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Page 1(Nasdaq: CNTF)HK000KRB
TechFaith
A Handset Original Developed Product (ODP)
& Original Developed Content (ODC)
Provider
Jan 2008
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Disclaimer
This presentation contains forward-looking statements. These statements are made under the ''safe harbor'' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as ''will,'' ''expects,'' ''anticipates,'' ''future,'' ''intends,'' ''plans,'' ''believes,'' ''estimates'' and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as TechFaith's strategic and operational plans, contain forward-looking statements. TechFaith may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K, etc., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties.
Statements that are not historical facts, including statements about TechFaith's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, TechFaith's limited operating history, mobile handset brand owners' discontinuation or reduction of the use of independent design houses, TechFaith's ability to retain existing or attract additional international customers, TechFaith's earnings or margin declines, failure of competing against new and existing competitors, and other risks outlined in TechFaith's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1, as amended. TechFaith does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
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Contents
Industry Evolution
Unique ODP Provider
Product Development Status
Customer Base
Appendix
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Top Five Brands
JapaneseBrands
ChineseBrands
EuropeanBrands
CarrierBrands
NicheBrands
Local Brands
PremiumBrands
1980 - 19951995 - 19982006 - 20072000 - 20051998 - 20002008 - Future
Global Handset Players Get More Diversified2008 - Future
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CDMA1X
GSM/GPRS
GSM/GPRS/EDGE
TD-SCDMA
WiMAX
CDMA 2000/EVDO
WCDMA
HSDPA
WiFi
HSUPA
Wireless Standards and OS Get More Complicated
3G
2G/2.5G to 2.75G
3.5G/3.9G
Mid-90s 2000 2005 20102002 2007
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Software workload in handset R&D
50% in 2G GSM 75% in 2.5G GPRS 85% in 3G WCDMA & EVDO
DRMStack
WA
P PUSH
Engine
PictBridge
EngineSoftware Becomes the Key Value Driver
Mobile Solutions Suite
MMSApp
UMB BrowserApp
PictBridgeApp
SyncMLApp
OtherApps
BrowserEngine
MMSEngine
EmailEngine
PUSHEngine
SyncMLEngine
SMS / EMS
Engine
WAP 1.2 / 2.0 HTTP 1.1
SSL 3 / TLS1DRM1.0
DRM2.0
TechSoft Universal Platform
OS / RTOS
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Fast-Growth Opportunities for TechFaith
Small players are not capable of providing original developed products;Big players can not cover a full spectrum of technologies from 2G to 3.5G;Carriers are promoting their own services with rich software applications;Dual-mode handsets are in high demand by carriers running two network systems or by international roamers.
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Contents
Industry Evolution
Unique ODP Provider
Product Development Status
Customer Base
Appendix
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CustomerBrandOwner
Total Handset Software & Design Solutions
Drivers onDifferent
OS
Frame workAPI
MMI:Specific
Features forDifferentOperators
U IMMI:
Common Features
Hardware Design
Industrial Design/Mechanical Design
ApplicationSoftware
TechFaith owns customer relationship
EMS is available for production if brand owner outsourcesmanufacturing
EMSProduction
Line
Chipset
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Cutting-Edge Technology Alliances
Strategic partner to develop Smartphone technology
Enabler of CDMA technology
Strategic investor
Collaborative founding “TechSoft”
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May ’06 - Application Software Co. - Jointly Invested by QualcommSep ’06 - Launched Window’s SmartphoneApr ’07 - Launched HSDPA SmartphoneNov ’07- Launched HSDPA Data/Voice Card
Volume based business
Higher ASP from games and other contents.
Extra revenue from gameservice, game terminals and UMPC.
ODP & Content Provider
2008
Company Founded 2002
Independent Design House
2002-2005
July ’02- Founded May ’05 - NASDAQ IPOOct ’05 - Launched
First 3G WCDMA/UMTS
Handset
Original Dev. Product(ODP)
Provider 2006-2007
Q1’08 – OnlineInteractive GameBusiness Unit Plan to Found
Company Profile – NASDAQ: CNTF
Project based business
Revenue mainly from NRE
Share the volume business via Royaltyincome.
