INDUSTRY OVERVIEW SOURCE OF INFORMATION

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1 The information and statistics set forth in this section and elsewhere in this document have been derived from various official and government publications, publicly available market research sources and from the market research report prepared by Frost & Sullivan, which was commissioned by us, unless otherwise indicated. We believe that the sources of such information are appropriate and we have taken reasonable care in extracting and reproducing such information. We have no reason to believe that such information is false or misleading in any material respect or that any fact has been omitted that would render such information false or misleading in any material respect. The information has not been independently verified by our Company, the Joint Sponsors, the Joint Global Coordinators, the Joint Bookrunners, any other party involved in the [REDACTED], or any of our or their respective directors, officers, representatives, affiliates or advisers and no representation is given as to its correctness, accuracy and completeness. Certain information and statistics included, including those excerpted from official and government publications and sources in China, may not be consistent with other information and statistics compiled within or outside China by third parties. SOURCE OF INFORMATION In connection with the [REDACTED], we have commissioned Frost & Sullivan, an independent third party, to conduct an analysis of, and to report on the global connector market, Asian Pacific ( APAC ) connector market and Greater China connector market from The report we commissioned, or the Frost & Sullivan Report, has been prepared by Frost & Sullivan independent of our influence. We paid Frost & Sullivan a fee of RMB720,000 for the preparation of the report, which we consider in line with market rates. Founded in 1961, Frost & Sullivan and its affiliates have 40 global offices with more than 2,000 industry consultants, market research analysts, technology analysts and economists. It offers industry research and market strategies and provides growth consulting and corporate training. The Frost & Sullivan Report that we commissioned includes information on the global connector industry and economic data, which have been quoted in this document. Frost & Sullivan s independent research was undertaken through both primary and secondary research obtained from various sources in the global connector industry. Primary research involved in-depth interviews with leading industry participants and industry experts. Secondary research involved reviewing company reports, independent research reports and data based on Frost & Sullivan s own research database. Projected data were obtained from historical data analysis plotted against macroeconomic data with reference to specific industry-related factors. In compiling and preparing the Frost & Sullivan Report, Frost & Sullivan has assumed that the social, economic and political environments in the relevant markets are likely to remain stable and that recovery of global economy, development of various connector application markets and other key drivers are likely to drive the connector market during the forecast period. Except as otherwise noted, all the data and forecast in this section are derived from the Frost & Sullivan Report. Our Directors confirm that, after taking reasonable care, there is no adverse change in the market information since the date of the Frost & Sullivan Report, which may qualify, contradict or have an impact on the information as disclosed in this section. 84

2 GLOBAL CONNECTOR MARKET OVERVIEW Connectors are playing an increasingly important role in the global electronic component industry and are generating higher historical and forecasted growth rates as compared with the global electronic component industry. The following chart sets forth the historical and forecast global connector market size, APAC connector market size and Greater China connector market size in terms of revenue for the periods indicated billions Global Connector Market Size by Revenue APAC Connector Market Size by Revenue Greater China Connector Market Size by Revenue % 4.1% E 4.9% 6.2% 5.6% 8.6% The main drivers for the growth of the global connector industry are: the increasing demand for connector content in end market devices, as a result of growing 3C applications (namely, computers, communication and consumer electronics); miniaturization of electronic devices; and an increasing number of electronic components due to increasing functionality of electronic devices. Rapid technology advancement in the global connector industry has led to increased demand for compact and reliable electronic devices. Products that are responsive and which provide increased convenience and better connectivity are also in demand and driving the connector industry. Furthermore, the compelling trend of Internet of Things also drives strong demand for connector products. Internet of Things is the infrastructure of the information society and comprises of the network of items, embedded with electronics, software, connectors, sensors, and network connectivity, that enables these items to collect and exchange data and to interoperate within the existing Internet infrastructure, which implies market potential for connectors at every nodes of the networks. Internet of Things can apply to consumer electronics, such as wearable devices, mobile devices, vehicles, manufacturing equipment, medical devices, home automation, to large scale deployments in transportation networks and smart cities. 85

