Win Semiconductors Corp

Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WinSemi's Resolve webcast conference for the first quarter of 2025. My name is Joe Sun, spokesman and associate vice president of finance in WinSemi. Joining me on today's call is Steve Chen, general manager of corporate administration. Today's call is organized into three sections. First of all, Steve will comment on the company's results and provide brief guidance for the second quarter of 25. Secondly, 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 and the webcast window throughout the conference. Before we begin, I would like to draw your attention to the safe harbor notice on page 1 of the presentation slide. 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 the forward-looking statements going forward. Now, let me hand over the call to Mr. Steve Chen, the General Manager of WinSemi.

Thank you, Joe, and welcome, everyone. WinSemi consolidated revenue for the first quarter of 2025. It was $20,000. 3576 million Down 4% quarter on quarter and 20% year on year Roughly in line with our previous expectations Capacity regulation of Semiconductors Waiver foundry held steady at approximately around 35% Similar to the prior quarters However due to less favorable product mix. We think this individual growth margin was 21.9% and consolidated growth margin was 16.7%. Thus, the consolidated operating margin was negative 6.1%. Net profit contributed to the present company for the first quarter was NT $1.6 million and the EPS was NT $0.04. Reviewing revenue changed across product segment in the first quarter. The cellular and Wi-Fi segment began to recover after hitting a through in the fourth quarter of last year. Wi-Fi PA was driven by the growing adoption of Wi-Fi 7, while the server PA benefit from the government subsides in China. As a result, both segments host modest quarter-on-quarter growth. The high-margin infrastructure segment is appearing better than expected coin demand from the customers in the fourth quarter of last year. In the first quarter, revenue of this segment remained in line with last year's average level, representing a slightly decline compared to the previous quarter. As for the other high-margin segment, optics, Customer inventory build up in the third quarter and first quarter of last year for the new product launch chapter of in the first quarter. With the seasonal slowdown, this segment records the largest quarter-on-quarter decline in this quarter. As we enter the second quarter of 2025, The global markets are increasingly overshadowed by concerns over the implementation of the reciprocal tariffs by the United States. Despite ongoing uncertainty, our business with customers has stayed unchanged thus far. While the outlook of the tariffs remains unclear, we remain We will maintain operational flexibility and continue proactive communication with both customer and supply chain. We will also work closely with our customers to stay focused on meeting demands in the mainstream market. We are optimistic about the Wi-Fi market as the growing adoption of the Wi-Fi 7 continues to thrive. driven our campaign for getting outside wafer. The trend already translate into solid growth of our Wi-Fi peer revenue that year and we are confident that the momentum will carry this year. Over the medium to long term, the infrastructure market represents another core area of focusing for our business. In particular, as AI continues to driven certain global demand for bandwidth and data traffic, improving the connectivity, quality, quantity of the low Earth orbit, which is a Leo satellite, has become a key priority for the industry players. WinSami's game technology also provides customers high frequency high-voltage solutions and we have identified promising business opportunities in this area. At the same time, AI is also bringing renewed momentum to the object structure, which makes the volume of the data following data center and from the cloud to the edge devices. The process of converting electrical signal to optical signal and the voice via the has made the three-foot compound semi-compound increasing critically. This represents another growth opportunity that WeSemi has been actively copyright in the recent years. Looking ahead to the second quarter of 2025 Consolidated revenue is expected to grow by approximately low change quarter on quarter with consolidated growth margin expected to be around high teens to low twenties level. I will turn the call back over to Joe. Thank you.

