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Nanya Technology Corporation Investor Presentation 2017

Jun 19, 2017

52061_rns_2017-06-19_b9120de0-61e0-4066-bd8d-8832999beada.pdf

Investor Presentation

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Nanya Technology 2017 Yuanta FHC Asia Investment and Fortune Forum Presentation to Investors & Analysts, June 13[th] , 2017 Joseph Wu, AVP & Deputy Spokesman

April 26, 2017 © 2017 Nanya Technology Corp.

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Safe Harbor

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 forwardlooking 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.

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June 13, 2017 © 2017 Nanya Technology Corp.

Outline

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01. DRAM Industry Landscape
02. NTC Overview
03. Business Strategy

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June 13, 2017 © 2017 Nanya Technology Corp.

Semiconductor Revenue by Categories

Unit: US$B

0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000		 Source: Gartner, WSTS
20%
22%
24%
23%
23%
0%
5%
10%
15%
20%
25%
2012
2013
2014
2015
2016
Others
Analog
Logic
CPU
Memory
Memory(%)

  • In 2016, memory products accounted for 23% of semiconductor market

  • In 2017, YoY growth rate of semiconductor is forecasted to be 12.3%

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Memory Market and Outlook
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2012 2013 2014 2015 2016
DRAM NAND Others
Note: % calculated by respective market revenue Source: WSTS, Gartner, DRAMeXchange
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Memory Market and Outlook

  • DRAM and NAND Flash are 2 key products in memory market

  • DRAM revenue was $41.2B in 2016, expected to exceed $60B in 2017 and 2018

  • Memory market revenue is forecasted approx. $110B in 2017 with 38% YoY

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June 13, 2017 © 2017 Nanya Technology Corp.

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Stable DRAM Industry Structure

  • Supply side dominated by 3 major suppliers

  • New comers are facing enormous barrier of entry

Since 2013 (3 plus major suppliers)

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Patents Defense
Trade Secrets and
Process Technologies
Complexity of Advanced
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Others
3.5% 2.6%
19.9%
Y2016
market
share
25.8%
48.2%
Source: Gartner, NTC
All other trademarks are property of their respective owners
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June 13, 2017 © 2017 Nanya Technology Corp.

Big Data Era / Diversified DRAM Demand

Ongoing growth momentum from smart phone, server and consumer segments

Smart
Phone
39%
Server
21%
PC
19%
DTV 4%
Tablet
4%
NW 3%
Automotive
2%
Others
8%
Y2017 Demand
22.5B
(4Gb eq.)		 Y2017 Y2017 YoY(Y2017/Y2016) YoY(Y2017/Y2016) YoY(Y2017/Y2016)
QTY
(Mu)		 C/B
(GB)		 QTY C/B Bit
Growth
Smart
Phone		 1,521 2.8 6.5% 27.3% 38.7%
Server 17.5 136 5.4% 22.5% 29.5%
SSD 185 0.35 27.6% 16.7% 48.9%
Car 94 2.15 2.7% 22.9% 26.3%
Switch 239 1.36 4.4% 19.3% 25.1%
DTV 224 2.1 1.4% 17.1% 18.6%
STB 302 0.6 3.8% 10.0% 14.4%
PC 269 5.6 1.5% 9.2% 11.5%

*Others includes STB, Storage (HDD/SSD), Gaming, Graphics, IP Cam, Industrial…

Source: Gartner, IHS, NTC MKT

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June 13, 2017 © 2017 Nanya Technology Corp.

