WEC — Annual Report 2016

Feb 7, 2017

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Winbond Electronics Corporation

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Safe Harbor Notice

• We have made forward-looking statements in this presentation. Our forward-looking statements contain information regarding, among other things, our financial condition, future expansion plans and business strategies. We have based these forwardlooking statements on our current expectations and projections about future events. Although we believe that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties and assumptions about us.

• We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this conference might not occur and our actual results could differ materially from those anticipated in these forward-looking statements.

• The information contained herein shall also not constitute an offer to sell or a solicitation of an offer to buy the company’s securities nor shall there be any sale of such securities in any state or country in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or country.

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Financial Results

2H16 Statement of Comprehensive Income - Consolidated

	2H’16			1H’16			2016			2015			YoY Change
Unit: NT$ M	Amount		%	Amount		%	Amount		%	Amount		%	Amount	%
Net Sales	21,508		100	20,584		100	42,092		100	38,350		100	3,742	10
Gross Profit	6,015		28	6,003		29	12,018		29	11,822		31	196	2
Operating Income	1,820		8	1,893		9	3,713		9	4,109		11	(396)	(10)
Pretax Income	1,867		9	1,888		9	3,755		9	4,248		11	(493)	(12)
Net Income	1,588		7	1,552		8	3,140		7	3,473		9	(333)	(10)
EPS (NT$)	0.41			0.40			0.81			0.90
EBITDA	4,610		21	4,773		23	9,383		22	9,966		26	(583)	(6)

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2H16 Balance Sheet - Consolidated

Unit: NT$ M Current Assets Net Fixed Assets Total Assets L/T Debt Total Equity Current Ratio Debt / Equity Ratio	Dec. 31 ’16 Jun. 30 ’16 Dec. 31 ’15 YoY Change Amount % Amount % Amount % Amount % 27,260 40 26,409 42 24,713 39 2,547 10 34,373 51 30,608 49 31,915 51 2,458 8 67,989 100 63,053 100 62,598 100 5,391 9 6,638 10 7,866 12 8,755 14 (2,117) (24) 45,221 67 41,994 67 40,099 64 5,122 13 1.87 2.25 2.00 0.50 0.50 0.56

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2H16 Statement of Cash Flows - Consolidated

Unit: NT$ M Operating Cash Flow Investing Cash Flow Financing Cash Flow Cash & Equivalents Depreciation and Amortization CAPEX	2H’16 1H’16 2016 2015 YoY Change Amount Amount Amount Amount Amount 5,769 4,222 9,991 7,659 2,332 (3,045) (1,702) (4,747) (4,431) (316) (2,313) (1,593) (3,906) (3,861) (45) 7,684 7,325 7,684 6,397 1,287 2,791 2,880 5,671 5,857 (186) (3,418) (1,571) (4,989) (4,094) (895)

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2H16 Statement of Comprehensive Income - Memory

	2H’16			1H’16			2016			2015			YoY Change
Unit: NT$ M	Amount		%	Amount		%	Amount		%	Amount		%	Amount	%
Net Sales	17,130		100	16,404		100	33,534		100	30,844		100	2,690	9
Gross Profit	4,122		24	4,138		25	8,260		25	8,462		28	(202)	(2)
Operating Income	1,463		9	1,507		9	2,970		9	3,507		12	(537)	(15)
Pretax Income	1,709		10	1,662		10	3,371		10	3,910		13	(539)	(14)
Net Income	1,479		9	1,419		9	2,898		9	3,291		11	(393)	(12)
EPS (NT$)	0.41			0.40			0.81			0.90
EBITDA	4,122		24	4,260		26	8,382		25	9,117		30	(735)	(8)

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2H16 Balance Sheet - Memory

Unit: NT$ M Current Assets Net Fixed Assets Total Assets L/T Debt Total Equity Current Ratio Debt / Equity Ratio	Dec. 31 ’16 Jun. 30 ’16 Dec. 31 ’15 YoY Change Amount % Amount % Amount % Amount % 21,270 33 20,630 35 19,345 33 1,925 10 33,608 52 29,910 50 31,195 53 2,413 8 64,399 100 59,534 100 59,496 100 4,903 8 6,638 10 7,866 13 8,755 15 (2,117) (24) 43,921 68 40,785 69 38,902 65 5,019 13 1.67 2.09 1.78 0.47 0.46 0.53

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2H16 Statement of Cash Flows-Memory

Unit: NT$ M Operating Cash Flow Investing Cash Flow Financing Cash Flow Cash & Equivalents Depreciation and Amortization CAPEX	2H’16 1H’16 2016 2015 YoY Change Amount Amount Amount Amount Amount 5,680 3,658 9,338 7,418 1,920 (2,832) (1,517) (4,349) (4,159) (190) (2,163) (1,586) (3,749) (3,770) 21 4,874 4,190 4,874 3,635 1,239 2,659 2,753 5,412 5,611 (199) (3,284) (1,513) (4,797) (3,908) (889)

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Revenue and GM Trend- Consolidated

Revenue (NT$B)

