Nordic Semiconductor

Investor Presentation • Apr 20, 2021

Quarterly Presentation Q1 2021 April 20, 2021

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Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although The Company believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.

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This presentation was prepared in connection with the Q1 results released on April 20, 2021. Information contained herein will not be updated. The following slides should also be read and considered in connection with the information given orally during the presentation.

Continued strong revenue growth Solid demand in all end-user markets

Revenue		Gross margin
USDm 143.2m			50.2 %
+104% y-o-y	+13% q-o-q	-1.7%p y-o-y	-2.5%p q-o-q

• Bluetooth revenue passing the USD 100m milestone at USD 119.8m (+134%)
• Proprietary revenue remaining solid at USD 20.9m (+36%)
• Cellular IoT revenue at USD 1.2m (+10%), influenced by supply issues
• Gross margin of 50.2%, within guided range
  • • Continued high volumes of high-margin SoCs
  • Lower margin on high-volume contracts

Order backlog keeps increasing

Backlog (USDm)

• Order backlog of USD 803m, +551% y-o-y
• Driven by increased volume from both tier-1 customers and the broad-market
• Bluetooth Low Energy and multiprotocol solutions account for 88 %
• Timing of deliveries dependent on wafer availability
• Laser-focus on customers and supply

High-volume customers driving growth

• Platform companies and tier-1s defining the features and specs for new ecosystems
• Nordic leverages on strong relations built over years
• Strong demand also in the broad market
• Digitization shift in the healthcare segment

Steady and high certification market share Significantly increasing value per design

1500 Bluetooth Low Energy end-product certifications, last 12 months

Other

TI

Strong growth across all verticals Driven by both consumer and industrial/retail customers

• Consumer electronics remains the largest area
• Healthcare and Building/Retail show the highest growth
• Ongoing disruption in
  • Logistics/asset tracking
  • Smart home
  • Smart lighting
  • Drug delivery & Disease monitoring

Short-range revenue by end-user markets, last 12 months (USD)

New product launches in Q1

Fast pick-up of the new generation nRF5340 Into volume production in Q4 2020

• Now available on 17 different module variants from 6 different module partners
• Received first >USD 1 million order from customer within the advanced wearable segment
• First order received from audio customer within hearing-aid
• Established support for AI & Machine Learning + Project CHIP

AI and machine learning – the future of IoT

Irnas' RAM 1: Remote monitoring of smart power grids using nRF9160 & nRF52811

• Nordic's partnership with TinyML company - Edge Impulse, makes AI and machine learning accessible on resource-constrained wireless IoT chips for the very first time
• Edge Impulse solutions and Nordic's nRF9160 cellular SIP and nRF52811 Bluetooth SoC now being used by Irnas in Slovenia in a new remote monitoring unit for smart power grids

Cellular IoT progressing

Regulatory certifications overview for nRF9160:

AT&T Bell Canada KDDI Softbank LGU+ TELUS

• Continuing to expand certification for global coverage
  • Approved by the Brazilian regulatory authority
  • Certified by the Canadian telecom carrier TELUS
• Volume ramp-up delayed due to supply issues
• Increase focus on easing application design
  • Low power tools, reference SW and videos
  • Software Development Kit adds key examples / middleware

Financials Pål Elstad, CFO

Revenue growth of 104%

Quarterly revenue (USDm)

• Y/Y growth across all technologies
  • Bluetooth +134% to USD 119.8 million
  • Proprietary +36% to USD 20.9 million
  • Cellular IoT +10% to USD 1.2 million

Revenue growth in all markets

Group	Consumer Electronics	Wearables	Building/ Retail	Healthcare	Others
USDm	USDm	USDm	USDm	USDm	USDm
143.2	51.2	19.9	35.4	16.3	17.9
+104%	+109%	+75%	+169%	+197%	+48%
+13%	-5%	+10%	+31%	+54%	+32%
y-o-y	y-o-y	y-o-y	y-o-y	y-o-y	y-o-y
q-o-q	q-o-q	q-o-q	q-o-q	q-o-q	q-o-q

• Year-on-year growth across all end-user markets
• Fastest growth in Healthcare and Building & Retail
• Strong but seasonally slower for Consumer Electronics

Gross margin within the guidance range

Gross margin (%)

Gross margin at 50.2%

• Higher share of lower margin SoCs in the Q1 deliveries, as guided in Q4
  • Revenue driven by high-volume tier-1 customers
• Gross margin expected at 50-51 % in Q2 2021
• Reiterating medium-term gross margin range of 48%-50% for the short-range business

