2Q FY2024/3

Consolidated
Financial Results
October 31, 2023
Socionext Inc.

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.
2

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 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 the available manufacturing capacity for our products are not fully taken into account. In connection
with analyzing our net sales and determining our design win balance, we take into account whether any customer demand constitutes “special
demand,” a term we use to refer to short-term customer demand resulting from stockpiling and other activities that do not reflect current
underlying demand. We determine whether any given demand is special demand on a case-by-case basis at our own discretion based on ourassessment of a variety of factors related to the demand in question. As a result, amounts that we identify as special demand may not be
objectively accurate in light of such definition of “special demand.” We believe that it is appropriate to exclude such short-term “special demand”
amounts from our design win balance because the design win balance is intended to serve as an index to evaluate and analyze our long-term
revenue trends. In terms of our net sales, net sales that are attributable to “special demand” should be viewed as short-term inflated demandthat may be front-loading longer-term demand, and thus such sales should be appropriately deemphasized when analyzing historical and future
trends in our results of operations. While “Design Win Balance” is not impacted by the occurrence or the amount of “special demand,” it canfluctuate by reflecting changes in assumptions for forecasts of demands except for “special demand.” 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 bemeaningful 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 performance and strategic initiative planning. Due to ourrelatively short operating history under our new business model and the extended period of time before a design win contributes to our productrevenue, we have limited financial data that can be used to evaluate our business and future prospects, and our management believes that ouroperating results in recent fiscal years may not be indicative of our future performance. We present design win information for reference
purposes only. You should not place undue reliance on design win information presented herein. Please refer to page 2 of this presentation
regarding certain risks associated with forward-looking statements.
3Consolidated Financial Results
for the 6 Months Ended September 30, 2023
──

Actual Consolidated Financial Results 2Q FY24/3 Results
Consolidated Earnings Forecast

2Q FY24/3 Consolidated Statements of Income(Yen in billions)
FY23/3
1Q
Net Sales

2Q

FY24/3
3Q

4Q

1Q

2Q

YoY

YoY %

39.9

42.8

56.1

53.9

61.4

55.5

12.7

29.7%

Product Revenue

31.0

35.3

43.9

46.5

52.9

48.5

13.2

37.5%

NRE Revenue

8.7

7.4

11.5

7.3

8.4

6.8

-0.5

-7.1%

Others

0.2

0.2

0.6

0.2

0.1

0.2

0.0

1.6%

Cost of Sales

19.9

22.1

31.8

30.2

34.5

28.2

6.1

27.8%

Selling, General and Administrative
Expenses

14.5

15.9

18.0

18.8

16.8

18.7

2.9

18.0%

R&D

10.6

11.5

13.4

13.8

12.2

12.5

1.0

8.3%

SG&A (excl. R&D)

3.9

4.4

4.6

5.0

4.7

6.3

1.9

43.8%

5.6

4.9

6.3

5.0

10.1

8.6

3.7

76.2%

14.0%

11.4%

11.2%

9.2%

16.5%

15.4%

+4.0%pt

5.1

5.0

5.2

4.5

8.0

7.3

2.4

12.7%

11.6%

9.3%

8.4%

12.9%

13.2%

+1.6%pt

129.6

138.4

141.6

132.3

137.4

144.6

6.2

Operating Income
MarginProfitMarginFX Rate (USD/JPY)

48.2%

5

1H FY24/3 Consolidated Statements of Income(Yen in billions)
FY24/3

1H

1H

YoY

YoY %

82.8

117.0

34.2

41.3%

Product Revenue

66.3

101.4

35.1

52.9%

NRE Revenue

16.1

15.2

-0.9

-5.4%

Others

0.4

0.3

0.0

-5.9%

42.0

62.7

20.8

49.5%

30.4

35.6

5.2

17.2%

R&D

22.1

24.6

2.5

11.5%

SG&A (excl. R&D)

8.3

11.0

2.7

32.4%

10.5

18.7

8.2

78.6%

12.6%

16.0%

+3.4%pt

10.0

15.3

5.3

12.1%

13.1%

+1.0%pt

134.0

141.0

7.0

Net Sales

Cost of sales
Selling, General and Administrative
Expenses

Operating Income
MarginProfitMarginFX Rate (USD/JPY)

FY23/352.7%

6

Quarterly Net Sales and Operating Income
Net Sales1

Operating Income1（Yen in billions）

Product Revenue
including

61.4

Special Demand

56.1

NRE Revenue
Others

39.9
29.8
27.1 28.3
6.4

6.4

7.7

19.2 21.2 20.4

15.0

31.8

8.7

42.8

11.5

8.4

6.8

7.3

14.0%

43.9

46.5

2Q

3Q

FY22/3
1.

4Q

1Q

48.5
10.1

5.0

35.3

2Q

3.0%

3Q

FY23/3

9.2%

8.9% 8.0% 8.7%

0.0

1Q

11.4%
11.2%

7.4
52.9

31.0

16.5%
15.4%

55.5

10.0

7.5

23.7

53.9

（Yen in billions）

Operating Income
Margin4Q

1Q

2Q

FY24/3

0.8
1Q

5.6
2.5

2.4

4.9

6.3

8.6

5.0

2.7
0.0%

2Q

3Q

4Q

FY22/3The quarterly figures 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

FY23/34Q

1Q

2Q

FY24/37

Details of 2Q FY24/3 Financial Results - YoY Changes
Operating Income YoY Analysis

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

includingMarginSpecial Demand

NRE Revenue

42.8

Operating Income

55.5
6.8

（Yen in billions）（Yen in billions）

6.1

15.4%

-0.8

-2.6
0.9

11.4%

7.4

35.3

FY23/3 2Q

4.9

4.9

FY24/3 2Q

FY23/3 2Q

FY24/3 2Q＜Net sales＞ YoY +12.7 bn yen (+29.7%)➢ Product revenue +13.2 bn yen (FX impact +1.8 bn yen)
➢ NRE revenue -0.5 bn yen (FX impact +0.2 bn yen）
➢ Depreciation of Japanese yen +2.1 bn yen (USD/JPY 138.4→144.6)

1.
2.

