A UGUST 2018 INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY AKTS Investor Presentation
This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions and are not historical facts and typically are identified by use of terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “forecast,” “predict,” “potential,” “continue” and similar words, although some forward-looking statements are expressed differently. You should be aware that the forward-looking statements included herein represent management’s current judgment and expectations, but our actual results, events and performance could differ materially from those expressed or implied by forward-looking statements. We do not intend to update any of these forward looking statements or publicly announce the results of any revisions to these forward-looking statements, other than as is required under U.S. federal securities laws. Akoustis’ business is subject to numerous risks and uncertainties, including those relating to fluctuations in our operating results, our dependence on a few large customers for a substantial portion of our revenue, a loss of revenue if contracts with the U.S. government or defense are canceled or delayed, our ability to implement innovative technologies, our ability to bring new products to market, achieve design wins versus our competitors and the rate of acceptance of our products in the market, the efficient and successful operation of our wafer fabrication and other facilities, our ability to adjust production capacity in a timely fashion in response to changes in demand for our products, our recent acquisition of STC-MEMS could disrupt our business and may not be successfully integrated, variability in manufacturing yields, our ability to retain the Trusted Foundry accreditation from the STC- MEMS acquisition, industry overcapacity, inaccurate product forecasts and corresponding inventory and manufacturing costs, dependence on third parties, our dependence on international sales and subcontract operations, our ability to attract and retain skilled personnel and develop leaders, our need for substantial additional funding may dilute our stockholders’ ownership and cause us to incur debt and other contingent liabilities, fluctuations in the price of our common stock, our ability to protect our intellectual property, claims of intellectual property infringement and other lawsuits, security breaches and other similar disruptions compromising our information, and the impact of government or environmental regulations. These and other risks and uncertainties, which are described in more detail in Akoustis’ most recent Annual Report on Form 10-K and in other reports and statements filed with the Securities and Exchange Commission, could cause actual results and developments to be materially different from those expressed or implied by any of these forward-looking statements. THESE MATERIALS DO NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF ANY OFFER TO BUY, ANY SECURITIES OF AKOUSTIS, INC., OR OF ANY OTHER ENTITY WHATSOEVER. ANY REPRESENTATION TO THE CONTRARY SHOULD BE IGNORED. “Akoustis®” the Akoustis logo and “BulkONE®” are registered trademarks of Akoustis Technologies, Inc. INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY FORWARD-LOOKING STATEMENTS 2
JEFF SHEALY CEO, FOUNDER Former VP & GM at RFMD (Qorvo) Co-founded RF Nitro (sold to RFMD) 22 YRS Industry Exp., MBA & PhD JOHN KURTZWEIL CFO Former CFO at Wolfspeed CREE, Extreme Networks; 30 YRS Industry Exp., CPA & MBA DAVID AICHELE VP BUS DEV Former Director RFMD (Qorvo) & Exec VP Private Company 23 YRS Industry Exp.,BSEE & MBA ROHAN HOULDEN VP ENG Former GM at Qorvo & Product Line Mgr. at Conexant 27 YRS Industry Exp., BSEE & MBA MARY WINTERS VP WAFER FAB Former Director MEMS ITC & Sr. Eng. Eastman Kodak 18 YRS Industry Exp., BSCE & MS UNIVERSITY PARTNERS COMMERCIAL PARTNERS National Science Foundation (NSF) INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY EXECUTIVE LEADERSHIP & PARTNERS 3
