Macronix — Interim / Quarterly Report 2015

Oct 29, 2015

Macronix International Co., Ltd. Third Quarter 2015 Results Oct 29, 2015

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Disclaimer

The presentation and discussion contain certain forward-looking statements with respect to the results of operation, financial condition and current expectation. The forward-looking statements are subject to known and unknown uncertainties and risks that could cause actual results to differ materially from those expressed or implied by such statements.

Such risks and uncertainties include but are not limited to the impact of competitive products and pricing, timely design acceptance by our customers, timely introduction of new technologies, ability to ramp new products into volume, industry wide shifts in supply and demand for semiconductor products, industry overcapacity, availability of manufacturing capacity, financial stability in end markets, and other risks.

The forward-looking statements in this release reflect the current belief of Macronix as of the date of this release and Macronix undertakes no obligation to update these forward-looking statements for events or circumstances that occur subsequent to such date.

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Copyright © Macronix International Co., Ltd. 1
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Agenda

Welcome Miin Wu 2015Q3 Financial Results Paul Yeh Business Update Miin Wu Remarks and Q&A Miin Wu

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Third Quarter Highlights

2015Q3 2015Q2 Actual Actual Revenue NT$ 5.65B NT$ 4.98B Gross margin % 14 % 12% Operating margin % -19% -24%

• Revenue sequentially increased by 14% because of higher demand in ROM and NOR product lines

• Gross margin sequentially increased by 2ppt because of favorable product mix

• OP margin improved sequentially due to higher gross profit

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Agenda

Welcome Miin Wu 2015Q3 Financial Results Paul Yeh Business Update Miin Wu Remarks and Q&A Miin Wu

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Quarterly Consolidated Statements of Comprehensive Income

Unit: NTD Million (except EPS) 2015/Q3 2015/Q2 2014/Q3 Net Sales 5,647 4,975 6,691 Gross Profit 786 608 1,140 Gross Margin% 14% 12% 17% Operating Expenses (1,836) (1,779) (2,239) Operating Income (1,050) (1,171) (1,099) Operating Margin% (19%) (24%) (16%) Net Non-Operating Income (Loss) 104 (46) (1) Income Before Taxes (946) (1,217) (1,100) Income Taxes (5) (5) (1) Net Income (951) (1,222) (1,101) Other Comprehensive Income (119) (203) 25 Comprehensive Income (1,070) (1,425) (1,076) Net Income(Loss) Attributable to : Shareholders of the Parent (949) (1,221) (1,097) NoncontrollingInterests (2) (1) (4)	QoQ YoY Change Change 14% (16%) 29% (31%) 2ppt (3ppt) 3% (18%) (10%) (4%) 5ppt (3ppt) (22%) (14%) (22%) (14%) (41%) (579%) (25%) (1%) (22%) (13%)
EPS*(NT$) (0.27) (0.35) (0.31)	(23%) (13%)
EBITDA 594 344 798 Weighted Avg Outstanding Million Shares 3,519 3,518 3,518

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2015Q3 Financial Highlights

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2015 YTD Sales = NTD 15,328 M
-7% YoY
Sales
NTD M
10,000 16,454M
15,328M
8,000
6,000
4,000
2,000
0
14Q1 Q2 Q3 Q4 15Q1 Q2 Q3
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2015 YTD GP = NTD 2,014M
-14% YoY
Gross Profit
NTD M
1,500
2,336M 2,014M
1,000
500
0
14Q1 Q2 Q3 Q4 15Q1 Q2 Q3
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2015Q3 Financial Highlights

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2015Q3 2014Q3
Gross Margin (%) 14% 17%
EPS (NTD) (0.27) (0.31)
Gross Margin (%) EPS
NTD
1.00
17%
14% 0.75
13%
12%
6% 8% 0.50 (1.18) (0.72)
0.25
0.00
Q2 Q3 Q4 15Q1 Q2 Q3 14Q1 Q2 Q3 Q4 15Q1 Q2 Q3
(0.25)
(0.10)
(0.31)
(0.36) (0.27)
(0.50)
(0.35)
(0.51)
(0.75) (0.65)
(1.00)
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GM%
25%
18% 17%
14%
13%
15% 12%
6% 8%
5%
-5% 14Q1 Q2 Q3 Q4 15Q1 Q2 Q3
-15%
-25%
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Quarterly Consolidated Balance Sheet / Cash Position

