Socionext Inc. · TSE:6526
Socionext — Q2 FY2024/3 Earnings Presentation
51 slides from Socionext's earnings presentation, Oct 31, 2023
Slide 1: 2Q FY2024/3 Consolidated Financial Results
2Q FY2024/3 Consolidated Financial Results October 31, 2023 Socionext Inc.
Slide 2: Disclaimer
Disclaimer This presentation has been prepared solely for the purpose of presenting relevant information regarding Socionext Inc. (“Socionext”). This presentation and the information contained herein does not constitute or form part of any offer for sale or subscription of or solicitation or invitat
Slide 3: Cautionary Note Regarding Design Win Amount and Design Win Balance
Cautionary Note Regarding “Design Win Amount” and “Design Win Balance” Cautionary Note Regarding “Design Win Amount” and “Design Win Balance” The calculation of “Design Win Amount” and “Design Win Balance” involves a considerable degree of future estimation and subjective judgment, including assumpt
Slide 4: Consolidated Financial Results for the 6 Months Ended September 30, 2023
Consolidated Financial Results for the 6 Months Ended September 30, 2023 ─ Actual Consolidated Financial Results 2Q FY24/3 Results ─ Consolidated Earnings Forecast
Slide 5: 2Q FY24/3 Consolidated Statements of Income
2Q FY24/3 Consolidated Statements of Income (Yen in billions) FY23/3 FY24/3 1Q 2Q 3Q 4Q 1Q 2Q YoY YoY % Net Sales 39.9 42.8 56.1 53.9 61.4 55.5 12.7 29.7% Product Revenue 31.0 35.3 43.9 46.5 52.9 48.5 13.2 37.5% NRE Revenue 8.7 7.4 11.5 7.3 8.4 6.8 -0.5 -7.1% Others 0.2 0.2 0.6 0.2 0.1 0.2 0.0 1.6%
Slide 6: 1H FY24/3 Consolidated Statements of Income
1H FY24/3 Consolidated Statements of Income (Yen in billions) FY23/3 FY24/3 1H 1H YoY YoY % Net Sales 82.8 117.0 34.2 41.3% Product Revenue 66.3 101.4 35.1 52.9% NRE Revenue 16.1 15.2 -0.9 -5.4% Others 0.4 0.3 0.0 -5.9% Cost of sales 42.0 62.7 20.8 49.5% Selling, General and Administrative Expenses
Slide 7: Quarterly Net Sales and Operating Income
Quarterly Net Sales and Operating Income Net Sales1 Operating Income1 （Yen in billions） Operating Income （Yen in billions） Product Revenue including Margin 15.0 Special Demand 61.4 NRE Revenue 56.1 55.5 16.5% 53.9 8.4 15.4% Others 6.8 14.0% 11.5 7.3 42.8 10.0 39.9 11.4% 11.2% 7.4 31.8 8.7 8.9% 8.0%
Slide 8: Details of 2Q FY24/3 Financial Results - YoY Changes
Details of 2Q FY24/3 Financial Results - YoY Changes Net Sales & Operating Income Operating Income YoY Analysis （Yen in billions） Operating Income （Yen in billions） （Yen in billions） Product Revenue including Margin Special Demand 6.1 -0.8 15.4% -2.6 NRE Revenue 55.5 6.8 0.9 42.8 11.4% 7.4 48.5 8.6
Slide 9: Details of 1H FY24/3 Financial Results - YoY Changes
Details of 1H FY24/3 Financial Results - YoY Changes Net Sales & Operating Income Operating Income YoY Analysis （Yen in billions） Operating Income （Yen in billions） （Yen in billions） Product Revenue 12.6 -1.5 including Margin -4.6 Special Demand 16.0% NRE Revenue 117.0 1.7 12.6% 15.2 82.8 16.1 18.7
Slide 10: Details of 2Q FY24/3 Financial Results - QoQ Changes
Details of 2Q FY24/3 Financial Results - QoQ Changes Net Sales & Operating Income Operating Income QoQ Analysis （Yen in billions） Operating Income （Yen in billions） （Yen in billions） Product Revenue including Margin Special Demand NRE Revenue 16.5% 15.4% 0.7 -1.8 61.4 -1.9 8.4 55.5 1.4 6.8 10.1 10.1
