WT — Call Transcript 2018

Apr 13, 2018

2017 Fourth Quarter Investor Conference Presented by Cheryl Yang February 8, 2018

Safe Harbor Statement

• WT’s forward-looking statements, which may include statements regarding its results of operations, financial condition or business prospects, are subject to significant risks and uncertainties and are based on WT’s current expectations.

• Actual results may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons, including, among other things: the cyclical nature of our industry; our dependence on introducing new products on a timely basis; our dependence on growth in the demand for our products; our ability to compete effectively; our dependence on key personnel; general economic and political conditions; possible disruptions in commercial activities caused by natural and human-induced disasters, including terrorist activity and armed conflict; and fluctuations in foreign currency exchange rates.

• In addition, any financial information contained here within is presented in conformity with International Financial Reporting Standards (IFRSs).

• Except as required by law, our release of financial forecasts and forward-looking statements at any particular time does not create any duty of disclosure, and we expressly disclaim any obligation to publicly update or revise any forecasts or forward-looking statements, whether as a result of new information, future events or otherwise.

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Agenda

1. Overview

2. Financial Update

3. Business Outlook

4. Questions and Answers

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1. Overview

Strong secular growth with economies of scale

• A leading Asian semiconductor distributor, founded in 1993 and listed in 2000 (ticker: 3036 TT)

• Strategic focus on Asia region and Automotive & Internet of Things (IoT) applications

• 2017 revenues of NT$189bn, up 31% YoY

• 45 offices in Asia (30 offices in China and 15 offices in Korea, Taiwan, and South Asia) with over 8,000 customers

• Over 2,000 headcounts after Maxtek acquisition in 4Q17 (over 650 sales, 200 PMs, and 450 FAEs)

• Completion of warehouse semi automation (total 6 warehouses in Taiwan, HK, Shenzhen China, Shanghai China, Korea, and Singapore)

• Completion of B2B service platform for major vendors and customers

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1. Overview

China Offices (30)

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Korea Office (1)
Harbin
Seoul
Shenyang Offices Across Asia
Dalian
Beijing
Taiwan Offices (4)
Qingdao
Zhengzhou
Taipei, Headquarters
Jinan
Xian Hsinchu, R&D
Ningbo
Taichung
Shanghai
Wuxi Tainan
Suzhou
Kunshan South Asia Offices (10)
Nanjing
Hangzhou
New Delhi, N. India
Wenzhou
Hefei
Mumbai, N. India
Chengdu
Chongqing
Pune, N. India
Changsha
Wuhan
Vietnam
Fuzhou
Fuqing
Bangalore, S. India
Xiamen
Dongguan
Bangkok, Thailand
Shunde
Guangzhou
Penang, Malaysia
Zhuhai
Hong Kong Singapore
Shenzhen
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1. Overview

NR (Net Revenue)

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YoY=31%
NT$B
YoY=27%
200 189
180
CAGR(2011~2015)=12%
160
144
CAGR(2006~2010)=16%
140
120 114
108
100
88
80
80 71
64
60
47
39 41
34
40 30
21
20 9 10 14
5
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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2. Financial Update

Statement of Comprehensive Income

Unit: NT$M

K t	4Q17	3Q17	QQ	4Q16	YY
ey accouns	Amount %	Amount %	o	Amount %	o
Net Operating revenues Gross profit Operating expenses Operating income Financing costs Others Earning before tax	59,844 100.00% 2,456 4.10% (1,373) -2.29% 1,083 1.81% (318) -0.53% 94 0.16% 859 1.44%	50,833 100.00% 2,245 4.42% (1,136) -2.24% 1,109 2.18% (232) -0.45% 41 0.08% 918 1.81%	17.73% -0.32ppt +0.05ppt -0.37ppt +0.08ppt -6.43%	45,452 100.00% 1,913 4.21% (1,541) -3.39% 372 0.82% (180) -0.40% 3 0.01% 195 0.43%	31.66% -0.11ppt -1.1ppt +0.99ppt +0.13ppt 340.51%
Income tax expense	(156) -0.26%	(150) -0.30%	4.00%	3 0.01%	-5300.00%
Non-Controlling Interests Profit after tax EPS(in dollars)	- - 703 1.18% 1.43	- - 768 1.51% 1.61	-8.46% -11.18%	- - 198 0.44% 0.42	255.05% 240.48%

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2. Financial Update

Statement of Comprehensive Income

Unit: NT$M

				Unit: N
Key accounts	Y2017		Amount % Y2016	YoY
	Amount %
Net Operating revenues Gross profit Operating expenses Operating income Financing costs Others Earning before tax Income tax expense Non-Controlling Interests Profit after tax EPS(in dollars)	189,419 100.00% 8,421 4.45% (4,503) -2.38% 3,918 2.07% (963) -0.51% 150 0.08% 3,105 1.64% (585) -0.31% - - 2,520 1.33% 5.26		144,147 100.00% 6,925 4.80% (4,464) -3.10% 2,461 1.70% (479) -0.33% 56 0.04% 2,038 1.41% (338) -0.23% - - 1,700 1.18% 3.61	31.41% -0.35ppt -0.72ppt +0.37ppt +0.18ppt 52.36% 73.08% 48.24% 45.58%

