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Asia Pacific Equity Research

02 August 2012

Apple iPhone 5
On track for Sept launch, but 4Q production units likely constrained unless display yields improve
In the past few weeks, several vendors have indicated delays and bottlenecks for iPhone 5 components. Apples comments about consumers waiting for iPhone launch also makes the timing and availability of new product launch very important. Heres JPM Asia tech teams take on this issue: Analyzing bottlenecks: Display appears the key issue, followed by casings: We believe that 4 display screens with in-cell panels are the key bottleneck in production. We believe Japan Display is supplying currently and LGD could start production in mid 3Q12, but Sharp is likely to remain at low yields, judging by yield rate improvements in previous products like the new iPad (see our In-cell & Touch panel report, Jun 16, 2012). It also appears unlikely for Apple to fall back to the previous design (glass on glass) since capacity has already been re-allocated at vendors like TPK (see page 2 for analysis of in-cell supply/demand in 2Q12). Casings are another area of constraint in our view, due to the introduction of new metal-based design. We believe that only Hon Hai Group is able to mass produce casings currently, while Greenpoint is still optimizing yields. Other areas like QCOM basebands and processors dont appear to be a critical bottleneck for 4Q12 and 1Q13 iPhone 5 production ramp. Sep launch likely, but 4Q12 supply will be constrained unless display yields improve: We still expect a product launch in Sep, since initial inventory is likely to be built up over months despite poor yields (we estimate 20M units produced in 3Q12). However, achieving our expected production volume of 45M iPhone 5 in 4Q12 is contingent on in-cell touch panel yields ramping up sufficiently (especially at Sharp). Our base case display supply assumptions indicate that supply would be sufficient for only 39M units (or 87% fulfillment) in 4Q12. In 1Q13, however, we expect yields to sufficiently recover to support the entire production demand (of 45M units). We also believe that any slippage on iPhone is not likely to affect iPad mini launch. Design change beneficiaries: We expect the key winners from iPhone 5 design change to be (1) Hon Hai group / Fanuc due to move to metal Unibody casings, (2) LGD/ Sharp (once yield issues are overcome) due to use of in-cell touch panels (3) Murata due to move to LTE, (4) Samsung for Application processors (5) TSMC (and potentially UMC) for LTE baseband chips at 28nm. StocksSupply chain pickup from late 3Q12: We expect iPhone supply chain related stocks to issue muted 3Q12 guidance due to uncertain production schedule, but expect a strong pickup in 4Q12. Our current key picks are Murata and LGD. We think a trading opportunity may arise in Hon Hai in 4Q12, but prefer to wait until after consensus estimates come down.
Table 1: In-cell display panel supply/demand situation in base case
Unit in millions, % In-cell supply / demand Base case for In- cell Supply In-cell Production demand from EMS vendors % of demand fulfilled
Source: J.P. Morgan estimates

Computer Hardware Gokul Hariharan

AC

(852) 2800-8564 gokul.hariharan@jpmorgan.com J.P. Morgan Securities (Asia Pacific) Limited

Alvin Kwock
(852) 2800-8533 alvin.yl.kwock@jpmorgan.com J.P. Morgan Securities (Asia Pacific) Limited

JJ Park
(822) 758-5717 jj.park@jpmorgan.com J.P. Morgan Securities (Far East) Ltd, Seoul Branch

Yoshiharu Izumi
(81-3) 6736-8637 yoshiharu.izumi@jpmorgan.com JPMorgan Securities Japan Co., Ltd.

Masashi Itaya
(81-3) 6736 8633 masashi.itaya@jpmorgan.com JPMorgan Securities Japan Co., Ltd.

Mark Moskowitz

AC

(1-415) 315-6704 mark.a.moskowitz@jpmorgan.com J.P. Morgan Securities LLC

Ashish Gupta
(91-22) 6157-3284 ashish.b.gupta@jpmorgan.com J.P. Morgan India Private Limited

Even with constrained production, Apple iPhone shipment estimates from our US IT hardware team should be achieved in 4Q12 (39M iPhones, and assuming 50-60% iPhone 5 mix).