Gross Margin

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35%
24 32%
30% 30%
29%
28%
27% 30%
20
22% 25%
16 20%
20%
12 22
21 15%
19
19
18
8 19
10%
17
17
4 5%
0%
0
1H'13 2H'13 1H'14 2H'14 1H'15 2H'15 1H'16 2H'16
Revenue Gross Profit GM%
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Revenue and GM Trend- Memory

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Revenue (NT$B)
Gross Margin
18
16 35%
29%
14 30%
26%
26% 25%
23% 24%
12
25%
10
16% 20%
17
16
8 14% 16
16
15 15%
15
6
13
13
10%
4
5%
2
0 0%
1H'13 2H'13 1H'14 2H'14 1H'15 2H'15 1H'16 2H'16
Revenue Gross Profit GM%
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Y2016 Memory CAPEX

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(NT$ B)
20.0
16.6
13.0
15.0
10.0
4.8
3.9
3.0
5.0 2.1
0.0
2012 2013 2014 2015 2016 2017 (E)
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CAPEX(Cash Basis) as of 02/07/2017

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Winbond Business Update & Outlook

Y2016 vs Y2015

	NT$B Y2016 Y2015 YoY Specialty 16.6 16.2 3% Mobile 4.6 3.5 30% Flash 12.3 11.1 11% Total Revenue 33.5 30.8 9% Total Net Income 2.9 3.3 (12%)

• Stable business growth due to improved product/customer mix

• Increasing R&D expense balanced out some net income

• Price erosion impacted the gross margin, but turned stable in Q4.

• Significant growth in automotive and industrial

• Mobile DRAM business gained momentum with penetration into tier-1 customers in handheld

• Stable business in NOR Flash and expanding business in SLC NAND Flash

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Revenue Breakdown by Application

Growing business in Car and Industrial

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2015
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Car & Industrial

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2016
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Car & Industrial

Note: Revenue excluded foundry and others

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Net Income Trend

Stable profits

Units: NT$ 100 millions

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Drivers for Stable Growth

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Stable
Profits
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Serve leading companies in each market segment

Adapt to the market trends

Differentiating Core Competences

High Quality

Diversified Multiple Highly Product technology Efficient Portfolio platforms Fab

Product Portfolio For Diversified Applications

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• ADAS

• Cluster

• Infotainment

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• Human Machine Interface (HMI)

• Smart Meter

• Industrial Networking

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• Smart phone

• Wearable

• xDSL & PON

• Switch

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• Wearable Device

• Smart Home

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Computing
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• PC

• Television

• Set-Top • PC Box Peripheral

• Cloud computing (Servers/D ata Center)

• Source：Winbond Website

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2H16 Revenue Breakdown by Application

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Car & Industrial
Communication
19%
31%
Consumer
24% Computer
26%
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Note: Revenue excluded foundry and others

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Car & Industrial Consumer Computer Communication
-
HoH +29% HoH +2% HoH +7% HoH 7%
-
YoY +33% YoY +10% YoY 0% YoY +7%
NT$M NT$M NT$M NT$M
3,500 4,500 4,500 5,500
3,000 4,000 4,000 5,000
2,500 3,500 3,500 4,500
2,000 3,000 3,000 4,000
1,500 2,500 2,500 3,500
1,000 2,000 2,000 3,000
500 1,500 1,500 2,500
0 1,000 1,000 2,000
2015H2 2016H2 2015H2 2016H2 2015H2 2016H2 2015H2 2016H2
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2H16 Revenue Breakdown by Product

Revenue (NT$B)

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 1H'13 2H'13 1H'14 2H'14 1H'15 2H'15 1H'16 2H'16 13% 11% 12% 11% 12% 11% 13% 14% 45% 50% 52% 54% 52% 53% 51% 48% 42% 40% 36% 35% 35% 37% 36% 38%	Flash HoH YoY +9% +13%
	Specialty -1% +1%
	Mobile +11% +47%

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2H16 Revenue Breakdown by Geometry

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Mobile DRAM Flash Memory
Mobile DRAM
100% 100% 11% 13%
80% 80%
67%
72% 53% 52%
60% 60%
40% 40%
20% 31% 28% 20% 36% 35%
2%
0% 0%
2016H1 2016H2 2016H1 2016H2
90nm 65nm 46nm 90nm 58nm 46nm
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Specialty DRAM
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100%
80%
60% 90% 92%
40%
20%
10% 8%
0%
2016H1 2016H2
65nm 46nm
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 2017

 2018

 3x nm DRAM products into volume shipment in Q3/2017

 2x nm DRAM to be released in 1H/2018

 3x nm SLC NAND to be released in 1H/2018

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2017 Winbond Business Outlook

• Limited revenue growth because of Fab capacity constraint

• New Fab capacity will contribute to revenue growth in Q4 2017

• Profit margin will improve with better product/customer mix

• Focus on automotive, industry, IoT, Mobile and KGD

• Self-developed 3x nm DRAM technology into volume shipment in 2H17

• Significant Capex for Fab capacity and advanced technologies

• Increasing R&D expense for advanced technology and new products