Macronix — Interim / Quarterly Report 2016

Nov 15, 2016

Macronix International Co., Ltd. Third Quarter 2016 Results October 27, 2016

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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 2016Q3 Financial Results Paul Yeh Business Update Miin Wu Remarks and Q&A Miin Wu

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Financial Highlights

	2016Q3	2016Q2
	Actual	Actual
Revenue	NT$7.1 B	NT$ 5.2B
Gross margin %	31%	14%
Operating margin %	10%	-16%

• Revenue sequentially increased by 37% because of strong demand in ROM(+269% QoQ), NOR(+9%) and NAND(+40%) product lines

• Gross margin sequentially increased by 17ppt mainly because of reversal of inventory loss provision

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Inventory trend

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NTD M
12,000
2013 2014 2015 2016
10,000 9,334
Increasing demand
9,652 8,231
9,136
8,000 7,275
6,761
Reduced
Inventory (net)
utilization rate
6,000
4,000
2,000
0
13Q4 14Q4 15Q4 16Q1 16Q2 16Q3
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Agenda

Welcome Miin Wu 2016Q3 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) 2016/Q3 2016/Q2 2015/Q3 Net Sales 7,092 5,181 5,647 Gross Profit 2,176 707 786 Gross Margin% 31% 14% 14% Operating Expenses (1,500) (1,553) (1,836) Operating Income 676 (846) (1,050) Operating Margin% 10% (16%) (19%) Net Non-Operating Income (Loss) (41) 11 104 Income Before Taxes 635 (835) (946) Income Taxes (2) 144 (5) Net Income 633 (691) (951) Other Comprehensive Income 187 (135) (119) Comprehensive Income 820 (825) (1,070) Net Income(Loss) Attributable to : Shareholders of the Parent 633 (689) (949) NoncontrollingInterests (0) (2) (2)	QoQ YoY Change Change 37% 26% 208% 177% 17ppt 17ppt (3%) (18%) - - 26ppt 29ppt - - - - - - - - - - - -
EPS*(NT$) 0.18 (0.19) (0.27)	- -
EBITDA 1,219 (237) 594 Weighted Avg Outstanding Million Shares 3,550 3,546 3,519

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2016Q3 Financial Highlights

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2016 YTD Sales = NTD 17,359M 2016 YTD GP = NTD 3,673M
+13% YoY +80% YoY
Sales Gross Profit
NTD M NTD M
2,045M 3,673M
10,000
15,329M 17,359M
2,000
8,000
6,000
1,000
4,000
2,000
0 0
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 15Q1 Q2 Q3 Q4 16Q1 Q2 Q3
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2016Q3 Financial Highlights

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2016Q3 2015Q3
Gross Margin (%) 31% 14%
EPS -- NT$ 0.18 (0.27)
Gross Margin (%) EPS
GM% NTD
Reversal of Inventory loss
40%
1.00
(0.27)
31% 0.75
(0.72)
0.50
0.18
0.25
20%
0.00
12% 14% 15% 14%
13% 15Q1 Q2 Q3 Q4 16Q1 Q2 Q3
(0.25)
8% (0.50) (0.10) (0.35) [(0.27)] (0.25) [(0.19)]
(0.47)
Reduced production (0.75)
0%
(1.00)
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3
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Quarterly Consolidated Balance Sheet / Cash Position

Unit: NTD Million

Unit: NTD Million
	2016/09/30	2016/06/30
Cash	5,393	5,409
Inventory(Net)	6,761	7,275
Property, Plant and Equipment	15,820	16,198
Total Assets	35,373	34,868
Interest bearing debt - short term	5,641	6,274
Interest bearing debt - long term	6,642	6,972
Total Liabilities	17,796	18,146
Shareholders' Equity	17,577	16,722
Debt Ratio (%)	50.3%	52.0%
Book Value -- NT$	4.87	4.63
Quarterly Highlight	2016/Q3	2016/Q2
Depreciation & Amortization	510	513
Capital Expenditures	(245)	(393)
Cash Flow from Operating	1,214	731

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Quarterly Sales Breakdown by Products (Parent Company)

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Unit: NTD Million
8,000
11%
6,000
7%
QoQ YoY
10%
Change Change
53%
4,000
NAND +40% +93%
65%
66%
NOR +9% +1%
ROM +269% +109%
2,000
28% FBG -18% -3%
17% 11% * FBG (foundry business group)
11% 13% 8%
0
2015Q3 2016Q2 2016Q3
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Quarterly Quantity Breakdown by Products (Parent Company)

