 Tn 200 0, 5 0 1947 -2010 -2017 No. of Years 2017 -2020 0 2000 -2014 -2018 No. of Years 2018 -2020 2

$5 Trillion Opportunity by 2025 $300 B $25 B $100 B $350 B Auto Comp Aviation Biotech IT/BPM $65 B $304 B $640 B $130 B $30 B Pharma Chemicals Construction Defence Leather $180 B $285 B $400 B $535 B $123 B Renewables Roads Electronics Food Processing Ports $223 B $125 B $424 B $100 B $9 B Textiles Thermal Power Tourism Media Wellness $150 B $110 B Mining Oil & Gas $112 B $192 B Capital Goods Railways 3

Transforming India 1. 25 Billion Enrolments 1 Billion 3 Bank Accounts 1. 2 Billion Mobile Subscribers 700 Million Internet Users Fastest Growing Ecosystem 17+ Indirect Taxes Subsumed 4

93 x Growth in Data Consumption; 99% Decline in Mobile Data Price Average monthly mobile data consumption per user, MB Price per GB, $ 14 12, 45 12 10 000 8 320 8 000 10 1 GB of data costs about 0. 1% of monthly GNI per capita, compared with 98% in 2013 8 6 000 6 4 000 93 x 4 2 000 0 2 89 2014 0, 16 0 2018 Source: India’s Trillion Dollar Data Opportunity 2013 2018 5

Direct Tax Reforms Before After CORPORATE TAX 25% - Revenue < USD 60 M 15% - New Manufacturing* 30% - Revenue > USD 60 M 22% - Domestic Companies* MINIMUM ALTERNATE TAX 18. 5% 15% USD 20. 7 B Tax Revenue Forgone * Removing all exemptions and incentives 6

Indirect Tax Reforms GST has been one of the biggest tax reforms implemented ~40 Indirect tax & cess converged to 1 common GST Removal of inter-state check posts has cut travel time of trucks by ~20% 20 – 30% travel time reduced across destinations Simplification across entire tax process including easier registration and fewer filings Kolkata Reduction of input manufacturing costs due to simplification of tax policy Removal of transportation bottlenecks such as check-posts, toll plazas etc. Chennai 7

Leap of 79 Ranks in World Bank Eo. DB Rankings World Bank’s Ease of Doing Business Ranking 63 14 Places Ease of Doing Business Ranking #63 (2020) 77 100 29 Places Global Innovation Index #52 (2019) 132 130 134 130 10 Places Logistics Performance Index 142 Make in India #44 (2018) (launched Sept’ 14) 2013 2014 2015 2016 2017 2018 2019 2020 8

Global Manufacturing Competitiveness BCG Manufacturing-cost Index 2019 (US = 100) 100 95 -97 103 108 103 100 109 104 101 86 88 103 100 96 91 87 86 109 108 87 113 105 102 99 87 83 Singapore Portugal Finland Australia Slovakia Denmark Hungary Indonesia Brazil Sweden Turkey Ireland Austria Czech Republic Russia Thailand Poland Spain Switzerland Canada India Taiwan Mexico United Kingdom Belgium Netherlands Italy France South Korea Japan United States 2 Germany 81 China 1 94 90 Viet Nam 116 120 118 Malaysia 122 2019 Edition New Additions Export value Labor 3 Electricity Natural Gas Other 1. Range shows average of All China (95) and Yangztee River Delta region (97); 2. Represents US Southern States; 3. Productivity-adjusted Note: Index covers four direct costs only. No difference assumed in “other” costs (for example, raw-material inputs, machine and tool depreciation); cost structure calculated as a weighted average across all industries; Ukraine, Norway and Romania also tracked by index, but not shown as no longer in Top 35; Philippines tracked due to similarity to SE Asian peers Source: BCG analysis 9

ESDM: USD 400 Bn by 2025 USD BILLION Market Overview Current Breakup 140 120 106, 6 86, 1 80 40 20 118, 4 Industrial* 100 60 118, 2 72, 1 38 29 75, 7 70 60 60, 8 6, 2 41 37 5, 9 49 53 Mobile 57 54, 4 43 5, 9 Consumer 6, 4 8, 8 11, 7 0 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19 2019 -20 Imports [VALUE] (34%) Domestic Production Total Exports Computer Hardware Strategic LEDs [VALUE] (24%) [VALUE] (22%) [VALUE] (12%) [VALUE] (7%) [VALUE] (2%) Source: ELCINA – Taskforce Report (2019) Source: Ministry of Electronics and Information Technology (Meit. Y) 10

Over 2. 5 x Growth in Production in 5 years Domestic Electronics Production USD BILLION 35, 0 Cumulative 30, 4 30, 0 Million Units Cellular Handsets 73. 6 400 28. 6 200 300 100 25, 0 330 58 0 2014 -15 20, 0 15, 0 11, 5 8, 5 10, 0 5, 0 13, 1 10, 8 6, 0 2, 8 3, 1 2, 9 2, 4 4, 7 6, 0 Million Units LCD/LED TVs 20 12, 5 10 0, 0 Mobile Devices Consumer Industrial Computer Strategic Electronics Hardware Electronics Components 5, 2 0 2014 -15 2019 -20 Source: Ministry of Electronics and Information Technology (Meit. Y) 11

