Soitec : H1’21 financial results

H1'21 Financial results

SOITEC

November 19, 2020

Disclaimer

This document is provided by Soitec (the "Company") for information purposes only.

The Company's business operations and financial position are described in the Company's 2019-2020 Universal Registration Document (which notably includes the 2019- 2020 Annual Financial Report). The Company's 2019-2020 Universal Registration Document was filed with the AMF and is available on the Company's website in both French and English versions (www.soitec.com, in section "Company - Investors - Financial Reports").

Your attention is drawn to the risk factors described in Chapter 2.2 of the Company's 2019-2020 Universal Registration Document

This document contains summary information and should be read in conjunction with the 2019-2020 Universal Registration Document.

This document contains certain forward-looking statements. These forward-looking statements relate to the Company's future prospects, developments and strategy and are based on analyses of earnings forecasts and estimates of amounts not yet determinable. By their nature, forward-looking statements are subject to a variety of risks and uncertainties as they relate to future events and are dependent on circumstances that may or may not materialize in the future. Forward-looking statements are not a guarantee of the Company's future performance.

The Company's actual financial position, results and cash flows, as well as the trends in the sector in which the Company operates may differ materially from those contained

in this document. Furthermore, even if the Company's financial position, results, cash-flows and the developments in the sector in which the Company operates were to conform to the forward-looking statements contained in this document, such elements cannot be construed as a reliable indication of the Company's future results or developments.

The Company does not undertake any obligation to update or make any correction to any forward-looking statement in order to reflect an event or circumstance that may occur after the date of this document. In addition, the occurrence of any of the risks described in Chapter 2.2 of the Universal Registration Document may have an impact on these forward-looking statements.

This document does not constitute or form part of an offer or a solicitation to purchase, subscribe for, or sell the Company's securities in any country whatsoever. This

document, or any part thereof, shall not form the basis of, or be relied upon in connection with, any contract, commitment or investment decision.

Notably, this document does not constitute an offer or solicitation to purchase, subscribe for or to sell securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from the registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The Company's shares have not been and will not be registered under the Securities Act. Neither the Company nor any other person intends to conduct a public offering of the Company's securities in the United States.

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Soitec H1'21 results

Soitec proprietary

Outline

1

2

3

4

H1'21 Highlights

Business Units highlights

H1'21 Financials

Outlook

Nov. 2020

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Soitec H1'21 results

Soitec proprietary

Outline

1

2

3

4

H1'21 Highlights

Business Units highlights

H1'21 Financials

Outlook

Nov. 2020

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Soitec H1'21 results

Soitec proprietary

H1'21 Highlights - Continuing our strong profitable growth and value creation trajectory

Semiconductor	Differentiated engineered substrates to serve	Key figures in H1'21
megatrends	our strategic end markets

5G

AI

EE*

*Energy Efficiency

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Soitec H1'21 results

Soitec proprietary

254 M€ sales

30.4% EBITDA margin

102 M€

operating

cash

flow

H1'21 - Financial highlights

Stable revenues

at constant exchange rates and perimeter

258 254

Revenues
in €m	187

H1'19 H1'20 H1'21

Sustained EBITDA margin (1)

				32,8%			30,4%
						30,2%
			EBITDA as %
			of sales	78.1	77.3
		EBITDA	61.4
			in €m

H1'19 H1'20 H1'21

Strong operating cash flow

102

up nearly

3x

36

Operating cash flow

in €m

8

H1'19 H1'20 H1'21

(1) EBITDA margin = Electronics EBITDA (EBITDA from continuing operations) / Sales

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Soitec H1'21 results

Soitec proprietary

H1'21 Highlights - Our priorities to manage the Covid-19 pandemic

Protecting our people

Supporting our clients

Operations and

supply chain continuity

Helping our community

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Soitec H1'21 results

Soitec proprietary

H1'21 Highlights - Steady expansion across the company to support profitable growth