3 APAC, Europe and North America are the top three regions in terms of connector sales, based on aggregate revenue generating from sale of connectors to customers in each region, and accounted for 54.2%, 21.8% and 21.1% of the global connector market size in 2015, respectively. The following table sets forth the historical and forecast global connector market size in terms of revenue by region for the periods indicated E Region 2010 to to 2020E (in billions, except for percentages) APAC % 6.2% Europe % 2.7% North America % 3.3% Others % 5.3% % 4.9% APAC CONNECTOR MARKET OVERVIEW APAC is the largest connector market in terms of revenue generated from sale of connectors to customers in each region. Demand for connectors in the APAC region is expected to experience steady growth in the next few years as an increasing number of international companies participating in connector end markets such as consumer electronics product suppliers from North America or Europe move their plants or factories to the APAC region and outsource their production to electronics manufacturing services partners in the APAC region. In addition, the rise of consumer electronic device and mobile and wireless device companies based in the APAC region such as Huawei and Xiaomi from China are continuously generating demand for connector products in this region. The mobile and wireless devices end market is one of the key major driving forces of the connector business in the APAC region. The development of key China-based companies is driving connector demand in the APAC region. In addition, the development of other end markets, such as automotive, are contributing to the development of the connector business in the APAC region due to the increasing affordability of vehicles and increasing popularity of green cars in the region. As of 2015, China had become the world s largest market for plug-in hybrid electric vehicles with a total sales volume of 84,000 units, accounting for 15.6% of the global plug-in hybrid electric vehicle volume of 540,000 units in Such growth is highly supported by both PRC central and local governments, providing allowances of RMB31,500 per each plug-in hybrid electric vehicle with mileage over 50 kilometers in Within APAC, Greater China is the largest market for connectors in terms of revenue generated from sales of connectors to customers and is expected to remain as the strongest driving force in the global and APAC connector markets. With more than 1,000 companies manufacturing connectors and related products, the market size of Greater China s connector market in terms of revenue reached 15.4 billion in 2015, accounting for 28.3% of the entire global market size. Going forward, Greater China s connector market is expected to continue to grow at a strong pace at a of 8.6% from 2015 to MAJOR CONNECTOR END MARKETS OVERVIEW Connector products are applied to a diverse range of end markets, including computer and consumer electronics, mobile and wireless devices, communications infrastructure and other 86

4 applications such as automotive, industrial and others. The following table sets forth the historical and forecast global connector market by end market in terms of revenue for the periods indicated. End Market E 2010 to to 2020E (in billions, except for percentages) Computer and consumer electronics % 1.5% Mobile and wireless devices % 8.9% Communications infrastructure % 8.3% Other end markets % 3.3% % 4.9% Computer and Consumer Electronics Connector End Market Overview The continuous upgrading of the Windows operating system as well as the popularity of 2-in-1 devices and tablets are expected to drive future growth in the global computer market, which will likely result in greater demand for connectors in this end market. For the consumer electronics market, equipment that has utilized connectors include diverse personal and entertainment electronics like radios, televisions, cameras, wearable products, video equipment, video games, major appliances and electrical housewares. With the introduction of a number of new transmission standards in consumer electronics and the trend for Internet of Things product, as well as the greatly improved quality and affordability of consumer electronic devices, consumer spending in this end market has accelerated which led to increased sales of connectors. Altogether, the steady need for various connectors in the computer and consumer electronics sector has laid a solid foundation for demand for connectors, contributing to the steady growth of connector market in the past and also underlying potential for future growth. The following chart sets forth the global computer and consumer electronics connector market size by revenue for the periods indicated billions % 1.5% Key Trends and Drivers Further Technical Advances and Integration of Functionalities The global connector industry is undergoing rapid technical development with better product functionality and higher compatibility, which enables connector products to be applied in more 87