Operating model performance Q1 2021

Gross margin 50.2%		Q1 2021	Q1 2020
R&D short-range 14.2%	Revenue	USD 143.2m	USD 70.2m	+104.1%	Growth in all technologies and markets
	Gross margin	50.2% USD 71.9m	51.9% USD 36.4m	-1.7pp	Change in customer mix
R&D cellular IoT 6.9%	R&D short-range	14.2% USD 20.3m	17.3% USD 12.1m	-3.1pp
R&D Wi-Fi 1.5% SG&A	R&D cellular IoT	6.9% USD 9.8m	9.6% USD 6.8m	-3.0pp	Higher R&D but lower R&D intensity
10.3%	R&D Wi-Fi	1.5% USD 2.1m	-	-	Expanding our portfolio
EBITDA 17.4%	SG&A	10.3% USD 14.7m	17.5% USD 12.3m	-7.2pp	Growth in number of employees but high operation leverage
	EBITDA	17.4% USD 24.9m	7.5% USD 5.2m	+9.9pp	High operational leverage and solid cost control

Cash operating expenses

Cash cost increase mainly due to increased number of employees, acquisition and FX.

Salary:

• Number of employees increased by 29% to 1 029 over the past last 12 months
• Wi-Fi acquisition added 81 employees

Other Opex:

• Varies with pace of product introductions
• Sharp focus on cost containment
• Low travelling expenses

Cash OPEX* (USDm)

Sharp year-on-year EBITDA improvement

0%

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125

7.5 % 18.1 % 24.0 % 21.1 % 16.9 % 17.4 % 26.0 % 30.9 % 29.0 % 25.7 % 0 5 10 15 20 25 30 35 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 EBITDA EBITDA-margin EBITDA-margin short-range

EBITDA (USDm) and margin (%), Quarterly EBITDA (USDm) and margin (%), Last 12 months

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Capex development

Capex (USDm)

• Capex of USD 5.4 million in Q1
• Expecting capex intensity in 2021 at the same level as 2020, at around 4% of revenue
• Investing is test capacity

Continued strong cash position

Cash position and Cash Flow Q1 2021 (USDm)

Operating cash flow of USD -26.7m Increasing net working capital due to accounts receivable

NWC/Revenue LTM at 26.9%, up from low level at 19.4% at the end of 2020

Continued disciplined cash strategy Solid cash balance at ~1.9 x last 12 months R&D-spend

Summary and Outlook Svenn-Tore Larsen, CEO

Nordic is on a long-lasting growth journey

Proprietary/ASICs Bluetooth LE

Bluetooth shows accelerating growth

Short-range revenue by technology, last 12 months (USDm)

Cellular IoT will drive digitalization of society Nordic has invested early in a huge market opportunity

• LTE-M and NB-IoT open new markets in 'Massive IoT'
• Nordic has been an early mover
  • Invested >USD 130 million in R&D in Cellular IoT over past 6 years
  • Industry leading offering in terms of power consumption, form factor, and software support
  • Nordic's nRF9160 and nRF52840 chosen by ERICSSON and Sigma for their joint 'ARDESCO' IoT reference design

5 billion IoT devices by 2025 - via cellular access technologies

Source: ERICSSON whitepaper, Cellular networks for massive IoT, January 2020

IoT plays an important role to reach UN goals

Backlog supports long-term growth plan

Solid market position

• Market leader in Bluetooth
• Positioned to take lead in cellular IoT
• Complementing portfolio with Wi-Fi

Accelerating demand growth

Medium- and long-term drivers in place to support our ambitious growth strategy

Wafer supplies limit capacity in 2021

• Wafer allocations continue to support minimum 25% increase in production volumes in 2021
• Nordic has managed to pull-in additional wafer volumes to serve customers in Q2, allowing for Q2 2021 revenue guiding of USD 140-150 million
• TSMC has communicated capex of USD 100bn over 3 years, and confirms capacity expansion for special technology nodes like N65/N55

January 2021:

April 2021:

Expect strong Q2 in challenging supply environment

Q2 2021 guidance

Revenue	Gross margin
USDm 140-150	~50%-51%
+58% - 69% -2% to +5% y-o-y q-o-q

• Working 24/7 to support our customers
• Risks and uncertainties remain
  • • Fast technology adoption continues to strengthen long-term growth potential
  • Supply capacity temporarily curtails production
• Stable short-term margin expectations
  • Reiterating medium-term gross margin range of 48%-50% for the short-range business