JERRY NEAL CO-CHAIRMAN, DIRECTOR Founded RFMD (now Qorvo); 35 YRS+ RF and Wireless Industry Experience ART GEISS CO-CHAIRMAN, DIRECTOR Former VP Operations RFMD (now Qorvo); previous Alpha mgmt. (now Skyworks) STEVE DENBAARS DIRECTOR Co-founded Nitres, Soraa, Soraa Laser Diode; UCSB Professor; Expert in III-N Materials JEFF MCMAHON DIRECTOR Director at North Highland, 17 YRS+ Mgmt. Consulting Experience SUZANNE RUDY DIRECTOR Former VP of Tax and Treasurer at Qorvo, UNC, UCSB degrees; Financial Expert STEVE MILLER DIRECTOR Former President/CEO and Chairman at Sawtek; Former Director at TriQuint INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY SEASONED BOARD MEMBERS 4
5 Our mission DELIVER DISRUPTIVE RF FILTERS FOR NEXT GENERATION MOBILE WIRELESS USING PATENTED, SINGLE CRYSTAL PIEZOELECTRIC MATERIALS May '14 Company founded Aug ’16 Agreements w/ Tier 1 Chinese RFFE Module MFR May‘15 Company goes public (AKTS) Dec ‘16 Add 2nd customer PO Jul '14 First BulkONE® patents filed Jul ‘16 Produced world’s first single-crystal BAW RF Filters Oct ‘16 Achieve milestone resonator Q=2914 Nov ‘16 First 2.5 GHz, 3.7 GHz single crystal filters May ‘17 First 5.8 GHz BAW demo wafer from N.Y. STC Fab June ‘17 Closed Acquisition of 150-mm STC N.Y. Fab June ‘17 Added to the Russell 2000 Aug ‘17 First BAW product prototypes shipped from N.Y. Fab to Mobile & Radar Customers Mar ‘17 Began trading on NASDAQ exchange Sep ‘17 Industry’s first Single Crystal 5 GHz WiFi BAW RF Filter protos to multiple clients Nov ’17 First PO from Top-5 Mobile OEM for LTE & 5 GHz WiFi filter samples Jan ’18 Complete capital buildout of 1st BAW filter line in N.Y. to support Key Event 5G =Received Contract R&D award from National Science Foundation (NSF) Mar ’18 XB1 Process frozen, begin qualification Mar ’18 AKF-1252 5.2 GHz BAW RF filter product announce ment Apr ’18 AKF-1938 3.8 GHz BAW RF filter product announcement New May ‘18 New Tier 1 Mobile Purchase Order Win New MILESTONES ACHIEVED INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY Jun ’18 AKF-1652 BAW RF Filter Announcement Jul ’18 Completed XB1 Technology and Materials Qualification Jul ’18 AKF-1938 Commercial Win for Radar Application Aug ’18 AKF-1136 Commercial Win for CBRS Band
MOBILE DEVICES REQUIRE RF FILTERS TO CONNECT Mobile device RF complexity increasing: Multiband - Today greater than 40 bands - Next generation up to 100 bands Multimode - Next generation includes 2G, 3G, 4G, 5G - Expanding high band spectrum Multi Connectivity - Data speeds driving architecture - Utilizing unlicensed 5GHz spectrum INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY Akoustis’ single crystal RF filter technology supports the high band spectrum in smartphones enabling high internet speeds… 6
(1) Source: Barclays, Semiconductor Market Perspectives, 2017 (2) Source: Mobile Experts 2016, May 2018 Update INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY RF MARKET DYNAMICS RF Front End (RFFE) valued for signal ‘selectivity’ over signal ‘manipulation’ 7 $24.50 2020 Early 5G Content
BAW segment is the fastest growing RF filter opportunity (>16% CAGR) Wide bandwidth, higher frequency innovation enables new BAW player Source: Mobility Experts 2016, March 2017 Update INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY $12.4B ACOUSTIC WAVE FILTER MARKET IN 2021 8
INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY • Opportunity for single crystal BAW to dominate 5GHz Wi-Fi and emerging 5G Mobile where higher performance RF filters are required • Focus on High Band solutions to differentiate on performance SINGLE CRYSTAL BAW TECHNOLOGY 7GHz 9 R F Filt e r Te c h n olo g y P e r f o r m a n c e Frequency (GHz) 0 1 2 3 4 5 6 7 8 Military Automotive WiFi 4GHighBands 5GMidBands B42/43/48/49 n7/38/41 n77/78 DSRC 5.2/5.6/5.8GHz B25/3/40 B7/41 n79 L-Band S-Band C-Band 2.4GHz TC-SAW SAW Poly Crystal BAW Single Crystal BAW