Slide 11: Consolidated Balance Sheet (As of September 30, 2023)
Consolidated Balance Sheet（As of September 30, 2023） Cash on Hand and in Banks (Yen in billions) (Yen in billions) As of As of Change Mar.31,2023 Sep.30,2023 Total Assets 193.9 178.0 -16.0 53.0 46.3 45.1 47.5 Total Current Assets 156.1 137.1 -19.0 37.2 38.1 33.9 Cash on-hand and in banks 45.1 47.5 +
Slide 12: Capex-Depreciation & Amortization / Cash Flow
Capex-Depreciation & Amortization / Cash Flow Capex1-Depreciation & Amortization2 Cash Flow2 (Yen in billions) (Yen in billions) Factors in operating cash flow change in FY24/3 1Q-2Q 8 １Q： Decreased due to bonus and tax payments ２Q： Increased due to collection of accounts receivable and 40 decrease
Slide 13: Breakdown by Application Market
Breakdown by Application Market Net Sales NRE Revenue Automotive Data Center & Networking Automotive Data Center & Networking Smart Devices Industrial & Others Smart Devices Industrial & Others 100% 100% 14% 23% 21% 24% 21% 32% 80% 41% 41% 80% 39% 39% 44% 50% 50% 57% 30% 21% 28% 24% 29% 60% 60% 22%
Slide 14: Breakdown by Geographic Region
Breakdown by Geographic Region Net Sales NRE Revenue US China Japan Others US China Japan Others 100% 100% 10% 7% 9% 10% 7% 8% 12% 12% 11% 12% 11% 19% 18% 21% 80% 80% 26% 31% 44% 38% 36% 17% 51% 52% 60% 59% 60% 66% 63% 21% 71% 56% 55% 25% 22% 20% 40% 40% 33% 42% 24% 18% 17% 45% 20% 20% 16% 37% 40% 1
Slide 15: Breakdown by Process Node
Breakdown by Process Node Net Sales NRE Revenue 5-7nm 10-16nm 20-28nm 40nm & above / Others 5-7nm 10-16nm 20-28nm 40nm & above / Others 100% 100% 10% 14% 17% 14% 22% 23% 21% 25% 29% 12% 80% 42% 80% 11% 45% 43% 18% 10% 55% 64% 19% 13% 23% 30% 60% 22% 60% 33% 30% 28% 46% 16% 28% 29% 40% 16% 40% 37% 34
Slide 16: Consolidated Earnings Forecast
Consolidated Earnings Forecast (Yen in billions) FY2023/3 FY2024/3 FY2024/3 Previous Full Year Forecast Full Year Forecast Previous Full Year Results YoY YoY % Forecast Forecast as of April 2023 as of Oct 2023 % Net Sales 192.8 200.0 214.0 21.2 11.0% 14.0 7.0% Operating Income 21.7 22.5 29.0 7.3 33.
Slide 17: Consolidated Earnings Forecast - Operating Income (vs Previous Forecast)
Consolidated Earnings Forecast - Operating Income （vs Previous Forecast） (Yen in billion) FX impact Improvement of Cost of goods manufactured rate NRE revenue R&D, SG&A Decrease in Expenses etc. Gross profit from Product revenue Forecast as of Forecast as of April 2023 October 2023 17
Slide 18: Background of Market Trend / Revised Earnings Forecast and Forecast after FY25/3
Background of Market Trend / Revised Earnings Forecast and Forecast after FY25/3 Market trend and Design win FY24/3 forecast After FY25/3 forecast ◼ Product revenue ◼ Market FY25/3-FY26/3 Automotive ◼ Product revenue − Increase in automotive, DC/Networks, and Industrials − Innovation continues for A
Slide 19: (Reference) Mid-Term Financial Targets announced in Sep 2022
(Reference) Mid-Term Financial Targets announced in Sep 2022 Mid-Term FY23/3 FY24/3 FY21/3 FY22/3 Target1 Results Estimate 214.0 Net Sales 99.7 117.0 High teen% 192.8 billion yen Growth billion yen billion yen CAGR billion yen CAGR:35% OP 1.6% 7.2% Low-to-Mid 11.3% 13.6% Margin (1.6 billion yen) (8.