TALENT

• 1,600 employees globally
• • +200 recruitments expected in
    H2 FY'21

• Free share allocation plan to all employees to acknowledge the efforts made by everyone to reach the company's targets and continue serving customers in recent months in spite of the constraints generated by the health crisis
• Bernard Aspar appointed Chief Operating Officer
• Arrival of Yvon Pastol as new Executive Vice President Customer group

INNOVATION

• 30 M€ invested in innovation
• • Including 12 M€ in funding
• 15 new patents families

• New POI products being developed with accelerated timeline
• Silicon Carbide: Development pilot line now installed and running in Substrate Innovation Center in Leti
• Demonstration of FD-SOI on high resistivity substrate to address additional 5G applications
• On the road to 200mm GaN on Silicon and integrating EpiGaN technologies into advanced engineered substrates

SUPPLY CHAIN

›	Raw materials sourcing	›	Long term contracts in place to secure a clear and predictable spending in raw materials over the next 2 to 3
	years
›	Long term contracts in place
›	Secured capacity expansion with manufacturing equipment vendors to support steep capacity ramp

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Soitec H1'21 results

Soitec proprietary

H1'21 Highlights - Focus on Operations

150 mm			200 mm		300 mm
› Bernin 3 (POI substrates)		› Bernin 1 (SOI substrates)		› Bernin 2 (SOI substrates)
› Ramping at a very fast pace: H1'21		› Running close to full capacity in H1'21		› Reached lower utilization rate in H1'21
capacity x2 vs H2'20		›	Strong demand in RF-SOI		› Back to full capacity expected in H2'21
› Full capacity target of 500 kwpy		› Lower demand in Power-SOI		› Awarded "Factory of the year" in France
					thanks to Industry 4.0 initiatives
› Hasselt (GaN substrates)		› Simgui (SOI substrates)
› High volume manufacturing MOCVD tool		›	Qualified for larger products portfolio (RF,		› Singapore (SOI substrates)
under qualification			automotive)		› Capacity expansion for refresh and
					epitaxy (RF-SOI)
					› Installing SOI capacity to prepare strong
					production ramp in FY'22

* Source: Usine Nouvelle (October 2020)

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Soitec H1'21 results

Soitec proprietary

Outline

1

2

3

4

H1'21 Highlights

Business Units highlights

H1'21 Financials

Outlook

Nov. 2020

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Soitec H1'21 results

Soitec proprietary

RF-SOI Business Unit

5G

H1'21 Highlights

Established standard for smartphone RF front-end modules

• Cellular: mainstream for switch, low-noise amplifiers, antenna tuners
• Connectivity: RF-SOI adoption for RFFE Wi-Fi 6 solutions including power amplifiers

Strong demand in both 200 mm and 300 mm fueled by 5G

• 200 mm remains solid and in high volumes
• Strong 300 mm demand growing fast at all major foundries

Soitec technology leadership

• Developing product roadmaps covering both high end to low end markets addressing 5G sub-6 GHz, mmW and Wi-Fi 6

Market dynamics

Global smartphone market to decline ~10% Y/Y in 2020

Strong global smartphone rebound expected in 2021

• 5G smartphones shipment estimated at 225Mu in CY20 and above 500 M units in CY21
• Strong 5G adoption in China (sub-6 GHz)
• Major smartphone OEM introducing mmW models

5G smartphones to drive significant RF-SOI content increase

• Sub-6GHz: in average RF-SOI content 60% higher on 5G vs 4G and up to 100% for mid Tier phones
• mmW: RF-SOI design wins confirmed for indoor access point (infrastructure)
• Wi-Fi6: RF-SOI design wins in Wi-Fi 6 and Wi-Fi 6E MU-MIMO RF FE

100% penetration in 4G/5G

Global smartphone shipments (M units)

RF-SOI content per sub-6 GHz smartphone (mm²)