% of unit shipment (4Gb eq.)
15%
7%
3%
~~2%~~
78%
51%
23%
10%
4%
2%
4%
40%
73%
82%
45%
24%
13%
1%
6%
50%
73%
84%
1%
0%
20%
40%
60%
80%
100%
2012
2013
2014
2015
2016
2017
2018
512Mb and below
1Gb
2Gb
4Gb
8Gb
8Gb
4Gb
2Gb
DRAM Density Trend Forecast		 % of unit shipment (4Gb eq.)
15%
7%
3%
~~2%~~
78%
51%
23%
10%
4%
2%
4%
40%
73%
82%
45%
24%
13%
1%
6%
50%
73%
84%
1%
0%
20%
40%
60%
80%
100%
2012
2013
2014
2015
2016
2017
2018
512Mb and below
1Gb
2Gb
4Gb
8Gb
8Gb
4Gb
2Gb
DRAM Density Trend Forecast		 % of unit shipment (4Gb eq.)
15%
7%
3%
~~2%~~
78%
51%
23%
10%
4%
2%
4%
40%
73%
82%
45%
24%
13%
1%
6%
50%
73%
84%
1%
0%
20%
40%
60%
80%
100%
2012
2013
2014
2015
2016
2017
2018
512Mb and below
1Gb
2Gb
4Gb
8Gb
8Gb
4Gb
2Gb
DRAM Density Trend Forecast		 % of unit shipment (4Gb eq.)
15%
7%
3%
~~2%~~
78%
51%
23%
10%
4%
2%
4%
40%
73%
82%
45%
24%
13%
1%
6%
50%
73%
84%
1%
0%
20%
40%
60%
80%
100%
2012
2013
2014
2015
2016
2017
2018
512Mb and below
1Gb
2Gb
4Gb
8Gb
8Gb
4Gb
2Gb
DRAM Density Trend Forecast		 % of unit shipment (4Gb eq.)
15%
7%
3%
~~2%~~
78%
51%
23%
10%
4%
2%
4%
40%
73%
82%
45%
24%
13%
1%
6%
50%
73%
84%
1%
0%
20%
40%
60%
80%
100%
2012
2013
2014
2015
2016
2017
2018
512Mb and below
1Gb
2Gb
4Gb
8Gb
8Gb
4Gb
2Gb
DRAM Density Trend Forecast		 % of unit shipment (4Gb eq.)
15%
7%
3%
~~2%~~
78%
51%
23%
10%
4%
2%
4%
40%
73%
82%
45%
24%
13%
1%
6%
50%
73%
84%
1%
0%
20%
40%
60%
80%
100%
2012
2013
2014
2015
2016
2017
2018
512Mb and below
1Gb
2Gb
4Gb
8Gb
8Gb
4Gb
2Gb
DRAM Density Trend Forecast		 % of unit shipment (4Gb eq.)
15%
7%
3%
~~2%~~
78%
51%
23%
10%
4%
2%
4%
40%
73%
82%
45%
24%
13%
1%
6%
50%
73%
84%
1%
0%
20%
40%
60%
80%
100%
2012
2013
2014
2015
2016
2017
2018
512Mb and below
1Gb
2Gb
4Gb
8Gb
8Gb
4Gb
2Gb
DRAM Density Trend Forecast		 8%
5%
84%
67%
7%
27%
2019
2020
12/ 16Gb
12/16Gb		 8%
5%
84%
67%
7%
27%
2019
2020
12/ 16Gb
12/16Gb
15%
7%
78%
51%
4%
40%		 3%
23%
73%
4Gb
2Gb		 10%
82%
6%		 4%
45%
50%
8Gb		 2%
24%
73%		 13%
84%
1%		 8%
5%
84%
67%
7%
27%
12/16G
5%
67%
27%
~~2%~~
2012
2013
512Mb and below		 2014
2015
2016
2017
1Gb
2Gb
4Gb		 2018
8Gb		 2019
12/ 16Gb

Source: Gartner, IHS, & NTC

 8Gb as main specification from 2017 and onwards

  • Product life of ≤4Gb mid-to-low densities extends due to legacy demand

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June 13, 2017 © 2017 Nanya Technology Corp.

