Win Semiconductors Corp

Good evening, ambassadors. We're there where you are. Welcome to Winsami's Results Webcast Conference for the first quarter of 2026. I'm Ava Shi, the Department Manager of Finance of Winsami. And we have 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, 2026. Secondly, I will go through the financial results in details. After that, we will open the floor for Q&A. Please freely submit your question in the input box. on the webcast window throughout the conference. Before we begin, please pay attention to the safe harbor notice on the page two of the presentation slide. Thank you. Please note that this presentation contains forward-looking statements and all of the financial figures hasn't been audited yet. These statements are based on our current expectations. Actual results may differ maturely from our expectations, and the company undertakes no obligation to update these forward-looking statements going forward. Now, I will hand over the call to Mr. Steve Chen, General Manager of WinSemi. Thank you, Yvonne.

and welcome, everyone. For the first quarter of 2026, we reported consolidated revenue of $20, $4.59 billion, down 4% quarter-on-quarter and up 26% year-on-year, slightly exceeding previous expectations. The SEP capacity utilization rate still holds steady at 60%, consistent with the previous quarter. As expected, a slightly less favorable problem is compared to the fourth quarter result in the individual growth margin of 32.2%. Down 3% point, sequentially, while consolidated gross margin was 26.3%, also declining by 5.5% quarter on quarter. As a result, consolidated operating margin decreased from 13.9% in the prior quarter to 9.4% this quarter. The net income attributable to the parent company for the first quarter was $533 million, and EPS was $1.26. Looking back at the first quarter of 2026, the optical segment sold the largest quarter-on-quarter decline. Many due to the seasonal stoppiness in the smartphone 3D printing demand as the U.S. model is moving into the off-season. The higher-margin infrastructure segment remains diversified, which continues to demand momentum from data center-related applications. Although shipment in the other application declined during the quarter, in Wi-Fi, certain router shipment were impacted by memory shortage, resulting in a slightly decline in revenue. Among the four major product segments, only cellular PA with records sequentially grows in the shipment. Support by recovery in global demand for mid to high-end smartphone models. Overall, the change in product needs were in line with our previous expectation. As we move into the second quarter of 2026, our smartphone business will continue to focus on mid to high-end models. The current memory shortage has a more limited impact on this segment compared to the low-end market. And therefore, we remain constructive on our cellular PA business. In addition, as demand for AI computing continues to grow and technology evolves, optical transmission has become an increasing important trend. Compound semiconductors play a critical role in optical modules, and we are seeing strong demand in this area. This reflects our long-standing technology leadership and manufacturing skill in compound semiconductors, as well as our position as a leading one-stop solution provider in the industry. covering the full value chain from epi design to the testing. Finally, infrastructure has become another key pillar of our successful transformation in recent years. Our customer base has become increasingly diversified across our space, Satellite Data Center and 5G Infrastructure We see strong potential in the commercial adoption of low-earth orbit satellite communication in smartphones. Combine the continuous adoption of higher-frequency technology These will further support our growth and enable us to leverage our strengths in the emerging space economy. Looking ahead to the second quarter of 2026, the customer demand strength and consolidated revenue is expected to increase by meeting quarter and consider that gross margin expects to be around the high 20 level. I will turn the call back over to Ava. Thank you.

