Financial Results for 1H of FY2018
and Prospects for FY2018

October 26, 2018
6807 Japan Aviation Electronics Industry, Ltd.
Copyright ©2018. Japan Aviation Electronics Industry. Ltd

AgendaI.

Technology to Inspire Innovation

Financial Results for 1H of FY2018

II. Prospect and Strategy for FY2018

Copyright ©2018. Japan Aviation Electronics Industry. Ltd

2

Technology to Inspire Innovation

I. Financial Results for 1H of FY2018(From April 1, 2018 to September 30, 2018)※ Total may not correspond to the total value of the items sinceamounts less than 100 million JPY are basically rounded off
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Net Sales and Incomes(JPY in 100 millions)

FY2017FY2018

Technology to Inspire Innovation

Year/Year
Change1H FY2018/
1H FY2017

vs. 1HFY2018
Projections

1H FY2018
Projections
anounced
Apr, 2018

1H

2H

1H

Net Sales

1,245

1,294

1,180

-66

95%

15101%

1,165

Operating
Income

95

111

94

-199%

-199%

95

7.6%

8.6%

7.9%

85

89

106

22126%

21125%

85

6.8%

6.9%

9.0%

6267

77

15124%

14123%

63

5.0%

5.2%

6.5%

111.0

110.7

110.3 (Average)(to Net Sales)

Ordinary
IncomeNetIncome(to Net Sales)(to Net Sales)

Exchange Rate
(JPY/USD)

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Net Sales and Incomes

Technology to Inspire Innovation▶ In spite of the net sales decrease compared to 1H ofFY2017, operating income maintained the same leveland ordinary income increased
Net Sales(JPY in 100 millions)

1,196

1,245

1,294

1,180899

Operating
IncomeOrdinary
Income41 26
1H FY2016

79 65
2H FY2016

95 85
1H FY2017

1118994 106

2H FY2017

1H FY2018semi-annual fiscal year basis

Copyright ©2018. Japan Aviation Electronics Industry. Ltd5Net Sales by Market Segment(JPY in 100 millions)

FY2017
1H

Year/Year
ChangeFY20182H

1H FY2018/
1H FY2017

1H

Technology to Inspire Innovation

vs. 1HFY2018
Projections

1H FY2018
Projections
anounced
Apr, 2018

Component
Ratio

Mobile Devices

692

686

582

44% -11084%35106%

547

Automotive

331

367

369

35%

38111%-998%

378

Industrial &Infrastructure

154

173

171

14%

17111%-1493%

185

Others

6768

57

7%

-1085%

2104%

55

1,245 1,294 1,180

100%

-66

95%

15101%

1,165

Total
Overseas
Overseas
Sales Ratio

937

948

848

75.2% 73.2% 71.9%
Copyright ©2018. Japan Aviation Electronics Industry. Ltd6Net Sales by Business Segment

Technology to Inspire Innovation(JPY in 100 millions)

FY20171H

2H

FY2018

Year/Year
Change1H

1H FY2018/
1H FY2017

vs. 1H 2018
Projections

1H FY2018
Projections
anounced
Apr, 2018

Component
Ratio

Connector 1,143 1,173 1,062

90%

-80

93%

12101%

1,050

UIS

4145

434%

2104%

0100%

43

Aerospace

57

72

706%

13122%

4106%

66

Others

444ー

0109%

-274%

61,245 1,294 1,180100%-6695%

15101%

1,165

Total

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7

Connector Business
Sales by Market Segment
Year/Year
1,143 Change(JPY in 100 millions)

93%

1,062

84%

582

1,000

Mobile Devices

692

Technology to Inspire Innovation

Sales: 93% (of 1H FY2017)▶ Mobile Devices• Sales of products with built-in
procured components decreased
significantly• Sales to Chinese smartphone
manufactures recovered• USB Type-C “DX07 series”
maintained the same level as
previous year

Automotive

305

112%

Industrial &Infrastructure

104
42

100%
81%

PC・LCD・TV
0 Others

1H FY2017342▶ Automotive

10434▶ Industrial & Infrastructure1H FY2018• Sales mainly to Japanese OEMs grew

• Declined due to customers’ orderadjustment reflecting the uncertain
market outlook