8.6

8.6

48.5

FY23/3 2Q

1

Product Gross NRE Revenue R&D, SG&A
Profitexpenses etc.1

FX impact2

FY24/3 2Q＜Operating income＞YoY +3.7 bn yen (+76.2 %)➢ Increase in gross profit from product revenue +6.1 bn yen➢ Decrease in NRE revenue -0.8 bn yen➢ Increase in R&D・SG＆A, etc. -2.6 bn yen➢ Depreciation of Japanese yen +0.9 bn yen

R&D cost connected to NRE revenue is recorded as an expense. Accordingly, NRE does not fully contribute to an increase in operating income for a particular period.
FX impact is an increase or decrease from the previous year or quarter caused by change in USD/JPY exchange rate. The FX impact is excluded from the other factors shown in the operating income analysis.

8Details of 1H FY24/3 Financial Results - YoY Changes
Operating Income YoY Analysis

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

includingSpecial Demand

NRE Revenue

Operating Income
Margin117.0
15.2（Yen in billions）

12.6

16.0%

（Yen in billions）

-1.5

-4.6
1.7

12.6%

82.8
16.1

66.3

FY23/3 1H

10.5

10.5

FY24/3 1H

FY23/3 1H

FY24/3 1H＜Net sales＞ YoY +34.2 bn yen (+41.3%)➢ Product revenue +35.1 bn yen (FX impact +4.4 bn yen)
➢ NRE revenue -0.9 bn yen (FX impact +0.7 bn yen）
➢ Depreciation of Japanese yen +5.0 bn yen (USD/JPY 134.0→141.0)

1.
2.

18.7

18.7

101.4

FY23/3 1H

1

Product Gross NRE Revenue R&D, SG&A
Profitexpenses etc.1

FX impact2

FY24/3 1H＜Operating income＞YoY +8.2 bn yen (+78.6 %)➢ Increase in gross profit from product revenue +12.6 bn yen➢ Decrease in NRE revenue -1.5 bn yen➢ Increase in R&D・SG＆A, etc. -4.6 bn yen➢ Depreciation of Japanese yen +1.7 bn yen

R&D cost connected to NRE revenue is recorded as an expense. Accordingly, NRE does not fully contribute to an increase in operating income for a particular period.
FX impact is an increase or decrease from the previous year or quarter caused by change in USD/JPY exchange rate. The FX impact is excluded from the other factors shown in the operating income analysis.

9Details of 2Q FY24/3 Financial Results - QoQ Changes
Net Sales & Operating Income
Product Revenue（Yen in billions）

including（Yen in billions）

16.5%

NRE Revenue

8.4

55.5

52.9

48.5

FY24/3 1Q

FY24/3 2Q

0.7

15.4%

-1.8
-1.9

6.8

10.1

FY24/3 1Q

8.6

FY24/3 2Q＜Net sales＞ QoQ -5.9 bn yen (-9.6%)➢ Product revenue -4.4 bn yen (FX impact +2.1 bn yen)
➢ NRE revenue -1.5 bn yen (FX impact +0.3 bn yen）
➢ Depreciation of Japanese yen +2.4 bn yen (USD/JPY 137.4→144.6)

1.
2.

（Yen in billions）

MarginSpecial Demand

61.4

Operating Income

Operating Income QoQ Analysis

1.4

10.1

FY24/3 1Q

8.6

Product Gross NRE Revenue1 R&D, SG&A
Profitexpenses etc.1

FX impact2

FY24/3 2Q＜Operating income＞ QoQ -1.5 bn yen (-15.3%)➢ Increase in gross profit from product revenue +0.7 bn yen➢ Decrease in NRE revenue -1.8 bn yen➢ Increase in R&D・SG＆A, etc. -1.9 bn yen➢ Depreciation of Japanese yen +1.4 bn yen

R&D cost connected to NRE revenue is recorded as an expense. Accordingly, NRE does not fully contribute to an increase in operating income for a particular period.
FX impact is an increase or decrease from the previous year or quarter caused by change in USD/JPY exchange rate. The FX impact is excluded from the other factors shown in the operating income analysis.

10Consolidated Balance Sheet（As of September 30, 2023）
Cash on Hand and in Banks(Yen in billions)(Yen in billions)

As ofMar.31,2023

Total Assets

Change

193.9

178.0

-16.0

156.1

137.1

-19.0

Cash on-hand and in banks

45.1

47.5

+2.3

Accounts receivable-trade

40.8

37.0

-3.8

1

Inventories

47.7

39.2

-8.5

Accounts receivable-other

16.2

5.8

-10.4

Total non-Current Assets

37.9

40.9

+3.0

84.1

54.3

-29.8

82.3

52.5

-29.8

Accounts payable-trade

23.4

16.0

-7.4

Accounts payable-other

24.6

4.0

-20.6

Liabilities related to changeable
subcontracting

18.9

18.2

-0.7

109.9

123.7

+13.8

56.6%

69.5%

Total Current Assets

Total Liabilities
Total Current Liabilities

Total Net Assets
Shareholders' Equity Ratio
1.
2.

As of
Sep.30,2023

Inventories consist of finished goods and work in process
Regular inventory turnover months = ordinary inventories balance/forecasted cost of sales in next-3-month average

46.3

Mar.31
2022

53.0

38.1

37.2

Jun. 30
2022

Sep.302022

Dec.31
2022

45.1

33.9

Mar.31
2023

Jun.302023

47.5

Sep.302023

Inventories
Customer reserved inventory
Regular inventory
2
Regular inventory turnover months

3.6

3.0

3.1

3.1

3.7

（Yen in billions）

3.8

45.7 47.7 43.8

3.9

Current Trend
39.2

29.6
16.4 19.3•

Customer reserved
inventory has
started returning to
the normal level

Mar.31 Jun.30 Sep.30 Dec.31 Mar.31 Jun.30 Sep.30
2022 2022 2022 2022 2023 2023 2023

11

Capex-Depreciation & Amortization / Cash Flow
Cash Flow2

Capex1-Depreciation & Amortization2(Yen in billions)(Yen in billions)

Factors in operating cash flow change in FY24/3 1Q-2Q

8

40

１Q：

Decreased due to bonus and tax payments

２Q：

Increased due to collection of accounts receivable anddecrease in inventories

1Q
FY22/3

2Q

6

20
4

0

2

-20

0
1Q
FY22/3

2Q

3Q

Capex
1.
2.