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Unit : Million
700
600
7%
500 3% 8% QoQ YoY
Change Change
400
NAND +4% +164%
NOR +18% +16%
300
91% 91%
95%
ROM +153% +34%
200
FBG -17% +0%
100 * Equivalent 8” WF base for FBG
(foundry business group)
2% 1% 2%
0
2015Q3 2016Q2 2016Q3
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Agenda

Welcome Miin Wu 2016Q3 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: 2012Q1 =100
500 485
400
343
331
300
267
251
200 187
158
145 138 140
108 118 111
100 94 96
100 84 77 88
0
12Q1 Q2 Q3 Q4 13Q1 Q2 Q3 Q4 14Q1 Q2 Q3 Q4 15Q1 Q2 Q3 Q4 16Q1 Q2 Q3
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Current status of ROM memory business

� ROM business

• ≤45nm products represented 92% of ROM business in 2016Q3

• ROM business is the key growth momentum in 2016Q3 because of big titles launched by key customer

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NTD %
ROM (by tech & sales)
100%
80%
66%
60% 80% 76% 77% 74% 79% 76% ≤ 45 nm
86%
92% 76%
≥ 65 nm
40%
20%
34%
20% 24% 23% 26% 21% 24% 24%
14%
8%
0%
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 2014 2015 2016(E)
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Business update – NOR equivalent density shipment

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Density shipment index: 2012Q1 =100
300
258
240
250 243
228
214 214 213
200 190 192 190
181
177
169
160
154
141 142
150
130
100
100
50
0
12Q1 Q2 Q3 Q4 13Q1 Q2 Q3 Q4 14Q1 Q2 Q3 Q4 15Q1 Q2 Q3 Q4 16Q1 Q2 Q3
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Current status of NOR memory business

Rev contribution form automotive segment

� NOR flash business

• ≤75nm products represented 50% of NOR business in 2016Q3

• Seeing strong demand in various applications

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≤ 55 nm
≤ 75 nm
NTD % NOR (by tech & sales) ≧ 0.10 µ m
100% 1% 1% 1%
32%
80% 33% 39% 42% 42% 42% 39%
46% 49% 48%
60%
40%
67% 68%
61% 58% 58% 58% 53% 50% 61% 51%
20%
0%
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 2014 2015 2016(E)
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% of NOR business
13%
12%
10%
8%
6%
3%
2011 2012 2013 2014 2015 2016YTD
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Speedy growth in automotive segment
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Revenue
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Business update – NOR flash breakdown

2016Q3 NOR Revenue breakdown

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Consumer,
36%
Comm, 25%
Computer,
20% Auto , 11%
I.M.A, 8%
Comm: including handsets
I (Industrial), M (Medical), A (Aerospace-defense)
2016Q3 NOR QTY
Computer Consumer Communication Automotive
QTY. +14% QoQ +14% QoQ +39% QoQ +12% QoQ
(M ea)
+29% YoY +9% YoY +22% YoY +11% YoY
200 200 200 100
100 100 100 50
0 0 0 0
2016Q2 2016Q3 2016Q2 2016Q3 2016Q2 2016Q3 2016Q2 2016Q3
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Business update – SLC NAND breakdown & outlook

� SLC NAND flash business

• Increasing design-win cases of advanced technology is the growth driver

• Keeps on robust growth and will be a key growth momentum of company

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Quarterly design-win
case count of 36nm
110
100
90
70
70
50
48
30
2016Q1 2016Q2 2016Q3
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SLC NAND Flash equivalent density shipment

2016Q3 NAND

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Total density (Tb)
Revenue breakdown
Density shipment index: 36 nm
2015Q1 =100
75 nm
Index 200,000 Comm,
55%
Consumer,
592 37%
80,000
600
479
60,000 100,000 Others, 8%
400
263
213 40,000
175 157
200 100 20,000
0 0 0
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3
2014 2015 2016(E)
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Prudent capex plan

� Prudent investment for bottleneck breakthrough of capacity

• Capacity is reaching fully utilized and shipment is in allocation mode

• Additional capex of NTD650M approved by BOD for advanced technology and high-end products

• With proper arrangement, capacity of advanced technology will increase by ~4K wafers/month

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The competence of Fab5 (12”) is taking off
Revenue
15,000
13,121
10,000 8,874 8,799
5,824
6,622
5,000
1,726
0
2011 2012 2013 2014 2015 2016 (E)
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Agenda

Welcome Miin Wu 2016Q3 Financial Results Paul Yeh Business Update Miin Wu Remarks and Q&A Miin Wu

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Copyright © Macronix International Co., Ltd. 20
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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