Ams OSRAM : Annual Report 2022

Sense the next

ams OSRAM Annual Report 2022

ams-osram.com

To our Shareholders	Our Company	Corp. Governance	Remuneration Report	Management Report	Group Financial Statements

Highlights

		Changes to
In millions of EUR	2022	2021	2021	2020
Revenues	4,819	-4%	5,038	3,504
Revenues on comparable portfolio basis	4,819	2%	4,731
Gross margin (adjusted)¹	31%		34%	33%
R&D expenses	630	-2%	692	423
Operating result (EBIT) (adjusted)¹	407	-19%	502	463
EBIT margin in % (adjusted)¹	8%		10%	13%
Net result (adjusted)¹	124	-55%	273	237
Earnings per share (adjusted)¹ (in EUR, basic)	0.47	-55%	1.05	1.07
Earnings per share (adjusted)¹ (in CHF, basic)²	0.47	-59%	1.14	1.15
Operating Cash Flow	599	-24%	792	702
Free Cash Flow	62	-87%	482	525
Capital expenditures	537	73%	310	177
Net debt (as of December 31)	1,717	-4%	1,795	1,706
Equity ratio	32%		33%	30%
Employees (average)	23,322	-11%	26,130	30,031

		Changes to
Segment results	2022	2021	2021
Revenues Semiconductors	3,167	-3%	3,279
EBIT margin Semiconductors (adjusted)¹	10%		14%
Revenues Lamps & Systems	1,652	-6%	1,760
EBIT margin Lamps & Systems (adjusted)¹	6%		3%

1. Excluding M&A-related, transformation and share-based compensation costs as well as results from investments in associates and sale of a business.
2. Earnings per share in CHF were converted using the average currency exchange rate for the respective periods.

Total revenues in EURm

5,038 4,819*

3,504

1,885

2019

2020

2021

2022

* Reflecting EUR 307m deconsolidation effects due to disposals

Operating result (EBIT) in EURm¹

463	502
392					407

2019

2020

2021

2022

Revenues by market 2022

24% Consumer

41% Automotive

35% Industrial & Medical

Earnings per share (EPS) in EUR (basic)¹

4.52

1.07 1.05

0.47

2019

2020

2021

2022

ams OSRAM Annual Report 2022	2

To our Shareholders

Our Company

Content

Corp. Governance

Remuneration Report

Management Report

Group Financial Statements

004 To our Shareholders

1. Preface Management Board

1. Preface Supervisory Board

1. Investor Relations
2. Executive Bodies

011 Our Company

012	Our company
013	Automotive
013	Consumer
013	Industrial & Medical
016	Our talent
018	Sustainability

037 Remuneration Report

038 Introduction

039 Principles and Objectives

1. Key elements of the Management Board remuneration

1. Management Board remuneration

1. Setting of targets
2. Total remuneration of the Management Board
3. Share-basedcompensation

1. Change in remuneration of the Management Board compared to the workforce

1. Supervisory Board remuneration

1. Principles for the remuneration of the Supervisory Board

1. Total Remuneration of the Supervisory Board

068 Group Financial Statement

1. IFRS Consolidated Financial Statements as of December 31, 2022

1. Notes to the Consolidated Financial Statements

1. Auditor's Report

1. Glossary
2. Imprint

019 Corporate Governance

1. Corporate Structure and Shareholders
2. Capital Structure

1. Supervisory Board

1. Management Board

1. Compensation, Shareholdings and Loans
2. Shareholders' Right of Participation
3. Changes of Control and Defense Measures

1. Auditors
2. Information Policy

1. Quiet periods/Blackout periods

052 Management Report

1. Overview of Past Fiscal Year
2. Business Results

1. Research and Development
2. Purchasing and Manufacturing­

1. Employees

1. Environmental Management
2. Subsidiaries and Investments

1. Risk Management

1. Events after the Balance Sheet Date

1. Outlook
2. Other Information

ams OSRAM Annual Report 2022	3

				To our Shareholders	Our Company	Corp. Governance	Remuneration Report	Management Report	Group Financial Statements

To our Shareholders

Preface Management Board

Preface Supervisory Board

Investor Relations

Executive Bodies

ams OSRAM Annual Report 2022	4

To our Shareholders	Our Company

Corp. Governance

Remuneration Report

Management Report

Group Financial Statements

Alexander Everke	Ingo Bank
(CEO, until 31 March 2023)	(CFO)

Thomas Stockmeier	Mark Hamersma
(CTO)	(CBO)

Preface Management Board

Dear Shareholders,

2022 was characterized by macro-economic and geopolitical developments that created exceptional challenges for economies worldwide. The war in Ukraine, distortions in global supply chains, cost inflation and the continued Covid-19 pandemic, in particular in China, led to significant uncertainties and new demands on our busi- ness, requiring special efforts from our company and our employees. Against this backdrop, we have been able to deliver overall solid results for 2022. Full-year group revenues were EUR 4,819 million, which includes deconsolidation effects. On a like- for-like portfolio comparison basis, revenues slightly increased by 2%, despite the headwinds mentioned above. We recorded an adjusted EBIT margin of 8.4% for the full year which was in line with our expectations.