3Q12E 21 20 104%

4Q12E 39 45 87%

1Q13E 48 45 106%

See page 10 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.morganmarkets.com

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Asia Pacific Equity Research 02 August 2012

Potential iPhone 5 delay Analyzing the bottleneck

We believe that lack of sufficient supply of in-cell touch panel displays (especially from Sharp and to an extent from LGD) are the main bottleneck in iPhone 5 production currently. In addition, yield for metal casings are also sub-optimal at Hon Hai and Green Point. Application processors and QCOM 28nm baseband chips do not appear to be key supply issues currently.

Displays Poor In-cell yields appear the main bottleneck

We believe that the 4 display screens with in-cell technology appear to be key bottleneck in production. Due to poor yields in Sharp, we believe that Japan Display is the only vendor who is able to ship meaningful volumes of in-cell based panels, but that LGD will gradually improve its yield. At acceptable yields, market share allocation would have been Japan Display (35%), Sharp (30%) and LG Display (35%) in our view, so the yield issues and delay at Sharp is quite serious. We believe that LG Display could start production in mid 3Q12, but Sharp is likely to remain at low yields in 3Q12, judging by yield rate improvements in previous products like the new iPad (took 6 months to ramp up to 500k per month capacity). We also believe it is unlikely and too late for Apple to fall back to prior design (glass on glass) since that capacity has already been re-allocated at vendors like TPK and Wintek.

In-cell touch panel supply situation Constraints likely in 4Q12

In our proprietary Supply / demand model for In-cell touch panels (see Table2 and 3 below) , we examine the availability of in-cell touch panel supply from the three different vendors ( Japan Display, LGD and Sharp) under three different scenarios, with varying assumptions for touch panel production yields at the three main vendors - LG Display, Japan Display and Sharp. Our Base case assumes Japan Display should kick-off mass production from July followed by LGD (during mid August), and Sharp under lower yield compared to peers. Under these base case assumptions, we find that supply should be adequate in 3Q12, but could fall short of production level demand in 4Q12. Our base case assumption implies that in-cell touch panel supply may be sufficient for only 39M units of iPhone 5 in 4Q12 (or 87% of the production demand from EMS vendors of ~45M units).

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Asia Pacific Equity Research 02 August 2012

Figure 1: Supply demand for In-cell Touch panel and sufficiency ratio 3Q12 - 1Q13E
M units, %

50 39

45

48

45

130% 120% 110%

40

30 21 20

104% 20 87%

106% 100% 90% 80% 70%

10

3Q12E Supply
Source: Company reports and J.P. Morgan estimates.

4Q12E Demand

1Q13E % of demand fulfilled

However, we anticipate that the supply demand balance should be achieved by 1Q13 since it gives sufficient time for all vendors to ramp up yields. Key variable remains yield rate, especially at Sharp.
Supply insufficient to satisfy 4Q12 production demand in all but our most bullish scenario (assuming very quick yield improvement in Sharp)

Table 2: In-cell display panel supply/demand situation

Unit in millions, % In-cell supply Bear case ( 10% lower yields from Base case) Base case Bull case (10% higher yields than Base case) In-cell Production demand from EMS vendors Bear case Demand Fulfillment ratio Base case Demand Fulfillment ratio Bull case Demand Fulfillment ratio
Source: Company data, J.P. Morgan estimates

3Q12E 17 21 24 20 85% 104% 120%

4Q12E 34 39 43 45 76% 87% 96%

1Q13E 42 48 52 45 94% 106% 116%

Our Bear case assumes 10% lower yields than the base case for each vendor, while the bull case assumes 10% higher yields for each vendor, compared to base case. Please see assumptions for individual companies in Table 3.

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Asia Pacific Equity Research 02 August 2012

Compared to our last report ( Incell and Touch panel supply demand report, Jun 16, 2012) , we have lowered yield rate assumptions for the three major panel suppliers, now averaging 54% by the end of this year (previously 70% by 4Q12E, downward revision mainly owing to Sharps failure to improve yields).
Table 3: In-cell display panel supply key assumptions
Unit in K sqm, %, million units Quarterly Capacity (K sqm) LGD Sharp Japan Display Yield rate (%) Bear case average Base case average Bull case average Base case - LGD Base case - Sharp Base case - JPD Unit output (million units) LGD Sharp Japan Display
Source: J.P. Morgan estimates

