Fiscal Year Ended March 31, 2023

Consolidated
Financial Results

April 28, 2023
Socionext Inc.

Consolidated Financial Results
for the Fiscal Year Ended March 31, 2023
─
─

FY23/3 Results
FY24/3 Forecast

Mid-Term Financial ModelFY23/3 Consolidated Statements of Income(Yen in billions)
FY22/3
Net Sales

Product Revenue
NRE Revenue
Others

FY23/3

YoY

YoY %（Reference）

Disclosure as of

Sep. 2022

Jan. 2023

117.0
84.6
28.1
4.3

192.8
156.8
34.9
1.1

75.8
72.2
6.8
-3.2

64.7%
85.3%
24.0%
-73.3%

49.8

103.9

54.2

108.9%

－

－

170.0
－
－
－

190.0
－
－
－

Cost of Sales
Selling, General and Administrative
Expenses
R&D
SG&A (excluding R&D)
Operating Income
MarginProfitMargin

58.8

67.1

8.3

14.2%

－

－

43.2
15.6
8.5
7.2%
7.5
6.4%

49.3
17.8
21.7
11.3%
19.8
10.3%

6.1
2.2
13.2
+4.1%pt
12.3+3.9%pt

14.2%
14.0%
156.5%

－
－
17.0
10.0%
13.0
7.6%

－
－
19.5
10.3%
16.2
8.5%

FX Rate (USD/JPY)

112.4

135.5

125

132

164.2%

3

FY23/3 Consolidated Statements of Income

Net Sales

Product Revenue
NRE Revenue

Others

1Q
27.1
19.2
6.4

1.5

FY22/3
2Q
3Q
28.3
29.8
21.2

20.4

0.7

1.6

6.4

7.7

4Q
31.8
23.7
7.5

0.5

FY23/3
1Q
2Q
39.9
42.8
31.0

35.3

0.2

0.2

8.7

7.4

(Yen in billions)
3Q
56.1

4Q
53.9

11.5

7.3

43.9
0.6

46.5
0.2

YoY
YoY %
22.2
69.8%
22.8

96.3%

-0.3

-67.3%

-0.3

-3.9%

Cost of Sales
Selling, General and Administrative
Expenses
R&D

11.9

12.2

12.1

13.5

19.9

22.1

31.8

30.2

16.6

122.7%

14.4

13.6

15.3

15.5

14.5

15.9

18.0

18.8

3.3

21.6%

10.4

10.0

11.5

11.3

10.6

11.5

13.4

13.8

2.6

22.7%

Operating Income

0.8

2.5

2.4

2.7

5.6

4.9

6.3

5.0

2.2

80.7%

4.5

1.7

59.7%

ProfitFX Rate (USD/JPY)

SG&A (excluding R&D)

4.0

3.7

3.8

4.2

3.9

4.4

4.6

5.0

0.8

Margin

3.0%

8.9%

8.0%

8.7%

14.0%

11.4%

11.2%

9.2% +0.5%pt

Margin

0.6%

8.6%

6.9%

8.9%

12.7%

11.6%

9.3%

8.4%

109.5

110.1

113.7

116.2

129.6

138.4

141.6

132.3

0.2

2.4

2.1

2.8

5.1

5.0

5.2

-0.5%pt

18.6%*Quarterly financial results of FY22/3 are unaudited・unreviewed by external auditors

4

Quarterly Net Sales and Operating Income and Changes
Net Sales

Operating Income（Yen in billions）

Product Revenue
NRE Revenue
Others

56.1

39.9

27.1
6.4

19.2

28.3
6.4

21.2

29.8
7.7

20.4

31.8

8.7

42.8

11.5

Margin

7.3

7.4

11.4%

2Q

FY22/3

3Q

4Q

8.9%

5.0

31.0

35.3

43.9

46.5

2Q

FY23/3

3Q

4Q

9.2%

5.6
2.5

1Q

8.0%

2.4

11.2%

8.7%

3.0%

0.0

1Q

Operating Income

10.0

14.0%

7.5

23.7

53.9

（Yen in billions）

4.9

6.3

5.0

2.7

0.8
1Q

0.0%

2Q

FY22/3

3Q

4Q

1Q

2Q

FY23/3

3Q

4Q*Quarterly financial results of FY22/3 are unaudited・unreviewed by external auditors

5

Details of FY23/3 Annual Financial Results
Operating Income YoY Changes Analysis

Net Sales & Operating Income
210.0 Product Revenue
200.0
190.0 NRE Revenue
180.0
170.0 Others
160.0
150.0
140.0
130.0
117.0
120.0
110.0
100.0
28.1
90.0
80.0
70.0
60.0
50.0
40.0
84.6
30.0
20.0
10.0
0.0

FY22/3（Yen in billions）

192.8
34.9

30.0
25.0
20.0
15.0

156.8

Operating Income
Margin

11.3%

10

21.7

9.8

21.7

-8.1

8.5

5

8.5

0
0.0%

FY22/39.4

2.1

Decrease in IP
license revenue（Yen in billions）（Yen in billions）

15

0.0

FY23/3

25
20

7.2%

10.0
5.0

（Yen in billions）

FY23/3<Net sales> YoY +75.8 bn yen (+64.7%)
 Product revenue +72.2 bn yen (FX impact +20.9 bn yen)
 NRE revenue +6.8 bn yen (FX impact +4.6 bn yen）
 Others -3.2 bn yen (IP license revenue)
 Depreciation of Japanese yen +25.6 bn yen (USD/JPY 112.4→135.5)

FY22/3

Product
Gross Profit

NRE Revenue

R&D, SG&A
expenses etc.

