NTC — Interim / Quarterly Report 2020

Nov 6, 2020

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Nanya Technology Q3 2020 Investor Conference

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Safe Harbor

The information herein and the presentation made during the conference contain forward-looking statements and are provided for information Neither nor other purposes only. Nanya Technology Corp. any person assumes responsibility for the accuracy and completeness of the forwardstatements or undertakes to the statements. You are looking duty update urged to review the information provided herein carefully, and please don’t distribute, reproduce or disclose the information in whole or in part without prior written permission of NANYA Technology Corp.

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Q3’20 Financial Results Summary

Amount in Million NT$, except for EPS & BVPS	Q3’20 Q2’20 QoQ Q3’19 YoY	Q3’20 Q2’20 QoQ Q3’19 YoY
Net Sales	15,324 100%	16,489 100% -7.1% 14,799100% 3.5%
Gross Profit (Loss)Gross Margin(%)	3,962 25.9%	5,042 30.6% -21.4% 4,137 28.0% -4.2%
Operating Income (Loss) Operating Margin(%)	2,069 13.5%	3,229 19.6% -35.9% 2,252 15.2% -8.1%
EBITDA*EBITDA Margin (%)	5,728 37.4%	6,784 41.1% -15.6% 5,957 40.3% -3.9%
Non-operating Income (Expense)	25 0.2%	207 1.3% 432 2.9%
Income Tax Benefit (Expense)	-481 -3.1%	-216 -1.3% -479 -3.2%
Net Income (Loss)Net Margin (%)	1,613 10.5%	3,220 19.5% -49.9% 2,205 14.9% -26.8%
Earnings Per Share (NT$)	0.53**	1.05 0.72
Book Value Per Share (NT$)	49.91***	49.63 49.71

Remark: * EBITDA = Operating income + Depreciation & Amortization Expenses

*** BVPS is calculated based on 3,073M outstanding shares

** EPS is based on weighted average outstanding shares of 3,073M

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Q3’20 vs. Q2’20 Results Comparison

	Q3’20 Q2’20 QoQ (PPT* Delta) Remarks	Q3’20 Q2’20 QoQ (PPT* Delta) Remarks
Amount in Million NT$
Net Sales	15,324	16,489 -7.1%  Bit shipment decreased low single digits%  ASP decreased low single digits%  FX negative impact 1.5%
Gross Profit (Loss) Gross Margin(%)	3,962 25.9%	5,042 30.6% -4.7%  Q3’20 Gross profit decreased NT$ 1,080M, mainly due to ASP and shipment decrease
Operating Expense	1,892 12.3%	1,813 11.0% 1.4%  R&D expense slightly increased
Operating Income (Loss) Operating Margin(%)	2,069 13.5%	3,229 19.6% -6.1%  Q3’20 OP Income decreased NT$ 1,160M
Net Income (Loss) Net Margin (%)	1,613 10.5%	3,220 19.5% -9.0%  Net Income decreased NT$ 1,607M • OP Income decrease of NT$ 1,160M • Interest income: NT$ 121M unfavorable • Income tax: NT$ 265M unfavorable

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*PPT: Percentage Points

20,000

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hts Quarterly Financial Highlig Revenue (Million NT$) Net Income (Million NT$) Gross Margin(%) Operating Margin(%)

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59%
55%
53%
52% 51%
50%
47%
44% [44%] 44%
42% 41%
40%
39%
40%
35%
33% 32% [33%] 32% 16,489 15,324
31% 31%
30.6%
28% 28%
14,419
27%
25% 13,116
25.9%
23% 23.8%
21%
25.7% 19.6%
18%
17%
15%
13.5%
11.0%
12.7%
3,220
1,286 [1,928 ] 1,613
0%
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20
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Cash Flows

2020 Q1~Q3 Cash Flow

Unit: Million NT$

Unit: Million NT$ Beginning Balance 51,335 47,532 Cash from Operating 5,476 5,070 Activities Capital Expenditures -3,069 -1,020 Dividend & Others -6,617 -247 Ending Balance 47,126 51,335 Free Cash Flow[(1)] 2,407 4,050*

-4,927 14,626 Capital -6,722 Expenditures Dividend & Others Cash from Operating Activities 44,149 47,126

• (1) Free Cash Flow = Cash from operating activities – Capital expenditures

* - NT$ 4.6 billion of dividend payout ;

• NT$ 0.7 billion from exchange differences on translation of foreign F/S

Jan. 1, 2020 Sep. 30, 2020 Beginning Ending Balance Balance

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CAPEX & Bit Shipment

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NT$ Billion
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Mid-thirties%
20.4 Approx.
twenties%
NT$~5B
10.5 Low-
teens%
5.5 2021
2018 2019 2020(E)
2018 2019 2020(E)
CAPEX Bit Shipment (YoY)
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Capital Expenditure (CAPEX)

• Q3’20 CAPEX NT$ 3.07 billion

 Push out appx. NT$ 5 billion CAPEX to 2021  2020 CAPEX guidance at NT$ 10.5 billion down from previous NT$ 15.76 billion

Bit Shipment

 Q3’20 Bit shipment decreased by low single digits% QoQ  Q4’20 QoQ bit shipment expected to be relatively flat  2020 YoY bit shipment growth in twenties %

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Q4’20 Market Outlook

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Outlook
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• Short term: US-China trade dispute and COVID-19 pandemic have affected overall DRAM demand in the last 3 quarters. DRAM demand is to stabilize in Q4’20

• Long term: COVID-19 vaccines development is key to DRAM market recovery. Datacenters, 5G, networking, A.I., remote work / online learning, etc. are main drivers for long term demand growth

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Supply
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 DRAM suppliers’ inventory level continued to decrease in Q3’20  Suppliers’ CAPEX plan conservative, may limit 2021/1H industry bit supply growth

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Demand
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• Mobile Market: Smartphone market were impacted by COVID-19 and international trade tensions Q1~Q3’20. Demand to improve in Q4, due to 5G new models and DRAM content increase

• Server Market: Enterprise demand weakened due to higher inventories at certain cloud service providers. Inventory adjustment and new server CPU with more DRAM channels in Q4 expected to drive demand momentum

• PC Market: Commercial Notebook and Chromebook demand supported by the remote work and e-learnings. Healthy Chromebooks demand throughout Q1’21

• Consumer Market: Demand recovering gradually benefiting from consumer confidence and new product launches in 2H20. DTV, game consoles, networking and auto segments, all show better demand

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Nanya Business Review & Outlook

• Q3’20 performance affected by the pandemic and supply chain inventory

• normalization

• Halted shipments to Huawei from September 15th, pending approval from the US

• government to resume business

• Market demand expected to recover gradually from Q4’20

• 1st generation 10nm-class node scheduled to pilot in Q4’20

• "Prime" Rated by ISS* ESG Corporate Rating

• ISS: Institutional Shareholder Services Inc.

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Th an k s & u estions Q

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