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2. Financial Update

Balance Sheet

Unit: NT$M

Key accounts	4Q17		Amount % 3Q17	4Q16
	Amount %			Amount %
Cash and cash equivalents Accounts receivable Inventory Other current assets Non-current assets	2,670 4 32,527 43 33,114 44 2,355 3 4,709 6		2,178 3 29,980 44 30,140 44 1,962 3 4,303 6	2,081 4 29,302 48 22,133 36 3,645 5 4,243 7
Total Assets	75,375 100		68,563 100	61,404 100
Short-term loans Accounts payable Other current liabilities Long-term loans	25,884 34 24,603 33 2,171 3 960.00 1		25,524 37 23,267 34 1,538 3 - -	22,313 36 18,657 30 1,818 3 - -
Other liabilities	1,654 2		1,512 2	1,713 3
Total Liabilities Total Equity	55,272 73 20,103 27		51,841 76 16,722 24	44,501 72 16,903 28
Indices	4Q17		3Q17	4Q16
Current ratio Debt/Assets ratio Debt/Equity ratio Gearing ratio	134% 73% 275% 1.20		128% 76% 310% 1.40	134% 72% 263% 1.20

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2. Financial Update

NR by Geography (Ship-to Destination)

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0.4% 0.5% 0.7% 0.4% 0.6% 0.5% 0.6% 0.5% 60
QoQ +24%
100% 2.1% 2.1% 1.7% 1.5% 2.3% 2.2% 2.0% 1.8% 3Q17
5.7% 7.1% 10.5% 7.0% 8.1% 8.1% 8.5% 5.7% 50 (Left)
9.5% 8.9% 7.2% 6.4% 9.2% 8.5% 7.1% 6.0% 40 4Q17vs.
80% (Right )
30
20
QoQ -1% QoQ -21%
60% 10 QoQ +5%
0
China Taiwan Korea ASEAN
40% 82.3% 81.4% 79.9% 84.7% 79.8% 80.7% 81.7% 86.0%
60 YoY +34%
50 4Q16
20% (Left)
40 vs.
4Q17
30 (Right )
0%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 20
China Taiwan Korea ASEAN Others 10 YoY +24% YoY +8%
YoY +55%
0
China Taiwan Korea ASEAN
Revenue (NT$B)
Revenue (NT$B)
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2. Financial Update

NR by Geography (Ship-to Destination)

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100% 0.5%3.2% 0.2%2.3% 0.5%2.0% 0.5%1.8% 0.6%2.0%
6.4% 5.6% 5.1% 7.8% 7.5%
8.4% 7.4% 7.7% 7.7% 7.5%
80%
Others
60% ASEAN
40% 81.5% 84.5% 84.7% 82.2% 82.5% Korea
Taiwan
20%
China
0%
2013 2014 2015 2016 2017
180 YoY +32%
160
140
2016
120 (Left)
vs.
100 2017
80 (Right)
60
40 YoY +27% YoY +26% YoY +50%
20
0
China Taiwan Korea ASEAN
Revenue (NT$B)
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2. Financial Update

NR by Customer Base

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100% 2.4% 2.3% 1.7% 1.6% 2.0% 2.2% 2.0% 1.7% 40 QoQ +34% 3Q17
6.1% 7.3% 11.2% 7.8% 9.3% 8.6% 8.8% 6.4% 35 (Left)
30 vs.
QoQ +4% 4Q17
25
80% (Right )
30.4% 34.1% 20
35.7% 33.1% 36.5% 38.5% 15
47.9% 46.3%
10 QoQ -14%
60% QoQ 0%
5
0
Taiwan China Korea ASEAN
Customer Customer Customer Customer
40%
60.2% 55.6% 57.8% 40 YoY +26%
51.4% 52.7% 50.7%
43.6% 44.1% 35 4Q16
20%
30 (Left)
25 YoY +48% vs.
4Q17
20 (Right )
0%
15
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
10 YoY +8%
YoY +40%
Taiwan Customer China Customer 5
Korea Customer ASEAN Customer 0
Taiwan China Korea ASEAN
Customer Customer Customer Customer
Revenue (NT$B)
Revenue (NT$B)
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2. Financial Update

NR by Customer Base

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100% 2.9% 2.2% 2.2% 1.9% 1.9%
7.3% 6.6% 6.1% 8.3% 8.1%
80%
40.7% 43.6% 45.9% 38.5% 35.6%
60% ASEAN Customer
Korea Customer
40% China Customer
Taiwan Customer
49.2% 47.5% 45.8% 51.2% 54.4%
20%
0%
2013 2014 2015 2016 2017
120 YoY +40%
100 2016
YoY +21% (Left)
80 vs.
2017
60 (Right )
40
YoY +27%
20 YoY +33%
0
Taiwan Customer China Customer Korea Customer ASEAN Customer
Revenue (NT$B)
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2. Financial Update