4Q

1Q
FY23/3

2Q

3Q

4Q

1Q
FY24/3

Depreciation & Amortization

Capex: Purchases of PP&E + purchase of intangible assets
Quarterly financial results of FY 22/3 are unaudited and unreviewed by external auditors

2Q

3Q

4Q

Operating CF

1Q
FY23/3

2Q

3Q

Investment CF

4Q

1Q
FY24/3

2Q

Free CF12

Breakdown by Application Market
Net Sales
Automotive
Smart Devices

NRE Revenue

Data Center & Networking
Industrial & Others

Automotive
Smart Devices

100%

Data Center & Networking
Industrial & Others

100%

80%

57%

50%

44%

41%

41%

32%

21%

23%
39%

80%

50%

22%
40%

23%

26%

0%

40%

24%

29%

29%
30%

18%

12%

28%

30%

32%
24%

14%

25%
40%

20%
20%

28%

27%

21%

30%

60%

22%

24%

39%

21%
60%

14%

16%

9%

11%

FY18/3

FY19/321%

9%
FY20/313%
FY21/316%

16%
FY22/3

28%

20%

14%

18%

16%

FY23/3 FY24/3 1H

27%

0%

4%
FY18/321%
8%

5%

FY19/3

FY20/3

FY21/326%

FY22/334%

38%

FY23/3 FY24/3 1H
13

Breakdown by Geographic Region
Net Sales
US

China

NRE Revenue

Japan

Others

100%

12%

12%

10%

11%

12%

7%

US

Japan

100%

9%

80%

11%

19%

18%

10%

60%

66%

63%

59%

51%

56%

33%

15%
7%
FY18/314%
11%
FY19/314%
FY20/3

FY21/3

21%
25%

42%

18%

18%
FY22/3

16%

22%

20%

20%

14%

17%

55%

40%

20%

26%

60%

40%

24%

8%

36%

71%

17%

7%

31%

38%

52%

Others

21%

80%

44%

0%

China

12%
11%

FY23/3 FY24/3 1H

0%

19%

6%

6%

FY18/3

FY19/3

16%

34%

37%

FY21/3

FY22/3

45%

40%

11%
FY20/3

FY23/3 FY24/3 1H
14

Breakdown by Process Node
Net Sales
5-7nm

10-16nm

20-28nm

NRE Revenue
5-7nm

40nm & above / Others

100%

10-16nm

20-28nm

100%

29%
80%

45%
64%

43%

22%

25%

23%

21%

18%

55%

23%
22%

33%

60%

40%

37%

36%

5%
FY18/39%
FY19/3

3%
FY20/320%
FY21/3

16%

28%

14%
11%

19%

13%

59%

62%

30%

16%
16%

40%

33%

39%

FY23/3 FY24/3 1H

44%

20%

40%

43%

FY21/3

FY22/328%

13%
FY22/3

10%

10%

34%
9%

31%
15%

0%

29%

17%

30%

46%
28%

14%

12%

80%

42%

60%

20%

40nm & above / Others

0%

15%

1%
FY18/3

FY19/3

FY20/3

FY23/3 FY24/3 1H
15

Consolidated Earnings Forecast(Yen in billions)

FY2023/3

FY2024/3

FY2024/3

Full Year Results

Full Year Forecast
as of April 2023

Full Year Forecast
as of Oct 2023

Net Sales

192.8

200.0

214.0

21.2 11.0%

14.0

Operating Income

21.7

22.5

29.0

7.3 33.6%

6.5 28.9%

11.3%

11.3%

19.8

17.5

10.3%

8.8%

587.02yen

504.55yen

MarginProfitMarginBasic Earnings per Share1

13.6% +2.3%pt
22.5

Dividends per Share2

210.00yen

210.00yen

1.
2.
3.

135.5yen

115.0yen

7.0%+2.3pt

5.0 28.6%+1.7%pt

639.52yen3
127.90yen

230.00yen3(after stock split)

FX Rate (USD/JPY)

2.7 13.8%

10.5% +0.2%pt(after stock split)➢

YoY

Previous
Previous
YoY % Forecast Forecast%

46.00yen

133.0yen(FX for2H : 125.0yen)

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. In the second half, it is expected to have an impact of approximately 1.2 billion yen on Net sales. The exchange rate sensitivity of JPY to other currencies
would be minor

Forecasted basic earnings per share for FY2024/3 has been revised from 519.80yen as of the end of April to 504.55yen as of the end of July, reflected the change in the number of shares since April 2023, which is due to the exercise ofstock options. The number of shares used for calculation of the forecast was 33,666,666 shares as of April, 34,684,312 shares as of July, and 35,182,431 shares as of October in the fiscal year 2023. (Actual basic earnings per share for
FY2023/3 was calculated based on 33,666,666 shares.)
Estimated dividends per share for FY2023/3 was 160.00yen as of the end of September, 2022 and 190.00yen as of the end of December, 2022
Socionext will conduct a five-for-one stock split of common stock owned by shareholders listed or recorded in the final shareholder register as of December 31, 2023.

16

Consolidated Earnings Forecast- Operating Income （vs Previous Forecast）(Yen in billion)

FX impact
Improvement of
Cost of goods
manufactured rate

Decrease in
Gross profit from
Product revenue

Forecast as ofApril 2023

NRE
revenue

R&D, SG&A
Expenses etc.

Forecast as of
October 2023
17

Background of Market Trend / Revised Earnings Forecast
and Forecast after FY25/3
Market trend and Design win

FY24/3 forecast◼ Product revenue

Automotive◼

− Innovation continues for ADAS (Advanced Driver
Assistance System) and AD (Autonomous Driving)− Demand is strongly active for zone architecture andsensing SoCs
− Design win has been piling up◼

DC/Networking− Demand for DC＆ networking and cloud service SoCs
is in growth trend− Acquiring new design wins in the US remains achallenge
Smart Devices− Demand for action cameras and new technology is
still strong− Opportunities are increasing for large-scale SoCs for
FA and measurement equipment, as well as forcustom SoCs using RF-CMOS technologies

FY25/3-FY26/3◼ Product revenue◼

◼ NRE revenue− Steady increase due to well acquired Design win◼ Operating Income−−− Opportunities with advanced customers are
increasing in computer vision and AR markets ets.
Industrial &Others

Market− Increase in automotive, DC/Networks, and Industrials− Decrease in MFP, Consumer product due to inventory
adjustment− Special demand (revenue contribute: JPY 15bn for
FY24/3, JPY 4bn for FY23/3), which is concentrated in 1H− 1H revenue is expected to be larger than 2H
Geography− China： increase in DC/Networking− US: Slightly increase including Consumer products− Japan： Decrease in consumer market, Increase inautomotive etc.

