Win Semiconductors Corp

The investor conference is about to begin. Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to Winsami's Resolve Webcast Conference for the fourth quarter of 2025. My name is Joe Teng, spokesman and associate vice president of finance in Winsami. Joining me today's call are Kyle Chen, Our CEO and Steve Chen, the General Manager of Corporate Administration. Today's call is organized into three sections. First of all, our CEO, Kyle, will comment on the company's resolve and provide brief guidance for the first quarter of 2026. Secondly, I will go through the operational process analysis over the past two years and the financials in details. And General Manager Steve Chen will have the industry outlook to share with you. 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. 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 this forward-looking statement going forward. Now, let me hand over the call to Mr. Kyle Chen, our CEO in WinSemi.

Thank you, Joe. Hi, everyone. Welcome to join this call. For the fourth quarter of 2025, WinSemi reported consolidated revenue of the 4.794 billion NT dollars. It's up about 7% of quarter on quarter and up 29% year on year, slightly exceeding the previous expectations. Individual gross margin for the quarter was 35.1%, improving by 6% from the previous quarter. which consolidate gross margin reach 31.8. It's up about 4.9% sequentially. Capacity utilization you keep steady about 60%. It's consistent with our previous quarter. The improvement in this gross margin was primarily driven by A more favorable product mix with an additional contribution of approximately 0.5% from the relevant profit generated by a list of Chinese customers held by our consolidated subsidiary. As a result, consolidated operation margin reached 33.9%. Net income attributable to the parent company for the fourth quarter was $1.029 billion NT dollars, and the EPS was $4.43 NT dollars. For the four years of 2025, accumulative revenue reached $16.2 638 billion NT dollars. It's about down 5% year on year. And the full year's EPS was 4 NT dollars. Okay, now I will review the detail of the fourth quarter. For the fourth quarter, let's divide it by the four major application segments. Firstly, it's infrastructure. is still sustained strong momentum from the previous quarter and remains a strong performing segment with continued revenue growth. Secondly, in terms of the Wi-Fi, as the peak season of the US-based flagship smartphones came to the end and the router market remains soft, So Wi-Fi revenue declined slightly. Third one is a cellular PA supported by better than expected end-market sales rules and recovery in demand from the Android smartphone PA customer. Cellular PA revenue remained flat. Last one is the optical segment. driven by a relatively laser inventory build cycle for smartphone 3D sensing applications as well as engineering revenue from the project development of AI optical communication demand momentum extended to this quarter so in total resulting in continuous growth in optical revenue so overall Although the full-year 2025 revenue was slightly lower than previous year, when Semiconductors have shifted meaningfully, the business focus has gradually moved away from the mature smartphone market to aerospace, infrastructure, and AI data center applications. which offer higher value-added content and greater technological complexity, close aligning with the core strengths that we have been long invested in developing. Looking ahead to the 2026 this year and even further in the future, as AI-driven data growth accelerates and the space-based economic expense. Both the demand for ultra-high bandwidth and low latency in AI optical communications and the need for broad coverage and high-speed transmission in low SOB, so-called LEO satellite network, rely heavily on the superior material properties and performance of the compound semiconductors. Our competitive advantage and strategy in compound semiconductors are built on many years proven mass production experience as well as long standing co-developing partnership with leading global customers. Enable us to offer comprehensive and differentiated portfolio for advanced process technologies. With a stable mass production management, we are also the only compound semiconductor foundry in this industry that provides a truly turnkey solution, deliberately integrated service from the upstream architectural structure design to downstream testing. By leveraging and replicating the successful business model established in the wireless micro-communication, we are extending this capability into high-growth markets, including the AI optical communication, optical sensing, and the rapid developing satellite sector. This integrated approach enables customers to shorten developing cycles and accelerate time to market. In AI optical communication, we are currently engaged in joint developing projects with multiple optical communication customers, supporting our continuous revenue growth in the year ahead. Looking ahead for the first quarter this year, 2026, due to this traditional low season, few working days, and when 3 Feb is for the annual maintenance. So our focus is the consolidated revenue is expected to decline by high single digital quarter on quarter. with a consolidated gross margin expected to be around mid-20s level. So now I turn the call back to Joe.