3Q12E 56 150 136 3Q12E 32% 40% 47% 55% 20% 55% 3Q12E 5 5 11

4Q12E 136 177 136 4Q12E 47% 54% 61% 68% 35% 65% 4Q12E 15 10 14

1Q13E 145 177 136 1Q13E 54% 61% 68% 73% 45% 70% 1Q13E 18 14 16

The production volume that we use to evaluate demand / supply sufficiency in 3Q121Q13E for display screens is based on our estimate of production of iPhone volumes at EMS vendors like Hon Hai (20M in 3Q12, 45M each in 4Q12 and 1Q13). These are different from the Apple iPhone shipment assumptions from our US IT Hardware team (see table 4 for these assumptions).

Casings Yields remain lower, Greenpoint lagging Hon Hai group

We believe that Apple is adopting metal Unibody casings instead of glass in its new iPhone 5, based on comments from multiple casing suppliers. However, the adoption of new casing material is causing lower yields in the initial ramp up of production. We believe that only Hon Hai Group is able to mass produce casings currently, while Greenpoint is still optimizing yields.

Application processors and QCOM 28nm base band chips not the main issue
Based on our discussions with multiple component vendors, application processors (manufactured by Samsung) and QCOM 28nm based band chips (MDM 9x15) are not likely to be bottleneck components in 3Q12 or 4Q12. Samsung has had sufficient experience in 32nm process ( Galaxy S3 application processors already using quad core Exynos chip based on 32nm). For 28nm we and our US team had concluded in our June 8 report that over 40m units of QCOM 9x15 chips could be supplied in Q4
4

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Asia Pacific Equity Research 02 August 2012

as additional production was ramped. Our sources currently indicate that 28nm is not currently the biggest concern for iPhone production later this year.

Manufacturing issues at final assembly: Not a show stopper, but hurting margins for Hon Hai
Finally, the full system assembly stage for iPhone 5 also is suffering from poor yields during initial ramp, in our view, due to the completely new industrial design. We believe the key reason why Hon Hai has not been able to move iPhone 5 production to Zhengzhou is also related to poor manufacturing yields. This is not a show stopper for volumes, since Hon Hai has sufficient capacity, but we think this is likely to hurt Hon Hai's OP margins in 3Q12.

Impact: Launch likely still in late Sept, but we think wide availability in 4Q12 is under question
We are expecting 20M and 45M units of iPhone 5 in production at EMS vendors like Hon Hai in 3Q12 and 4Q12, assuming that yields are not affected. Since Apple typically builds pre-launch inventory ahead of schedule, we believe the launch schedule may not be adversely affected by the potential yield issues. However, we believe that the wide availability of iPhone 5 in 4Q12 could be constrained if yields on in-cell touch panels (especially at Sharp) do not improve meaningfully in 4Q12. Sharp has the largest installed base for in-cell touch panels and would have accounted for 30% of market share in iPhone 5 panels, assuming optimum yields.

iPhone 5: What is the JPM Asia Tech team expecting?

We are expecting a significant product upgrade in iPhone 5 including the following: (1) Improved product design, replacing glass casings with metal Unibody casings, enabling a slimmer form factor. (2) Adoption of in-cell 4 touch panels (instead of glass-on-glass), again enabling thinner form factors. (3) Moving to LTE, adopting QCOM 28nm baseband chipsets (9x15). (4) Adopting HD front facing lens, while staying with 8Mpx for rear-facing lens. (5) Quad core application processor, fabricated at 32nm (previous generation dual core A5 application for iPhone 4S fabricated at 40nm).

Key vendors who we expect to benefit from the design change are:
(1) Hon Hai group and Fanuc (higher CNC machine demand) due to move to metal Unibody casings, (2) LGD due to use of in-cell touch panels

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Asia Pacific Equity Research 02 August 2012

(3) Murata due to move to LTE, implying higher demand for MLCC and more complicated RF front end modules (4) Lens makers due to adoption of front-facing HD lens (5) Samsung which we believe is likely to be sole supplier for the application processor

U.S. IT Hardware View on Apple Supply Chain Dynamics

Apple is covered by J.P. Morgan IT Hardware analyst Mark Moskowitz, who authored this section

