INX — Interim / Quarterly Report 2024

Nov 19, 2024

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2024 Third Quarter

Institutional Investor Conference

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Disclaimer

Innolux Corporation’s statements of its current expectations and estimates are forward-looking statements subject to significant known and unknown risks and uncertainties and actual results may differ materially from those contained or implied in the forward-looking statements. These forwardlooking statements are not guarantees of future performance and therefore one should not place undue reliance on them. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Agenda

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1. Market Overview

2. Corporate Strategies

3. Financial Results

4. Q&A

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Market stays healthy in a structural way

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• No new TV capacity in the next two years

• Growth of size help digest capacity

• Price fluctuates with market demand and cost of material/component

• Healthy-to-low inventory level secures sensible price trend

• Cost management becomes the key

• Tight supply-demand strengthened by fade-out of original factory

Uncertainties:

1. Supply chain turbulence (ex. shortage, logistic disruption)

2. Geo-political issues 3. Production disruption

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Capacity
Made-to-order
discipline
Market
Price
Demand
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• (ex. Earthquake)

• Healthy-to-low inventory level in favor to customer new project launch

• • Average size growth for various products

• More diverse application adopting LCD display

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Market highlights

TV

Growth driver:

• Size growth--Global LCD TV panel shipment average size growth 1.4” YoY (51.8” in Y2024(F))

Update:

1. Tight supply-demand trend maintained.

IT

Growth driver:

• Average size growth for NB and monitor

• Replacement and system EOL  AI PC Update:

• Expected PC replacement brought by EOL of Win 10 and new opportunities of AI PC.

• MiniLED / MicroLED as alternatives for enhanced visual experience, LCD as entry level option.

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Automotive

Growth driver:

• Growth in average shipment size

• EV promotion policy

Update:

1. The growth of average size and EV promotion policy support the market amid the slow down in vehicle shipment.

2. MiniLED / MicroLED as alternatives for enhanced visual experience, LCD as entry level option.

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Source: INX Mkt. Omdia

Innolux diversification map

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Linear Diversification
• Traditional way of business TWIST Chip design
Commodity display
Capability to handle IC glass
Chip
substrate manufacturing
• Etching
•
TFT Pattern on glass w/
or w/o via
• Laser
Chip
packaging
LCM TFT
CORE
Business unit
Customer Chip
testing
Commodity
Automotive
Non-commodity
TFT->LCM
TFT->LCM +System
Fundamental EXTEND 5
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Innolux core competiveness for FOPLP

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Innolux More than Panel

Transformation journey from Display to Semiconductor, levering our advantage of panel form glass patterning and manufacturing.

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1st Core Competiveness 2nd Core Competiveness
Manufacturing high yield fine pitch Experienced manpower expert in
pattern on big size panels Plasma, Photolithography,
Etching, and Panel Inspection.
High Yield Rate Experienced Talent
FOPLP
Available Facility & Tools
3rd Core Competiveness
High depreciated facility and tools 6
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Innolux FO-PLP Chip First

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• Smaller Die cost saving > 40%

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(Source: WikiChip Analysis)

• Keep or enhance the chip function by Fan-Out

• • Innolux offers the world’s largest panel of FOPLP
• • (700mm x 700mm)

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Package size 12” Wafer PKG Q’ty 700mm Panel PKG Q’ty
(mm) (Utilization Rate) (Utilization Rate)
1010 614 (86%) 3564 (92%)
700mm
5.8 x
die Q’ty
12inch FO WLP
700x700 Panel FO
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Innolux FOPLP roadmap

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Advanced packaging value chain

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Innolux FOPLP
6.X times area output
 InnoLux RDL fan-out  TGV (Through-glass-via)
 IC package in RF, substrate provide cost process on
PMIC, Audio, competitive solution for AI glass substrate
Automotive Radar, and HPC chip-let application  Target large size xPU
for shorter with fine pitch pattern. /FPGA AI/ HPC
interconnection,  Strip (95x240mm) or sub- application
panel (297x240)  Better thermal stability,
and cost efficiency
format delivery. mechanical stability
Ex. 77GHz Radar transceiver
Chip-First for High Frequency
Ex. 650V DC/DC convertor
Chip-first RDL-first TGV
Low contact resistance, Fine pitch pattern for High speed for generative AI/ HPC
high breakdown voltage AI, HPC chip-let application 8
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Target market

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From Yolegroup 2023

Golden opportunities for global advanced packaging players

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Innolux as a reliable partner of glass substrate solution provider 與全球半導體夥伴合作，為下一代半導體提供玻璃端的解決方案

GLOBAL MAPPING OF THE ADVANCED PACKAGING SUPPLY CHAIN*

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• Illustrative purpose only, not indicative of current customer / partners Source: Technology & Market Trends for Advanced Packaging, 2023 Yolegroup

