WEC — Call Transcript 2013

Feb 6, 2013

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4Q12 Investor Conference

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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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Winbond Financial Results

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4Q12 Income Statement- Consolidated

	4Q’12		3Q’12		QoQ change	QoQ change
Unit: NT$ mil	Amount	%	Amount	%	Amount	%
Net Sales	7,869	100	8,540	100	(671)	(8)
Gross Profit	1,161	15	1,546	18	(385)	(25)
Operating Income	(457)	(6)	(102)	(1)	(355)	348
Pretax Income	(513)	(7)	(207)	(2)	(306)	148
Net Income	(556)	(7)	(325)	(4)	(231)	71
EPS (NTD)	(0.15)		(0.09)		(0.06)
EBITDA	1,706	22	2,123	25

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4Q12 Balance Sheet- Consolidated

	Dec 31 ’12	Dec 31 ’12	Sep 30	’12	QoQ change	QoQ change
Unit: NT$ mil	Amount	%	Amount	%	Amount	%
Cash & Equivalents	5,815	10	6,020	10	(205)	(3)
Net Fixed Assets	29,021	52	30,306	52	(2,007)	(6)
Total Assets	56,219	100	57,824	100	(1,973)	(4)
L-T Liabilities	6,550	12	5,100	9	1,450	28
SH Equity	34,658	62	35,230	61	(572)	(2)
Current Ratio	1.41		1.26
Debt/ Equity Ratio	0.62		0.64

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4Q12 Cash Flow Statement- Consolidated

	4Q’12	3Q’12	QoQ change
Unit: NT$ mil	Amount	Amount	Amount
Operating Cash Flow	2,198	739	1,459
Investing Cash Flow	(1,273)	(157)	(1,116)
Financing Cash Flow	(852)	(1,041)	189
Cash & Equivalents	5,815	6,020	(205)
Depreciation and Amortization	2,163	2,225	(62)
CAPEX	858	356	502

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4Q12 Income Statement- Winbond alone

	4Q’12	4Q’12	3Q’12	3Q’12	4Q’11	4Q’11	QoQ change	QoQ change		YoY change	YoY change
Amount		%	Amount	%	Amount	%	Amount	%		Amount	%
	6,236	100	6,579	100	5,717	100	(343)	(5)		519	9
	514	8	694	11	(97)	(2)	(180)	(26)		611	(630)
e	(506)	(8)	(330)	(5)	(1,164)	(20)	(176)	53		658	(57)
	(556)	(9)	(325)	(5)	(1,230)	(22)	(231)	71		674	(55)
	(556)	(9)	(325)	(5)	(1,189)	(21)	(231)	71		633	(53)
	(0.15)		(0.09)		(0.32)		(0.06)			0.17
	1,604	26	1,841	28	1,255	22

Unit: NT$ mil Net Sales Gross Profit Operating Income Pretax Income Net Income EPS (NTD)

EBITDA

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4Q12 Balance Sheet- Winbond alone

	Dec 31 ’12	Dec 31 ’12	Sep 30	’12	QoQ change	QoQ change
Unit: NT$ mil	Amount	%	Amount	%	Amount	%
Cash & Equivalents	3,707	7	3,520	7	187	5
Net Fixed Assets	28,396	53	29,687	54	(1,291)	(4)
Total Assets	53,559	100	54,968	100	(1,409)	(3)
L-T Liabilities	6,550	12	5,100	9	1,450	28
SH Equity	33,472	62	34,098	62	(626)	(2)
Current Ratio	1.21		1.05
Debt/ Equity Ratio	0.60		0.61

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4Q12 Statement of Cash Flow- Winbond alone

	4Q’12	3Q’12	QoQ change
Unit: NT$ mil	Amount	Amount	Amount
Operating Cash Flow	2,017	813	1,204
Investing Cash Flow	(1,042)	(313)	(729)
Financing Cash Flow	(787)	(835)	48
Cash & Equivalents	3,707	3,520	187
Depreciation and Amortization	2,110	2,171	(61)
CAPEX	843	318	525

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Revenue and GM Trend- Consolidated

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Gross Margin
Revenue (NT$ bil)
12.0 25%
22%
19%
10.0
19% 18% 20%
16%
8.0 15%
13% 15%
6.0
9.6 10%
8.9 8.9 8% 9.1
8.5
4.0 7.9
7.3 7.5
5%
2.0
0.0 0%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
Revenue Gross Profit GM%
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Note: Entities in the consolidated statements include Nuvoton, WEC America, WEC Japan, etc..

