Fiscal Year Ending March 31, 2018 First Half

Results Briefing
Digital Media Professionals Inc.
November 17, 2017

The views and forecasts that appear in these materials represent determinations made by the Company at the time the materials were created.
The accuracy of the information therein is not guaranteed.
Please be aware of the possibility that actual performanceand results
differ considerably
due to a variety
factors.
Copyright(C)may
DigitalMedia Professionals
Inc. ofAll
Rights Reserved.

01

Explanation of Results, Fiscal YearEnding March 31, 2018 Second Quarter2

Fiscal Year Ending March 2018,
Full-Year Business Forecast

3

Proposition for Future Growth

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

1

1

Explanation of Results, Fiscal YearEnding March 31, 2018 Second Quarter2

Fiscal Year Ending March 2018,
Full-Year Business Forecast

3

Proposition for Future Growth

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

2

Operating Environment of the Company
Semiconductor Industry
 The size of the semiconductor market in 2017 is forecast to surge 19.7% from the year
earlier to US$ 411.1 billion (Gartner)
 Demand has been driven by new iPhone products and orders from Chinese smartphonemanufacturers, with semiconductor supply tightening centered on memory
 Trade inquiries for automotive semiconductor applications are on the rise as the number ofcar models equipped with driving support systems increases

 The miniaturization of leading-edge semiconductor products continues. TSMC and Samsung
are planning for volume production of 7nm chips beginning in 2018

AI / Visual Computing Field Smartphones and edge devices are seeing the inception of AI accelerator applications
 With the arrival of new AI related applications, semiconductor demand will increase forsensors, AI accelerators, and networks, while data centers and servers will also see furtherupgrades AI will revolutionize production sites, in semiconductors and elsewhere (Industry 4.0)

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

3

Fiscal Year Ending March 31, 2018 Second Quarter

Results Highlights
Successful return to black figures due to significantly higher sales atIP licensing and professional service operations
LSI product operations moving to the volume production phase IP licensing operations (sales increased ¥106 million compared with the year-earlier period)• Increased running royalties from existing customers in game machines and digital cameras,etc.
• Licensing of the new GPU IP core "K3000" to new and existing customers
 Professional services operations (sales increased ¥135 million compared with the yearearlier period)• Growth in commissioned projects from automotive equipment manufacturers centering on AIapplications• Additional new order receipts relating to commissions for the acceleration of NEDO
"Development commissions for power-saving AI engines"
For details see page 12

 LSI products operations (sales increased ¥9 million compared with the year-earlier period)• Completion of the development of next-generation graphics processing LSI "RS1" (final cost
recognized on accounts)• New order receipts for volume production
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

4

Fiscal Year Ending March 31, 2018 Second Quarter

TopicsLicensing start of "ZIA DV700" AIprocessor IP▶ Processor IP for Deep Learning inference process
specialized processor with ultra low power consumption

Start of sample product (ES) shipments of the“RS1” next-generation graphics processor
developed jointly with BANDAI NAMCO forgame machines

×Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

5Fiscal Year Ending March 31, 2018 Second Quarter

Topics"ZIA Classifier" adopted for the drive recorder AI service provided
by Sumitomo Mitsui Auto Service Company, Limited, the top auto
leasing company in Japan
Approximately 90%* of traffic accidents are due to humanerror such as inattentive driving and driving while
engaged in other activities* According to research conducted by Sumitomo Mitsui Auto Service

In the auto leasing industry the first applicationof AI technology to video analysis
Performs automatic drive-recorder
video analysis to identify the specificdriving behavior (causative behavior)that leads to dangerous driving,combined with an external camera
video (behavior result) analysis andreport
Promotion of effective
analyses using AI technology

AI controlled analysis of drive recorder video
footage of the car interior identifies
dangerous behavior such as talking on amobile phone while driving

×Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

6

Fiscal Year Ending March 31, 2018 Second Quarter

Results Summary (P/L) - YoY Change(Unit: million yen)

YoY change

FY 03/2017 2Q

FY 03/2018 2Q(Amount)(Increasedecrease rate)Net sales

192

442

250

129.4%

Operatingincome-364

18382-

Ordinaryincome-376

19395

-

Net income-366

19385- Development cost of RS1 reduced by ¥100 million compared with the year-earlier period
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

7

Fiscal Year Ending March 31, 2018 Second Quarter

Results Summary (B/S) - YoY Change(Unit: million yen)

End of March 2017

End of September
2017

Increase-decreaseamountCurrent assets

1,668

1,499-169

Non-current assets

112

298

186

1,780

1,798

18

Current liabilities

9154-37Non-current liabilities

18180

Total liabilities

11072-38

Total net assets

1,670

1,72555

Total liabilities and netassets

1,780

1,79818

Total assets

 Equity ratio of 95.8% remains at a high level
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

8

1

Explanation of Results, Fiscal YearEnding March 31, 2018 Second Quarter2

Fiscal Year Ending March 2018,
Full-Year Business Forecast

3

Proposition for Future Growth

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

9

FY ending March 31, 2018
Key Activities in the Second Half of the Period Under Review
Further diversification of revenue sources and opportunities by strengthening
existing businesses and engaging in AI related business activities
 Volume production of next-generation LSI graphics processor "RS1" Promotion of "DV700" AI processor IP licensing• Applications such as cameras, office machines, factory automation, andautomobiles
 Enhancement of ZIA platform product line-up and provision of solutions throughalliances with partner companies Acceleration of AI related professional services centering on automotive
equipment manufacturers
 Promotion of development commissions from NEDO for power-saving AIengines
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

10FY ending March 31, 2018

Full-Year Business Forecast
Projections for sales, operating income, and ordinary income are unchanged
from the beginning of the fiscal year
Net loss for the period improved due to the recognition of an extraordinary
gain of ¥51 million from a settlement payment associated with the end of a
distributor agreement(Unit: million yen)

YoY change

FY 03/2017(actual)

FY 03/2018(projection)(Amount)(Increasedecrease rate)

Net sales694

1,100406+58.4%

Operatingincome-263-90

173-

Ordinary
income-262

-90

172

-Net income-365

-39

326

-

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

11NEDO(Crosscutting technology development project to promote IoT)

Started development of artificial intelligenceplatform based on power saving AI engine andcloud able to integrate dissimilar engines
Amount awarded DMP under
the contract (total amount)¥475 million (existing portion)¥108 million (additional portion inthe current FY)

Duration of the commission

June 2016 - March 2019

Project outline
・ Development of a power saving AI engine whichenables AI algorithms to process 10 times more
efficient than predecessors did・ Development of an AI platform for integrating
dissimilar engines on the cloud side

Accelerate DMP AI Business
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

12

1

Explanation of Results, Fiscal YearEnding March 31, 2018 Second Quarter2

Fiscal Year Ending March 2018,
Full-Year Business Forecast

3

Proposition for Future Growth

Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

13

Proposition for Future Growth
Addedvalue

Entry into the next added-value
and growth market
Expansion into thegrowing IoT field

Expansion into the AI /Deep Learning fields

Development of software and hardware
products for AI applications centered onthe ZIA platform

Establishment of SoC businessplatforms in amusement
markets where chances exist towin a top position
Shift to volume production of new
product "RS1"

Expansion of professional services
centered on automotive industry
Expansion of the SoC / Module Business• Top share in amusement SoC• High-volume edge AI processors
Growthmarkets

Phase 1

Phase 2Phase 3Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

14