NTC — Interim / Quarterly Report 2020

Aug 25, 2020

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Nanya Technology Q2 2020 Financial Summary

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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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.

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Q2’20 Financial Results Summary

Q2’20 Financial Results Summary	Q2’20 Financial Results Summary	Q2’20 Financial Results Summary
Amount in Million NT$, except for EPS & BVPS Q2’20 Audited Q1’20 Audited QoQ Q2’19 Audited YoY
Net Sales	16,489 100%	14,419 100% 14.4% 12,441100% 32.5%
Gross Profit (Loss)Gross Margin(%)	5,042 30.6%	3,436 23.8% 46.7% 4,348 34.9% 16.0%
Operating Income (Loss) Operating Margin(%)	3,229 19.6%	1,832 12.7% 76.2% 2,805 22.5% 15.1%
EBITDA*EBITDA Margin (%)	6,784 41.1%	5,437 37.7% 24.8% 6,427 51.7% 5.6%
Non-operating Income (Expense)	207 1.3%	492 3.4% 600 4.8%
Income Tax Benefit (Expense)	-216 -1.3%	-395 -2.7% -657 -5.3%
Net Income (Loss)Net Margin (%)	3,220 19.5%	1,928 13.4% 67.0% 2,748 22.1% 17.2%
Earnings Per Share (NT$)	1.05**	0.63 0.90
Book Value Per Share (NT$)	49.63***	50.40 49.01

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

*** BVPS is calculated based on 3,072M outstanding shares after deduction of NT$ 1.5 cash dividend

** EPS is based on weighted average outstanding shares of 3,061M

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Q2’20 vs. Q1’20 Results Comparison

	Q2’20 Audited Q1’20 Audited QoQ (PPT* Delta) Remarks	Q2’20 Audited Q1’20 Audited QoQ (PPT* Delta) Remarks
Amount in Million NT$
Net Sales	16,489	14,419 14.4% Bit shipment increased by mid-to-high single digits QoQ ASP increased by mid-to-high single digits QoQ FX negative impact 0.5%
Gross Profit (Loss) Gross Margin(%)	5,042 30.6%	3,436 23.8% 6.7% Q2’20 Gross profit increased NT$ 1,606M, mainly due to shipment and ASP increase, and cost improvement
Operating Expense	1,813 11.0%	1,604 11.1% -0.1% SG&A increased NT$ 41M, R&D expense increased NT$ 168M
Operating Income (Loss) Operating Margin(%)	3,229 19.6%	1,832 12.7% 6.9% Q2’20 OP Income increased NT$ 1,397M
︱© 2020 N Th Net Income (Loss) Net Margin (%)	~~l Cti All Ri~~ 3,220 19.5%	ht Rd 1,928 13.4%* 6.2% Net Income increased NT$ 1,292M • Primarily from OP Income increase of NT$ 1,397M • FX loss : NT$ 280M unfavorable (Q2’20: -202M; Q1’20: +78M) • Income tax: NT$ 180M favorable (Q2’20: 216M; Q1’20: 395M)

• Q2’20 Gross profit increased NT$ 1,606M, mainly due to shipment and ASP increase, and cost improvement

︱© 2020 Nanya Tech ~~nology Corporation. All Rig~~ hts Reserved.

*PPT: Percentage Points

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Quarterly Financial Highlights

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Revenue (Million NT$) Net Income (Million NT$) Gross Margin(%) Operating Margin(%)
59%
55%
53%
52% 51%
50%
47%
44% [44%] 44%
42% 41%
40%
39%
20,000 40%
35%
33% 32% [33%] 32% 16,489
31% 31%
30.6%
28% 28% 14,419
27%
25%
23%
21%
23.8%
25.7%
18%
17% 19.6%
15%
11.0%
12.7%
3,220
1,928
- 0%
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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 ︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Cash Flows

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Unit: Million NT$ Beginning Balance 47,532 44,149 Cash from Operating 5,070 4,080 Activities Capital Expenditures -1,020 -838 Financing & Effect of Exchange Rate -247 141 Changes Ending Balance 51,335 47,532 Free Cash Flow[(1)] 4,050 3,242

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

• +NT$ 513 million from exercise of ESOP;

2020 1H Cash Flow

Unit: Million NT$

-1,858 Capital 9,150 -106 Expenditures Financing Cash from & Effect of Operating Exchange Activities Rate Changes 44,149 51,335

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

• -NT$ 788million from exchange differences on translation of foreign F/S

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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CAPEX & Bit Shipment

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NT$ Billion
20.4
15.76
5.5
2018 2019 2020(E)
CAPEX
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Mid-thirties%
Approx.
twenties%
Low-
teens%
2018 2019 2020(E)
Bit Shipment (YoY)
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Capital Expenditure (CAPEX)

• Q2’20 CAPEX NT$ 1,020 million

• 2020 CAPEX plan revised up to NT$ 15.76 billion(B) from NT$ 9.2B, mainly for 10nm-class piloting line establishment

Bit Shipment

• Q2’20 Bit shipment increased by mid-to-high single digits% QoQ

• Q3’20 QoQ bit shipment expected to be flat

• 2020 YoY bit shipment growth in twenties %

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Response to COVID-19

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COVID-19
Status
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• Taiwan: COVID-19 pandemic situation calms down and restraints gradually unlocked

 International: COVID-19 outbreaks in the United States, Brazil and India have been severe

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Supply
Chain Mgmt.
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• Production line and subcontractors are all located in Taiwan, not affected by COVID-19

• Raw materials currently not affected

• Shipment and transport of the supply chain are normal

• Increase inventory of materials and chemicals

• Minor equipment delivery delay, no impact on overall operation

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Customer
Support
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• Support and services to our customers with goal to assist our customers for stable production

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Next
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• Continue monitor the future development of COVID-19 and take appropriate measure to assure the overall normal operation

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Q3’20 Market Outlook

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Outlook
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• Short term: COVID-19 pandemic has affected overall DRAM demand, US-China trade dispute has impacted networking sector. Potential recovery await COVID-19 vaccines matured and stimulus packages by countries

• Long term: Datacenters, 5G, networking, A.I., remote work / online learning, etc. will be main drivers for future demand

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Supply
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 Vendors are conservative on 2H’20 CAPEX, 2021 bit supply growth uncertain

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Demand
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• Mobile Market: COVID-19, entity list ban from U.S. Commerce Department negatively impacted smartphone shipment in 1H’20. Demand to improve as major smartphone suppliers launch new models in 2H’20

• Server Market: 1H’20 demand strong due to remote work, online learning and e-commerce. 2H’20, datacenters expected to be soft. Server DRAM inventory adjustment ongoing

• PC Market: Notebook shipment to be flat YoY, with Q3’20 shipment comparable to Q3’19. Chromebooks demand to increase in Q3’20

• Consumer Market: Game consoles and IoT demand stable, DTV expected to recover from Q3 and onward, automotive demand to pick up from Q3 as well

• ︱© 2020 Nanya Technology Corporation. All Rights Reserved. ︱NTC Proprietary & Confidential︱

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Nanya Business Review & Outlook

• Q2’20 performance & supply chain were not affected by the COVID-19 pandemic

• Mixed market outlook in 2H’20

• Cash dividends of NT$ 4.6B (approx. NT$ 1.5 per common share) distributed on

• July 24, 2020

• 1st generation 10nm-class node on track to pilot in 2H’20; 2nd generation 10nm-

class node development on schedule

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Thanks & uestions Q

︱© 2020 Nanya Technology Corporation. All Rights Reserved.