Macronix — Interim / Quarterly Report 2014

Jan 29, 2015

Macronix International Co., Ltd. Fourth Quarter 2014 Results January 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

2014Q4 Financial Results Business Update Remarks and Q&A

C.Y. Lu Paul Yeh C.Y. Lu C.Y. Lu

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Fourth Quarter Highlights

2014Q4 2014Q3 Actual Actual

Revenue NT$ 6.0 B NT$ 6.7 B Gross margin % 8% 17% Operating margin % -36% -16%

• Revenue sequentially decreased by 11% because of seasonal lower demand in all product lines

• Gross margin sequentially decreased by 9ppt because of inventory writedown and unfavorable product mix

• OP margin decreased sequentially due to lower gross profit and higher litigation expense

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Agenda

Welcome C.Y. Lu 2014Q4 Financial Results Paul Yeh Business Update C.Y. Lu Remarks and Q&A C.Y. Lu

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Quarterly Consolidated Statements of Comprehensive Income

U	2014/Q4 2014/Q3 2013/Q4 Net Sales 5,960 6,691 5,860 Gross Profit 482 1,140 680 Gross Margin% 8% 17% 12% Operating Expenses (2,637) (2,239) (2,148) Operating Income (2,155) (1,099) (1,468) Net Non-Operating Income (Loss) (130) (1) (41) Income Before Taxes (2,285) (1,100) (1,510) Income Taxes (9) (1) (2) Net Income (2,294) (1,101) (1,512) Other Comprehensive Income 222 25 141 Comprehensive Income (2,072) (1,076) (1,371) Net Income(Loss) Attributable to : Shareholders of the Parent (2,292) (1,097) (1,501) NoncontrollingInterests (2) (4) (11) nit: NTD Million (except EPS)	QoQ YoY Change Change (11%) 2% (58%) (29%) -9ppt -4ppt 18% 23% 96% 47% 108% 51% 108% 52% 770% 58% 93% 51% 109% 53% (44%) (78%)
	EPS*(NT$) (0.65) (0.31) (0.42)	110% 53%
	Weighted Average Outstanding Million Shares 3,518 3,518 3,518

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Annual Consolidated Statements of Comprehensive Income

2014 2014 (Pro Forma)* 2013 Net Sales 22,414 22,414 22,204 Gross Profit 2,759 2,759 1,951 Gross Margin% 12% 12% 9% Operating Expenses (9,082) (8,074) (8,307) Operating Income (6,323) (5,315) (6,356) Net Non-Operating Income (Loss) (146) (146) 3 Income Before Taxes (6,469) (5,461) (6,353) Income Taxes (14) (14) (5) Net Income (6,483) (5,475) (6,358) Other Comprehensive Income 487 487 112 Comprehensive Income (5,996) (4,988) (6,247) Net Income(Loss) Attributable to : Shareholders of the Parent (6,461) (5,453) (6,306) NoncontrollingInterests (22) (22) (52) Unit: NTD Million (except EPS)	YoY YoY Change Change (Pro Forma) 1% 1% 41% 41% 3ppt 3ppt 9% (3%) (1%) (16%) 2% (14%) 2% (14%) 336% 336% (4%) (20%) 2% (14%) (58%) (58%)
EPS*(NT$) (1.84) (1.56) (1.79)	3% (13%)
Weighted Average Outstanding Million Shares 3,518 3,518 3,518

*2014 Pro Forma IS: litigation expense NT$1,008M is excluded

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2014Q4 Financial Highlights

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2014Q4 Sales = NTD 5,960 M 2014Q4 GP = NTD 482M
+2% YoY -29% YoY
2014 Sales = NTD 22,414 M 2014 GP = NTD 2,759M
+1% YoY +41% YoY
Sales Gross Profit
NTD M NTD M
1,951M 2,759M
10,000 22,204M 22,414M
1,250
8,000
6,000
750
4,000
250
2,000
0
13Q1 Q2 Q3 Q4 14Q1 Q2 Q3 Q4
13Q1 Q2 Q3 Q4 14Q1 Q2 Q3 Q4 (250)
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2014 Financial Highlights

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2014 2013
Gross Margin (%) 12% 9%
EPS (NTD) (1.84) (1.79)
(1.56) Pro Forma
Gross Margin (%) EPS
EPS numbers are retro-adjusted
NTD
1.00
18%
17%
18% 0.75
12%
8% 0.50 (1.79) (1.84)
6% 0.25
4%
0.00
Q2 Q3 Q4 14Q1 Q2 Q3 Q4 13Q1 Q2 Q3 Q4 14Q1 Q2 Q3 Q4
(0.25)
(0.26)
(0.31)
(0.36)
(0.50) (0.42)
(0.59) [(0.52)] (0.52)
(0.75) (0.65)
(1.00)
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GM%
25%
18%
17%
18%
12%
15%
8%
5% 6%
4%
-4%
-5% 1 3Q1 Q2 Q3 Q4 14Q1 Q2 Q3 Q4
-15%
-25%
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Quarterly Consolidated Balance Sheet / Cash Position