Copyright ©2018. Japan Aviation Electronics Industry. Ltd8UIS BusinessTechnology to Inspire Innovation

Sales by Market Segment(JPY in 100 millions)50

Year/Year
Change104%

41

Automotive

23100%

43

23

25

Industrial &Infrastructure

0Sales: 104% (of 1H FY2017)▶ Automotive(capacitive touch panel)• Full-scale mass production offilm sensors was maintained(Mass production started in 4Q ofFY2017)▶ Industrial & Infrastructure

18111%

1H FY201720• Operating panels forsemiconductor manufacturing
equipment and teachingpendants for robots continued
to perform well

1H FY2018

Copyright ©2018. Japan Aviation Electronics Industry. Ltd9Aerospace BusinessTechnology to Inspire Innovation

Sales by Market Segment(JPY in 100 millions)

80

60

40
Industrial &Infrastructure
andAutomotive

Year/Year
Change

57

36

122%

144%

700

▶ Industrial & Infrastructure• Demand of oil drilling sensors
doubled due to rising crude oil
prices52• Linear motor for semiconductor
lithography equipment remainedrobust▶ Defense & Space• Decreased due to a decline indefense budget for domestic
programs

20Defense &Space

Sales: 122% (of 1H FY2017)21
1H FY2017

87%

18
1H FY2018

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10Operating Profit by Business Segment

Technology to Inspire Innovation(JPY in 100 millions)

FY20171H

Connector
UIS
Aerospace
OthersTotal

FY20182H

1H

Year/Year
Change

112

121

106

9.8%

10.3%

10.0%

44

3

9.2%

9.6%

8.0%

167

1.6%

8.9%

10.0%

-22

-20

-23-1

95

111

94-1-6-0.4
6

7.6%
8.6%
7.9%
※ Percentages(%) for FY2017 and 1H FY2018 indicate Operating Income to Net Sales Ratios.
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11

Technology to Inspire Innovation

II. Prospect and Strategy for FY2018(From April 1, 2018 to March 31, 2019)

Copyright ©2018. Japan Aviation Electronics Industry. Ltd

12

Prospects for FY2018

Technology to Inspire Innovation(JPY in 100 millions)

1H

Net Sales

FY20182H
Projections Projections

206

94

99192

(to Net Sales)

8.1%

7.9%

8.0%

8.0%

174

10690

196

6.8%

9.0%

7.3%

8.1%

129

77

68

145

5.1%

6.5%

5.5%

6.0%

(to Net Sales)

NetIncome(to Net Sales)

FY2018Projections(announcedApr, 2018)95%

15 101%2,40093%-8

FY2018/FY2017

2,539 1,180 1,235 2,415 -125

Operating
IncomeOrdinary
Incomevs. FY2018
Projections

Year/Year
ChangeFY2018FY2017-1496%

2008.3%23113%

21 112%175
7.3%

15112%

15 111%1305.4%※ 2H FY2018 assumed exchange rates ¥110 to the U.S. dollar

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Prospect for Net Sales by Market Segment

Technology to Inspire Innovation(JPY in 100 millions)

FY2017FY2018
1HMobile
Devices

Year/Year
Change2H
Projections

FY2018
Projections

vs. FY2018
Projections(announcedApr, 2018)

FY2018/FY2017

1,379582

597

Automotive

698369393

762

64 109%-899%

770

Industrial &Infrastructure

327

171

18535629 109% -29

92%

385

Others1355760

118-1787%

3 103%

115

2,539 1,180

1,235

2,415 -12595%

15 101%

2,400

Total

1,179 -200

FY2018
Projections86%

49 104%

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1,13014

Prospect for Net Sales by Business Segment

Technology to Inspire Innovation(JPY in 100 millions)

FY2017FY20182H
Projections Projections

1HConnector

Year/Year
ChangeFY2018

vs. FY2018
Projections

FY2018
Projections(announcedApr, 2018)10 100%2,155

FY2018/FY2017

2,316 1,062 1,103 2,165 -151

93%

UIS86

4345882 102%-199%

89

Aerospace

1297082152

23 118%8 106%

144945101 112%-280%

1215 101%

2,400

OthersTotal

2,539 1,180 1,235 2,415 -12595%

Copyright ©2018. Japan Aviation Electronics Industry. Ltd15Connector Business Strategy [Mobile Devices]①

