Philippe Combes

Display
Components
Philippe Combes
Executive Vice President Philips Components
CEO Business Group Display Components

W e w i l l r e i n f o r c e o u r l e a d i n g p o s i t i o n
a n d g r a s p h i g h g r o w t h a n d h i g h
v a l u e a d d e d b u s i n e s s o p p o r t u n i t i e s !

Display Components - the Key Messages
• We are number 1 in color picture tubes
• We have the power of innovation
• The Plasma market offers bright perspectives
• We constantly drive towards cost leadership
• We deliver high customer service
• We focus on fast growing segments

It’s great to be a leader in display!
Television Tubes
Monitor Tubes
Plasma Display Panels (PDP)

• Market Overview
• Current position
• Our future strategy
– C a t h o d e R a y T u b e ( C R T )
Contents
– Plasma Display Panels (PDP)
• Summary

4 5 0
4 0 0
3 5 0
3 0 0
2 5 0
2 0 0
1 5 0
1 0 0
5 0
D i s p l a y M a r k e t
1 4 ” - 4 0 ” [ m i l l u n i t s ]
C R T
C R T
an exciting technology, capturing the high volume of the market
CRT will remain a tough competitor for new technologies
0
1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4
Plasma &
Projection

In TV tubes, the Jumbo segment is the fastest growing
M i l l i o n
u n i t s
2 0 0
1 5 0
1 0 0
5 0
Source: Philips BI
0
G l o b a l T V C R T m a r k e t
3 0 ” - 4 0 ”
1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4
9%
36%
35%
20%
2 0 0 4
29%
43%
20%
8%
V o l u m e V a l u e
J u m b o
L a r g e
M e d i u m
S m a l l

TV tube market developments
• The television tube market is growing with an average of 4.8 %
CAGR 2000-2004 in value
– T h e J u m b o s e g m e n t h a s t h e s t r o n g e s t v a l u e g r o w t h ( > 1 4 % ) .
• Innovation rate will increase to satisfy consumer trends triggered
by alternative technologies (flat, slim, high resolution).
• M a i n g r o w t h a r e a s a r e C h i n a a n d E u r o p e
• Supply demand is becoming balanced in all segments
• Allowing prices for small and medium size tubes to increase,
restoring attractiveness to this segment

In Monitor tubes, 17” will be the dominant size
Million
units
Source: Philips BI
2 0 0
1 5 0
1 0 0
5 0
0
Global monitor CRT market
1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4
> 2 0 "
1 9 "
1 7 "
1 5 "
1 4 "

Monitor tube market developments
• PC market showing continuous volume growth of more than 10%
per year
• The trend is large, slim and flat !
• Color CRT monitors continue to dominate the desktop display market
• China will be the largest market for Monitor CRTs
• Supply-demand getting in balance in 2002, one year earlier than
previously forecasted. Allowing for prices to recover
• Due to the penetration of LCD, the monitor tube market is expected
to reach its peak around 2006 / 2007

• Market Overview
• Current position
• Our future strategy
– C a t h o d e R a y T u b e ( C R T )
Contents
– Plasma Display Panels (PDP)
• Summary

Market share (value)
20%
15%
10%
5%
0%
S o u r c e : P h i l i p s B I
We are the leader in TV tubes!
Nr 1 in television CRTs
(1 8 % W o r l d W i d e )
Philips
Sony
Samsung LG
Thomson
Matsushita
20%
15%
10%
5%
0%
Samsung
Nr 5 in monitor CRTs
( 9 % W o r l d W i d e )
CPT
LG
Sony
Philips
Hitachi

O u r c u s t o m e r s i n c l u d e t h e w o r l d ’ s m a r k e t - a n d i n n o v a t i o n - l e a d e r s

The 2000 European TV of the Year is using Cybertube

Our global presence is uniquely balanced!
E u r o p e
This is supported by our local industrial base.
1 9 9 5
A m e r i c a s
A s i a
E u r o p e
2 0 0 0
A s i a
A m e r i c a s

We have been able to manage strong price decreases
Index
1 1 0
1 0 0
90
80
70
60
50
T V t u b e 1 4 i n c h
Price
C o s t
1996 1997 1998 1999 2000