Unit: NTD Million (except book value)	2015/09/30	2015/06/30
Cash	3,819	3,811
Inventory(Net)	10,235	10,412
Property, Plant and Equipment	17,887	18,951
Total Assets	38,807	39,971
Interest bearing debt - short term	3,992	5,649
Interest bearing debt - long term	9,851	8,324
Total Liabilities	18,589	18,783
Shareholders' Equity	20,218	21,188
Debt Ratio (%)	47.9%	47.0%
Book Value (NT$)	5.61	5.95
Quarterly Highlight	2015/Q3	2015/Q2
Depreciation & Amortization	1,460	1,488
Capital Expenditures	(366)	(559)
Cash Flow from Operating	355	(226)

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Quarterly Sales Breakdown by Products (Parent Company)

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Unit: NTD Million
4%
7% QoQ YoY
53% 9% Change Change
NAND -3% +58%
65% NOR +13% +4%
66%
ROM +91% -56%
FBG -23% -22%
32%
FBG (foundry business group)
10%
17%
11% 15% 11%
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Quarterly Quantity Breakdown by Products (Parent Company)

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Unit : Million
600
2%
500 3%
4%
QoQ YoY
400 Change Change
NAND -18% +18%
300
94% NOR +9% -3%
94% 95% ROM +61% -44%
200
FBG -22% -20%
Equivalent 8” WF base for FBG
100
(foundry business group)
4% 2% 2%
0
2014Q3 2015Q2 2015Q3
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Agenda

Welcome Miin Wu 2015Q3 Financial Results Paul Yeh Business Update Miin Wu Remarks and Q&A Miin Wu

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Business update - ROM equivalent density shipment

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Density shipment index:
2010Q1 =100
1,600
1,490
1,439
1,164
1,200
1,090
957
800
687
629
598 610
469
514
435 408
417
382
365
400 336
230
186 166
132
100 99
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013 2014 2015
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Current status of ROM memory business

� ROM business

• ≤ 45nm products represented 76% of ROM business in 15Q3

• Seasonal demand is weaker than expectation due to platform transition of key customer

• According to key customer, the details of its new generation platform will be released in 2016

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NTD % ROM (by tech & sales)
100% 1%
80%
35%
60% 61%
66%
76% 76%
60% 80% 80% 78%
84%
32 nm
40%
45 nm
65%
≥ 65 nm
20% 40% 39%
34%
20% 20% 24% 24% 21%
16%
0%
14Q1 Q2 Q3 Q4 15Q1 Q2 Q3 2013 2014 2015
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Business update – NOR equivalent density shipment

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Density shipment index:
300 2010Q1 =100
270
250 238 238
211
214 211
188
197 201
200 178
171 158
157
145
142
150
133
111 117 111
100
95
100 84
71
50
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013 2014 2015
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Current status of NOR memory business

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≤ 75 nm
NTD % NOR (by tech & sales) ≧ 0.10 µ m
100%
≤75nm products represented 42% of NOR
21%
28% 30% 33% 34% 33% 32%
80% 39% 42% 40%
According to iHS, in 2015Q2 Macronix ranks No. 2
with global market share of 20.9% and still 60%
40% 79%
72% 70% 67% 66% 67% 61% 68%
Increasing design-wins provide the sustainable 58% 60%
growth momentum for the future 20%
0%
14Q1 Q2 Q3 Q4 15Q1 Q2 Q3 2013 2014 2015(E)
40%
34%
35% 37%
30% 33% 32% 32% 31.9%
25.4% 25.4%
25.00%
25% 22.0% 22.5%
24% 25.5% 20.90%
23.8% 21.5%
20% 21.5% 20.8%
20.30%
18.8% 19.1%
15%
15.1%
10% 13.3%
12.0%
10%
9%
5% Source: iHS, Macronix
Macronix Cypress (Spansion) Micron
4% Marketing
0%
Y2008 Y2009 Y2010 Y2011 Y2012 Y2013 Y2014 2015Q1 2015Q2
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� NOR flash business