The Semiconductors segment provided 66% of full-year revenues. The automotive semiconductor business recorded solid results, particularly in light of continued supply chain volatilities as we moved through the year and notable inventory adjust­ ments in automotive supply chains in the second half of 2022. While managing unsupportive market dynamics, we confirmed our position as the global leader in automotive LED lighting and expanded our design pipeline in future applications. Our consumer business achieved full-year results which were in line with adjusted expectations, which reflected the less favorable market development over the course of the year, namely the lack of demand recovery in the China and Android markets. Overall, we underscored our position as a key supplier of optical solutions to the leading consumer OEMs last year for applications such as display management and camera enhancement sensing. Finally, the industrial and medical semiconductor business performed well last year on an overall basis as industrial markets provided attractive demand support through much of the year.

The Lamps & Systems (L&S) segment also recorded a solid performance last year, accounting for 34% of total revenues at an improved EBIT contribution year-on-year. Even in light of the demanding market environment, the L&S automotive business, which makes up the largest part of the L&S segment and includes legacy traditional lighting, showed an overall positive development and underlined its leading market position.

The accretion of synergies and savings from the integration of OSRAM continued in line with our plans in 2022. We were also very successful in advancing various

integration­ programs across our combined business, including significant IT system and ERP harmonization, aligning the fiscal year for the group, streamlining corporate structures and aligning policies and processes. We are pleased to confirm that we achieved the full set of integration milestones we had set ourselves for 2022 and are focused on realizing further progress through 2023.

Fulfilling our promise to realign and focus our portfolio, we realized several further planned disposals last year and can now confirm that all communicated planned disposals have been closed. With this, the divestment process announced with the acquisition of OSRAM is completed. We achieved total proceeds from these disposals of well above EUR 550 million which is above our initial expectations. This is a strong achievement considering a less favorable environment for such transactions last year.

At fairs and customer events, we presented our enhanced capabilities as an innovator that combines leading expertise in light emitting and sensing. In automotive, for example, we showcased the newest generation of front lighting for dynamic forward lighting. In so-called highly pixelated matrix headlamps, our pioneering efforts create a solution that is a fully integrated light source/driver system with more than 25,000 addressable light points. It not only significantly improves adaptive headlight operation but also enables warning symbols to be projected onto the road. Next

to this, we offer a range of solutions for interior cabin sensing. Our optical sensors can be combined with dedicated light emitters to create high performance systems monitoring driver alertness or the cabin space.

Another revolutionary emerging optical technology is microLED. This leading-edge display technology will power the next generation of displays which answer the needs of the display industry in terms of exceptionally brilliant colors, brightness and contrast at very low power consumption. Our deep customer engagement in this area confirms our strategic leadership position in true microLED with the smallest structure size as well as our clear frontrunner position for high-volume industrialization of this technology. Last year we continued to invest strongly into this area and underlined the partner engagement by making significant investments into our manufacturing capabilities to support future microLED demand.

ams OSRAM Annual Report 2022	5

				To our Shareholders	Our Company	Corp. Governance	Remuneration Report	Management Report	Group Financial Statements

Overall, the positive feedback that we receive from customers on our leading product and technology portfolio reassures us on our strategic path.

2022 also marked the groundbreaking of our new 8" LED production facility at our existing location in Malaysia. With this, we are the frontrunner in the industry in the move to state-of-the-art 8" manufacturing and we are adding this capacity to support expected growth in both microLED as well as advanced LED. The very significant strategic investment is in line with our commitment to growth and we expect to shape many different applications with this facility over the next 10 to 20 years. The construction of the facility building progressed fully in line with plans last year, despite a more demanding supply and cost situation and is nearing completion. Beyond this and reflecting last year's market situation, we focused on streamlining other investments in R&D and capital expenditures for future technologies.

With a view to our financial position, we were able to improve our debt position and balance sheet structure last year. We repaid well over EUR 400 million of outstanding debt, including the matured USD convertible bond, and saw our net debt position move lower at the end of 2022 compared to end of 2021.

