VAVE-Marketing

Monthly Update Meeting

8. January2014

Topics

–Action Item Review from last Meeting–VAVE Bowler 2013/ 2014–VAVE Sites Update – GM, DCA, BCM–Marketing Slides (no update this month – discussion only)–VAVE Project Priorization Review–Action Items & Notes

2 | CONFIDENTIAL

Action Items Review

| CONFIDENTIAL3

Notes & New Action Items from last meeting 1/2

• Should Siemens 3D53 phase 2 be initialized? Dara/Rolf– Kick off now. We have 50% share, but are 25% more expensive than the 2nd source. Cost saving

proposals are welcome

• How to proceed with the NPS temperature sensor? Kai/HobbyThe project has been stopped as MOQ is very low. 30% cost reduction by 10k MOQ. Kai is working with Jackie Zhang. The task is delegated to sourcing. Task closed for VAVE

• Kick off ER series (HR series with removed boost stage)? Claude/Rolf– ER project (stripped down HR unit) – Claude/ Boris to establish specification, then VAVE will take

over. In process– HR mod std for Knor: Potential 25k, needs customization by removing all not required features.

Claude to meet customer and clarify specification. Afterwards to decide if project will be assigned to VAVE or R&D. In process

• Kick off PSK redesign for life extension (eliminate EOL parts) and cost reduction (move to SMT parts etc)? Claude Rolf

– Claude to define spec for customized PSK for Stadler Rail opportunity. In process

• Kaveh and Rolf to meet to review BMP VAVE plan– Open

4 | CONFIDENTIAL

Notes & New Action Items from last meeting 2/2

• Establish a list of the SSN transformation cost for the high runners in GM and establish a proposal for transformation cost down Hobby/ CharlieSSN transformation cost information available in VAVE database. Started project on PFE1100 for transformation cost down at the end of Nov.

• Correct mismatch of VAVE Database vs Oracle Dementra Marian H / BorisDone, VAVE-Mkt database has been reworked. Closed

• Set up meeting to define further proceeding with HR series (what is the right timing to kick off VAVE activities) Rolf/Claude/Marian H

– Open

• Schedule meeting to review MS31 cost down project Rolf/Jochen/Kai– Project in process. Meeting not held.

• Update FMPe20.48G cost reduction target in VAVE database -> Kai– ...

• Rastislav will provide Sourcing update on YSD.00086 in the next meeting Rastislav Vojtek

5 | CONFIDENTIAL

VAVE Bowler &Sites Update

| CONFIDENTIAL6

VAVE bowler 2013

7 | CONFIDENTIAL

3.158M $ cost saving achieved in 2013.

Strong Q4 with close to 900k $ savings

$0

$500'000

$1'000'000

$1'500'000

$2'000'000

$2'500'000

$3'000'000

$3'500'000

$4'000'000

$4'500'000

$5'000'000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Plan

Actual

Trend

ImprovementPriority

Measure JOP 2012 2013 JAN FEB M AR APR M AY JUN JUL AUG SEP OCT NOV DEC Target

Plan $55'000 $152'000 $278'000 $439'000 $645'000 $909'000 $1'247'000 $1'673'000 $2'216'000 $2'884'000 $3'684'000 $4'600'000

Actual $165'800 $394'600 $793'321 $949'506 $1'102'480 $1'278'697 $1'488'898 $1'766'980 $2'272'565 $2'559'438 $2'878'429 $3'158'604

VAVE contribution plan 2013

Contribution dollars from VAVE team activities due to product cost reduction or new project w ork

0

$4.6M from VAVE

projects(target revised to 3M$ in Aug

13)

VAVE 2014 Goal - 3M USD

8 | CONFIDENTIAL

ImprovementPriority

Measure JOP 2014 2013 JAN FEB M AR APR M AY JUN JUL AUG SEP OCT NOV DEC Target

Plan $85'000 $200'000 $410'000 $560'000 $790'000 $1'110'000 $1'400'000 $1'700'000 $2'030'000 $2'330'000 $2'630'000 $3'000'000

Actual

VAVE contribution plan 2014

Contribution dollars from VAVE team activities due to product cost reduction or new project w ork

0

$3.0M from

VAVE projects

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECPlan $41'000 $70'000 $134'000 $68'000 $83'000 $140'000 $106'000 $116'000 $160'000 $130'000 $136'000 $171'000ActualPlan $44'000 $45'000 $75'000 $77'000 $142'000 $160'000 $164'000 $164'000 $150'000 $146'000 $140'000 $175'000ActualPlan $0 $0 $1'000 $5'000 $5'000 $20'000 $20'000 $20'000 $20'000 $24'000 $24'000 $24'000ActualPlan $41'000 $111'000 $245'000 $313'000 $396'000 $536'000 $642'000 $758'000 $918'000 $1'048'000 $1'184'000 $1'355'000ActualPlan $44'000 $89'000 $164'000 $241'000 $383'000 $543'000 $707'000 $871'000 $1'021'000 $1'167'000 $1'307'000 $1'482'000ActualPlan $0 $0 $1'000 $6'000 $11'000 $31'000 $51'000 $71'000 $91'000 $115'000 $139'000 $163'000ActualPlan $85'000 $115'000 $210'000 $150'000 $230'000 $320'000 $290'000 $300'000 $330'000 $300'000 $300'000 $370'000Actual $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Plan $85'000 $200'000 $410'000 $560'000 $790'000 $1'110'000 $1'400'000 $1'700'000 $2'030'000 $2'330'000 $2'630'000 $3'000'000Actual $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Plan $85'000 $200'000 $410'000 $560'000 $790'000 $1'110'000 $1'400'000 $1'700'000 $2'030'000 $2'330'000 $2'630'000 $3'000'000Actual $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

