Fiscal Year Ended March 31, 2016

Results Briefing
Digital Media Professionals Inc.
May 17, 2016

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 resultsmaydiffer considerably
due to a variety
factors.
Copyright(C)
DigitalMedia Professionals
Inc.ofAll
Rights Reserved.

1

1

Explanation of Results,
Fiscal Year Ended March 31, 2016

2

Progress Report on Medium-Term
Management Plan

3

Performance Forecast,Fiscal Year Ending March 31, 2017

4

Reference materials:

Medium-Term Management Plan (Fiscal Year Ended
March 31, 2014 - Fiscal Year Ending March 31, 2019)
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

2

1

Explanation of Results,
Fiscal Year Ended March 31, 2016

2

Progress Report on Medium-Term
Management Plan

3

Performance Forecast,Fiscal Year Ending March 31, 2017

4

Reference materials:
Medium-Term Management Plan (Fiscal Year Ended
March 31, 2014 - Fiscal Year Ending March 31, 2019)
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

3

Industry and Business Environment
1. Overall Semiconductor Market
Global•Fall in smartphone demand having an effect, but
semiconductor demand for in-car devices and industrial
instruments trending favorably•

Mergers and acquisitions continue among major
semiconductor vendors•

Gentle growth continued at +1.4% in 2016 and +3.1% in2017, with market size for 2017 anticipated to be
US$351.6 billion*

Industry
restructuring
trend tospeed up

Domestic•

Number of ASIC-based development projects reduced due tosteep rise in semiconductor development costs•

Gentle growth of +2.3% annually anticipated from 2014 to 2017
in domestic demand, and market size for 2017 anticipated to be¥3,936.2 billion**World Semiconductor Trade Statistics (WSTS), Japan Chapter, as of December 1, 2015

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

4

Industry and Business Environment
2. Visual Computing Field• Rapid growth averaging +32.8% annually from2014 to 2019 is anticipated for the domestic
IoT market, with the market growing to ¥715.9
billion by 2019*1•

The global in-car electronics market is expected to
grow to approx. ¥34 trillion by 2020*2. Use of IT in
automobiles will increase, and in-car sensors anddisplays will continue to add functionality.

•

GPU-based deep learning technology will reach theimplementation stage, and AI will evolve to aconsiderable degree (e.g., AlphaGo)*1: MM Research Institute, as of January 20, 2016
*2: Japan Electronics and Information Technology Industries Association (JEITA)

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5

Fiscal Year Ended March 31, 2016

Results Highlights
 Net sales rose 58.1% year-on-year due to beginning shipments of theVF2 next-generation LSI, core to the medium-term management plan
Net Sales (Unit: million yen)800

Up 58.1%

733

600

464
400

355

200

0
FY ended
2014年3月期

March 31, 2014

FY ended2015年3月期

March 31, 2015

FY ended2016年3月期
March 31, 2016

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6

Fiscal Year Ended March 31, 2016

Results Summary (P/L)
Profits improved tremendously due to rise in net sales
Compared toprevious FY

FY ended
March 31,2015

FY ended
March 31,
2016

(Amount)(Increasedecreaserate)

Net sales

464

733

269

58.1%

Operating
loss

−462

−176

285

－

(Unit: million yen)

Ordinary
loss

−265

−193

72

－

Current net
loss

−311

−64

247

－

R&D costs generatedby LSI development
had an effectAmount of loss reduced
due to inclusion of ¥129
million in extraordinary
income due to sale ofshares in CogniVue
Corp. (Canada)

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7

Fiscal Year Ended March 31, 2016

Field-by-Field Conditions
IP Core Licensing Field

Income was generated from new licenses for medical device
applications and from licenses for next-generation products fromexisting customers, as well as from new running royalties
resulting from customers bringing products to market. However,there was a softening in the market for customers' products, andoverall conditions for the field were bearish.
TOPICS

SMAPH-F 2D vector graphics IP core used byRenesas in LSIs for OA equipment (announced January 12, 2016)
SMAPH-F
 Adds support for the OpenVG 1.1 2D vector graphics standard from Khronos Group, which drafts
specifications for graphics APIs.
 Boasting of small silicon size and moreover rendering performance that ranks among the top in the industry,
employed for a variety of both consumer and industrial applications.
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8

Fiscal Year Ended March 31, 2016

Field-by-Field Conditions

SoC/Module Business Field
Began mass production and shipping of VF2
high-performance graphics semiconductor with
development having been completed,contributing greatly to sales
TOPICS

