Transcript Slide 1

Cowen Group
40th Annual Technology, Media &
Telecom Conference
Dr. John C.C. Fan, President and CEO
Richard Sneider, Treasurer and CFO
May 30, 2012
Forward-looking Statements
This presentation includes forward-looking statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995. These statements relate to our expected future financial and operating performance,
growth in the markets in which our products are sold, our market share for our products, and our significant
customers. We may use words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “could,” “seeks,”
“estimates,” and variations of such words and similar expressions in identifying forward-looking statements. In
addition, any statements which refer to expectations, projections, our stock value multiple, the value of Golden-i
products, or other characterizations of future events or circumstances are forward-looking statements. These
statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which
are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in
such forward-looking statements, whether as a result of new information, future events or otherwise. We refer you to
the documents the Company files from time to time with Securities and Exchange Commission, and specifically the
“Risk Factors” section of the Company’s Form 10-K for the period ended December 31,2011 and Form 10-Q for the
three month period ended March 31, 2012. We do not undertake to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
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Kopin Highlights
• Innovations
– Original nanotechnology from MIT Lincoln Laboratory
– Strong IPs – 200+ patents and increasing rapidly
• Global leader in key product categories
– Advanced Nanotransistor products for Smartphones
– Revolutionary Systems for Defense, Industrial and Consumer Applications
• Drivers of Growth
– III-V : A Compounding Story -More Smart Phone Sales, More Chips per
Phone, More Advanced Chips with Higher ASPs
– Imaging Systems : New Products Aimed at Billion $ Markets
– Evolving Licensing Model
• Strong financial results
– Profitable, Operating Cash Flow Positive and Strong Financial Position
(Cash and S/T investments > $100M, no debt)
– Generated $19.3 million in cash from operating activities in 2011
– Over $30million spent on Stock repurchase since 2006
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III-V Product Group
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The World is Changing
What won’t be Wireless?
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Wireless is Fueled by GaAs
“GaAs has firmly established
itself as the technology of
choice for RF front-end in
applications such as cellular
handsets and WLAN.”
Glen Riley, VP Commercial Foundry,
TriQuint Semiconductor
Why?
Longer Battery Life
Smaller Footprint
High Data Rate
Superior Signal Strength
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Where We Fit
Substrates
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GaAs Transistor Wafers
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Power Amplifiers /
Modules
Mobile Devices
Smartphones Are Fueling Growth in Wireless
• Smartphones will be >50% of the market next year
• GaAs content in a Smartphone significantly higher than legacy feature phones
Smartphone Growth
1,800
Smartphone
Units Shipped (Millions)
1,600
Non-Smartphone
1,400
1,200
1,000
800
600
400
200
0
2011
2012
2013
2014
2015
2016
Cited from: Customer Data, Prismark, and Internal Estimates
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Why Kopin is Succeeding…
Quality
• Highest Yields
• Proprietary In-Situ Monitoring
• Quick-Lot
Technology
Manufacturing
• Experience
• Innovation
• Performance
• Capacity
• Scalability
• Multiple Fabs
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BiHEMT Complexity
• More than 3x - 4x the number of
layers in BiHEMT relative to HBT
n+ InGaAs Contact
n+ GaAs Cap
n InGaP or AlGaAs Emitter
p+ GaAs Base
• Precise pHEMT layer control
needed for excellent interfaces
n GaAs Collector
• Additional calibrations required
n+ GaAs Sub-collector
• Additional and tighter QL tests
required
n+ GaAs pHEMT contact
n GaAs cap
n InGaP or AlAs Etch Stop
HBT
n GaAs Collector
n AlGaAs Schottky
n+ delta doping
AlGaAs Spacer
InGaAs Channel
AlGaAs Spacer
n+ delta doping
n+ GaAs Sub-collector
AlGaAs and GaAs Buffer Layers
GaAs Substrate
GaAs Substrate
n+ InGaAs Contact
n+ GaAs Cap
n InGaP or AlGaAs Emitter
p+ GaAs Base
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BiHEMT
n InGaP or AlAs Etch Stop
Industry Leading Quality Control: Smart Epi™
Process control
Every wafer
Every run
Real time
Smart Epi is in every Kopin System
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Manufacturing – Capacity and Capability
2 Yr $16 million New Capacity Expansion Complete
Largest, most advanced Epi Wafer Manufacturing Toolset in Industry
Current investment  sufficient capacity into 2012
Efficiencies continue to improve
6” Capacity in Thousands
•
•
•
•
Year
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Technology
Increasing
Front End
Complexity
WCDMA Band
1
EDGE
Quad Band
WCDMA Band
2
WiFi
WCDMA Band
3
LTE / Wimax
WCDMA Band
4
Multimode Transceiver
Baseband
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Technology
Requirements
Advanced HBTs=
BiFET, BiHEMT
Kopin is Top Merchant Market Share Leader
Supply Agreements with Industry Power Amplifier Leaders
• Skyworks Solutions (customer >16 years)
• RFMD (>10 years)
• TriQuint (>10 years)
• AWSC (>10 years)
• WIN
• GCS
Client Diversification =
Revenue Stability and
Higher Capacity Utilization
Kopin
Market
Share,
45%
Others
Kopin Wins Fourth Consecutive Supplier Award from Skyworks Solutions – announced February 3, 2011
Note: Percentages based upon III-V revenues.