Diversified DRAM Specifications

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% of unit shipment Mobile DRAM %
100% 100%
LPDDR5
LPDDR2 21.7%
32.0%
80% LPDDR3 80%
LPDDR4
15.9%
1.6%
60% 60%
31.3%
DDR3
40% 40%
DDR4
41.5%
20% 20%
21.2%
0% 0%
2012 2013 2014 2015 2016 2017 2018 2019 2020
Others DDR2 DDR3 DDR4 DDR5
LP DDR2 LP DDR3 LP DDR4 LP DDR5 Mobile DRAM %
Others include GDDR5, Wide I/O(I&II), SDRAM, DDR, & Mobile SDR/DDR Source: Gartner, IHS, & NTC MKT
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 Consumer and Automotive to adopt DDR4/LPDDR4 from 2018

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June 13, 2017 © 2017 Nanya Technology Corp.

Outline

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01. DRAM Industry Landscape
02. NTC Overview
03. Business Strategy

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June 13, 2017 © 2017 Nanya Technology Corp.

Q1’17
2016
2015
Revenue
12.2B
41.6B
43.9B
Gross Profit
Gross Margin (%)
4.9B
40.1%
12.9B
30.9%
17.3B
39.4%
Operating Income
Operating Margin (%)
3.9B
31.5%
8.6B
20.5%
13.5B
30.7%
Non-operating Income
-0.6B
17.2B
4.2B
Net Income
Net Margin (%)
3.3B
26.8%
23.7B
57.0%
17.1B
39.1%
Capital
27.5B
27.5B
24.3B
EPS
1.19
8.67
7.07
NT$B: Billion
2016 & Q1’17 P&L Results		 Q1’17
2016
2015
Revenue
12.2B
41.6B
43.9B
Gross Profit
Gross Margin (%)
4.9B
40.1%
12.9B
30.9%
17.3B
39.4%
Operating Income
Operating Margin (%)
3.9B
31.5%
8.6B
20.5%
13.5B
30.7%
Non-operating Income
-0.6B
17.2B
4.2B
Net Income
Net Margin (%)
3.3B
26.8%
23.7B
57.0%
17.1B
39.1%
Capital
27.5B
27.5B
24.3B
EPS
1.19
8.67
7.07
NT$B: Billion
2016 & Q1’17 P&L Results		 Q1’17
2016
2015
Revenue
12.2B
41.6B
43.9B
Gross Profit
Gross Margin (%)
4.9B
40.1%
12.9B
30.9%
17.3B
39.4%
Operating Income
Operating Margin (%)
3.9B
31.5%
8.6B
20.5%
13.5B
30.7%
Non-operating Income
-0.6B
17.2B
4.2B
Net Income
Net Margin (%)
3.3B
26.8%
23.7B
57.0%
17.1B
39.1%
Capital
27.5B
27.5B
24.3B
EPS
1.19
8.67
7.07
NT$B: Billion
2016 & Q1’17 P&L Results		 Q1’17
2016
2015
Revenue
12.2B
41.6B
43.9B
Gross Profit
Gross Margin (%)
4.9B
40.1%
12.9B
30.9%
17.3B
39.4%
Operating Income
Operating Margin (%)
3.9B
31.5%
8.6B
20.5%
13.5B
30.7%
Non-operating Income
-0.6B
17.2B
4.2B
Net Income
Net Margin (%)
3.3B
26.8%
23.7B
57.0%
17.1B
39.1%
Capital
27.5B
27.5B
24.3B
EPS
1.19
8.67
7.07
NT$B: Billion
2016 & Q1’17 P&L Results
NT$B: Billion
Q1’17 2016 2015
Revenue 12.2B 41.6B
12.9B
30.9%
8.6B
20.5%
17.2B
23.7B
57.0%		 43.9B
17.3B
39.4%
13.5B
30.7%
4.2B
17.1B
39.1%
Gross Profit
Gross Margin (%)		 4.9B
40.1%
Operating Income
Operating Margin (%)		 3.9B
31.5%
Non-operating Income -0.6B
Net Income
Net Margin (%)		 3.3B
26.8%
Capital 27.5B 27.5B 24.3B
EPS
1.19		 8.67 7.07

Company highlights

  • 2016 NT$ 23.72B net income of 2016, EPS NT$ 8.67.

