Alchip Technologies
(3661 TT)
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Proprietary and Confidential Information
Safe Harbor Disclaimer
This presentation contains forward-looking statements, including statements about business outlook and strategy, and statements about historical results that may suggest trends for our business. These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. Actual results could differ materially from our current expectations as result of many factors, including: our financial performance, including our net revenue, cost of revenue, operating expenses and ability to sustain profitability; our planned capital expenditures; our ability to expand our customer base; our ability to expand our product and service offerings; the impact of seasonality on our business; our ability to remediate the material weaknesses and significant deficiencies in our internal control over financial reporting; our ability to stay abreast of modified or new laws applying to our business; and our spending of the net proceeds from this offering. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.
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Proprietary and Confidential Information
Company basic information
�Founded: February 2003
�Chairman: Kinying Kwan, CEO: Johnny Shen
�Business: ASIC design service and manufacturing
�Employee: 230-240
�Capital: 615 million NT dollars
ChinaSales/ SoC Design
CenterShanghai & Wuxi
ChinaSales/ SoC Design
CenterShanghai & Wuxi
JapanSales/ SoC Design
CenterShin Yokohama
JapanSales/ SoC Design
CenterShin Yokohama
North AmericaSales OfficeSilicon Valley
North AmericaSales OfficeSilicon Valley
KoreaSales officeSeoul
KoreaSales officeSeoul
TaiwanHeadquarter
TaipeiManufacturing
CenterHsinchu
TaiwanHeadquarter
TaipeiManufacturing
CenterHsinchu
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Proprietary and Confidential Information
2015 Qty P&L statement
US$( 000) 1Q16 QoQ (%) 2Q16 QoQ (%) YoY(%) 1H16 YoY (%)
Revenue 28,645 4.8 25,148 -12.2 -11.1 53,793 6.3
COGs 23,482 25.4 24,572 4.6 10.6 48,054 15.5
Gross Profit 5,163 -32.9 575 -88.9 -90.5 5,739 -36.3
Op. Exp 5,184 -19.2 6,544 26.2 27.5 11,729 18.3
Op. Income -21 n.m. -5,969 n.m n.m -5,990 n.m.
Non. Op. 297 48.1 -926.4 n.m n.m -629.0 n.m.
Pre-Tax Profit 277 -88.4 -6,896 n.m n.m -6,619 n.m.
Income Tax 12 -33.5 498 3964.3 -48.7 510 -20.5
Net income 264 -88.9 -7,393 n.m n.m -7,129 n.m.
EPS (NT$) 0.14 -3.94 -3.8
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Proprietary and Confidential Information
1H16 Operation Recap
1H16 revenue came at US$53.7M, up 6.3% YoY
� Revenue growth in 1H16 due mainly to the amplified shipment
of TW customer’s ISP product
� China Bit-coin customer also contributed 1H16 revenue growth
2Q16 revenue came at US$25.2M, down %12% QoQand 11% YoY respectively
� ISP kept on strong shipment, however, bitcoin mining chip
shipment slowed down on bitcoin system halving
� D&P revenue was weak in 2Q due to sluggish industry outlook.
Some design project milestone delayed to 3Q
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Proprietary and Confidential Information
1H16 Operation Recap (cont.)
2Q16 posted net loss of US$7.4M, QoQ, YoY from profit to loss
� Alchip’s major bitcoin customer KnC Miner declared bankruptcy in the end of May, creating financial loss of around US$3.4M
� Design revenue is slow in 2Q16, causing margin impact
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Proprietary and Confidential Information
KnC Miner’s Bankruptcy
Direct financial impact
� Recognized total of US$2.4M operational loss for AR and inventory
� Recognized total of US$1.03M non-operational loss for stake investment
Indirect operational impact
� Enhance our risk control to other bitcoin customers
� Revising down future potential contribution of bitcoin related business
� It posted influence to other bitcoin customers placing orders
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Proprietary and Confidential Information
Revenue breakdown by application
Quarterly breakdown 14-1H16 yearly breakdown
8%10%
13%
5%
23%
32%
28%
61%
23%
36%
20%
7%
46%
22%
39%
28%
0%
20%
40%
60%
80%
100%
3Q15 4Q15 1Q16 2Q16
TV consumer networking niche,market
50%
12%
9%
8%
27%
43%
8%
29%
14%
34%32%
33%
0%
20%
40%
60%
80%
100%
2014 2015 1H16
TV consumer networking niche,market
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Proprietary and Confidential Information
Revenue breakdown by process node
Quarterly breakdown 14-1H16 yearly breakdown
Advanced technology node means 40nm or better
8%
11%12% 13%
23%
32%
24%
16%
39%
29%44%
64%
31%
28%
20%
7%
0%
20%
40%
60%
80%
100%
3Q15 4Q15 1Q16 2Q16
55nm,or,lower 40nm 28nm 20/16,or,higher
26%
13% 13%
40%
29%
20%
25%
34%53%
9%
25%
14%
0%
20%
40%
60%
80%
100%
2014 2015 1H16
55nm,or,lower 40nm 28nm 20/16,or,higher
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Proprietary and Confidential Information
Revenue breakdown by region
Quarterly breakdown 14-1H16 yearly breakdown
32%
18% 18%
21%
19%
41%
31%
12%
7%
7%
13%
1%
22%
30%
25%
61%
20%
3%
13%
4%
0%
20%
40%
60%
80%
100%
3Q15 4Q15 1Q16 2Q16
Japan China Korea Taiwan EU/US/Others
42%
22%20%
14%
29%
23%
19%
12%
7%
8%
26%
42%
17%
12%
9%
0%
20%
40%
60%
80%
100%
2014 2015 1H16
Japan China Korea Taiwan EU/US/Others
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Proprietary and Confidential Information
2H16 Business outlook
Expect significant quarterly revenue growth in 3Q16profit margin would recover
� Continuous shipment of handset camera used ISP product
� Starting shipment of amusement machine main chip for JP customer
� Bitcoin mining chip shipment to China customer to recover in 3Q16
Expected 4Q16 revenue to post mild seasonal slide, margin could improve on better revenue mix
� Shipment of consumer electronic products to decrease on seasonal factor
� Compensated by increasing shipment of JP amusement machine main chip
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Proprietary and Confidential Information
2H16 Overall outlook
Continuously positive on China market� Continuously strong support and subside by government for
China semiconductor/IC industry
� Numbers increase of China customers who become able to adapt advanced technology nodes
� Alchip still enjoys advantage within the advanced technology nodes
Japan and Korean market � Shipment of JP amusement machine main chip restarted in late
2Q and is expected to continue through 2017
� Kick-off of 16nm JP medical supercomputer projects
� Many advanced technology node products in business discussion with JP customers
� Korean customers are slow and no significant recovery expected in the near-term
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Proprietary and Confidential Information
Thanks!
www.alchip.com
Taipei/Hsinchu││││Shin Yokohama││││Santa Clara││││Shanghai/Wuxi││││Seoul
Corporate Headquarters
9F, No.12., Wenhu St., Neihu Dist., Taipei, Taiwan 114
Tel +886-2-2799-2318
Fax +886-2-2799-7389