DCA project deck /increment

GM project deck /increment

DCA project deck cumulative

BCM project deck cumulative

Sum 1 (per months)

Sum 2 (incremental)

Bowler*

GM project deck cumulative

BCM project deck /increment

Location Contribution to 2014 goal:

DCA: $1’350’000 GM: $1’500’000 BCM: $150’000

VAVE Site Update Gongming

• Projects• Xyratex-04G: Phase 3 cost reduction project – New PCB arrived, EVT tests in

process. Some minor issues with new PFC stage. New fan qualification (Nidec) failed (+10C). Work with supplier to get better performing fans. Current cost savings $2.78 (target $4.50).

• Xyratex-07G: Cost down proposal & presentation established. $3.00 have been identified. Presentation will be ready to share by 1/10/14

• APO15.48G: EVT qualification in process. Efficiency marginal fail spec. Sourcing contribution behind schedule. $8.40 achieved. Hobby, is this true as sourcing has only achieved 1% cost savings?

• Hp 3NR26: Samples sent to customer for qualification. FCST 8000 pcs, cost savings $2.00. Hobby, add what are the components of cost savings...

• Cisco 3I77 project closed. Cisco finally approved the VAVE proposal.• Siemens 3D53 phase 2: Hobby, do we have the VAVE presentation• Linear Project kicked off (HCT-28). Hobby, please update• Electrolux: Wait for coating machine from USA

9 | CONFIDENTIAL

VAVE Site Update BCM (Malaysia)

• Projects:– SSQE48T15033, 20033, 25012, 25015, 25018, 25025 : 2014 Target Saving

– USD52K, FT-Pass, Derating-On-going– SQE48T30033 : 2014 Target Saving – USD21K, FT-Pass, Derating-On-going– SQE48T20120-NDBBG cost reduction – support VAVE team Gongming:

Estimated Saving – USD0.50/Module. Status: Not Started– Scale down of currently used uC (less RAM): Sourcing still in negotiation

with supplier. Minimum saving USD0.04/Module.

10 | CONFIDENTIAL

VAVE Site Update Dubnica• Projects:

• Carrier 3F75/77/78: Brainstorming ideas have been divided in “JDI or trivial changes” and “no trivial changes”. VAVE will focus on the first with a cost reduction of around 20..30 USD. For no-trivial changes R&D must be involved (another 20..30 USD cost saving potential).

• SLI inverter 3C35: Sheet metal supplier messed up samples and must redo it. Project further delayed by 2 weeks. New components, including display, have been partly pre-qualified. Final qualification in new case.

• K-Unit cost reduction: DVT in process (with new transformer & new PCB). Next step: safety update.

• Application specific project for Hörmann (MD098): samples sent for customer qualification• Asprio M35: Cost savings above target (95 USD vs 78 USD)• Proton: Success (!) with new improved version. Proton increase orders -> 600K$ • JDI project: Individual projects per Engineer

• On hold:• Mot 3E80 – Sales to define proceeding with this negative GM (-14%) product• Mot 3F44 – Sales to define proceeding with this negative GM (-3%) product• Tadiran 3C84: Upgrade proposal has not been accepted due to re-qualification

efforts/risk and volume. Product EOL in discussion.

11 | CONFIDENTIAL

Marketing Slides

| CONFIDENTIAL12

VAVE project selection database

• Embedded is the latest VAVE project selection database

• New:– Annual forecast numbers updated based on Q4 entries– Forecase comparison Q3 to Q4 including color coding– Ranking update based on Q4 forecast numbers

13 | CONFIDENTIAL

Microsoft Excel Worksheet

Project Priorization Review

| CONFIDENTIAL14

Current Project Priorization

DCA1.Carrier – 3F75

2.K-family - transformer

3.Aspiro M35 – cost red

4.SLI 3C3x – cost red

5.JDI projects

6.HR23xx -> not started -> needs to be discussed

7.CPCI -> not started

8.M-units -> not started

9.PSK units -> redesign to extend life cycle?

15 | CONFIDENTIAL

Kick off Xyratex-

07G VAVE soonKick off Xyratex-

07G VAVE soon

VAVE Resource availability

• DCA team: Resources for new 4 projects available. Additional resource will be ready by beginning of 2014 after current projects closing.

• GM team: 4 projects in process (one for BMP). Resources will be available in Mar 2014 or then due to new priority settings. No resource to support NPS shelf/cabinet projects

• BCM team: None (works in cooperation with GM team)

16 | CONFIDENTIAL

Action Items & Notes

| CONFIDENTIAL17

Notes & New Action Items

18 | CONFIDENTIAL