5 situations and scenarios. For example, USB Type-C connector, a type of connector with innovative functions, has been extensively applied not only to computers but also to a wide range of electronic products including televisions and displays. See Mobile and Wireless Devices Connector End Market Key Trends and Drivers Growing Demand for Mobile Phone Products. In the future, connectors that are compatible with various kinds of products across application fields are likely to become more popular in the market. Advanced market players in this field include our Company, Molex Incorporated, TE Connectivity and etc., and first movers are more likely to seize emerging market opportunities as well as to build brand awareness globally, leading to a fast expansion of market share. Miniaturization and Functional Integration The continued trend of device miniaturization and the popularity of wearable devices and 2-in- 1 devices will likely create greater demand for miniaturized connectors and continued innovation. Since computers and other consumer electronics devices are being made smaller in size with enhanced functionality to improve user experience, components like connectors need to be similarly miniaturized but at the same time deliver enhanced performance. Higher Product Affordability Sales of consumer electronics products such as digital cameras and TVs have been rising in developing countries such as China and India as a result of greater product affordability, and sales could witness greater growth in less developed regions such as Africa, which may drive substantial demand for connector products in these end markets. Per capita spending by consumers in China on computers and consumer electronics products is forecasted to grow at a of 11.9% from 2015 to Mobile and Wireless Devices Connector End Market Overview Connectors are essential parts of mobile phones and wireless devices and accessories to transmit signals between interconnecting multiple circuits and linking mobile devices with other related equipment such as earphones, chargers, keyboards and etc. The following chart sets forth the global mobile and wireless devices connector market size by revenue for the periods indicated. billions % % Key Trends and Drivers Growing Demand for Mobile Phone Products The mobile and wireless devices connector end market has continuously expanded around the world (especially in developing countries such as China and India), attributed in large part by further 88

6 availability of mobile Internet and the increasing affordability of mobile phone products, including smartphones and feature phones, as well as mobile phone accessories and related products. Global mobile phone shipments reached 1.9 billion units in 2015, and are expected to amount to 2.4 billion units in 2020, registering a of 4.8% during the period from 2015 to The growth of the global mobile phone market is driven by the popularity of smartphones, with a total shipment volume of 1.5 billion units in 2015, which account for 77.6% of the entire mobile phone market. Demand for mobile accessories, such as adapters, is also expected to increase in the near future and thereby generate further demand in the mobile and wireless devices connector market. The proliferation of mobile phones generally, and smartphones in particular, drives demand for various accessory products such as chargers, batteries, earphones, headsets and power banks. For example, first released in August 2014, USB Type-C, a physical specification for a small 24-pin reversible-plug connector for USB devices and USB cabling, is a newer trend in the connector market which will fully support USB 3.1 and has various characteristics that may make it futureproof in this end market. The slim physical design of USB Type-C enables laptops and consumer electronics to be made slimmer. USB Type-C ports and cables can transmit data at a maximum speed of 10 Gbps and deliver 100W of power. Although USB Type-C is physically incompatible with other types of USB ports and connectors, this creates a new market for adaptors during the gradual transition into the Type-C era. Starting from early 2015, USB Type-C compatible devices has started to grow. The latest Apple Macbook and Google Chromebook have USB Type-C ports with the other laptop manufacturers such as Dell and ASUS to follow the suit. Tablets, such as Nokia s N1 Tablet and ASUS s ZenPad S8, and smartphones, such as the LeTV One and OnePlus, are also supporting Type-C ports. This has given a boost to USB Type-C accessories markets and their manufacturers that have released Type-C compatible products. Going forward, various USB connectors will likely be homogenized into USB Type-C. Accordingly, the market for USB Type-C connectors and compatible products is likely to witness substantial growth in the next few years as more compatible devices are released. It is estimated that approximately 15% to 20% of smartphones, laptops and tablets sold globally will use USB Type C slots by the end of 2016, which is expected to further grow to 80% by the end of Due to product upgrades, the global mobile phone accessory market size in terms of revenue is growing rapidly from 51.4 billion in 2010 to 83.1 billion in 2015, at a of 10.1% and is expected to further increase to billion in 2020, registering a of 13.5% during the period from 2015 to 2020, where USB Type-C is a key driving force of the connector product demand. The development of the mobile phone accessory market will create substantial demand for connector products applied in this sector. The following chart sets forth the market size of the global mobile phone accessory market by revenue for the periods indicated. billions % 13.5% 89

