FUJIMI-MICRO TECHNOLOGY

SALES PRESENTATION

(Sales Dept)

16 Jan 2018

Prepared by KH Teoh

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Table of Contents

1) Customer Group Introduction

- Introduction
- General Information
- Finished Goods
- Market Position

2) Local Customer Information

- Organization Chart
- Form Factor and Products

3) Fujimi Products
- Slurry to Seagate Processes

4) Seagate Activities
- Current Activities
- Future Activities

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Customer Group Introduction

1) Customer Group Introduction

- Introduction
- General Information
- Finished Goods
- Market Position

2) Local Customer Information

- Organization Chart
- Form Factor and Products

3) Fujimi Products
- Slurry to Seagate Processes

4) Seagate Activities
- Current Activities
- Future Activities

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Introduction
Seagate is the global leader in data storage solutions, developing
amazing products that enable people and businesses around the
world to create, share and preserve their most critical memories and
business data.

Today data storage is more than just archiving; it’s about providing
ways to analyse information, understand patterns and behaviour, to
re-live experiences and memories. It’s about harnessing stored
information for growth and innovation. Seagate is building on its
heritage of storage leadership to solve the challenge of getting more
out of the living information that’s produced everyday.

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Introduction (The Evolution of Storage)

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General Information
Seagate Technology PLC (commonly referred to as Seagate) is
an American data storage company. It was incorporated in 1978,
as Shugart Technology. Since 2010, the company is incorporated
in Dublin, Ireland, with operational headquarters in Cupertino,
California, United States.

Steve J. Luczo Dr. Dave Mosley

Executive Chairman C.E.O.

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General Information
Seagate developed the first 5.25-inch hard disk drive (HDD), the 5-
megabyte ST-506, in 1980. They were a major supplier in
the microcomputer market during the 1980s, especially after the
introduction of the IBM XT in 1983.

Today Seagate, along with its competitor Western Digital, dominates

the HDD market. Much of their growth has come through acquisition
of competitors.

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General Information (Acquisition)

In 1989, Seagate acquired Control Data Corporation's Imprimis
division, makers of CDC's HDD products and acquired Conner
Peripherals in 1996.

In 2005, Seagate acquired Mirra, Inc., a producer of personal servers

for data recovery. It also acquired ActionFront Data Recovery Labs,
which provides data recovery services.

In 2006, Seagate acquired Maxtor in an all-stock deal worth $1.9

billion, and continued to market the separate Maxtor brand.

The following year, Seagate acquired EVault and MetaLINCS, later

rebranded i365.

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General Information
In 2011 Seagate acquired Samsung’s HDD business and in 2014,
Seagate acquired Xyratex, a storage systems company, for
approximately $375 million.
The same year, it acquired LSI's flash enterprise PCIe flash and SSD
controller products, and its engineering capabilities, from Avago for
$450 million.

In October 2015, Seagate acquired Dot Hill Systems Corp., a supplier

of software and hardware storage systems, for approximately $696
million.

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Finished Goods

One of the Seagate internal and specialized products is The Guardian

Series which is highly specializes internal drives.

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Finished Goods
The line initially focused on high-capacity, high-performance SCSI
drives; since 2001, it became Seagate's most popular product as the
hard disk drive industry started to move to a 7200 RPM spindle
speed.

The Seagate Barracuda is a series of hard disk drives and in this series
have a spindle speed of 7200 RPM.

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Finished Goods
Apart from Barracuda, there are some other end products by Seagate
in terms of External / Consumer range such as Portable HDD and
External HDD for Desktop and Macs.

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Finished Goods
Below end products are X-box Game Drive Hub, Play Station 4 Game
Drive and also Enterprise / Data Centre (Nytro).

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Market Position
WW HDD Shipment in 2016 (units in million)
Units shipped in Units shipped in 2016 market
Manufacturer Y/Y growth
2015 2016 share
Seagate 188.51 155.01 -17.8% 36.6%
Toshiba 75.75 93.55 23.5% 22.1%
WDC 204.47 175.51 -14.2% 41.4%
TOTAL 468.73 424.07 -9.5% 100%

These three firms shipped 424 million HDD units in calendar 2016,
representing a fall of 9.5% YoY (year-over-year), as compared to the 468
million units shipped in 2015.

At the end of 2016, Western Digital continued to lead the market with a share
of 41.4%, followed by Seagate and Toshiba at 36.6% and 22.1%, respectively

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Market Position
Revenue Comparison

Both charts show a rise-and-fall pattern, with Seagate's more marked. Since
2012, Seagate annual revenues have declined from $14.94bn to $11.2bn in
fiscal 2016, down 25 per cent, and a projected $10.9bn in fiscal 2017.

It appears that WD has been managed better than Seagate since 2012.

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Market Position
Seagate : Fiscal 4Q 2017 (ended June 30, 2017 Financial Results

(in $ million) 4Q16 4Q17 FY16 FY17

Revenue 2,654 2,406 11,160 10,771
Growth -9% -4%
Net income
70 114 248 772
(loss)
For the fourth quarter, the company reported revenue of $2.4 billion, gross
margin of 27.7%, net income of $114 million.

