mems, Dmitry Pokhlebkin, electronics, Russian market, Frost & Sullivan

1. Frost & SullivanFrost & Sullivan
MEMS in the Russian semiconductor industry landscapeMEMS in the Russian semiconductor industry landscape
Dmitry Pokhlebkin
Frost & Sullivan

2. Russia holds a small share of the global electronic components* (EC)
market, with domestic electronic components meeting only 27% of the
Russian market demand
Russian electronic components market:
Supply chain, 2013
Global electronic components market: World
segmentation, 2013 г.
Foreign EC manufactures
Foreign franchise distributors
Global electronic
components market
Russian EC
Imports
D ti
Foreign independent
distributors
Other
17 %
Other
17 %
Russian electronic
components market
reached $ 2.7 Bn in
2013
reached $ 450 Bn in
2013
manufactures
Federal Russian
distributors
Domestic
Combined
USA
12 %
USA
12 %
Europe
11 %
Europe
11 %
Russia
< 1 %
Russia
< 1 %
JapanJapan
China
53 %
China
53 %
17 %17 %
Regioanl Russian
distributors
Combined
11% 8% 17% 53% 10% 1%
p
7 %
p
7 %
53 %53 %
Конечные потребители электронных компонентов (OEM, EMS)
Domestic electronic
components comprises
27%Note: * - Electronic components include semiconductors and passive
2
27%
Sources: Frost & Sullivan
components

3. Even provided outpacing growth of the domestic electronics industry
Russia will keep staying lower 1% of the global marketRussia will keep staying lower 1% of the global market
Russian electronic components market, $ BnGlobal electronic components market, $ Bn
2,34
2,52
2,703
375
419 429 449
400
500
CAGR 2009 – 2013 гг.
11%
CAGR 2009 – 2013 гг.
18%
1,41
1,90
1
2298
200
300
400
0
2009 2010 2011 2012 2013
0
100
2009 2010 2011 2012 2013
0,6% 0 9%
100%
Segmentation of global electronic
components market, %
Current Russia share in the global
electronic components market is 0,6% (ie
2.7 / 449)
99,4% 99,1%
0,6% 0,9%
98%
99%
Russia
World
Provided outpacing growth of the
domestic electronics industry (ie 18% -
11%) Russia will have 0,9% by 2020
3
2013 2020
Sources: Frost & Sullivan

4. … but “Ukrainian crisis” consequences are not taken into account …
Negative factors of possible sanctions
against Russia:
Correlation graphs of oil prices and Russian
electronic components market
1503 against Russia:
Force reduction oil prices on the
international market
Oil price forecast implicit in the federal50
100
150
1
2
3
/ barrel
$ Bn
Oil price forecast implicit in the federal
budget for 2014 is $ 101 per barrel
Increased competition in the world
military markets
00
2009 2010 2011 2012 2013
$ /
Russian EC market Oil price
Currently 35% of the Russian EC market
is military and aerospace
… others:
Russian EC market segmentation, 2013 г.
5%
4% 2%
Military and aerospace
Rupture of the cooperation in a number
of international research projects
Issues of “dual use“ equipments and
products imported into Russia
35%
7%
6%
5% Military and aerospace
Industrial electronics
Communications equipment
Automotive electronics
products imported into Russia
…
8%
8%
Security systems
Consumer electronics
Medical electronics
Lightning and displays
4
25%
Retail equipment
Sources: Frost & Sullivan

5. On the background of value migration in EC subsegment Russia
participates in the most marginal and high-tech EC sectors, excluding
passive EC, but not enough developing microelectronics
EC value chain, Russia, 2013
5 years ago today in 5 years
Materials EC Modules Product Materials EC Modules Product Materials EC Modules Product
37%∑ = 100% 35%∑ = 100% 32%∑ = 100%
Segment of “Product"
will slightly decline due
to the weakening value
component of a brand
5%
22%
35%
7%
25%
33%
10%
30%
28%
p
“EC” would take a part of
“Modules” share due to
increasing cost of
technologies5% 7% 10%
Semiconductor market structure, 2013EC market structure, 2013
technologies
93%
7%
29%
50%
100%
82%
79%
18%
50%
100%There is no
significant amount
of EC production in
Russia which is a
However, Russian
microelectronics
share is much
lower compared
71%
0%
Russia World
21%
82%
0%
Russia World
O l i di
positive factor; EC
are more profitable
p
to the World
structure
5
Passive EC
Semiconductors
Optoelectronics, sensors, discretes
Microelectronics Sources: Frost & Sullivan

6. so far …
Provided outpacing growth of the domestic electronics industry Russia will have <1% by
20202020
The Russian EC market maintains its dependence on imports and oil price
Russia engaged in medium margin segments without competing with China in theRussia engaged in medium-margin segments, without competing with China in the
segment of passive EC, on the other hand - not having sufficient domestic market for
development of microelectronics segmentp g
Is it all points of growth …?p g
6

