ELECTRONICS INDUSTRY INHUNGARY

ELECTRONICS INDUSTRY INHUNGARY

OPENING DOORS FOR YOUR INVESTMENT

ELECTRONICS INDUSTRY CONTENT Published by the Hungarian Investment Promotion Agency, HIPA All rights reserved HIPA, 2016 www.hipa.hu 6 ABOUT HUNGARY 12 THE ELECTRONICS INDUSTRY IN HUNGARY 20 LABOUR FORCE 26 LOCATION 30 HUNGARIAN INVESTMENT PROMOTION AGENCY (HIPA)

Electronics Industry in Hungary 7 ABOUT HUNGARY MAIN FIGURES FORM OF GOVERMENT PARLIAMENTARY REPUBLIC AREA 93,030 km 2 CURRENCY FORINT (HUF) GDP (PPP) 183,989 MILLION (2014) INFLATION -0.1% (2015, HCSO*) TIME ZONE GMT + 1 HOUR UNEMPLOYMENT RATE 6.8 % (2015, HCSO) HUNGARY 9,855,571 (as of January 2015) OTHER MAJOR CITIES CAPITAL BUDAPEST 1,757,618 POPULATION Debrecen (203,506) Szeged (162,593) Miskolc (159,554) Pécs (145,985) Győr (129,372) (as of January 2015) 78% 65% CLIMATE TEMPERATE 57% 41% (similar to the rest of the continental zone) 40% RISK OF NATURAL DISASTERS VERY LOW 27% Inward FDI stock in 2014 (percentage of GDP) HUNGARY CZECH SLOVAKIA POLAND ROMANIA SLOVENIA REPUBLIC Source: wiiw FDI Database MEMBERSHIP IN INTERNATIONAL ORGANISATIONS EU, UN, OECD, WTO, NATO, IMF, EC EU member: since 2004 (Source: *HCSO = Hungarian Central Statistical Office)

Electronics Industry in Hungary ABOUT HUNGARY...has reduced the CORPORATE TAX RATE to the lowest level in the CEE region. INVESTMENTS IN FOCUS BUSINESS ENVIRONMENT introduced a new act on a practice based DUAL TRAINING in favour of business needs....has reduced the PERSONAL INCOME TAX IN ORDER TO IMPROVE THE BUSINESS CLIMATE, THE HUNGARIAN GOVERNMENT 9 to 15%. created one of the most competitive FLEXIBLE LABOUR CODEs in Europe (in favour of employers)....has entered into STRATEGIC PARTNERSHIP AGREEMENTS with numerous companies, giving fast access to the government via workshops and regular consultations. has doubled the amount of financial support for R&D ACTIVITIES in the 2016-2020 period. has introduced a FOREIGN-TRADE FOCUSED foreign policy to attract FDI.

Electronics Industry in Hungary 11 ABOUT HUNGARY QUALITY OF LIFE EXPLORE THE COUNTRYSIDE Hungary s diverse countryside offers a wide range of outdoor activities: 11,000 kilometres of hiking routes; more than 2,500 kilometres of cycle paths; 17 golf courses; ten national parks; and many protected nature reserves for those in love with fresh air. The protected Pusztaregion, the Great Plain, the romantic Danube Bend with its historic sites, and pretty baroque towns, such as Eger, attract visitors all over the year. Lake Balaton, the largest fresh water lake in Central Europe, is a perfect holiday resort. BUDAPEST IS THE 2. BEST CITY ON EARTH (Condé Nast Traveler, 2015) EXPATS LIKE HUNGARY Budapest is a city full of surprises and wonders, with its lively centre, pretty parks, majestic river, tall church spires, and lavish spas. One of the most exciting cities in the world, Budapest is full of secrets, hidden spots to explore, and old favourites to revisit. This is the city where being bored is not an option. According to TripAdvisor, Budapest is offering the best price-value ratio in the world. According to Condé Nast Traveler readers, Budapest is the second best city on earth. INTERNATIONAL SCHOOLS Expatriates looking to stick with the curricula of their home countries can choose from a range of private international schools for their children. There are also many English, German or French public and private pre-schools for children aged from three to six. The school year starts in September and ends in June, and school buses are usually available at private schools. There are many opportunities to study in a foreign language at universities too.