Cash Inventory(Net) Property, Plant and Equipment Total Assets Interest bearing debt - short term Interest bearing debt - long term Total Liabilities Shareholders' Equity Debt Ratio (%) Book Value (NT$) Quarterly Highlight Depreciation & Amortization Capital Expenditures Cash Flow from Operating EBITDA Unit: NTD Million	2014/12/31	2014/09/30
	7,636 9,302 21,128 44,843 14,277 2,074 22,065 22,778 49.2% 6.40 2014/Q4	7,257 9,554 22,420 47,596 7,409 10,097 22,789 24,807 47.9% 7.05 2014/Q3
	1,885 (264) 1,760 (330)	1,892 (607) (139) 798

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Annual Consolidated Balance Sheet / Cash Position

Unit: NTD Million	2014/12/31	2013/12/31
Cash	7,636	11,979
Inventory(Net)	9,302	8,795
Property, Plant and Equipment	21,128	26,728
Total Assets	44,843	54,030
Interest bearing debt - short term	14,277	8,215
Interest bearing debt - long term	2,074	10,935
Total Liabilities	22,065	25,304
Equity	22,778	28,726
Debt Ratio	49.2%	46.8%
Book Value (NT$)	6.40	8.15
Annual Highlight	2014	2013
Depreciation & Amortization	7,565	7,744
Capital Expenditures	(1,660)	(4,318)
Cash Flow from Operating	293	(579)
EBITDA	1,377	1,726

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Quarterly Sales Breakdown by Products (Parent Company)

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Unit: NTD Million
8,000
6,000
QoQ YoY
57%
Change Change
4,000 58% 57%
Flash -11% -0.1%
ROM -8% -2%
FBG -22% +26%
2,000
32%
34% 33%
FBG (foundry business group)
8% 11% 10%
0
2013Q4 2014Q3 2014Q4
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Annual Sales Breakdown by Products (Parent Company)

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Unit: NTD Million
30,000
25,000
YoY
20,000
Change
Flash +5%
15,000 60% 62%
ROM -15%
10,000 FBG +25%
30%
FBG (foundry business group)
26%
5,000
10% 12%
0
2013 2014
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Quarterly Quantity Breakdown by Products (Parent Company)

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Unit : Million
600
500
QoQ YoY
400 Change Change
Flash -18% -2%
300
95% 96% 96%
ROM -12% -10%
FBG -21% +24%
200
Equivalent 8” WF base for FBG
100
(foundry business group)
5% 4% 4%
0
2013Q4 2014Q3 2014Q4
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Annual Quantity Breakdown by Products (Parent Company)

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Unit : Million
2,000
YoY
Change
1,600
Flash +10%
1,200 ROM -24%
FBG +19%
97%
800 95% * Equivalent 8” WF base for FBG
(foundry business group)
400
5% 3%
0
2013 2014
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8 ” Equivalent Wafer- Out Trend

Wafer	Wafer	Out	Out	Out
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
	09Q1				Q2		Q3		Q4	10Q1			Q2		Q3		Q4	11Q1			Q2		Q3		Q4	12Q1			Q2		Q3		Q4	13Q1			Q2		Q3		Q4	14Q1			Q2		Q3		Q4

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Agenda

Welcome C.Y. Lu 2014Q4 Financial Results Paul Yeh Business Update C.Y. Lu Remarks and Q&A C.Y. Lu

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Business update - ROM equivalent density shipment

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Density shipment index:
2009Q1 =100
1,400
1,250
1,206
1,200
976
1,000
914
802
800
511
600
528
502
393
365
342
350
400 306
320
193
139
161 156 [111]
200 120
100 [106] 84 83
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2010 2011 2012 2013 2014
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Current status of ROM memory business

� ROM business

• ≤ 45nm products represented 84% of ROM business in 14Q4

• 32nm 16/32Gb products will be in mass production in 15Q1

• Average density per unit: 6.7Gb, 6.0Gb,11.4Gb and 12.4Gb for 14Q1, Q2 ,Q3, and Q4 respectively

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NTD %
ROM (by tech & sales)
100%
14%
24%
33% 35%
80%
57% 60% 61%
60% 80% 76%
84%
76%
67%
40%
59% 57% 45 nm
65 nm
38%
20% 36% 34%
75 nm
22%
18%
15% 5%
0% 3% 7% 5%4% 3%5% 2%3% 2%2% 2%3% 1% 1% 0%1% 3% 1%1% ≧ 0.10 μ m
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014
2013 2014
18
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Business update - NOR equivalent density shipment

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Density shipment index:
800 2009Q1 =100
640
569
600 576
530 542
505
480
460
425
382
422
390
360
400
299
298 317
272
270
250 256
227 192
200 173
100
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2010 2011 2012 2013 2014
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Current status of NOR memory business

� NOR flash business

• 75nm products represented 34% of NOR business in 14Q4

• 75nm 3V serial 128Mb RPMC CS was sent for qualification in 14Q4 (with RPMC feature for Win10 platform)

• 55nm 3V dual-quad serial 256/512 Mb NOR ES was sent for qualification (for auto application)

