Socionext Inc. · TSE:6526
Socionext — Q1 FY2025/3 Earnings Presentation
50 slides from Socionext's earnings presentation, Jul 31, 2024
Slide 1: 1Q FY2025/3 Consolidated Financial Results
1Q FY2025/3 Consolidated Financial Results July 31, 2024 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 3 Months Ended June 30, 2024
Consolidated Financial Results for the 3 Months Ended June 30, 2024 ─ Actual Consolidated Financial Results1Q FY25/3 Results
Slide 5: 1Q FY25/3 Consolidated Statements of Income
1Q FY25/3 Consolidated Statements of Income (Yen in billions) FY24/3 FY25/3 1Q 2Q 3Q 4Q 1Q YoY YoY % Net Sales 61.4 55.5 52.7 51.6 52.8 -8.7 -14.1% Product Revenue 52.9 48.5 40.5 40.9 42.3 -10.6 -20.1% NRE Revenue 8.4 6.8 11.9 10.5 10.3 1.9 23.1% Others 0.1 0.2 0.2 0.2 0.2 0.0 24.0% Cost of Sales 34
Slide 6: Quarterly Net Sales and Operating Income
Quarterly Net Sales and Operating Income Net Sales1 Operating Income1 （Yen in billions） （Yen in billions） Product Revenue Operating Income 19.4% including 15.0 Margin Special Demand 61.4 17.6% NRE Revenue 56.1 16.5% 53.9 8.4 55.5 52.7 Others 51.6 52.8 15.4% 6.8 14.7% 11.5 7.3 14.0% 42.8 11.9 10.5 10
Slide 7: Details of 1Q FY25/3 Financial Results - YoY Changes
Details of 1Q FY25/3 Financial Results - YoY Changes Net Sales & Operating Income Operating Income YoY Analysis Others （Yen in billions） Operating Income （Yen in billions） （Yen in billions） NRE Revenue Margin 19.4% Product Revenue 16.5% -1.1 1.0 2.1 -1.8 61.4 8.4 52.8 10.3 10.1 10.3 52.9 10.1 10.3 4
Slide 8: Details of 1Q FY25/3 Financial Results - QoQ Changes
Details of 1Q FY25/3 Financial Results - QoQ Changes Net Sales & Operating Income Operating Income QoQ Analysis Others （Yen in billions） Operating Income （Yen in billions） （Yen in billions） NRE Revenue Margin Product Revenue 19.4% 0.8 1.6 -0.6 0.9 51.6 52.8 14.7% 10.5 10.3 10.3 10.3 7.6 40.9 42.3 7.
Slide 9: Consolidated Balance Sheet (As of June 30, 2024)
Consolidated Balance Sheet（As of June 30, 2024） Cash on Hand and in Banks (Yen in billions) (Yen in billions) As of As of Change Mar.31,2024 Jun.30,2024 Total Assets 186.8 177.9 -8.9 55.9 69.7 69.1 46.3 53.0 47.5 Total Current Assets 138.9 136.0 -2.9 38.1 45.1 37.2 33.9 Cash on-hand and in banks 69.
