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Nanya Technology Corporation Investor Presentation 2017

Mar 23, 2017

52061_rns_2017-03-23_5224287a-89b7-4b19-b6a9-89fc13c6ad74.pdf

Investor Presentation

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Nanya Technology Bank of America Merrill Lynch 2017 Asia Pacific TMT Conference

Presentation to Investors & Analysts, March 21[st] - 22[nd] , 2017 Dr. Pei Ing Lee, President & Spokesman

March 21-22, 2017 © 2017 Nanya Technology Corp.

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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March 21-22, 2017 © 2017 Nanya Technology Corp.

Outline

  1. Nanya Technology Overview 02. DRAM Industry 03. Business Strategy

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Nanya Technology Overview

IDM Company

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Technology & Capacity Partnerships

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  • Founded in 1995, • Technology : • Technology license form MU IPO in 2000

  • • DRAM Process, Design,  Starts 20nm piloting in Option rights to license Micron Production & Sales Jan.’17 1x and 1y nm technologies and

  • • Headquarters:  Plan to ramp 20nm to 38K products. New Taipei, Taiwan WSPM in 1H’18 •

  • • Shareholding in Micron Employees: >2,600 • Capacity:

  • • Acquired about 5.26% of Focus on value-added DRAM market  Current: 60,000 WSPM(12” ) Micron’s share.

  • • Formosa Plastic Group  2018: 68,000 WSPM(12” ) (FPG) has 75.8% equity (38K 20nm + 30K 30nm)

  • ownership

*WSPM: Wafer Starts Per Month

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Strong Performance

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Net Income(NT$ billion) EPS (NT$)
30 28.2 14
23.7
11.77
20
17.2
8.67
7
7.07
10 8.1
3.40
0 0
Y2013 Y2014 Y2015 Y2016
Net Income
8.1 28.2 17.2 23.7
(NT$ Billion)
EPS(NT$ ) 3.40 11.77 7.07 8.67
----- End of picture text -----

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March 21-22, 2017 © 2017 Nanya Technology Corp.

2016 P&L Results

NT$B: Billion NT$B: Billion NT$B: Billion NT$B: Billion NT$B: Billion NT$B: Billion
2015 Q1’16 Q2’16 Q3’16 Q4’16 2016
Revenue 43.9B 10.4B
3.4B
32.7%
2.6B
25.3%
-0.79B
1.8B
18%		 8.9B
2.5B
28.4%
1.7B
18.5%
-0.6B
0.4B
4.4%		 10.2B
3.2B
31.1%
1.7B
16.6%
-0.3B
1.4B
13.7%		 12.1B
3.8B
31.1%
2.6B
21.2%
18.8B
20.1B
165.9%		 41.6B
12.9B
30.9%
8.6B
20.5%
17.2B
23.7B
57.0%
Gross Profit
Gross Margin (%)		 17.3B
39.4%
Operating Income
Operating Margin (%)		 13.5B
30.7%
Non-operating Income 4.2B
Net Income
Net Margin (%)		 17.1B
39.1%
Capital 24B 27B
EPS
7.07		 0.68 0.14 0.51 7.33 8.67

Company highlights in 2016

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

  • Shipment increased 20.3% yoy, ASP decreased 22.1% yoy.

  • Recognized NT$17.94B profit from Inotera share disposal.

  • Debt ratio 37.5% at the end of the 31st of Dec, 2016.

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Financial Highlights

 Q1’17 gross margin likely to improve QoQ due to favorable market condition.

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Revenue (Million NT$) Net Income (Million NT$) Gross Margin(%)
30,000 70%
49%
44% [48%] 47% 42%
40% 32.7%
37% 31.1% 31.1%
30% 28.4%
18%
13%
-4%
-30%
-31%
-85%
-30,000
-102%
Revenue, Net Income (Million NT$)
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-110%

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Cash Flows

Cash Flows
2016 2015
(Unit: Million NT$) Audited &
Consolidated		 Audited &
Consolidated
Beginning Balance 3,104 7,268
Cash from Operating Activities 15,945 18,522
Capital expenditures -22,336 -3,842
Long-term & Short-term loans -6,351 -14,382
Investments and others 18,740 -4,463
Ending Balance 9,102 3,104
Free Cash Flow(1) -6,391 14,680
(1) Free Cash Flow = Cash from operating activities – Capital expenditures

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March 21-22, 2017 © 2017 Nanya Technology Corp.

20nm CAPEX & Bit Shipment

CAPEX

Bit Shipment (YoY)

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Bit Shipment (YoY)
NT$19.84B Phase 3
~45%
Phase 1 20%
NT$35.9B 16%
+
Phase 2
Flat down single
-8.6% digits%
2013 2014 2015 2016 2017 2018
Y2016 ~ Y2018E
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Capital Expenditure (CAPEX)

  • Anticipated CAPEX of NT$55.74B for 38K WSPM 20nm migration. (2016 CAPEX NT$ 20.6B for 20nm)

  • BoD approved 3rd stage 20nm CAPEX of NT$19.84B. (as of 2017/3/9)

  • Estimated 2017 CAPEX of NT$ 34.3B

  • 2017 CAPEX mainly from: 1. Cash on hand 2. US$5B ECB, 3. Cash from operating activities

Bit Shipment

  • 2017 bit shipment down single digits. Bit shipment resume positive(2018 +45% yoy, 2019 +15% yoy).

