CHROMA — Call Transcript 2024

Feb 26, 2024

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2023.4Q Earnings Conference

Paul Ying, CFO Leo Huang, Chairman & CEO

26[th] February, 2024

1

Disclaimer

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This presentation contains some forward-looking statements that are subject to substantial risks and uncertainties. Typically, these statements contain words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “plan”, “forecast”, “project”, “predict”, “potential”, “continue”, “may”, “should”, “will”, and “would” or similar words. You should consider these forward-looking statements carefully because such statements are only our expectations or projections about future events, and actual results may differ materially from those expressed or implied by such statements. The forward-looking statements in this presentation include, but are not limited to, growth rates for various markets estimated by third party sources, future products and technology development, widespread market acceptance of the hosted delivery model, future revenue growth and profitability. You should be cautioned that the forward-looking statements are no guarantee of our future performance. The forward-looking statements contained in this presentation are made only as of the date of this presentation and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances, except as required by law.

This presentation and the information contained herein are the property of Chroma Ate Inc.

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2

Agenda

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• Corporate Profile • Financial Review • Operation Highlights • Q&A

3

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CORPORATE

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PROFILE

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4

Consolidated Sales Breakdown

Corporate Profile

• Chroma Group founded in 1984, a world leading own

brand and design of high precision test & measurement instruments, automated test systems, intelligent manufacturing systems and test & automation turnkey solutions provider. Businesses cover test and

measurement instruments and ATS for electronics, ICT and cleantech various industries.

• Key success: Precision, Reliability, Innovation

• Chroma group consolidated business units of Chroma Ate

Inc., Modular Assembly System (MAS).

• 2023 Consolidated Sales : NT$ 18.7 billion

• 2023 Net Income: NT$ 4.1 billion

• Chroma Group total of 3,464 employees (as of December,

2023)

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Consolidated Chroma Ate Sales Others
Consolidated MAS Sales
21,431
1%
4%
18,676
1%
4%
14,779
3%
13,044
5%
11,813 3%
2% 5%
9%
89% 92% 92% 95% 95%
2019 2020 2021 2022 2023
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• Excluded Chroma New Material Corp. as a terminated business entity.

5

Financial Performance

Consolidated Sales & Gross Margin

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Parent Company Sales / Gross Margin / RD Expenses

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Sales Revenues Gross Margin
Consolidated Sales Gross Margin
R&D Expenses R&D Expenses in % of Sales Revenues
22,067
13,461
18,676
12,530
58%
17,584
10,308
15,532 54%
53% 53%
52% 52%
51%
49%
13,910 48%
9,180
47%
8,111
Chroma HQ Employees ： 2,012  (R&D 37%)
14%
13% 13%
12% 12%
1,172 1,216 1,351 1,639 1,542
2019 2020 2021 2022 2023 2019 2020 2021 2022 2023
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6

Financial Performance

ROE

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25%
24%
18%
15%
13%
2019 2020 2021 2022 2023
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Dividend

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Basic EPS Cash dividend
Payout ratio
12.14
9.45
9.96
8.00
7.00
6.60
5.56
4.48
4.50
3.01
2019 2020 2021 2022 2023
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* Dividend for 2023 will be paid out after resolution of AGM

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Global Operation Sites

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1999 2017 2008 2018 1993 2001
109
Distributors
Netherlands: Germany: Japan: Korea: United States: United States:
Ede Augsburg Shin-Yokohama/ Pangyo Irvine, CA Foothill Ranch, CA
Osaka Milpitas, CA Georgetown, TX
Redmond, WA Marlborough, MA
Portland, OR Wixom, MI
Chandler, AZ Stroudsburg, PA
Austin, TX Apex, NC
Sherman, TX Odessa, FL
Allentown, PA Canada: Mississauga
Albany, NY Mexico: Juarez
1999 2000 2003 2009 Brazil: Porto Alegre
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52 109

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1998 1999 2000
China/ Shenzhen China/ Beijing China/ Shanghai
2001 2006 2011
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2016
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：Singapore
Indonesia: Jakartar
Others: Qingdao/ Zhengzhou/ Xian/Hefei/ Chengdu/ Wuhan/ Hangzhou/ Changsha/ Hong Kong
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FINANCIAL REVIEW

