Win Semiconductors Corp

Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WinSemi's Result Webcast Conference for the first quarter of the year 2021. My name is Zhou Dan, the spokesman and associate vice president of finance in WinSemi. Joining me Secondary, I will go through the financials in detail. After that, we will open to the floor for Q&A. Please freely submit your questions in the input box on the webcast window throughout the conference. Semiconductors Corp Semiconductors Corp Semiconductors Corp Semiconductors Corp

Spicey P.J. Shimon accounted for slightly less than 20% of the overall settlement revenue in the quarter. Revenue of $9 billion decreased 12% quarter-on-quarter, in line with our expectations. This translates into a mild decline of 1% YOY. Due to the impact of the product mix and the capacity utilization, gross margin declined succinctly to 33.4%, with a decline in revenue and an increase in operating expense. The operating margin in the first quarter was 19.9%, declining by 4.4% DPS was NT$ 2.72 Looking at the product list in the first quarter, the magnitude of the sequential decline in cellular and Wi-Fi revenue was relatively mild. We attribute this mainly to the fact that working from home and learning from home has become the new normal. since the outbreak of the COVID-19 pandemic. Driven by the demand for long-time intervals and the large amount of audio and video data transmission from wireless connected devices. Devices including handheld, Wi-Fi-based stations and IoT applications all require better and more stable connection quality. We have provided high-quality and high-performance power amplifiers for a long period of time, and our product has become the first choice for the market. In addition, since last year, despite rapid changes in the market share of the smartphone brand and the tension of the G-Class growth accomplish, Many of our Asia-based customers have actually benefited from this change with a continuous increase in demand. Given our diversified customer base and competitive advantage in technology and capacity, we have always played an important role in the market. We are actively planning the development of the new plant in Southern Taiwan Science Park in Kaohsiung this year, and it is expected to officially start construction in the middle of this year. This is to serve customers' long-term demand for production capacity and to lay the fundamental foundation of our continuous growth in the future. Looking ahead to the second quarter of 2021, we expect revenue to grow low single digits quarter on quarter and growth margin to be around the level of low 30s. I will turn the call back to Joe.

The page in your presentation slide, starting from page four. Page four, we discussed about the revenue and the margin. June 1, 2021, revenue was $65,000. 109 million NT, QOQ was down 12%, and the YOY was down 1%. And because of the product mix and the capacity user addition, our Q1 growth margin declined by 1.5 percentage points to 35.5%. and operating margin was down 4.4% UOQ to 19.9%. And talk about the product mix because Steve mentioned on his management actually below 20% of the overall cellular business, and at the same time, cellular and the Wi-Fi, it looks better than infra and optical, but in this kind of mix, it's unfavorable to our gross margin. And another one is the operation The operation expense is also higher in Q1 compared to last quarter. That's because our button lines and EPS in the is making the Q1 all-tax ratio higher than before. And the next page, we talk about earnings in H5. In Q1 year 2021, the net profit was 1095 million NT, and the QOC was down 14%. and fuel cooling, which is the balance shift figure. In Q1, because the tarbacks were lower than last quarter, so we have an increase in net free cash flow inflow. 500 million Total revenue went down 12 potential cubes. The Wi-Fi and Infra public remained in the same level. So because of the balance and the percentage change, so it is unfavorable. This kind of problem is unfavorable to our growth market. Okay, then... 2021 revenue to growth by low single digit UOQ. And we also expect QQ 2021 growth margin to be around the level of low 30. Okay, then we can quickly go through our financial statements. Before I begin, I still, I always want to remind everybody, all of you here, excuse me, it's the face, it's I'm on it, Facebook, Facebook. The name rather be Corp Corp will be in page 11. The income before income tax was 1,386 million NT. So the net income tax expense was 291 million NT. The tax rate equivalent to 21%. The net income becomes The CTS was $2.72 in this order, and the ROE became 14%, which is 2% lower compared to last quarter. The depreciation expense was $1 billion NT in this quarter and the cost is $1,834,000,000 NT. That's the income statement for Q1. The next page will be the non-off item. In page 311, the money comes from the foreign exchange Then we can talk about balance sheets in page 12. March 31st, 2021, the measure, and first of all because we are with the temporary issue and Liability So the total liability from was almost 280%, and the rate ratio went up to 53% because of the issuance of the ETP. Okay, this is what I have. So now we can talk, or we can Okay, there's a question asking about the growth margin, operating margin, those kind of questions. Okay, and first of all, as I mentioned, the growth margin, the major reason for growth margin this time is because of the changing product mix and also the declining capacity utilization rate. And so, In the future, it depends on both utilization and the product mix. If both are favorable to the mix and the utilization rate can be better than what There is an additional employee bonus for Chinese New Year this time because So it's a one-off reason and one-off item for Q1. And normally our operating ratio most of the time below 12%. So what we believe that after this Q1, then it should be back to normal for the operating ratio. Thank you. Okay, looks like not many questions on the list and then we will give you more card about what we have in the in this quarter and the next quarter. As you can see that in the Q1, our customer in cellular looks like a little bit stronger. And looking forward, we may see a little bit For the Q2, we also still see that the cellular customer has a stronger demand. And at the same time, the 3D sensing, normally the high season for 3D sensing will be in Q3. and this time in Q2 probably the 3D sensing business will be under some kind of product transition period so the 3D sensing business may be weaker in Q2 but the cellular business looks even stronger Since the rest of the other business pretty much in line with Q1, so that's why Although the revenue will look a little bit growing in Q2, but the margin may be still not favorable from the product mix perspective. So yeah, that's what we see here. and also I would like to talk about a lot of investors are interesting about the demand for IBM customers. As you know, You guys know that right now the compound semiconductor, there is limited IDM for RF, it's only few, and most of the business, Winsani has those IDN customers in the Wi-Fi products, especially Wi-Fi routers, IoT Gameways, which is like Wi-Fi base station, those kind of business. In the past, over one year, because of the COVID-19 pandemic, work from home, learn from home, making the Wi-Fi base station, the demand stronger. And so the Wi-Fi sticks. Normally the Wi-Fi router or Wi-Fi base station will need a better performance, higher volume in comparison to the smartphone, I mean the mid-end and low-end smartphone. So Wi-Fi 6, we do see Wi-Fi 6 migration. We have a very good relationship and business with those IBM on this kind of business. in the Wi-Fi business. And I think, I know there's a lot of investors also interested about Wi-Fi succeed. I have to say, yes, we do see Wi-Fi 6E is coming, and we already have projects with important customers, including those IBM customers, and I believe that Wi-Fi 6E should contribute our revenue further in the near future. Yeah, that's about the problem in the IBM customer and the Wi-Fi. Thank you.