In 2022, we also made measurable progress in the area of sustainability. Sustainability has been firmly anchored in the company across functions for a long time and we have now harmonized our related structures and processes. To steer our efforts, we have developed a comprehensive sustainability strategy built around the focus topics of climate protection, working conditions, diversity, human rights, integrity, and the circular economy. The progress we have made has already been reflected in external ESG analyses last year: we improved significantly year-on-year in several well-renowned sustainability ratings and were selected as one of few companies for S&P's Corporate Sustainability Assessment Yearbook. This validates our corporate strategy, which regards sustainability as an essential component of our long-term success. Aligned with these objectives, our products are designed for energy effi­ ciency so that they can support customers in their sustainability goals and help create positive contributions to society.

We would like to thank our employees for their great commitment towards our vision during a demanding 2022. Their imagination, energy and dedication are the cornerstones of our worldwide success. We also thank our shareholders, ­customers and partners for their continuing support and trust in ams OSRAM and the Supervisory­

Board for supporting decisions to advance our strategy. With our integration progressing as planned, we are now taking the next step as a leader in the optical

­arena. The focus will be even more on significant innovation and continuing to ­leverage our portfolio and engineering talent to benefit our customers.

Optical semiconductor solutions are a key enabling technology, making many other innovations possible across industries. Drawing on our strengths, we are excited to provide breakthrough optical technologies that offer our customers a competitive edge in a fast-changing world. Our theme for this report - "Sense the next" - reflects this commitment. As a trusted innovation partner, we will keep sensing the next technology trends and designing innovative products and solutions for sensing, visualization and illumination. We invite our customers to experience the possibilities of how our distinctive portfolio and expertise is creating the future of optical solutions.

Alexander Everke	Ingo Bank	Dr. Thomas Stockmeier	Mark Hamersma
Chairman of the Management Board	Member of the Management Board	Member of the Management Board	Member of the Management Board
CEO (until 31 March 2023)	CFO	CTO	CBO

ams OSRAM Annual Report 2022	6

				To our Shareholders	Our Company	Corp. Governance	Remuneration Report	Management Report	Group Financial Statements

Preface Supervisory Board

Ladies and Gentlemen,

The major geopolitical developments of 2022, particularly those related to the war in Ukraine, unfortunately created meaningful discontinuities and uncertainties for the world economy, including inflationary pressure. Additionally, noticeable impacts from Covid-19 continued in key regions of the world over a significant part of the year. The combination of these effects negatively influenced supply chains and market demand, resulting in a challenging macro-economic environment. This development also impacted the semiconductor industry, the high-tech industry and end markets for ams OSRAM last year.

Despite a more difficult market situation over the course of 2022, ams OSRAM steered course and remained focused on its strategic objectives and their implemen- tation. ams OSRAM made further good progress in the integration of OSRAM and the re-alignment of the group's portfolio to focus on the core technology areas in sensing, illumination and visualization. This included announcing and implementing further planned disposals of businesses that are not part of this strategic core. The integration also remained an important aspect in the work of the Supervisory Board last year, following a number of significant steps taken in 2021.

In 2022, the Supervisory Board held six meetings, with and without Management Board participation, to analyze and discuss the business situation and strategic potential of the company and take relevant decisions. The meetings were held virtually at the beginning of the year due to Covid-19-related restrictions and precautions and in person in the latter part of the year. All members of the Supervisory Board participated in all of its meetings and the same applies to all meetings of its committees, with the exception of one member not participating in one Supervisory Board meeting. The meetings were complemented by ongoing direct interactions between Management Board and Supervisory Board members in which the Management Board added to the scope of its monthly reporting and provided details on the business and financial situation of the group, investment projects, the integration, and developments in technology, manufacturing operations and human resources. In this context, the Supervisory Board paid particular attention to the evolution of cash flows, the debt position and the balance sheet structure.

The Supervisory Board also continued to track efforts and strategies for strengthening or regaining market share in important business areas and end markets.

­Complementing these activities were detailed discussions with the Management Board on executing the group's strategy for long-term profitable growth. The ­Supervisory Board thus fulfilled its responsibility to monitor the business and financial development of the group as well as the Management Board's implementation of the corporate strategy.

