Melexis N : 2022 - Melexis Annual Report

ON THE COVER: THE HONEY BEE

Thanks to its magnetic compass, the fascinating honey bee has the ability to perceive the omnipresent magnetic field (MF) of the Earth. Its magnetic field sensitivity matches this wonderful creature with our Triaxis® magnetic sensors.

TABLE OF CONTENTS

• Letter to our shareholders
  2 Who we are
  3 What we do
  4 What we stand for
  5 Our strategy
  6 Our sustainability report
  7 Our corporate governance
  8 Financial report
  9 Shareholder information

1. Excerpts from the Melexis nv statutory
2. Glossary
3. List of used acronyms
4. GRI content index
5. About this report

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• Melexis Annual Report 2022

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LETTER TO OUR SHAREHOLDERS

"Our unwavering

focus on innovation

keeps on bearing fruit"

Dear shareholder,

2022 was once again a successful year for Melexis, both in terms of revenue and design wins. This goes to show that our unwavering focus on innovation keeps on bearing fruit.

Speaking of innovation, one of the highlights of the year was the opening of our new award-winning site in Sofia, Bulgaria. This state-of-the art building was designed fully in line with the Melexis spirit: it provides a sustainable and modern workplace that aims to contribute to the well- being of our employees. As COVID-19 measures were gradually relaxed throughout the world, our colleagues were able to reconnect with each other, all the while still being able to enjoy the autonomy and self-determination that come with our hybrid way of working.

On the other hand, we were confronted with many challenges throughout the year, the geopolitical situation being the most impactful on a human level. I am truly in awe of the relentless drive and motivation of our people in Kyiv, who have continued their work to the best of their ability even in the most unimaginable circumstances, and I would like to expressly thank them for their efforts. The solidarity

that their fellow Melexians have shown worldwide is yet another example of how our core values protect us and bring us closer together in difficult times. Indeed, our values are our best vaccine.

Financial performance

In 2022, despite continued supply constraints, Melexis posted a 30% sales increase compared with 2021. These results were positively influenced by content growth, product mix, pricing and currency effects. Our growth was manifestly driven by electrification and a significant increase in body, chassis and safety applications. In the adjacent markets, we observed traction for products supporting digital health. Demand for products supporting all these applications is still soaring, whereas the limited wafer supply continues to necessitate the allocation of the products available.

The Board of Directors approved to propose to the annual shareholders' meeting a total dividend of EUR 3.50 gross per share over the result of 2022.

Melexis Annual Report 2022

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Supply chain

Ever-increasing electrification and the growing number of comfort and safety applications have led to a significant acceleration of analog IC demand in the automotive industry. On the supply side, the automotive semiconductor industry in general and Melexis in particular rely a lot on mature technologies for the ICs used in mixed signal sensor and driver applications, whereas the vast majority of the global industry investments in 2021 and 2022 focused on the more modern technologies. The latter serve mainly digital processors used for, among other applications, ADAS and infotainment, where Melexis is not active. As a result, Melexis and the automotive supply chain are still impacted by the limited wafer fab capacity.

As the saying goes, there is opportunity in every crisis. If there is one thing the world has learned from the supply chain disruptions in the semiconductor industry, it is that chips are indispensable in today's world. This insight has enabled closer communication with our customers and their customers, as well as increased visibility in the supply chain. Given the mismatch between supply and demand in the automotive market, new ways of contracting have been introduced in our industry over the last two years, namely long-term agreements (LTAs). The main goal of these new market practices is securing volumes and more predictable pricing.

Product launches

In 2022, we launched 16 new products. These included a current sensor that measures voltage, current and

temperature for battery monitoring in electric vehicles; an embedded driver for oil pumps, engine cooling fans and positioning actuators for thermal valves which are crucial in electric vehicles; and a magnetic position sensor offering state-of-the-art sensing for steer-by-wire systems as well as for thermal valves. Also worth mentioning is the launch of Tactaxis™, a fully integrated sensor prototype which improves robots' ability to interact with fragile objects.

Sustainability

Melexis' commitment to a sustainable future is firmly embedded in our strategy. A large part of our product portfolio is designed in service of electrification, as well as the reduction of CO2 emissions by internal combustion engine vehicles. But our sustainability efforts go beyond the products that we offer: we are intrinsically concerned with our impact in terms of environmental, social and governance (ESG) topics. For example, as you will read in this annual report, after having set a baseline in 2021 we are now working towards reducing our scope 1 and 2 emissions by means of official KPIs.

Our dedication to diversity, inclusion and equal opportunity, passionately advocated by our Chairwoman, Françoise Chombar, has borne fruit since the very beginning. Our gender-diverse and multicultural workforce of no less than 57 nationalities brings with it a myriad of perspectives and lots of creativity, which I am convinced strongly contribute to our innovative mindset and, by extension, the success of our business.

"In the long term, Melexis will keep benefiting from electrification, premiumization and autonomous driving"

• Melexis Annual Report 2022

Looking forward

Based on our customers' ordering behavior and the ongoing supply chain disruptions, we anticipate that the mismatch between supply and demand will not be resolved in 2023. We continue allocating the available materials across the customer base and working with our partners to further increase overall capacity.

In the long term, Melexis will keep benefiting from trends such as electrification, premiumization (prioritization of premium cars by car manufacturers) and autonomous driving. The need for mobility and the ever-increasing electronic content in cars are the fundamentals of our growth strategy. Our people, our solid financial basis and our focus on innovation, combined with a diverse product

portfolio and a promising end market, bring the necessary ammunition to face short and mid-term geopolitical and macroeconomic challenges. Our accelerated investment in R&D aiming to address new applications and the expansion of our Malaysian facility, doubling its probing capacity, will bolster up the solid long-term demand for Melexis semiconductors. Together with all our stakeholders, we continue working towards a better future, a future that is safe, clean, comfortable and healthy.

Yours sincerely,

Marc Biron

On behalf of the entire Melexis team

MELEXIS INCLUDED IN EURONEXT TECH LEADERS

In June, Euronext launched 'Euronext Tech Leaders', a new initiative highlighting the visibility and attractiveness of high- growth and leading tech companies towards international investors, and included Melexis in its selection of companies. Euronext Tech Leaders is composed of 100+ high-growth and leading companies, each meeting a specific set of criteria to qualify. It complements Euronext's existing Tech offer and aims to strengthen the European tech sector and be a catalyst for the next generation of tech leaders.

Melexis Annual Report 2022

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