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IC packaging performance

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Panel vs. wafer

Silicon wafer based substrate

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Wire bond at lead frame or substrate

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Panel based glass substrate

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Copper direct interconnect with EMC 6 sides encapsulation

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• Better area utilization

• Better productivity and material usage efficiency

Panel glass vs. silicon

• Better cost competitiveness in glass with stronger bargaining power (INX as panel maker)

• Larger size possibility

• Heterogeneous package

Wire bond vs. copper direct interconnect

• Shorter trace means lower resistance and lower signal interference

• Interconnection provide package miniaturization

EMC 6 sides encapsulation

• MSL-1 (highest level of moisture proof)

• Better heat dissipation

• High electrical current 100A and high voltage of 650V.

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Long term strategy and shareholder value

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LONG TERM
Maximized shareholder value
Maximized
Max.
shareholder return shareholder
Premium product value
Agile product mix
Competitive
core fabs
Profit
Margin
Capacity
Facility
Lean capex
Optimized
supply chain
Capacity
management
Beneficial
convergence
factory
settlement
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Steering transformation

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Non
Display
Display
ILS IMS
Medical Auto PLP
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• Solution integration approach

• X-ray and automotive as system integration solution providers

• Roll out inherent strength to other non-display

• business

113

ESG recognition

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ESG Indices

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Morgan Stanley Capital International (MSCI) ESG Ratings : A

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DJSI World Index Membership for 6 consecutive years

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Sustainability

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• Water A

• Climate Change A-

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• °

• • Approved in May 2023 (Well-Below 2 C commitment)

• • Scope 1 and Scope 2 emissions by 15% by 2026 (compared to 2020)

• Scope 3 emissions by 6.2% (compared to 2021)

15.1

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• Sustainalytics ESG Risk Ratings: Low Risk

• • Top 10% among electronic components industry

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• ISS (Institutional Shareholder Services)

• ESG Ratings and Rankings: B-

• Top 10% among electronic components industry

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Operation performance by domain

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 Revenue of higher margin domains marked an increase in value QoQ

 Gross margin could vary greatly across different product types

Revenue share by domain

Gross margin by domain

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100%
25% 22% 24% 24%
80%
8%
8% 10% 9%
60%
40%
67% 70% 66% 67%
20%
0%
1Q24 2Q24 3Q24 1Q~3Q/24 1Q~3Q/24
Commodity (TV, IT, Tablet, MP) Non-commodity (commercial products)
Non-display (X-ray, automotive)
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Product Type	Revenue (NT$ million)	Average GM
	3Q24 QoQ (%) % share	1Q~3Q/24
Non-display	13,465 6% 24%	11-15%
Non-commodity	5,562 21% 10%	21-25%
Commodity	36,446 -8% 66%	6-10%

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Statements of comprehensive income highlights

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(NT$ million) Net Sales Cost of Goods Sold Gross Profit Operating Expenses Operating Profit (Loss) Net Non-operating Income (Exp.) Profit (Loss) before Tax Net Profit (Loss) Net Profit (Loss) Attributable to Owners of Company Basic EPS (NT$)(1)(2) EBITDA(3) Depreciation & Amortization Capital Expenditure	3Q 2024 55,473 100.0% 50,471 91.0% 5,002 9.0% 5,793 10.4% (790) -1.4% 1,521 2.7% 730 1.3% 494 0.9% 421 0.8% 0.05 7,080 12.8% 7,871 3,846	2Q 2024 56,861 100.0% 51,150 90.0% 5,711 10.0% 5,347 9.4% 364 0.6% 1,118 2.0% 1,482 2.6% 1,184 2.1% 1,131 2.0% 0.12 8,213 14.4% 7,849 3,782	QoQ % 3Q 2023 -2.4% 57,654 100.0% -1.3% 53,510 92.8% -12.4% 4,144 7.2% 8.3% 5,729 9.9% - (1,585) -2.7% 36.1% 238 0.4% -50.7% (1,347) -2.3% -58.2% (1,885) -3.3% -62.7% (1,898) -3.3% (0.21) -13.8% 6,064 10.5% 7,649 5,330

Notes:

1. Basic EPS = Net Income-Parent / Weighted Average of Outstanding Common Shares

2. Capital Stock (common): NT$79.9billion as of September 30, 2024

3. EBITDA = Operating Income + Depreciation & Amortization

4. All figures are prepared by Innolux Corporation in accordance with the International Financial Reporting Standards as endorsed in TIFRS.

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Q&A

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The information contained in this file is the exclusive intellectual property or confidential document of Innolux Corporation ("INX"), and shall not be distributed, reproduced, or disclosed in whole or in part without prior written permission of INX. INX shall not be liable for any information and unauthorized misuse, abuse, modification of this file.

www.Innolux.com

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