Slide 10: Capex-Depreciation & Amortization / Cash Flow
Capex-Depreciation & Amortization / Cash Flow Capex1-Depreciation & Amortization2 Cash Flow2 (Yen in billions) (Yen in billions) 10 8 20 6 4 0 2 0 -20 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY22/3 FY23/3 FY24/3 FY25/3 FY22/3 FY23/3 FY24/3 FY25/3 Capex Depreciat
Slide 11: Breakdown by Application Market
Breakdown by Application Market Net Sales NRE Revenue Automotive Data Center & Networking Automotive Data Center & Networking Smart Devices Industrial Smart Devices Industrial Others Others 100% 6% 5% 100% 11% 6% 6% 3% 14% 10% 8% 16% 14% 13% 27% 23% 23% 8% 29% 17% 18% 13% 18% 11% 16% 80% 21% 80% 27%
Slide 12: Breakdown by Geographic Region
Breakdown by Geographic Region Net Sales NRE Revenue US China Japan Others US China Japan Others 100% 100% 10% 7% 8% 9% 10% 7% 8% 12% 12% 11% 12% 11% 14% 12% 19% 18% 80% 80% 26% 31% 20% 24% 38% 36% 44% 44% 51% 52% 60% 59% 60% 63% 18% 13% 66% 55% 21% 71% 56% 25% 20% 40% 40% 39% 33% 34% 24% 18% 51% 17
Slide 13: Breakdown by Process Node
Breakdown by Process Node Net Sales NRE Revenue 3-7nm 10-16nm 20-28nm 40nm & above / Others 3-7nm 10-16nm 20-28nm 40nm & above / Others 100% 100% 8% 6% 10% 14% 17% 22% 21% 6% 23% 25% 23% 29% 12% 3% 12% 80% 42% 80% 45% 43% 18% 10% 9% 55% 64% 21% 18% 19% 30% 60% 22% 60% 33% 30% 28% 46% 17% 20% 28% 29%
Slide 14: Consolidated Statements of Income
Consolidated Statements of Income (Yen in billions) FY21/3 FY22/3 FY23/3 FY24/3 FY25/3 1Q Net Sales 99.7 117.0 192.8 221.2 52.8 % YoY -3.7% +17.3% +64.7% +14.8% -14.1% Product Revenue 73.1 84.6 156.8 182.9 42.3 NRE Revenue 23.0 28.1 34.9 37.6 10.3 Other Revenue 3.6 4.3 1.1 0.8 0.2 Cost of Goods Sold
Slide 15: Consolidated Balance Sheets
Consolidated Balance Sheets FY25/3 FY25/3 (Yen in billions) FY21/3 FY22/3 FY23/3 FY24/3 FY21/3 FY22/3 FY23/3 FY24/3 1Q 1Q Assets Liabilities and Equity Cash on-hand and in banks 42.7 46.3 45.1 69.7 69.1 Accounts Payable-trade 12.0 16.6 23.4 15.8 16.0 Accounts receivable-trade, net 28.6 25.1 40.8 35.
Slide 16: 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 Smart Devices Industrial 100% Others 100% Others 4% 5% 5% 3% 2% 3% 6% 8% 7% 5% 5% 8% 10% 7% 13% 7% 8% 8% 11% 13% 11% 10% 8% 17%
Slide 17: 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% 8% 9% 7% 8% 11% 12% 11% 12% 11% 12% 11% 12% 12% 20% 22% 31% 23% 80% 80% 17% 34% 30% 22% 26% 17% 24% 43% 40% 37% 39% 38% 37% 42% 28% 13% 48%
Slide 18: Breakdown by Process Node (Quarterly Ratios)
Breakdown by Process Node (Quarterly Ratios) Net Sales1 NRE Revenue1 3-7nm 10-16nm 20-28nm 40nm & above / Others 3-7nm 10-16nm 20-28nm 40nm & above / Others 100% 100% 1% 8% 6% 8% 6% 11% 10% 11% 15% 15% 4% 6% 23% 23% 21% 21% 22% 23% 7% 20% 21% 27% 7% 31% 27% 3% 10% 80% 40% 41% 37% 35% 80% 21% 46% 44%
Slide 19: Following slides are repeated materials from FY 24/3 financial results presentation
Following slides are repeated materials from FY 24/3 financial results presentation
Slide 20: Consolidated Earnings Forecast
Consolidated Earnings Forecast Repeated material from FY24/3 (Partially Updated1) (Yen in billions) FY2024/3 FY2025/3 Full Year Forecast Full Year Results YoY YoY % as of April 2023 Net Sales 221.2 200.0 -21.2 -9.6% Operating Income 35.5 27.0 -8.5 -24.0% Margin 16.1% 13.5% -2.6%pt Profit 26.1 19.5 -
Slide 21: Overview
Overview ─ Breakdown of Design Win ─ Outlook of Future Growth and Market Trend
Slide 22: Strong Design Wins
Strong Design Wins Repeated material from FY24/3 ◼ “Design Win Amount1” has more than doubled through transformation since 2018 The amount was at level of 250 billion yen in FY24/3 following FY23/3 “Design Win Amount1” (LTR) acquired in each fiscal year Approx. Approx. 250 billion yen 200 billion ye
Slide 23: Increase in the ratio of large-scale Design Wins
Increase in the ratio of large-scale Design Wins Repeated material from FY24/3 ◼ Large-scale Design Wins have been increasing both in numbers and total amounts Significant portion of future product shipments is expected to come from large-scale projects, which will improve our business efficiency 1