For the fiscal year ended June 30, 2017, the company reported revenue of $10.8
billion, gross margin of 29.5%, net income of $772 million.

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Market Position
Investors’ Worrying Situation

• Global annual revenue for FY17 is the lowest one since FY11 and
down 4% from the former fiscal year.
• For the quarter sales fall 10% sequentially and 9% Y/Y.
• Net income down 41% Q/Q to $114 million
• Even total drive capacity shipped decreased 3% from the former
quarter to 62.2EB and average capacity per drive shipped is the
same as for the former three-month period, 1.8TB, a figure that
was constantly growing since many years.
• Cuts number of employees by 600
• Shares were down $7.36, or 19%, at $32.40

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Market Position
Investors’ Worrying Situation

Now 92% of Seagate's revenue are on HDDs and 8% in other businesses

(enterprise systems, flash and others).

This bad situation could explain the replacement of Steve Luczo by Dave
Mosley as CEO effective last October being in charge to find a new
business model for the company to try to expand, as it is almost totally
concentrated on HDDs becoming a shrinking market, and never becoming
a leader in SSDs.

Without any change Seagate's sales could be below $10 billion next fiscal
year. Revenue is expected to be a little better next quarter: between $2.5 to
2.6 billion.

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Market Position
Shipments of hard and solid state disk (HDD/SSD) drives worldwide from
2015 to 2021 (in millions)

Estimates suggest that shipments of HDDs will decline, falling to 395

million units shipped in 2017. SSD shipments are expected to increase to
190 million shipped units that same year.

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Market Position
Tardy entry into helium drives

When perpendicular magnetic recording (PMR) began to hit the buffers in

terms of areal density improvements after 2010, WD began to develop
helium-filled drive technology.

The drives were filled with helium instead if air, and it had lower friction
than air, meaning disk platters didn't need to be so strong, and could be
thinner, meaning more could be fitted inside a standard drive enclosure,
meaning an 80 per cent or better capacity increase.

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Market Position
Seagate preferred to develop shingled magnetic recording (SMR) as a a
PMR capacity boost and look to post-PMR HAMR (heat-assisted magnetic
recording) technology, then slated to arrive in 2016, as its areal density
get-out-of-PMR-jail card.

But WD developed SMR as well as helium-filled drive technology, leaving

Seagate in an air-filled hole until it introduced its own helium drive
technology in 2016, four years after WD, with a seven-platter, 10TB drive.

In essence Seagate was four years late in delivering helium-filled drive

technology, giving WD an advantage.

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Market Position
Hybrid flash-disk drives

When SSDs began to become popular as a means of getting much faster

read-write access to data than disk, flash bits were far more expensive
than disk bits.

The obvious halfway house was to fit a small slug of flash cache to disk
drives and so speed up access to high-priority data.

Seagate, and lots of other companies, took to this view and introduced
what became a stream of hybrid small form factor (2.5-inch) drives for
notebooks and even tablet computers.

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Market Position
The first was a Momentus 5400 PSD drive in 2006. It was followed by
the Momentus XT in May 2010.

Back in 2012, we wrote that "Luczo said that by 2017 over 85 per cent of
Seagate's HDD production will be of hybrid drives, covering both
consumer and enterprise products. Cold boot times are just 2 secs slower
than an SSD, making hybrid HDDs a good fit for the tablet and Ultrabook
notebook market.“

However, it was not to be. The price of flash bits fell fast enough for
buyers to split into two camps; SSD fans willing to spend cash on
performance, and disk fans preferring to spend it on capacity.

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Market Position
Tablet computers went for flash because of concerns about power
consumption, weight and fragility around disks. Suppliers like Apple
twinned proper SSDs with disk drives in its Fusion drive idea.

Performance-hungry desktops and workstations plumped for SSDs.

Enterprise data centres began replacing fast 2.5-inch disk drives with SSDs
too and, basically, the hybrid flash/disk drive market was going nowhere.

Seagate would have made a better choice by going full tilt into supplying
SSDs, which is what fellow disk drive manufacturers Toshiba and Western
Digital did.

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Local Customer Information

1) Customer Group Introduction

- Introduction
- General Information
- Finished Goods
- Market Position

2) Local Customer Information

- Organization Chart
- Form Factor and Products

3) Fujimi Products
- Slurry to Seagate Processes

4) Seagate Activities
- Current Activities
- Future Activities

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Organization Chart

Seagate Organization Chart for related department

only (Updated version Dec ’17)

Seagate

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Form Factors and Products

Application Storage Name Platter Substrate Thickness

Nearline 12TB Mobula P&C Glass 3.5” 0.635mm

(Server) (97mm)
Nearline 10TB Tatsu 1.3TB Al 97mm 0.8mm
(Helium)
Nearline 8TB Makara Plus 1.3TB Al 3.5” 1.27mm
(97mm)
Desktop / - Pharaoh 1TB Al 3.5” 1.27mm
CCTV
Notebook - Rose Wood 1TB Glass 67mm 0.635mm
(2.5mm)

