HTC Investors

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Convening of an investor conference concerning Q2 09 Business Review
1.Date of the investor/press conference:2009/07/31

2.Location of the investor/press conference:Conference call

3.Financial and business related information:
2Q09 BUSINESS REVIEW:
(1)2Q revenue reached NT$38.2bn, up 10% YoY, inline with mid point of guidance range (NT$37.5bn~NT$38.5bn).
(2)2Q GPM was 32% (better than 31%± 0.2% guidance), margin upside mainly comes from cost structure improvement.
(3)2Q OPEX ratio came better than guidance (14.5% ± 0.2%) at 13.8%; therefore, 2Q operating margin came at 18.0%, also better than 16.5% mid-point guidance.
* All the numbers above are based on unconsolidated financial statements.

BUSINESS ENVIRONMENT:
(1)Mid-tier converged devices started emerging, attractive price/performance will further drive smart phone penetration.
(2)Next generation mobile broadband user experience would be benchmarked by user-friendly interface, social-network embedded communication, intuitive touch-panel based navigation and efficient multi-task operating system.
(3)Mobile broadband trend continues to grow wireless industry and dominates the growth opportunity. Competition in converged innovation becomes critical in mobile device industry and could lead to vendor landscape reshuffle.
(4)US market is relatively healthier while European market weaker.

MANAGEMENT INITIATIVES:
(1)Phase I branding process was more than successful amid a learning and uncertain stage. Meaningful brand awareness has been built as a leading Smartphone innovator and organization /talent has also been established toward brand focus.
(2)A proactive phase II branding process has begun from the Hero launch and HTC cycling team sponsorship at Tour De France . Management aims to further  drive growth at phase II by delivering the best customer experience. A holistic product launch approach on brand, channel, sales and marketing is expected to be boosted at this phase.
(3)The HTC “Sense” delivers HTC brand commitment to provide user centric experience and receives global media recognition in the three key themes, Make it Mine, Stay Close and Discover the Unexpected.  HTC ‘Sense” further raises the bar of competition and demonstrates our  leadership in the Android platform.
(4)Management adjusts product mix to expand into the mid-tier ASP product segment; percentage of revenue contribution begins from  2H09.
(5)Management aims to maintain a balance between profitability & volume in the transition (entering mid tier price product segment ) to drive volume growth and market share.
(6)Management sees China as key growth driver within 3 years when 3G infrastructure and operating environment become mature; initial engagement on all technology standards from major carriers has begun.
(7)Invited one new board director - Mr. Hochen Tan, the ex-Chairman of Chung Hua Telecommunication Co., into HTC Board.
(8)Invited Richard Brennan, the ex-CMO of Orange, into CEO office and act as senior executive for HTC brand and customer experience development.
(9)Employee stock bonus dilution is 1.678%, calculated based on the closing share price prior to the annual shareholders meeting date on June 19th.
(10)The ex-dividend date and the cash dividend payout date are August 3 and September 2, 2009 respectively.
(11)The board approved a 13 million shares treasury share buyback program with the NT$6.5 billion as the cap of buyback amount lasting to Oct. 2.

3Q09 BUSINESS OUTLOOK:
(1)3Q revenue expects to decline mid to high single digit YoY or from NT$34bn to NT$36bn.
(2)Non ODM unit shipment expects to grow mid single digit YoY while the Non ODM ASP will decline more than 10% YoY. ODM revenue expects to drop QoQ.
(3)GPM expects to be around 32.5%± 0.5%.
(4)OPEX ratio expects to be around 15%± 0.5%.
* All the numbers above are based on unconsolidated numbers.

2009 BUSINESS OUTLOOK
(1)Revenue expects to decline low to mid single digit from the 2008 level, lower than original guided 10% growth.
(2)Gross margin comes in at upper level of guided range (30%~32%).
(3)OPEX ratio increased from 13.5% to slightly above 15%, in order to expand marketing campaign on brand awareness.
(4)Management is taking necessary actions to lift the business momentum in the 4th Q.
* All the numbers above are based on unconsolidated numbers.

4.Any other matters that need to be specified: The material for the investor conference is disclosed under corporate governance item on Market Obsevation Post system and HTC Corporation Website.