  • 20nm cost per bit expected to cross over by end of 2017

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March 21-22, 2017 © 2017 Nanya Technology Corp.

20nm Plan

  • Plan to convert 38K WSPM to 20nm Technology. Total capacity increase to 68K WSPM.

  • 20nm volume production schedule in Q3’17, 30K wafers input expected in Q4’17.

  • Cost cross over expected by end of 2017.

  • Initial offering DDR4 & LPDDR4X.

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8Gb 8Gb
DDR4 LPDDR4X
Jul, 2015 Oct, 2016 Jan, 2017 2H, 2017 2018
•
Ground breaking of new HQ Jan. 2017 Piloting of 20nm Starts Ramping up to 38k 1H’18
and additional 12” Fab for 20nm • 8Gb LPDDR4X Mass
Production Q3’18
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  • Ramping up to 38k 1H’18

  • • 8Gb LPDDR4X Mass Production Q3’18

  • New 12” Fab (FAB-3A-N) complete

  • 20nm Volume Production

  • 8Gb DDR4 Mass Production Q4’17

  • Ramping up to 30K Q4’17

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Investment of Micron Private Placement

The Investment as of 2016/12/02 Accounting Treatment as of 2016/2/28 Accounting Treatment as of 2016/2/28
Volume
• 57,780,138 shares		 Account • Available-for-sales
financial assets
Purchase
price &
EX rate
• US$ 17.29 per share
(=NT$544.42752)
US$ 1: NT$ 31.488		 Market Price • US$ 23.44 per share
(=NT$718.436)
US$ 1: NT$ 30.65
Investment
amount
• NT$ 31,457,097,237		 Market Value • NT$41,511,331,233
Shareholding
• about 5.26% of Micron’s
interest		 Measurement •
Mark to market on
monthly basis
Lock-up
period
• Six months (till 2017/6/2)		 Unrealized
gain		 • NT$10,054,233,987

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Dividend for Y2016

Subject Cash dividend of NT$ 1.5 per common share

BoD Approval

  • BoD approved cash dividend of NT$ 1.5 per common share on 2017/3/9 .

  • • Will be proposed to the AGM for approval scheduled on 2017/5/26

  • Cash yields 3.2% (3/20 closing price NT$ 47.20)

Payout ratio

  • 17.3% (NT$ 1.5 / EPS NT$ 8.67)

  • • 70.8% (exclude disposal gain of Inotera, NT$ 1.5 / EPS NT$ 2.12)

  • Exclude disposal gain of Inotera, EPS was NT$ 2.12 (EPS NT$ 8.67 – NT$ 6.55)

Remark

  • Net cash in NT$ 16B (Disposal of IMI shares(NT$ 47.5B), Acquisition of Micron’s private placement (NT$ 31.5B)).

  • Expect NT$ 34.3 billion CAPEX in 2017 for 20nm ramping.

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Outline 01. Nanya Technology Overview 02. DRAM Industry 03. Business Strategy

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Rational DRAM Supply Growth

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WW DRAM Wafer Start (K/M, 300mm) WW DRAM Wafer Start (K/M, 300mm)
1,500
WW DRAM Wafer Start (K/M, 300mm)
WW DRAM Wafer Output (K/M, 300mm)
1,304
1,213
1,111
1,098 1,082 1,096
1,058 1,080
1,000
500
0
2010 2011 2012 2013 2014 2015 2016 2017
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 Limited supply growth contributed mainly by process conversion

 About 20% supply growth in 2017 expected

Source: DRAMeXchange, NTC MKT

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Diversification of Demand

 22% yoy bit demand increase in 2017 projected

 Ongoing growth momentum from cloud computing and mobile applications

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Y2016 Y2017 YoY Auto +
Industrial, 0.1%
Consumer
Bit
Unit : QTY(Mu) ｜ C/B(GB) QTY, C/B QTY C/B QTY(Y/Y) C/B(Y/Y) Growth Tablet & others,13.5%
0.2%
Mobile
Cloud Server 17 110 17.6 133 3.5% 20.9% 25.2% 8.5% Y2010 PC +
upgrade
Server 3.8Bn modules 64.3%
+ WS (4Gb eq)
11.6%
PC 270 5.1 263 5.6 -2.6% 9.8% 7.0%
Tablet 180 2.1 164 2.6 -8.9% 23.8% 12.8%
P2P
Consumer &
PC + upgrade
Smart Auto + others, 14.6% modules, 18.9%
1,480 2.1 1,482 2.7 0.1% 28.6% 28.7%
Phone Industrial, 3.8%
Tablet, 3.8%
Y2017
LCD 223 1.8 219 2.0 -1.8% 11.1% 9.1% 21.8Bn
TV Server +
(4Gb eq) WS, 21.3%
Mobile, 37.5%
M2M Car 91.3 0.6 93.8 2.1 2.7% 250.0% 259.6%
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15 Source: Gartner, IHS, NTC MKT

March 21-22, 2017 © 2017 Nanya Technology Corp.