After FY25/3 forecast−

Product Gross margin rate Improvement: owing todecrease in the expense for front-loading procurement etc.
Increase in R&D and SG&A: Development for state of thearts technologies, increase of depreciation, investment for
IT, overseas selling expense, labor cost for reinforcing
talented engineers
Restructuring expense recorded in 1H

◼ FX
−
−

−

Assumption in 2H FX: 1USD=125JPY
FX sensitivity in sales: Approx. JPY 1.3bn in FY24/3 annual,approx.1.2bn in FY24/3 2H.
FX sensitivity in Operating Profit: JPY approx. 0.35bn◼

While new mass production launches will continue toserve as the basis for growth, there is a possibility thatnew mass production will be offset by the end of special
demand , which might limit the growth.
New mass production launch− Based on the acquired design win (worth 200 billion
JPY) from FY20/3 to FY23/3 and the current strong
situation, expecting stable sales growth through new
mass production launches.
Factors to be offset− For 5G network products, which have been driving
the growth, Special Demand ended in the first half of
FY24/3, returning to the baseline in FY25/3, and may
decline faster than expected from FY26/3 onward.
− Chinese market & consumer market are being weak
Automotive business− While current design win for automotive is well, takes
time for start of mass-production and revenue
contribution
Excluding the impact of FX, we expect a period of
relatively flat or slight decrease in the next two years

After FY27/3◼

Expecting a return to high growth against a backgroundof strong design win acquisitions especially in theautomotive market
18

(Reference) Mid-Term Financial Targets announced in Sep 2022

FY21/3
Net Sales
GrowthOP
Margin1.

FY22/3

99.7
117.0
billion yen billion yen

1.6%(1.6 billion yen)

7.2%

(8.5 billion yen)

Mid-Term
Target1

FY23/3Results

High teen%
CAGR

192.8
billion yen

Low-to-Mid
teen %

11.3%

FY24/3
Estimate
214.0
billion yen
CAGR:35%

13.6%(21.7billion yen) (29.0 billion yen)

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 that these targets will be achieved, and the Company undertakes no duty to update these targets as circumstances change.

19Illustrative Image of Socionext Growth◼

Keeping high level revenue, net sales will possibly be flat due to the end of special demand and weakening Chinese andconsumer market, followed by growth acceleration driven by mass production in automotive-related business, etc.
Net sales achievement and forecast1

Sales growth mechanism

Effect of FX(Upward revision due to the yen depreciation
against the US dollar from USD 1 = JPY 120)
Effect of Special Demands (Mainly in 1H FY24/3)

Design win grew stepwise

Upward Deviation beyond the Mid-term Plan

FY18/3••

FY19/3

FY20/3

FY21/3

FY22/3

FY23/3

Without these temporary factors, net sales are
expected to grow steadily with continuous mass
production from design win balance

Initial Estimate in the
Mid-term Plan+) More mass production
assuming FX at JPY 115-) The end of Special demand-) Weakening Chinese and consumer market

FY22/3
JPY 117.0bn

FY21/3
JPY 99.7bn

FY21/3
1.
2.

Sales growth line
assuming FX at JPY120

FY24/3e
JPY 214.0bn

Actual net sales swelled due to the special
demand and other upward deviation2+) Design win balance contribution to sales(acquired via Transformation Phase 2)+) Mass production of automotive, etc.

FY22/3

2

FY23/3

FY24/3eRefer to page 2
Net sales for FY21/3 and FY22/3 was based on the actual FX rate then. The upper line chart assumes FX rate of USD 1 = JPY 120 in and after FY23/3 for the purpose of comparison between the current and long-term growth trend. The
lower line chart was net sales estimate in the mid-term plan recalculated with an assumption of USD 1 = JPY 115. Upward deviation is calculated using this recalculated net sales estimate. Please note that the actual mid-term planassumed FX rate of JPY 115 except for FY23/3 with an assumption of JPY 125

20

Topics/ Recent Development

◼

◼

◼

◼

Constant reconsideration of R&D structure to strengthen design and development capabilities•“Socionext Strengthens Design and Development Capabilities with New Office in
Bangalore, India”(announced on 2023/8/10)•
Reorganizes global design and development resources“Socionext Announces Collaboration with Arm and TSMC on 2nm Multi-Core Leading CPU
Chiplet Development“(announced on 2023/10/18)“Socionext Begins Development of SoCs for Advanced ADAS and AD Using 3nm Automotive
Process”(announced on 2023/10/23)
Plans five-for-one stock split of common stock owned by shareholders listed or recorded in
the final shareholder register as of December 31, 2023
(announced on 2023/10/31)

21Appendix:

Overview─────Consolidated Financial Statements
Breakdown of Net Sales (Quarterly)
Detail of Design Win
Growth Strategy
Company Overview and others

FY23/3 Consolidated Statements of Income(Yen in billions)

FY21/3

FY22/3

FY23/3

FY24/3 1H

FY24/3E

Net Sales

99.7

117.0

192.8

117.0

214.0

% YoY

-4%

+17%

+65%

+41.3%+11.0%

Product Revenue

73.1

84.6

156.8

101.4

-

NRE Revenue

23.0

28.1

34.9

15.2

-

Other Revenue

3.6

4.3

1.1

0.3

-

Cost of Goods Sold

(43.2)(49.8)(103.9)(62.7)

-

56.5

67.3

88.8

54.3

-

56.7%

57.5%

46.1%

46.4%

-

R&D

(39.2)(43.2)(49.3)(24.6)-

Selling, General and Administrative Expenses (excl. R&D)

(15.8)(15.6)(17.8)(11.0)-

Operating Income

1.6

8.5

21.7

18.7

29.0

% Margin

1.6%

7.2%

11.3%

16.0%

13.6%

Non-Operating Income

0.4

0.6

1.8

1.8

-

Profit before Income Taxes

2.0

9.1

23.4

20.4

-

(0.5)

(1.6)

(3.7)

(5.2)

-

1.5

7.5

19.8

15.3

22.5

1.5%

6.4%

10.3%

13.1%

10.5%

Gross Profit% Margin

Income Taxes

Profit% Margin23

Consolidated Balance Sheets(Yen in billion)

