Nordic Semiconductor

Investor Presentation • Feb 7, 2023

Quarterly Presentation Q4 2022 February 7, 2023

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This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with The Company's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for The Company. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

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.

The Company is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither The Company nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This presentation was prepared in connection with the Q4 results released on February 7, 2023. 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.

Revenue reflects turbulent environment

Q4 2022:

• § Revenue of USD 191 million (+12%)
• § Bluetooth growth of 26%
• § Gross margin 52.7%, flat gross profit
• § EBITDA margin above 20% despite higher R&D

Q1 2023:

• § Guidance for revenue of USD 140-160 million and gross margin of >52%
• § Low demand for legacy* products and softer contribution from China
• § Continued impact of wafer supply
• § Investment to secure future supplies

Revenue, gross profit and EBITDA (USDm)

Tier-1s are taking a larger share

Bluetooth revenue composition (USDm)

§ Shifting revenue composition

• § Significantly increased sales to tier-1 customers in the US and Europe
• § Top-10 accounted for >50% of Bluetooth revenue in Q4'22
• § Lower sales to SMEs, particularly in China

Weak sales to domestic customers in China

Quarterly revenue from domestic Chinese customers

• § Domestic Chinese customers accounted for 20%-25% of revenue through 2021
• § Share of revenue declined <10% in Q4' 22, with a weak outlook also for Q1'23
• § The pace and potency of a rebound in China is one of the key elements determining the outlook for product demand going forward

Order backlog

Backlog and revenue development (USDm)

• § Worked through 2022 to better align order backlog and delivery capability
• § Q4 reduction reflecting reduced tier-1 lead times and order cancellations

Steady and high certification market share Significantly increasing value per design

Nordic

Other

TI Telink

⁷ *Source: DNB Markets/FCC

Cellular IoT

Cellular IoT revenue last 12 months (USDm)

• § Large base of ~300 projects, with several beginning to gain commercial traction
• § Near-term uncertainty regarding project timing, customers' financing and product demand in the current economic climate

New customer-product launches in Q4

Warner Bros. Interactive smart wand nRF52832 + nPM1100	Magene High-end bike computer nRF52840 (Bluetooth and ANT+)	Moko Smart Smart Plug nRF9160 + nRF52833	voestalpine Krems GmbH leova® SMART nRF9160	adhoc networks Smart waste solution nRF9160
The Harry Potter: Magic Caster Wand™ integrates touch sensors and a motion sensor to help the wand determine which spell the user wants to cast	support sensor devices such as heart rate monitors, power meters, speed and cadence sensors as well as electronic shifting systems	monitoring energy usage and save power consumption by remotely controlling load switches	measure the microclimate directly in each user's vineyard and enables sustainable and optimized time and resource management in viticulture	measuring fill levels in waste container. Allowing management businesses such as government bodies or private companies to allocate rubbish collection resources	9

Traction in the audio vertical

Several customer already in volume production

Engaging with developers

Engaging with design partners

LE Audio Wireless Mic Demo (Fanstel / EMSi / Packetcraft)

Laird Audio kits

Products already in the market

Shipped +2k pcs nRF5340 Audio development kits to date. Fully features SDK through our nRF Connect SDK

Working with module partners, OEM/ODMs to broaden the Nordic LE Audio opportunity

Healthy pipeline of projects in various segments like headphones, hearing aids, speakers, microphones, and more

Nordic makes developing Wi-Fi products easy Empower new innovative low-power Wi-Fi 6-enabled products

• § Roll-out of thousands of the new nRF7002 Development Kit through distribution channels
• § Full set of software support on nRF Connect SDK - combined with Nordic's best in class technical support
• § First 3rd party Wi-Fi 6 modules and end-product showcased at CES 2023

Expanding the PMIC portfolio

Multi-function PMIC with unique system management features

"I have been an earlier adopter for many of your parts over the years and would really like to put this PMIC in a design where the customer reaction is simply WOW. Congratulation for you and your team, you are definitely going to shake up the industry."

Customer email when nPM1300 was launched

Nordic Tech Tour 2022

Where engineers meet engineers

• § 45+ cities across US and EMEA
• § More than 1,700 attendees
• § First time attendees at 71%
• § 56% currently planning a project using Nordic
• § Focus on Matter, cIoT and Wi-Fi
• § Strong feedback from participants:

"Excellent presenters and relevant info. Good job, well done!"