7 Miniaturization and Wireless Charging of Mobile Phone Mobile phones nowadays are being made lighter and smaller to deliver better user experience. Connectors are therefore expected to be similarly miniaturized with higher levels of precision. In addition, a few mobile phone manufacturers have already launched smartphone models with wireless charging functionality. Wireless recharging systems require special connectors to facilitate the transmission of electrical current. As more mobile phone manufacturers start to develop wireless charging technology and launch smartphones with wireless charging functionality in the near future, connector demand in this end market will likely continue to grow. Communications Infrastructure Connector End Market Overview Communications infrastructure transmits massive quantities of data over great distances. For the communications infrastructure end market sector, connector products are mainly applied in data center and fiber optic transmission infrastructure scenarios, such as connectors used to facilitate cable signal transmissions). Communications infrastructure connectors are building blocks of transmitters, receivers, transceivers, transponders, routers, servers, antennas and optical cables that provide the fundamental optical-electrical interface for interconnecting the electronic equipment used in the communication networks. Contributing to continuous communications infrastructure upgrades, connectors used in this end market have evolved as a key segment of connector applications. The following chart sets forth the global communications infrastructure connector market size by revenue for the periods indicated. billions % % Key Trends and Drivers Expansion of Data Centers Demand for communication infrastructure connectors is largely driven by the accelerating growth in data traffic and continually growing need for additional network bandwidth, which in turn results from, worldwide adoption of high-bandwidth smartphone and internet-enable devices and rich media content, for example, video downloads, online gaming and social networking. As traffic increases, more data centers capacity is being built. The volume of data center internet protocol traffic is expected to grow from 3.4 zettabytes in 2014 to 10.4 zettabytes by the end of 2019 representing a of 25%. 90

8 Data centers require a variety of physical connectors, routers, electricity, signals and networks, which generates heavy demand for connectors. Increasing deployment of data centers help ensure continued strong demand for connectors. Large internet companies are facing challenges due to growing numbers of users. Many of them (such as Google, Amazon, Facebook, Baidu, Alibaba and Tencent) have responded by building their own data centers. Capital expenditures in the data center sector are expected to increase in next generation technologies, which will generate greater demand for innovative connector products. Looking forward, it is estimated that data centers of small and medium-sized enterprises will upgrade their servers from 1G to 10G, using 40G in their aggregation layer, while servers of large and super large-sized enterprises may undergo a transition to 25G, using 100G in their aggregation layer. In addition, high performance computing is now entering everyday servers because of the adoption of multi-core processors for medium-sized enterprises to perform their own modeling and analytics. As supercomputing intrinsically needs quicker processor connectivity, higher bandwidth pipes must be deployed. Furthermore, as data centers grow to accommodate increasing traffic, and data transmissions within data centers thereby have to cover longer distances, it is expected that single-mode cables and technology will become increasingly prevalent due to their effectiveness in long-distance applications. Along with advancements in information technology, global internet traffic has increased dramatically, the majority of which is generated by data centers. The following chart sets forth the market size of the global data center connector market by revenue for the periods indicated. billions % % Broader Acceptance of Cloud Computing Cloud computing has emerged as a major growth driver in the data center industry. Cloud computing is the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer. Applications run through cloud computing are distributed across thousands of servers that are connected by a high-speed network. Nearly all consumer data applications today are delivered as cloud services, and enterprise data applications are rapidly moving to the cloud as well. By 2019, more than 80% of workloads will be processed by cloud data centers; while the rest will be processed by traditional data centers. Cloud computing requires a variety of physical sensor connectors, routers, electricity, signals and networks, which generates heavy demand for sensor connectors and creates market potential for innovative connectors. Application of leading technologies such as big data drives enterprises to increase the volume and speed of their data centers. Depending on fiber optics to link to servers and 91