7. Global MEMS trends: growth due to new technologies and market-based
solutionssolutions
The projected CAGR of the global MEMS market will stay above the global EC market
growth - about 13%*growth about 13%
Current MEMS global market is about $ 12 Bn, and will exceed $ 20 Bn in 2018
A h lf f MEMS t h l i t th t f "I t d ti " d “G th“A half of MEMS technologies are at the stages of "Introduction" and “Growth“
20 basic MEMS technologies: "Introduction" - 20%, "Development" - 30%, "Maturity" - 40%,
"Decline" - 10%
3 key industry segments ("Consumer Electronics", "Automotive" and "Healthcare") ocupy 80-
85% of global MEMS market and this trend will continue within the next 5 years
"Healthcare” will take a part of "Automotive“ share; "Consumer Electronics" will remain at the
same level
Note: * - The average price per a MEMS unit will decline by
about 30%
7
about 30%
Sources: Yole Développement, Frost & Sullivan

8. Russian MEMS trends: formation of the domestic market for MEMS starts
at the background stagnating segmentsat the background stagnating segments
Today the Russian market is represented in a form of imported preassembled modules with
integrated MEMS-components
There is no domestic mass-production of MEMS; and MEMS components are not supplied:
1) No national assembly modules, 2) assembled modules should not be repaired (module
changes entirely)
Structure of Russian MEMS market differs from the structure of the world MEMS market
World MEMS: «Consumer Electronics", "Automotive" and "Health" - collectively more 80%
Russian MEMS: «Automotive", “Military" and "Industrial Electronics" - collectively about 80%
The main segment of the domestic MEMS market – "Automotive" is experiencing a serious
decline
" Automotive" - decline by 8% in 2014 (PwC forecast)Automotive - decline by 8% in 2014 (PwC forecast)
8
Sources: PwC, Frost & Sullivan

9. Frost & Sullivan ranked EC segments recommended for support and
development in Russia based on the World trends and Russian market
features
Semiconductors
Microelectronics Other semiconductors
3D; RFID; Аналоговые ИС
Радиационностойкие (Rad-Hard)
Высоконадежные (High-Rel)
Optoelectronics :
Цифровые матрицы с
Sensors and actuators:
Датчики давления (Pressure sensors)
Discretes:
Силовые транзисторы и модули
3D; RFID; Аналоговые ИС
Цифровые матрицы с
чувствительными элементами (CCD
and CMOS image sensors)
Лазерные передатчики и приемники
(Laser transmitters and pickups)
Твердотельное освещение и
Датчики давления (Pressure sensors)
Датчики ускорений и рысканья
(Acceleration and yaw sensors)
Датчики магнитного поля (Magnetic-
field sensors)
Микроэлектромеханические
Силовые транзисторы и модули
(Power transistors and modules)
Слаботочные транзисторы (Small-
signal transistors)
Переключающие транзисторы
(Switching transistors)Твердотельное освещение и
светодиоды (Solid-state lamps and
LEDs)
Устройства инфракрасного диапазона
(Infrared devices)
Оптроны и оптические переключатели
Микроэлектромеханические
системы (MEMS)
(Switching transistors)
Диоды (Diodes)
Выпрямители (Rectifiers)
Тиристоры (Thyristors)
ВЧ и СВЧ диоды, транзисторы и
модули (RF and microwave diodesр р
(Couplers and optical switchers)
Цифровые визуальные индикаторы
(Digital character display)
Фотоэлектрические модули
(Photovoltaic solar cells)
модули (RF and microwave diodes,
transistors and modules)
Note:
1) - «First tier»
9
Оптоволоконные компоненты (Fiber-
optic components) 2) - «Second tier»
Sources: Frost & Sullivan

10. 10 arguments in favor of MEMS in Russia
1. MEMS market is growing faster than the World EC
market
2 M j i f MEMS h l i h l
Today MEMS leads at two percent, tomorrow - more
"I d i " d "D l " i l d ½ MEMS2. Majority of MEMS technologies are at the early
stages of lifecycle
3. Large range of possible applications in all industrial
segments
"Introduction" and "Development" include ½ MEMS
technologies
Examples: portable electronics, automotive, military, space,
medicine, security, etc.seg e ts
4. MEMS technology opens up new design possibilities
5. The reduction in size leads to increased sensitivity of
Mainly due to miniaturization, which allows to create entirely
new products
By reducing the inertia of a device mechanical elementsy
the sensors based on MEMS
6. Greater reliability compared to the separate
components
By reducing the inertia of a device mechanical elements
SoC reliable sets of multiple devices with the same
functionality
7. MEMS technology allows to reduce power supply
8. The reduction in size leads to a reduction in the chip
Low power consumption results in lower heat generation
Additional cost savings through reducing consumption of
expensive materialsarea
9. There is a sort of activity in MEMS in Russia
10 A ti MEMS i t t d l t f
expensive materials
Russian Association of MEMS, about 20 domestic
organizations developing MEMS
Att ti t MEMS ithi "D l t f t h l
10
10.Accounting MEMS in strategy development of
Russian electronics industry
Attention to MEMS within "Development of nanotechnology
industry in the Russian Federation until 2015"
Sources: Frost & Sullivan