Amusement equipment-geared VF2
high-performance graphics LSI begins
mass production, shipping
VF2
 An LSI that achieves industry-leading power performance, with all of DMP's technologies wielded to consolidate on
one chip 3D graphics capabilities and 2D image coding functions.
 The DMP spirit of depicting the future through graphics technology is imbued in the name of this product derived
from our "Visualize the Future" corporate motto.
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

9

Fiscal Year Ended March 31, 2016

Field-by-Field Conditions

Professional Services Field
Tone set for expansion with having won numerous
new proposals in the image recognition field andreceived commissions to design image-processing
semiconductors
TOPICS

Decision made to install DMP-madeimage processing software on fleet
cars of a major automobile
manufacturer
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10

Fiscal Year Ended March 31, 2016

Results Summary (B/S)）(Unit: million yen)

End of March2015

End of March
2016

Increase-decreaseamountCurrent assets

2,012

1,984

−28

Non-current assets

113

260

146

2,126

2,244

118

Current liabilities

52

226

173

Non-current liabilities

19

18

−0

Total liabilities

72

245

173

Total net assets

2,054

1,999

−54

Total Liabilities and Net Assets

2,126

2,244

118

Total assets

・ Equity ratio high at 88.9%
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

11

1

Explanation of Results,
Fiscal Year Ended March 31, 2016

2

Progress Report on Medium-Term
Management Plan

3

Performance Forecast,Fiscal Year Ending March 31, 2017

4

Reference materials:
Medium-Term Management Plan (Fiscal Year Ended
March 31, 2014 - Fiscal Year Ending March 31, 2019)
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

12

Progress Report on
Medium-Term Management Plan
Build and expand businessby developing and increasing sales of SoC
Launch professional services

5,000

10x
Net Sales(Unit: million
4,500 yen)
4,000

Expand IP licensing business

3,500
3,000

Begin shipping
new LSI products

2,500
2,000
1,500

733

1,000
500

355

464

0
FY ended March 31,
2014 performance(12th business year)

FY ended March 31,
2015 performance(13th business year)

Phase 1

FY ended March 31,
2016 performance(14th business year)

FY ending March 31,2017 forecast(15th business year)

FY ending March 31,2018 plan(16th business year)

FY ending March 31,
2019 plan(17th business year)

Phase 2
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13

Key Points in Medium-Term Management Plan
SoC/Module Business Field

Build and expand business bydeveloping and increasing sales of SoC
Next-generation LSI development progressing smoothly.
Productization completed, shifting to mass production.
Beginshippingｖ

Design, investigate,
trial production
FY ended March 31, 2015

Performance
evaluation

Productization
completed

FY ended March 31, 2016

Mass
production

FY ending March 31, 2017

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14

Further Possibilities
Added
value

Possibilities for entering the next value-added, growth markets
Expand into artificial
intelligence/deeplearning* fields

Expand into growing
IoT field
Products that implement sophisticated image
processing in fields such as wearables, carapplications, home, industry, and home electronics

Make use of technologies developed inphases 1 and 2 to enter artificial
intelligence and deep learning markets

Establish foundations for
SoC business in the winnableamusements market
Bring VF2 to market, begin mass production
Begin development of new products next fiscal year

MarketPhase 1

Phase 2

*A type of machine learning that makes use of multiple layers of neural networks
and is applied to various types of data and pattern recognition such as image
and voice recognition.

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15

On the Artificial Intelligence Market
The size of the artificial intelligence market will grow to ¥86 trillion by 2030
Low power consumption inference processors required on the device side as GPU put touse for learning the large amounts of information and enormous amounts of imaging andother data on the cloud side
Size of market for artificial intelligence-related industries• Automatic driver assistance (ADAS)
86 trillion yen• Security• Manufacturing processes• Medical• Virtual reality

DMP GPU coreLow power
consumption

High-speed
processing

Small
Low cost

Area in which DMP as one of four companies in
the world that can offer GPUs can takeadvantage of its development technology
capabilities

23 trillion yen
3 trillion yen
2015
2015年

2020
2020年

2030
2030年

Source: 2015 Ernst & Young Institute Co., Ltd. "The 'Creation' and'Destruction' that Artificial Intelligence Produces"

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

16

DMP's Capacity to Develop Technology:
NEDO* Results
Commercializing research results
2003"Task-Driven Industrial Technology
Development Costs Grant"
Development of semiconductor application chip
GPU prototype(Proof of Concept)

Turn IP and LSI into products
More than 80 million units of customer
products shipped (cumulative)•

PICA/SMAPH GPU IP•

NV7 GPU Chip

2012

"Strategic Energy-saving Technology Innovation Program"
Development of low-power consumption graphics processor