Current supply chain dynamics do not change our view on Apple's smartphone market position or iPhone unit shipment estimates. We continue to expect a September product announcement related to the new iPhone 5, followed by volume ramp in the month of October. As for the iPad, there are increasing signs in the supply chain of a new and smaller form factor to be potentially introduced later this year. While we have previously regarded an iPad mini launch as more of a C2013 or later event, we are starting to become more flexible in our view as relates to a potential C2012 event. In such a case, we would expect Apple to further assert its market leadership in tablets, which is a market that continues to lack a formidable #2 vendor. iPhone 5 supply constraints? Our J.P. Morgan Asia Tech team has been closely monitoring the ebb and flow of the Apple-related supply chain, particularly as relates to potential supply constraints for displays and casings for the new iPhone 5. At this point, the assumptions of our Asia Tech team do not suggest a major limitation or hurdles that would prevent a year-end push. Lastly, we are not concerned about any impact from 28nm chip constraints at Qualcomm, as we think that this issue will fade entering C2013. Based on inputs from our J.P. Morgan Asia Tech team, the estimated iPhone 5 production capacity, assuming display and casing constraints, is around 20 million units in the September quarter and 39 million units in the December quarter. (Note: these figures relate to production activity, not shipments.) Assuming quarterly production capacity continues to improve in early C2013, we think that the first two quarters of figures mentioned above (20M in Sep-Q and 39M in Dec-Q) indicate that the iPhone 5 production capacity is sufficient enough for Apple to meet or beat our total iPhone unit estimates of 39.4 million and 37.8 million units for the December 2012 and March 2013 quarters, respectively. We estimate that iPhone 5 units could be 50-60% of total iPhone shipments in the first two quarters of volume ramp, scaling up after that. Had the current assumptions for production capacity ahead of the iPhone5 launch suggested a lower step-function up in the quarterly run rate to 39 million units exiting the year, then we could have been concerned. Our view on the new iPhone 5 Our long-held view has been that the iPhone 5 will be a revolutionary refresh, including a thinner form factor but with a slightly bigger screen. In our view, the screen stands to fill more of the black sidewalls present in the prior generations. As is widely expected, the new smartphone stands to be 4G LTE capable, and given the prospect of a thinner body, we think that the iPhone 5 can avoid being classified as a "pocket hog," which has hurt other 4G LTE offerings in the marketplace.

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Asia Pacific Equity Research 02 August 2012

In addition to hardware improvements, we think that Apples new software-driven services with iOS 6 should resonate well with the customer base evaluating the iPhone 5. As we have stated previously, Apple continues to assert its role in enabling the Digital Age for many consumer and corporate mobile users. With iOS 6, we believe that Apple is taking another firm step forward with Passbook, Maps, and FaceTime over cellular. Plus, the company has signaled incremental advancements will be available for Siri, which should be a positive catalyst, given the first version of Siri has been met with mixed customer reception. In our view, Apple's own version of mapping and navigation services affirms the company's ability to develop more than just hardware or software. The software is underpinning an increasingly services-led experience. Of note, we think that the new Passbook app is the precursor to Apples role in mobile payments, which we coined as iPay earlier this year. Last week, Apple announced plans to acquire mobile security maker AuthenTec for approximately $356 million. While there has not been any official company announcement related to the planned use of the assets, we think that AuthenTec's technology could be used to incorporate a fingerprint-based security application, which could be used in mobile payment platforms. Apple's recent earnings miss does give us pause Following Apples rare earnings miss last week, we think that the top two issues for the stock and model are: 1) can the iPhone 5 restore order to the story, and 2) has Apple saturated its customer penetration opportunities? For the last 7-8 years, Apple has been a product cycle story but with the additional complements of 1) increasing customer penetration and 2) entering completely new product categories. Incremental customer penetration helps smooth out or absorb volatility of new product cycle (i.e., 2-3 quarters of boom, followed by a quarter or two of bust). This point is highlighted, as the iPhone 5 is about a quarter from full volume ramp and already it appears that Apples model is unable to absorb volatility related to product transition. Obviously, the broader macroeconomic issues are likely having an impact, too. In any event, we think that a successful iPhone 5 launch is important to restoring investor sponsorship of Apple's stock, and at this point, we do not think the potential supply chain constraints mentioned in this supply chain-focused report are big enough to derail the iPhone 5 launch. It also is important to recall Apples competitive advantage of maintaining tight relationships with the key suppliers throughout the supply chain. If displays or other component constraints manifest at greater than expected levels, we think that Apple's position of strength in the supply chain should partially buffer the company relative to its competitors from any supply chain-driven impact on Smartphone industry unit shipments. Table 4 shows the Apple iPhone shipment estimates from the US IT hardware team