RF-SOI substrates

1500

1000

500

0

HR-SOIRFeSI

CY18 CY19 CY20 CY21 CY22

3G/4G 5G Source: Soitec estimates

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Soitec H1'21 results

Soitec proprietary

FD-SOI Business Unit

EE AI

5G

H1'21 Highlights

Advances in FD-SOI technology, foundry offering and recognition

• Lattice wins EM Best-in-Industry for CrossLink FPGA platform
• ST Microelectronics unveils Stellar MCU platform
• Globalfoundries unveils 22FDX RF+, advancing RF capabilities
• Dual-modeBluetooth IP in 22FDX reduces power consumption by 50% while extending into through wireless stereo / hearing aid applications
• Samsung Foundry Forum (SAFE) promotes FD-SOI + eMRAM as foundry-first

FD-SOI Edge processors (e.g., GreenWaves GAP9) adapts power per application 300 mm FD+HR wafers sampling for next-generation 5G, radar, Sub-THz

Market dynamics

FD-SOI continues adoption for ultra low power applications

Adding radio connectivity to the cloud with RF-to-Bits SoC(s) managed by AI & using next-generation Soitec

• Cost-efficientintegrated radio in 5G (mmWave), Wi-Fi 6 & radar
• Energy-efficientanalog / mixed-signal solutions (data converter)
• Compute-efficientautomotive with eMRAM memory
• Next-generationSoitec solution for Sub-THz design

FD-SOI connects the cloud with low power efficiency and new architecture

Foundries developing technology nodes at 18nm and 12nm

"Vision" processors for autonomous driving	Lattice Semiconductor FD-SOI based "Nexus" FPGA platform	FD-SOI for mmWave	Synaptics 22nm FD-SOIfar-field
			voice processing

			Source: Lattice
Nov. 2020	12	Soitec H1'21 results	Soitec proprietary

Specialty-SOIBusiness Unit	AI	EE

H1'21 Highlights

Power-SOI for management control

• Limited automotive revenue but secured by long term contract, product extension in 300 mm confirmed

Imager-SOI for facial recognition

• Sustained facial recognition demand for high-end smartphones

Photonics-SOI as a standard for datacenters optical transceivers

› Steady demand of multiple IDMs and foundries for 100G transceivers

Market dynamics

Automotive market - Weak demand in 2020, solid recovery ahead

• Innovation to fuel Power-SOI demand for Battery Management System (BMS) and high voltage gate drivers based on SOI

3D sensing for smartphones

• Success of facial recognition smartphones expected
• Image sensing is expending with demanding features

Datacenters demand - Healthy growth for cloud data center traffic

• 400G Silicon Photonics
• Proof-of-conceptfor co-packaged optics

Power-SOI for management control

Power-SOI opportunities for BMS

Imager-SOI for facial recognition

Photonics-SOI for datacenters

Battery pack

+

BMS

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Soitec H1'21 results

Soitec proprietary

Filters Business unit

5G

H1'21 Highlights

POI - Ideal substrate to extend SAW filters technology reach, new paradigm addressing Sub-6 GHz

• Signed business agreement with Qualcomm Technologies on supply of POI substrates for 4G/5G RF filters
• Accelerating 150 mm POI ramp in high volume manufacturing
• Preparing fab expansion to reach 500K wafers/year

Frec|n|sys - Accelerating POI product development and adoption

Market dynamics

5G Sub-6 GHz adoption driving the demand for new high-performance filters

• POI substrates bring the performance (larger bandwidth, lower loss, superior temperature stability, efficient rejection) required for 5G filters

Product roadmap to address several bands and new 5G requests

Smartphone RF front-end module block diagram	Filters technologies and POI positioning	Soitec POI substrate
PA							SAW filter	POI substrate
		Antenna			Antenna
	Filter
LNA		Switch			Tuner

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Soitec H1'21 results

Source: Soitec estimates

Soitec proprietary

	EpiGaN Business Unit			EE	5G
	H1'21 Highlights			Market dynamics
Successful integration within Soitec		GaN epiwafers for RF
›	Continue production ramp and synergies with Soitec manufacturing		› Base stations: strong traction for GaN RF infrastructure (power amplifiers)
Multiple customer qualifications on-going		› Smartphones: GaN/Si considered for 5G mmWave and sub-6 GHz (power
	amplifiers)
›	RF GaN/Silicon (150 mm-200 mm) in IDMs and foundries
Product roadmap		GaN epiwafers for Power
	› Start customer evaluation of GaN/Si for Power (200 mm)
› New products in 200 mm for both RF and Power applications
›	Gan/Silicon and GaN/Silicon carbide
	GaN epiwafer for 5G base stations, smartphone power amplifiers	GaN differentiation	GaN epiwafer substrate