Slide 24: Design Win Balance by Application Market and Region
Design Win Balance by Application Market and Region Repeated material from FY24/3 Automotive Japan By By DC&NW US application region1 Industrial EU SD China Others Aisa excluding China As of FY24/3 As of FY24/3 ◼ “Automotive” and “US” increased respectively following the recent strong design wins ◼
Slide 25: Abundant Global Design Win Balance
Abundant Global “Design Win Balance” Repeated material from FY24/3 ◼ In FY2024/3, Design Win Balance1 from “Automotive” and “Smart Devices” increased. ◼ Design Win Balance in “Data Center & Networking” expected to increase, as new business in US is in progress Automotive Data Center & Networking Ind
Slide 26: Illustrative Image of Growth
Illustrative Image of Growth Repeated material from FY24/3 ◼ While expansion of new mass production continues, Net Sales will possibly be flat or slightly decrease in FY25/3 and FY26/3, due to end of Special Demand and weakening of Chinese and consumer markets → Another growth acceleration will foll
Slide 27: OP Margin Trend and Outlook for Future
OP Margin Trend and Outlook for Future Repeated material from FY24/3 ◼ OP margin has shown improvement in recent years, and while it may temporarily remain flat, it is expected to grow again due to the increase in product revenue Long-term OP margin trend after FY2022/3 FY24/3 Level Forecast under t
Slide 28: Market Trend, Background of FY25/3 Forecast and Outlook for FY26/3 & Beyond
Market Trend, Background of FY25/3 Forecast and Outlook for FY26/3 & Beyond Repeated material from FY24/3 Market trend and Design win FY25/3 forecast FY26/3 & beyond outlook ◼ Product Revenue ◼ Product Revenue Automotive ◼ Overview ◼ FY26/3: Same level as FY25/3 or slightly lower - Sales from new ma
Slide 29: Growth strategy
Repeated material from FY24/3 Growth strategy ─ Further Growth through “Phase 2 Transformation” ─ Solution SoC Business Model ─ Growing Demand for Custom (Bespoke) SoCs ─ Positioning of Socionext in Custom SoC Market ─ Socionext’s Development Platform for “Entire Design” for Diverse Fields and Produ
Slide 30: Further Growth through Phase Transformation
Further Growth through “Phase 2 Transformation” Repeated material from FY24/3 ◼ 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 “Phase 1 Transformation”
Slide 31: Socionext's Mission
Socionext’s Mission Repeated material from FY24/3 “Together with our global partners, we bring innovation to everyone everywhere” Socionext will help to bring about a prosperous society by delivering new value to our customers and to people around the world beyond them. We will do this as a valued p
Slide 32: Transformation into Global Custom SoC Vendor in Advanced Technology Areas
Transformation into Global Custom SoC Vendor in Advanced Technology Areas Repeated material from FY24/3 ◼ 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 we refer to as “Solution
Slide 33: Solution SoC Business Model
Solution SoC Business Model Repeated material from FY24/3 ◼ Socionext has established new and distinctive “Solution SoC1” business model to provide optimal custom SoCs to customers who require advanced and innovative chips “Solution SoC” ◼ Collaborating with customer to design optimal SoC architectu
Slide 34: Features of Solution SoC Business Model
Features of Solution SoC Business Model Repeated material from FY24/3 ◼ The primary difference between “traditional ASIC2” and “Solution SoC1“ is how to interface with customers ◼ The primary difference between “Solution SoC” and “ASIC designed by ASSP vendors2“ is the breadth of optional customizat
Slide 35: Competitive Advantages of Solution SoC Business Model
Competitive Advantages of Solution SoC Business Model Repeated material from FY24/3 (Partially Updated) ◼ Socionext features “Entire Design” (from SoC architecture to thermal design and quality) and “Complete Service” (full turnkey and production) and deliver unique (“Bespoke”) SoCs for all types of
Slide 36: Growing Demand for Custom (Bespoke) SoCs