FY21/3

FY22/3

FY23/3

FY24/3 1H

Assets

FY21/3

FY22/3

FY23/3

FY24/3 1H

Liabilities and Equity

Cash on-hand and in banks

42.7

46.3

45.1

47.5

Accounts Payable-trade

12.0

16.6

23.4

16.0

Accounts receivable-trade, net

28.6

25.1

40.8

37.0

Accrued Expenses

7.4

6.9

30.3

10.9

Inventories1

6.7

16.4

47.7

39.2

Others

1.9

3.9

28.6

25.6

Others

2.6

2.9

22.4

13.5

80.6

90.6

156.1

137.1

Total Current Liabilities

21.3

27.4

82.3

52.5

8.9

11.6

17.2

19.7

Total Non-current Liabilities

1.3

1.4

1.7

1.8

Reticle

3.7

4.7

5.6

7.3

22.6

28.8

84.1

54.3

Others PP&E

5.2

6.9

11.6

12.4

Common Stock

30.2

30.2

30.2

32.5

Intangible Assets

11.6

12.2

13.0

15.0

Capital Surplus

30.2

30.2

30.2

32.5

Deferred Tax Assets

2.3

3.1

6.9

5.4

Retained Earnings

21.4

28.9

48.6

56.9

Others

0.9

0.8

0.8

0.8

Others

(0.1)

0.3

0.8

1.9

23.7

27.8

37.9

40.9

Total Equity

81.7

89.6

109.9

123.7

104.2

118.4

193.9

178.0

Total Liabilities and Equity

104.2

118.4

193.9

178.0

Total Current Assets
Property, Plant and Equipment

Total Non-current Assets
Total Assets

Total Liabilities

Strong Balance Sheet
Cash on-hand and in banks¥47.5bn(FY24/3 1H)

1.
2.

Inventories is calculated as the sum of “Finished goods” and “Work in progress”
Equity Ratio is calculated as (Total Equity / Total Liabilities and Equity)

Debt

No Debt(FY24/3 1H)

Equity Ratio2

70%(FY24/3 1H)
24

Breakdown by Application Market (Quarterly Ratios)
Net Sales1
Automotive
Smart Devices

NRE Revenue1

Data Center & Networking
Industrial & Others

Automotive
Smart Devices

100%

100%

10%

80%

46%

40%

40%

40%

33%

35%

33%

30%

23%

16%

60%

24%
23%

27%

31%

20%

17%
0%

1.

16%

17%

15%
14%

25%

12%

23%

45%

29%

13%

15%

17%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3 FY24/3 FY24/3
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q

0%

28%

35%

33%

21%

28%

35%

17%

27%

25%

40%

33%

10%

23%

29%

31%

30%

13%

24%

14%

40%

20%

19%

12%

24%

41%
29%

27%

9%

60%

33%

19%

14%

28%

14%

24%

27%

24%
14%

24%

23%
80%

17%

40%

Data Center & Networking
Industrial & Others

22%

12%

13%

38%

38%

10%
49%

29%

31%

22%

22%

26%

29%

32%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3 FY24/3 FY24/3
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q

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.

25Breakdown by Geographic Region (Quarterly Ratios)
Net Sales1
US

China

100%

12%

11%

12%

11%

NRE Revenue1

Japan
7%

8%

Others

6%

7%

8%

US
100%

9%

80%

60%

80%

55%

49%

48%
51%

48%

43%

40%

37%

3%

31%

12%
17%

55%

20%
24%
13%

1.

16%

21%

24%

33%
29%

43%

46%

15%

10%
23%

18%

10%

9%

0%

20%

22%

28%

13%

26%
15%

23%
20%

55%
45%

39%

15%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3 FY24/3 FY24/3
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q

12%

23%

34%

57%
29%

15%

22%

6%

29%

20%

21%

11%

Others

22%

14%

37%

19%

5%

30%

34%

40%

16%

7%

Japan

42%
60%

40%

0%

4%

39%

37%

20%

China

33%

45%

44%

36%

22%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3 FY24/3 FY24/3
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q

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.

26Breakdown by Process Node (Quarterly Ratios)
Net Sales1
5-7nm

10-16nm

20-28nm

NRE Revenue1
40nm & above / Others

100%

100%

23%
80%

46%

44%

40%

41%

37%

35%

60%

27%
40%

30%

29%

20%
15%

21%

23%

30%

12%

9%
15%

0%

1.

10%

16%

11%

7%

20%

22%

30%

25%

14%

36%
25%

7%

40%

20-28nm

31%

44%
34%

20%

24%

24%

13%

13%
15%

23%

58%
46%

15%

12%

66%

36%

11%
10%

34%

40%

15%

11%
16%

30%
20%

27%

21%

11%
12%

11%

40nm & above / Others
10%

24%

60%

55%
19%

17%

8%

18%

17%
20%

21%

10-16nm

80%

21%

23%

27%

23%

5-7nm

72%

67%
57%

45%

23%

10%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3 FY24/3 FY24/3
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q

0%

FY22/3 FY22/3 FY22/3 FY22/3 FY23/3 FY23/3 FY23/3 FY23/3 FY24/3 FY24/3
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q

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.

27

Detail of “Design Win Amount” to Revenue
Illustrative Description of “Design Win Balance”

Repeated material―
Presentation Material For FY23/3“Design Win Balance1” ・・・“Design win balance” (LTR; Life Time Revenue) represents our estimates of remaining accumulated “design win amount” that is associated with projects thatare 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 “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” 1“Design Win
Amount”“Design Win
Balance”

Cancellation+
Additional
Design Win“Amount”

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

Product Revenue

NRE Revenue

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

JPY±+

End of Year N-1
1.

Additional
Design Win“Amount”

Review and update
estimates ofdesign anddevelopment costs
and other factors.

Cancellation

1trillion

Revenuerecognition

Year N
Revenue

Ratio of Primary Areas
End of Year N“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 primary areas reflected in the “design win
amount” for FY21/3 and FY22/3 suffered from subsequent cancellations that accounted for more than 15% 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. There have been no significant subsequent cancellations
regarding the design win amount for the fiscal year ended March 31, 2023, although there can be no assurance that cancellations will not occur in the future with respect to design win amounts for such fiscal year or any prior fiscal year. A foreign
28
exchange assumption of $1=\100 has been used. Also refer to page 3
2.
For illustrative purposes only

Strong Design Wins

Repeated material―
Presentation Material For FY23/3“Design Win Amount” has approximately doubled throughout our transformation since 2018
◼ Stepping up to the next “Design Win Amount” level in FY23/3 with approximately 250 billion yen◼

“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 primary areas reflected in the “design win amount” for FY21/3 and FY22/3 suffered from subsequent cancellations that accounted for more than 15% 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. There have been no significant
subsequent cancellations regarding the design win amount for the fiscal year ended March 31, 2023, although there can be no assurance that cancellations will not occur in the future with respect to design
win amounts for such fiscal year or any prior fiscal year. 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. Refer to page 3.