FX Impact

FY23/3<Operating income> YoY +13.2 bn yen (+156.5%)
 Increase in gross profit from product revenue +9.4 bn yen
 Increase in NRE revenue +2.1 bn yen
 Increase in R&D・SG＆A, etc. -8.1 bn yen(Decrease in IP license revenue -3.2 bn yen)
 Depreciation of Japanese yen +9.8 bn yen
6Details of 4Q FY23/3 Financial Results - YoY Changes
Operating Income YoY Analysis

Net Sales & Operating Income
Product Revenue（Yen in billions）（Yen in billions）

NRE Revenue

53.9

Others

7.3

31.8
7.5

Margin（Yen in billions）（Yen in billions）

46.5

（Yen
（Yenininbillions）
billions）

3.5

9.2%

8.7%
5.0

ｰ1.0
2.7

5.0

FX impact

FY23/3 4Q

2.7
-2.9

2.7

23.7
FY22/3 4Q

Operating Income

FY23/3 4Q

FY22/3 4Q

FY23/3 4Q＜Net sales＞ YoY＋22.2 bn yen (+69.8%)
 Product revenue +22.8 bn yen (FX impact +4.7 bn yen)
 NRE revenue -0.3bn yen (FX impact +0.7bn yen）
 Others -0.3bn yen (IP license revenue)
 Depreciation of Japanese yen +5.3 bn yen (USD/JPY 116.2→132.3)

FY22/3 4Q

Product
Gross Profit

NRE Revenue

R&D, SG&A
expenses etc.

＜Operating income＞YoY +2.2 bn yen (+80.7%)
 Increase in gross profit from product revenue +3.5bn yen Decrease in NRE revenue -1.0 bn yen
 Increase in R&D・SG＆A, etc. -2.9 bn yen(Decrease in IP license revenue -0.3 bn yen)
 Depreciation of Japanese yen +2.7 bn yen*Quarterly financial results of FY 22/3 are unaudited・unreviewed by external auditors

7

Details of 4Q FY23/3 Financial Results - QoQ Changes
Operating Income QoQ Analysis

Net Sales & Operating Income
Product Revenue（Yen in billions）（Yen in billions）

NRE Revenue

11.5
43.9

FY23/3 3Q（Yen in billions）（Yen in billions）

7.0

（Yen
（Yenininbillions）
billions）

ｰ3.9

MarginOthers56.1

Operating Income

11.2%

53.9

9.2%

7.3

46.5

FY23/3 4Q

6.3

FY23/3 3Q

-1.6
6.3

-2.8
5.0

5.0

FY23/3 4Q＜Net sales＞ QoQ -2.1 bn yen (-3.8%)
 Product revenue 2.6 bn yen (FX impact -2.7 bn yen)
 NRE revenue -4.3 bn yen (FX impact -0.4 bn yen）
 Others -0.5bn yen (IP license revenue)
 Appreciation of Japanese yen -3.1 bn yen (USD/JPY 141.6→132.3)

FY23/3 3Q

Product
Gross Profit

NRE Revenue

R&D, SG&A
expenses etc.

FX impact

FY23/3 4Q＜Operating income＞QoQ -1.3 bn yen (-21.1 %) Increase in gross profit from product revenue +7.0 bn yen Decrease in NRE revenue -3.9 bn yen
 Increase in R&D・SG＆A, etc. -1.6 bn yen(IP license revenue -0.5 bn yen)
 Appreciation of Japanese yen -2.8bn yen
8Consolidated Balance Sheet（As of March 31, 2023）
Cash on Hand and in Banks(Yen in billions)(Yen in billions)

Total Assets
Total Current Assets

Cash on-hand and in banks
Accounts receivable-trade

Inventories 1

Accounts receivable-otherTotal non-Current Assets

Total Liabilities
Total Current Liabilities

Accounts payable-trade

Accounts payable-otherLiabilities related tochangeable subcontracting

Total Net Assets
Shareholders' Equity Ratio

As of
Mar.31,2022

As ofMar.31,2023

Change

118.4
90.6
46.3
25.1
16.4
0.9
27.8
28.8
27.4
16.6
2.1

193.9
156.1
45.1
40.8
47.7
16.2
37.9
84.1
82.3
23.4
24.6

+75.5
+65.5
-1.1
+15.8
+31.3
+15.3
+10.1
+55.3
+54.9
+6.8
+22.5

-

18.9

89.6

109.9

75.7%

56.6%

1. Inventories consist of finished goods and work in process
2. Regular inventory turnover months = ordinary inventories balance/Cost of Sales in 3-month average

+18.9

46.3

53.0

37.2

Mar.31 2022

Jun. 30 2022

Sep.30 2022

Dec.31 2022

Inventories

Regular inventory
Customer reserved inventory

2

Regular inventory turnover months

3.0
16.4

3.1

29.6
3.1

45.1

38.1

45.7

47.7

3.6

3.7

19.3

Mar.31 2023

（Yen in billions）

FY24/3Returning tonormal level

Increasing due totop line growth andsales for automotive+20.3
Mar.31
2022

Jun.302022

Sep.302022

Dec.31
2022

Mar.312023
9

Capex-Depreciation & Amortization / Cash Flow
Cash Flow

Capex1-Depreciation & Amortization(Yen in billions)(Yen in billions)

Depreciation & Amortization

Factors in operating cash flow change
in FY23/3 1Q-4Q

Capex
8

25

40

20

6

1Q:
2Q:
3Q:
4Q:

Increase in other assets (current)
Increase in other liabilities (current)
Time lag between procurement cash-out and cash-in
Decrease in the other assets (current)
Inventory stays at the same level

20

15
4
10
2

0

0

5
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY22/3

FY23/3

1, Capex: Purchases of PP&E + purchase of intangible assets-20
FY21/3FY22/3FY23/3

1Q

2Q

3Q

FY22/3

4Q

1Q

2Q

3Q

4Q

FY23/3Operating CF

Investment CFFree CF*Quarterly financial results of FY 22/3 are unaudited・unreviewed by external auditors