9 outside networks, cloud-based services are gaining more recognition in enhancing the safety of data storage and digital communications. The advent of cloud computing operations will likely help ensure the continued strong demand for connectors from such end market. Further Application of Fiber Optic Connectors Data communications technology has continued to advance. While some legacy data centers still use copper cables to connect servers, newer data centers are generally designed to ensure certain minimum interconnection speeds requiring the use of fiber optic cables that transmit light signals to among servers. Recent technology trends of server upgrades and high performance computing, which is the use of parallel processing for running advanced programs in a short lapse of time, will likely lead to continued prosperity in the fiber optic connector market in the near future. The wide adoption of fiber optic connectors in the communications infrastructure end market is attributed to its advantages of low signal attenuation, high speed and noise immunity. As compared with copper connectors, fiber optic connectors are able to provide more bandwidth with better signals across greater distances and to deliver reliable data with lower interference. In 2015, the application of fiber optic connectors in the communications infrastructure end market contributed to 61.6% of total fiber optic connector revenue. Along with further utilization of regional networks, data centers and other data transmission equipment, fiber optic connectors are playing an increasingly important role in facilitating improved performance of servers and high performance computing. By 2020, demand from the communication infrastructure end market is expected to account for 69.2% of the overall fiber optic connector market. In December 2015, we acquired the optical modules business of Avago, which, according to Frost & Sullivan, is the world s largest supplier of analog interface components for communications, industrial and consumer applications with products in end markets such as data center networking, home connectivity, broadband access, telecommunications equipment, smartphones and base stations, data center servers and storage, as well as other fields. Avago has focused on strengthening its fiber optic product portfolio for emerging 40G and 100G enterprise and data center applications, through its laser, receiver and photonics integration capacities. Other End Markets The following table sets forth the historical and forecast global connector market by other end markets in terms of revenue for the periods indicated E End Market 2010 to to 2020E (in billions, except for percentages) Automotive % 2.6% Industrial % 3.0% Transportation % 5.6% Military/Aerospace % 2.8% Medical Equipment % 5.9% Instrumentation % 6.2% Others % 3.0% % 3.5% 92

10 Automotive Connector End Market The automotive market is the largest end market for connectors in other end markets. The below set forth the key trends and drivers for the automotive connector market: Connectors Applied in Autonomous Driving. With increasing levels of automation in vehicles, many companies are developing vehicles with autonomous driving capabilities to deliver better passenger experiences and safety. An autonomous driving system on a vehicle requires the integrated functioning of a camera, distance measuring system, steering system, oil system, braking system and more, which require connector products to facilitate signal transmission. Many companies have also developed and are manufacturing vehicles with advanced driver assistance systems to help protect drivers and passengers, and much of the enhanced safety content is driven by regulatory frameworks requiring or incentivizing its adoption. Increasing Demand for Vehicles. In 2015, the global vehicle market size in terms of sales volume reached 82.9 million units. APAC was the largest market with sales volume of 38.6 million units in 2015, followed by North America that generated total sales volume of 20.6 million units. With increasing living standards and improved affordability of vehicles, the global vehicle market size in terms of sales volume is expected to register steady growth in the next few years and reach 93.2 million units by Rising demand for vehicles will likely generate increased connector applications in this sector. In addition, as a growing number of countries are promoting sustainable development by saving energy and reducing emissions, green cars are increasing in popularity in many countries. In 2015, the global plug-in hybrid electric vehicle market size in terms of sales volume reached 540,000 units and is expected to reach 1.4 million units in Green cars need more connector products and more sophisticated connectivity systems to facilitate power transmission. Therefore, the rising demand for vehicles (especially green cars) will likely continue to help drive the connector market. In addition, the increasing demand of electrical charging gun, a type of electric vehicle supply equipment, is also expected to greatly stimulate the growth of automotive connector market. Increasing Popularity of In-vehicle Infotainment. Electronic content is becoming increasingly prevalent in vehicles. In particular, in-vehicle information systems including TV receivers and DVD displays can satisfy passengers entertainment needs while built-in navigation systems and warning systems can improve passenger experience and enhance safety. With the increasing automation and digitalization of vehicles, there exists greater demand for connector products used in various applications including power transmission systems, intelligent safety systems and network signal transmission systems. In addition, advanced driver assistance systems for vehicles are in high demand and vehicles with better safety ratings are generally more attractive to customers. Advanced driver assistance systems require more sophisticated mechanisms in order to facilitate the safe and efficient functioning of the vehicle, which will likely drive increased demand for connectors. Industrial Connector End Market The applications of connectors in the industrial end market range from heavy equipment, robotic machinery to hand-held measuring equipment. Industrial connectors that collect, process and communicate data among equipment in automated systems need to meet strict technical requirements for industrial machinery to achieve various purposes including measurement, changing chemical compounds and adjusting pressure. The broad application of connectors in contemporary industrial contexts has contributed to steady and promising developments in this sector. 93