2022´s Supervisory Board decisions focused in particular on the annual accounts, the budget, the alignment of the corporate strategy, the General Meeting proposals regarding the Chairperson and Deputy Chairperson of the Supervisory Board, the approval of a more concise group structure with a reduced number of group compa- nies, the approval of management appointments in subsidiaries and adjustments to the procedures and internal structure of the Supervisory Board. To further bolster the efforts to become the leader in optical solutions, an all-day strategy meeting with the management was held to discuss the mid- to longer-term development path for strategic business lines and the mid-term planning process underlying the annual budgets.

The Supervisory Board and Management Board again evaluated the economic success and implementation of major decisions taken in previous years. A majority of projects showed outcomes in line with or exceeding the assumptions made. For ­projects where this was not the case, a detailed analysis was conducted to inform and improve future decision-making. The Supervisory Board also once again evaluated its own activities in a structured process last year.

To underline the increasing relevance of sustainability and ESG topics for the group's business, strategy and stakeholders, the Supervisory Board created an ESG Committee in 2022. The Committee focuses on integrating sustainability and ESG parameters into the business strategy together with the management. This includes defining the group's sustainability strategy as well as steps to ensure sustainable business

management and resource use. ESG- and sustainability-related topics have been included in the Management Board's compensation targets since 2022.

The Nomination Committee worked extensively on the succession planning for both Supervisory Board and Management Board positions last year, including related to upcoming Supervisory Board elections. Beginning in the second half of 2022, succession planning for the Management Board became an important element of the Supervisory Board's overall activities. In the first quarter of the current year, the ­Supervisory Board and Alexander Everke agreed that he will hand over to a successor at the end of March 2023. The Supervisory Board's concurrent appointment of Aldo Kamper as new CEO of ams OSRAM starting 1 April 2023 ensures a seamless transition of leadership for the group. As Ingo Bank had decided not to renew his contract for personal reasons and is leaving the company, the Supervisory Board appointed Rainer Irle as new CFO of ams OSRAM starting 1 July 2023.

The other committees of the Supervisory Board fulfilled their responsibilities while actively engaging with the relevant members of company management over the course of 2022. Topics included the procedure for and audit of the annual accounts

• mostly in collaboration with the auditor - the internal audit process, the monitoring of financial reporting and effective internal control and risk management for the
  Audit Committee and innovation management, key customer and development projects, the ongoing development and industrialization of microLED technology, the application strategy, optimized central development processes, and academic collaborations for the Technology Committee.

The Compensation Committee focused on updating and redefining the remuneration policy and long-term incentive program for the Management Board following a detailed analysis of the existing programs and evolving stakeholder expectations. The new remuneration policy which the Supervisory Board will propose for approval in this year's Annual General Meeting is designed to appropriately balance company and stakeholder objectives.

ams OSRAM Annual Report 2022	7

				To our Shareholders	Our Company	Corp. Governance	Remuneration Report	Management Report	Group Financial Statements

On behalf of the Supervisory Board, I would like to thank the Management Board and, in particular, the employees of ams OSRAM worldwide for their commitment and dedication to the group's strategic goals in the demanding environment of 2022. I would also like to thank Alexander Everke and Ingo Bank for their strong leadership over the last years, during which they realized the significant and complex acquisition of OSRAM in the CEO and CFO roles.

Moreover, I would like to thank the shareholders, customers, partners and other stakeholders of ams OSRAM for their continued support as the group pursues its strategy for leadership in optical solutions.

Dr Margarete Haase

Chairperson of the Supervisory Board

ams OSRAM Annual Report 2022	8

				To our Shareholders	Our Company	Corp. Governance	Remuneration Report	Management Report	Group Financial Statements

Investor Relations

ams OSRAM share price development

20
17.29
15
10
	6.75
5
January 3, 2022	December 30, 2022

ams OSRAM in CHF

SOX - Semiconductor Sector Index (rebased) STOXX Europe 600 (rebased)

The extensive product and technology portfolio of ams OSRAM creates a range of opportunities for profitable growth which the group expects to realize over the coming years. Implementing its strategy for global leadership in optical solutions, the group continues to invest in future technologies to enable innovation, differentiation and growth in new markets as societal megatrends drive demand for optical tech- nologies. At the same time, ams OSRAM is creating sustained value from substantial synergies as part of the integration of ams OSRAM. Combining these elements as a global industry leader, ams OSRAM offers meaningful potential for long-term appreciation of its shares.

The ams OSRAM share saw a volatile development through 2022 resulting in a negative performance for the year. This development reflected significant impacts on global semiconductor markets from last year's geopolitical and macro-economic developments as well as supply chain imbalances and inventory adjustments in key end markets. An attractive business outlook supported the share price development in the early part of the year, complemented by achieving further milestones in the planned portfolio re-alignment and disposal process while the integration and related synergy creation continued to progress. Towards the end of the first half, the war in Ukraine and resulting macro-economic and inflation effects led to increased share price volatility given higher levels of uncertainty.