"Whole-day seminars can be hit-and-miss. This was a whole-day worth spending"

"Very impressed by how knowledgeable/nice the Nordic staff were" "I got exactly what I wanted - a sneak peak at the new nRF7002"

Financials Pål Elstad, CFO

Bluetooth-driven revenue

Cellular IoT revenue (USDm) Quarterly

Strong healthcare and industrial

Group		Consumer		Industrial		Healthcare		Others
USDm		USDm		USDm		USDm		USDm
191.4		108.9		51.7		22.3		6.6
+12%	-5%	-5%	-14%	+34%	+0%	+118%	+55%	+23%	-27%
y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q	y-o-y	q-o-q

150

Gross margin

• § High margin levels through 2022
• § Expect >52% for Q1 2023
• § Reiterating long-term ambition to maintain gross margin >50%

70%

Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022

Operating model performance Q4 2022

Gross margin 52.7%		Q4 2022	Q4 2021	Δ
	Revenue	USD 191.4m	USD 171.2m	+11.8%	Revenue ↑ due to price, volume, and product mix
R&D short-range 14.2%	Gross margin	52.7% USD 100.9m	58.9% USD 100.8m	-6.2pp	Margin ↓ due to price, product and customer mix Flat gross profit
R&D cellular IoT 7.0%	R&D short-range	14.2% USD 27.3m	13.8% USD 23.7m	+0.4pp	Continuing to invest:
R&D Wi-Fi 2.3% SG&A 8.8%	R&D cellular IoT	7.0% USD 13.5m	7.3% USD 12.5m	-0.3pp	Total R&D up from USD 39.9m to USD 45.2m, § and from 23.3% to 23.6% of revenue
	R&D Wi-Fi	2.3% USD 4.4m	2.2% USD 3.8m	+0.1pp	Continued favorable fx in the quarter §
EBITDA 20.3%	SG&A	8.8% USD 16.8m	10.8% USD 18.5m	-2.0pp	Costs ↓ due to operational leverage, favorable fx
	EBITDA	20.3% USD 38.9m	24.7% USD 42.4m	-4.6pp	EBITDA above 20% despite high R&D

Investing for growth

Cash cost increase mainly due to increased number of employees, partly offset by favorable fx

Salary:

• § Number of employees increased by 21% to 1,452 over the past last 12 months
• § Fx changes reduced payroll cost by USD 6m compared to Q4'21 rates

Other OPEX:

§ Varying with pace of product introductions

Cash OPEX* (USDm)

Capex intensity remains low

Capex (USDm)

• § Capex of USD 8.4 million in Q4
• § Overall capex intensity 3% for the full year 2022

Continued strong cash position

Cash position and Cash Flow Q4 2022 (USDm)

• § Strong EBITDA contribution for continued positive cash performance
• § Increase NWC
• § Mainly due to inventory and accounts payables
• § NWC/Revenue LTM of 21.6%
• § Other items mainly impacted by timing of compensation plan settlements
• § USD 100m prepayment in Q1 to strengthen supply resilience from 2024

Summary and Outlook Svenn-Tore Larsen, CEO

Mixed near-term outlook across segments Long-term outlook remains positive

• § Customers: Large tier-1s with continued strong Bluetooth demand, mixed picture among SMEs
• § Wafers: Automotive continues to drive competition for 55nm wafers, and limits Bluetooth nRF52/53 shipments
• § Technologies: Low demand for legacy* products, temporary slowdown for cIoT
• § Verticals: Consumer more exposed than Industrial, strong growth in Healthcare
• § Geographies: Currently low demand in China, strong in Europe

Revenue low-point in Q1

Q1 2023 guidance

Revenue	Gross margin
USDm 140-160m	>52%
-13% to -24% -16% to -27% y-o-y q-o-q

• § Higher share of revenue from tier-1 customers
• § Wafer supply curbs Bluetooth production
• § Slower demand in some areas

Strong growth → uncertain near-term outlook

• § No longer expects to meet the USD 1 billion revenue ambition in 2023 but sees a run-rate of USD 1 billion in the second half of the year
• § Continue to invest in long-term growth
• § Flexible business model, adapting to changing economic conditions