			Source: Figure adapted from Analog Device 2017
Nov. 2020	15	Soitec H1'21 results	Soitec proprietary

Compounds Business Unit

EE 5G

	H1'21 Highlights		Market dynamics
Smart CutTM based Silicon Carbide	Silicon Carbide
› Pilot line fully operational as per plan jointly with Applied Materials	›	Qualification products ready in calendar Q121
›	First R&D samples delivered	›	Strategic interest from major automotive device/system makers
›	Smart CutTM technology capability validated through test device results

SiC substrates for electric vehicles

Electric vehicles demand (M units)

(million units)

>20M

2.3M

2019

2021

2030

Source: Soitec estimates

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Soitec H1'21 results

Projected SiC wafers demand

Soitec SiC engineered substrate solution

(k wafers)

Current industry solution (bulk)

Soitec's engineered substrate solution

10x

2019

2021

2030

Source: Soitec estimates

Soitec proprietary

Dolphin Design	AI	EE

	H1'21 Highlights			Market dynamics
IP business			IP business
› More than 20 GlobalFoundries-FD-SOIAdaptative-Body-Biasing IP licenses	›	Introduce DSP platform to address AI & edge applications (smart meters)
› Launched new IP R&D (focused on 22nm FD-SOI & 22nm ultra low leakage)	›	Launch of new platforms: power management, MCU sub-system, digital signal
› Introduced energy-efficient MCU sub-system platform for IoT (audio, MEMS)		processing (standard and AI with neuronal networks), audio detection and
	emission
ASIC			› Launch FD-SOIdemo-chip for "Silicon proven" IP platforms.
› Re-built solid physical implementation teams		ASIC
› Strengthening of aerospace and defense business development
	›	Leverage IP platforms on AIoT, industrial & defense
› 1st design wins in consumer IoT (wearables, video codec)
Adaptative Body Biasing (ABB)	IP for earbuds	IP for wearables	IP for smart meters	ASIC for aerospace

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Soitec H1'21 results

Soitec proprietary

Outline

1

2

3

4

H1'21 Highlights

Business Units highlights

H1'21 Financials

Outlook

Nov. 2020

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Soitec H1'21 results

Soitec proprietary

H1'21 Highlights

Stable revenue (1)		Decrease in gross profit

in €m

-11%

258254

H1'20H1'21

1. at constant exchange rates and perimeter

Stable Electronics EBITDA

in €m

8777

H1'20H1'21

Strong operating cash flow

in €m

7877

in €m

102

H1'20H1'21

36

H1'20H1'21

The income and expenses related to discontinued operations are directly reported as "Net result from discontinued operations". Down to the line "Net result after tax from continuing operations", the

Group consolidated P&L account exclusively and fully reflects the Electronics activities as well as corporate expenses.

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Soitec H1'21 results

Soitec proprietary

H1'21 Sales performance

	In €m	H1'21	H1'20	Change vs H1'20	H1'21 Sales breakdown
						%	% at constant
						FX and scope
								4%
	150/200 mm wafer sales	138	121		+14%	+15%			150/200 mm
	300 mm wafer sales	105	125		-16%	-15%	41%	54%	300 mm
	Royalties and other revenues	10	11		-8%	-8%
										Royalties and other
	Total sales	254	258		-1.6%	-0.4%			revenues

150/200-mmwafer sales up 15% (at constant exchange rates)

• Slight increase in volumes
• More favorable product mix
• Sustained growth in RF-SOI
• Lower sales of Power-SOI
• POI sales ramp-up

300-mmwafer sales down 15% (at constant exchange rates)

• Lower sales essentially reflects decline in volumes
• Sales of RF-SOI300-mm remained at high level
• Significantly lower sales of FD-SOI
• Robust sales of Photonics-SOI and Imager-SOI