The share price development in the second half of the year largely reflected negative demand trends and market dynamics in major end markets. The group's automotive business was negatively impacted by meaningful inventory adjustments in automotive supply chains while a lack of demand recovery in the China and Android markets drove year-on-year volume reductions in the consumer business. These factors resulted in a negative momentum of the share price through the second half of the year.

At the same time, ams OSRAM was successful in re-aligning and streamlining its portfolio in line with the group's long-term strategy, announcing and/or closing several disposal transactions in a more challenging environment. At the end of 2022, ams OSRAM had signed all planned disposals of non-core businesses as the group continues to focus on key areas for leadership in optical solutions. Against the backdrop of these impacts to the group's business and markets and a more unfavorable capital market environment, the ams OSRAM share showed a negative performance of 59% compared to the beginning of the year.

In April 2022, ams OSRAM held a global virtual Capital Market Day (CMD) to update investors and analysts on its strategy, its new aligned business portfolio and strong technology position. Several hundred stakeholders worldwide participated in the virtual event, which was presented by the complete Management Board as well as select business area leaders. In the context of the CMD, ams OSRAM defined a five pillar value proposition for investors and stakeholders which guides the implementation of the group's strategy: Commitment to growth, path to strong sustainable prof- itability, balanced and diversified business mix, prudent financial policy, and focus on long-term value generation.

In line with its emphasis on prudent financial policy, ams OSRAM repaid more than EUR 400 million of debt in 2022 which included the planned repayment of the matured USD convertible bond. ams OSRAM had previously decided to suspend its cash dividend policy for 2021 to focus on strengthening its business in the context of the acquisition of OSRAM. To further support the integration as well as investments in growth technologies, including the group's significant long-term oriented investment for an industry-first 8" LED manufacturing facility, ams OSRAM has decided to suspend its cash dividend policy for fiscal year 2022.

At the Annual General Meeting in June 2022, the agenda items subject to a vote were approved with significant majorities except for the agenda item on the remuneration report for 2021. As a consequence, ams OSRAM has updated and extended the remuneration report for 2022, which is included on page 37of this report, to meet the information expectations of various stakeholders.

ams OSRAM continued its extensive investor relations activities last year, based on its quarterly reporting and regular presentations to research analysts, institutional investors and press. As Covid-19 travel restrictions continued in major regions for the majority of the first half of the year, ams OSRAM held investor road shows covering Europe, North America and Asia/Pacific in a virtual format.

With travel restrictions decreasing in the second half, ams OSRAM returned to physical or hybrid formats for investor meetings last year. This included international investor conferences which were a further means to access existing shareholders and identify potential new investors in different regions.

ams OSRAM Annual Report 2022	9

				To our Shareholders	Our Company	Corp. Governance	Remuneration Report	Management Report	Group Financial Statements

As a result, ams OSRAM ­recorded increasing interest from investors outside of Europe, helped by the ­advanced stage of the integration and the increased global footprint of the group.

The "Investor" section of the company website ams-osram.comoffers a comprehensive range of financial reports, press releases, presentations, audio releases, general meeting and corporate governance information and additional data on the ams OSRAM share.

ams-OSRAM AG ISIN: AT0000A18XM4 Securities code: 24924656

Ticker symbol (SIX Swiss Exchange): AMS

Bloomberg: AMS SW

Reuters: AMS.S

Executive Bodies

Management Board

Aldo Kamper (CEO, since 1 April 2023)

Alexander Everke (CEO, until 31 March 2023)

Ingo Bank (CFO, until 30 April 2023)

Dr. Thomas Stockmeier (CTO)

Mark Hamersma (CBO)

Supervisory Board

Guido Klestil (Honorary Chairperson)

Dr. Margarete Haase (Chairperson)

Hans Jörg Kaltenbrunner (Former Chairperson, until 24 June 2022) Dr. Wolfgang Leitner (Deputy Chairperson, since 24 June 2022) Michael Grimm (Former Deputy Chairperson, until 24 June 2022) Loh Kin-Wah

Tan Yen Yen

Dr. Monika Henzinger

Brian Krzanich

Brigitte Ederer

Andreas Gerstenmayer (since 24 June 2022)

Andreas Pein (employee representative)

Günter Kneffel (employee representative)

Sabine Radesey (employee representative)

Patrick Reinisch (employee representative)

ams OSRAM Annual Report 2022	10