Nordic Semiconductor

Investor Presentation • Oct 22, 2019

Capital Markets Day

October 22, 2019

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Market leader in IoT

CEO, Svenn-Tore Larsen

Agenda

• 12:00-12:10 Q3 2019 Highlights Svenn-Tore Larsen, CEO
• 12:10-12:30 A market leader in IoT Svenn-Tore Larsen, CEO
• 12:30-13:05 Go-to-market strategy Geir Langeland, Sales Director
• 13:05-13:30 FedEx Delivering the future Ole Petter Skaaksrud, FedEx
• 13:30-13:45 Break
• 13:45-14:10 Short-range update Kjetil Holstad, Director Product Management
• 14:10-14:35 Cellular IOT Svein-Egil Nielsen, CTO
• 14:35-14:55 Financials Pål Elstad, CFO
• 14:55-15:00 Summary & Outlook Svenn-Tore Larsen, CEO
• 15:00 Q&A

Q3 2019 highlights

Q3 as guided – solid growth outlook for Q4

Q3 2019 Q4 2019 guidance

Revenue		Gross margin
USDm 82.2		49.8%
+4.4% y-o-y	+16.5% q-o-q	-0.5%p y-o-y	-1.5%p q-o-q

Revenue		Gross margin
USDm 75-79		~50%
+23%-29% y-o-y	-4%-9% q-o-q	-1%p y-o-y	Flat q-o-q

Customer wins fuel backlog development

• Stronger customer inroads have turned around the backlog development
• Q3'19 +45% compared to end of Q3'18
• Seeing volume orders coming in from new tier-1 customers

A market leader in IoT

Nordic Semiconductor at a glance A market leader in the IoT space

• Founded in 1982, Headquartered in Norway
• 750+ employees
• R&D in Norway, Finland, Poland and the US
• Publicly listed in Norway under the ticker OBX:NOD
• Key partners: TSMC, AMKOR, ASE
• Fabless semiconductor company specialized in low power wireless connectivity and embedded processing for IoT
• Market leader in Bluetooth Low Energy - expanding into 802.15.4/Thread and Zigbee
• Entering low power cellular IoT with LTE-M and NB-IoT technologies

A long-lasting growth journey

Proprietary/ASICs Bluetooth LE

*2019e based on mid-point of Q4 guidance

Clear market leader in Bluetooth Low Energy

• Consistent leader in terms of end-product certifications
• 44% market share in Q3
• Nordic technology inside >2,100 Bluetooth LE products certified since 2014
• More than twice as many as #2 and 7-8 times as many as #3-6

Bluetooth Low Energy end-product certifications, number of products*

*Source: DNB Markets

Our success is built on 6 strategic pillars

1	Lead on connectivity	Low power, high performance, feature-rich, reliable and robust
2	Excite developers	Ease-of-use, value-add integration and solutions
3	Customer engagement	Combined broad market and tier-1 customer engagement model
4	Scalability	Scalability across technologies, markets and customers
5	Investing early	Investing early and growing with high-growth markets
6	High financial ambitions	Strong long-term profitable growth and value generation

Lead on connectivity

Low power, high performance, feature-rich, reliable and robust

Lead on connectivity

Strong low power wireless connectivity and applications offering

Low power short-range IoT

Bluetooth, 802.15.4/Thread, Zigbee and 2.4GHz RF SoCs Decades of low power connectivity experience

Low power cellular IoT

Multimode LTE-M / NB-IoT connected SiPs Entering commercial phase after 4 years of R&D

Integrated circuits (ICs) Embedded software Development tools

• Shipped >2bn ICs
• Broad platform
• Advanced multiprotocol solutions

• Nordic application framework
• System-in-Package (SiPs)
• System-on-Chip (SoCs) with on-chip MCU

• Software development kits (SDKs)
• Excellent tech support
• Nordic DevZone

Award winning technologies and solutions

• "Nordic Semiconductor low power cellular IoT solution named as 2019 CES Innovation Awards Honoree"
• "The nRF52840 wins RF/Microwave category of Electronic Products magazine's "Product of the Year" awards"
• "nRF9160 cellular IoT module shortlisted for 'Best IoT Connectivity Solution' in 2019 Awards of IoT World"
• "nRF Connect for Cloud wins 'Most Competitive Development Tool in China' category of China Electronic Market Editor's Choice Awards"
• "Nordic Semiconductor Bluetooth Low Energy development tools reap top German design award"

Excite developers

Ease-of-use, value-add integration and solutions

Excite developers and drive engagement Leading the developer experience from A - Z

• devzone.nordicsemi.com is the leading community in the industry

• 80,000 developers and 2.4m annual site visits

• Strong tech support team
• Nordic Tech Tours
• Tutorials and webinars
• Blogs, guides, Wireless Quarter

Developer kit shipments, units

Strong growth in development kit shipments

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2013 2014 2015 2016 2017 2018 LTM Cellular development kits and Thingy: 91 account for ~10% of total development kit shipments YTD

Customer engagement

Combined broad market and tier-1 customer engagement model

Customer engagement

Combining broad market and Tier 1 customer engagement

• Engaging the broad market through active engineering community and distributors
• Working closely with vertical market leaders and key accounts – aligning roadmaps
• Increased focus on platforms and their large and growing ecosystems

Scalability

Scalability across technologies, markets and customers

Scalability

across technologies, markets and customers

Increased ASP in a declining ASP market

ASP development, illustration

• Overall short-range ASP increasing with higher share of Bluetooth LE revenue
• Bluetooth ASP turned around in 2018- 2019, in a market with declining prices
• Outlook going forward:
  • More complex applications will require higher value SoCs
  • Tier-1s volumes set to increase, ASP will depend on their product mix

Investing early

Investing early and growing with high-growth markets

Investing early! – in high growth markets

Investing into a massive long-term market opportunity

• R&D Short-range GSMA (Feb 2019): 25.2bn IoT connections by 2025
  • IDC (June, 2019): 41.6bn IoT devices by 2025
  • Business Insider (Jan 2019): >64bn IoT devices by 2025
  • ARM (Sept 2019): "…as we progress toward 1 trillion connected devices by 2035"

Strong outlook for Bluetooth IHS: Bluetooth LE market outlook, million units

• Solid organic growth in many established verticals
• Potentially disruptive growth in several areas
  • Smart homes
  • Smart lighting
  • Medical devices
  • Logistics/asset tracking

Source: IHS Markit | Technology, now part of Informa Tech, Wireless IoT Connectivity Intelligence Service, 2019

Confident in long-term cellular IoT outlook

• Volumes and revenues pushed out in time
  • Carrier and industry ecosystem maturation
  • Software development
  • Certification processes
  • Customer development cycles
• Unchanged confidence in market opportunity withdrawing the timing of cellular IoT breakeven in 2020

ABI: Cellular M2M shipments, million units

Source: ABI Research, August 2019

Our aspiration: Building a USD 1bn company within 5 years

• Growth of 20%-30% for Bluetooth and multi-protocol products
• Gradual build-up of the cellular IoT business to a similar size as the short-range business in 5 years