NTC — Interim / Quarterly Report 2022

Aug 30, 2022

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Nanya Technology Q2 2022 Investor Conference

︱© 2022 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. 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 carefully the information provided herein. This information shall not be distributed, reproduced or disclosed in whole or in part without prior written permission of NANYA Technology Corp.

︱© 2022 Nanya Technology Corporation. All Rights Reserved. ︱NTC Proprietary & Confidential︱

2

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Q2’22 Financial Results Summary

Amount in Million NT$, except for EPS & BVPS	Q2’22	Q1’22 QoQ Q2’21 YoY
Net Sales	18,031 100%	19,946 100% -9.6% 22,637100% -20.4%
Gross Profit (Loss)Gross Margin(%)	7,958 44.1%	8,750 43.9% -9.1% 9,583 42.3% -17.0%
Operating Income (Loss) Operating Margin(%)	5,364 29.8%	6,262 31.4% -14.3% 7,063 31.2% -24.1%
EBITDA*EBITDA Margin (%)	9,210 51.1%	10,105 50.7% -8.9% 10,89648.1% -15.5%
Non-operating Income (Expense)	1,741 9.7%	1,766 8.9% -143 -0.6%
Income Tax Benefit (Expense)	-530 -2.9%	-1,478 -7.4% -756 -3.3%
Net Income (Loss)Net Margin (%)	6,575 36.5%	6,550 32.8% 0.4% 6,163 27.2% 6.7%
Earnings Per Share (NT$)	2.12**	2.11 2.00
Book Value Per Share (NT$)	57.40***	58.45 51.43

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

• ** EPS is based on weighted average outstanding shares of 3,097M

*** BVPS is calculated based on 3,097M outstanding shares after deduction of approx. NT$ 3.7 cash dividend

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Q2’22 vs. Q1’22 Results Comparison

	Q2’22	Q1’22	QoQ (PPT* Delta)	Remarks
Amount in Million NT$
Net Sales	18,031	19,946 -9.6%  Bit shipment decreased high single digits%  ASP decreased mid-single digits%  FX positive of mid-single digits%increase
Gross Profit (Loss) Gross Margin(%)	7,958 44.1%	8,750 43.9% 0.2%  Q2’22 Gross profit decreased NT$ 792M, mainly due to shipment and ASP decrease
Operating Expense	2,594 14.4%	2,488 12.5% 1.9%  Operating expenses increased NT$ 106M
Operating Income (Loss) Operating Margin(%)	5,364 29.8%	6,262 31.4% -1.6%  Q2’22 OP income decreased NT$ 898M
Net Income (Loss) Net Margin (%)	6,575 36.5%	6,550 32.8% 3.7%  Net Income increased NT$ 25M • OP Income decreased NT$ 898M • Income tax decreased NT$ 948M

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*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%
49.4%
49.2%
47%
44% 43.9% 44.1%
42.3%
42%
41%
20,000 38.1% 37.5% 19,946 40%
35% 18,031
31.2%
30.6% 29.1% 31.4%
28% 29.8%
27%
25.7% 25.9%
23% 23.8% 22.0%
19.6%
17.1%
15%
13.5%
11.0% [12.7%] 6,550 6,575
8.8%
- 0%
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22
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Cash Flows

2022 1H Cash Flow

				Unit: Million NT$
Unit: Million NT$	Q2’22		Q1’22		-6,544	3,173
Beginning Balance Cash from Operating Activities	92,537 *6,326		80,700 11,318	Cash from Operating 17,644	Capital Expenditures	Financial Activities & Others
				Activities
Capital Expenditures	-5,379		-1,165
Financial Activities& Others	**1,489		**1,684	80,700			94,973
Ending Balance	94,973		92,537
Free Cash Flow(1)	947		10,153
(1) Free Cash Flow = Cash from operating activities – Capital			expenditures