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Table 4: J.P. Morgan - Current iPhone Unit Estimates

Units in 000s 3QA iPhone Units Y/Y Growth % Q/Q Growth % 26,028 28.0% -25.8% F2012E 4QE 22,775 33.4% -12.5% Year 120,911 67.3% 1QE 39,377 6.3% 72.9% 2QE 37,841 7.9% -3.9% F2013E 3QE 34,625 33.0% -8.5% 4QE 35,525 56.0% 2.6% Year 147,369 21.9%

Source: Company reports and J.P. Morgan estimates.

Asian Tech Stocks to benefit

We expect iPhone supply chain related stocks to issue muted 3Q12 guidance due to uncertain production schedule, but expect a strong pickup in 4Q12. Our current key picks in the iPhone supply chain are Murata and LGD. We think a trading opportunity in Hon Hai may arise in 4Q12, but prefer to wait until after consensus estimates come down.
Valuation table Apple iPhone supply chain vendors
Rating Kinsus Sharp LGD Hon Hai Foxconn Tech Catcher Murata Ibiden TXC TPK Wintek Pegatron OW OW OW N OW UW OW OW N OW N N Price (LC) 8/1/2012 83.2 265. 24200 84.8 107.5 135 3715 1239 46.5 347.0 13.4 38.7 Mkt Cap US$ mn 1,238 3,766 7,681 30,261 4,209 3,383 10,711 2,392 469 3,581 827 2,911 Target Price 100 550 34,000 90 125 120 5,320 2,000 40 400 14 37 EPS Growth 2012E 2013E 6.4% 21.4% NA NA NA 389.5% -5.8% 25.0% 22.9% -100.0% -15.6% 6.7% 78.5% 30.9% 50.3% 28.2% -4.9% 18.2% 6.5% 5.8% NA NA NA 11.0% P/E (x) 2012E 2013E 12.5 10.3 NA 3.2 34.3 7.0 11.8 9.4 11.1 NA 10.6 9.9 14.3 10.9 11.1 8.6 14.1 11.9 8.8 8.3 NA NA 11.4 10.3 ROE (%) 2012E 2013E 11.8 13.4 -9.9 13.8 2.5 11.5 11.7 13.1 19.7 NA 15.5 14.4 6.7 8.8 5.8 7.0 13.7 15.3 36.6 30.1 0.2 -0.2 7.9 8.0 P/B (x) 2012E 2013E 1.6 1.5 0.5 0.5 0.8 0.8 1.4 1.2 11.1 NA 1.5 1.4 0.9 0.9 0.6 0.6 1.9 1.8 2.9 2.2 0.7 0.7 0.9 0.8

Source: Bloomberg and J.P. Morgan estimates. (Share price as of Aug 1, 2012)

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Appendix
iPhone Supply Chain
Component Connector Connector Connector Camera module Camera module Lense Lense PCB PCB PCB PCB PCB Assembly Assembly Metal casing Metal casing Passive components Passive components Passive components Passive components Passive components Crystal Crystal Data cable and charger Driver IC Application processor Baseband NAND flash AAC Acoustic Display Display Touch Panel Touch Panel Touch Panel FC-CSP for A4 and A5 FPC FPC Ceramic Package High-Frequency components High-Frequency components Vibration Motor Vibration Motor Compass Packaging Packaging Lense actuator Lense actuator
Source: Company, J.P. Morgan

Company Entery Japan Aviation Electronics Industry Daiichi Seiko LG Innotek Primax Largan Genius Optical Unimicron Tripod AT&S Ibiden Meiko Hon Hai Pegatron Foxconn Tech Catcher Cyntec Murata Mfg Taiyo Yuden SEMCO TDK Daishinku TXC Cheng Uei Novatek Samsung (foundry) TSMC (foundry) Samsung Acoustic LG Display CMI TPK Wintek CMI Ibiden NOK Fujikura Kyocera Murata Mfg Taiyo Yuden NIDEC Minebea Asahi Kasei Microdevices Ibiden SEMCO Mitsumi Electric Alps

