Slide 1: 3Q FY2023/3 Consolidated Financial Results
3Q FY2023/3 Consolidated Financial Results January 30, 2023 Socionext Inc.
Slide 2: Introduction
Introduction ─ Socionext at a Glance ─ Solution SoC Business Model ─ Transformation ─ Market Consolidated Financial Results for the 9 Months Ended December 31, 2022 Mid-Term Financial Model
Slide 3: Socionext at a Glance
Socionext at a Glance Socionext has developed a new and distinctive “Solution SoC” business model to provide optimal custom SoC to customers who need advanced and innovative chips Company Overview Business Overview (Ratio is NRE revenue breakdown for FY22/3) History Business model Application Mark
Slide 4: Detail of Custom SoC and ASSP
Detail of Custom SoC and ASSP 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 ) Logic Application Logic IC Specific IC Socionext mainly
Slide 5: Features of Solution SoC Business Model
Features of Solution SoC Business Model 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 of optional customization 2 Custom SoC(ASIC) ASSP Tra
Slide 6: Transformation into a Global Custom SoC Vendor in Advanced Technology Area
Transformation into a Global Custom SoC Vendor in Advanced Technology Area Through a transformation of business and company culture, Socionext has turned into a global leading custom SoC vendor with a new and distinctive business model that the company refers to as “Solution SoC” Expansion of Busi
Slide 7: Illustrative Description of “Design Win Amount”
The Image of Timeline from Design Win to Mass Production Illustrative Description of “Design Win Amount” “Design Win Amount” ・・・ “Design Win Amount” represents estimate of the lifetime demand from design projects. “Design Win Amount” is divided into NRE-based and product-based amounts. “Design Win A
Slide 8: Strong Design Wins from Focus Areas
Strong Design Wins from Focus Areas Roughly doubled annual “Design Win Amount¹” since the transformation in 2018, especially in the focus areas² “Design Win Amount” (LTR) acquired in each fiscal year Focus Areas2 Approx. Others2 JPY 200 bn.~ Approx. JPY 100 bn.~ Approx.75% Approx.80% Approx.70% Ap
Slide 9: Transforming into a Global SoC Company with Cutting-edge Technologies
Transforming into a Global SoC Company with Cutting-edge Technologies Shift in NRE revenue composition illustrates the steady progress of business transformation FY18/3 FY21/3 FY22/3 1-3Q FY23/3 Focus Areas Focus Areas 50% (NRE Revenue) 79% 86% 78% Our focus areas are (a) Automotive, (b) Data Cent
Slide 10: Breakdowns by Application Market (Yearly Ratios)
Breakdowns by Application Market (Yearly Ratios) Net Sales NRE Revenue 100% 100% 14% 21% 22% 34% 80% 41% 41% 80% 39% 39% 44% 50% 50% 57% 30% 28% 27% 60% 60% 24% 22% 25% 29% 27% 26% 30% 17% 40% 40% 23% 28% 30% 20% 28% 24% 16% 20% 20% 28% 16% 21% 27% 14% 34% 18% 26% 21% 13% 16% 14% 9% 11% 9% 8% 4% 5%
Slide 11: Breakdowns by Geographic Region (Yearly Ratios)
Breakdowns by Geographic Region (Yearly Ratios) Net Sales NRE Revenue 100% 100% 10% 11% 7% 11% 10% 7% 7% 12% 12% 12% 19% 18% 80% 80% 25% 31% 46% 36% 51% 52% 60% 59% 60% 66% 63% 55% 23% 71% 56% 25% 20% 40% 40% 29% 24% 18% 20% 17% 20% 45% 14% 16% 34% 37% 15% 19% 12% 14% 14% 18% 18% 7% 11% 11% 6% 6% 0%