Roadmap to 2025 Domestic Market (USD Bn) Exports (USD Bn) Production for Domestic Market (USD Bn) Total Production (USD Bn) Mobile Phones 190 110 All Electronics 400 31 400 34 30 80 80 4 2019 -20 2025 -26 PC, Tablets 250 40 33 150 118, 4 76 64 7 12 2019 -20 Source: FICCI, NPE 2019 2025 -26 22 2021 -22 0 7 6 2025 -26 12

Making India a Global Hub for Electronics Manufacturing $25 Bn in Fiscal Support for Allied Sectors Support for Electronics Manufacturing 1. Production Linked Incentives Mobile Phones, Components, IT Hardware Production Linked Incentives for 1. 2. 3. 4. 5. Advanced Chemistry Cell Automobiles & Auto Components Telecom & Networking Solar PV Modules White Goods 2. Capex Linked Incentives Components, Sub. Assemblies $13 Bn 3. Development of Electronics Manufacturing Clusters All Electronics Manufacturing Work in Progress $7 Bn 1. 2. 3. 4. Io. T Devices and Wearables Semiconductor FABs Display FABs Domestic Fabless Product Companies $5 Bn (Expected)

Cascading Incentives – “Incentive on Incentive” Components Subassemblies SMT Components Actives Camera Modules Vibrator Motor Passives PCBs Data Cables Mechanics Electromechanicals Display Assembly Sensors, Transducers, Crystals Capex Linked MEMS / NEMS ATMP Production + Capex Linked Finished Goods Mobile Phones Tablets Servers Laptops All-In-One PCs Production Linked Advanced Chemistry Cell Battery Storage Production Linked + State Incentives (Capex @ 15 -25% / power / land subsidies / tax refunds) + Remission of Duties and Taxes on Export

PLI Scheme for Large Scale Electronics Manufacturing (April 2020) Production ~ INR 10. 6 lakh crore (~ USD 141 Bn) Mobile Domestic Value Addition Export ~ INR 6. 3 lakh crore 60% of the Production Electronic Components Domestic Value Addition Investment ~ INR 10, 751 crore (~ USD 1. 43 Bn) 15% - 20% 35% - 40% 25% - 35% 45% - 50% Employment ~ 2, 000 Direct Jobs

PLI Scheme for Large Scale Electronics Manufacturing – Round 1 Mobile Phones (Invoice Value INR 15 K+) Mobile Phones (Domestic Companies) Specified Electronic Components

PLI for Large Scale Electronics Manufacturing (Round 2) Incentive 5% - 3% for a period of 4 years • Target Segment: SMT Components, Actives, Passives, PCBs, Discretes etc. Outlay INR 2, 161 Crore (USD 288 Mn) • No. of Players: 30+ • Production per Player: INR 840 Crore (USD 110 Mn) • Incentive per Player: INR 32 Crore (USD 4 Mn)

SPECS - Capex Incentives for Components & Sub-assemblies Incentive 25% @ P&M, R&D, To. T, Utilities Outlay INR 3, 285 Crore (USD 434 Mn) Target Segments Components: SMT Components, Actives, Passives, PCBs, Electromechanicals, Discretes Sub-assemblies: Camera Modules, Display Assemblies, Vibrator Motors, Data Cables, Mechanics

Indicative Target Companies – PLI R 2 and SPECS Europe Exxelia Group, Comet AG, Eaton Corporation, Phoenix Mecano India Globe Capacitors, Deki Electronics, CDIL, Tibrewala, Epitome, Desai, Shivalik Bimetal, PCB Power, Shogini, Micropack, Alcon, ASIP Japan Fuji Electric, Meiko, Renesas, ROHM, Taiyo Yuden, TDK Corp, Shinko, Kyocera Taiwan Ralec Electronic, Chilisin, Inpaq, ASE, Panjit, Nanya PCB, Passive System Alliance United States Amkor, Diodes, Gene. Si. C, AVX, Standex, Linx, Bel Fuse, Benchmark, Bourns, Cornell Dubilier, Cooper Bussman, Vishay

PLI Scheme for IT Hardware Incentive Outlay 4% - 2% INR 7, 350 Crore (USD 980 Mn) • Target Segment: Laptops (Invoice Value > $400), Tablets (Invoice Value > $200), AIO PCs & Servers • No. of Players: 5 • Production per Player: USD 7, 400 Mn* • Incentive per Player: USD 166 Mn* • Investment per Player: USD 67 Mn over 4 years * Unappropriated incentive amount shall be used to incentivize overperforming applicants For Details check: pliithw. com

PLI Scheme for IT Hardware Per Manufacturer, Figures in USD Mn Rate of Incentive Production Threshold Investment Required Eligibility Production Incentivized Incentive Year 1 4% 133 7 400 16 Year 2 3% 333 20 1, 000 30 Year 3 2% 667 40 2, 000 40 Year 4 2% 1, 333 67 4, 000 80 2, 467 67 7, 400 166 Total

