Renesas Electronics Corporation · TSE:6723

Renesas Electronics — Q1 FY11/3 Earnings Presentation

39 slides from Renesas Electronics's earnings presentation, Jul 29, 2010

1. Slide 1: FY11/3 Q1 Financial Results

   FY11/3 Q1 Financial Results Renesas Electronics Corporation July 29, 2010 Yasushi Akao, President © 2010 Renesas Electronics Corporation. All rights reserved. 00000-A

2. Slide 2: Notes and Forward-Looking Statements

   (NOTE) FY10/3 consolidated results are sum of respective results of the former NEC Electronics Corporation and the former Renesas Technology Corp. The amount of “Net sales” and “Sales from semiconductors” are presented by rearranging the former Renesas Technology’s sales account to adjust presentati

3. Slide 3: Executive Summary

   Executive Summary I. FY11/3 Q1 Financial Results Achieved 10 billion yen increase in sales as compared to the combined sales of the former companies (NEC Electronics Corporation and Renesas Technology Corp.) before the merger. Operating result nearly reached break- even level. Recorded structural

4. Slide 4: I. FY11/3 Q1 Financial Results

   I. FY11/3 Q1 Financial Results 4 © 2010 Renesas Electronics Corporation. All rights reserved.

5. Slide 5: FY11/3 Q1 Financial Snapshot

   FY11/3 Q1 Financial Snapshot Q1 sales increased by 4% QoQ Operating loss improved dramatically, into black without merger-cost Recorded significant net loss due to impairment loss for long-term assets FY10/3 FY11/3 (B yen) Q1 Q4 Q1 YoY QoQ Net Sales 235.3 281.7 292.0 +56.7 +10.4 Semiconductor Sales

6. Slide 6: Trends in Quarterly Results

   Trends in Quarterly Results Both semiconductor sales and operating loss improved in FY11/3 Q1 FY10/3 FY11/3 (B yen) Q1 Q2 Q3 Q4 Q1 Net Sales 292.0 280.4 281.7 265.0 235.3 Semiconductor Sales 208.7 234.4 247.7 251.7 261.5 -0.3 Operating -12.7 -12.7 Income (Loss) -43.9 -43.9 6 © 2010 Renesas Electroni

7. Slide 7: Q1 Semiconductor Sales (YoY / QoQ)

   Q1 Semiconductor Sales (YoY / QoQ) Semiconductor sales increased by 4% QoQ The MCU sales in particular increased dramatically in emerging countries centering around the Chinese market FY11/3 (B yen) Q1 YoY QoQ Semiconductor Sales 261.5 +25% +4% Sales Overview by BU (QoQ) SoC SoC 77.7 -3% -4% [↓] Dec

8. Slide 8: FY11/3 Q1 Factors in Net Income (Loss) from Operating Profit (Loss)

   FY11/3 Q1 Factors in Net Income (Loss) from Operating Profit (Loss) FY11/3 Q1 Although operating loss improved dramatically QoQ, FY11/3 Q1 net loss Operating Net Income worsened significantly, due to recording of Income (Loss) (Loss) impairment loss for long-term assets (B yen) -0.3 Non-operating in

9. Slide 9: Balance Sheets

   Balance Sheets As of Apr. 1, 2010 As of (After the Jun. 30, 2010 (B yen) capital injection) Total Assets 1,215.4 1,151.0 Cash and Cash Equivalents 337.7 318.6 Inventories 126.6 130.7 Liabilities 801.7 777.5 Interest-bearing Debt 372.0 375.4 Shareholders’ Equity 421.0 388.0 Net Assets 413.6 373.5 D/E

10. Slide 10: Cash Flow

    Cash Flow FY10/3 FY11/3 (B yen) Q1 Q4 Full-year Q1 Cash Flows from -40.6 16.8 24.6 -2.0 Operating Activities Cash Flows from -24.0 -21.2 -76.8 -14.4 Investing Activities Free Cash Flows -64.7 -4.3 -52.3 -16.4 10 © 2010 Renesas Electronics Corporation. All rights reserved.