Ticker 1333 TT 6807 JT 6640 JT 011070 KS 2336 TT 3008 TT 3406 TT 3037 TT 3044 TT 4062 JT 3787 JT 2317 TT 4938 TT 2354 TT 2474 TT 2452 TT 6981 JT 6976 JT 009150 KS 6762 JT 6962 JT 3042 TT 2392 TT 3034 TT 005930 KS 2330 TT 005930 KS 2018 HK 034220 KS 3481 TT 3673 TT 2384 TT 3481 TT 4062 JT 7240 JT 5803 JT 6971 JT 6981 JT 6976 JT 6594 JT 6479 JT 3407 JT 4062 JT 009150 KS 6767 JT 6770 JT

Allocation

Rev. Exposure (FY12)

60% 60% 40% 35% 5% 40-50% 75%-80% 15-20% 50% 5% MLCC - 70% MLCC - 20% MLCC-10% 29% 6-10% 5% 5% 35-40% (all Apple business included) 80%+ (all Apple business included) 12% 2%

40-50% ~30% na na na 60-70% ~50% 30% 45% 30% 25% 70% ~30-40% 10-20% 80%

7%

~30% of system LSI sales 5-10% na ~6% 40% (iPhone + iPod) 50% (iPhone + iPod) <5%

8%

60-70% 30-40%

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Asia Pacific Equity Research 02 August 2012

Companies Recommended in This Report (all prices in this report as of market close on 01 August 2012) LG Display (034220.KS/W24200/Overweight), Murata Manufacturing (6981) (6981.OS/3715/Overweight)
Analyst Certification: The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report.

Important Disclosures

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Murata Manufacturing (6981), LG Display. Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: LG Display. Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from LG Display. J.P. Morgan Securities (Far East) Ltd, Seoul branch is acting as a Market Maker (Liquidity Provider) for the Equity Linked Warrants of LG Display and owns 20,886,740 as of 1-Aug-12. Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan covered companies by visiting https://mm.jpmorgan.com/disclosures/company, calling 1-800-477-0406, or emailing research.disclosure.inquiries@jpmorgan.com with your request.
Date Rating Share Price (Y) 8120 8700 8470 6950 5440 5610 5440 4870 5250 4650 4630 4170 3390 3140 3870 3650 3860 4570 5040 4715 4420 4860 5390 6010 5860 4025 4215 3965 4440 OW OW OW OW OW OW OW OW N N N N N N N N OW OW OW OW OW OW OW Price Target (Y) 10000 11500 10500 8500 7100 7300 6700 6300 6100 5800 5100 4500 3700 3100 3400 3900 4100 4700 5100 5000 5400 5500 6200 7000 6600 5200 5000 4800 5400

11-Dec-06 OW 20-Apr-07 31-Oct-07

Murata Manufacturing (6981) (6981.OS, 6981 JO) Price Chart
15,701 OW OW Y6,100 N Y3,400N Y4,700 Y7,300 N Y4,500 13,458 OW Y10,500 OW OW Y6,300N Y3,100 Y4,100 Y7,100 Y5,100 N OW 11,215 OW Y10,000 OW Y8,500 OW Y5,800 N Y3,900 OW Y11,500 OW Y6,700 N Y3,700 8,972 Price(Y) 6,729 4,486 2,243 0 Sep 06 Jun 07 Mar 08 Dec 08 Sep 09 Jun 10 Mar 11 Dec 11 N Y5,100 OW OW Y7,000 OW Y5,200 Y5,400 OW Y5,400 N Y5,000 OW Y5,500 OW Y6,600 Y5,000Y6,000 OW OW OW Y6,200 OW Y4,800 Y5,320 OW

01-May-07 OW 21-Jan-08 01-Feb-08 11-Mar-08 14-Apr-08 08-Jul-08 30-Jul-08 30-Sep-08 04-Nov-08 19-Nov-08 07-Jan-09 16-Apr-09 30-Jul-09 20-Jan-10
Sep 12 14-Oct-10

01-May-08 OW

01-May-09 N

01-Mar-10 16-Nov-10 12-Jan-11 01-Apr-11 03-Oct-11 04-Nov-11 06-Feb-12

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Dec 11, 2006.