11 Other Connector End Markets The global connector industry has seen growth in other end markets apart from the end markets discussed above. Rising healthcare standards generate demand for medical devices, which require connectors in order to function. Meanwhile, the development of automatic instrument apparatuses and improving public transportation systems will likely drive increased demand for connectors in the instrumentation and transportation end markets. COMPETITIVE LANDSCAPE ANALYSIS Global Connector Market Competitive Landscape Our Company ranked fifth in the global connector market for 2015, accounting for 4.2% of the total global market share in terms of revenue. The other top four players in the global connector market for 2015 were TE Connectivity, Amphenol, Molex Incorporated and Delphi Connection Systems, accounting for 15.9%, 8.1%, 6.0% and 4.5% of the global market in terms of revenue, respectively. The top ten players together represented 47.0% of the global market share. The leading players in the global connector market continuously accelerate their global expansion and further market penetrations through approaches such as mergers and acquisitions. We face significant competition in our business and primarily compete with our competitors on the basis of product quality, design, technical and production capabilities, customer relationships and services and product pricing. The following chart sets forth the top 10 companies in terms of revenue in 2015 in the global connector market. 15.9% 8.1% 6.0% 4.5% 4.2% 3.2% 1.8% 1.6% 1.0% 0.7% TE Connectivity Amphenol Molex Incorporated Delphi Connection Systems Our Company Yazaki JAE JST Hirose Sumitomo Wiring Systems 94

12 The following table sets forth the top 10 companies in terms of revenue in 2015 in the global connector market by end market in Rank Computers and Consumer Electronics Mobile and Wireless Devices Communications Infrastructure 1 Our Company TE Connectivity TE Connectivity 2 TE Connectivity Molex Incorporated Amphenol 3 Amphenol Our Company Molex Incorporated 4 Molex Incorporated Amphenol JAE 5 LuxShare JAE Hirose 6 JAE CommScope LuxShare 7 China Aviation Optical-Electrical FCI Rosenberger 8 JST JST CommScope 9 Delphi Connection Systems LuxShare Our Company 10 Yazaki Samtec Delphi Connection Systems The following table sets forth the top 10 companies in terms of revenue in 2015 in the Greater China connector market. 11.7% 11.2% 9.2% 7.8% 5.3% 4.4% 2.8% 2.4% 2.2% 2.1% Our Company TE Connectivity Amphenol Molex Incorporated LuxShare JAE China Aviation Optical-Electrical JST Delphi Connection Systems Yazaki Entry Barriers Ability to Provide Customized Solutions Unlike other electronic components, connectors are inbuilt elements of electronic products and thus are required to be tailor-made for their functionality, physical conditions and appearance. Each connector solution or product has unique specifications and undergoes an independent development process. Technological competencies and research capabilities are key factors for delivering the required solutions to customers in the requisite time. Furthermore, the ability for connector manufacturers to become intimately involved in the design and development process of its end customers to provide the customized solution required including the ability to act as an IIDM such as our Company to deliver one-stop solution covering many aspects of new product development and existing product upgrades including design, molding, debugging and etc., which can enhance the efficiency of the cooperation between the connector manufacturers and brand companies, will significantly increase efficiency of the product development, resulting in lower cost and enhanced production capability for such manufacturer to meet the demand of its customers. 95