Thank you, Steve. Let's move to the page three of the presentation slides. Here are our ESG achievements so far. We ranked in the top 5% among TPEX listed companies for corporate governance evaluation from 2015 to 2025. We also recognize in the ASI World Index from 2020 to 2024. And the 2025 DJSI World Index component list will be available in May. We will update the data later. Please move to the page five of the presentation slide, Revenue and the Margin Chain. The first quarter revenue was $4.59 billion, down by 4% quarter over quarter, and up by 28% year over year, slightly ahead to our first quarter guidance. And also, this is the best-performing first quarter since entering the smartphone inventory adjustment cycle from 2022. First quarter 2026, capacity utilization was around 60%. Remains flat than that quarter. However, due to a slightly less variable product mix, First quarter individual and the consolidated gross margin was 32.2% and 26.3% respectively. And the consolidated up income margin was 9.4%. Compared to the previous quarter, first quarter consolidated gross margin and open income margin declined by 5.5% 4.5 percentage point respectively. You can refer to the following chart on this page regarding to the quarterly margin chain. Compared to the last quarter, all of the gross margin, open income margin, and the net income margin of first quarter went down sequentially. But we can see very significant improvement compared to the first first quarter of 2025. Let's move to the page six earning channel. Compared to the fourth quarter 2025, first quarter is traditionally low season and the consolidated revenue and up income declines sequentially. Overall, our first quarter net income attributable to parent company was 533 million NT dollars. EPS was 1.26 NT dollars, both showing significant year-over-year growth trend. In the first quarter of last year, we only maintained breakeven. Our net income attributable to the parent company was around 16 million NT dollars. In the first quarter this year, our earnings have increased significantly. Our net income attributable the parent company was more than 30 times higher than the first quarter of 2025. For the non-operating items, I will bring you more detail later. Let's move on to page seven. Predomics In first quarter, both cellular and infrared accounts for 30 to 35 percent, and Wi-Fi accounts for 15 to 20 percent of total revenue. Due to recovery in global demand for mid- to high-end smartphones, the revenue from cellular enjoyed pretty impressive growth in the traditional low season. So the share of cellular revenue increased. However, no matter Wi-Fi, infra, or optical, have all grown compared to the first quarter last year. In addition, for your better understanding, we start to list the proportion of optical revenue separately from this year. In the first quarter, opticals takes around 5% to 10% of total revenue, which mainly contributed from 3D sensing. in first quarter. Let's move to page 8, Guidance. Just as Steve mentioned, support by customer demand strengthens. We expected second quarter 2026 consolidated revenue to increase meetings quarter over quarter. And also, with more profitable part on this and the capacity utilization. We expect it second quarter 2026. Consolidated gross margin will be around the level of high 20s. Let's move to page 10. The consolidated statements of comprehensive income. In first quarter 2026, although revenue, gross margin, open income margin, and net income went down sequentially in traditional law season, but compared to the same period last year, we have recovered significantly profitability. It can be seen from the significant improvement in the growth margin and the open income margin rate. Growth margin accounts for 26.3%. Open income margin accounts for 9.4%. Net income margin accounts for 9.8%. Finally, EPS reaches 1.26 NT data. In addition, utilization is around 60%, which is much higher than 35% first quarter 2005. Depreciation expenses continue to decline. Total depreciation expenses account for 772 million NT dollars. Meanwhile, we continue to focus on project-based capital expansion, such as optical organ-related. Total CAPAS accounts for 884 million NT dollars, significantly increased compared to the same period last year. Okay. Let's move to page 11, non-operating items. First, due to the significant appreciation of the U.S. dollar this quarter, there was an exchange gain of approximately 182 million NT dollars. However, because some financial assets invest in the last quarter distributed dividends. The net value in the first quarter declined, resulting in recognized valuation losses. But this is not an abnormal change. Overall, loss on financial assets at fair value through profit or loss accounts for $122 a million NT data. In total, the non-operating income and expenses for this quarter account to 101 million NT data. Please read virtually slide 12 of the presentation consolidated balance sheet. Overall, our financial status has not changed much. The total assets of this quarter are 60.56 billion NT dollars, not much different from 60.73 billion NT dollars in last quarter. The total liabilities are 19.27 billion NT dollars, also not much different from $18.7 billion in last quarter. Our current ratio is maintained at 223%, and the liability ratio is 32%. Overall, our financial structure remains sound this quarter, This is all I have for my presentation. Thank you. We now begin to Q&A section. Please submit your question in the input box on the webcast window.

Okay. I think right now I will first have give more picture about Q2's growth momentum for each segment. Yeah, I think and actually we will have double digit growth for Q2. And so actually I think all four segments was increasing quarter-on-quarter but what we see is that Wi-Fi may be as low as one, maybe very, very low, just a little better than Q1. And besides Wi-Fi, I think most of the segments, they will all have double-digit growth, no matter cellular, infrared, and optical. Especially optical, I think because of the momentum is keeping revving up, so we see optical maybe will have the biggest growth for Q2. Yeah, I think that's the whole segment for the picture about Q2. Thank you. Okay, I think recently there's some news about our CapEx expansion. I think, yeah, definitely, originally we have around 43 six-inch GaN capacity equivalent, and that will include our four-inch non-meter GaN nitride or indium phosphide capacity included. Semiconductors Corp Semiconductors Corp limited capacity. So, like we report to the investment from the last conference call, we already say, we already see some progress no matter for the VIXO, CDM, and even our for the aerospace applications. adoption is keeping going up, so definitely this year we will increasing more capacity for our 4H9, no matter which kind of material. So that's the reason why some of the news in the market will say we will have more than double this kind of time, double time, couple times up our capacity. Uh, that's mainly because of, uh, our Indian phosphide and the canine nitride capacity in P4 is not bigger, especially Indian phosphide, uh, because, uh, uh, in P4, I think it's all for the NIE stage. Uh, and this year we already have some, uh, progress for the Indian phosphide, uh, especially our PD application that will be mass production in this year. So definitely we need to prepare more capacity for that.

Yeah.

and talking about the status, I think, for communication. I think this year the PD will make production, and LD, I think, as we just mentioned in the previous conference. Right now, the spec, our device is O, is already meet the spec in the market demand. Yeah, but the reliability is very low and that's the tailor-made project by customer. So I don't think LD will go to the mass production this year. I think this year we're still in the qualified and reliability test stage. Yeah, and so we will see LD for the Corp Corp Corp Corp Corp Yeah, so right now we already see the infrastructure product needs have to be changed after the deal adoption. In before, I think the base station may be taking the majority of our infrastructure and revenue, but right now we see the whole aerospace application is already taking more than 30% of our Infrastructure Revenues. So I think it all indicates that the more diversified and more better product needs for our applications. Thank you.

Please submit your question in the input box on webcast window.

Okay, it's a question about how the full year look for 2026. I think it's really hard for us to have a whole year prediction because usually our customer just Press the order by the cycle type. And I think even we have more diversified product mix right now, but the smartphone-related revenue is still more than 50% is related to that. So it's always a very big up and down quarter by quarter. Yeah, so... In order to give a more precise picture, I think we will update our forecast quarter by quarter in order to avoid any misleading to the investor. Sorry for that. Thank you. Okay, that's the other question about one of, want to know better about one of our customer for optics. But I'm sorry, as the IR, I don't think we have the position to comment our space, the individual customer. No matter their order or their spec, I don't think it's suitable to make some comment here. Sorry.

There are no further questions. Thank you for your participation in WinSami's conference. There will be a webcast replay within hours. Please visit www.winfoundry.com under the Investor Relations section. You may now disconnect it. Goodbye.