29

Increase in the Ratio of Large-Scale Design Wins
The ratio of large-scale Design Wins has been rising. We expect a significant portion of future product shipments will
be attributable to large-scale Design Wins, which generally contribute to improve our business efficiency◼

1“Design Win Amount ” (LTR) acquired in each fiscal year
Size : ≥¥30bn
Size : ≥¥10bn, <¥30bn
Size : <¥10bn
Approx.
200 billion yen
Number of projects

Approx.

250 billion yen

Approx.

100 billion yen

3
FY18/32
2

2
FY19/3

5

FY20/38
FY21/3

4

2
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 primary areas reflected in the “design win amount” for FY21/3 and FY22/3 suffered from subsequent cancellations that accounted for more than 15% 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. There have been no significant
subsequent cancellations regarding the design win amount for the fiscal year ended March 31, 2023, although there can be no assurance that cancellations will not occur in the future with respect to design
win amounts for such fiscal year or any prior fiscal year. 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. Refer to page 3.

30

Design Win Balance: Breakdown of Changes

Repeated material―
Presentation Material For FY23/3◼

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

800

Increase due to securing production quota
for FY23/3

840

Main factors in changes (approximate figures)600

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

400

2. Changes in balance from existing design wins: +60 billion yen• Increase sales in FY23/3: 20 billion• Increase in and after FY24/3: 40 billion

200

3. Sales recognition: -150 billion yen

0
Design Win Balance
as of March 2022
1.

New Design Wins

Review and update ofestimates, cancellation, etc.

Revenue recognition

Design Win Balance
as of March 2023

“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 endof 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 primary areas reflected in the “design win
amount” for FY21/3 and FY22/3 suffered from subsequent cancellations that accounted for more than 15% 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. There have been no significant
subsequent cancellations regarding the design win amount for the fiscal year ended March 31, 2023, although there can be no assurance that cancellations will not occur in the future with respect to design win amounts for such fiscal year or any
prior fiscal year. A foreign exchange assumption of $1=\100 has been used.
2.Charts on this page exclude amount of “Special Demand.” Refer to page 3
3.Design Win Balance as of June 2022 was 880 billion yen

31

Abundant Global “Design Win Balance1”
Design wins for projects based on advanced technologies, especially in the automotive market, from global leading
customers. Our total Design Win Balance reached approximately 1 trillion yen as of March 31, 2023 (excl. special
demand2)◼ Our substantial presence encourages us to acquire new design wins by leveraging the experience of our development
process
Industrial & Others
Automotive
Data Center & Networking
Smart Devices◼

nm

Customer3

3-7nm

Global OEMs
Tier-1 Suppliers /Emerging
companies

Application
HP
Computing
AD/ADAS

Data
Centersnm

Customer3

5-12nmGlobal Major
Telecom
Equipment
Players

Application

Camera5G
Base Station
CU/DU/RU

7-22nmnm

Customer3

Application

Major
Players

Industrial
automation

Customer3

nm

Major
Players

IoT &Radar devices 5-28nm

Camera
ISP

LiDAR
Rader
HMI

Application

5-12nmPrinter

Technology

7-12nmMeasurement
equipment“Design win balance1” (LTR) as of June 30, 2022 & March 31, 2023 (excl. special demand2)
JPY
300bn
JPY
150bn

Jun-22
1.

Mar-23Jun-22Mar-23Jun-22Mar-23Jun-22Mar-23“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 endof 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 primary areas reflected in the “design win
amount” for FY21/3 and FY22/3 suffered from subsequent cancellations that accounted for more than 15% 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. There have been no significant
subsequent cancellations regarding the design win amount for the fiscal year ended March 31, 2023, although there can be no assurance that cancellations will not occur in the future with respect to design win amounts for such fiscal year or any
prior fiscal year. A foreign exchange assumption of $1=\100 has been used
2. Charts on this page exclude amount of “Special Demand.” Refer to page 3
3. Only non-Japanese customers are listed

32

Design Win Balance by Application Market and Region

Repeated material―
Presentation Material For FY23/3

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 from “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%

Japan

By
application

By
regionAutomotive

US

DC&NW

EuropeSD

China

Industrial & Others

As of FY23/3

Asia excluding China

As of FY23/3◼ 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 calculated based on the regional companies of Socionext

33

Roadmap to OP Margin Target

Repeated material―
Presentation Material For FY23/3

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(Mid-Term target2)(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

Low-to-Mid
teen%◼ Increase in total net sales◼ Improvement in R&D efficiency

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 page 19

34

Further Growth through "Phase 2 Transformation”◼

Repeated material―
Presentation Material For FY23/3

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”“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
TargetHigh teen%
CAGR
Low-to-Mid
teen%

FY23/3Results

FY24/3
Estimate

192.8
214.0
billion yen billion yen

11.3%

13.6%

High growth
will turn visible
35

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
2nm process node, 2.5D/3D, Chiplets and AI for SoC design

×

Growth Strategy

AD/ADAS

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

DC/HPC/5G

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 forindustrial market and provide custom SoC withadvanced process nodes or RF-CMOS technologies

Transformation of R&D Structure
Build the 3-tiered R&D structure, andintegrate R&D structure globally• Leading Global R&D Team - Project Management - R&D Resources• Establish global business R&D operation• Strengthens design and development capabilities in India

Continue to Acquire New Design Wins
36

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◼

Design trends◼
◼

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

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

GPU/
Codec

DSP

NPU

◼
◼

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

PCIeGen3

HWE

DSP

Peripheral

PCIeGen4

NPU

Peripheral

PCIeGen5

Peripheral

Networking
Data Center

SW

Application Specific Middleware
Application Specific Libs
Custom Device Driver

CODEC

HW
SERDES

HW

AI
DSP

NW
Switch

SW

PF

HWE

x24

HW

APP

SystemControlCommon concept across major markets

Automotive

SW

OCM
96MB
DSP

HWE
x8

x4

Actively invest in leading technologies (2nm & beyond, chiplet(die-to-die interconnect, 2.5D/3D packaging), AI for design, IP, etc)