Okay. I think there's a question. I want to know, well, let me read 5G as SOC in text. the 5G PA I think first we should say that until right now what we call the 5G PA we provided is all getting up 9 phase PA and that's more related to the sub 6 gigahertz PA until right now I think all the mini with 5G PA installed in the handheld devices. I think it's not made by Jenny Osmond. So, I think it's not such an impact that the SOC for the millimeter wave PA will impact the getting offline or not because I think until right now you can see all the sub-6 gigahertz PA that was made by getting offline is 40 PA yeah and so I think until right now we don't see that some kind of replacement for sub-6 gigahertz PA to become use SOC Okay, I think it's a very complicated question we want to know about. First, the competition, second is how is the opportunity for wind-saming in Invasage and even for LIGA. I think that maybe can all consolidate to wind-saming is how is the strategy about wind-saming about the technology. I think as you know that since we've been established, I think we are more focusing to become a technology leading country in the world. So we develop all the technology by ourselves and provide all the total solution to the customer. from the hundreds of gigahertz to hundreds of megahertz. So, any customer, innovators, who want to design any kind of application from the cellular DA to the satellite PA, he can find the total solution technology to them in WinGemi. But for other competitors, I don't think they can do that. because they may be more focusing on some spatial technology, not a very fully coverage about the frequency and the application. So I think that's a big difference from Rusemi and other competitors. So, and especially because of technology, so certainly Rusemi has take an opportunity in infrastructure and even in LiDAR because we I think right now we only pure plate foundries who can provide fully infrastructure base station related or even the satellite kind of PEO technology in the world. No other conductor can provide with that. and at the same time, the LiDAR, I think, because we certainly are so successful in the 3D sensing, so definitely we already have a very good experience to make production those kind of very complicated and powerful devices than traditional optical company. I think the technology building Charity still will provide re-friendly in a very good position in those new coming new applications. Thank you.

Okay, there's, I think several investors concerned about the tier one smartphone maybe There is a 3D sensing design change may impact our business or any kind of question like that. Okay, first of all, I have to say sorry that anything related to US Tier 1 smartphones or our customers is a source of, to them, a major source that may be sensitive. It's not, as a supplier to, in this supply chain, we may not, we may not describe too much about that, about that, but something I assure is that Our customers still have a major share in this supply chain and in this product. Is there any change of the design that only will make the entry barrier higher, which is to make sure our customers still have the major share? For us, we are the only source. We are the only hungry partner to our customers, so there is nothing to worry about that, about the three defenses this year. Thank you.

Okay, I think that's a continuous question about the mini-meter wave 5G PA. I think we may need to think more clearly. The mini-meter wave PA, the 5G PA that you think is getting outside, mainly right now, you think for the small cell or venture cell, those kinds of infrastructure, related devices. But for the silicon-based SoC, I think right now it's more used in smartphone devices. Okay, I think because there's still some investment want to know about our new provider expansion or later in step 3 or the new fab that will build in south of China south of Taiwan in Kaohsiung in the future I think First, I think in this year we may not have any new capacity that were added to us. Yeah, because right now we just start to build our first floor equipment in this year and that should be maybe well completed and move into equipment. in next year Q1 and Q2 so for this year I don't think we will edit the capacity yeah and for the new threat in Kaohsiung I think we will start to the construction as like I said before the middle of this year and that maybe will take two to three years to fill complete the construction and then move the equipment in so maybe we will need around 3 years to prepare for the new bed in Kaohsiung before we got the capacity for that so So that's why although we still have plenty space to expand in South Sea, but we need to start the Kaohsiung site right now. Otherwise, we will have very long-term demand and supply gap in the future. Thank you. Okay, let's do some questions related to the LiDAR basis. Yeah, I think as we mentioned before, yeah, because like I said, we think we are successful in 3D sensing, so definitely we have a lot of projects and customers come to WeFraming and try to co-developing the LiDAR by patient with us. But because until right now LiDAR is not a standard equipment for the car, so in most of the case right now we see those LiDAR developing projects still in the project base and also in the very initial stage. So, yeah, maybe we will have some revenue from those projects, but I think compared to Our total revenue will still be pretty small. So I think for this year, it still should be in that kind of a project-based revenue and taking a very few contributions to us. Thank you.

Okay, there are no further questions. Thank you for your participation in WinSemi conference. There will be a webcast replay within hours. Please visit www.winfundry.com under the Investor Relations section. You may now disconnect and goodbye.