11. Slide 11: II. FY11/3 Forecasts

    II. FY11/3 Forecasts 11 © 2010 Renesas Electronics Corporation. All rights reserved.

12. Slide 12: Semiconductor Market Trend

    Semiconductor Market Trend Semiconductor market annual growth rate (in yen) 20% 16.6% 8.4% 10% 14.6% 7.3% 0.1% 5.2% 7.0% 0% -10% -5.6% -16.2% -20% -20.6% *SAM base -30% Total Semiconductor FY09/3 FY10/3 FY11/3 FY12/3 FY13/3 (Note) SAM: Semiconductor market excluding DRAM, MPU, Flash and Sensor. Sour

13. Slide 13: FY11/3 Financial Forecasts

    FY11/3 Financial Forecasts Aim to achieve operating profit for the full-year. Net loss is expected to widen significantly, expected amount of 77 billion yen in special loss from promoting structuring reforms as part of the “100-day project”. FY10/3 FY11/3 Forecast (B yen) 1H 2H Full-year 1H 2H Full-

14. Slide 14: FY11/3 Semiconductor Sales Forecast

    FY11/3 Semiconductor Sales Forecast Expect to exceed the market growth, absorbing the dis-synergies from restructuring of product portfolio Raised semiconductor sales target by 20.0 billion yen from May 2010, reflecting the recent healthy environment YoY% Expand sales in the global market 1,190.0 Se

15. Slide 15: FY11/3 Q2 Operating Income (Loss) Forecasts

    FY11/3 Q2 Operating Income (Loss) Forecasts Expect to record operating loss due to various expenses concentrated in the half year-end, despite the profit Operating Income (Loss) increase from sales increase FY11/3 FY11/3 Q1 Q2 Forecast Difference between Q1 expense and Q2 expense: Approx. 10 B yen H

16. Slide 16: FY11/3 1H/2H Operating Income (Loss) Forecasts (YoY)

    FY11/3 1H/2H Operating Income (Loss) Forecasts (YoY) Operating Income (Loss) Expect profit growth exceeding sales growth (approx. 10.0 billion yen), due to effects of FY11/3 FY11/3 merger synergies including fixed-cost reductions 1H Forecast 2H Forecast Increased fixed-costs by acquiring Nokia’s Dec

17. Slide 17: FY11/3 Full-Year Net Income (Loss)

    FY11/3 Full-Year Net Income (Loss) (In comparison with operating profit/loss) FY11/3 Full-year Implement fundamental restructuring reforms in FY11/3. Expect to post special loss of Operating Income Net Income (Loss) Forecast (Loss) Forecast 77.0 billion yen 7.0 Non-operating income (loss): Approx. -

18. Slide 18: III. Results and Action Plans of the 100-Day Project

    III. Results and Action Plans of the “100-Day Project” 18 © 2010 Renesas Electronics Corporation. All rights reserved.

19. Slide 19: Outline of the 100-Day Project

    Outline of the “100-Day Project” Realize merger Formulate growth synergies strategies - Integrate development environment, design platforms, -Optimize business portfolio- various infrastructures- Strengthen cost- competitiveness Sustain stable Strengthen growth through product profit recovery Streng

20. Slide 20: Summary: Effects of the 100-Day Project

    Summary: Effects of the “100-Day Project” Target Formulate Annual average sales growth rate: growth strategies 7-10% per year from FY11/3 to FY13/3 Realize merger Generate synergies of total of synergies approx. 40 billion yen from FY11/3 to FY13/3 Implement Cumulative cost reductions of structural

21. Slide 21: Semiconductor Sales Plan

    Semiconductor Sales Plan Focus resources on growing businesses through optimization of the business portfolio Realize 7-10% CAGR growth in FY13/3 from FY11/3 centering on growing businesses Strengthen cost-competitiveness by streamlining on-going core businesses Composition CAGR 7-10%(FY11/3  FY13/

22. Slide 22: Formulate Growth Strategies: Focused Business Areas

    Formulate Growth Strategies: Focused Business Areas Utilizing the business advantages gained through the merger, contribute to the realization of feature-rich society by focusing on application areas that support the society’s infrastructures, such as living/social environment, entertainment, advanc

23. Slide 23: Formulate Growth Strategies: SoC Solutions

    Formulate Growth Strategies: SoC Solutions Focus on developing “infrastructure” businesses where Renesas Electronics has comprehensive competitive value Growth Strategies (B yen) 10-15% CAGR Approx. Communication - Expand businesses by strengthening advanced modem 76% Infrastructure technology (LTE)

24. Slide 24: Strengthening of Communication Infrastructure (1)

    Formulate Growth Strategies: Strengthening of Communication Infrastructure (1) - Acquisition of Nokia’s wireless modem business  Advantages of the acquiring technology W/W 3G modem >Special IP requiring long-term accumulated technology technology share expertise Acquiring >W/W No. 1 share technolog

