INVESTORS

Letter to Shareholders

Dear Shareholders,

As the market demand slowed and the economy was in decline in mainland China in 2015, plus the effects of exchange-rate depreciation of yen and euro, the output value of Taiwan’s manufacturing industry in 2015 was down 10.8% from 2014. Moreover, Japanese competitors set up factories in mainland China and went off the beaten track to use equipment and materials made in mainland China to reduce the cost, thus competing in the global marketplace with lower-priced linear guideway. The company’s consolidated revenue was NT$ 14.89 billion in 2015, down 1% from last year’s NT$ 15.9 billion. The reason why HIWIN was still able to deliver stable performance in such a weak economy and competitive environment is that it has made long-term investment in innovations and expanded the product line and its global market layout is deep and broad, which can show our business capacity.

In terms of research and development, HIWIN is devoted to developing middle and high-end products, such as smart screws, linear guideway and robots, moving towards the goal of realizing industry 4.0. Using the smart ball screw and linear guideway system displayed in EMO 2015, the operator can monitor the machine production state remotely from the cloud and predict the time to replace spares the with a smart phone, truly realizing intelligent manufacturing of industry 4.0. AB/AC axis, the key system part of five-axis processing machine with linear motor at the core starts delivery, leading Taiwan’s machine tools into the era of five-axis combined processing machine through transformation and upgrading. As for manufacturing capacity, the execution of vertical and horizontal integration is being sped up. HIWIN cooperates with end product manufacturing process to provide machine design service, converged device, machine arm and electromechanical parts, and authorized equipment manufacturers’ operation mode of the total solution, which also starts a “new era of original service” of HIWIN.

HIWIN aims to become the world’s major robot manufacturer, design and build a smart and automatic production line for its customers and provide one-stop integrated service. Throughout 2015, there were many successful application cases of HIWIN’s various robots in many industries, such as electron, medical service, food, banks, consumer goods, machine tools, industrial machinery, panels and PCB. IFR estimates that the global demand for various robots will exceed 1.3 million in 2018, so HIWIN is ready to shine in the field of robots.

HIWIN succeeded in purchasing Luren Precision in 2015, a special machine tool factory of high-precision gear cutter and gear manufacturing process in Taiwan, whose hardware and software technology related to gear and gear cutter can greatly assist HIWIN in building various globally competitive robots, completing the puzzle in HIWIN’s key manufacturing process filed of robots. In addition, for future development, HIWIN positively enlarged the scale of investment in Taiwan, mainland China, Germany, Japan, America and Italy and built a more detailed marketing network, both of which would add new functions to future revenue growth and lay a solid foundation for HIWIN’s moving towards the world’s No.1 leading brand.

HIWIN continued to focus on R&D innovation and brand marketing in 2015 and gained recognition from media at home and abroad. It ranked 5th in Top 100 Fastest Growing Enterprises 2009~2014 published by Nikkei Business and it’s also the only Taiwanese enterprise in the top 20; it ranked 37th in Forbes Top 100 Global Innovators again; it’s weight was in top 10 of Nasdaq’s Robo-Stox constituents; it won Taiwan Excellence Gold Award and Taiwan Excellence Silver Award given by the Ministry of Economic Affairs for the 15th consecutive year; it’s been in Top 20 Most Innovative Taiwanese Companies selected by Ministry of Economic Affairs for 5 consecutive years (2011~2015); besides, it also won Excellence in Corporate Social Responsibility (CSR) Award and its CSR report was accredited by AA1000 and won Taiwan Corporate Social Award and Growth Through Innovation Award.

HIWIN has long been devoted to operation and pursuing solid growth and performs its duties as a corporate citizen in its global sites. “HIWIN Thesis Award” is held in Taiwan for the 13th time, having a giant effect on research and teaching of universities; HIWIN commissions Chinese Mechanical Engineering Society (Beijing) to hold “HIWIN Doctoral Dissertation Award” (candidates are from mainland China, Taiwan, Hongkong and Macao) in mainland China, and it has been held for the 6th time and become a benchmarking award in mainland China; It is estimated that the compound library it donates to 6 elementary schools in Hsinchu will be completed and open in Sep. 2016. It continues to cooperate with universities in industry-university cooperative projects to help students build competency for their future jobs; it cooperates with universities to set joint research and development centers, combine specialties of the industry and schools and cultivate senior talents in medical engineering and rehabilitation technology; it assists universities in setting up a training center of industrial robot application, expecting this center to become one of the important training bases of Taiwan’s robot professionals; it denotes “Robotic Gait Training System” to hospitals to refine rehabilitation and medical quality through their service platform and influence, benefiting more patients.

Looking ahead to 2016, we can see that the global economy tends to recover; although it recovers slowly and conservatively, opportunities and challenges coexist. The “Robotic Gait Training System” it had worked on for years was officially approved for sale by China Food and Drug Administration in March 2016. Mainland China is energetically pushing for “Made in China 2025” and has included robots in the 13th Five Year Plan; the demand for intelligent manufacturing and robots is rising rapidly, which is the best opportunity for HIWIN. On the other hand, America’s economic growth slows and depreciation effects of yen and euro continue, both of which will intensify the industry competition. Therefore, facing the transformation of the overall environment, we will respond prudently, continue to invest R&D resources, develop new products, improve manufacturing process and enhance operating efficiency. As a leading company in the development of intelligent manufacturing and intelligent automation thanks to our innovative thinking, we believe we will cooperate with Taiwanese and global customers to go to the future of industrial upgrading, becoming the best partner of customers in industry 4.0.

Here, I’d like to thank all our colleagues for their tireless efforts and all shareholders, government agencies and banking consortia for their support; I appreciate shareholders’ long term support for HIWIN’s management team in innovation and building its global brand position and I hope you will continue supporting us and giving us advice in the new year.