Slide 12: Breakdowns by Process Node (Yearly Ratios)
Breakdowns by Process Node (Yearly Ratios) Net Sales NRE Revenue 100% 100% 9% 14% 17% 25% 23% 21% 31% 11% 80% 80% 45% 43% 42% 18% 10% 55% 64% 21% 30% 60% 60% 33% 22% 30% 46% 28% 28% 29% 40% 40% 37% 18% 34% 59% 36% 9% 20% 31% 16% 20% 44% 40% 43% 29% 28% 15% 20% 13% 15% 5% 9% 3% 1% 0% 0% FY18/3 FY19/3
Slide 13: 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 8% within the Custom SoC(ASIC)1 market, where some players can design 7nm/5nm SoCs. Custom SoC(ASIC) 1 Market Share2 (2021) ASSP1 Market Share2 (2021) Market Share Market Sha
Slide 14: Socionext Based on Growing Market
Socionext Based on Growing Market Total global market size of focus areas is expected to grow at 12.3% CAGR¹, higher than that of custom SoC (ASIC) Automotive custom³ SoC(ASIC) market is expected to grow at 14.3% CAGR¹ Custom SoC2,3(ASIC) 28 Custom SoC(ASIC)/ SAM of Focus Areas2,4,5 Markets ($Bn
Slide 15: Consolidated Financial Results for the 9 Months Ended December 31, 2022
Introduction Consolidated Financial Results for the 9 Months Ended December 31, 2022 ─ Actual Consolidated Financial Results ─ Forecast Consolidated Earnings Mid-Term Financial Model
Slide 16: 3Q FY23/3 Consolidated Statements of Income
3Q FY23/3 Consolidated Statements of Income (Yen in billions) FY22/3 FY23/3 1Q 2Q 3Q 4Q 1Q 2Q 3Q YoY YoY % Net Sales 27.1 28.3 29.8 31.8 39.9 42.8 56.1 26.3 88.1% Product Revenue 19.2 21.2 20.4 23.7 31.0 35.3 43.9 23.5 114.9% NRE Revenue 6.4 6.4 7.7 7.5 8.7 7.4 11.5 3.8 48.9% Others 1.5 0.7 1.6 0.5
Slide 17: 1-3Q FY23/3 Consolidated Statements of Income
1-3Q FY23/3 Consolidated Statements of Income (Yen in billions) 1-3Q 1-3Q YoY YoY % FY22/3 FY23/3 Net Sales 85.3 138.8 53.6 62.8% Product Revenue 60.9 110.2 49.4 81.1% NRE Revenue 20.6 27.6 7.0 34.3% Others 3.8 1.0 -2.8 -74.1% Cost of Goods Sold 36.2 73.8 37.6 103.7% Selling, General and Administrat
Slide 18: Quarterly Net Sales and Operating Income and Changes
Quarterly Net Sales and Operating Income and Changes Net Sales Operating Income （Yen in billions） （Yen in billions） 60.0 Product Revenue Operating Income 56.1 10.0 NRE Revenue Others Margin 50.0 11.5 42.8 14.0% 39.9 40.0 7.4 11.2% 8.7 11.4% 31.8 28.3 29.8 30.0 27.1 5.0 8.9% 8.7% 7.5 8.0% 6.4 7.7 6.4
Slide 19: Details of 3Q FY23/3 Financial Results (Including YoY Changes)
Details of 3Q FY23/3 Financial Results (Including YoY Changes) Net Sales & Operating Income Operating Income YoY Changes Analysis （Yen in billions） （Yen in billions） （Yen in billions） Product Revenue （Yen in billions） Operating Income （Yen in billions） NRE Revenue 56.1 11.2% Margin Others 11.5 8.0%
Slide 20: Details of Nine Months Ended Dec.31 2022 Financial Results
Details of Nine Months Ended Dec.31 2022 Financial Results (Including YoY Changes) Net Sales & Operating Income Operating Income YoY Changes Analysis （Yen in billions） （Yen in billions） （Yen in billions） 150.0 Product Revenue 138.8 20.0 Operating Income 140.0 NRE Revenue 130.0 Margin 12.1% 120.0 Oth
Slide 21: Consolidated Earnings Forecast
Consolidated Earnings Forecast (Yen in billions) FY2022/3 FY2023/3 FY2023/3 Full Year Forecast as of Full Year Forecast as of Full Year Results YoY YoY % Sept. 2022 Jan. 2023 Net Sales 117.0 170.0 190.0 73.0 62.4 % Operating Income 8.5 17.0 19.5 11.0 130.4% Margin 7.2% 10.0% 10.3% +3.1%pt Profit 7.5