• Including income tax payment of NT$ 3.5 billion

• ** Mainly due to effect of exchange rate changes on cash and cash equivalents

Jan. 1, 2022 Beginning Balance

Jun. 30, 2022 Ending Balance

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CAPEX & Bit Shipment

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NT$ Billion
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28.4 Plan Mid-thirties % Mid-thirties%
20.4
Low-
11.3
8.5 25B teens%
5.5
(estimate) Flat ~
~ Flat
down
2018 2019 2020 2021 2022 E 2018 2019 2020 2021 2022 E
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CAPEX
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Bit Shipment (YoY)
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Capital Expenditure (CAPEX)

• Q2’22 CAPEX NT$ 5.4 billion (B)

• 2022 CAPEX plan up to NT$ 28.4B

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Bit Shipment

• Q2’22 bit shipment decreased by high-single digits% QoQ

• 2022 YoY bit shipment expected to be between flat and down marginally

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• 12-inch DRAM FAB

• R&D Center

• Water Resource Recycling Center

• Total investment is approximate NTD 300B

• The investment plan will take 3 phases

• 10nm-class (1A/1B/1C/1Dnm) process

• • Advanced with EUV

• Approximately 45,000 wafers / month (after 3 phases)

• 1[st] Phase production start 2025

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Market Outlook(2H’2022)

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Outlook

• Weaker DRAM market outlook due to high inflations, Russia-Ukraine Conflict and China COVID-19 control measures, supply chain disruption and consumer spending weakness

• Short-term market correction. Long-term DRAM demand remains positive outlook on 5G, AI, cloud computing and networking

Supply

• DRAM demand softening trigger major DRAM suppliers 2023 investment adjustment. Equipment shipment delays may impact suppliers capacity improvement plan

Demand

• Server Market: Datacenter leading demand growth, however the adverse effect of inflation likely impact server DRAM demand in 2H’22. New CPU platform with DDR5 launch delayed

• Mobile Market: Average DRAM content increasing, however smartphone shipment trim down due to macro-related downside

• PC Market: Enterprise demand remains solid, while consumer demand soften, 2022 NB shipment decline

• Consumer Market: WiFi 6/6E stimulates networking demand. Automotive demand resumes growth while component shortage alleviated. Control measures have severely reduced local demand in China in 1H’22, and 2H’22 remain unclear

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Nanya Business Review & Outlook

Finance

• Cash dividend NT$ 3.7/share distributed on July 26, 2022

• • Q2’22 EPS NT$ 2.12/share; 1H’22 EPS NT$ 4.24/share

Operation

• New FAB groundbreaking on June 23, 2022

• 1st 10nm-class (1A) product sampling

• 2nd 10nm-class (1B) piloting

• 3rd 10nm-class (1C) developing on track

Market Outlook

• Market shot-term correction and long-term positive on cloud computing, 5G, AI and networking related applications

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Thanks & Questions

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Q2’22 Consolidated Income Statement

	Q2’22	Q1’22	QoQ	Q2’21	YoY
Amount: Million NT$
Net Sales	18,031 100.0%	19,946 100.0% -9.6% 22,637 100.0% -20.4%
Cost of Goods Sold	10,072 55.9%	11,196 56.1% 13,054 57.7%
Gross Margin	7,958 44.1%	8,750 43.9% -9.1% 9,583 42.3% -17.0%
SG&A Expenses	663 3.7%	594 3.0% 639 2.8%
R&D Expenses	1,931 10.7%	1,895 9.5% 1,882 8.3%
Operating Income	5,364 29.8%	6,262 31.4% -14.3% 7,063 31.2% -24.1%
Non-operating Income (Exp.)	1,741 9.7%	1766 8.9% -143 -0.6%
Income before Tax	7,105 39.4%	8,028 40.2% -11.5% 6,920 30.6% 2.7%
Income Tax Benefit (Expense)	-530 -2.9%	-1,478 -7.4% -756 -3.3%
Net Income	6,575 36.5%	6,550 32.8% 0.4% 6,163 27.2%
Earnings Per Share (NT$)	2.12	2.11 2.00
Book Value Per Share(NT$)	57.40	58.45 51.43

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