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Year 2023 Condensed Consolidated Income Statement

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Condensed Consolidated P&L 2023 % 2022 % YoY %
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		2023 %	2023 %
(In Million NTD, except for EPS in NTD)
Net Sales		18,676 100%	22,067 100% (15%)
Consolidated Sales of Testing Equipment Business		17,787 95%	20,269 92% (12%)
Consolidated Sales of MAS		658 4%	830 4% (21%)
Consolidated Sales of New Material		0 0%	635 3% n/a
Others		231 1%	333 1% (31%)
Cost of Goods Sold		(7,919) (42%)	(10,710) (48%) (26%)
Gross Profit		10,757 58%	11,357 52% (5%)
Operating Expenses: General & Administration Research & Development		(4,327) (23%) (1,757) (10%)	(4,401) (20%) (2%) (1,917) (9%) (8%)
Operating Income		4,673 25%	5,039 23% (7%)
Non-Operating Income (Expenses), net		493 3%	1,402 6% (65%)
Income (Loss) Before Tax Income Tax		5,166 28% (1,070) (6%)	6,441 29% (20%) (1,219) (5%) (12%)
Net Income		4,096 22%	5,222 24% (22%)
Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests		3,979 21% 117 1%	5,106 23% (22%) 116 1% -
		$ 4,096 22%	$ 5,222 24% (22%)
EPS (Basic)		$ 9.45	$ 12.14 (22%)
EPS (Diluted)		$ 9.37	$ 12.00 (22%)

2022 included the gain from disposal of investment (ADLINK) of NTD 414 million plus revert the gain from disposal of property to ADLINK of NTD 90m.

10

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Year 2023.4Q Condensed Consolidated Income Statement

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Condensed Consolidated P&L 2023.4Q % 2023.3Q % QoQ % 2022.4Q % YoY %
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	2023.4Q %	2023.4Q %
(In Million NTD, except for EPS in NTD)
Net Sales	5,025 100%	4,847 100% 4% 6,074 100% (17%)
Consolidated Sales of Testing Equipment Business	4,913 98%	4,627 96% 6% 5,810 96% (15%)
Consolidated Sales of MAS	44 1%	165 3% (73%) 188 3% (77%)
Others	68 1%	55 1% 24% 76 1% (11%)
Cost of Goods Sold	(2,446) (49%)	(2,084) (43%) 17% (3,300) (54%) (26%)
Gross Profit	2,579 51%	2,763 57% (7%) 2,774 46% (7%)
Operating Expenses: General & Administration Research & Development	(1,094) (22%) (451) (9%)	(1,088) (22%) 1% (1,170) (19%) (6%) (437) (9%) 3% (549) (10%) (18%)
Operating Income	1,034 20%	1,238 26% (16%) 1,055 17% (2%)
Non-Operating Income (Expenses), net	(16) -	307 6% n/a 65 1% n/a
Income (Loss) Before Tax Income Tax	1,018 20% (193) (4%)	1,545 32% (34%) 1,120 18% (9%) (291) (6%) (34%) (206) (3%) (6%)
Net Income	825 16%	1,254 26% (34%) 914 15% (10%)
Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests	799 16% 26 -	1,225 25% (35%) 863 14% (7%) 29 1% (10%) 51 1% (49%)
	$ 825 16%	$ 1,254 26% (34%) $ 914 15% (10%)
EPS (Basic)	$ 1.89	$ 2.91 (35%) $ 2.05 (8%)
EPS (Diluted)	$ 1.87	$ 2.89 (35%) $ 2.00 (7%)

2023.4Q currency exchange losses of 135m.

11

Balance Sheet Highlights & Financial Ratio

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Consolidated (In Million NTD) Balance Sheet Highlights Cash & Short Term Investments Inventory Short Term Debt Long Term Debt Shareholders Equity	2023. Dec 2022. Dec + / - % 4,794 6,685 - 28% 4,675 4,753 - 2% 2,136 2,024 6% 990 1,165 - 15% 22,517 21,873 3%
Total Assets	33,482 33,828 - 1%
Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)	217 148 87 72 128 101 Net Cash Net Cash
ROE (%)	18% 25%
ROA (%)	12% 16%
Cash Position EBITDA Cash Flow from Operation	2023 2022 YoY 5,973 7,180 (17%) 3,408 5,297 (36%)
Free Cash Flow	2,014 6,198 (68%)

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All ROE + ROA has been annualized.