High density Mid density (32Mb~128Mb) Low density

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Low density
NTD % 100% NOR (by tech & sales) NTD % NOR (by density & sales)
100%
7%
15% 19% 23% 26% 28% 30% 33% 34% 21% 32% 12% 16%
80%
80%
55%
60%
60% 54%
52%
85%
40% 81% 77% 74% 72% 70% 79% 40%
67% 66% 68%
75 nm 20%
20% 38%
≧ 0.10 µ m 34% 32%
0% 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2012 2013 2014
2013 2014
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Business update – NOR Flash breakdown

2014Q4 NOR

Revenue breakdown

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Consumer,
34% Comm,
22%
•OTHERS includes
Computer, Handset, Industrials and others
20% 7%
Auto &
Indu., 17%
2014Q4 NOR QTY breakdown
QTY.
(M ea) Computer Consumer Communication Handset Auto & Indu.
-
21% QoQ -13% QoQ -10% QoQ -46% QoQ -6% QoQ
200 +4% YoY +9% YoY -1% YoY -55% YoY +20% YoY
150
150 150 150 150
100
100 100 100 100
50 50 50 50 50
0 2014Q3 2014Q4 0 2014Q3 2014Q4 0 2014Q3 2014Q4 0 2014Q3 2014Q4 0 2014Q3 2014Q4
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Business update - NOR Flash breakdown

2014 NOR

Revenue breakdown

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Consumer,
33% Comm,
21%
Computer,
Handset,
21%
11%
Auto &
Indu., 14%
2014 NOR QTY breakdown
QTY. Computer Consumer Communication Handset Auto & Indu.
(M ea)
+10% YoY
+18% YoY +9% YoY -17% YoY +20% YoY
600
600
400
400 400 400 400
200 200 200 200 200
0 0 0 0 0
2013 2014 2013 2014 2013 2014 2013 2014 2013 2014
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Business update – SLC NAND breakdown & outlook

� SLC NAND flash business

• 36nm 1Gb NAND CS was qualified in 14Q4; in MP & Shipment in 15Q1 (for various applications)

• 36nm MCP (2Gb NAND+1Gb DRAM) CS was sent for qualification in 14Q4 (for M2M application)

• 36nm 2Gb NAND was already in MP & shipment in 14Q4 (for STB/TV applications)

• 36nm 8Gb NAND was pre-released in 14Q4

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SLC NAND Flash equivalent density shipment
2014Q4 NAND
Total density (Tb)
Index
Revenue breakdown 2,500 2,347 3,000 150,000 150,000
Density shipment index:
2014Q1 =100
2,000
1,643
Comm, 2,000 100,000 75 nm 100,000
1,500
52%
968 36 nm
1,000 535
Consumer, 593 573 1,000 50,000 50,000
398
37% Others, 500
11% 100
0 0 0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2015(E)
2014
2015(E)
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Growth drivers in 2015

IoT / Wearable

Wireless

Automotive / Industrial

Newly launch product series with the features:

• Wide range Vcc ( 1.7V ~ 3.6V )

• Ultra low power consumption

• ( 75% lower in active mode; 95%

lower in standby mode)

• Small form factor

Comprehensive product coverage

• Provide MCP products:

NOR MCP / NAND MCP

• Provide full spectrum densities

• Reduce cost by tech migration

Long-term competency

• Committed Fab capacity

• Broad product portfolio with excellent quality

• AECQ-100 qualified: NOR (-40⁰C ~ 125⁰C) & NAND (-40⁰C ~ 105⁰C)

• RMA ≦1 ppm

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HD NOR + NAND Wireless HD NOR + NAND Automotive
150 Accu. design-win case count 126 150 Accu. design-win case count 131
97
100 100
Already sent ES to 19 75
65
global well-known
42
customers 50 50
14
0
0 0
Y2011 Y2012 Y2013 Y2014 Y2011 Y2012 Y2013 Y2014
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Press release

Spansion and Macronix Reach Settlement Agreement

Agreement Ends Litigation Between the Companies Worldwide

SUNNYVALE, Calif. and HSINCHU, Taiwan, Jan 27, 2015 – Spansion Inc. (NYSE: CODE), a worldwide leader in non-volatile memory and embedded systems solutions, and Macronix International Co., Ltd. (TSE: 2337), a global leader in non-volatile memory semiconductor solutions, today announced the companies have settled all outstanding patent disputes and actions, including their respective complaints at the US International Trade Commission as well as District Court, inter partes review proceedings at USPTO, and Macronix’s patent infringement complaint against Spansion in Germany. As part of the settlement, both companies agreed to dismiss all patent cases between them and their downstream customers worldwide.

In the agreement, the companies have granted certain rights under the disputed patents to each other. The settlement allows both direct their full attention and resources companies to to continuing to innovate and serving their customers’ needs as leaders in the memory semiconductor industry.

Other terms of the settlement agreement, including financial terms, were not disclosed.

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Agenda

Welcome C.Y. Lu 2014Q4 Financial Results Paul Yeh Business Update C.Y. Lu Remarks and Q&A C.Y. Lu

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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