Royalties and other revenues down 8%

• Includes €8.5m contribution from Frec|n|sys, Dolphin Design and EpiGaN

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Soitec H1'21 results

Soitec proprietary

Gross margin evolution

					35.4%	33.8%
Gross margin		32.4%
						30.4%
as % of sales	28.6%

24.9%

Sales

in €m

H1'16		H1'17	H1'18		H1'19	H1'20	H1'21
		150/200-mm wafer sales		300-mm wafer sales
		Royalties & other revenues

• • Gross margin tailwinds
• Favorable bulk material prices

• • Gross margin headwinds
• Impact of capacity increase
• • Higher depreciation costs
  • Ramp-upcosts of Bernin III 150 mm facility

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Soitec H1'21 results

Soitec proprietary

Current operating income

In €m	H1'21	H1'20	Change
Sales	254.4	258.5	-2%
Gross profit	77.4	87.4	-11%
As a % of sales	30.4%	33.8%
Gross R&D expenses	(31.2)	(30.8)	+1%
Prototype sales and others	1.5	4.1	-64%
Subsidies and income tax credit	12.2	10.7	+14%
Net R&D expenses	(17.5)	(16.0)	+10%
As a % of sales	6.9%	6.2%
Sales & Marketing expenses	(5.5)	(4.9)	+12%
General and administrative expenses	(17.3)	(15.3)	+13%
Total SG&A expenses	(22.7)	(20.2)	+13%
As a % of sales	8.9%	7.8%
Current operating income	37.2	51.3	-28%
As a % of sales	14.6%	19.9%

• Net R&D expenses up 10%, represents less than 7% of sales:
• • Slightly higher gross R&D expenses
  • • Higher resources allocated to projects
    • Higher depreciation
  • Lower prototype sales
  • Higher subsidies and research tax credits
• SG&A expenses up 13%, remains at less than 9% of sales:
• • Increase in charges related to employee compensation schemes
  • • Higher number of employees
    • Share-basedpayment plans
  • Continued effort to structure the Group in order to support future growth

The income and expenses related to discontinued operations are directly reported as "Net result from discontinued operations". Down to the line "Net result after tax from continuing operations", the Group consolidated P&L account exclusively and fully reflects the Electronics activities as well as corporate expenses.

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Soitec H1'21 results

Soitec proprietary

Net profit

	In €m	H1'21			H1'20
	Current operating income	37.2	51.3
	Other operating income and expenses	(0.0)		1.8
	Operating income	37.1	53.2
	Financial expenses	(3.8)	(3.8)
	Net foreign exchange gain / (loss)	(6.4)	2.1
	Net financial result	(10.2)	(1.7)
	Income tax	(4.8)	(9.9)
	Net profit from continuing operations	22.2	41.6
	Net loss from discontinued operations	(0.0)	(0.0)
	Net profit (Group share)	22.2	41.5

• In H1'20, other operating income included a gain on the disposal of an industrial site
• Net financial loss:
• • Stable financial expenses (mostly includes non- cash financial interests related to OCEANEs 2023)
  • Net foreign exchange loss of €(6.4)m recorded in H1'21 vs a gain of €2.1m in H1'20
• Income tax continues to benefit from tax loss carryforwards

The income and expenses related to discontinued operations are directly reported as "Net result from discontinued operations". Down to the line "Net result after tax from continuing operations", the Group consolidated P&L account exclusively and fully reflects the Electronics activities as well as corporate expenses.