Free Cash Flow = Net Cash Provided by Operating Activities + (Net Cash used by Investing Activities)

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OPERATION

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HIGHLIGHT

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13

2023.4Q & Annual Product Mix and Consolidated Sales Breakdown

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		(Unit: Million NTD)	2023.4Q % QoQ YoY	2023 % YoY 2022 %
		Test Instruments & Automatic Testing System (ATS)	1,501 52% (23%) (19%)	8,078 64% 15% 7,052 52%
		Semiconductor / Photonics Test Solutions	865 30% (19%) 60%	2,963 24% (34%) 4,523 34%
		Turnkey Solutions	171 6% 159% 163%	454 4% (21%) 578 4%
		Service & Others	365 12% 88% 45%	1,035 8% (21%) 1,308 10%
		Total of Parent Company Sales	2,902 100% (11%) 7%	12,530 100% (7%) 13,461 100%
		+ Sales from Overseas Operations & Related Subsidiaries	2,011 48% (35%)	5,257 (23%) 6,808
		Chroma Consolidated Testing Equipment Business MAS Other Subsidiaries	4,913 98% 6% (15%) 44 1% (73%) (77%) 68 1% 24% (11%)	17,787 95% (12%) 20,269 92% 658 4% (21%) 830 4% 231 1% (31%) 333 1%
		Consolidated Sales (Continued Business Units)	5,025 100% 4% (17%)	18,676 100% (13%) 21,432 97%

The consolidated sales in 2022 have excluded terminated business entity of Chroma New Material Corp.

14

Year 2024 Guidance

In year 2023, Chroma total consolidated sales revenues reached 18.7 billion NTD, which declined of 15% YoY. The Parent Company sales reached 12.5 billion, presented a decline of 7%. EV and ESS

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industries are major sales contribution in 2023.

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Year 2024 Business Outlook:

• ✓ 2024 growth momentum largely contributes from semiconductor / Photonics sector.

✓ The accelerating development and optimizing chip performance of HPC/AI will continue drive

the demand for SLT testers.

✓ A big turnaround of mature nodes (28nm) market increase the sales contribution to ATE

systems.

✓ The Test Instruments & ATS for power testing solutions sustained a steady growth.

15

Green Revenue - Parent

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Note: Revenues are classified according to FTSE Russell’s Green Revenues Classification System (GRCS).

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Technology & Solution Milestones High Precision Test Solutions

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Semiconductor Test Solutions

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3650-S2

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2022 2023

3680 HDRF

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Internally Integrated
One-touch engagement
3 [rd] party RF instruments
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768pin 12 slots 15kVA Floating LB electronics IC: SiC/Power/logic

3680 HDRF2

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2024
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Internally Integrated One-touch engagement 4 Vector Signal Transceivers 32 RF ports 6Ghz Software Defined Radio 200Mhz bandwidth Supports various protocols: Bluetooth 5.2, Wi-Fi 6, LoRa, GPS

IC: SiC / Power / Logic / Wireless

18

System Level Test Solutions

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Temperature-forcing Systems

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✓ -40℃~ +150℃ ​@Tc ✓ -70℃~ +150℃~ +150~ +150℃ ✓ Up to 1,200W power ✓ Up to 1,000W dissipation dissipation 2021 2022 2023

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✓ -70℃~ +150℃~ +150~ +150℃ ​@Tc
✓ Up to 1,000W power
dissipation
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✓ -40℃~ +150℃ ​@Tc
✓ Up to 2,000W power
dissipation
2024
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Hybrid Tri-temp Test Handler

• ✓ 3x3~120x120mm ✓ -70 ~ +150℃ @Tc, up to 1.2kw dissipation

• ✓ 500 kgf contact ✓ TSD (Tj) available Model 3110 Gen2

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Single Site Test Handler

• ✓ 3x3~120x120mm

• ✓ - 40 ~ +150℃ @Tc, up to 1.8kw dissipation

• ✓ 500 kgf contact ✓ TSD (Tj) available Model 3210

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FT & SLT Hybrid Test System

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• ✓ 5x5~120x120mm

• ✓ 4~24 sites

• ✓ -40 ~ +150℃ @Tc, up to 1.5kw/site dissipation

• ✓ 500 kgf/site contact

• ✓ TSD (Tj) available

• ✓ Warpage detection

• ✓ OHT integration

Model 3200

Advanced packaging of AI/HPC, automotive, IoT, cloud, network and data center chips