Electronics Industry in Hungary 13 THE ELECTRONICS INDUSTRY ELECTRONICS STRONGHOLD SK UA THE ELECTRONICS INDUSTRY IN NUMBERS A SLO HR HU SRB RO 4% Share of electronics of the GDP Electronics account for 19.7% of the total Hungarian manufacturing production 15.4 BILLION Production value ($20.5 billion) Hungary has one of the most productive electronics industry in the CEE region 25 years ago today, Electrolux has opted for Hungary. When the company group decided about the localization of their production capacities in Hungary, flexibility, quality and the availability of local expertise played an important role, as well. Our experience from the recent years shows that we have brought our new capacities to the best possible location since our Hungary-based factories have come to fill a central position in the European production of Electrolux." Dr. Sándor Gönczi, CEO, Electrolux Lehel Ltd. Did you know that Hungarian researchers (Ottó Bláthy, Miksa Déri and Károly Zipernowsky) invented the modern transformer in 1885?

Electronics Industry in Hungary 15 THE ELECTRONICS INDUSTRY ELECTRONICS STRONGHOLD THE ELECTRONICS INDUSTRY IN NUMBERS 27.8% Share of electronics in the total of Hungarian exports 93.3% Export ratio 160,000 Total number of employees in the industry Did you know that Dénes Gábor was a Hungarian electrical engineer and physicist, most notable for inventing holography, for which he later received the 1971 Nobel Prize in Physics?

Electronics Industry in Hungary 17 THE ELECTRONICS INDUSTRY ELECTRONICS STRONGHOLD MAJOR ELECTRONICS INDUSTRY COMPANIES BY LOCATION Sárvár FLEXTRONICS Szombathely JABIL Zalaegerszeg ELECTRONICS FLEXTRONICS Nagykanizsa GE HONEYWELL Did you know that a Hungarian physicist, electrical engineer and inventor gave the Thermographic camera (1929) and the Plasma television (1936) to the world? He was Kálmán Tihanyi, who also (co-)invented the modern cathode ray tube and completely electronic television in (1928). Veszprém VIDEOTON Székesfehérvár DENSO FOXCONN VALEO VIDEOTON Kaposvár VIDEOTON Marcali VIDEOTON Komárom FOXCONN Tatabánya SANMINA SCI Tab FLEXTRONICS Budapest CONTINENTAL TEMIC ERICSSON GE HUAWEI SIEMENS Biatorbágy TYCO ALPINE Tamási PHILIPS Budaörs GE Dunaújváros AIKAWA Pécs HARMAN JABIL Vác IBM ZOLLNER Páty Gyál FLEXTRONICS Szigetszentmiklós NCR Salgótarján MITSUBA Szügy ZOLLNER Nagykáta CLARION Fót, Veresegyháza GE Ózd GE JOHNSON ELECTRIC Hatvan BOSCH JOHNSON ELECTRIC LEAR Miskolc BOSCH SANMINA SCI SHINWA Cegléd INFINEON Kecskemét PHOENIX MECANO Tiszaújváros JABIL Nyíregyháza ELECTROLUX Hajdúnánás VIDEOTON Debrecen NATIONAL INSTRUMENTS Jászfényszaru SAMSUNG Jászárokszállás ROSENBERGER Jászberény ELECTROLUX Törökszentmiklós VIDEOTON "Hungary created a business environment that supports the growth of the automotive sector. The knowledge and experience of the workforce in electronics manufacturing, as well as the engagement and ambition of the employees contribute to improving competitiveness, and allowing businesses to expand their operations. Infrastructure and developed logistics routes provide quick access and ensure smooth communication with customers in Western Europe. The seventeen years of operation behind us allow me to confidently say that it is worth building our future on local resources." Yasuki Matsui, Managing Director Alpine Electronics Manufacturing of Europe, Ltd.