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GaN is the next GaAs
Enables Tremendous Energy ($) Savings
Switching
Figure-of-Merit
GaN vs. state-of-art Silicon
Less
Efficient
3,000
2,500
2,000
1,500
1,000
More
Efficient
500
0
GaN
GaN
Si MOSFET
Vendor A
Si MOSFET
Vendor B
Si MOSFET
Vendor C
Applying GaN technology to data server market
alone, improvements to conversion efficiency can
reduce energy consumption >$5B / yr
Data from EPC Corp.
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Display Products
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Step-by-Step Product Evolution
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2
1
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Industrial, Prosumer, Consumer
Information System
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3
The Golden-i Family
Golden-i – Monocular, Industrial
Optical Subsystem
Gunsight, Eyewear
Optical Module
Electronic Viewfinder
Component
Microdisplay
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Next Generation Device Requirements
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•
•
•
•
•
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High Definition Microdisplay
Optical module to Magnify the Image
Electronics – Processors, Driver Electronics, Radio, Motion Sensor, etc.
Software – Operating System, Voice and Speech Recognition, etc.
Application Software
Proper Ergonomics
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Step 4 Game Changer
• World’s First Hands-Free Computer
Headset
– Intelligent Terminal for Cloud
Computing
– 15” SVGA color image
– Processor and Operating System
Software
– Noise Cancellation
– Voice and Motion Control
– Wireless-WiFi and Bluetooth
• Great IP Protection –
Over 30 Patents, issued and
pending, for Hardware and Software
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Step 4 Multiple Vertical Apps = Billion $ TAM
Apps include:
•Distribution
•Manufacturing
•Medical
•Military
•Repair
•Security
Full Environmental Temperature Range
Industrial Certified~ Mil Std. 810
All Weather Operation
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Step 4
Golden-i Business Model
Kopin and Motorola Solutions Joint Development Program
• Kopin Provides the Imaging System and Operating Software
• Motorola Manufactures and Distributes Ruggedized Version
• Kopin and Motorola Jointly Engage Software App Developers
• Product Launch Scheduled for 2012
Kopin Sells the Imaging System and Receives License Revenue per unit
for Operating Software and Know-how
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Step 5 The Golden-i Family
Gen 4 Rugged
Gen 3.8 Prosumer
Common Software Platform
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Gen 3.3 Consumer
75% Common
25% New: Apple and
Android
Future Golden-i Entertainment Systems
• Hands-Free Headset
– Binocular
– 3D HD
– Wireless
– Software
• For Entertainment and Consumer Markets
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Summary
III-V Transistor Wafer Group
Imaging Systems Group
• Market leader
• Market leader
• Client diversity – revenue stability
• Vertical application diversity – revenue stability
• Strong smartphone growth expected
• Golden-i market projections in billions of dollars
Financial Strength
Strong Balance Sheet
Strong Intellectual Property Portfolio
Strong Technology and Manufacturing
Innovative New Products
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