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Semiconductor Measurement Solutions

2D+3D Measurement

• •XY / Z Resolution: 30nm / 0.05nm

• •Sensor: BLiS

• •Light Source: Multiple Light Sources

• •Applications:

Probe Mark Indentation Depth 2D/3D CD & Surface Topography

BLiS technology

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Model 7980
2023
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2D+3D Measurement

• •XY / Z Resolution: 30nm / 0.05nm

• •Sensor: BLiS

• •Light Source: Multiple Light Sources

• •Applications:

RDL: ≧ 2 μm, AR3 TSV/VIA: ≧ 2 μm, AR15 OVL ≦ 0.2 μm

BLiS technology

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Model 7981
2024
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BLiS: Broadband Light integrated System (Multi-sensors with different functions are integrated.)

Advanced Packaging: InFO, CoWoS, 3D IC

20

Photonics Test Solutions

PD/APD Burn-in System

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Model 58606 Temp. : 40 ° ~ 180 ° C DUT pad size > 70um ± 2mA; ± 80V

2021 2023

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HP LD Burn-in System

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Model 58605 Temp. : 20 ° ~ 85 ° C Up to 6Amps of Pulse Driving 2024

VCSEL Wafer Test System II

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Model 58635 Series Temp.: -20 ° ~ 100 ° C LIV+NF two-in-one Pulse width: <10 us

OFC (optical fiber communication)

Consumer / Automotive Sensing; LiDAR

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AI IT Infrastructure Test Applications

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CoWoS
AI/HPC Chips
AI Server
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Advanced Packaging

• 3D Measurement System 7980/7981

• RDL, TSV/VIA, OVL, surface 3D profile

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AI / HPC Chips

• Tri-temp SLT Handler 3110

• FT & SLT Hybrid Test System 3200

• Temperature Forcing System 31000R Series

Vcore Power Supply

v

• Ultra Low Voltage DC Load 63202A

Optical Fiber Communication

• Laser Diode Burn-in and Reliability Test System 58604

• Laser Diode Characterization System 58620

• VCSEL Wafer Test System 58635

Data Storage - Hard Disk Drive

• Photonics Device Mapping Probe Tester 58212-C v

• Photodiode for HAMR (Heat-Assisted Magnetic Recording)

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HAMR
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Data Center

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Technology & Solution Milestones High Power Test Solutions

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Power Electronics Test Solutions

Bidirectional DC Source

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Regenerative AC Load

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Regenerative DC Load

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Bidirectional: Source & Load with energy regen High Power Density: 6-18kW/3UH, Eff:92% Model 62000D Series 100V-1800V, 540A

Programmable AC Load with energy regen High Power Density: 15kW/3UH, Eff:90% Model 63800R Series 9kW-15kW, 350VLN

Programmable DC Load with energy regen High Power Density: 18kW/3UH, Eff:93% Model 63700 Series 18kW, 600/1200/1800V

2021 2022

2023

2024

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Regenerative Grid Simulator

High power AC source with energy regen Optional regen AC Load Parallel up to 1MVA Model 61800-100HV 105kVA, 500VLN-800VLN

Server PSU, BBU Testing & EV Power Electronics, Green Energy (PV, ESS, PCS, Battery/Fuel Cell), Battery Storage

24

Turnkey: Battery Cell Formation

Prismatic Solution

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Battery Cell Formation Model 17000-K029 5V, 240A

2019 2021

Pouch Solution

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Battery Cell Formation Model 17000-K015 5V, 60A

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All-In-One Formation System

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Battery Cell Formation Model 17000 All-In-One Series 5V, 200A 2024

2023

Cylindrical Solution

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Battery Cell Formation Model 17080 / Model 17080-K001 5V, 30A

Battery Cell

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Thank You

26 Copyright © 2023 Chroma ATE Inc. All rights reserved.