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Operations Review

Extracted from Annual Report 2016

NORTH ASIA

Mobile and Computing Segment

This segment remains the top revenue contributor for the North Asia region. With the increasing popularity of the China smartphone labels in the domestic market, we saw an increase in demand coming from Memory components. We also saw an increase in the demand for the product line Qorvo, a key player in the Radio Frequency market, and it is highly used in majority of the China smartphone labels.

Industrial and Instrumentation Segment

We saw growth in mainly 3 sub-segments – Transmission and Distribution, Chemical Analyser and Environmental Instrumentation and Process Control. In 2016, there was an increase in new customers due to the recognition of our reference designs. Our value-add service allowed for more product mix, generating higher revenue in this segment. We also saw new applications that required our solutions and components in the industrial automation area, mainly in IoT and Robotics. As we see potential in this segment due to the increase in infrastructure and industrial projects, we stay focused at growing this segment.

Consumer Segment

Several new applications such as the True Wireless Stereo Drive by Apple's new airpods and Smart Speakers for Smart Homes usage contributed to the increase in this segment. In addition, our strong expertise in this field has garnered recognition and we see increased demand for our solutions. This segment will continue to grow as we improve on our reference designs to fulfil market needs.

Lighting Segment

We saw growth in this area due to the focus across the region in infrastructure projects. These projects require Smart Lighting for Smart Homes and for energy conservation purposes. With a strong portfolio of product lines in this segment to cater to market needs, we expect the demand to continue in the following year.

SOUTHEAST ASIA AND INDIA

Consumer Segment

This segment is our top revenue contributor in this region contributed by the increased adoption of our solutions. With our strong expertise in the Bluetooth and Bluetooth Low Energy applications, which are used in automation and communication applications, we continuously improve our solutions for our audio customers. Our strong footprints in the region allowed us to retain our top customers in the wireless audio market and grow the demand for our wireless Bluetooth solutions.

Mobile and Computing Segment

The 'Make in India' government initiative has started to gain momentum with some of the local key players getting ready to build their own local PCBA. With our strong engagement with the local players and their ODMs, we have started designing-in to new products to gain market share, especially in the memory components. We believe that the market will continue to see growth as the demand for smart phones is on the rise with competitive 3G and 4G services now being made available by local service providers.

Operations Review

Industrial and Instrumentation Segment

This segment remained resilient for FY2016 with our strong product portfolio. There are 3 key sub-segments that contributed to the segment growth:-

> Infrastructure

The growth of this segment is due to the rise in government initiatives to improve and enhance the nation's infrastructure. We have also added Xilinx into our product portfolio to enhance our offering for the industrial IoT segment. With the continued directions from the government for this segment, we forsee growth in this segment moving forward, especially with power adapters, embedded wirelessconnected end products for infrastructure and automation applications.

> e-Government Projects

With several government initiatives being announced in 2016, we saw growth in this segment. After the recent initiatives by India's government on Digital India and demonetisation, India is moving towards a cashless economy, giving rise to the digitalising of the banking sector. This led to increase in the demand for our NXP's smart card chips. Also, we saw a rise in our Point-of-Sale terminal demand, mainly in micro-ATMs for the retail sector. With our strong positioning in the India's market and with ongoing collaborations with key customers to provide solutions in this region, we believe we are able to grow this segment.

> Energy Harvesting

This segment saw continued growth as our strengths in Metering, Power and Connectivity remained strong. Our product lines have expanded significantly to meet the rising need for green energy in the emerging markets, and we believe we will see continued growth in this segment. Particularly in India, the government has recently launched a program called Ujwal Bharat with a vision of 24 hours power for all in order to illumintate the life of every Indian by 2022. With these initiatives, we see potential and will remain focused at growing our revenue in this segment.

LED Lighting Segment

This segment saw growth due to the rise in government's infrastructure projects. With the continued price erosion and existing strong competition in this segment, the Group have taken caution in the selection of product lines to ensure that businesses are profitable. Moving forward, we will focus on niche segments like LED display demand for Railway projects, Lighting control gears and Drivers. We believe that the Lighting segment will continue to see more market demand owing to the increase in government-related projects.

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