Electronics Industry in Hungary 19 THE ELECTRONICS INDUSTRY SUCCESS STORIES SAMSUNG Samsung Hungary Ltd. opened a new plant in 2014 with an investment of $25 million in Jászfényszaru which created 75 new jobs in the country. The factory in Jászfényszaru has been expanding since its establishment in 1989. The production started in 1990 and the plant started exporting products three years later. The past 25 years has seen the production of over 62 million devices, including televisions and projectors. The factory is expecting to raise the production efficiency with the expansion. The new section is mainly dedicated to the production of televisions, led screens and plasma devices for export and distributing them in the countries of the European Union. Recently Samsung employs around 1800 workers in electronics industry in Hungary. 1800 Many multi-national firms have established successful electronics production sites in Hungary. International companies have been active in the country and have been working closely with local communities for decades; to date, the total Foreign Direct Investment in the industry is 3.8 billion ($5 billion). 1000 3.8 BILLION Foreign Direct Investment ALPINE Japanese electronics company Alpine invested 39 million USD in 2015 at its plant in Biatorbágy, on the outskirts of Budapest, and expects to double its production capacity by 2018 and create 500 jobs. Through the project the company is expecting to invest in new technology and install new production lines, which will enable it to increase the proportion of Hungarian suppliers it relies on. In overall the company employs 1000 people in Hungary. 650 ROSENBERGER The story of Rosenberger Magyarország Ltd. began in 2003. Bit-by-bit Jászárokszállás was expanded into the European Assembly and Logistics centre. Competencies were developed in close cooperation with the parent company, employees were trained and the quality management system, which has been certified, has proven itself during frequent audits. With about 1,650 qualified employees, Jászárokszállás has developed into a reliable competence centre and makes a considerable contribution to the growing turnover of the Rosenberger group. Rosenberger expanded its capacity with 250 new jobs in 2015. With this expansion Rosenberger has 2300 employees in the country. HONEYWELL Honeywell, a US-based company, was set to expand its manufacturing plant in 2014 with an investment of 10 million. The company s investment will create 109 new jobs. Nagykanizsa became the strategic centre of the company thanks to the development. Honeywell has 650 colleagues in Hungary. 2300

Electronics Industry in Hungary T he leading Hungarian universities offer engineering courses at the highest international standards. These institutions operate knowledge centres and function as research facilities which work closely with industrial partners. Electronics and IT are the key focus areas. LABOUR FORCE EDUCATION GYŐR Széchenyi István University BUDAPEST Eötvös Loránd University University of Óbuda Pázmány Péter Catholic University Hungarian Academy of Sciences Budapest University of Technology and Economics Bay Zoltán Nonprofit Ltd. for Applied Research MISKOLC University of Miskolc DEBRECEN University of Debrecen SPECIALIZED HIGHER EDUCATION IN ELECTRONICS RESEARCH TO EXPAND HUMAN RESOURCE CAPACITIES FOR THE DEMANDS OF THE INDUSTRY VESZPRÉM University of Pannonia GYŐR: Széchenyi István University The IT laboratory offers industrial simulation projects and engineering development services for the automotive industry. PÉCS University of Pécs SZEGED University of Szeged PÉCS: University of Pécs SZEGED: University of Szeged The Faculty of Engineering and Information Technologies was founded in 1970. Today has more than 3,000 students. The 8 basic training programmes cover technical, artistic and information technology related fields of study in the following branches: architecture, civil engineering, environmental engineering, electrical engineering, information technology and architectural design. The University has a technical faculty with 50 years of educational and R&D experience. The faculty has a practical training as well which based on extensive industrial relations. MISKOLC: University of Miskolc Courses in energy engineering; mechanical engineering; IT engineering; and electronic engineering. Knowledge centre supported by Bosch, Electrolux, TVK, and Holcim. VESZPRÉM: University of Pannonia The IT department operates a medical IT R&D centre; an I&M software research centre; an infotech, biotech, and nanotech centre, and conducts IT research into logistics systems. DEBRECEN: University of Debrecen Masters education in building and environment engineering. Research groups in areas such as building automation, electric vehicle development. 21

LABOUR FORCE EDUCATION Electronics Industry in Hungary 23 BUDAPEST Eötvös Loránd University Regional Knowledge Centres (RKC) utilize R&D results. The RKCs cooperate closely with the industry to manage innovative projects focused on R&D at an international level, and to turn R&D projects into marketable products and technologies. University of Óbuda Strong engineering faculty, especially electrical engineering and mechanical and safety engineering. Operates a knowledge centre focusing on robot technology R&D. Pázmány Péter Catholic University The IT Faculty s Budapest research centre is engaged in nanotechnology, nanoelectronics, designing and measuring microelectronics systems, medical diagnostics, mobile platforms and systems, and more. Hungarian Academy of Sciences The Research Institute for Technical Physics and Materials Science focuses on areas such as nanostructures, microtechnology and protonics. Budapest University of Technology and Economics: Higher education in mechanical and chemical engineering, electronics and IT, and transportation engineering. Industrial cooperation in the areas of biometrics, medical engineering, communications and IT, automobile, mobile innovation. Also operates an IT innovation and knowledge centre. "Over more than 125 years, Siemens has developed a strong footprint and has contributed significantly to the economic and social development of the country with its expertise and manufacturing capabilities. We have committed, motivated and well-educated Hungarian colleagues, who ingeniously work for achieving excellent results on all levels in all fields from skilled craftsmen to engineers, from business managers to software developers. Dale A. Martin, President & CEO, Siemens Ltd. Budapest University of Technology and Economics Higher education in mechanical and chemical engineering, electronics and IT, and transportation engineering. Industrial cooperation in the areas of biometrics, medical engineering, communications and IT, automobile, mobile innovation. Also operates an IT innovation and knowledge centre. Bay Zoltán Nonprofit Ltd. for Applied Research Comprised of the Research Institutes for Technical Physics and Materials Science, the Institute for Material Science and Technology (laser technology, metals, polymers and composite technologies, sensor and instrument development), the Institute for Nanotechnology, and the Institute for Applied Telecommunication Technologies (ambient intelligence, integrated systems, sensor networks, intelligent transportation systems, ad hoc communication networks).