10Breakdown by Application Market (Yearly Ratios)
Net Sales

NRE Revenue

100%

100%

80%

57%

50%

44%

41%

41%

60%

20%

0%

32%

80%

14%

23%

16%
11%

9%
FY18/3

FY19/326%

21%
9%
FY20/3

22%

24%

13%
FY21/316%
FY22/3

40%

32%

30%
28%

18%

14%
1

FY23/3

0%

29%

28%

20%

4%
FY18/3

14%

24%

39%
28%

25%

27%

16%

50%

39%

60%

22%

40%

20%

21%

27%
21%

8%

5%

FY19/3

FY20/3

FY21/3

30%
24%

30%

26%

FY22/3

Automotive

Data Center & Networking

Automotive

Data Center & Networking

Smart Devices

Industrial & Others

Smart Devices

Industrial & Others

18%

34%

FY23/311

Breakdown by Geographic Region１ (Yearly Ratios)
Net Sales
100%

12%

12%

10%

NRE Revenue

11%

12%

7%

80%

100%

11%

19%

18%

80%

36%

44%
60%

66%

63%

51%

59%

52%

60%

71%

40%

20%

0%

56%

55%
20%

40%

15%

14%

17%

7%

11%

14%

FY18/3

FY19/3

FY20/3

US
1.

10%

China

24%

14%
FY21/3
Japan“Geographic region” is by each of the regional companies of Socionext

Others18%

FY22/3

8%

31%

26%

25%

21%

33%
20%

18%

7%

12%

16%
FY23/3

0%

19%

6%

6%

FY18/3

FY19/3
US

16%

34%

37%

FY21/3

FY22/345%

11%
FY20/3
China

Japan

FY23/3

Others12

Breakdown by Process Node (Yearly Ratios)
Net Sales

NRE Revenue
100%

100%

80%

64%

55%

45%

43%

42%

29%

22%

60%

25%

23%

21%

80%

18%
33%

60%

20%

0%

37%
31%

36%

5%

9%

FY18/3

FY19/35-7nm

10-16nm

28%

20%

3%
FY20/320-28nm

16%

10%

28%

FY21/3

16%

33%

13%
FY22/3

FY23/340nm & above / Others

10%
12%

30%

40%

34%
9%

15%

29%

17%

19%

30%

46%
40%

14%

20%

0%

44%
28%

59%
40%

43%

FY21/3

FY22/315%

1%
FY18/3

FY19/35-7nm

10-16nm

FY20/320-28nm

FY23/340nm & above / Others

13Consolidated Earnings Forecast(Yen in billions)

Full Year Results

Full Year Forecast
as of April 2023

YoY

YoY %

192.8

200.0

7.2

3.8%

Operating Income

21.7

22.5

0.8

3.6%

11.3%

11.3%

0.0%pt

19.8

17.5

-2.3

10.3%

8.8%

-1.5%pt

ProfitMarginBasic Earnings per Share

FY2024/3

Net Sales
Margin

FY2023/3

587.02yen

Dividends per Share

210.00yen

FX Rate (USD/JPY)

135.5yen-11.5%

519.80yen
210.00yen
115.0yen

FX sensitivity: Appreciation or depreciation of 1 yen against USD would have impact of approximately 1.3 billion yen on Net Sales and 0.35 billion yen on
Operating Income annually. The exchange rate sensitivity of JPY to other currencies would be minor
Dividend forecast was 160 yen per share as of September 2022 and 190 yen per share as of January 2023
14

Background of Earnings Forecast / Market Trend
Revenue forecast

Operating Income forecast

 Product revenue Operating Income







Application Market:− Increase for Automotive, Data Center & Networking and Industrial− Slight increase for Consumer, Smart Devices
FY24/3 First and Second Half Fluctuation:
1H revenue may exceed 2H due to “Special Demand”
Geographical Region:− China: Increase in Automotive, Data Center & Networking− US:
Slight increase including for consumers− Japan: Increase in Smart Devices and Automotive, while consumer products
expected to decline NRE revenue







FX rate assumption: 1USD = 115JPY
FX sensitivity (annual): 1.3 billion for net sales, 0.35 billion yen for OP, per 1 yenappreciation or depreciation against USD
Product Gross Profit Margin:
Expected to improve slightly due to decrease of advance procurement
Increase in R&D and SG&A:− R&D cost for leading-edge technology products, Depreciation & Amortization− IT investment, Overseas selling expense− Cost of labor to maintain human resources− Gradual increase expected in real term, but overall revenue will slightly decrease
due to FX impact

Business and market trend
Automotive
Data Center &Networking
Smart Devices
Industrial &Others









Innovation continues for ADAS (Advanced Driver Assistance System) and AD (Autonomous Driving)
Demand is active for zone architecture and sensing SoCs
Demand for 5G and cloud service SoCs is in growth trend
Acquiring new design wins in the US remains a challenge

Demand for interchangeable lens cameras is expanding / Action cameras are shifting towards higher image quality and luxury
Opportunities with advanced customers are increasing in computer vision and AR markets
Opportunities are increasing for large-scale SoCs for FA and measurement equipment, as well as for custom SoCs using
RF-CMOS technologies
15

Strong Design Wins
“Design Win Amount” has approximately doubled through transformation since 2018
 Acquired approximately 250 billion yen in FY23/3, keeping growth trend“Design Win Amount1” (LTR) acquired in each fiscal year

Approx.

250 billion yen ~Approx.

200 billion yen
Approx.

100 billion yen

FY18/3

FY19/3

FY20/3

FY21/3

FY22/3

FY23/3We do not update the “design win amount” for any changes in circumstances that we become aware of after such period-end date. Those changes include: (1) recognition of revenue relating to such projects
or any other subsequent changes in the development process, estimated sales volumes, unit prices, available manufacturing capacity or other factors that occur, and (2) any subsequent cancellation ofprojects. For example, certain projects in our focus areas reflected in the “design win amount” for FY21/3 and FY22/3 suffered from subsequent cancellations that accounted for more than 10% and 20%,
respectively, of the relevant “design win amount” shown in the graph above. However, the “design win amount” corresponding to subsequent project cancellations for FY18/3, FY19/3, FY20/3 and FY21/3
were more than offset by the effects of increases in actual or newly estimated unit prices or volumes with respect to some of the projects compared to our original expectations, and thus the retrospective“design win” amounts for such years after taking these subsequent effects into consideration would show a modest increase compared to the amounts depicted above. A foreign exchange assumption of
1USD=100JPY has been used with respect to all six periods set forth in the above graph.
1.