Okay, thank you. It's our pleasure to present our financial results for the first quarter of 2005. Please also can refer the presentation slides. Remember to read over the Fed Harbor notice in page two. And I will started from page 5. Page 5 is talking about revenue and the margin trend. In June 1, 2025, our consolidated revenue was 3.58 billion. QOQ was down around 3.5% and YY was down around 20%. The due to unfavorable product mix in Chuhuan and under the same agitization rate quarter to quarter which is 35% Winsani's individual gross margin was 21.9% for our wafer foundry business they are consolidated therefore our consolidated gross margin become 16.7% and consolidated operating margins become negative 6.1% which is decreasing by 3.7 and 4.8 percentage points compared to last quarter and Not normally, in our earnings call, at this moment, the investor will ask him about how about our China customers listed stock impact this time the gross margin. I will share with you that because the stock price for our China customer stock price in the end of December 31st and end of March 31st the stock price is almost the same so the impact is very very limited and then Page 2, Page 6, talking about the earning trend. Because of the number of items, the positive number of income. So in June 1 of 25, our net profit is attributable to the parent company. was $16 million. And the Q1's EPS became $0.04. That's the earnings for Q1. And next page, we discussed about the product mix. Things that we have measured Corp Corp Corp Corp Corp Corp Corp Corp Corp and a little bit going down and the majority went down as the optical business because most of the high season rent up is over for the specialty 3D sensing product. On the other hand, the federal business and the Wi-Fi business has been through the trial in last April. We see both the federal Wi-Fi business return to positive growth. As Steve has mentioned, we believe it's because of Wi-Fi 7 trend is driving the adoption and also coming a benefit from government subsidy in China and this is about Q1 product mix and next page we will discuss about the guidance in page 8 Although Steve has already mentioned our guidance for Q2, I not only will repeat it, but also I will give a little bit of cover for you. First of all, we expect Q2 2025 to consolidate the revenue to increase about low teams of CO2 basis. We do see that because of the second half new product launch in the end market, we already see some customer already doing the inventory preparation at started from Q2 and so therefore we see probably the most significant growth for the in Q2 of the Wi-Fi business and the second The second stronger business will be in Q2 will be the optical business. Although the 3D sensing, we see that the 3D sensing revenue probably will be very in line with Q1, but non-3D sensing business looks not too bad in Q2. So, in total, of course, it may have some 3D sensing preparation, inventory preparation in Q2 at the same time, but we see strong 3D sensing business in Q2. that makes the optical vision become the second stronger among our product mix. And the third one will be the value of business. We believe that it should be also related to the new portal launch in the second half in the end market, from the end market, and there's a lot of customers already doing the inventory tool. And then finally, the infrastructure, we see, because most of the case of infrastructure will be a project-based, so we see infrastructure business in Q2 will be slightly down a little bit. So that's a problem for our guidance for Q2 revenue. And because of that, we believe that the The QQ utilization will be going up compared to Q1. But the product mix probably won't be better than Q1 because the mix is stronger. You guys know that Wi-Fi and cellular is high volume, low volume business, and then they both are going up in Q2. So the product mix is probably not won't be better than Q1. But therefore we believe that the growth margin, consolidated growth margin for Q2 will be around the level of high teens to low 20s. That's Q2's guidance. And then Then we can quickly go through our financial statements, starting from H-10. And then, first of all, I still want to remind everybody that all of the figures in our presentation is based on the audited basis. The actual results should be based on CPS report The income statement Q1 2025 the net revenue was $3,576,000,000 and the CO2 was down around 3.5% and YY down 20% and next the growth profit was 598 million and the gross margin for consolidated basis was 16.7% and because of revenue revenue went down and operating expense went up a little bit it become 815 million NT therefore that operating expense operating expense ratio went up around 1%, became 23%. And therefore, the operating loss was 217 million NT. The operating margin became negative 6.1%. And thanks to the non-up item there is a non-up raising income around $156 million so therefore the loss before the income tax was $51 million and together with the income tax expense and therefore The net loss was 63 million NT and the net margin became negative 1.8%. And the profits attributable to the parent company was 15 million NT dollars. Therefore, the EPS for this quarter was 0.04 NT dollars The ROE return on equity was 0.2% and probably utilization rate in line with last quarter which is 35% Depreciation expense the trend is going down is going down from now, and then we see a little bit lower than last quarter, become $1,106 million. And the car tax is also only $91 million, which is a majority for maintenance purposes. Okay, and... Next page, page which is page 11, is the detail for the non-op item, which is the major item, still the foreign exchange can, and also interest expense. And my last page will be page 12. which discussed about the balance sheet. The consolidated balance sheet dated March 31st. The cash in the cash equivalent becomes $5,546 million. The total assets was $61,949,000. And the total liability was the $24,668,000,000. And the common stock remained the same as last quarter, remained the same. And then, so the total equity was $37,281,000,000. The full value of the share was $85.68, and not unchanged. and then finally the key financial index the current ratio was 252% which is better than last quarter and the debt ratio is a little bit higher than last quarter become 40% but it's very minor okay then this is my My portion? Okay, and then, now, thank you. We now begin the Q&A, so please submit your question in the input box on the webcast window now.

