Renesas Electronics Corporation · TSE:6723

Renesas Electronics — Investor Day (May 2023)

14 slides from Renesas Electronics's investor day presentation, May 19, 2023

  1. Slide 1: Finance

    写真を変える? (林さん) FINANCE MAY 19, 2023 SHUHEI SHINKAI SVP AND CFO RENESAS ELECTRONICS CORPORATION © 2023 Renesas Electronics Corporation. All rights reserved.

  2. Slide 2: 6x Break Down – Near Term Priorities

    6x BREAK DOWN – NEAR TERM PRIORITIES 3x Valuation Execution of mid-term plan ▪ Capacity expansion b-2 a ▪ Inventory management ▪ M&A b-1 Valuation gap-fill ▪ Down cycle management b-1 ▪ Shareholder return 2022 ▪ FCF conversion Market cap 2x Scale b-2 Multiple expansion a © 2023 Renesas Electronics C

  3. Slide 3: Progress to Date

    Non-GAAP PROGRESS TO DATE Mid-term model*1 2019 2020 2021 2022 Industrial, Adjusted*1 Adjusted*1 Adjusted*1 Adjusted*1 Total Automotive Infra and IoT 6,204 6,357 8,894 12,282 Grow Grow Grow Revenue oku yen oku yen oku yen oku yen @SAM+ @SAM @SAM++ Gross margin 43% 48% 54% 56% 50-55% ≈45% ≈60% Operat

  4. Slide 4: Operational Resilience

    OPERATIONAL RESILIENCE Margin trajectory Key trend 2019 2022 60% Gross margin % of revenue 60% 40% 40% Margin*1 Fixed cost 20% Operating margin 20% 0% 0% 40% Front end Foundry Inhouse YoY*2 production Inhouse Foundry 20% Semi 0% Power Power market SoC -20% SoC Analog Product Analog -40% mix MCU MCU

  5. Slide 5: YoY Gross Margin

    Non-GAAP YoY GROSS MARGIN Industrial, Automotive Infra and IoT 58% Depreciation Utilization Manufacturing Product mix Company wide mix costs incl. price up 55% 1H 2022 1H 2023 Adjusted*1 Adjusted*1 *1: Based on adjusted revenue. FX 1USD=100yen, 1EUR=120yen. Excluding 6” fab shutdown & structural ref

  6. Slide 6: Capex & Capacity Expansion

    CAPEX & CAPACITY EXPANSION Inhouse capacity expansion*1 Capacity & capex% of revenue*2 (Authorization basis) Advanced process (Foundry) 15% 10% Mature process Capex % of Revenue (KW/M) Capex Average MCU/ 5% Analog Foundry N3, Kawashiri & Saijo (KW/M) Inhouse MCU/ K6 2022 2030 capacity Analog Takasak

  7. Slide 7: Inventory Strategy

    INVENTORY STRATEGY Strategic inventory*1 Die bank (oku yen) (oku yen) DOI 120 days +40% Raw material BCM stock 1Q 2022 1Q 2023 Model WIP Leadtime Die bank (Inhouse) MCU/MPU Analog/Power Custom (Foundry) (Weeks) Finished goods Case by case 1Q 2022 1Q 2023 Updated model *1: Excluding FX effects DOI: D

  8. Slide 8: Lookback on Capital Allocation – Sizable M&A

    LOOKBACK ON CAPITAL ALLOCATION – SIZABLE M&A ($3.0bn*1) ($7.2bn*1) (€4.5bn*1) ($M) 2,000 +7% +33% Revenue 1,500 +99% 1,000 % vs. Announced 500 Year 0 CY2016 CY2022 CY2018 CY2022 CY2021 CY2022 ($M) +6% 150 Cost +10% synergy 100 +12% c.40% of % vs. 50 c.30% of LTM OP*2 c.30% of LTM OP*2 Plan LTM OP*2

  9. Slide 9: Lookback on Capital Allocation – Tuck-in

    LOOKBACK ON CAPITAL ALLOCATION – TUCK-IN Connectivity AI / Software Platform Advanced Wi-Fi chipsets 4D imaging radar solution Embedded AI solutions Acquisition (expected) NFC solutions Minority investment Cellular IoT chipsets Wireless transceiver solution AI based chipsets Shared platform & Custom

  10. Slide 10: Capital Allocation Policy

    CAPITAL ALLOCATION POLICY ▪ Invest to capture demand in mature process Organic growth ▪ Increase DOI to shorten lead time and BCM purpose Financial soundness ▪ Target <1.0x net leverage M&A ▪ Continue to acquire complementary technology ▪ Resume dividend payments as reasonably soon as Shareholder re

  11. Slide 11: Model House Keeping

    Non-GAAP MODEL HOUSE KEEPING Revenue growth SAM+ Gross margin 50~55% R&D % ≈16% SG&A % ≈8% Operating margin 25~30% EBITDA margin 35~40% Tax rate 15~20% Capital expenditures 5% as mid-term average Inventory 120 days FCF margin 20~30% Net leverage <1.0x in mid-term © 2023 Renesas Electronics Corporati

  12. Slide 12: 6x Break Down – Near Term Priorities

    6x BREAK DOWN – NEAR TERM PRIORITIES 3x Valuation Execution of mid-term plan ▪ Capacity expansion b-2 a ▪ Inventory management ▪ M&A b-1 Valuation gap-fill ▪ Down cycle management b-1 ▪ Shareholder return 2022 ▪ FCF conversion Market cap 2x Scale b-2 Multiple expansion a © 2023 Renesas Electronics C

  13. Slide 13: Thank You

    THANK YOU © 2023 Renesas Electronics Corporation. All rights reserved. 13

  14. Slide 14: Forward-Looking Statements

    (FORWARD-LOOKING STATEMENTS) The statements in this presentation with respect to the plans, strategies and forecasts of Renesas Electronics and its consolidated subsidiaries (collectively “we”) are forward-looking statements involving risks and uncertainties. Such forward looking statements do not r

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