DRAM Essential to New Data Era

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IoT
Servers
Tablets
Phones
IoT,
Wearables
Smart Car
Video
PC Era
SiP
Portable Big
Devices Data
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系統級
Smart Home,
記憶體封裝
Smart Office, Main DRAM Features
Main DRAM Features
Smart City
 Low power consumption  High Density for big data
 High Bandwidth for data transit  High Bandwidth for data transition
 Small form factor by stacking
 Reasonable density to save cost
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  • High Bandwidth for data transition

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Sufficiency

 Favorable market conditions continues in 1H 2017

107%
101%

103%
99%
100%
101%
101%
98%

Source: Gartner, IHS, DRAMexchange, NTC MKT

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Outline 01. Nanya Technology Overview 02. DRAM Industry 03. Business Strategy

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March 21-22, 2017 © 2017 Nanya Technology Corp.

2017 Revenue Breakdown Guidance

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Applications Consumer & Specialty Auto & IT Low Power Server PC
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 grade Consumer
66.7%
& Specialty
57.1% 58.9%
51~62%
Consumer &
Specialty
0%
2014 2015 2016 2017(E)
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* Revenue portion by Application

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Comprehensive DRAM Portfolio

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Specialty Mobile Auto & IT Custom
•
• DDR4 ~ DDR • LPDDR3 ~ LPDDR DDR4 ~ DDR2 • Foundry
•
• Packaged & SiP • KGD, PoP & MCP LPDDR3 ~ LPDDR • Non-JEDEC DRAM
•
Packaged & KGD
NW
IP Cam
STB
POS
Feature
Smart Phone
HDD Phone Car
Data
IP Cam Printer Card IPC NW
DSC Tablet
----- End of picture text -----

SiP = System in Package

KGD = Known Good Die PoP = Package on Package MCP = Multiple-Chip Package

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March 21-22, 2017 © 2017 Nanya Technology Corp.

Nanya Business Outlook

  • Limited DRAM supply growth 2017, healthy market condition expected.

  • Q1’17 ASP guidance up 10-15% QoQ.

  • 20nm volume production scheduled Q3’17, target 30K WSPM Q4’17.

  • Target 38K WSPM of 20nm in 1H 2018 to better meet customers’ needs and improve cost structure.

  • DDR4 & LPDDR4 new product engagement.

  • Nanya offers a comprehensive portfolio of DRAM solutions and continues to focus on specialty DRAM business.

  • *WSPM: Wafer Starts Per Month

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March 21-22, 2017 © 2017 Nanya Technology Corp.

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Thanks & Questions

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March 21-22, 2017 © 2017 Nanya Technology Corp.

2016 Income Statement

Y2016 Y2016 Y2015 Y2015 YoY
Amount: Million NT$ Audited &
Consolidated		 Audited &
Consolidated
Net Sales 41,633 100.0% 43,876 100.0% -5.1%
Cost of Goods Sold 28,781 69.1% 26,568 60.6%
Gross Margin 12,851 30.9% 17,308 39.4% -25.8%
SG&A Expenses 1,821 4.4% 1,867 4.3%
R&D Expenses 2,478 6.0% 1,954 4.5%
OperatingIncome 8,552 20.5% 13,487 30.7% -36.6%
Non-operating Income (Exp.) 17,173 41.3% 4,190 9.5%
Income before Tax 25,726 61.8% 17,677 40.3% 45.5%
Income Tax Benefit (Expense) -1,997 -4.8% -506 -1.2%
Net Income 23,729 57.0% 17,171 39.1%
Net income attributable to non-controlling
interests		 7 0.0% 30 0.1%
Net Income attributable to NTC 23,721 57.0% 17,141 39.1% 38.4%
EPS(NT$) 8.67 7.07

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March 21-22, 2017 © 2017 Nanya Technology Corp.

ECB Offering

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Subject Issue US$ 500 million Zero Coupon Convertible Bond due 2022 Issue US$ 500 million Zero Coupon Convertible Bond due 2022
Issue Size & Coupon •
•		 Issue Amount: US$ 500 million
Coupon Rate: 0%
Listing • Singapore Exchange Securities Trading Limited
Issue Date • Jan. 24 2017
Maturity Date • Jan. 24, 2022
Initial Conversion Price • NT$ 52.47 per share
Yield to Put/ Maturity • 1.75%
Put Option Date • On January 24, 2020 (At the end of 3rd year)
Call Option Period • At any time after January 24, 2020 (36 months from Issue Date)
• Converted Securities: The newly-issued common shares of Nanya Technology
Conversion • Conversion Period: At any time starting from the day immediately following the
40th day after the Issue Date to the 10th day prior to the Maturity Date.
(2017/3/6~2022/1/14)
Dilution Effect • If the bonds are fully converted, the dilution effect to original shareholders is
about 9.9%. (excluding book value adjustment)

March 21-22, 2017 © 2017 Nanya Technology Corp.

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