The life-time revenue (or LTR) of the ”design win amount” for a particular period reflects our expectations as of the end of such period, based on various estimations and assumptions that we believe to be reasonable at such time, regarding
the total future revenue from the design win projects that were acquired during such period, many of which involve a considerable degree of subjective judgment. Actual revenues could differ, and our expectations regarding future
revenues could change after such period-end date, due to various factors such as subsequent cancellations, changes in the development process and costs, actual revenues earned, changes regarding sales volumes and product durations,price changes, changes in our manufacturing capacity and the impact of foreign exchange fluctuations, among others. In addition, we continue to refine our estimation methods without retroactively updating past-period amounts. As aresult of the foregoing, a direct period-to-period comparison may not be meaningful beyond describing general trends over extended periods.

16Design Win Balance: Breakdown of Changes


Design Win Balance increased from March 2022with acquisition of new design wins and increase of amount for products currently in production stage

Approximately 60% of current Design Win Balance expected to be turned into net sales in FY25/3 to FY28/3(Yen in billions)

Design Win Balance (Approx.)FY2022/3 - FY2023/3

1,200

60

250

150

1,000

1,000

Increase due to securing production quota
for FY23/3

840
800

Main factors in changes (approximate figures)600

1. New design wins: +250 billion yen• Automotive: approx. 40%• US: approx. 40%

2. Changes in balance from existing design wins: +60 billion yen

400• Increase sales in FY23/3: 20 billion• Increase in and after FY24/3: 40 billion

3. Sales recognition: -150 billion yen

200

0

•
•
•
•
•

Design Win Balance
as of March 2022

New Design Wins

Review and update ofestimates, cancellation, etc.

Revenue recognition

Design Win Balance
as of March 2023

Design Win Balance is calculated on assumption of 1USD=100JPY“Special Demand” is excluded for the following reasons: (1) Sales are likely to fluctuate (2) It is expected to be recorded as sales mainly in 1H FY24/3 and deducted from the balance (3) Considering the situations including advancewafer procurement by customer request, we considered it is not appropriate to count the amount from Special Demand into Design Win Balance, an index to evaluate and analyze long-term revenue trend
Amounts on this slide are rounded to the nearest billion yen
Changes in balance from existing design wins include cancellation and review / update of estimates by change of production volume, sales price, etc.
Design Win Balance as of June 2022 was 880 billion yen

17Mid-Term Financial Target-Top Line Growth
Sales growth are driven by product sales from existing design wins and acquiring new design wins
 “Growth beyond the Mid-Term Plan (1)” and “Effect of FX (3)” are expected “Effect of Special Demands (2)” also contributes to growth3

Effect of FX

Effect of Special Demands (Mainly in 1H FY24/3)

FX 115

FX 135Growth beyond the Mid-Term Plan
Initial Estimate at Mid-Term Plan

FX 125

2

FX 115

FX 125
FX 125
FX 115

FX 115

1

Business Transformation

FY21/3

FY22/3

FY23/3

FY24/3e18

Design Win Balance by Application Market and Geographic Region

-


-

By application market:

Reflecting the recent strong design wins in automotive market, approx. 30% of Design Win Balance is from “Automotive”, 20+% is from “Data Center & Networking”, and10+% is form “Smart Devices”
Growth in demand for advanced SoCs in the industrial equipment has resulted in “Industrial & Others” accounting for approx. 30%

By geographic region:

Japan continues to account for about one third, but share of US and China increased to about 20% and about one quarter respectively / Europe accounts for about 10%

By application market

By geographic region

Automotive
DC&NW
SD
Industrial & Others

Japan
US
EuropeChina
Asia excluding China

 By application market: relatively well-balanced increase in Design Win Balance

By region: US and China each saw an increase in Design Win Balance Sales from DC&NW and Automotive businesses in China will grow faster than Automotive in US / Share of China continues toexpand for now
 In the mid-term, well-balanced sales growth is expected, in line with the composition of Design Win Balance••

Charts on this page excludes amount of “Special Demands”“Geographic region” is by each of the regional companies of Socionext

19

Detail of “Design Win Amount” to Revenue
Illustrative Description of “Design Win Balance”“Design Win Balance1” ・・・“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 Balance” thus reflects certain subsequent developments after the end of the period in which the applicable design wins wereacquired up until the relevant balance date. “Design Win Balance” is regularly managed in accordance with prudent procedures to account for future risks.

Image of Change in “Design Win Balance”2“Design Win
Balance”“Design Win Amount” calculated from
“Design Win Balance” 3“Design Win
Amount”“Design Win
Balance”±+

Additional
Design Win“Amount”

Review and update
estimates of
product volumes
and unit price formass production
stage and otherfactors.

Product Revenue3
NRE Revenue3-

Revenuerecognition“Design Win Balance”(As of March 31st, 2023)
Approx.

1trillion

JPY

±

+

End of Year N-1
1.

2.

Additional
Design Win“Amount”

Review and update
estimates ofdesign anddevelopment costs
and other factors.

