Win Semiconductors Corp

Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to Winn-Sammy's Result Webcast Conference for the second quarter of the year 2021. My name is Zhou Fen, the spokesman and the Associate Vice President of Finance in Winn-Sammy. Joining me on today's call is Steve Chen, General Manager of Corporate Administration in Woonstown. Today's call is to organize into three sections. First of all, Steve will comment on the company's results and provide brief guidance for the third quarter for 2021. Secondly, I will go through the financials in details. After that, we will open to the floor for Q&A. Please freely submit your questions in the info box on the webcast window throughout the conference. Before we begin, I would like to draw your attention to the safe harbor notice on page one of the presentation slides. Please note that this presentation contains forward-looking statements. These statements are based on our current expectations. Actual results may differ materially from our expectations, and the company undertakes no obligation to update these forward-looking statements going forward. Now, let me hand over the call to Mr. Steve Chen, the general manager of WinSemi.

Thank you, Bill, and welcome everyone. After a traditionally slow season in the first quarter, we have seen a gradual pickup of customer demand, and our revenue in the second quarter reached $6.2 billion, an increase of 3% quarter-on-quarter and 2% year-on-year. This was roughly in line with our previous expectations. Given the changes in the pandemic, our growth margin in the second quarter increased by 2.2 percentage points from the previous quarter, recovering to 35.7%. This also gives a sequential increase of our operating margin by 2.8 percentage points, returning to the level of 22.7%. EDS in the second quarter was 2.32 in 2020, and EDS for the first half of 2021 was 5.04 in NT dollars. Looking at the product mix in the second quarter, apart from infrastructure revenue being maintained at the level of the first quarter, the double-digit sequential growth in federal TA revenue was the most pronounced, especially the contribution of 5G TA revenue of the total federal TA revenue recovered to over 20% again. And the significant increase in the momentum of Chinese fabulous customers was also one of the drivers. After the third quarter of 2020, we could not no longer supply to our largest Chinese customers in that time due to the U.S.-China trade conflict. However, as we had previously stated, after the reshuffle of the smartphone-owned market, our strategy of diversifying customers has been served us well again. Many Chinese customers who have worked with us for many years seized this opportunity to gain market share. They choose to work closely with us, given our strong support in R&D and production capacity. This was a win-win for our customers and us, strengthened our confidence in delivering continuous revenue growth in 2021. In response to our customers' further future growth and the long-term demand for the production capacity, We will adhere to our strategy of inventively R&D resources to participate for the next-generation product development of our customers and expanding production capacity. We believe our customers' market share and hearing will further reinforce our leading position in the compound-sending semiconductor industry. Looking ahead to the third quarter of 2021, we expect revenue to grow by high single digits quarter-on-quarter and growth margin to be around the level of mid-30s. I will turn the call back to Joe. Thank you.

Okay, it's my turn. It's our pleasure to present our financial results for the second quarter of year 2021. You can also refer to our presentation slides, starting from page four. Page four talks about revenue and the margin. With the continued gaining share on China's market through China's fabulous customers, and our Q2 revenue was of 6.2 billion NT. CO2 was up 3% and the YOY up 2%. And with the utilization, 90% of the utilization rate as we expected, the Q2 revenue Given by some changes in product mix, our growth margin improved by 2.2 percentage points to 35.7%, which is better than our original low service expectations. And therefore, the operating margin improved about 2.8 percentage points to 22.7%. We will discuss about product mix changes in page seven later. And next page, please switch to the page five. I'll talk about image. The second quarter net profit was 930 million NT. QOQ was down 15%. That's mainly because of the impact from one outpouring exchange loss due to the appreciation of New Taiwan Dollar against US Dollar in QQ. So therefore the EPS coming at $2.32 NT and compared to Q1, Q1 was $2.72. And please look to the next page in page six. Page six talk about free test floor and the building. As a Q2 of a net outflow for our free cash flow, that's because we continue increasing in car tax. And the Q2 interest-bearing debt and the billing ratio maintain at a similar level of the last quarter. So, please switch to the page seven. We may discuss more about our product mix. In case you, the product mix value was between the 50 and 55%, which is higher from 45 to 50% last quarter. and the silo revenue for Q2 actually QOQ a couple pieces up. And especially 5G, for 5G silo was higher than 20% of the total silo of PDA. And another one is infrastructure. Infrastructure, Actually, infrastructure remains in the same range between 13% and 20%, which is the similar level as Q1, but it's better than our expectations. and the 3D sensing in this quarter down to 14% from 19% last quarter and which is as we expected when last earnings call we did mention that the 3D sensing business will will be experiencing production system period. And Wi-Fi business also went down a little bit. Become between 10 and 15% for the total revenue. That's the product mix in this page. And then the next page, is going to talk about the Q3 guidance. I think Steve has mentioned it on his management comment, but I just repeat again. We expect Q3 21 revenue to grow by high single-digit QOQ. and we expect Q3 growth margin to be around the level of mid-30s. Okay, then we can quickly go through the financial statements. We started from income statement for Q2 in page 10. I have to remind you guys that all of the figures below is based on an audited basis. The actual results should wait until the CTA's report. The Q2 Net revenue was $6,195 million, up 3% and YOY up 2%. The gross profit was $2,212 million, which is up about 10% CO2. The gross margin becomes 35.7%, which is, in truth, about 2.2 percentage points. The operating expense becomes 803 million NT dollars and the OPAX ratio was 13% The operating income was 1409 million NT dollars which is up 18% CO2 The operating margin becomes 22.7% which is improved about 2.8 percentage points. The non-upgrading income and expense was the $283 million loss, which is the detail in page 12, and the majority was the foreign exchange loss. The income before income tax was $1126 million, and the income tax expense was $197 million NT, so the tax rate equivalent to 17.5%. The net income was 930 million NT, so the net margin becomes 15%. So EPS come out at $2.32 NT. And the ROE for Q2 was 12%. And the utilization rate, as I mentioned earlier, in this quarter was 90%, which is increased from 80% last quarter. The depreciation expense was 1028 million NT. a little bit higher than last quarter. The car park become 2,702 million NT, which is higher than last quarter. Okay, then please trip to the page 11 for the income statement for the first half in 2021. The net revenue, was 12,204,000,000 NT. YOY was up 1%. The gross profit was 4,224,000,000 NT. The gross margin becomes 34.6%. And the operating expense become 1,619 million NT. So the operating ratio becomes 13% for the first half. The operating income was 2,605 million NT. The operating margin becomes 21.3%. The non-op item was 92 million NT loss. So the income before income tax was 2,513 million NT. and the income tax expense is about $488 million. The net income becomes $2,025 million, so therefore the net margin becomes 16.6%. So the EPS for the accumulated first half becomes $5.04. The ROE for the first half accumulated become 13% and approximately utilization rate was 85%. The depreciation for the first half was 2,227 million NT. The chow part for the first half was 4,536 million NT. Okay, that's the first half for income statement. The next page will be a number of items. For your own reference, I just let you know that the major item is the foreign exchange loss. And the page 13 is the balance sheet. The balance sheet Okay, think that the June 30th, 2021, the cash and the credit equivalent was $19,899,000,000 NT. The total assets was $32,576,000,000. and the total liability was 37,634,000 NT. So the debt ratio equivalent to 52%. And the total equity was almost 35 billion NT. And the full value per share is about 77.183 million NT. NT Dollar. And finally, the current ratio was 263% for the first half. Okay. So this is my presentation. Thank you. Now, we now begin the Q&A. And please submit your question in the info box on the web search window now. Thank you.