Slide 22: Factors Related to Revisions to Earnings Forecast
Factors Related to Revisions to Earnings Forecast Net Sales Operating Income （Yen in billions） （Yen in billions） Special demand with upfront WF procurement R&D etc. NRE etc. FX impact NRE etc. Product gross profit FX impact Temporary expense Product revenue for procurement Forecast as of Sep. Foreca
Slide 23: Consolidated Balance Sheets (As of December 31, 2022)
Consolidated Balance Sheets（As of December 31, 2022） Cash on Hand and in Banks (Yen in billions) (Yen in billions) As of As of Change Mar.31,2022 Dec.31,2022 Total Assets 118.4 191.7 +73.3 53.0 46.3 Total Current Assets 90.6 154.6 +64.0 37.2 38.1 Cash on-hand and in banks 46.3 38.1 -8.1 Accounts rec
Slide 24: Capex-Depreciation / Cash Flow
Capex-Depreciation / Cash Flow Capex1-Depreciation Cash Flow (Yen in billions) (Yen in billions) Factors in operating cash flow change 8 in FY23/3 1Q-3Q 1Q: Increase in other assets (current) 40 2Q: Increase in other liabilities (current) 3Q: Time lag between procurement cash-out and cash-in 6
Slide 25: Mid-Term Financial Model
Introduction Consolidated Financial Results for the 9 Months Ended December 31, 2022 Mid-Term Financial Model
Slide 26: Mid-Term Financial Targets
Mid-Term Financial Targets Mid-Term FY21/3 FY22/3 Target + High teen% Net Sales Growth JPY 99.7 bn JPY 117.0 bn CAGR Low-to-Mid OP Margin 1.6% 7.2% teen % The mid-term targets presented herein represent our plans and expectations as of September, 2022. These mid-term targets are forward-looking stat
Slide 27: Mid-Term Financial Target - Top Line Growth
Mid-Term Financial Target -Top Line Growth 1) Product sales from accumulated design wins and 2) Acquiring new design wins are drivers of sales growth 190 billion yen (FX 132) Effect of special demands (one time) (FX 132) (FX 125) (FX 115) Effect of substantial sales growth ← Business Transformatio
Slide 28: Roadmap of Net Sales Growth
Roadmap of Net Sales Growth As the markets for our focus areas grow, we aim to grow our total net sales at a high teen % CAGR in the mid-term based on our accumulated design wins and by acquiring additional design wins for these focus areas Focus areas 1 Expecting to increase ratio of focus areas1
Slide 29: Roadmap to OP Margin Target
Roadmap to OP Margin Target Aiming to increase product revenue driven by accumulated design wins With increasing product revenue and operating leverage, we aim to improve profitability Roadmap to OP Margin Target OP Margin OP Margin (FY22/3) (Mid-Term target2) 1 2 3 Low-to-Mid 7.2% Decline in Im
Slide 30: Aiming for Growth beyond Mid-Term
Further Growth "Phase 2 Transformation” Maintain top line growth and solid profitability achieved through “Phase 1 Transformation” Aim for further growth and development through new and distinctive “Solution SoC” business model and “Phase 2 Transformation” “Phase 1 Transformation” Mid-Term Finan
Slide 31: Toward Future Growth
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 Increase in demand Solution SoC business model for “Solution SoC” to continue