Volume based business
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R&D in Chengdu
Business Model - ODP & ODC ProviderOriginal Developed Products Contents
Web Server
ODP facilitates Contents to test and run on a variety of platforms Contents enrich application of ODPContents work for both PC and handsets creating a new business opportunity
ApplicationSoftware
Windows
GMS/TD-SCDMA
UMTS/HSDPA
CDMA/EVDO
PC
PSP Phone
R&D in Hangzhou
R&D in Beijing
2008
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R&D in Chengdu
Revenue Generation from New Business ModelContents
Web Server
Higher handset ASP from enrich application contentsNew revenue from game services (points, ads, license fee…)New revenue from game terminals
PC
PSP Phone
R&D in Hangzhou
R&D in Beijing
2008
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Contents
Industry Evolution
Unique ODP Provider
Product Development Status
Customer Base
Appendix
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170Feature Phone
Gross Margin > 20%
45
58
Smartphone & PPC PhoneGross Margin > 25%
Low TierGross Margin > 10%
450
TechFaith’s Product Position- Focusing on Mid to High Tier
90
Cost Wholesale Price
50
Low Tier
Middle
High Tier
35
100
180
20
Unit: US$
35
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170
45
58
CDMA1X Gross Margin
10%-40%
HSDPA Gross Margin
20%-40 %
GSM Gross Margin
10%-30%
WCDMA Gross Margin
15%-30%
Low Tier
Middle
High Tier
Cost Wholesale Price
50
450
35
100
180
90
TechFaith’s Product Position- Focusing on Mid to High Tier
3520
Unit: US$
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HSDPA Data/Voice Card - Pike
Band HSDPA2100/GPRS10/GSM900/DCS1800/PCS1900MHzMemory 160MB LCD 0.8’’ OLEDCamera N/AEntertainments Modem/MP3 AAC /AAC+Communication Mini USBTalk time 3G: 47~120 mins /2.5G: 100~220 minsStandby time 150-270 hrsBattery 580mAh Size 98*36*16mm/56gSchedule Oct, 2007
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GSM GSM
PPC
Phones
Launched
Technology Combinations in High Demand
Feature
Phones
Q4’ 2007
Digo S26
Q1’ 2008
Twins Yin Tai
GSM CDMA
GSM GSM
GSM GSM
T7620+ T7630
GSM CDMAT7620
GSM WCDMATwins
Cynthia 850Gallic
GSM GSM
CDMA WCDMA GSM TD-SCDMA
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Platform TI OMAP 850 (200MHz)Band EDGE / GSM / GPRS 850/900/1800/1900MHzMemory 2GB + 64MB LCD 2.4’ QVGA TFTCamera 2.0 M Main camera Entertainments 64 Poly MP3 / MP4 / MIDI / AAC / WMA / WMV / MSM / MMSCommunication ActiveSync / WAP / JAVA / WiFi 802.11b/g / Bluetooth 2.0 / Mini USB / Windows IE browser Talk time 200 minsStandby time 120 hrsBattery 1100mAHSize 111*53*12.5mm Schedule Nov, 2007
Slim Windows Mobile – Vista 850
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Band GPRS10/GSM900/DCS1800/PCS1900MHz/EDGE
Memory 256Mb+64Mb /A2DP
LCD 2.2’’QVGA TFTCamera 2.0 M/ 1.3 M optional
Entertainments MP3/AMR/AAC/AAC+/MP4/3GP/Voice video recorder
Communication MMS/STK/PC Sync/WAP 2.0/Bluetooth 2.0 A2DP/Java 2.0
Standby time 220 hrs Talk time 180 mins Battery 770mAhSize 110*47*10.9mm Weight About 100g Schedule Dec, 2007
Music Phone - Rock
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Contents
Industry Evolution
Unique ODP Provider
Product Development Status
Customer Base
Appendix
HK000KRBHK000J5S22
Russia
China JapanTaiwan
Indonesia
India
Brazil
United StatesEgypt
UkraineEurope
MalaysiaVietnamThailand
South Korea
United Arab Emirates
Worldwide Market Coverage
Turkey
Saudi ArabiaMorocco
Algeria
Canada
Libya
Yemen
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Africa
Europe Russia
North America
Latin America ChinaSouth East Asia
IndiaMiddle EastAfrica
TechFaith’s Worldwide Customers & Prospects
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Contents
Industry Evolution
Unique ODP Provider
Product Development Status
Customer Base
Appendix
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Q3/07 Q4/07 2009
Engineering Sample
Mass Production
TD-SCDMA Product Road Map
TD/GSM AR + AH + EDGE
HSDPA2.8M/GSM + AR +AH+EDGE
Linux-based & One-chip Low-costHSUPA (UMTS)
Engineering Sample
Mass Production
Mass Production
CTA of Feature Phone & Data Card
No.1 CNC Qingdao Field Testing
Demonstration at PT/EXPO COMM CHINA 2007
Working Sample for MII Field Testing
Q1/08 Q3/08
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Development of TechFaith’s TD-SCDMA Projects
Phase I product achieved top one score in field test of CNC Qing Dao Branch in
Sep 2007. The company chose TechFaith’s product as the only benchmark for
other suppliers such as ZTE, Huawei, Samsung, and LG.
Two models of feature phone and one model of data card were shown to the
public in our customers’ counters at PT/EXPO COMM CHINA 2007 from 23rd-27th
Oct 2007.
Data card won CMCC bidding ( two winners). Two models of feature phone are
joining the CMCC bidding. Bidding result will come in Feb, 2008.
In late January, TechFaith will provide data card working sample of 2.8Mbps TD-
SCDMA HSDPA for field testing held by MII in our customer’s name.
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Component Suppliers
PA Suppliers(1) NXP Platform: RFMD and Skyworks.(2) Qualcomm Platform: Avogo and Anadigics(3) T3G: Maxim
LCD Suppliers(1) Samsung SDI: 2.2 ", 2.4 " QVGA(2) Tovis: 1.8 " QCIF, 2.8" QVGA(3) Sharp: 1.8 " QQVGA, 2.6" WQVGA, 3.0" WVGA(4) CASC: 2.2 " QCIF, 2.4 " QVGA(5) TPO: 2.5 " QVGA landscape
GPS Supplier: SiRFFinger Print Recognition Suppler: Atrua
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ODP & ODC Business Models Allow TechFaith to Build Its Competitive Advantages, Achieve Fast Growth, and
Maintain Sustainable Profitability