NTC — Interim / Quarterly Report 2020

Jun 18, 2020

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Nanya Technology Q1’ 2020 Financial Summary

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Safe Harbor

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The information herein and the presentation made during the conference contain forward-looking statements and are provided for information purposes only. Neither Nanya Technology Corp. nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements or undertakes duty to update the statements. You are 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.

Q1’20 Consolidated Income Statement

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	Q1‘20	Q4'19	QoQ	Q1’19	YoY
Amount: Million NT$	Audited	Audited		Audited
Net Sales	14,419 100.0%	13,116 100.0%	9.9%	11,372 100.0%	26.8%
Cost of Goods Sold	10,983 76.2%	9,739 74.3%		6,739 59.3%
Gross Margin	3,436 23.8%	3,377 25.7%	1.8%	4,633 40.7%	-25.8%
SG&A Expenses	533 3.7%	562 4.3%		465 4.1%
R&D Expenses	1,071 7.4%	1,374 10.5%		1,148 10.1%
Operating Income	1,832 12.7%	1,440 11.0%	27.2%	3,020 26.6%	-39.3%
Non-operating Income (Exp.)	492 3.4%	111 0.8%		567 5.0%
Income before Tax	2,324 16.1%	1,550 11.8%	49.9%	3,586 31.5%	-35.2%
Income Tax Benefit (Expense)	-395 -2.7%	-265 -2.0%		0 0.0%
Net Income	1,928 13.4%	1,286 9.8%	50.0%	3,586 31.5%	-46.2%
EPS(NT$)	0.63	0.42		1.18
Book Value Per Share	50.40	49.78		55.26

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

Q1’20 vs. Q4’19 Results Com arison p

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	Q1’20	Q4’19	QoQ (PPT Delta) Remarks*	QoQ (PPT Delta) Remarks*
Amount in Million NT$	Audited	Audited
Net Sales	14,419	13,116	+9.9%	 Bit shipment increased by low teens% range QoQ  ASP remained flat QoQ  FX negative impact 1.5%
Gross Profit (Loss) Gross Margin(%)	3,436 23.8%	3,377 25.7%	-1.9%	 Q1’20 Gross profit increased NT$ 59M, mainly due to shipment increase and FX negative impact
Operating Expense	1,604 11.1%	1,937 14.8%	-3.7%	 SG&A decreased NT$ 30M, R&D expense decreased NT$ 303M
Operating Income (Loss) Operating Margin(%)	1,832 12.7%	1,440 11.0%	+1.7%	 Q1’20 OP Income increased NT$ 392M
Net Income (Loss) Net Margin (%)	1,928 13.4%	1,286 9.8%	+3.6%	 Net Income increased NT$ 642M • Primarily from OP Income increase of NT$ 392M • Gains by FX: NT$ 342M favorable (Q1’20: +78M, Q4’19: -264M) • Income tax: NT$ 131M unfavorable (Q1’20: 395M; Q4’19: 265M)

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*PPT: Percentage Points

Quarterly Financial Highlights Revenue (Million NT$) Net Income (Million NT$)

Gross Margin(%) Operating Margin(%)

59%

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55%
53%
52% 51%
50%
47%
44% 44% 44%
42%
41%
40%
39%
20,000 40%
35%
33% 33%
32% 32%
31% 31%
28% 28% 14,419
27% 13,116
25%
23%
21%
23.8%
25.7%
18%
17%
15%
12.7%
11.0%
1,928
1,286
- 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
︱© 2020 Nanya Technology Corporation. All Rights Reserved.
Revenue, Net Income (Million NT$)
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Cash Flows

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	Q1‘20	Q4'19	Q1'19
Unit: Million NT$	Audited & Consolidated	Audited & Consolidated	Audited & Consolidated
Beginning Balance	44,149	43,184	57,384
Cash from Operating Activities	4,080* -838 141	4,798	5,916
Capital expenditures		-840	-1,723
Financial Activities & others		-2,992**	-1,203
Ending Balance	47,532	44,149	60,374
Free Cash Flow(1)	3,242	3,957	4,193

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

• Account receivable increased NT$ 1.6 billion (B) due to revenue increase

** NT$ 2.05 B investment to acquire FATC shares and NT$ 1.1B currency translation due to NTD appreciation

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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 %

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Approx.
teens%
Low-teens%
2018 2019 2020(E)
Bit Shipment (YoY)
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Capital Expenditure (CAPEX)

• Q1’20 CAPEX NT$ 838 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

• Q1’20 Bit shipment increased by low teens% QoQ

• Q2’20 QoQ bit shipment expected to be flat

• 2020 YoY bit shipment growth guided for approx. teens%

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Response to COVID-19

Epidemic Prevention Measures

• Implemented epidemic prevention measures complied with government’s regulation, plus additional policy to protect employees, contractors and visitors. No abnormal cases occurred thus far

• Internal epidemic prevention measures include physical separation protocols, work from home, all personnel body temperature screening, use of surgical masks, catering health management...etc.

• External epidemic prevention measures include entrance requirements, video or

• teleconference instead of travel or visit…etc.

Supply Chain Mgmt.

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

• Raw materials and equipment are currently not affected

• Shipment and transport of the supply chain are normal

• Increase inventory of materials and chemicals

• Multi le su liers to reduce risk p pp

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

• Continue monitor the future development of COVID-19 and take appropriate measure to

• Next assure the overall normal operation

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Q2’20 Market Outlook (COVID-19 effect)

Outlook

 Short term: Demand increased from remote work, virtual learning or online shopping. Stronger demand from servers, notebooks, tablets, SSDs and networking devices, offsetting weaker demand from smartphones.

• Long term: If EU, U.S. and other countries epidemics under control in Q2, market may bound from turbulence to stable. If the epidemics continue through Q3, Global recession will be ex ected p

• Conservative Capex in 2019 result in discipline bit supply growth in 2020

Supply  COVID-19 pandemic has not interrupted DRAM supply

• 2021 bit su l rowth de ends on DRAM su liers CAPEX lan in 2H20 pp y g p pp p

• Mobile Market: Expected DRAM content to grow, as 12GB adoption increase in Android high-end smartphones. However, COVID-19 impacted overall smartphone demand

• Server Market: Hyperscalers are increasing their 2020 CAPEX. COVID-19 has caused cloud computing demand to surge due to stay-at-home requirements

• Demand  PC Market: Notebooks benefits from increased demand for remote work and study. PC OEM demand is better than expected

• Consumer Market: DRAM demand strong resulted from tablets, networking, SSD, and game consoles; COVID-19 caused short term production lockdown in South East Asia and Mexico, Automotive sectors relatively weak worldwide

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Nanya Business Review & Outlook

• Strong Q1’20 bit shipment growth from datacenters, 5G infrastructure,

• networking and PC segments

• Overall COVID-19 impact is uncertain, need to closely monitor market demand

• changes

• Cash dividend of NT$ 4.6B (Approx. NT$ 1.5 /share)

• 10nm-class DDR4, LPDDR4 and DDR5 development on track and scheduled to

• start piloting in 2H’20

︱© 2020 Nanya Technology Corporation. All Rights Reserved.

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Thanks & uestions Q

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