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Revenue and GM Trend- Winbond alone

Revenue (NT$ bil)

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Revenue (NT$ bil) Gross Margin
8.0 20%
17%
7.0
14%
15%
6.0 13%
11%
5.0
8% 10%
4.0
7.4
7.2
6.9 6.8
6.6
6.2
3.0
5.7 5.8
6% 5%
2.0 5%
-2%
1.0
0%
0.0
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12
-1.0 -5%
Revenue Gross Profit GM%
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Y2013 Memory CAPEX

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NT$ B
16.0
14.1
14.0
12.0
10.0
7.4
8.0
6.0
6.0
4.2
4.0 3.0
1.9
2.0
0.0
2008 2009 2010 2011 2012 2013E
Cash Basis CAPEX as of 2/6/2013
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Y2013 CAPEX

• Total Flash: 19K WPM

• 58nm Flash to 8K WPM

• 46nm Flash to 3K WPM

• Total DRAM: 16K WPM - 46nm DRAM to 12K WPM

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Winbond Business Update & Outlook

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4Q12 Business Wrap-Up

• Weaker business in 4Q12

• Inventory adjustment in channels at year end

• Enlarged price erosion due to conservative market sentiments

• Reduced Fab capacity (90% utilization)

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2012 vs 2011

NT$B	2012	2011	YoY %
Flash Specialty Mobile	10.7 11.4 3.3	9.5 11.9 5.7	13% -4% -42%
Total Revenue	25.4	27.1	-6%

 Flash

 Worldwide #1 Serial Flash supplier in 2012

 Specialty DRAM

• Relatively stable business with improved customer/product mix

• Mobile DRAM

• Under transition from Pseudo RAM to Low Power DRAM

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Memory Revenue Breakdown

Revenue (NT$ bil) 8.0 7.4 7.2 6.9 7.0 6.8 6.6 6.2 6.0 31% 33% 5.7 5.8 39% 42% 43% 5.0 37% 45% 39% Flash 4.0 29% 25% 16% 13% Mobile 13% 14% 15% 11% 3.0 Specialty 2.0 40% 45% 45% 49% 46% 44% 42% 44% 1.0 0.0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12

Specialty Mobile Flash

Note: Specialty including Graphic

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4Q12 Flash Memory Business

 -1% QoQ / +33% YoY

 Inventory adjustment in mobile phone customers

• Embedded Flash business stayed normal

• Enlarged price erosion in Q4

• 58nm products accounted for > 20% Flash sales (from 15% in Q3)

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4Q12 DRAM Memory Business

Specialty DRAM

• -6% QoQ / -3% YoY

• 46nm products accounted for > 25% of Specialty DRAM sales

  • (from 20% in Q3)

• KGD accounted for > 20% of Specialty DRAM sales

Mobile RAM

• -19% QoQ / - 12% YoY

• Low power DRAM contributed > 35% of mobile RAM business

  • (< 20% in 1H)

• Pseudo RAM migrating to 46nm

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2013 Market Outlook

• “Smart phone”, “Tablets”, “LCD TV” and “Networking” will trigger demand in 2H

• Opportunities to Winbond:

― Medium/low density memory in peripheral modules

• Feature phone market continues to shrink, while brand name phone makers will gain more share

• “ Personal computing” is trending toward “”mobile computing”

• DRAM industry consolidation will lead to more stable and healthy market

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2013 Winbond Business Outlook

 Flash

• Further expand product portfolio from “Serial Flash” to “Code Storage Flash” markets

 DRAM

• Price dynamics in “Specialty DRAM” will lag behind “PC DRAM” due to nature of business with tier-1 customers

• Low-power business will warm up in 2H and show strong growth in 2014

• “Stable and good product quality”, “stable supply” and “excellent customer service” are keys to drive Winbond business upside

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QUESTIONS & ANSWERS

Company website

• Winbond: www.winbond.com

• Nuvoton: www.nuvoton.com