SoC development

Begin mass production andshipping
Adopted by major amusement
industry company•

VF series SoC

2015"Green Device Social Pilot Implementation Promotion Program"
R&D on next-generation image recognition and image processing
technology platforms
Advance deeplearning processor
research

Next-generation AI processor
development
Enter markets expected to growconsiderably*New Energy and Industrial Technology Development Organization
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17

"Green Device Social Pilot Implementation Promotion Program"
Next-generation image recognition and processing technology
platform R&D project

Carry out advance R&D on artificial intelligence (next-generation image
processor using deep-learning) platform with expected applications inindustrial robots and self-driving cars
Results
 Development completed on next-generation shader core that will be
image recognition core
 Development of CNN core for deep learning application completedwith OpenCL implementation, benchmarking using FPGA Carry out prototyping of graph-based algorithm implementation tool
 Real-time performance of OS, etc., evaluated as means for gauging system performance,collection of fundamental data on future requirement definitions completed

Nurtured as the next effective revenue base among
DMP's medium-term projects
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

18

1

Explanation of Results,
Fiscal Year Ended March 31, 2016

2

Progress Report on Medium-Term
Management Plan

3

Performance Forecast,Fiscal Year Ending March 31, 2017

4

Reference materials:
Medium-Term Management Plan (Fiscal Year Ended
March 31, 2014 - Fiscal Year Ending March 31, 2019)
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

19

Fiscal Year Ending March 31, 2017

Projected Performance Net sales increased 36.3% over same period previous fiscal year due
to factors including the expansion of sales channels for VF2 highperformance graphics semiconductor and cultivation of new customers

Net Sales (Unit: million yen)
1,000

+36.3％

750

733

1,000
(Forecast)

464

500

355
250
0

FY ended
2014年3月期
March 31, 2014

FY ended2015年3月期
March 31, 2015

FY ended2016年3月期
March 31, 2016

FY ending
2017年3月期
March 31, 2017

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20

Fiscal Year Ending March 31, 2017

Projected Performance
FY ended
March 31, 2016
(Actual)FY endingMarch 31, 2017
(Forecast)

Net sales

733

1,000

267

36.3%

Operating loss

−176

−161

15

ー

Ordinary loss

−193

−161

32

ー

Current net loss

−64

−161

−97

ー

(Unit: million yen)Compared to previous FY(Increase-decrease
rate)(Amount)

 Loss forecast owing to inclusion of costs related to development of VF2
successor
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21

Fiscal Year Ending March 31, 2017

Future Efforts Field-by-Field
IP Core Licensing Field
Licensing of graphics IP core and development of IP aimed at deep learning.

SoC/Module Business Field
Work to increase earnings by cultivating new customers and expanding sales
channels for VF2 high-performance graphics semiconductor that went onsale previous fiscal year. Devote energies to new product development.

Professional Services Field
Work to expand by devoting energies to getting image-processing
semiconductor design commissions and to automobile-related, security, andmedical-field service businesses.
Encourage strategic alliances
Regarding initiatives pursued with operational capital tie-up partner
UKC Holdings Corporation, joint approaches toward customers arebeing pursued in the SoC/module business field. Discussions are also
continuing on entry into the in-car device and IoT-related fields.

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

22

1

Explanation of Results,
Fiscal Year Ended March 31, 2016

2

Progress Report on Medium-Term
Management Plan

3

Performance Forecast,Fiscal Year Ending March 31, 2017

4

Reference materials:
Medium-Term Management Plan (Fiscal Year Ended
March 31, 2014 - Fiscal Year Ending March 31, 2019)
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

23

(Medium-Term Management Plan)

PolicyBecome a one-stop solutions provider
in the visual computing* field*Visual computing:General term for computer processing via graphics and images

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

24

(Medium-Term Management Plan)

Our Company's Strengths
Core technologies and business experience insemiconductors that produce high added value for DMP

DMP's strengths

IP businessexperience

World-leading

Global-level
customers

GPU IP

SoC technology
Sophisticated, built-in

including systemIP

low power
consumption
Imagetechnology
recognition IP

Superlative
supportaimed at expanding
fieldsCopyright (C) Digital Media Professionals Inc. All Rights Reserved.