• ≤75nm products represented 42% of NOR business in 15Q3

• According to iHS, in 2015Q2 Macronix ranks No. 2 with global market share of 20.9% and still growing

• Increasing design-wins provide the sustainable growth momentum for the future

Targeting the growing automotive market with competitive products

• Rapid and sustainable growth in automotive market • Macronix is global ranking No. 3 in 2014

• • Top 3 companies account for 93% market share in automotive segment

• • Revenue contribution from automotive segment is expected to grow

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250 NOR from automotive segment
202
Rev equivalent index:
200
2013Q1 = 100 CAGR = 26% 177 178
156 160
150 143 148
132
125
124
100
100
50
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2013 2014 2015
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Targeting the booming IoT market with innovative products

UltraLow Power/Wide Range Vcc Memory Solution

Target Markets: Internet of Things (IoT) / Wearable Devices Density: 512Kb to 64Mb

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Features:

	�Ultra Low Power	�Small Form Factor
	Consumption	�WSON, USON	Macronix’s innovative solutions aiming the
	�70% to 90% power	Packages, WLCSP,	booming IoT and wearable markets
	savings �Wide Range Vcc (1.65 -	KGD �Standard Serial NOR	• Aiming emergent markets with annual market size≧20B units within 3 yrs • Sample requests are from all regions and
	3.6V)	Flash Interface	diversified applications for KGD & discrete
	�extends battery life		memory
	byup to 50%	�Unique ID, secured	• Already sent out ES/CS to ~200 global top tier
		OTP	customers in various applications, including Wireless charger, Wearable, Connectivity, Smart home appliance, Alarm & security, Thermostat, Smart meter, Smart pill, etc.

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Current status – NOR flash breakdown

2015Q3 NOR

Revenue breakdown

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Consumer,
36%
Comm, 22%
Handset,
Computer, 5%
18%
Auto &
Indu., 19%
2015Q3 NOR QTY breakdown
QTY.
(M ea) Computer Consumer Communication Handset Auto & Indu.
-
200 -14% YoY3% QoQ +9% QoQ+7% YoY +15% QoQ+3% YoY -107% YoY+3% QoQ +51% YoY+22% QoQ
150
150 150 150 150
100
100 100 100 100
50 50 50 50 50
0 2015Q2 2015Q3 0 2015Q2 2015Q3 0 2015Q2 2015Q3 0 2015Q2 2015Q3 0 2015Q2 2015Q3
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Current status – Alliance with lobal to -tier distributor g p

Macronix and Arrow Electronics Announced Global Distribution Partnership

• Press release were co-launched globally by both Macronix and Arrow Electronics on June 16, 2015.

• The new agreement enables Macronix Flash memory products & solutions available globally through Arrow’s extensive sales and distribution network.

• Arrow is specializing in automotive and industrial segments

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Business update – SLC NAND breakdown & outlook

� SLC NAND flash business

2015Q3 NAND

• Sequential lower NAND sales because of customers’ inventory adjustment in 15Q3

• Exponential growth of design-wins demonstrate the payoff of effort and indicate the increasing revenue in the future of NAND business

Revenue breakdown

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Comm,
Consumer, 58%
35%
Others, 7%
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SLC NAND Flash equivalent density shipment

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Total density (Tb)
3,000 150,000
Index
1,500 Density shipment index: 36 nm 40,000
2014Q1 =100
75 nm
2,000 100,000
1,000 877 1,033
787
593 573 20,000
501
398 1,000 50,000
500
100
0 0 0 0
14Q1 Q2 Q3 Q4 15Q1 Q2 Q3 Q4(E) 2013 2015(E)
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Agenda

Welcome Miin Wu 2015Q3 Financial Results Paul Yeh Business Update Miin Wu Remarks and Q&A Miin Wu

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For more information regarding Macronix http://www.macronix.com

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For all inquiries, suggestions and comments ir@mxic.com.tw