04-Dec-10 OW

22-Dec-11 OW

10

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Asia Pacific Equity Research 02 August 2012

04-Apr-12 09-Jul-12 Date 11-Oct-06 10-Apr-07

LG Display (034220.KS, 034220 KS) Price Chart
94,318 OW W56,000 80,844 OW W50,000 OW W70,000N W36,000 67,370 53,896 Price(W) 40,422 26,948 13,474 0 Oct 06 Jul 07 Apr 08 Jan 09 Oct 09 Jul 10 Apr 11 Jan 12 N W31,000 W53,000 OW OW W50,000 OW W32,000 N W31,000 N W36,000OW W55,000 OW W45,000

OW OW

4940 4140

6000 5320 Price Target (W) 40000 45000 50000 56000 60000 70000 60000 36000 31000 24000 28000 31000 36000 40000 53000 55000 60000 55000 52000 50000 45000 42000 32000 36000 34000

Rating Share Price (W) OW OW OW OW OW OW N N N N N OW OW OW OW OW OW OW OW OW OW OW OW 30400 32400 39650 42400 45000 49250 37750 32900 29950 20850 31150 31350 35600 30000 41700 41700 43950 37250 38200 34850 29500 30550 18550 28550 21500

22-May-07 OW 03-Jul-07 10-Oct-07 31-Oct-07 03-Jul-08 10-Jul-08

OW W40,000 OW W60,000 OW W45,000 OW W60,000 N W28,000 W40,000 OW W55,000 OW W42,000W36,000 N W24,000 OW OW W60,000 OW W52,000 OW OW W34,000 20-Aug-08

02-Dec-08 N 17-Apr-09 10-Jun-09 17-Jul-09 12-Nov-09 06-Jan-10 01-Apr-10 23-Apr-10 17-Sep-10 13-Jan-11 28-Mar-11 01-Jul-11 22-Jul-11 13-Sep-11 28-Jan-12 25-Jun-12

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Oct 11, 2006.

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = Underweight Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] In our Asia (ex-Australia) and UK small- and mid-cap equity research, each stocks expected total return is compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research website, www.morganmarkets.com. Coverage Universe: Hariharan, Gokul: ASUSTek Computer (2357.TW), Acer Inc (2353.TW), Catcher Technology (2474.TW), Compal Electronics, Inc. (2324.TW), Delta Electronics, Inc. (2308.TW), Foxconn Technology (2354.TW), Hon Hai Precision (2317.TW), Lenovo Group Limited (0992.HK), Lite-On Technology Corporation (2301.TW), Pegatron Corp (4938.TW), Quanta Computer Inc. (2382.TW) Moskowitz, Mark: Aeroflex (ARX), Apple Inc. (AAPL), Brocade (BRCD), Dell Inc. (DELL), EMC (EMC), Emulex Corp. (ELX), Fusion-io (FIO), Hewlett-Packard (HPQ), IBM (IBM), Lexmark International (LXK), NetApp (NTAP), Orbotech (ORBK), QLogic Corporation (QLGC), STEC (STEC), Seagate Technology (STX), Western Digital (WDC), Xerox Corporation (XRX)

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This document is being provided for the exclusive use of G LABS1 at UNIVERSITY OF CHICAGO

Gokul Hariharan (852) 2800-8564 gokul.hariharan@jpmorgan.com

Asia Pacific Equity Research 02 August 2012

J.P. Morgan Equity Research Ratings Distribution, as of July 6, 2012

J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients* Overweight (buy) 45% 51% 44% 70% Neutral (hold) 43% 47% 48% 62% Underweight (sell) 11% 34% 8% 51%

*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at http://www.morganmarkets.com , contact the primary analyst or your J.P. Morgan representative, or email research.disclosure.inquiries@jpmorgan.com. Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS, and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.

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Gokul Hariharan (852) 2800-8564 gokul.hariharan@jpmorgan.com

Asia Pacific Equity Research 02 August 2012

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