25

(Medium-Term Management Plan)

Business Structure:
Management Resources and Business Domains

Offering unique products, licenses, and services witha distinctive IP portfolio
Three pillars
SoC modules

Globalalliances

Productbusiness

DMP’s IP
 Fabless Semiconductor IP
vendor
 Saleschannels

Visual computing
field
Customers
 OEM

•GPU
•System IP
IP

Alliance IP

IP licensing
business Semiconductor
vendor System integrator
 Software house•Image recognition•Others
Solutions

Professional
services business(R&D, software products)
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26

(Medium-Term Management Plan)

DMP's Strategy
Build foundation for growth with "three pillars" that canmake the most of DMP's strengths
Provide competitive SoC and solutions that the make most of DMP IP
Productbusiness

 Make the most of strengths to start business in "fields we can win" Expand size of business by providing SoC/modules
Create new business in growth fields

IP licensing
business

 Focus on visual computing field Expand portfolio, strengthen proposal-making ability

Professional
services business

Offer superior technological capabilities and make essential todeveloping new fields
 Build up high value-added services using GPU/vision technologies(in-house/external) as base Strengthen R&D
Systems andcorporate

Strengthen management resources through alliances(Partners for commercial distribution, semiconductor development and outside IP
adoption)
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27

(Medium-Term Management Plan)

Regarding the IP Business
Offer IP on industry's cutting edge with demonstrable low
power consumption and high performance
Next-generation image recognition processor IP under development
・ High-performance, low-power consumption processor for Computer Vision use
Image
recognition
technology
Bus technology

Graphics
technology

・Preparing algorithm library that includes ability to detect persons, face recognition, and gesturerecognition

Loputo System Series
SoC Interconnect IP

DDR Memory Controller IP

・ Supported bus protocols:
AMBA AXI, OCP, ACE I/F support

・ DDR 1/2/3/4, LPDDR 1/2/3 support

・ Support for low latency, QoS thanks tomultilayered configuration

ant Series

・ SoC interfaces: AXI, OCP/
・DDR PHY interface (DFI)

SMAPH Series

UI Drawing Engine IP Core

3D Graphics IP Core

2D Graphics IP Core・ World's smallest core at 0.5 x 0.5 mm

・ Latest Khronos standard:
OpenGL ES 3.0 compatible

・ Latest Khronos standard:
OpenVG1.1 compatible

・ Low power consumption, highrendering performance, distortion
correction

・ DMP’s unique advanced feature MAESTRO ・ High-speed rendering of such vector graphic
content as fonts, maps, and incons withindustry's smallest IP core size

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28

(Medium-Term Management Plan)

Regarding the IP Business
Focus on visual computing market bound for growth

Connected home

Security

Image
recognition
Mobile vision
Robots/FA

Games

User interfaces
Automobile driving
assistance

Wearable computing

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

29

(Medium-Term Management Plan)

Semiconductor Market Prospects
IoT(*)(Conventional)
Mobile / PC / TV

Growth in fields where Japanesecompanies are strong

Cars / home electronics / industry / home / medical / security

VolumeDevice types*IoT (Internet of Things):
The idea of being able to provide connectivity to a variety of devices and the like used in daily life—going beyond suchinformation technology devices as PCs, smartphones, tablets, and game equipment—and then connect them to the internet
as well as perform tasks such as automatic recognition, automatic control, remote monitoring, etc. by communicating withthem interactively.
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

30

(Medium-Term Management Plan)

Semiconductor Market Prospects
Arrival of IoT (Source: Cisco IBSG.2011)
Consumer devices

Industry

Social infrastructure

World population

6.3 billion
people6.8 billion
people7.2 billion
people7.6 billion
peopleNumber of devices
that are connected

0.5 billion

12.5 billion

25 billion

50 billion

Number of devices
per person

0.08

1.84

3.47

6.58

2003

2010

2015

2020

The number of devices connected to the internet exceeds the world population
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

31

(Medium-Term Management Plan)

DMP's Strategic One-stop Solutions
Visual Computing Field
 High value-added IP core
 Advanced processor IP (GPGPU/image
recognition) that enables heterogeneous
processing environment
ModuleBus technology

Software

SoC system technology

Image recognition technology

 System IP that achieves top-rank system
performance in terms of low power
consumption
 Collection of software tools optimized fordrawing out IP performance

Graphics technology

 SoC/modules differentiated by
DMP IP Professional services
 Algorithms
 Benchmarking, optimization
 Application development
1. Very distinctive technological 2. Ability to respond to 3. Lean capacity for productcapabilities
development
customers

 Inspection

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32

(Medium-Term Management Plan)

Future prospects that make the most of
our strengths and competitive advantages

Phase 2Phase 1■■■Development of SoC:
Develop products in fields where
we can "win"Expand IP portfolio:Enter image processing field■ Provide one-stop solutions■ Expand IP portfolio■ IoT-related service business

Launch professional services

Phase 2
SoC/modules
Scale ofbusiness

Phase 1

Professional
services

IP licensing
FY ended March 31, 2014

FY ending March 31, 2017

FY ending March 31, 2019

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33