Macronix — Interim / Quarterly Report 2016

Mar 7, 2017

Macronix International Co., Ltd. Fourth Quarter 2016 Results February 14, 2017

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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 C.Y. Lu 2016Q4 Financial Results Paul Yeh Business Update C.Y. Lu Remarks and Q&A C.Y. Lu

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Financial Highlights

		2016Q4	2016Q3		2016	2015
		Actual	Actual		Actual	Actual
	Revenue	NT$6.8B	NT$ 7.1B		NT$ 24.1B	NT$ 20.9B
Gross	margin %	32%	31%		24%	12%
Operating margin %		9%	10%		-2%	-24%
�	Due to seasonality, revenue decreased by			�	Revenue increased by 15% resulted from
	5% QoQ; but increased by 21% YoY				higher demand in all product lines

• Due to seasonality, revenue decreased by 5% QoQ; but increased by 21% YoY

• Gross margin sequentially increased by 1ppt due to higher utilization rate

• OP margin was sequentially flat

• Gross margin increased by 12ppt due to better product mix and lower cost

• � OP margin improved by 22% because of higher gross profit and reduced expense

• Steady improvement with sustainable profitability

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Agenda

Welcome C.Y. Lu 2016Q4 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

Unit: NTD Million (except EPS) 2016/Q4 2016/Q3 2015/Q4 Net Sales 6,766 7,092 5,599 Gross Profit 2,163 2,176 467 Gross Margin% 32% 31% 8% Operating Expenses (1,545) (1,500) (2,002) Operating Income 618 676 (1,535) Operating Margin% 9% 10% (27%) Net Non-Operating Income (Loss) 1 (41) (129) Income Before Taxes 619 635 (1,664) Income Taxes Expense (benefit) (83) 2 2 Net Income 702 633 (1,666) Other Comprehensive Income (22) 187 (210) Comprehensive Income 680 820 (1,876) Net Income(Loss) Attributable to : Shareholders of the Parent 703 633 (1,663) NoncontrollingInterests (1) (0) (3)	QoQ YoY Change Change (5%) 21% (1%) 364% 1ppt 24ppt 3% (23%) (9%) (140%) (1ppt) 36ppt (3%) (137%) (3,877%) (3,917%) 11% (142%) (112%) (90%) (17%) (136%) 11% (142%)
EPS*(NT$) 0.20 0.18 (0.47)	11% (143%)
EBITDA 1,189 1,219 (120) Weighted Avg Outstanding Million Shares 3,554 3,550 3,522

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Annually Consolidated Statements of Comprehensive Income

Unit: NTD Million (except EPS) 2016 2015 Net Sales 24,125 20,928 Gross Profit 5,836 2,512 Gross Margin% 24% 12% Operating Expenses (6,194) (7,516) Operating Income (358) (5,004) Net Non-Operating Income (Loss) (113) 823 Income Before Taxes (471) (4,181) Income Taxes Expense (benefit) (224) 15 Net Income (247) (4,196) Other Comprehensive Income (77) (323) Comprehensive Income (324) (4,519) Net Income(Loss) Attributable to : Shareholders of the Parent (243) (4,188) NoncontrollingInterests (4) (8)	YoY Change 15% 132% 12ppt (18%) (93%) (89%) (94%) (76%) (93%) (94%) (54%)
EPS* -- NT$ (0.07) (1.19)	(94%)
EBITDA 1,875 2,021 Weighted Average Outstanding Million Shares 3,554 3,522

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2016Q4 Financial Highlights

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2016Q4 Sales = NTD 6,766M 2016 Q4 GP = NTD 2,163M
+21% YoY +364% YoY
2016 Sales = NTD 24,125M 2016 GP = NTD 5,836M
+15% YoY +132% YoY
Sales Gross Profit
NTD M NTD M
2,512M 5,836M
10,000
20,928M 24,125M
2,000
8,000
6,000
1,000
4,000
2,000
0 0
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4 15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4
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2016 Financial Highlights