Technology to Inspire Innovation▶ Board-to-Board Connectors

 Increase market share and establish a de facto standard in
Chinese Smartphone market
Development Roadmap, Board-to-Board Connectors
Contact Spacing Range0.3mm Pitch

0.35mm Pitch

0.4mm Pitch
Copyright ©2018. Japan Aviation Electronics Industry. Ltd16

Connector Business Strategy [Mobile Devices]②Technology to Inspire Innovation▶ “DX07 Series“ USB Type-C Connector
 Expansion in high-value-added segment
 Launched waterproof receptacle adopting
JAE’s unique potting-less technology

Waterproof receptacle

 Strengthening new business areas(Entering new markets reaching introductionphase) Expand VirtualLink™ compatible products Development of products for industrial andautomotive markets

Back: " VirtualLink™ " compatible
Front: on-board 2-row SMT type

 Expand cable harness and other products for
new field of businessPotting-less:

Omission of resin seal process

VirtualLink™: New standard enabling VR headsets to connect with the main
device over a single Type-C cable
Cable Harness with Screw Lock

Copyright ©2018. Japan Aviation Electronics Industry. Ltd17

Connector Business Strategy [Automotive]①

Technology to Inspire Innovation▶ Expand products compatible withhigh-speed data transmission
 Expand onboard camera business toJapanese OEMs based on results inin European market
 Develop connecters for next-generation
information communication technology

MX55 Series connector forcamera(Actual door mirror of European
OEM equipped with JAE connector)▶ Product compatible with European de-facto
standards
 Mass production of airbags connector
compatible with European standards will
start from the second half of FY2018⇒ Deploy to European, North Americanand Japanese markets

AK Squib connector for airbags

Copyright ©2018. Japan Aviation Electronics Industry. Ltd18

Connector Business Strategy [Automotive]②Technology to Inspire Innovation▶ Development of High current / High voltage products for EV Develop and expand business of high current / high voltage
connectors
 Expand range of customers for service plug connectors
High current /High voltage connector

High current/Highvoltage terminalfor ECU monitoringbatteryCharger(battery)High current /high voltage
Motor/inverterDocking connector

Service plug

Fast charging plug(Power Feeding)Service plug：Connector for battery circuit shutdown during maintenance and inspection of EV

Copyright ©2018. Japan Aviation Electronics Industry. Ltd19

Connector Business Strategy [Industrial & Infrastructure ①]

Technology to Inspire Innovation▶ High speed EV charging infrastructure Adopting regional sales strategies
considering market expansion
 Already in use in Japan and North America Expanding to Europe and China
 CHAdeMO-type variation covering V2H to Highspeed charging already in place COMBO-type to be sequentially launched tocater overseas markets
Variation of KW Series
KW01
KW02
KW03

High-speed Connector
125A/500V

V2H Connector
25A/450V

Medium-speed, V2G Connector

80A/500A

Introduction example inNorth America“KW01 Series”(CHAdeMO-type)

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Connector Business Strategy [Industrial & Infrastructure ②]

Technology to Inspire Innovation▶ Approach to Factory Automation and Robots

 Expanding products for Robots (for Co-robots, overseas
market, etc.)
JB10Connector lineup for robots(circular)

Manipulator

for Small size servo motor

JN14(low profile)

DF02(rectangular)

Released in
CY2017

Controller
for Middle/Large size servo motor

JL10 (circular)

KN02(small rectangular)

Enhanced in
CY2017

JL04V (circular)
KN01(rectangular)

KN02

HB01

HB03

(small rectangular) (waterproof cable-to-cable)(ultra small cable-to-cable)

JN1/JN2/JN2V Released in(circular)(circular) CY2018

Released in
CY2017

Released in
CY2018

Released in
CY2017Released inCY2018

Copyright ©2018. Japan Aviation Electronics Industry. Ltd21UIS Business Strategy

Technology to Inspire Innovation▶ Approach to Automotive Market
 Accelerate promotion for capacitive touch panel Expansion of new adoption leading to sales increase in FY 2019
Glass type metal
mesh sensor