Slide 20: Illustrative Image of Socionext Growth
Illustrative Image of Socionext Growth ◼ Keeping high level revenue, net sales will possibly be flat due to the end of special demand and weakening Chinese and consumer market, followed by growth acceleration driven by mass production in automotive-related business, etc. Sales growth mechanism Net s
Slide 21: Topics / Recent Development
Topics/ Recent Development ◼ Constant reconsideration of R&D structure to strengthen design and development capabilities • “Socionext Strengthens Design and Development Capabilities with New Office in Bangalore, India” (announced on 2023/8/10) • Reorganizes global design and development resources ◼
Slide 22: Appendix: Overview
Appendix: Overview ─ Consolidated Financial Statements ─ Breakdown of Net Sales (Quarterly) ─ Detail of Design Win ─ Growth Strategy ─ Company Overview and others
Slide 23: FY23/3 Consolidated Statements of Income
FY23/3 Consolidated Statements of Income (Yen in billions) FY21/3 FY22/3 FY23/3 FY24/3 1H FY24/3E Net Sales 99.7 117.0 192.8 117.0 214.0 % YoY -4% +17% +65% +41.3% +11.0% Product Revenue 73.1 84.6 156.8 101.4 - NRE Revenue 23.0 28.1 34.9 15.2 - Other Revenue 3.6 4.3 1.1 0.3 - Cost of Goods Sold (43.
Slide 24: Consolidated Balance Sheets
Consolidated Balance Sheets (Yen in billion) FY21/3 FY22/3 FY23/3 FY24/3 1H FY21/3 FY22/3 FY23/3 FY24/3 1H Assets Liabilities and Equity Cash on-hand and in banks 42.7 46.3 45.1 47.5 Accounts Payable-trade 12.0 16.6 23.4 16.0 Accounts receivable-trade, net 28.6 25.1 40.8 37.0 Accrued Expenses 7.4 6.
Slide 25: Breakdown by Application Market (Quarterly Ratios)
Breakdown by Application Market (Quarterly Ratios) Net Sales1 NRE Revenue1 Automotive Data Center & Networking Automotive Data Center & Networking Smart Devices Industrial & Others Smart Devices Industrial & Others 100% 100% 10% 9% 12% 14% 17% 23% 23% 23% 24% 30% 28% 27% 33% 35% 33% 35% 80% 40% 40%
Slide 26: Breakdown by Geographic Region (Quarterly Ratios)
Breakdown by Geographic Region (Quarterly Ratios) Net Sales1 NRE Revenue1 US China Japan Others US China Japan Others 100% 100% 6% 3% 4% 5% 6% 7% 8% 7% 8% 9% 7% 12% 11% 12% 11% 12% 11% 12% 20% 22% 31% 23% 80% 80% 17% 34% 30% 22% 43% 40% 37% 28% 13% 39% 42% 48% 48% 22% 49% 14% 51% 55% 60% 55% 60% 10%
Slide 27: Breakdown by Process Node (Quarterly Ratios)
Breakdown by Process Node (Quarterly Ratios) Net Sales1 NRE Revenue1 5-7nm 10-16nm 20-28nm 40nm & above / Others 5-7nm 10-16nm 20-28nm 40nm & above / Others 100% 100% 8% 11% 10% 11% 15% 15% 23% 23% 21% 7% 20% 21% 27% 7% 27% 31% 10% 37% 35% 80% 40% 41% 80% 13% 13% 46% 44% 24% 14% 11% 12% 30% 24% 21%
Slide 28: Detail of Design Win Amount to Revenue; Design Win Balance
Detail of “Design Win Amount” to Revenue Repeated material― Illustrative Description of “Design Win Balance” Presentation Material For FY23/3 “Design Win Balance1” ・・・ “Design win balance” (LTR; Life Time Revenue) represents our estimates of remaining accumulated “design win amount” that is associat
Slide 29: Strong Design Wins
Strong Design Wins Repeated material― Presentation Material For FY23/3 ◼ “Design Win Amount” has approximately doubled throughout our transformation since 2018 ◼ Stepping up to the next “Design Win Amount” level in FY23/3 with approximately 250 billion yen “Design Win Amount1” (LTR) acquired in each
Slide 30: Increase in the Ratio of Large-Scale Design Wins
Increase in the Ratio of Large-Scale Design Wins ◼ The ratio of large-scale Design Wins has been rising. We expect a significant portion of future product shipments will be attributable to large-scale Design Wins, which generally contribute to improve our business efficiency 1 Size : ≥¥30bn “Design