13 Operational Efficiency Connector manufacturers are increasingly required to commence mass production shortly after confirming product design and specifications with customers, especially in light of the short product life cycle for many of the end products in which connectors are utilized, increasing the critical importance of time to market for such end products. The ability to quickly ramp up high production volumes and provide short delivery times with respect to each customized product in certain end markets, such as computer and consumer electronics and mobile and wireless end markets, require strong production capability and operational flexibility with highly efficient production lines. There are few industry players in the world likes us that can exert satisfactory quick-to-ramp capabilities. Building and developing these capabilities requires substantial investments of time, capital and technical knowhow. Ability to Create Technological Breakthroughs in the Industry Connector manufacturers often cooperate and conduct research with industry- and standardsetting associations, academic institutions and customers to develop new technology, such as by working with USB Implementers Forum, Inc. to establish new USB standards. Research capabilities and initiatives and reputation are key factors in determining a connector manufacturer s bargaining power with customers and industry peers. Customer and Supplier Relationships Maintaining reliable and consistent relationships with customers and raw material suppliers alike is crucial for the long-term business development of connector manufacturers. Leading connector manufacturers have existing and proven relationships with raw materials suppliers and customers and recognized as to their experiences, capability and the products and services they offer. New market entrants will likely find it difficult to establish and build such relationships due to the small scale of their businesses, relatively unknown brands and lack of industry experience, and their market entry and subsequent growth may be hindered by these factors. RAW MATERIAL ANALYSIS Given the customized nature of our interconnect solutions and the wide spectrum of the interconnect components and modules we produce, we use a wide variety of raw materials in our production. We have listed below the major raw material categories and their historical price for illustration purposes only. The major raw materials for manufacturing connector products are copper, gold salts and plastics. The following chart illustrates the price of copper, gold and two major plastic materials we used for the periods indicated. Price Curve of Copper Price Curve of Gold /ton /g Price Curve of PBT Price Curve of PA /ton RMB/ton

14 Gold In China, the price of gold experienced steady growth during the period from 2010 to 2012 due to a rise in demand, followed by a gradual downturn, and reached 36.2 per gram in The price of gold in China is forecasted to continue to decline in the coming years, and is expected to reach 33.1 per gram in Copper Copper is one of the key raw materials used in the manufacture of connectors. In China, the price of copper has experienced a steady decline over the past few years and reached 6,622.0 per ton in 2015 after an increase in 2011 due to a rise in demand. General oversupply is expected to exert downward pressure on the price of copper over the next five years, and is expected to reach 4,129.7 per ton in Plastic Materials Plastic materials used in our production primarily include polybutylece terephthalate ( PBT ), Polyamide ( PA ) and other plastic materials. From 2010 to 2011, the price of PBT gradually increased due to a shortage of domestic supply of 1.4-butanediol, one of the major raw materials used to make PBT. In addition, as a result of limited research and development and post processing capabilities of PRC PBT manufacturers, certain types of PBT products, such as fiber-level PBT, were highly dependent on imported supplies, which also caused the price of PBT to increase during the period. The price of PBT, however, has gradually decreased since 2012 as a result of enhanced capabilities of technological innovation and mass production of PRC manufacturers. The price of PBT is expected to continue to decline steadily going forward. From 2010 to 2011, the price of PA experienced gradual increases due to shortage of domestic supply and price growth of major raw materials used to make PA, as a result of increasing demand of automobile, electrical equipment and other electronic products, as well as expansion of manufacturing capacities. The prices of PA, however, went down gradually since 2012, primarily attributed to the enhanced capabilities of technology innovation and mass production of PRC manufacturers. The price of PA is expected to decline steadily in the next few years. 97