 Accelerate adoption to new car models for further growth Production capacity increase of film type
 Mass production for new customer starting from 4Q of 2018
Film type metal
mesh sensor▶ Approach to Industrial Market
 Capture new markets by catering needs oftouch screen operation to controlling panels
Resistive touch screensensor(Exhibited at CEATEC 2018 inJapan, for reference)

Copyright ©2018. Japan Aviation Electronics Industry. Ltd22

Aerospace Business Strategy▶ Sensor for Oil Drilling Strengthen sales and service
operation coping to increasing
demandTechnology to Inspire Innovation

Sales for Oil drilling Market(JPY in 100 millions)

1.7 fold(annual)50

 Enhance production capacity by
expanding production space andincreasing manpower(already done in 1H of 2018)⇒ Continued to operate at fullcapacity
 Strengthen technical andmaintenance supporting capability
in Huston, USAPlan2H

2.0 fold(first half)

1H0

FY2017FY2018

 Expand business by new products Increase the added value ofproducts
such as by improving measuring
accuracy
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Strategy for New Products▶

Technology to Inspire Innovation

JAE and NEC jointly developed one of the world's smallest
high performance antenna deviceThe surface mount type antenna was developed by combining NEC’s
metamaterial ultra compact μSR ™ technology and JAE’s precision
processing technology
 Product features
 Achieves over 90% of antenna radiation efficiency High flexibility of mounting places Widely applicable to standards such as Wi-Fi,Bluetooth, V2X, LPWA, etc.

 Applicable areas and application (estimate) Game machines, Wi-Fi routers, network home
appliances, etc.
 Applicable to a wide range of applications infuture such as Connected Car, IoT etc.
Metamaterial:

Metamaterials are artificial materials engineered to have properties notfound in nature through periodic placement of building blocks.
μSR™ technology: Split Ring (SR) Resonator Technology (Small Antenna ElementTechnology)

Copyright ©2018. Japan Aviation Electronics Industry. Ltd24Direction for Mid-term GrowthTechnology to Inspire Innovation

Pursue further growth in sales and profits byenhancing global marketing and productivity
improvement
Maintain industry leading position for mobile devicesmarket



Accelerate growth in Automotive and Industrial &Infrastructure markets

Productivity improvement by manufacturing
technology innovation

Achieve FY 2018 target, set foundation forgrowth,and enhance development and marketing for
mid-term business growth
Copyright ©2018. Japan Aviation Electronics Industry. Ltd25

<Cautionary Statement>
The plans, strategies & results forecasts and targets for our company and our consolidated affiliates (hereinafterJAE) noted in these materials are forecasts and targets as of October 26, 2018, and include risks and uncertainties.
The targets noted in these materials are not projections, and do not reflect current projections by the management
team with regards to future results. Rather, these are targets to be attained by the management team throughimplementing business strategies.
Note that actual results may differ greatly from forecasts and targets, etc. based on various factors. Major factorsthat affect actual business results, etc. are the political and economic situations in Japan, the US, Asia and so forththat involve regions where JAE conducts business operations, demand fluctuations for JAE products (includingsoftware products) in the market, deflationary pressures caused by severe competition, the ability to continue
supplying over our competitors, the ability to expand business operations in overseas markets, changes to the laws
and regulations concerning business activities, and their transparency, potential legal responsibilities, exchangerates, etc, and there may be other factors beyond the ones listed here. Actual results may differ from managementtargets and other forecasts due to a worsening global economy and the global financial situation, stagnation in thedomestic and overseas stock markets, etc. Note that descriptions concerning projections are current as of that day.
Although new risks and factors of uncertainty that occur at any anytime are evident, it is impossible to predict theiroccurrence or effects. In addition, details describing future predictions may not actually occur due to risk anduncertainties. Do not rely solely on these descriptions.

Reference

Copyright ©2018. Japan Aviation Electronics Industry. Ltd

Technology to Inspire Innovation

28

Capital Investment & Depreciation

Technology to Inspire Innovation(JPY in 100 millions)

217

120.1

97.1

88.5

108.5

197

1H FY2016

220

176

2H FY2016

89.3

86.2

108.3

111.1

219

1H FY2017

2H FY2017

CapitalInvestments

109.6

Depreciation

91.2

and others

200

1H FY2018

2H FY2018
Projections(Depreciation and others include disposal of fixed assets)

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