NR by Application

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30
100% 3.7% 3.4% 2.9% 3.0% 3.7% 4.0% 4.2% 3.4% QoQ +31% 3Q17
25 (Left)
8.3% 9.0% 6.9% 6.2% 7.2% 7.8% 6.6% 6.4% vs.
20
4Q17
12.8% 10.9% 11.4% QoQ +9%
80% 15.9% 15.5% 13.4% 14.9% 13.8% 15 QoQ +23% (Right )
QoQ -3%
10
15.5% QoQ +14%
17.2%
17.1% 17.7% 16.4% 5
19.5%
60% 20.8% 21.8% 0
19.2%
19.0% 19.7%
18.9% 21.3%
22.6%
40% 22.8% 22.2%
4Q16
YoY +22%
30 (Left)
20% 41.3% 45.2% 39.1% 37.7% 41.9% 25 4Q17vs.
31.2% 20
28.5% 28.1% (Right )
YoY +35%
15
YoY +46%
10 YoY +38%
0% 5 YoY +36%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 0
Communication Computing
Consumer Industry & Instrument
Automotive Others
Revenue (NT$B)
Revenue (NT$B)
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2. Financial Update

NR by Application

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100% 7.1% 3.1% 3.8% 3.2% 3.8%
6.2% 7.3% 7.4% 6.9%
Others
12.4%
80% 13.7% 15.3% 13.4% 13.2%
Automotive
22.0%
21.3% 18.3% 17.6%
21.3%
60%
Industry & Instrument
20.4% 20.6%
30.4% 27.2% Consumer
40% 25.3%
Computing
20% 37.4% 37.9%
28.0% 28.4% 27.0% Communication
0%
2013 2014 2015 2016 2017
80 YoY +33%
2016
(Left)
60 vs.
2017
YoY +32% (Right )
YoY +26%
40
YoY +30%
20 YoY +23%
0
Communication Computing Consumer Industry & Instrument Automotive
Revenue (NT$B)
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2. Financial Update

ROE vs. EPS

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EPS
6.00 18.82% 20%
ROE%
15.27%
5.00 16.03%
14.05% 13.42%
15%
4.00 11.36% 12.51% 11.74% [12.31%] 12.15% 12.01%
3.00 10%
10.67%
9.55%
2.00
5%
4.69%
1.00
0.00 0%
2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
ITEM 2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
ROE% 11.36% 14.05% 12.51% 11.74% 12.31% 12.15% 9.55% 10.67% 16.03% 4.69% 12.01% 13.42% 18.82% 15.27%
EPS 3.86 5.18 1.24 1.09 1.14 1.13 0.90 0.93 1.40 0.42 1.06 1.15 1.61 1.43
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2. Financial Update

ROWC vs. NWC/Sales

	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales	ROWC vs. NWC/Sales
0.00 0.05 0.10 0.15 0.20 0.25 0.30	13.16% 14.83% 11.92% 10.94% 9.32% 8.13% 8.72% 9.04% 10.91% 4.54% 11.66% 11.66% 12.04% 10.56% 0% 5% 10% 15% 20% 25% 2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 NWC/Sales ROWC
	ITEM	2013	2014	1Q15	2Q15	3Q15	4Q15	1Q16	2Q16	3Q16	4Q16	1Q17	2Q17	3Q17	4Q17
	NWC/Sales	0.15	0.15	0.18	0.21	0.24	0.25	0.25	0.24	0.19	0.18	0.18	0.19	0.18	0.17
	ROWC	**13.16% **	**14.83% **	**11.92% **	10.94%	9.32%	8.13%	8.72%	9.04%	10.91%	4.54%	**11.66% **	**11.66% **	**12.04% **	10.56%

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2. Financial Update

Operating Cash Cycle

0 20 40 60 80 100

Turnover days 2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 AR 46 43 53 66 74 78 78 72 57 58 59 50 48 48 INV 54 50 53 54 56 58 59 59 49 46 58 59 52 50 AP (46) (41) (46) (51) (48) (44) (44) (46) (39) (39) (44) (41) (39) (38) Operating cash cycle 54 52 60 69 82 92 93 85 67 65 73 68 61 60 54 52 60 69 82 92 93 85 67 65 73 68 61 60 2013 2014 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 AR INV AP Operating cash cycle

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3. Business Outlook

We currently expect 1Q 18 :

• Revenue : between NT$48 billion ~ NT$51 billion, at a forecast exchange rate of 29.3 NT Dollars to 1 US Dollar

• Gross profit margin : between 4.4% ~ 4.6%

• Operating profit margin : between 2.0% ~ 2.2%

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Thank You !

WT Microelectronics Co., Ltd. Website : www.wtmec.com

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