◆ Strengthen ties to SoC ecosystem and drive global
innovation

OCM
20MB

CPU x48

SystemControl

Ethernet

DDR5 x 3ch

OCM
8MB

Socionext’s initiatives◼

CPU x40

SystemControl

USB/SATA

Ethernet

DDR5 x 3ch

CPU x12

USB/SATA

DDR5 2ch

What Socionext can do

Ethernet

DDR5 x 2ch

◼

x8

x8
USB2/3LPDDR5 x 1ch◼

Common complexity to achieve optimal PPA
Common concepts across major markets
Software-Defined SoC as part of a software-oriented system

LPDDR5 x 1ch◼

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

37

Transformation of R&D Structure
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◼

2022 ～～March 2018

～ 2021

Leading Global R&D Team
Business
Unit

System Architecture
Software, IPs,
Chiplets, Packaging
Advanced Technology

Package

Project Management

Sales

Sales

Business Group
Business
Unit

Business
Unit

Business
Unit

Business
Unit• Acquiring talented engineers
globally and build-up a strong
R&D team• Increase engineers for advanced
development

System Architecture

DFTCore IPs

DesignSoftwareBusiness Unit

Business Unit

Business Unit

Business Unit

Business Unit

Business Unit

Common Technology

R&D

Measures

Reinforce PM in line with thestatus of global design wins

Production Technology/Quality Assurance

Consolidation of BUs led to shift of business areas fromTV, and Cameras to Automotive, Data Center & Networking
and Smart Devices

R&D Resources

Reinforce resources including
outsourcing to non-Japan-based
design companies（ex. Open new office in India）

Building a global and competitive R&D structure
in line with new and distinctive business model
for future growth38

Socionext at a Glance◼

Repeated material―
Presentation Material For FY23/3

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 FY23/3)

History
ASSP/ASIC

Primary Areas

Business model
Solution SoC

5-7nm

Solution SoC(Optimal Custom SoC)

Started business in 2015

Business Description

Fabless
Custom SoCs

As of March 31, 2023

30.2

billion yen

Employees1

As of March 31, 2023
GlobalEmployees
Engineers22,526
Approx.

1,900

192.8

billion yen
1.
2.
3.
4.

Net Sales Growth(YoY)

OP Margin

64.7%

11.3%

19%

59%

10-16nm~Socionext’s Positioning in Semiconductor Market~
Types of Custom SoC(ASIC) Business Models3

Logic
GeneralPurposeApplication
Specific

Key Financials FY23/3
Net Sales

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

2018

CapitalProcess Node

ASSP

Custom SoC(ASIC)➢ Strength within the Automotive, Data
Center & Networking and Smart Devices
applications➢ 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 $24bn4 in 2022

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 JapanClassifications of these business models are based on our own assessment
Market Size estimated by Socionext based on Omdia data ”Competitive Landscaping Tool CLT, Annual- 4Q22”. All market sizes are calculated in terms of USD-based revenue

39

Detail of Custom SoC and ASSP◼

Repeated material―
Presentation Material For FY23/3

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 IC

Logic Application
Specific IC

Socionext mainly operates within this market

Total Semiconductor

Memory IC

Microcomponent
IC

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

40

The Image of Timeline from Design Win to Mass Production
Illustrative Description of “Design Win Amount”

Repeated material―
Presentation Material For FY23/3“Design Win Amount１” ・・・“Design Win Amount” represents estimate of the lifetime demand from design projects. “Design Win Amount” is divided into NRE-based and 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

R&D
COGS

1.
2.

Refer to page 3
For illustrative purposes only. The actual timeline of product development to mass production may differ materially based on the product and actual customer demand41

Features of Solution SoC Business Model1

Repeated material―
Presentation Material For FY23/3

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)

ASSP

Traditional
ASIC2

Solution
SoC

ASIC designed
by ASSP vendors2

Customer

Customer

Customer

Architecture(Service/Application)

Architecture (System)

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
Manufacturing
1.
2.

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.

42Competitive Advantages and Features for Solution SoCs◼

Through our Solution SoC business model, we design optimal custom SoCs in collaboration with our customers while
drawing on the optimal IP, design methodology and OSS from across the semiconductor ecosystem

Competitive advantages of solution SoCs
Compared to Traditional ASIC1
Available for companies with limited in-house resources◼ Valuable support of software development in early stages andupstream design◼

Compared to ASIC designed by ASSP vendors1◼

Flexibly draw on ecosystem resources in order to design optimal
custom SoCs
(as opposed to limited modifications restricted to their own IP and
design methodologies)

Key Foundations of our Solution SoC Model with our Strong R&D Team
1.

2.

3.

Understanding Customers◼

Deep understanding of architecture of customer’s systems◼

Experience of ASSP business which enables our teams to understand the customer’s system, applications and IPs

Understanding SoCs◼

Deep understanding of SoCs architecture and technologies including IP, EDA tools, packaging, quality control and manufacturing◼

Years of experience and expertise in custom SoC business for a wide range of applications◼

Entire design capability in advanced technology areas

Scale
◼

4.

Experience◼

1.

Abundant engineering resources for large scale development including upstream design with architects, system and software engineers, front-end andback-end engineers, and packaging engineers
Years of experience developing highly reliable products for automotive applications

Classifications are based on our own assessment

43

Transformation into a Global Custom SoC Vendor
in Advanced Technology Areas◼

Repeated material―
Presentation Material For FY23/3

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 SoC”
Business Model

Past

2018

Primary Applications

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

Industrial(3nm, 5nm, 7nm)

Quick Decision-Making
with a Flat Team
Structure44

Transforming into a Global SoC Company
with Cutting-Edge Technologies◼

Repeated material―
Presentation Material For FY23/3

Shift in NRE revenue composition illustrates the steady progress of our business transformation

FY18/3

FY21/3

FY22/340%

43%

FY23/3

1%

Advanced
Process Nodes

28%(NRE Revenue1)

30%

28%

5-7nm
19%

59%

10-16nm

Revenuefrom
Outside Japan(NRE Revenue1)

Outside Japan

29%
64%

69%

74%

45

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

Apple Others
49%
51%

Market Size

Others34%$24 billion
Market CAGR3

49%

Market Size$121 billion
Others28%

2.
3.

Qualcomm

17%

9%

8.8%

1.