600MHz (2x35MHz) 2.5 GHz (LTE B41) 3.55-3.7 GHz 5.9-7.1 GHz 600MHz (2x35MHz) 3.55-3.7 GHz 3.4-3.8 GHz 5.9-6.4 GHz 3.4-3.8 GHz 3.4-3.7 GHz 3.46-3.8 GHz 3.6-3.8 GHz 3.3-3.6 GHz 4.8-5 GHz 3.4-3.7 GHz 4.4-4.9 GHz 3.4-3.7 GHz 10 5G Band Specification New Bands Supporting Operators Band n77 (3300-4200 MHz) Band n78 (3300-3800 MHz) NTT DOCDMO, KDDI, Softbank Mobile, China Mobile, China Unicom, China Telecom, KT, SK Telecom, LG Uplus, Etisalat, Orange, Telecom Italia, British Telecom, Deutsche Telekom, Telstra Band n79 (4400-5000 MHz) NTT DOCOMO, KDDI, Softbank Mobile, China Mobile, China Unicom, China Telecom Bandn257 (26.5-29.5 GHz) Band n258 (24.25-27.5 GHz) NTT DOCOMO, KDDI, Softbank Mobile, China Mobile, KT, SK Telecom, LG Uplus, Etisalat, Orange, Verizon, TMobile, Telecom Italia, British Telecom, Deutsche Telekom, Telstra Band n260 (37-40 GHz)* AT&T, Verizon, T-Mobile Global Snapshot of 5G Spectrum <1 GHz 3 GHz 4 GHz 5 GHz 700MHz 3.7-4.2 GHz 3.6-4.2 GHz New sub 6 GHz 5G bands: • Band n77 at 3.3-4.2 GHz • Band n78 at 3.3-3.8 GHz • Band n79 at 4.4-5.0 GHz (Source: Huawei, 2017) • Licensed spectrum for 5G: 3.3-5.0 GHz • New unlicensed activity: 5.9-7.1 GHz (Source: Qualcomm, Oct 2017) EMERGING 5G PUSHING SPECTRUM HIGHER INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY
COMPETING BAW FILTER TECHNOLOGY INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY Polycrystalline Piezo Single Crystal Piezo Topside Air Cavity Topside Air Cavity Topside Air Cavity Backside Parasitic Backside Air Cavity Backside Air Cavity Polycrystalline Piezo Single Crystal Bulk Acoustic Resonator (XBAW) Poly Film Bulk Acoustic Resonator (FBAR) Poly Solidly-Mounted Resonator (SMR) 11 TOP ELECTRODE TOP ELECTRODE BOTTOM ELECTRODE BOTTOM ELECTRODE AIR CAVITY BRAGG REFLECTOR SUBSTRATE SUBSTRATE POLYCRYSTAL PIEZOELECTRIC LAYER POLYCRYSTAL PIEZOELECTRIC LAYER
12 High power, wide bandwidth RF filters operating at high frequency High Thermal Conductivity High Mechanical Coupling High Sound Velocity >10W Input Power (Watts) Output Power (Watts) Loss (dB) Thickness (A) Vac (km/sec) Poly-AlN Single Crystal AlN (GEN2) BETTER Frequency (GHz) Admittance(S) WHY SINGLE CRYSTAL FOR BAW?
13 Frequency (GHz) 5.0 5.9 Performance ❑ Wide Bandwidth Solution for U-NII-1+2A Band ❑ Low Loss ~2dB in U-NII-1+2A band ❑ High Rejection >54dB in U-NII-2C+3 band ❑ High Power Rating +32dBm maximum AKF-1252 RF Filter solution optimized for Tri-Band WiFi Routers Addresses 5 GHz co-existence in Tri-Band WiFi routers Size reduction supports growing MU-MIMO complexity Industry Leading 5 GHz BAW Performance AKF-1252 RF Filter Product Reduced Size Ultra-small footprint 2.5 x 2 mm2 Laminate module FIRST TO ANNOUNCE 5.2 GHz BAW RF FILTER PRODUCT
14 ❑ High Rejection >40dB over wide spectrum up to 10 GHz ❑ Wide Bandwidth Covering 100 MHz ❑ Low Insertion Loss in Filter Passband ❑ Single-ended 50 Ohm input/ output ports ❑ High Operating Temperature Range -40 C° to + 105 C° Industry Leading Wideband Rejection AKF-1938 RF Filter Product Small Size Ultra-small footprint 2.5 x 2 mm2 Ceramic Package Frequency (GHz) Wideband S21 (db) Addresses high performance and is a significant size reduction – critical for multi-element phased array radar 3.8 GHz BAW RF FILTER FOR MILITARY RADAR MARKET AKF-1938 – 2ND announced commercial BAW RF Filter 14
In-Building Industrial Public 3.6 GHz BAW RF FILTER FOR CBRS MARKET AKF-1336 – Citizens Band Radio Service 15 • Education • Healthcare • Hospitality • Military • Multi-Family • Office • Entertainment • Government • Retail • Manufacturing • Mining • Oil & Gas • Power & Utilities • Transportation Source: xcellair.com
GROWING PRODUCT PORTFOLIO INNOVATION IN SINGLE CRYSTAL BULK 16 WAVE TECHNOLOGY Center Frequency (GHz) 1 2 3 4 5 6 7 50 150 200 100 250 300 350 AKF-1335 AKF-1652 AKF-1252 AKF-1125D AKF-1125U AKF-1256 AKF-1258 AKF-1259 AKF-1938 AKF-1136 Automotive Mobile Defense/Radar Infrastructure WiFi P e r f o r m a n c e
INTEGRATED DESIGN & MANUFACTURING INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY Akoustis Facility—Canandaigua, NY • Acquired in June 2017 a 120,000 Sq. Ft. Wafer Manufacturing Facility, Class 100 Clean Room (30k+ square feet), 150-mm Wafer Fab Tools, 57-acres of real property and ongoing MEMS operation • Transitioning existing DoD Trusted Foundry accreditation for MEMS • Consolidates Company’s supply chain into NY Facility and internalizes single crystal BAW RF filter production with shorter cycle time and higher manufacturing capacity • Advances Company transformation into an Integrated Design and Manufacturer (IDM) of patented, single 17