-

Revenuerecognition

Year N
Revenue

End of Year N

Ratio of Focus Areas“Design win balance” represents our estimates of remaining accumulated “design win amount” that is associated with projects that are active as of a particular date. “Design win balance” thus reflects certain subsequent developments after the end of
the period in which such design win was acquired up until the relevant balance date, including (1) recognition of revenue relating to such projects or any other subsequent changes in the development process, estimated sales volumes, unit prices,available manufacturing capacity or other factors that occur, which could either increase or decrease “design win balance” and (2) any subsequent cancellation of projects. For example, certain projects in our focus areas reflected in the “design win
amount” for FY21/3 and FY22/3 suffered from subsequent cancellations that accounted for more than 10% and 20%, respectively, of the relevant “design win amount” shown in the graph above. However, the “design win amount” corresponding tosubsequent project cancellations for FY18/3, FY19/3, FY20/3 and FY21/3 were more than offset by the effects of increases in actual or newly estimated unit prices or volumes with respect to some of the projects compared to our original expectations,and thus the retrospective “design win” amounts for such years after taking these subsequent effects into consideration would show a modest increase compared to the amounts depicted above. A foreign exchange assumption of 1USD=100JPY has
been used
For illustrative purposes only
3. Refer to slide 43

20

Consolidated Financial Results
for the Fiscal Year Ended March 31, 2023
─
─

FY23/3 Results
FY24/3 Forecast

Mid-Term Financial ModelMid-Term Financial Targets

FY21/3

FY22/3

Mid-Term
Trarget1

99.7

117.0

High teen%
CAGR
Low-to-Mid
teen %Net Sales
Growthbillion yen

billion yen

OP Margin

1.6%

7.2%

FY23/3Results
192.8

billion yen

11.3%

The mid-term targets presented herein represent our plans and expectations as of September, 2022. These mid-term targets are forward-looking statements, are subject to significant business,
economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company, and are based upon assumptions with respect to future decisions, which
are subject to change. Actual results may vary and those variations may be material due to a number of factors. Nothing in this presentation should be regarded as a representation by any person thatthese targets will be achieved, and the Company undertakes no duty to update these targets as circumstances change.

22

Roadmap to OP Margin Target
Increase product revenue through accumulated design wins
 Improve profitability with product revenue increase and operating leverageRoadmap to OP Margin Target
OP Margin

OP Margin(FY22/3)

7.2%

1

2

3

Decline in
GP Margin

Improvement in
R&D / Net Sales Ratio

Improvement in
SG&A / Net Sales Ratio

Increase in product revenue
 Increase in product revenue ratio1
 GP margin decreases due to decline
in proportion of NRE revenue, butamount of GP will increaseMechanism Increase in product revenue

 Improvement in R&D efficiency(Mid-Term target2)

Low-to-Midteen%

 Increase in total net sales

while total expense increases

Impact on
OP Margin
Progress1.
2.

In line with expectation alongwith product revenue increaseRatio is steadily getting lower,
still room for improvement

Improving over expectation

Product revenue ratio is defined as product revenue divided by net sales, which indicates how much portion of net sales comes from sales of products as opposed to NRE revenues
For the mid-term financial targets, please see slides 22

23

Further Growth through "Phase 2 Transformation”


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”“Phase 1 Transformation”

Mid-Term Financial Targets

More design wins by “outside-in change”• Transformation of business model and focus business area Expand “Design Win Amount”  Expand “Design Win Balance”
 Expand product revenue
 Expand profit by operating leverage

Further Growth and Development
through “Phase 2 Transformation”• Build competitive R&D structure / active investment• Strengthen ties to SoC ecosystem• Maintain high level of design win amountNet Sales
OP Margin

FY21/3

FY22/3

99.7

117.0

billion yen

billion yen

1.6%

7.2%

Mid-Term
TargetFY23/3Results

High teen%
CAGR

192.8
billion yen

Low-to-Mid
teen%

11.3%

“Aiming for further
Growth”24Toward Future GrowthBeyond the mid-term, Socionext aims to continue acquiring additional design wins in pursuit of further growthMarket Trend
Increase in demandfor “Solution SoC” to continue
Entering the era of “More Than Moore”,
new services and applications continue to emerge

R&D
Strengthen “Solution SoC” design platform
Investment in leading technologies
Enhance R&D efficiency and technology capability

×Growth Strategy

AD/ADAS

Continue to leverage the competitive strength of the
Solution SoC business model

5G/DC/HPC

Strengthen investment and offer broader range of
products

Smart Device

Enhance capabilities in advanced and low power
technologies in innovative markets

Industrial
and Others

Leverage “Solution SoC” business model for industrial
market and provide custom SoC with advanced process
nodes or RF-CMOS technologies

Transformation of R&D Structure
Build 3-tier R&D structure
to address business expansion
Global R&D Leading Team - Project Management - R&D Resources

Continue to Acquire New Design Wins

25

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 Build standard and optimized R&D flow withplatform-based approach Improve development efficiency and profitability

CPU x12

Build solid development platform including software
Closer partnership with SoC ecosystem(EDA, IP and other suppliers)

OCM
8MB

GPU/
Codec

DSP

NPU
x4

PCIeGen3

Peripheral

HWE

DSP

HWE

PCIeGen4

SW
CODEC

HW
SERDES

x24
Peripheral

HW

PCIeGen5

7nm

Ethernet
SystemControl
HWE

NPU
Peripheral

Common concept across major markets
Networking

Data Center

Application Specific Middleware
Application Specific Libs
Custom Device Driver

AI
NW
Switch

SW

OCM
96MB
DSP

HW

PF

CPU x48

SystemControl

OCM
20MB

Automotive

SW

APP

USB/SATA

Ethernet

x8

Actively invest in leading technologies (3nm & beyond, chiplet, AI for
design, IP, etc)

 Strengthen ties to SoC ecosystem and drive global
innovation

CPU x40

SystemControlSocionext’s initiatives
USB/SATA

x8

DDR5 x 3ch

Move to platform-based design, based on a computer architecture
Keep up with technology evolution while maintaining the existing
assets of each functional layers.