• Market Overview
• Current position
• Our future strategy
– C a t h o d e R a y T u b e ( C R T )
Contents
– Plasma Display Panels (PDP)
• Summary

We will grasp high growth and high value added
business opportunities in our display market
Focus on
– Winning customers through innovation and
customer intimacy
– High growth segments: Jumbo expansion
– Cost competitiveness

S a l e s [ B E u r o ]
Our sales growth is built on our R&D investments
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5
4
3
2
1
0
CRT Sales CRT R&D spending
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R&D spending [Mill Euro]
1 4 0
1 2 0
1 0 0
8 0
6 0
4 0
2 0
0
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 0.0%
R & D i n m i l l E u r o
R&D percentage of sales
R&D spending [ % of sales]

To grow, we focus on big, flat, slim and high resolution

Rolling out our unique flat technology - Cybertube
Off-state flatness
impression
Weight
Lowest weight due to
medium glass wedge
&CHSC
Magnetic Shielding
Microphony
GPM technology provides best
in class performance due to
strength of shadow mask
Sony Wega
Philips
+ +
+
0
-
--
Picture Flatness Impression
Depth
All competitors at similar
depth
Drop Test (neck down)
AG gives better
performance but others are
at threshold level for RF
Drop Test (E/W)
AG gives worse performance
Our flat solution allows for fast and cheap implementation!

U s i n g e - t o o l s t o o p t i m i z e o u r s u p p l y c h a i n a n d c u s t o m e r i n t i m a c y
• Electronic Key Account Management ( ek@m TM)
– Customer intimacy
– Supply chain integration
– Quality excellence
• eProcurement
– B2B integration for strategic bill of materials
– e C o-design with key suppliers
– A r i b a implementation for non product related purchases

U S A
Mexico
2 lines
B r a z i l
We capture the growth in jumbo
CRT site where lines will be added
Other CRT sites
C e n t r a l - E u r o p e
3 lines
W - E u r o p e
C h i n a
2 lines
Taiwan
by investing in cost competitive locations

24% market share in jumbo TV tubes by 2004 (value)
l a r g e
Jumbo sales
j u m b o
Revenues per Segment
s m a l l
m e d i u m
l a r g e
j u m b o
2000 2004
m e d i u m
s m a l l

We have accelerated our restructuring effort
USA
Mexico
Brazil
5 lines
‘00-’02
CRT sites
W-Europe
Central-Europe
1 line
‘00-’01
5 lines
‘00-’01
China
Taiwan
Moving large and jumbo to future customer locations

• Market Overview
• Current position
• Our future strategy
– C a t h o d e R a y T u b e ( C R T )
Contents
– Plasma Display Panels (PDP)
• Summary

Plasma is a consumer dream come true

A promising technology with high growth potential
PDP Market
[mill units]
S o u r c e : P h i l i p s B I
9
8
7
6
5
4
3
2
1
0
1 9 9 8 2 0 0 0 2 0 0 2 2 0 0 4 2 0 0 6 2 0 0 8
“A picture on the wall”

PDP market developments
• The 1999 biggest markets are Europe and North America
• At current price levels the main market is business
application
• Market studies reveal that wall hanging televisions are very
appealing to the consumers
• As prices will come down, the consumer market will develop

Our PDP Business Model
• We will support Philips Consumer Electronics in their ambitions
in the Plasma market
• W e w i l l d o t h i s b y c o n c e n t r a t i n g o n t h e p a n e l m o d u l e a s s e m b l y
and leveraging our in-house knowledge in
– pixel structure simulation and addressing
– d i g i t a l s i g n a l p r o c e s s i n g
– semiconductors
• We will purchase our parts from leading suppliers, enabling us
to develop the business with limited investments and maintain
flexibility.
• We will maximize value creation, while minimizing financial risk

• Market Overview
• Current position
• Our future strategy
– C a t h o d e R a y T u b e ( C R T )
Contents
– Plasma Display Panels (PDP)
• Summary

S u m m a r y
• We are number 1 in color picture tubes
• We have the power of innovation
• We constantly drive towards cost leadership
• We focus on fast growing segments
The CRT is an exciting business with growth opportunities,
giving a tough time to new technologies.
Of new technologies, Plasma offers bright perspectives

Display
Components
Philippe Combes
Executive Vice President Philips Components
CEO Business Group Display Components