18 XB1 process to support RF Filters up to 7 GHz XB1 process qualification complete with expected production ramp in 2HCY18 Single Crystal BAW Resonator (XB1 Process) XB1: Silicon wafer platform Internal Manufacturing – Canandaigua, NY SINGLE CRYSTAL BAW RF FILTER PROCESS (XB1) INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY
AKOUSTIS IP PORTFOLIO • Foundational single crystal BAW devices and RF filters • Vertical portfolio from platform substrates to system application • 17 Patents(1), 28 patents pending plus numerous trade secrets • Key University IP from Cornell and UCSB in materials (1) Includes Akoustis issued patents, Cornell patent under license (see PR 9-7-16), and UCSB patents under agreement (see PR 9-22-15) INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY http://www.akoustis.com/patents/ IP - BARRIERS TO ENTRY 19
INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY AKOUSTIS TARGET END MARKETS (1) Source: Mobile Experts 2016, March 2017 Update (2) Source: Akoustis, Dedalus Consulting Application Smartphones, Tablets, Pucks Smartphones, Tablets, Pucks Tri-Band Routers, SetTop Boxes, CPE FD-MIMO, Small Cells Radar, Milcom AKOUSTIS SOLUTIONS 1.8-3GHz BAW Discrete/Multiplex Filter 3-6GHz BAW Discrete/Multiplex Filter 2.4/5.2/5.7GHz BAW Discrete Filter 1.8-6GHz BAW Discrete/Multiplex Filter 1-10GHz Discrete, Multiplexer, Integrated Switch Filters VALUE PROPOSITION Improve battery life & reduce dropped calls Size reduction, Improve battery life & reduce dropped calls Size reduction support 5GHz, multiband simultaneous operation Size reduction support higher power, improve receive sensitivity Size reduction support higher power, 2017 FILTER MARKET SIZE $8.3 Billion(1) $2.2 Billion(2) 4G LTE MOBILE 5G MOBILE WiFi BTS 20 Military
Future MOBILE WIRELESS / SMARTPHONE INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY • Focus on mid-tier & high-tier smartphone models • New smartphone models annually; model updates every 6 months • Tier-1 use integrated Front End, more complex, longer design cycle (12-18 months) • Tier-2 use partial Front End, utilize discrete filters, shorter design cycle (6-12 months) Application Product/Cycle Time 21
MOBILE WIRELESS / SMARTPHONE OEM/ Transceiver: INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY RFFE Module: Target Customers OEM / Transceiver RFFE Module VALUE PROPOSITION RF filter performance drives data speed, phone heat and battery life 22
INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY Application Product / Cycle Time WIFI • Focus on retail and enterprise models • Most platforms utilize discrete RF filters • New retail models every 6 months, new enterprise models every 12-18 months 23 Target Customer
INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY WIFI Single Crystal BAW Filter 3.0mm 8.2mm AKF-1252 Akoustis Akoustis 5 GHz BAW filter is 23x smaller 4.2mm 24 High Q, small form factor filters are necessary High frequency coexistence RF filters support Tri-Band Value Proposition 2.5mm x 2.0mm x 0.9mm 5.2GHz Radio Tri-Band 2.4/5.2/5.7GHz WiFi Router (2x2 MIMO) Source: Link-Sys AC2200 MU-MIMO Tri-Band Router 103.3 mm3 vs. 4.5 mm3
AKOUSTIS AT A GLANCE INNOVATION IN SINGLE CRYSTAL BULK WAVE TECHNOLOGY $57.0M OF INVESTMENTS AND GRANTS IN USE AKTS Average Volume (Tr. 3 Months) 86.4K Shares Outstanding (3/31/18) 22.3M Market Cap (12/31/17) $143.8M Debt (12/31/17) $15.0M Cash (12/31/17) $15.5M Insider Ownership 33.0% Fiscal Year End June 30 FINANCING ACTIVITIES Activity Latest Transaction Amount ($M USD) Seed 2014 $0.5M Financing 2015 $5.7M Financing 2016 $3.6M R&D Grants 2017 $1.1M Financing 2017 $31.1M Financing 2018 $15.0M Total $57.0M 25
AKOUSTIS AT A GLANCE 26 (1) Source: Mobility Experts 2016, March 2017 Update