Okay, let me go to the operational analysis and also the Q4 review. Thank you, Kyle. welcome everybody then please turn the page to okay from the very beginning please read it over the same proper notice and then pages three the pages three is our ESG achievement we keep updating the ESG award including DJSI and also Taipei Exchange listed the ranking. And now please flip to the page four and page five. We're going to share with you that in the past two years, the operational review, and I think for business and the revenue review, I'm going to leave it to Steve later in his report. And then I will focus on, first of all, the operation expense. on page 5. As you can see that in the past two years, our all packs have been kept at a stable level around 800 million NT plus and minus. Even in the period, we may suffer some kind of downturn, but or even in the second half, we have a better utilization rate, but we intentionally to control the OPAQs. But we also allocated around 50% of the OPAQs to R&D to input more resources into the new technology or new application for the future growth that we have to do. On the right-hand side, I'm gonna show you the operational cash flow and the CapEx. In the past two years, Even during the period of Q4-24 to the Q2-25, we suffered a loss. We were having a downturn at that time, but we're still keeping our operational cash flow positive. And then even in the second half, Entering the second half of 25, we have a better utilization and a better business. We still manage the operational cash flow very well. And then on the same time, we also manage the car packs in the past two years. Also disposing the idle assets and the You can see that starting from the second half of 25, we have a little bit higher of a car tax. That's the project-based car tax. That's for a new demand and a new opportunity to work with our partner and the customer. Okay, please flip to the next page, page six. This page, on the left hand side, you can see the depreciation expense trend. In the past two years, the depreciation expense the we we intentionally to have a control the car park so that we have less pressure of the depreciation expense and even in the second half I can see that we already the depreciation already passed the peak and the depreciation expense is going down significantly entering the 2025 and then also reducing the fixed cost burden on the same time and especially the second half for The single quarter even below 1 billion NT for each quarter. We also improved the product mix and also the cash flow. by lowering the depreciation, amortization, etc. And we're still keeping the operating cash flow positive. And on the right-hand side, we're going to show you The utilization rate, see that in the past two years, quarter by quarter, we may suffer the up and down, but the second half of 25, we're coming back to around 60% of the utilization rate, and with the revenue ran up, the the revenue ran up, the utilization also ran up. You can see we haven't reached the peak of the previous, the peak which is in the second, the Q2 of 24, but our gross margin is already exceed the level at that time. That's because We have a better product mix together with UT utilization, a better utilization, and then pushing the gross margin also become better. I think that we're doing a lot of things to moving the business to the high margin business. Okay, then we come back to the Q4. Please step to the page 8. The Q4-25, our consolidated revenue was $4,794,000,000. QOQ was up 7%, and YOY was up 29%, and mainly driven by the High-margin product for example like infrastructure and optical electronic Business and then even the even though the smartphone the q4 is of the Inventory pool is entering the the in almost the end, but it looks like the new model, flagship model of smartphone seems to be selling better than expected. The decline for cellular and Wi-Fi is limited. At the same time, the Android cellular phone has a better performance. That's making our growth margin improve. As we mentioned, the utilization maintained at 60%, but because of favorable product mix, the individual growth margin was 35.1%. In addition, The relevant profit generated by the listed stock by a founded Chinese customer held by our consolidated subsidiary contribute 0.45 percentage point to our gross margin. So as a result, our consolidated gross margin at Q4 become 31.8% and operating profit margin was 13.9%, which each one was increased by QOQ increased by 4.9 and 5.3 percentage point compared to Q3, which is for those Those are better than our earlier expectations. And please flip to page 9, talk about the earnings. Because of the growth margin improvement, also operating ratio stable, the The net income attributable to the