Slide 31: Design Win Balance: Breakdown of Changes
Design Win Balance: Breakdown of Changes Repeated material― Presentation Material For FY23/3 ◼ Design Win Balance increased from March 2022 with acquisition of new design wins and increase of amount for products currently in production stage ◼ Approximately 60% of current Design Win Balance expected
Slide 32: Abundant Global Design Win Balance
Abundant Global “Design Win Balance1” ◼ Design wins for projects based on advanced technologies, especially in the automotive market, from global leading customers. Our total Design Win Balance reached approximately 1 trillion yen as of March 31, 2023 (excl. special demand2) ◼ Our substantial presen
Slide 33: Design Win Balance by Application Market and Region
Design Win Balance by Application Market and Region Repeated material― Presentation Material For FY23/3 ◼ By application market: ‐ Reflecting the recent strong design wins in automotive market, approx. 30% of Design Win Balance is from “Automotive”, 20+% is from “Data Center & Networking”, and 10+%
Slide 34: Roadmap to OP Margin Target
Roadmap to OP Margin Target Repeated material― Presentation Material For FY23/3 ◼ Increase product revenue through accumulated design wins ◼ Improve profitability with product revenue increase and operating leverage Roadmap to OP Margin Target OP Margin OP Margin (FY22/3) (Mid-Term target2) 1 2 3 Lo
Slide 35: Further Growth through Phase Transformation
Further Growth through "Phase 2 Transformation” Repeated material― Presentation Material For FY23/3 ◼ Aim for further growth and development through new and distinctive Solution SoC business model and “Phase 2 Transformation”, while maintaining top line growth and solid profitability achieved by “Ph
Slide 36: Toward Future Growth: Continue to Acquire New Design Wins
Toward Future Growth ◼ Beyond the mid-term, Socionext aims to continue acquiring additional design wins in pursuit of further growth Market Trend Growth Strategy AD/ADAS Continue to leverage the competitive strength of the Solution SoC business model Increase in demand for “Solution SoC” to continue
Slide 37: Strengthen R&D and Investment in Leading Technologies
Strengthen R&D and Investment in Leading Technologies ◼ Subsystem configurations and bus architectures are becoming similar across major applications ◼ Building a common design platform improves development efficiency and profitability Design trends ◼ Common complexity to achieve optimal PPA x8 x8 ◼
Slide 38: Transformation of R&D Structure
Transformation of R&D Structure ◼ Rebuilding global R&D structure in line with the change of primary business areas and the business model ◼ Reinforcing flexible and scalable “Solution SoC” development platform 2022 ～ Measures ～March 2018 ～ 2021 Leading Global R&D Team Sales Sales System Architectur
Slide 39: Socionext at a Glance
Socionext at a Glance Repeated material― Presentation Material For FY23/3 ◼ Socionext has developed a new and distinctive “Solution SoC” business model to provide optimal custom SoCs to customers who need advanced and innovative chips Company Overview Business Overview (Ratio is NRE revenue breakdow
Slide 40: Detail of Custom SoC and ASSP
Detail of Custom SoC and ASSP Repeated material― Presentation Material For FY23/3 ◼ Socionext operates mainly within Custom SoC market, where products are designed for a specific customer (Although ASSPs are designed also for specific applications, they are not designed for a specific customer ) Log
Slide 41: Timeline from Design Win to Mass Production
