Cross Boarder Innovation Reflections on 3 Decades of Hi-Tech Experience in the Pearl River Delta

A tale of 3 successful technology companies incorporated over the last 3 decades 5 driving forces of innovation Technology Markets Manufacturing R&D Talents SAE Magnetics (H.K.) Ltd. in the early 80’s Amperex Technology Ltd. at the turn of the millennium Altai Technology Ltd. in 2006

Company Highlights – SAE Founded in HK in 1980 focus on turn key solution for magnetic recording heads and Hard Disk Drives Acquired by TDK Corporation in 1986 The only independent manufacturer for magnetic recording heads Global workforce over 40,000 Approx 30% of the world market Revenue more than US$2.5 billion Headquartered in HK, manufacturing in Dongguan, Japan, & US Diversified business strategies since 2000 Acquired Acasia from ASTRI in 2004 for Optoelectronics technologies Partnership with Intel and others on optical communication technologies Finger navigation for Smart Phone applications

EV powered by ATL Battery Energy Storage Systems for Smart Grids Company Highlights – ATL EV powered by ATL Battery Energy Storage Systems for Smart Grids Founded in HK in 1999 focus on the commercialization of lithium polymer batteries of Bellcore The first licensee of the world successfully turned the technology to volume production Acquired by TDK in 2005, now the largest of the world for lithium polymer batteries Manufacturing in SongShan Lake of Dongguan, extending to NingDe of Fujian with over 8,000 workforces Revenue over US$500 million

Company Highlights – Altai Pioneer of Super Wi-Fi technologies on outdoor wireless broadband solutions Spun-off from ASTRI in 2006 HQ in HK, branches located in Shenzhen, USA, Singapore and Argentina with over 100 employees Award winning wireless technologies for Wi-Fi and white-space Leading telecom solution provider Carrier solution deployed in more than 60 countries (Remark: Altai is an independent technology startup)

5 Driving Forces of Innovation Technologies Markets Manufacturing R&D Talents

The changing ecosystem of hi-tech Used to be Now Core Technologies Mainly import from overseas Hybrid portfolio of indigenous and overseas Market Overseas Overseas are important while local PRC markets are emerging and growing exponentially Manufacture HK based migrating to the PRD PRD migrating to lower cost regions within, or in some cases outside Mainland China R&D Process and manufacturing More full-fledged including fundamental research, materials, to product development Top-notch Talents Heavily rely on overseas supplies Local talents are taking more driving seats than before

HK-Shenzhen Cross Border Innovation Motivations of the both sides For HK: Access to talents, markets, and suppliers in China For PRC: Access to capitals, IP protection, jurisdiction system, etc An increasingly conducive environment The lessons of Foxconn and other OEMs In contrast to winning companies such as Huawei, ZTE, Tencent, BYD, etc. Increasingly comprehensive infrastructure Hardware: Logistics, transportation, etc Software: Research institutes or campus of universities of HK in Shenzhen, etc Determination of the two governments? A vote of confidence The plan of a TDK R&D Center in QianHai, Shenzhen But can this be considered a vote of non-confidence of HK?

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