Timeline for Localization Year Timeline Sub-Assembly to be Localized 1 01. 04. 2021 Not Applicable 2 01. 04. 2022 onwards PCB Assembly 3 01. 04. 2023 onwards 4 01. 04. 2024 onwards Battery Packs Criteria Applicable Incentive 4% Assembled domestically by the applicant company itself Assembled domestically, either by the applicant company itself or through one of its vendors. (not applicable for All-in-One PCs and Servers) Power Adapters / SMPS Assembled domestically, either by the applicant company itself or through one of its vendors Cabinets / Chassis / Enclosures Manufactured domestically by the applicant company itself or through one of its vendors 3% 2% 2% OR Power Adapters / SMPS * Applicant must meet localization criteria for eligibility Assembled domestically, either by the applicant company itself or through one of its vendors 1%

PLI Scheme for IT Hardware- for registration & application pliithw. com

PLI Scheme for IT Hardware - Target companies India Coconics, HLBS Computers, RDP Workstations, Smartron, Panache, Syrma, Sahasra, Smile Taiwan Inventec, Quanta, Compal, Foxconn, Wistron, Acer, ASUS United States Flex, Dell, Apple, Cisco

Expression of Interest (Eo. I) – Semiconductor FABs Vision • Setting up / expansion of existing Semiconductor wafer / device fabrication (FAB) facilities in India OR • Acquisition of Semiconductor FABs outside India Mission • Seek interest from potential investors • Formulate schematic support and other strategies Eo. I Details • Submission of a Preliminary Project Report (PPR) • Last Date for Submission of Eo. I – 28. 02. 2021 For Details check: www. meity. gov. in/esdm/FAB 25

Scheme for Semiconductor FABs- Eligibility Category C Category A Category B Integrated Device Manufacturers (IDMs) OR Foundries OR Indian Company / Consortia Indian Companies / Consortia Setting Up / Expanding Semiconductor FAB in India Acquisition of Semiconductor FAB outside India CMOS Technology nodes for fabricating processors, memories, analog / digital / mixed signal Integrated Circuits Compound Semiconductor based emerging technologies for fabricating High Frequency / High Power / Optoelectronics Devices Preferably with • Node Size < 28 nm • Wafer Size of 200 mm • Wafer Size of 300 mm • Capacity > 30, 000 WSPM 26

Scheme for Semiconductor Fab - Target companies Europe Infineon, ST Microelectronics, Japan Rohm, Renesas, Fuji Electric, Panasonic South Korea Samsung, SK Hynix Taiwan TSMC, UMC, VIA Technologies, Nuvoton, Powerchip, Lite-On, Winbond, Vanguard United States Texas Instruments, Micron, Intel, Qorvo, Analog Devices, Maxim, Microchip, NXP, ON Semiconductor, Global. Foundries, Skywater, Cree, X-FAB

PLI Scheme for Telecom & Networking Products- (Do. T) Incentive MSME- 7, 7, 6, 5, 4% Others- 6, 6, 5, 5, 4% for a period of 5 years Target Segments: Telecom and Networking Products- Core transmission products, 4 G/5 G and future products, Enterprise equipment- Switches and Routers (No overlap with Meit. Y) Base Year: FY 2019 -2020 Outlay INR 12, 195 Crore (USD 1, 626 mn) Eligibility: • Cumulative incremental investment from 1. 4. 2021 and minimum threshold each year (20%, 40%, 70% & 100%) over 4 years; and • Minimum threshold sales each year over Base Year • Minimum Investment: MSME– Rs 10 Cr; Others– Rs 100 Cr.

PLI Scheme for Telecom & Networking Products- (Do. T) S. No 1 Core Transmission Equipment Description of Goods Dense Wavelength Division Multiplexing (DWDM), Optical Transport Network (OTN), Multi Service Provisioning Platform (MSPP), Synchronous Digital Hierarchy (SDH), Packet Transport Network (PTN)/ Multi-Protocol Label Switching (MPLS), Gigabit Passive Optical Networks (GPON)/ Next Generation- Passive Optical Network (NG-PON) Optical Line Terminal (OLT), Digital Microwave Radio 2 4 G/5 G, Next Generation Radio Access Network and Wireless Equipment 4 G/ Long Term Evolution (LTE)Radio Access Network (RAN) Base Station & Core Equipment; 5 G RAN Base Station & Core Equipment; Edge and Enterprise Equipment; Wireless Telecommunication Equipment in Access and Backhaul 3 Access & Customer Premises Equipment (CPE), Io. T Access Devices and Other wireless Equipment Unified Communications Platforms, IP Multimedia Subsystem, Soft Switch, GPON Optical Network Terminal (ONT), Wireless Fidelity (Wi-Fi) Access Point and Controller, LTE CPE, 5 G CPE, Short Range Devices and Associated Electronics in new technologies like 4 G/5 G/Fibre To The Home (FTTH) etc. 4 Enterprise equipment: Switches, Routers, Internet protocol (IP) and Packet Switching and Routing Apparatus 5 Any Other Product- As decided by the Empowered Group of Secretaries (EGo. S) No overlap with Meit. Y

Thank You Technology Meets Opportunity