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Soitec H1'21 results

Soitec proprietary

Slight increase in Electronics EBITDA margin (continuing operations)

								32.8%			30.4%
			EBITDA as % of sales	24.4%		30.2%
	16.5%
	13.8%

78.1 77.3

EBITDA	61.4
in €m

34.9

15.0 18.5

• H1'21 EBITDA almost stable
• H1'21 EBITDA margin slightly up despite lower gross margin

H1'16

H1'17

H1'18

H1'19

H1'20

H1'21

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Soitec H1'21 results

Soitec proprietary

Sharp increase in operating cash flow

Operating cash-flows from continuing operations

In €m			H1'21		H1'20
Net profit			22.2	41.6
Depreciation and amortization	27.4	19.4
Other items			27.7	17.1
EBITDA			77.3	78.1
Change in working capital	31.2	(27.6)
Incl. receivables		(24)	(47)
Incl. inventories		60	21
Incl. others			(4.8)	(1.6)
Tax paid			(6.3)	(14.2)
Net cash generated by operating activities	102.3	36.3
Nov. 2020	25	Soitec H1'21 results

• 40% increase in D&A, mainly resulting from:
• • Continuous investments carried out in previous years
• Strong decrease in WCR due to:
• • Sharp decrease in accounts receivables: -€60m
  • Partially offset by:
  • • Higher level of inventories to meet sequential sales increase expected in H2'21: +€24m
    • Decrease in other liabilities
  • €31m decrease in WCR compares to €28m increase in H1'20
• €102 m cash generated by operating activities, up nearly threefold versus H1 FY'20

Soitec proprietary

Strong increase in cash position

Net change in cash: + €100m

in €m		(0)
(48)	49	(2.3)
102
			291
191

	Cash and cash	Net cash generated	Adjusted net cash	Adjusted net cash	Net cash generated	Net impact of Forex	Cash and cash
	equivalents	by continuing	used in investing	generated by	by discontinued	fluctuations	equivalents
	at 31 March 2020	activities	activities	financing activities	activities		at 30 Sept. 2020
Nov. 2020	26	Soitec H1'21 results			Soitec proprietary

Cash position

Generated cash

Used cash

Forex impact

Balance sheet

	In €m	30 Sept	31 March	In €m	30 Sept	31 March
	2020	2020			2020	2020
	Intangible assets	92	88
	Tangible assets	324	297
	Other non-current assets	30	23			Total equity	577	552
	Deferred tax assets	37	37			Long-term financial debt	254	193
	Total non-current assets	482	445			Provisions and other non-current liabilities	44	41
	Inventories	144	123			Total non-current liabilities	297	233
	Trade receivables	112	167			Trade payables	70	76
	Other current assets	70	74			Other current liabilities	113	88
	Cash and cash equivalents	291	191			Short-term financial debt	43	52
	Total current assets	617	556			Total current liabilities	225	217
	Total assets	1 099	1 001			Total liabilities and equity	1 099	1 001

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Soitec H1'21 results

Soitec proprietary

A solid financial structure

Shareholders' equity

€m

552577

31 March 20

30 Sept. 20

Gross debt

€m

297

245

31 March 20

30 Sept. 20

• Equity further reinforced:
• • Mainly thanks to H1'21 result
• Gross debt increased by €52m:
• • €58m first partial drawdown on €200m L/T loan granted by Banque des Territoires as part of Nano 2022 plan

Cash and cash equivalents

€m

				291
		191
		31 March 20	30 Sept. 20
Nov. 2020	28	Soitec H1'21 results

Net debt	› Increase in cash position reflects:
€m
› Strong free cash-flow
	› New financing
	› Net debt / Equity ratio: 0.01

54

5

31 March 20

30 Sept. 20

Soitec proprietary

Outline

1

2

3

4

H1'21 Highlights

Business Units highlights

H1'21 Financials

Outlook

Nov. 2020

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Soitec H1'21 results

Soitec proprietary

Outlook - FY'21 & FY'22

FY'21 guidance

• Confirmed stable revenues at constant exchange rates and perimeter
• Confirmed Electronics EBITDA margin of around 30%
• Planned Electronics adjusted net cash out related to CAPEX of €135m vs. at least €100m previously announced

FY'22 outlook

• Revenues now expected above $900m (i.e. above €800m based on a €/$ rate of 1.13)

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Soitec H1'21 results

Soitec proprietary

Thank you

Follow us on:

Soitec

@Soitec_FR / @Soitec_EN

Soitec

www.soitec.com

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Soitec H1'21 results

Soitec proprietary