5.0%

Broadcom(2021-2025E)

These Market Data
are estimated by
Socionext based on
Omdia data

21%

Market CAGR3(2021-2025E)

Intel
Marvell 7%

10%

11%
MediaTek

Nvidia13%
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-3Q 2023” classification and “Custom SoC(AS)C)” as “Logic ASIC” based on Omdia "Application Market Forecast Tool-3Q 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-3Q 2023”. Market CAGR(2021-2025E) is calculated (figure of 2025E / figure of 2021)^(1/4)-146

Demand for Custom SoC(ASIC) Exceeding Demand for ASSP◼

The custom SoC(ASIC) market is expected to grow at 8.8% CAGR(2021-2025E)1,2, faster than the total semiconductor &ASSP markets

Market Growth1
Market CAGR2(2017-2021)

Semiconductor

ASSP

CustomSoC(ASIC)
1.
2.

8.3%

11.6%

6.0%

Market CAGR2(2021-2025E)

3.4%

5.0%

8.8%

Background of Growing Demand
for Custom (bespoke) SoCs

1

Through the evolution of technology, new services andapplications emerge, and demand for Custom SoCs is
expected to expand in the “More than Moore” era.

2Dissatisfaction with ASSP due to (1) limited
performance in the "More than Moore" era,
when PPA no longer improves at historical ratesand (2) lock-in concerns

3

Evolving and expanding semiconductor ecosystem(Foundry, OSAT, EDA, IP vendor, OSS, etc)

Calculated by Socionext based on Omdia ”Application Market Forecast Tool-3Q 2023”. " Figures for the market for "logic ASICs" are used for the “Custom SoC(ASIC)"
Market CAGR(2017-2021) and Market CAGR(2021-2025E) are calculated by (figure of 2021 / figure of 2017)^(1/4)-1 and (figure of 2025E / figure of 2021)^(1/4)-1, respectively

47

Socionext Focused on Growing Markets◼ Total global market size of Primary Areas1 is expected to grow at a 14.6% CAGR2, higher than that of custom SoC (ASIC)◼ The Automotive custom SoC (ASIC)4 market is expected to grow at a 11.9% CAGR2

Custom SoC3, 4 (ASIC)
($Bn)

19
2021

ASSP3, 4
($Bn)

111

2021

Semiconductor3($Bn)

Custom SoC (ASIC) / SAM3, 5
27

2025E
135

6.3

9.4

2021

2025E

($Bn)

Custom SoC (ASIC) / SAM of primary areas1, 3, 6
($Bn)

2025E

4.5

7.7

2021

2025E

SAM of Automotive 3, 7

593

677

2021

2025E

($Bn)

0.6

2021

0.9

SAM of Data Center & Networking3. 7
($Bn)

3.4
2025E

2021

6.2

2025E

1. We have mainly acquired design wins in our Primary Areas, that is, (a) Automotive, (b) Data Center & Networking and (c) Smart Devices, although we do not focus only on these 3 areas but also seek opportunities in other growing markets such as the Industrial
application market
2. CAGR is calculated by (figure of 2025E / figure of 2021)^(1/4)-1
3. Calculated by Socionext based on Omdia ”Application Market Forecast Tool-3Q 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 the market for ourcurrent businesses model. Our estimates of each Serviceable Available Market (SAM) and Primary Areas 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
4. We define “ASSP” as the “Logic ASSP” segment and “Custom SoC(ASIC)” as the “Logic ASIC” segment based on Omdia "Application Market Forecast Tool-3Q 2023“ classifications.
Omdia’s classifications of the markets may differ in certain respects from our target markets. Classification are based on the company’s assessment. Omdia’s classifications may differ in certain respects from our target
5. 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 Network Switches”, “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”
6. SAM of Primary Areas’ (Automotive, Data Center & Networking and Smart Devices) Market are “Data Center Servers”, “Solid-State Drives”, “Enterprise Ethernet Switches & Routers”, “Carrier Ethernet Switches & Routers”, “Optical Equipment”, “Broadcast & Streaming
Video”, “Data Center Network Switches”, “Mobile Comm Infrastructure”, “Other Consumer Electronics”, “Connectivity & Telematics”, “Infotainment & Cluster”, “ADAS” and “Chassis & Safety”, ”Security & Video Surveillance”
7. 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 Network Switches”, and “Mobile Comm Infrastructure”

48

Example of Design Win in Each Application Market
We acquired design wins for chips using advanced technology that are crucial for customers to build their applications◼ Those achievements led to repeated orders from some customers◼

E/E Architecture & LiDAR (Central ECU / Zone ECU)

Data Center
Switch3/5nm

SSD
Controller

Computing& Storage

5nm

Network
Interface Card

(HP Computing)
Cloud Data Center/ On-premise

7/16/22nm

12nm

CPU

Computing
Systems (Server)

Accelerator

7nm

5G Networking(Zone Computing)

7nm (Antenna /Direct RF)
7nm (Baseband processing)

16/22nm

7nm (Computing)(LiDAR / Radar / Camera)
5G Smart
Devices

5G Network
Antenna

RU

DU

CU

Cloud Core
Network49

Performance Comparison with Competitors (Traditional ASIC Vendors)
We have improved net sales per employee and operating income per employee◼ We will target further improvements in these metrics through the transformation of our R&D structure◼

Net Sales1, 2, 3

Operating Income1, 2, 3

(USD in Millions)(USD in Millions)941

Traditional
ASIC Vendor A
Traditional
ASIC Vendor B

399
422

208

291

716
29

409
FY21

Net Sales per employee1, 2, 3
(USD in Thousands)

FY22

47

51

122

69
FY20

Operating Income per employee1, 2, 3

161

FY21

FY22

Number of employees1, 2(USD in Thousands)

358
406

1.
2.
3.

75

1,426
28

FY20

6

564

Traditional
ASIC Vendor A

505
538

Traditional
ASIC Vendor B

489

FY20

15

1,042

FY21

29

36

858
625

2,626
2,569

2,526

64
60

146

68

109

121

717
FY22

FY20

791
783

FY21

FY22

834

426
466

570
FY20

FY21

Net sales, operating income and number of employees are based on data disclosed by each company. Net Sales and operating income were converted into USD using the average exchange rate for the respective fiscal years.
The fiscal year end for Socionext is March 31 and the fiscal year end for Traditional ASIC Vendor A&B is December 31.
Socionext has adopted Japan Generally Accepted Accounting Principals (“J GAAP”), and Traditional ASIC Vendor A & B have adopted International Financial Reporting Standards (“IFRS”). Accordingly, the figures shown above may not becomparable due to differences in accounting standards

FY2250