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2016 2015
Gross Margin (%) 24% 12%
EPS -- NT$ (0.07) (1.19)
Gross Margin (%) EPS
GM% NTD
40%
1.00
32%
(0.07)
0.75
31%
(1.19)
0.50
0.18 0.20
0.25
20%
0.00
15% 14%
14%
13% 12% 15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4
(0.25)
8% (0.10) (0.35) [(0.27)] [(0.19)]
(0.50) (0.47) [(0.25)]
(0.75)
0%
(1.00)
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4
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Quarterly Consolidated Balance Sheet / Cash Position

Unit: NTD Million

Unit: NTD Million
	2016/12/31	2016/09/30
Cash	6,368	5,393
Inventory(Net)	7,087	6,761
Property, Plant and Equipment	15,500	15,820
Total Assets	35,545	35,373
Interest bearing debt - short term	4,681	5,641
Interest bearing debt - long term	5,636	6,642
Total Liabilities	17,225	17,796
Shareholders' Equity	18,320	17,577
Debt Ratio (%)	48.5%	50.3%
Book Value -- NT$	5.07	4.87
Quarterly Highlight	2016/Q4	2016/Q3
Depreciation & Amortization	506	510
Capital Expenditures	(115)	(245)
Cash Flow from Operating	2,988	1,214

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Annual Consolidated Balance Sheet / Cash Position

Unit: NTD Million

Unit: NTD Million
	2016/12/31	2015/12/31
Cash	6,368	5,593
Inventory(Net)	7,087	9,334
Property, Plant and Equipment	15,500	16,596
Total Assets	35,545	37,628
Interest bearing debt - short term	4,681	6,224
Interest bearing debt - long term	5,636	7,862
Total Liabilities	17,225	19,199
Equity	18,320	18,429
Debt Ratio	48.5%	51.0%
Book Value -- NT$	5.07	5.10
Annual Highlight	2016	2015
Depreciation & Amortization	2,041	5,901
Capital Expenditures	(923)	(1,461)
Cash Flow from Operating	5,421	1,703

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Quarterly Sales Breakdown by Products (Parent Company)

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Unit: NTD Million
8,000
11%
12%
6,000
9% QoQ YoY
Change Change
53% 55%
4,000 NAND -1% +63%
62%
NOR +0.4% +8%
ROM -19% +48%
2,000 FBG +11% +9%
28% 24%
FBG (foundry business group)
19%
10% 8% 9%
0
2015Q4 2016Q3 2016Q4
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Annual Sales Breakdown by Products (Parent Company)

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Unit: NTD Million
30,000
25,000
YoY
11%
Change
20,000
8%
NAND +65%
NOR +5%
15,000
65% 58% ROM +49%
10,000 FBG +0%
FBG (foundry business group)
5,000
15% 20%
12% 11%
0
2015 2016
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Quarterly Quantity Breakdown by Products (Parent Company)

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Unit : Million
700
7%
600 7%
500 QoQ YoY
5%
Change Change
400
NAND +6% +81%
NOR +10% +34%
300
91% 91%
92%
ROM +3% +21%
200
FBG +12% +9%
100 * Equivalent 8” WF base for FBG
(foundry business group)
3% 2% 2%
0
2015Q4 2016Q3 2016Q4
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Annual Quantity Breakdown by Products (Parent Company)

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Unit : Million
2,400
YoY
6%
Change
NAND +107%
4%
NOR +16%
1,600
ROM +16%
FBG +4%
92%
94% * Equivalent 8” WF base for FBG
800 (foundry business group)
2% 2%
0
2015 2016
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Agenda

Welcome C.Y. Lu 2016Q4 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
500 Density shipment index: 2012Q1 =100 485
400
351
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 Q4
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Current status of ROM memory business

� ROM business

• ≤45nm products represented 77% of ROM business in 2016Q4

• More shipment of ≥65nm technology in 2016Q4 due to product mix

• • Strong demand from key customer results in high fab utilization rate in 2016

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NTD %
ROM (by tech & sales)
100%
80%
66%
60% 80% 76% 77% 74% 79% 77% 76% 76% 83%
92% ≤ 45 nm
40% ≥ 65 nm
20%
34%
20% 24% 23% 26% 21% 23% 24% 24% 17%
8%
0%
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4 2014 2015 2016
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Business update – NOR equivalent density shipment
Density shipment index: 2012Q1 =100
300
258
255
243 240
250
228
214 214 213
200 190 192 190
177 181
169
160
154
150 141 142
130
100
100
50
0
12Q1 Q2 Q3 Q4 13Q1 Q2 Q3 Q4 14Q1 Q2 Q3 Q4 15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4
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Current status of NOR memory business

