2012 Cowen Conference 05 30 12 by HC120914114033

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									              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




4
    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

                                                    Power Amplifiers /
    Substrates             GaAs Transistor Wafers                        Mobile Devices
                                                       Modules




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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

                                1,600          Smartphone
                                               Non-Smartphone
                                1,400
     Units Shipped (Millions)




                                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                                            • Capacity
• Innovation                                            • Scalability
• Performance                                           • Multiple Fabs




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  BiHEMT Complexity                          n+ InGaAs Contact
                                               n+ GaAs Cap
 • More than 3x - 4x the number of       n InGaP or AlGaAs Emitter
   layers in BiHEMT relative to HBT            p+ GaAs Base
 • Precise pHEMT layer control               n GaAs Collector
   needed for excellent interfaces
                                          n+ GaAs Sub-collector
 • Additional calibrations required
                                            n InGaP or AlAs Etch Stop
 • Additional and tighter QL tests        n+ GaAs pHEMT contact




                                                                        BiHEMT
   required                                    n GaAs cap
                                            n InGaP or AlAs Etch Stop
               n+ InGaAs Contact            n AlGaAs Schottky
                 n+ GaAs Cap                 n+ delta doping
           n InGaP or AlGaAs Emitter          AlGaAs Spacer
                 p+ GaAs Base                InGaAs Channel
HBT




                                              AlGaAs Spacer
                n GaAs Collector             n+ delta doping
             n+ GaAs Sub-collector     AlGaAs and GaAs Buffer Layers

                 GaAs Substrate               GaAs Substrate


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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


                                                  WCDMA Band
         Increasing                 EDGE                1
         Front End                Quad Band
                                                  WCDMA Band
         Complexity                                     2        Technology
                                                                Requirements
                                     WiFi         WCDMA Band
                                                        3      Advanced HBTs=
                                                                BiFET, BiHEMT
                                  LTE / Wimax     WCDMA Band
                                                        4




                                     Multimode Transceiver




                                            Baseband




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Kopin is Top Merchant Market Share Leader
Supply Agreements with Industry Power Amplifier Leaders

• Skyworks Solutions (customer >16 years)
• RFMD (>10 years)                                                      Kopin
• TriQuint (>10 years)                                                  Market
• AWSC (>10 years)                                                      Share,
• WIN                                                                    45%
• GCS

               Client Diversification =                                       Others
               Revenue Stability and
             Higher Capacity Utilization


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


                                                                   GaN vs. state-of-art Silicon
                                           Less
                                         Efficient   3,000
                       Figure-of-Merit




                                                     2,500
                          Switching




                                                     2,000
                                                     1,500
                                                     1,000
                                                      500
                                          More
                                         Efficient      0
                                                             GaN       Si MOSFET   Si MOSFET   Si MOSFET
                                                             GaN        Vendor A    Vendor B    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

                                           The Golden-i Family
                                  5        Industrial, Prosumer, Consumer


                                      Information System
                          4           Golden-i – Monocular, Industrial


                              Optical Subsystem
                    3         Gunsight, Eyewear


                        Optical Module
               2        Electronic Viewfinder


                   Component
          1        Microdisplay




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     Next Generation Device Requirements

     •   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   Gen 3.3 Consumer




                                                    75% Common
                                                    25% New: Apple and
            Common Software Platform                Android



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      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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