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Form Factors and Products

Mobula Tatsu Makara Plus Makara Pharaoh

Media SINGAPORE SINGAPORE SINGAPORE SINGAPORE FEM

& FEM

Substrate HOYA TOYO & JOHOR & JOHOR FEM

JOHOR FEM
(small)

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Form Factors and Products

SEAGATE JOHOR (PLANT 1)

Program 1P Supplier 2P Supplier Remarks

Makara Plus Kao Kao 8TB

(High End)
Tatsu Kao Kao 10TB - Under qualification stage
(no MP)

In Plant 1, for 1P polishing machines total is 41 units and brand is Peter

Wolters from Germany.

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Form Factors and Products

For 2P polishing machine total is 39 units and brand is Taiyo from

Japan. Each polishing machine capacity is 50 disk/run.

Slurry tank is 2,500 liters and Satelite tank is 200 liters.

Polishing pad used in plant 1 for 1P is Filwel and 2P is Fujibo.

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Form Factors and Products

SEAGATE JOHOR (PLANT 2)

Program 1P Supplier 2P Supplier Remarks

Makara Cabot Kao 8TB

(Low End)
Glass Kao Kao Pilot run

Polishing pad used in plant 2 for 1P is Filwel and 2P is Fujibo.

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Form Factors and Products

In plant 2, for 1P polishing machine total is 76 units and brand is Wittig and
capacity is 25 disks/machine.

For 2P polishing machine total is 40 units and brand is Speed Fam with
capacity 50 disk/machine.

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Fujimi Products

1) Customer Group Introduction

- Introduction
- General Information
- Finished Goods
- Market Position

2) Local Customer Information

- Organization Chart
- Form Factor and Products

3) Fujimi Products
- Slurry to Seagate Processes

4) Seagate Activities
- Current Activities
- Future Activities

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Slurry to Seagate Processes

1P Sample Z1709

oImprove planarization ability to planarize GS with less removal amount:

 Apply better masking agent
 Modify PSD

How to improve ?
Adding additives that work as protection layer and increase small
silica particle population. Small silica particle adhere to the disk
surface and they would behave as protection layer.

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Slurry to Seagate Processes

1P Sample Z1709

oImprove removal rate to increase removal amount with less time:

 Increase H2O2 amount

Next actions :
 Waiting for Seagate down time

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Slurry to Seagate Processes

2P Sample W1512 G4 & W1512 G5

Background
Previous test W1512G2 and W1512G3 show significant lower MRR and
worst HMSWQ performance than POR.

Fujimi action plan is to submit 2 improvement samples

1.RDD W1512G4
2.RDD W1512G5

Test plan :

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Slurry to Seagate Processes

2P Sample W1512 G4 & W1512 G5

Test Results :

1.Both G4 and G5 slurry show significant worst MRR than POR. Unable
to meet MR spec limit.
2.G4 shows comparison AOI yield and Scl with POR whereas slightly
worst for G5.
3.No major issue on 95AT Post AWI and HMSWQ_P at MD & OD.
4.G5 shows slightly worst sector max at MD compare to POR. No issue
for G4.
5.G4 shows worse wrinkle than POR whereas G5 show comparable
wrinkle performance with POR.

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Slurry to Seagate Processes

2P Sample W1512 G4 & W1512 G5

Test Results :

Fujimi next actions :

 Need to discuss on the priority and future direction for next
sample submission.
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Seagate Activities

1) Customer Group Introduction

- Introduction
- General Information
- Finished Goods
- Market Position

2) Local Customer Information

- Organization Chart
- Form Factor and Products

3) Fujimi Products
- Slurry to Seagate Processes

4) Seagate Activities
- Current Activities
- Future Activities

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Current Activities

Tatsu currently under qualification stage (no mass production yet). Last
quarter 8k sample submitted to Media. Next year March will submit another
120k to media as second qualification. Their plan is 500k during MP but so far
nothing is confirmed, only plan.

Tatsu can not meet the requirement of HMS Wq Max and HMS Wq, this is the
qualification problem and internal struggle to improve.

If Tatsu approved, this program will run in plant 1 and expected running only
10% of Makara Plus. Priority still to run Makara Plus.

Fujimi 1P (Z1709) and 2P (W1512 G4 G5) sample will be used in Makara plus
program if approved.

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Future Activities
Current glass production line up as POR is based on conventional
processes which include lapping, 1P (Cerium Oxide), 2P (Silica Acidic Base)
and etc… based on Fremont processes.

By mid of Jan ‘18, Seagate will send the 1st qualification sample to
Woodland plant.

Current glass start up substrate is 67mm with thickness 0.635mm for 12 TB

for Nearline – Mobula program.

The idea of production line up processes which no need 1P and directly to

2P will be future idea.

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SEAGATE ~ the inside story ~

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That’s all.

Thank you.

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