Slide 32: 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 5nm 7nm 7nm Common complexity to achieve optimal
Slide 33: Transformation of R&D Structure
Transformation of R&D Structure Rebuilding global R&D structure in line with the change of focus business areas and the business model (Concept-In / Spec-In) Reinforcing flexible and scalable “Solution SoC” development platform 2022 ～ Measures ～March 2018 ～ 2021 Global R&D Leading Team Sales Sal
Slide 34: Continuing Growth Trend in a Highly Uncertain Semiconductor Market
Continuing Growth Trend in a Highly Uncertain Semiconductor Market Continuing growth trend even in the current semiconductor market with increasing uncertainties, achieved further growth during 1-3Q FY23/3 Solid demand relative to full-year outlook/mid-term financial target despite stagnant cons
Slide 35: Detail of “Design Win Amount” to Revenue
Detail of “Design Win Amount” to Revenue Illustrative Description of “Design Win Balance” “Design Win Balance” ・・・ “Design Win Balance” represents the company’s estimate of future life-time demand from the outstanding “Design Win Amount” that has been acquired up to a particular date. “Design Win Ba
Slide 36: Appendix: Breakdowns of Net Sales and Operating Income (Quarterly Ratios)
Appendix: Breakdowns of Net Sales and Operating Income (Quarterly Ratios)
Slide 37: Breakdowns by Application Market (Quarterly Ratios)
Breakdowns by Application Market (Quarterly Ratios) Net Sales NRE Revenue 100% 100% 10% 9% 12% 14% 23% 24% 28% 33% 35% 33% 80% 40% 40% 40% 80% 46% 28% 25% 27% 40% 24% 21% 60% 60% 24% 24% 14% 33% 24% 27% 31% 27% 33% 28% 23% 40% 40% 29% 29% 31% 10% 24% 29% 30% 14% 16% 19% 49% 20% 15% 20% 29% 31% 29% 2
Slide 38: Breakdowns by Geographic Region (Quarterly Ratios)
Breakdowns by Geographic Region(Quarterly Ratios) Net Sales NRE Revenue 100% 100% 7% 6% 3% 4% 7% 5% 6% 12% 11% 12% 11% 8% 12% 11% 31% 23% 80% 80% 17% 34% 30% 22% 43% 42% 48% 48% 49% 51% 14% 60% 55% 55% 60% 10% 26% 23% 34% 37% 40% 40% 33% 29% 16% 24% 16% 29% 57% 55% 20% 19% 45% 20% 20% 39% 29% 33% 24
Slide 39: Quarterly Breakdowns by Process Node (Quarterly Ratios)
Quarterly Breakdowns by Process Node(Quarterly Ratios) Net Sales NRE Revenue 100% 100% 8% 11% 10% 23% 7% 20% 21% 7% 31% 27% 37% 35% 80% 44% 40% 41% 80% 46% 24% 14% 11% 30% 24% 21% 11% 60% 12% 60% 23% 23% 23% 16% 30% 27% 20% 30% 40% 29% 40% 30% 34% 15% 18% 66% 55% 58% 17% 46% 20% 45% 9% 17% 19% 20% 3
Slide 40: Upfront Investment toward Future Growth
Upfront Investment toward Future Growth Aiming to increase upfront investment gradually under “Sufficient & Efficient investment” policy (upfront investment accounts for the larger part of 2 R&D not linked to individual design projects) Image of Socionext’s R&D Structure ~Amount~ 1 Cost linked to
Slide 41: 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 42: Cautionary Note Regarding “Design Win Amount”
Cautionary Note Regarding “Design Win Amount” Cautionary Note Regarding “Design Win Amount” The calculation of “design win amount” involves a considerable degree of future estimation and subjective judgment, including assumptions regarding development plans, development costs, NRE revenues, per-unit
Slide 43: Socionext’
Socionext’