Electronics Industry in Hungary 25 LABOUR FORCE INNOVATION R&D IN HUNGARIAN ELECTRONICS INDUSTRY DRIVING AUTOMOTIVE INDUSTRY EVOLUTION THE BOSCH GROUP Employs approximately 11,000 people in Hungary, making automotive parts, power tools, security systems and home appliances in four production plants. The company established an R&D Development Centre in Budapest in 2013 (automotive technology) which is the company s largest European R&D centre. The company and the University of Miskolc (central town of Borsod-Abaúj-Zemplén county, Northern Hungary) established the Bosch Department within the University to support practical-oriented education and research in engineering sciences, devoting special attention to mechatronic applications. Practicaloriented education is based on a modern laboratory system, with dedicated labs for pneumatics and hydraulics, sensor techniques, PLCs and modular mechatronics systems, as well as robotics and electrical driving systems. Bosch management intends to invest in the globally competitive knowledge of Hungarian engineers. A Strategic Partnership Agreement was concluded on 31 July, 2013 between the Government of Hungary and Bosch Hungary. Dedicated to innovation: double the number of Government incentives for R&D activities in 2016. In recent years, a great number of international companies have developed a close cooperation with Hungarian educational institutes. The common aim was to support the development of highly-skilled labour and to explore research, product development, and testing capabilities. Great innovation capacity available + Great research and development potential. THE BUDAPEST UNIVERSITY OF TECHNOLOGY AND ECONOMICS Involved in joint projects with Nokia, Cisco Systems, Ericsson, Flextronics, GE, IBM, and Siemens. Projects cover research and education, applied theory, design, manufacturing and testing of semiconductor devices, micro- and nanoelectronics, and energy transfer systems.

Electronics Industry in Hungary 27 LOCATION LOGISTICS & INFRASTRUCTURE PAN-EUROPEAN CORRIDORS CROSSING HUNGARY IV: Dresden Prague Vienna Bratislava Győr Budapest Arad Bucharest Sofia Thessaloniki Istanbul V: Venice Trieste Ljubljana Maribor Budapest Uzhhorod Lviv Kiev VII: Vienna Bratislava Budapest Belgrade the Black Sea X: Salzburg Ljubljana Zagreb Beograd Niš Skopje Veles Thessaloniki 4 AT THE CROSSROADS OF FOUR MAIN EUROPEAN TRANSPORTATION CORRIDORS EXTENSIVE ROAD & RAILWAY TRANSPORTATION NETWORK HIGHLY DEVELOPED LOGISTICS & TELECOMMUNICATIONS INFRASTRUCTURE V IV COMMERCIAL CORRIDORS & INFRASTRUCTURE VII IV V X VII After examining numerous possibilities, the leadership of National Instruments Corporation announced in December, 2000 that NI decided to open its first overseas manufacturing facility in Debrecen. Both the economic and scientific environment played a crucial role in the decision besides the logistics background and the significant fact that the local University constantly provides qualified workforce to the industry. László Ábrahám, General Manager, National Instruments MOTORWAYS IN HUNGARY M1: Budapest AUT M3: Budapest RO/UKR/SK M5: Budapest SRB M6: Budapest Pécs M7: Budapest SLO LEGEND existing planned

Electronics Industry in Hungary 29 LOCATION AVAILABLE INVESTMENT SITES 110 INDUSTRIAL PARKS MORE THAN 100 OFFICES ARE WAITING FOR YOUR INVESTMENT 480 GREEN- AND BROWNFIELD SITES HIPA operates an internal database of industrial parks, investment sites, and industrial halls in Hungary. The Investment Sites Database is one of the most comprehensive resources of its kind, the HIPA database is part of the information package for potential investors. LOOKING FOR INVESTMENT SITE? HIPA WILL SUPPORT YOU! The Investment Sites Database lists nearly 700 green- and brownfield sites, industrial parks and offices throughout Hungary. It simplifies the task of matching investors needs to potential locations. Searchable by size, location, available infrastructure and incentives, the database is an excellent starting point for any prospective investor.