Okay, I think here we will, the first question we'll answer that to be that several investments more want to know is the tail rate impact for wind saving. I think after we check most of our revenue, I think we only have a very few revenue, which is almost a very, very low single digit revenue. is related to direct shift to USA and most of them that is not the mass production for that is those of whether we shift to USA mainly for some use sample or for the R&D purpose for different customer so actually I think based on Right now, the current type of situation, I think the impact for Wi-Fi directly should be very, very low. But will that have some other impact in the future? I think there's a lot of uncertainty right now, but we will watch that very carefully. Thank you. Okay, that's the other question we want to know about our optical revenues breakdown. Yeah, like we in the recently conference we already share with the investor that right now our non-3D sensing revenue taking more percentage in our optical revenue. I think two years ago, the 3D sensing revenue may be taking 90% of our total optical revenue. But right now, I think our non-3D sensing optical revenue is already taking around like 40% plus and minus, quarter by quarter is a little different, but roughly that will be around like 40% to the total optical revenue. Yeah, so which means right now for WinSIM is optical application or technology is not only for the 3D sensing we have found the other 40% optical revenue that's coming from the traditional optical communication and even the LiDAR applications and that's the reason why although we the revenue for 3D sensing may be going down because of generation by generation for our end customers, but actually we still can keep certain level of our optical revenue. Thank you. Thank you.

There are a couple of questions asking about Wi-Fi for this year, or I should say recently. I think we see a positive about Wi-Fi business since last year. We see significant growth last year and then we also are optimistic about this year. The reason why is because our Wi-Fi business is divided into like the application in the stereo phone and also application in the Wi-Fi router. And so we have We have, I think the majority of the Wi-Fi PA in the smartphone is the majority is coming from the U.S. end customer, which is every year is the new for the launch will be the most of the momentum. Our customer has taken a very good share in the recent years. And another momentum is because of Wi-Fi router. I think Wi-Fi router business, we have US IBM as our customer, and also we have China customers. They are also very aggressive in the market and I think for the rest of the years due to the Wi-Fi's violent adoption we see the strong adoption and it's driving the demand for our Gaia Marconi PA waiver demand and That's the major part of our Wi-Fi business. Thank you.

Okay, I think that there are some questions related to our optical business. I think for our optical business, I think the customer definitely is not the same as our original RF business. yeah because of this besides the city fencing that's most of the application is the traditional optical communication application so for this category our customer that will be Corp Corp Corp Corp Corp Corp Definitely we also keep very closely collaborate with them for the traditional optical communication devices to see any kind of project we can collaborate together and also for example like are our customers at the program. Yeah, they also have a very good sales revenue for the opticals and definitely we will keep investing our resources for R&D and to try to have more engagement with those kind of existing customers and some new project with the Existing or potential optical players. Yeah.

Thank you We know further question in a slot and We will wait another two minutes, thank you Okay, there's no further questions in the slides. So now, thank you very much for your participation in WinSemi's conference. And there will be a webcast replay within hours. So please visit www.WinFoundry.com under the Investor Relations section. Thank you very much again and you may now disconnect. Thank you very much and goodbye.