Growing Demand for Custom (Bespoke) SoCs Repeated material from FY24/3 Background of Growing Demand for $Bn Custom (Bespoke) SoCs and Solution SoC partner 15 Emergence of new services and applications Others 1 New services and applications emerge through evolution of technologies; Demand expands for
Slide 37: Positioning of Socionext in Custom SoC (ASIC) Market
Positioning of Socionext in Custom SoC (ASIC) Market Repeated material from FY24/3 ◼ With the exception of Apple, Socionext has the 2nd largest market share of 12% within the Custom SoC(ASIC)1 market, where some players can design 5nm/3nm SoCs. Custom SoC(ASIC) 1 Market Share2 (2022-2023) ASSP1 Mark
Slide 38: Strengthening Investments in R&D and Leading-Edge Technologies
Strengthening Investments in R&D and Leading-Edge Technologies Repeated material from FY24/3 System, subsystem configurations and bus architectures are becoming similar across Computer architecture-based design & development ◼ major applications and closer to computer architecture ◼ In major markets
Slide 39: Advanced SoC Developments on Computer Architecture Basis in Diverse Fields
Advanced SOC Developments on Computer Architecture Basis in Diverse Fields Repeated material from FY24/3 ◼ Common development platform established as system configurations across major applications become similar towards computer architecture-based ◼ Addresses PPA optimization challenges due to desi
Slide 40: Design Wins Expanding in Each Application Market
Design Wins Expanding in Each Application Market Repeated material from FY24/3 Smart Devices Industrial Advanced RF 5/7nm Test & Measurement 5/7/12nm 28nm DSLR/Action Printer F, Codec, Se (ISP, R cure ic IPs …) cif ,U pe se 5/7nm -s rL on Network cameras og ti EDA Tool ca ic, AR pli etc Ap . Compute
Slide 41: Design Wins Expanding in Each Application Market
Design Wins Expanding in Each Application Market Repeated material from FY24/3 Smart Devices Industrial Application nm Customers1 Advanced Application nm Customers1 RF Major Major Players FA Players Network cameras DSLR/Action 5-12 Test & Measurement 5-28 F, Codec, Se Printer (ISP, R cure ic IPs …)
Slide 42: Expanding Business in Each Application Market
Expanding Business in Each Application Market Repeated material from FY24/3 Smart Devices Industrial Advanced ◼ Demand for new technologies in smart devices RF ◼ Demand expanding for Solution SoC with area continues to be strong due to expanding advanced technologies in industrial use of AI applicat
Slide 43: Transformation of Global R&D Structure
Transformation of Global R&D Structure Repeated material from FY24/3 ◼ 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 Measurement 2022 - Reinforce “Entire Design” capabil
Slide 44: Appendix: Overview
Appendix: Overview ─ Detail of Design Win ─ Company Overview and others
Slide 45: Detail of Design Win Amount to Revenue
Detail of “Design Win Amount” to Revenue Illustrative Description of “Design Win Balance” Repeated material from FY24/3 “Design Win Balance1” ・・・ “Design win balance” (LTR; Life Time Revenue) represents our estimates of remaining accumulated “design win amount” that is associated with projects that
Slide 46: Socionext at a Glance
Socionext at a Glance Repeated material from FY24/3 ◼ 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 breakdown for FY24/3) History
Slide 47: Detail of Custom SoC and ASSP
Detail of Custom SoC and ASSP Repeated material from FY24/3 ◼ 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 ) Logic Application Logic I
Slide 48: The Image of 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 from FY24/3 “Design Win Amount１” ・・・ “Design Win Amount” represents estimate of the lifetime demand from design projects. “Design Win Amount” is divided into NRE-based and produ
Slide 49: Transforming into a Global SoC Company with Cutting-edge Technologies
Transforming into a Global SoC Company with Cutting-edge Technologies Repeated material from FY24/3 ◼ Shift in NRE revenue1 composition illustrates the steady progress of our business transformation FY18/3 FY21/3 FY22/3 FY23/3 FY24/3 1% 5-7nm Advanced 28% 40% 43% 3-5nm Process Nodes 19% 59% 9% 30% 7
Slide 50: Socionexlt’
Socionexlt’