Ethernet

DDR5 2ch

USB2/3

DDR5 x 2ch

What Socionext can do

7nm

x8

LPDDR5 x 1ch



5nm

Common complexity to achieve optimal PPA
Common concepts across major markets

LPDDR5 x 1ch



DDR5 x 3ch

Design trends

DSP
SecureACC

ISP
NW
Protocol

Subsystem configurations

Open Framework & Middleware
Linux Kernel
System control DriverStandard Device Driver
ARM Trusted FW/UEFI

MemoryCPUIFSMB Firmware
SMB Firmware
XX
XX
XX

MCU

26

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～March 20182022 ～～ 2021

Global R&D Leading Team

Sales

Sales

Business Group
Business
Unit

Business
Unit

Business
Unit

Business
Unit

Business
Unit

System Architecture
Package

DFTCore IPs

DesignSoftwareBusiness Unit

Business Unit

Business Unit

Business Unit

Business Unit

Business Unit

Common Technology

R&D

System Architecture,
Design Methodology, DFT,
Design Quality, Chiplet, Package

Measures
Hire talented personnel
globally

Project Management

Reinforce PM in line withthe status of design wins

R&D Resources

Reinforce resources
including outsourcing to
Non-Japan-based design
companies

Production Technology/Quality Assurance

Consolidation of BUs led to shift of business areas from
TV, Cameras to Automotive, Data Center & Networking andSmart Devices

Building global and competitive R&D structure
in line with new and distinctive business model
for future growth27Appendix:
Overview────Socionext at a Glance
Solution SoC Business Model
Transformation
Market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 FY23/3)

History
ASSP/ASIC

Business model
Solution SoC

Application Market

5-7nm

Solution SoC(Optimal Custom SoC)

Started business in 2015

Business Description

Fabless
Custom SoCs

2018

Capital30.2

billion yen

As of March 2023

GlobalEmployees
2Engineers

2,526
Approx.

1,900

Key Financials FY23/3
Net Sales

192.8

billion yen
1.
2.
3.

Net Sales Growth
(YoY)

64.7%

76%
“Automotive” “Data Center & Networking”“Smart Devices”

Employees1

OP Margin

11.3%

Numbers of employees and engineers are on a consolidated basis
Number of staff working in divisions relating to technical development and analysis in and outside Japan
Estimated by Socionext based on Data by Omdia

Process Node
19%

59%

10-16nm~Socionext’s Positioning in Semiconductor Market~
Types of Custom SoC(ASIC) Business Models

Logic
GeneralPurposeApplication
Specific
ASSP
Custom SoC(ASIC)

 Automotive, Data Center & Networking
and Smart Devices are main focus areas New and distinctive business model Provides cutting-edge custom chips forinnovative customers

Three business models
 Traditional ASIC Solution SoC

New and distinctive
business model ASIC designed by ASSP vendor

Market Size $24bn3
29

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 IC

Total Semiconductor

Memory IC

Microcomponent
IC

Logic Application
Specific IC

Socionext mainly operates within this market

Custom SoC

Socionext provides cutting-edge custom chips
for innovative customers

Custom SoCs are integrated circuits that are equipped with functions designed for a specificcustomer. Custom SoCs are optimally designed in accordance with customers' request

ASSP
Analog IC

Discretes etc

ASSPs (Application Specific Standard Product) are integrated circuits for a specific function generally
needed in a certain application/domain. Since ASSPs are not designed for a specific customer,
they can be components for multiple customers in certain application markets.
General Purpose
Logic
30

Features of Solution SoC Business Model 1
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 optionalcustomization
2
Custom SoC(ASIC)

Architecture(Service/Application)

Architecture (System)

ASSP

Traditional
ASIC2

Solution
SoC

ASIC designed
by ASSP vendors2

Customer

Customer

Customer

Customer

Architecture (SoC)
Specification (SoC)

HW

SW

Use SoC vendor’s
IP and design
methodology

IP
PCB
PKG
DFT

SoC

SoC Design

Physical

SoC
VendorSoC
VendorSoC
VendorSoC
VendorMass Production /Quality Control
1.
2.

Manufacturing

This slide is an image based on the company’s recognition.
This graphic provides an illustrative framework of the types of industry players based on the company’s classifications.

31

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”
Business Model

Past
2018

Focus Areas

DTV

Focus onASSP and ASIC

Present

Technology

CultureMainlyDomestic Focus

Follower

HierarchicalOrganization

Global Market

LeaderBlu-ray/DVD

DSC

Automotive

Focus onSolution SoC

Expansion ofoverseas business

Smart
Devices

Data Center &Networking(3nm,5nm,7nm)

Quick Decision-Making
with a Flat Team
Structure
32

The Image of Timeline from Design Win to Mass Production
Illustrative Description of “Design Win Amount”“Design Win Amount１” ・・・“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 Amounts” are expected to contribute to product revenue once projects progress to the mass production stage of the project lifecycle.
“Design Win Amount” is calculated in accordance with prudent procedures as below• Each “Design Win Amount” is estimated based on assumptions such as per-unit prices and estimated future product sales volumes, not on sales forecasts provided by customers1• A foreign exchange assumption of 1USD=100JPY has been used

“Design Win
Amount”

Illustrative Timeline from Design Win to Mass Production2
Year0

Year1

Acquisition of
Design Win

Year2

Design &Development

Year3

Year4

Year5

Year6

Year7~

Mass Production
Product Revenue

Main source of Operating Income

NRE Revenue

Limited contribution to Operating Income

Revenue
Cost
1.
2.

R&D

Refer to slide 43
For illustrative purposes only. The actual timeline of product development to mass production may differ materially based on the product and actual customer demand

COGS

33

Transforming into a Global SoC Company with Cutting-edge Technologies
 Shift in NRE revenue composition illustrates the steady progress of business transformation

FY18/3
Advanced
Process Nodes

FY21/3

FY22/3

FY23/3
5-7nm

1%
28%

(NRE Revenue)

40%

43%
30%

28%

19%

59%

10-16nm

Revenuefrom
Outside Japan(NRE Revenue)

Outside Japan

29%
64%

69%

74%

34

Positioning of Socionext in Semiconductor Market
With the exception of Apple, Socionext has the 2nd largest market share of 10% within the Custom SoC(ASIC)1 market,
where some players can design 7nm/5nm SoCs.
Custom SoC(ASIC) 1 Market Share2 (2022)
Market ShareASSP1 Market Share2 (2022)

Market Share Excluding Apple

Market Share

Market Size $12 billion

OthersApple 49%
51%

Market Size3

Others34%$24 billion
Market CAGR3

Market Size3$121 billion

9.8%

These Market Data
are estimated by
Socionext based on
Omdia data
1.
2.
3.