  • Q1’17 Net Income of NT$ 3,275M, Net Margin 26.8%, EPS NT$ 1.19

Note: All financial numbers are audited and approved by BoD

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June 13, 2017 © 2017 Nanya Technology Corp.

Q1’17 Consolidated Cash Flow

(Unit: Million NT$) Q1'17 2016 2015
Beginning Balance 9,102 3,104 7,268
Cash from Operating
Activities		 5,498 15,945 18,522
Capital expenditures -6,147 -22,336 -3,842
Long-term & Short-term
loans		 9,984* -6,351 -14,382
Investments and others 1,864** 18,740 -4,463
Ending Balance 20,300 9,102 3,104
Free Cash Flow(1) -649 -6,391 14,680

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

*2016 Net Cash in NT$ 16B, (Disposal of IMI shares(NT$ 47.5B), Acquisition of Micron’s private placement (NT$ 31.5B)). Note: All financial numbers are audited and approved by BoD

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Financial Highlights
 Q1’17 Gross Margin back to 40% since Q2’15
Revenue (Million NT$) Net Income (Million NT$) Gross Margin(%)
30,000 70%
49%
[48%] 47% 42% 40.1%
40% [44%] 32.7%
37% 31.1% 31.0%
30% 28.4%
18%
13%
-4%
-30%
-31%
-85%
-30,000 -110%
-102%
Gross Margin (%)
Revenue, Net Income (Million NT$)
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June 13, 2017 © 2017 Nanya Technology Corp.

20nm CAPEX & Bit Shipment

CAPEX

BIT SHIPMENT (YOY)

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34.3
Billion NT$
22.3
5.6 5.8
3.8
2013 2014 2015 2016 2017(E)
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~45%
20%
16%
down low
-8.6% single digits %
2014 2015 2016 2017(E) 2018(E)
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  • Capital

  • Expenditure (CAPEX)

  • Estimated 2017 CAPEX of NT$ 34.3B

  • Anticipated CAPEX of NT$55.7B for 38K WSPM 20nm migration. (2016 CAPEX NT$ 20.6B for 20nm)

  • 20nm CAPEX mainly from: 1. Cash on hand 2. US$500M ECB, 3. Cash from operating activities

Bit

Shipment

  • Q1’17 bit shipment down 14.4%, Q2’17 bit shipment forecast to increase low single digits % and future bit shipment to grow onward

  • 2017 bit shipment to decrease low single digits %

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June 13, 2017 © 2017 Nanya Technology Corp.

Financial KPI

Debt Ratio

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98.2%
89.3%
60.1%
47.3%
37.5%
2012 2013 2014 2015 2016
•
Debt ratio 38.9% at the end
of the 31st of March, 2017.
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Dividend for Years

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 Cash dividend/per share (NT $)
2.80
2.00
1.50
0 0
2012 2013 2014 2015 2016
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  • Consecutive 3 years stable dividend policy since 2014

15

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June 13, 2017 © 2017 Nanya Technology Corp.

Outline

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01. DRAM Industry Landscape
02. NTC Overview
03. Business Strategy

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June 13, 2017 © 2017 Nanya Technology Corp.

Focus on Specialty DRAM Business

Applications

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100%
8.7% PC
~10%
22.4%
26.3%
Commodity 17.4%
Low Power
20~30%
12.3%
7.2%
12.1%
Low Power Auto & IT
6.4%
(Mobile) 4.5% 8~9%
50%
Auto
&
Industrial Consumer
66.7%
& PC
57.1% 58.9%
Peripheral
Consumer
51~62%
&
PC Peripheral
0%
2014 2015 2016 2017(E)
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  • Revenue portion by Application

  • Specialty includes Consumer & PC Peripheral, Auto & Industrial, Low Power

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June 13, 2017 © 2017 Nanya Technology Corp.