� NOR flash business

• ≤75nm products represented 47% of NOR business in 2016Q4

• With the best product quality in industry, Macronix quickly gains market shares in automotive segment and big global brand customers

• Macronix provides the best solution to meet customers’ demand of switching from embedded to SiP NOR

• Increasing demand due to rising trend of “smart” systems

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≤ 55 nm
NOR (by tech & sales) ≤ 75 nm
NTD % ≧ 0.10 µ m
100%
1% 1% 1% 1%
32%
33%
80% 39% 42% 42% 42% 46% 39%
46% 49% 46%
60%
40%
67% 68%
61% 58% 58% 58% 53% 50% 53% 61% 53%
20%
0%
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4 2014 2015 2016
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Rev contribution form automotive segment

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% of NOR business
13%
12%
10%
8%
6%
3%
2011 2012 2013 2014 2015 2016
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Speedy growth in automotive segment
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Revenue
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Business update – NOR flash breakdown

2016Q4 NOR Revenue breakdown

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Consumer,
34%
Comm, 29%
Computer,
20%
I.M.A., 6% Auto , 11%
Comm: including handsets
I (Industrial), M (Medical), A (Aerospace-defense)
2016Q4 NOR QTY
Computer Consumer Communication Automotive
QTY. +7% QoQ +9% QoQ +21% QoQ +1% QoQ
(M ea)
+31% YoY +33% YoY +48% YoY +14% YoY
200 200 200 100
100 100 100 50
0 0 0 0
2016Q3 2016Q4 2016Q3 2016Q4 2016Q3 2016Q4 2016Q3 2016Q4
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Business update – NOR flash breakdown

2015 NOR Revenue breakdown 2016 NOR Revenue breakdown

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Consumer, Consumer,
34% Comm, 34% Comm,
27% 27%
Computer, Computer,
20% 19%
Auto, 13%
I.M.A, 7% Auto, 12% I.M.A, 7%
2015 vs.
2016 NOR Qty breakdown
Computer Consumer Communication Automotive
QTY.
(M ea) +15% YoY +14% YoY +22% YoY +14% YoY
800 800 800 200
400 400 400 100
0 0 0 0
2015 2016 2015 2016 2015 2016 2015 2016
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Business update – SLC NAND breakdown & outlook

� SLC NAND flash business

• Passed AEC-Q100 qualification, Macronix’s products are proven the best-in-class quality and performance

• With outstanding product quality, Macronix is gaining business from global major customers

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Accumulative design-win
case count of 36nm
350
300 271
250
200
218
150
100
118
50
48
0
2016Q1 2016Q2 2016Q3 2016Q4
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SLC NAND Flash equivalent density shipment

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Total density (Tb)
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2016Q4 NAND
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Density shipment index: 36 nm Revenue breakdown
2015Q1 =100 75 nm 200,000
Index
Comm, 58%
592
600 514 80,000 Consumer,
479
36%
60,000 100,000
400
263
40,000 Others, 6%
213
175 157
200 100 20,000
0 0 0
15Q1 Q2 Q3 Q4 16Q1 Q2 Q3 Q4 2014 2015 2016
(A)
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2017 capex plan

� Prudent investment in production

• Full fab utilization; BB ratio is over 1 for four consecutive months and lead time is getting longer

• Projected capex of NTD2.35B in 2017 for advanced technology and productivity improvement

• The competency of Fab 5 (12” fab) is performing

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Revenue The competence of Fab5 (12”) is taking off
15,000
12,832
10,000 8,874 8,799
6,622
5,824
5,000
1,726
0
2011 2012 2013 2014 2015 2016
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Agenda

Welcome C.Y. Lu 2016Q4 Financial Results Paul Yeh Business Update C.Y. Lu Remarks and Q&A C.Y. Lu

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Copyright © Macronix International Co., Ltd. 24
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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