Electronics Industry in Hungary 31 HIPA OUR SERVICES HOW DO WE SUPPORT YOUR ELECTRONICS PROJECT? BEFORE YOU MAKE A DECISION WE OFFER YOU... AFTER YOU HAVE CHOSEN HUNGARY...one-stop-shop management consultancy services to address your business needs....tailor-made incentive offers and information packages on the business environment, labour market, tax regulations, etc.... location search & evaluation + site visits. We are open to your feedback and offer mediation between government and business based on your inputs. We support your further expansion and plans. PLEASE CONTACT US...meetings with HR & Real Estate agencies, Law firms and other consultants based on your needs....reference visits at companies that are already established in Hungary....assistance with your incentive application. Address: 1055 Budapest, Honvéd utca 20. Customer service: investment@hipa.hu Telephone: +36 1 872 6520 Web: www.hipa.hu

Electronics Industry in Hungary 33 HIPA SUPPLIER DEVELOPMENT FOR OEMs / SUPPLIERS OUR SERVICES FOR INTEGRATORS B2B, SUPPLIER FORUM = Personal encounter between potential suppliers and producers CERTIFIED SUPPLIER DATABASE = Online, interactive certified supplier database and virtual marketplace PUBLICATIONS, MARKET INFORMATION = Information about the current Hungarian supplier base SUPPLIER LISTS = Filtering SUPPLIER LISTS by company requests PARTNERSHIP AGREEMENT = Cooperations and common projects to develop Hungarian suppliers DEVELOPMENT OF ACTUAL SUPPLIERS = Training for the Hungarian suppliers, and potential suppliers FOR SUPPLIERS UNIVERSITY AND R&D COOPERATION = Supporting educational and R&D cooperation between universities and suppliers EDUCATION, TRAINING = Professional trainings in several fields (efficiency trainings, benchmarking techniques, automotive standards) EXHIBITIONS = Appearance on Hungarian and international exhibitions and fairs

Electronics Industry in Hungary 35 HIPA INCENTIVES OVERVIEW GOVERNMENT INCENTIVES As a member of the European Union, Hungary s regulations on incentive opportunities are in accordance with the EU rules. One of Hungary s competitive advantages over other countries in the region is the Government s strong commitment to increase the competitiveness of SMEs and large enterprises in Hungary. Alongside the regulatory tools that contribute to the competitive business environment of local companies, Hungary offers wide-ranging incentives to facilitate foreign direct investments and reinvestments by local enterprises. Subsidies may be granted as regional aid or specific aid, such as R&D subsidies. THESE INCENTIVES INCLUDE, BUT ARE NOT LIMITED TO 25% WESTERN TRANS- DANUBIA Regional grants are the most typical forms of incentives for greenfield / brownfield investments or reinvestments. The maximum amount of regional incentive is shown on the regional aid intensity map. The map above illustrates that regional aid available for investment for a large enterprise may be up to 50% of the eligible costs of the investment, depending on the region. For investments not exceeding 50 million, the maximum intensity ratio can be increased by 10 percent for medium-sized and by 20 percent for small enterprises. Győr CENTRAL HUNGARY, Budapest 0 / 20 / 35% 35% CENTRAL TRANSDANUBIA Székesfehérvár SOUTHERN TRANSDANUBIA NORTHERN HUNGARY SOUTHERN GREAT PLAIN Szeged Miskolc NORTHERN GREAT PLAIN Debrecen 50% Pécs CASH SUBSIDIES for investments, training, job creation and R&D TAX INCENTIVES reduction of corporate tax, social tax, or for encouraging R&D activities... LOW-INTEREST LOANS Investors may apply with their suppliers for a VIP Cash Grant together. SPECIAL INCENTIVES of the free enterprise zones The maximum available aid intensity decreases if the investment is a large investment (exceeding 50 million): 50% of the maximum aid intensity determined in the regional aid map is available for investment between 50 and 100 million, with 34% of the maximum aid intensity for investment over 100 million. For information on up-to-date and individual incentive packages please contact HIPA directly.

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