DAVICOM — Investor Presentation 2021

Nov 9, 2021

Disclaimer

Davicom Semiconductor, Inc. does not release any financial forecast. However, the statement of the company’s business, finance condition and Q&A in this presentation may differ from future actual results. This causes from market demand, prices fluctuations, competitions behavior, global economic situations, exchange rate fluctuations, supply chain and other factors or risks beyond the company’s control.
This presentation is based on the information obtained from various sources which the Company believes to be reliable. Please refer to the information on MOPS website as the main basis if any adjustment has been made.

Davicom Semiconductor, Inc.
(Ticker Symbol: 3094)

Investor Conference

15:00 Nov. 9, 2021

Operation Strategy
Operating Policy
Focusing on the niche markets
Mastering the high gross profit margins
Developing the new businesses actively
Pursuing the company operation growth
Providing highly reliable product quality, professional and thoughtful technical services
Concentrated to the niche market required by a high security and stability
Holding fast to 65~70% of gross margin to maintain the company's long-term profit
Tracking the market trend
Developing a market-oriented connectivity components for the embedded ecosystem to enhance the product lines
Seeking a capital cooperation partners to expand the market and increase the revenue

Worldwide Headquarters

Located at Hsinchu Science Park, Taiwan, R.O.C.

Core Technology
Ethernet
MAC & PHY

Networking Protocol
Stacks
Software Drivers
& Algorithms
Video Decoder
USB & Interfaces
Audio Signal
Processing
DSP & Algorithms

RFID Omni-Solution

Mixed Signal

AIoT & Algorithms

Performance Retrospective, 1/2
Revenue and Profit
Q3/2021 Q3/2020
Revenue NTD 77,022K NTD 57,149K
Gross Margin 74.19% 67.10%
EBT NTD 24,899K NTD 6,357K
EPS NTD 0.26 NTD 0.07

Performance Retrospective, 2/2
Revenue and Profit, Q1~Q3/2021 vs. 2020
Q1~Q3/2021 Q1~Q3/2020
Revenue NTD 218,030K NTD 170,690K
Gross Margin 70.30% 68.20%
EBT NTD 60,542K NTD 29,186K
EPS NTD 0.63 NTD 0.30
The company founded 25 years and 65 successive quarters of 65%~70% margin by a high add-on value of services; Since the company’s public listing, the annually average EPS around 1 NTD

IC Product Portfolio

Ethernet
DM9119 Transceiver with 10/100/1000Mbps
Switch, Controller with USB & SPI

E-Paper Display Driver (EPD)
Segment 36, 120, 126, 160
Dot Matrix EPD Driver

Video Decoder (VD)
1 and 4 channels; 720H and 960H resolution; mixer

AI SoC
DM8111 (RISC-V, CIS (CMOS Image Sensor) )

Market & Operation Retrospective in 2021, 1/3
The market impacted by COVID-19 and Global Supply Chain Restructuring
§ Cost rising due to wafer fab capacity tight, and IC packaging and testing
§ Stock-up in advance to prevent the supply chain from being broken
The operating countermeasures to the tight wafer mature process and the production cost rising
§ Effective and efficient production plan
To fulfill the customers’ demands
To ensure the revenue and the profit
§ Rising the product selling price since May, 2021
To hold the product high margin

Market & Operation Retrospective in 2021, 2/3
Performance reflecting the operating countermeasures
§ Compared to the first 3 quarters in 2020, the revenue in 2021 27.73% increasing and the average selling margin 70.3% in 2021 while 68.2% in 2020; especially, Q3/2021 record high in the recently same period

Notes:

Performance
Retrospective in 2021, 3/3
Revenue and Profit, Q3/2021 vs. Q3/2020

            Q3/2021             Q3/2020

Revenue NTD 77,022K NTD 57,149K
Gross Margin 74.19% 67.10%
EBT NTD 24,899K NTD 6,357K
EPS NTD 0.26 NTD 0.07
The expectation of revenue and selling margin in Q4/2021 still holding fast as those in the previous 3 quarters; the annual performance in 2021 better than the one in 2020.

Market & Operation Prospective in 2022, 1/3

Some production capacity in wafer mature process still tight, but not being worsen and getting mitigated gradually (that is, Davicom getting more sufficient production capacity supports)

Many countries in worldwide having regulated the carbon reduction targets and set the schedules for carbon peak and carbon neutral; consequently, for the new clean energy power generation and power grid, the demand of communication network systems increasing (that is, Davicom’s networking Ethernet IC products foreseen to more and more markets)

Market & Operation Prospective in 2022, 2/3
Other uncertainties maybe unfavorable to the consumer electronics raw materials and product market:
The severity of global inflation
The inventory sell-through rate

The impact of uncertainties mentioned above to Davicom’s operations in 2022:
Davicom always focusing on the operationa of the embedded system niche market and rarely accessing the consumer electronics market, therefore, the above uncertainties very possibly not adverse impact on Davicom’s operations in 2022

Market & Operation Prospective in 2022, 3/3

Distributions of the company's sales of products to the major application markets up to Q3/2021
Industrial Monitoring and Control 33.34%
Security and Access Control 10.10%
Business and Finance 9.33%
Vehicle 8.58%
Electricity System 8.55%
Medical Equipment 5.33%
Telecommunication 3.75%

With reference to the above possible positive and negative situations, Davicom’s stable growth still foreseen in 2022

Connectivity Beyond Limits