Qualcomm

Broadcom

Nvidia(2021-2025E)

17%

9%Marvell 7%

6.4%

21%

Others28%49%Market CAGR3(2021-2025E)

Intel

10%

11%
MediaTek

13%
Broadcom

The market data above does not include certain traditional ASIC vendors in Taiwan
such as GUC, Alchip and Faraday due to the lack of third-party statistical data.

We define “ASSP” as the “Logic ASSP” segment based on Omdia ”Application Market Forecast Tool-1Q 2023” classification and “Custom SoC(AS)C)” as “Logic ASIC” based on Omdia "Application Market Forecast Tool-1Q 2023". Omdia’sclassifications of the markets may differ in certain respects from our target markets. Classification are based on the company’s recognition
These market data are estimated by Socionext based on Omdia data ”Competitive Landscaping Tool CLT, Annual- 4Q22”. All market sizes are calculated in terms of USD-based revenue
Calculated by Socionext based on Socionext internal information and Omdia ”Application Market Forecast Tool-1Q 2023”. Market CAGR(2021-2025E) is calculated (figure of 2025E / figure of 2021)^(1/4)-135

Socionext Based on Growing Market
Total global market size of focus areas is expected to grow at 15.3% CAGR¹, higher than that of custom SoC (ASIC)
 Automotive custom³ SoC(ASIC) market is expected to grow at 14.1% CAGR¹
Custom SoC2,3(ASIC)(Billion USD)ASSP2,3(Billion USD)

19

2021
111

2021

Semiconductor²(Billion USD)

1.
2.
3.
4.
5.
6.

27

2025E
142

(Billion USD)

6.3

9.7

2021

2025E

Custom SoC(ASIC)/ SAM of Focus Areas2,4,5 Markets

8.0

4.5
2025E
656

593
2021

Custom SoC(ASIC)/ SAM2,4

2025E

2021
(Billion USD)

0.6

2021

Automotive6
1.1

2025E
Data Center & Networking6
6.3(Billion USD)
3.3

2025E

2021

2025E

CAGR is calculated by (figure of 2025E / figure of 2021)^(1/4)-1
Calculated by Socionext based on Omdia ”Application Market Forecast Tool-1Q 2023”. These figures are our estimate of the market size for ASIC, ASSP and semiconductor markets and are not intended as an objective indicator of the size of themarket for our current businesses model. Our estimates of the each Serviceable Available Market (SAM) and Our 3 Focus Markets are based on certain assumptions and were calculated using statistical data and publications from external sources as
indicated herein. Actual market size may differ from these estimates due to the limitations peculiar to such statistical data and publications in terms of their accuracy
We define “ASSP” as the “Logic ASSP” segment based on Omdia’s ”Application Market Forecast Tool-1Q 2023”.’s classification and “Custom SoC(ASIC)” as “Logic ASIC” based on Omdia’s classification. Omdia’s classifications may differ in certain
respects from our target
SAM are “Data Center Servers”, “Solid-State Drives”, “Other Peripherals”, “Enterprise Ethernet Switches & Routers”, “Carrier Ethernet Switches & Routers”, “Optical Equipment”, “Broadcast & Streaming Video”, “Data Center Networking”, “M2M Modules”,“Mobile Comm Infrastructure”, “Other Consumer Electronics”, “Other Wireless Communications”, “LCD TV”, “OLED TV”, “Set-Top Boxes”, “Connectivity & Telematics”, “Infotainment & Cluster”, “ADAS”, “Chassis & Safety”, “Medical Electronics”,“Automation”, and “Test & Measurement”, ”Security & Video Surveillance”
Our focus areas are (a) Automotive, (b) Data Center & Networking and (c) Smart Devices. SAM of Focus Areas’ Market are “Data Center Servers”, “Solid-State Drives”, “Enterprise Ethernet Switches & Routers”, “Carrier Ethernet Switches & Routers”,“Optical Equipment”, “Broadcast & Streaming Video”, “Data Center Networking”, “Mobile Comm Infrastructure”, “Other Consumer Electronics”, “Connectivity & Telematics”, “Infotainment & Cluster”, “ADAS” and “Chassis & Safety”, ”Security & Video
Surveillance”
SAM of Automotive are “Connectivity & Telematics”, “Infotainment & Cluster”, “ADAS” and “Chassis & Safety” in Automotive Electronics Categories. SAM of Data Center and Networking are “Data Center Servers”, “Solid-State Drives”, “Enterprise
Ethernet Switches & Routers”, “Carrier Ethernet Switches & Routers”, “Optical Equipment”, “Broadcast & Streaming Video”, “Data Center Networking”, “Mobile Comm Infrastructure”

36Appendix:
Breakdown of Net Sales and Operating Income(Quarterly Ratios)

Breakdown by Application Market (Quarterly Ratios1)
Net Sales

NRE Revenue

100%

80%

100%

46%

40%

40%

40%

20%

24%
23%

14%
17%

0%

35%

33%

16%

60%

40%

33%

30%

27%

16%
17%

31%

27%

14%

19%
14%

19%

29%

12%

30%

13%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3
1Q

Automotive

2Q

3Q

4Q

Data Center & Networking

1Q

2Q

Smart Devices

3Q

27%

4Q

Industrial & Others

9%
23%

40%

0%

12%

24%

33%

21%

24%

28%
29%

28%

35%

25%

14%

41%
20%

13%

28%

14%

60%

40%

24%
15%

24%

24%

80%

10%

33%
29%

31%

10%
23%

10%

49%
29%

31%

22%

26%

22%

29%

32%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3
1Q

Automotive

2Q

3Q

4Q

Data Center & Networking

1. The quarterly ratios are highly volatile and may fluctuate significantly from quarter to quarter as they are greatly affected by the development status of individual projects.