parent company reached around 1029 million NT for the Q4. In the whole year of 2025, it was 1694 million NT. The Q4 EPS was $2.43. and the whole year of 2025 was a $4 NT. Okay, that's for the bottom line. And please flip to the page 10, talk about our product mix in Q4. Our product mix, okay, the Q4, Q4, you can see that our CEO mentioned that we are moving our product mix gradually to the more favorable to our gross margin and profit for a period of time. So you can see that Q4 is very clear that the infrastructure increased the most at the expense of cellular PA and the Wi-Fi also going down at Q4, another growth happened at optical electronic business. For optical business, because of 3D sensing ran up later than other segments for the flagship smartphone, so there's still a good performance in Q4. and compared to last quarter. Okay, then finally we go to the guidance. I think Kyle has mentioned that we're going to repeat again. For the Q1 26, because of the traditional low season and also less working day, in addition we have annual maintenance. So We expect that consolidated revenues are going to decline high single-digit QOQ. And also Q1's gross margin, we expect it will be around the level of the mid-20s for the gross margin. And if we separate different segments of the product, we probably will see that except cellular PA will be growing in Q1. The rest of infrastructure, Wi-Fi, and optical electronic will be entering the low season and will not be higher than Q4. Okay, then we can go through our financial statement. Okay, the page 13 for the those are the, I have to remind everybody this on an audited basis, the actual results should be based on the CPA's report. Okay, the revenue for Q4 of almost 4.8 billion NT, QOQ up 7%, YY up 29%, and the gross margin was 31.8% compared to 26.9% in Q3. And operating ratio keeping the same at 18% last quarter, So the operating margin become almost 14% compared to 8.6% last quarter, which is better. And the non-op item was gained around 437 million NT. We have detail in page 15 for your reference. The income before income tax was almost $1.1 billion NT. The income tax expense was $142 million NT. Therefore, the net income became $960 million NT. QOQ was up 40%. Net margin was 20%. compared to Q3. Q3 was 15.2%. And then the net profit attributable to the parent company was 1.1 billion and 29 million NT. So therefore, the EPS was $2.43. and return on equity is 10% and utilization, same as last quarter, 60%. Depreciation expense keep going down, become 827 million, a capex of 372 million, also lower than last quarter. That's Q4. And please flip to the page 14. Page 14 talks about the whole year of 2025. The total revenue for 2025 was $16,639,000,000. The YOY was down slightly, around 5%. And the gross margin for the whole year was 24.2%, one percentage point higher than last year. and OPEX ratio equivalent to 20%. So operating margin become 4.3%. And non-op item 672 million NT. The income before income tax was 1387 million NT. So therefore the net income become 1090 million NT therefore net margin was 6.5% compared to 1.9% last year. The net profit attributable to the parent company was 1,694,000,000 therefore the EPS become $4 NT even. The return on equity for the 2025 whole year was 4.3%. The whole year's utilization equivalent to 50%. The depreciation expense was $3,907 million, which is lower than last year. and CarPax a little bit higher than last year was $1,691 million. And normally, we will provide some kind of depreciation expense and the CarPax guidance for 26. Depreciation expense, we expect It will be going down around 10% to 20% at 2026. And the car parks for the whole year 2026, we also expect probably will be 2 billion NT plus and minus. OK, then please flip to the page 15. talk about the non-op item. I think it's quite straightforward. The total non-op item was a gain on 437 million NT dollars, including the foreign exchange gain and the financial cost, which is the interest expense. That's pretty straightforward. Okay, then finally, last page will be the balance sheet. I think the cash equivalent was $7,067,000,000. And total assets was $60,729,000,000. And total liability was $18,738,000,000 NT, and common stock remained the same, so total equity become almost $42 billion, compared to almost $40 billion at September 30th. Okay, then, therefore, the full value per share at December 30th was $98 NT compared to the $93.12 at September 30th. The key index including current ratio was 248%, not much different than the September 30th. debt ratio was the same, exactly the same as last quarter, which is 31%. Okay, this is pretty much what I have. Okay, thank you, and then I will hand over the call to Steve Chen, the General Manager of Corporate Administration.