Nanya Manufacturing Site

 New clean room completed in Oct 2016 to facilitate the deployment of advanced technology nodes

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CUB2
SB1 FAB-3A
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20nm Conversion

  • 20nm technology to reach 38K WSPM. Total capacity will amount to 68K WSPM

  • 20nm verification completed in Q2’17, volume production scheduled for Q3’17,

  • 30K wafers input expected in Q4’17, cost cross-over anticipated in Q4’17

  • For DDR3, DDR4 & LPDDR4X offerings

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8Gb 8Gb
DDR4 LPDDR4X
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Jul, 2015

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Oct, 2016 Jan, 2017

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2H, 2017

2018

Ground breaking of new HQ and additional 12” Fab for 20nm

Jan. 2017 Piloting of 20nm Starts

  • Ramping up to 38k 1H’18

  • • 8Gb LPDDR4X Mass Production Q3’18

  • New 12” Fab (FAB-3A-N) complete

  • 4Gb DDR3 Mass Production Q3’17

  • 8Gb DDR4 Mass Production Q4’17

  • Ramping up to 30K Q4’17

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June 13, 2017 © 2017 Nanya Technology Corp.

Specialty DRAM Applications

Specialty DRAM widely adopted by consumer, PC peripherals, auto, industrial and IoT

Specialty DRAM demand growth continuously promising

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Office
Home
&
&
Enterprise
Entertainment
 DTV / STB  NB / DT / NW
 DVD/ Pachinko  HDD / SSD
 IoT / Game  Printer / POS
Specialty
DRAM
Automotive Industry
 Infotainment  Automatic
 ADAS  NW / IPC
 Telematics  Infrastructure
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June 13, 2017 © 2017 Nanya Technology Corp.

Ke Drivers for S ecialt DRAM y p y

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Now Future 2017~2018 (2019~)

DRAM Content 1GB ~ 3GB 1GB ~ 6GB Driving Force Video & Image DRAM Content 1Gb ~ 4Gb 1Gb ~ 8Gb Driving Force Connectivityy DRAM Content 1Gb ~ 4Gb 1Gb ~ 16Gb ~~128GB 128GB~~ Driving Force 512GB~ 2T~ DRAM Content 2GB ~ 3GB 18GB ~24GB Infotainment ADAS M2M Infotainment ADAS Driving Force

Connectivityy

• Specialty DRAM spec ranging from consumer DRAM, auto/industrial grade and mobile DRAM

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June 13, 2017 © 2017 Nanya Technology Corp.

Storage Market Evolution

3D NAND will significantly boost SSD penetration with more DRAM

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Unit: Million
600
HDD SSD
500
400
300
200
100
0
2014 2015 2016 2017 2018
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DRAM requirement for HDD and SSD: DRAM requirement for HDD and SSD: DRAM requirement for HDD and SSD:
2017~2018 2019~
HDD 128Mb ~ 1Gb
SSD 1Gb ~ 4Gb 4Gb ~ 16Gb

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June 13, 2017 © 2017 Nanya Technology Corp.

Nanya Specialty DRAM Product Lineup

 Comprehensive product portfolio to meet various requirements  Long-life support to fulfill customer needs

Technology 30nm 20nm • • DDR/DDR2/DDR3 DDR3/DDR4 • • Spec. LPDDR1/LPDDR2/LPDDR3 LPDDR3/LPDDR4 • • Customized Customized Density 512Mb/1Gb/2Gb/4Gb 2Gb/4Gb/6Gb/8Gb Grade Commercial/Industrial/Automotive Lifecycle Long-life and stable supply

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June 13, 2017 © 2017 Nanya Technology Corp.

Key Takeaways

 Limited DRAM supply growth 2017, favorable market condition expected

  • Q2’17 ASP guidance up high single digit % QoQ

  • 20nm verification completed in Q2’17, mass production scheduled Q3’17

 Consumer and Automotive to adopt DDR4/LPDDR4 from 2018, which requires 20nm and beyond for offering

 As a dedicated specialty DRAM supplier, Nanya offers a comprehensive portfolio of DRAM solution to our customers

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June 13, 2017 © 2017 Nanya Technology Corp.

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