25. Slide 25: Strengthening of Communication Infrastructure (2)

    Formulate Growth Strategies: Strengthening of Communication Infrastructure (2) – Strengths of Renesas Electronics >Network market: Close relationship with customers using Renesas Electronics’ extensive range of MCUs  Renesas Electronics’ competitive advantage in the mobile convergence market >Acqui

26. Slide 26: Realize stable growth on MCU business

    Formulate Growth Strategies: Realize stable growth on MCU business Aim to achieve steady growth exceeding market growth rate by combining strengths of the former NEC Electronics Corporation and the former Renesas Technology Corp.  Strengthen businesses in the emerging countries (China) and other fo

27. Slide 27: MCU Business, Business strategies targeting China

    Formulate Growth Strategies: MCU Business, Business strategies targeting China Maximize business effects through local-led structure, responding to changing market environment [China’s changing market environment] Government-led Expansion of social infrastructure, promotion of energy savings Ris

28. Slide 28: Formulate Growth Strategies: Analog & Power Devices

    Formulate Growth Strategies: Analog & Power Devices Focus on areas of developing power supplies and automobiles with large market scale Enhance product lineups by providing kit solutions for analog ICs, power devices and optical devices Aim to expand business by providing solutions utilizing broad M

29. Slide 29: Synergies through MCU and Analog & Power Devices

    Formulate Growth Strategies: Synergies through MCU and Analog & Power Devices Strengthen Analog & Power Business by enhancing product lineups based on system integration capabilities and sales channels obtained by MCU business Examples of kit solutions for MCU and A&P devices MCU share by platform (

30. Slide 30: Formulate Growth Strategies: Enhance Overseas Business

    Formulate Growth Strategies: Enhance Overseas Business Enhance global semiconductor sales ratio to over 60% by FY13/3 Strengthen MCU business in China and expand overseas sales with kit solutions for MCU and A&P devices Expand sales by strengthening the wireless communication infrastructure Measures

31. Slide 31: Realize Merger Synergies: Cost Effects

    Realize Merger Synergies: Cost Effects Effects of cost efficiency (B yen) Cumulative cost reductions of 40 B yen FY11/3 – FY13/3 Merger synergies Synergies (Combination of 25 250 synergies and dis- Information system Integrate IT operation cost synergies) Sales SCM  Integration/Consolidation of 20

32. Slide 32: Optimization of Sales Channels Including Halving Domestic Distributors

    Realize Merger Synergies: Optimization of Sales Channels Including Halving Domestic Distributors Reinforce sales force by reconstructing sales channels Reduce sales expenses by enhancing sales efficiency Targets Reorganize sales channels by concentrating competitive distributors and sales agencies

33. Slide 33: Implement Structural Reforms

    Implement Structural Reforms Promote fundamental cost structural reforms to realize stable growth aiming two-digit operating profit ratio 100-day Project Cost effect from implementation Reorganize manufacturing structures: of structural reforms and synergy effects Streamline Approx. 53 B yen Cumulat

34. Slide 34: Implement Structural Reforms: Fab Strategies

    Implement Structural Reforms: Fab Strategies Front-end (in-house): Restrain Capex for capacity ramp up, enhance productivity Back-end (in-house): Enhance overseas production capacity Front-end Back-end  Increase manufacturing efficiency by  Enhance overseas production capacity for in- promoting la

35. Slide 35: Advanced Process Development

    Implement Structural Reforms: Advanced Process Development Thoroughly utilize outside foundries on manufacturing of advanced products at 28 nm node and beyond Strategic Partners Renesas Electronics TSMC GLOBALFOUNDRIES Fully utilize 300mm lines at the Tsuruoka and the Naka fabs for the mass producti

36. Slide 36: Implement Structural Reforms: Optimize Human Resources

    Implement Structural Reforms: Optimize Human Resources Plan to streamline human resources of approx. 5,000 employees mostly in FY11/3, complete by FY13/3 Reduce total human resources including outsourcing by 10% Review Net cutback: business approximately 3,000 portfolio, Manufacturing structural ref

37. Slide 37: IV. Summary

    IV. Summary 37 © 2010 Renesas Electronics Corporation. All rights reserved.

38. Slide 38: Management Targets

    Management Targets  Aim to attain operating profit in the first fiscal year after the merger  Target net profit in the second fiscal year by focusing on structural reforms at an early stage of the integration process  Aim to achieve two-digit operating profit ratio in the mid-term period by const

39. Slide 39: Renesas Electronics Corporation

    Renesas Electronics Corporation © 2010 Renesas Electronics Corporation. All rights reserved.

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