1Q

2Q

Smart Devices

3Q

4Q

Industrial & Others
38

Breakdown by Geographic Region (Quarterly Ratios1)
Net Sales
100%

12%

11%

12%

11%

7%

NRE Revenue
8%

6%

7%

80%

60%

55%

49%

51%

48%
55%

48%

43%

100%

3%

80%

31%

40%

12%
17%

16%
20%

0%

20%
13%

24%

16%

21%

19%

15%

29%

33%

15%

18%

23%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3
1Q

2Q

3Q
US

4Q
China

1Q
Japan

2Q
Others

3Q

4Q

12%

23%
28%
26%

34%

57%

0%

6%

15%

29%

43%

10%

22%

10%

40%

20%

21%

11%

30%

34%

14%
37%

24%

5%

7%

42%
60%

40%

4%

55%
39%

29%

33%

22%

45%

45%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3
1Q

2Q

3Q
US

4Q
China

1. The quarterly ratios are highly volatile and may fluctuate significantly from quarter to quarter as they are greatly affected by the development status of individual projects.

1Q
Japan

2Q

3Q

4Q

Others39

Breakdown by Process Node (Quarterly Ratios1)
Net Sales

NRE Revenue

100%

80%

100%

46%

44%

40%

41%

37%

35%

20%

30%

9%
15%

0%

29%

27%

23%

17%
10%

16%

21%

20%

5-7nm

2Q

3Q
10-16nm

25%

24%

36%

40%

1Q

2Q

3Q

40nm & above / Others

4Q

31%

24%
12%

11%

21%
11%

10%

24%

66%

58%
36%

46%

15%
13%

23%

34%

20%

0%

27%

16%

30%

55%

10%

20-28nm

14%

7%

60%

18%

19%

4Q

30%

12%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3
1Q

20%

11%

40%

15%
17%

27%

23%

30%

7%
80%

21%

60%

40%

23%

8%

72%

45%

23%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3
1Q
5-7nm

2Q

3Q
10-16nm

4Q
20-28nm

1. The quarterly ratios are highly volatile and may fluctuate significantly from quarter to quarter as they are greatly affected by the development status of individual projects.

1Q

2Q

3Q

4Q

40nm & above / Others
40Upfront Investment toward Future Growth Aiming to increase upfront investment gradually under “Sufficient & Efficient investment” policy(upfront investment accounts for the larger part of2

R&D not linked to individual design projects)

Image of Socionext’s R&D Structure

1 Cost linked toindividual design projects~Amount~
NRE
Revenue• Occur during the design &development stage(Approx.)Upfront investment~Amount~

2 Cost not linked toindividual design projects

Total R&D
expensesminus NRE
revenue(Approx.)Total R&D•

This slide is an image based on the company’s recognition

Upfront
Investment

 Meet customer requests and acquire
new design wins
 Strengthen skills of integration andefficiency
 3nm & beyond, chiplet, AI for design,
IP, etc
41

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
invitation of any offer to buy or subscribe for shares of our common stock (the “securities”) in any jurisdiction in which such offer, solicitation or
invitation would be unlawful. This presentation and the information contained herein is being furnished to you solely for your information andmay not be reproduced, disclosed to or redistributed to any other person, in whole or in part without our prior written consent.
This presentation is based on the economic, regulatory, market and other conditions as in effect on the date hereof, and neither Socionext nor
its advisors or representatives guarantees that the information contained in this presentation is true, accurate or complete. It should beunderstood that subsequent developments may affect the information contained in this presentation, which neither Socionext nor its advisors or
representatives are under an obligation to update, revise or affirm. The information in this presentation is subject to change without prior noticeand such information may change materially. Neither this presentation nor any of its contents may be disclosed to or used by any other person
for any purpose without the prior written consent of Socionext.
This presentation contains statements that constitute forward-looking statements, including estimations, forecasts, targets and plans. Suchforward-looking statements do not represent any guarantee by management of future performance. Any forward-looking statements in thispresentation are based on the current assumptions and beliefs of Socionext in light of the information currently available to it, and involve
known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Socionext’s actual results,
performance, achievements or financial position to be materially different from any future results, performance, achievements or financial
position expressed or implied by such forward-looking information.
Except as otherwise indicated, the views, statements and outlook indicated herein are those of Socionext. The information related to or preparedby companies or third parties other than Socionext is based on publicly available and other information as cited, and Socionext has notindependently verified the accuracy and appropriateness of, nor makes any warranties regarding, such information.
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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 andsubjective judgment, including assumptions regarding development plans, development costs, NRE revenues, per-unit prices
and estimated future product sales volumes as well as the estimated lifespan and likelihood of cancellation of particular
products. Product sales volumes are estimated based on preliminary customer indications of volume as well as our own
projections made using historical customer transaction data, third-party market data and other factors while restrictions on theavailable manufacturing capacity for our products are not fully taken into account. We may change our calculation method for“Design Win Amount” and “Design Win Balance” and have done so in the past, and thus a direct period-to-period comparison
may not be meaningful beyond describing general trends over an extended period. Design win information is calculated on a
management accounting basis and is formulated and used internally for management’s assessment of business performanceand strategic initiative planning. Due to our relatively short operating history under our new business model and the extended
period of time before a design win contributes to our product revenue, we have limited financial data that can be used toevaluate our business and future prospects, and our management believes that our operating results in resent fiscal years may
not be indicative of our future performance. We present design win information for reference purposes only. You should notplace undue reliance on design win information presented herein. Please refer to page 42 of this presentation regarding
certain risks associated with forward-looking statements.

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