The Image of Timeline from Design Win to Mass Production Illustrative Description of “Design Win Amount” Repeated material― Presentation Material For FY23/3 “Design Win Amount１” ・・・ “Design Win Amount” represents estimate of the lifetime demand from design projects. “Design Win Amount” is divided in
Slide 42: Features of Solution SoC Business Model
Features of Solution SoC Business Model1 Repeated material― Presentation Material For FY23/3 ◼ The primary difference between “traditional ASIC”2 and “Solution SoC“ is how to interface with customers ◼ The primary difference between “Solution SoC” and “ASIC designed by ASSP vendors”2 is the breadth
Slide 43: Competitive Advantages and Features for Solution SoCs
Competitive Advantages and Features for Solution SoCs ◼ Through our Solution SoC business model, we design optimal custom SoCs in collaboration with our customers while drawing on the optimal IP, design methodology and OSS from across the semiconductor ecosystem Competitive advantages of solution So
Slide 44: Transformation into a Global Custom SoC Vendor in Advanced Technology Areas
Transformation into a Global Custom SoC Vendor Repeated material― in Advanced Technology Areas Presentation Material For FY23/3 ◼ Through a transformation of our business and company culture, Socionext has turned into a global leading custom SoC vendor with a new and distinctive business model that
Slide 45: Transforming into a Global SoC Company with Cutting-Edge Technologies
Transforming into a Global SoC Company Repeated material― with Cutting-Edge Technologies Presentation Material For FY23/3 ◼ Shift in NRE revenue composition illustrates the steady progress of our business transformation FY18/3 FY21/3 FY22/3 FY23/3 1% Advanced 28% 40% 43% 5-7nm Process Nodes 19% 59%
Slide 46: Positioning of Socionext in Semiconductor Market
Positioning of Socionext in Semiconductor Market ◼ With the exception of Apple, Socionext has the 2nd largest market share of 10% within the Custom SoC(ASIC)1 market, where some players can design 7nm/5nm SoCs. Custom SoC(ASIC) 1 Market Share2 (2022) ASSP1 Market Share2 (2022) Market Share Market Sh
Slide 47: Demand for Custom SoC (ASIC) Exceeding Demand for ASSP
Demand for Custom SoC(ASIC) Exceeding Demand for ASSP ◼ The custom SoC(ASIC) market is expected to grow at 8.8% CAGR(2021-2025E)1,2, faster than the total semiconductor & ASSP markets Market Growth1 Background of Growing Demand Market CAGR2 Market CAGR2 for Custom (bespoke) SoCs (2017-2021) (2021-20
Slide 48: Socionext Focused on Growing Markets
Socionext Focused on Growing Markets ◼ Total global market size of Primary Areas1 is expected to grow at a 14.6% CAGR2, higher than that of custom SoC (ASIC) ◼ The Automotive custom SoC (ASIC)4 market is expected to grow at a 11.9% CAGR2 Custom SoC3, 4 (ASIC) Custom SoC (ASIC) / SAM3, 5 ($Bn) ($Bn)
Slide 49: Example of Design Win in Each Application Market
Example of Design Win in Each Application Market ◼ We acquired design wins for chips using advanced technology that are crucial for customers to build their applications ◼ Those achievements led to repeated orders from some customers E/E Architecture & LiDAR (Central ECU / Zone ECU) Data Center Swit
Slide 50: Performance Comparison with Competitors (Traditional ASIC Vendors)
Performance Comparison with Competitors (Traditional ASIC Vendors) ◼ We have improved net sales per employee and operating income per employee ◼ We will target further improvements in these metrics through the transformation of our R&D structure Net Sales1, 2, 3 Operating Income1, 2, 3 (USD in Milli
Slide 51: Socionexlt’
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