RENESAS INDUSTRIAL BUSINESS OVERVIEW MICHAEL HANNAWALD SVP, DEPUTY GM INDUSTRIAL BUSINESS UNIT 2017 Renesas Electronics Corporation. All rights reserved.
AGENDA Corporate Business Overview Industrial Business Business Status Real-Time embedded Artificial Intelligence (e-ai) Future Spark Silicon on Thin Buried Oxide (SOTB) Take Away 2017 Renesas Electronics Corporation. All rights reserved. Page 2
CORPORATE OVERVIEW Financials Overview* (FY17 1H) Semi Sales Breakdown by Application*** (FY17 1H) B yen Margin Net Sales 376 Semi Sales 367 Gross Profit 171 45.6% Operating Income 58 15.5% BBU Approx. 20% Industrial Automotive ABU Approx. 50% EBITDA** 94 24.9% Depreciation and Amortization 35 Net Income Attributable to Shareholders of Parent Company * Non-GAAP item **EBITDA: Operating income + depreciation and amortization + amortization of long-term period expenses 61 IBU Approx. 30% ***ABU: Automotive Solution Business Unit IBU: Industrial Solution Business Unit, BBU: Broad-based Solution Business Unit 2017 Renesas Electronics Corporation. All rights reserved. Page 3
SEMICONDUCTOR SALES TREND & TARGETS B Yen Long-term Financial Targets 163.2 21.0 49.3 147.5 148.3 18.6 18.5 45.4 45.1 161.4 18.5 48.2 172.6 24.5 (5.8) 50.6 194.3 36.3 (15.4) 54.0 BBU IBU 2x Served Available Market Growth in Focus Markets 50% 91.9 82.5 84.1 91.7 96.6 102.9 ABU Gross Margin >20% FY16/3 Q4 (Jan-Mar16) FY16/12 Q1 (Apr-Jun16) FY16/12 Q2 (July-Sep16) FY16/12 Q3 (Oct-Dec16) FY17/12 Q1 (Jan-Mar17) FY17/12 Q2 (Apr-Jun17) () contribution from Intersil acquisition Operating Margin 2017 Renesas Electronics Corporation. All rights reserved. Page 4
INDUSTRIAL BUSINESS 2017 Renesas Electronics Corporation. All rights reserved. Page 5
INVESTMENT FOCUS TO 7 SEGMENTS Smart Infrastructure Smart Factory Smart Home Office Automation 5.4 B$ 5.9% Building Automation 1 B$ 10% 1.5 B$* 8.6%** Utility Meter ICT Industry Automation Home Appliance Healthcare *Served Available Market (SAM) **Application CAGR FY15-21 both estimated by Renesas 2017 Renesas Electronics Corporation. All rights reserved. Page 6
EXCELLENT MARKET POSITION Smart Infrastructure Smart Factory Smart Home MCU ASSP MCU/SoC/MPU MCU No.1 No.2 No.1 No.1 Electronic Power Meter Network Memory Factory Automation Home Appliances Major Players Major Players Major Players Landis+Gyr AG Cisco Systems, Inc. Fanuc Corporation Mitsubishi Electric Corporation Daikin Industries, Ltd. Haier Inc. HPL Electric & Power Pvt Ltd. Huawei Technologies Co.Ltd. Rockwell Automation, Inc. Schneider Electric SA Midea Group Whirlpool Corporation Itron Inc. Siemens AG Yaskawa Electric Corporation Larsen & Toubro Limited 2017 Renesas Electronics Corporation. All rights reserved. Page 7
INDUSTRIAL - BUSINESS OUTLOOK Sustainable Outlook until 2021 in Focus Markets Strong Gross Margin Driver 60% Gross Margin >20% Operating Margin FY16 (Act) FY17 (Est) FY21 (Target) 2017 Renesas Electronics Corporation. All rights reserved. Page 8
REAL TIME e-ai EMBEDDED ARTIFICIAL INTELLIGENCE 2017 Renesas Electronics Corporation. All rights reserved. Page 9
RENESAS e-ai FOCUS ON REAL TIME EMBEDDED SYSTEMS Learning IT Information Technology OT Operational Technology AI Inference E-AI Inference Core competencies in OT Real-time system (efficiency) End-point control (reality) Safety and robustness AI on embedded system 2017 Renesas Electronics Corporation. All rights reserved. Page 10
RENESAS e-ai INFERENCE IN OT BY MCU EDGE COMPUTING Learning in IT many numbers Inference in OT Neural Network Algorithm Renesas Translation Code Size 300 MB [ 3 ] 99.6% Code Size 300 KB 2017 Renesas Electronics Corporation. All rights reserved. Page 11
EXPERIMENT RESULT AT NAKA FACTORY Measured Voltage Normal Measured Voltage Abnormal Abnormality Detection realized by e-ai 6x better abnormality detection rate Almost no pseudo alarms in factory Less maintenance efforts Effects Cost reduction by earlier detection Less human interactions Significantly increased production efficiency Time Time Increased Production Efficiency 2017 Renesas Electronics Corporation. All rights reserved. Page 12
EXPANSION OF E AI EXCELLENT MARKET POTENTIAL IN RENESAS FOOTPRINT Process Abnormality Detection Time series analysis solution based on Naka factory PoC Semi Specialized Equipment High-End Vibration Inspection Predictive Maintenance Frequency domain analysis PoC with global customer Quality Management Image recognition for multivariate analysis Growth Area Automotive Mechanical Food Multi-use Equipment Middle to Low-end # of factory 2017 Renesas Electronics Corporation. All rights reserved. Page 13
OFFLOAD ENGINE DRP - FOR REAL TIME EDGE COMPUTING EXECUTING e-ai WITH HIGH SPEED AT LOW POWER INPUT OUTPUT DRP*: Key Differentiator Introduce e-ai into embedded world 10x Faster than GPU 100x Faster than CPU Real Time Edge Computing on MCU at Low Power *DRP; Dynamically Reconfigurable Processor 2017 Renesas Electronics Corporation. All rights reserved. Page 14
EXPANSION OF ECOSYSTEM TOWARDS OPEN e-ai PLATFORM Data Pre-Processing Service, Data analytics Learning platform Sample models, Neuro-network implementation Embedded system Customer & Partner Platform Board, Tool Top share footprint Embedded-AI solution AI secure update solution e-ai Service Platform SIer Development environment Software IP 2017 Renesas Electronics Corporation. All rights reserved. Page 15
DRIVE SMART SOCIETY AND CREATE NEW MARKETS NEW Embedded system Learning platform Pre Processing Data analytics Neuro-network support Board, Tool SIer DRP Development environment Software IP 2017 Renesas Electronics Corporation. All rights reserved. Page 16
FUTURE SPARK SOTB SILICON ON THIN BURIED OXIDE 2017 Renesas Electronics Corporation. All rights reserved. Page 17
FUTURE SPARK SOTB Standby Current (µa) 10 1 28nm FDSoI 90~40nm 130~90nm Conventional Battery System (>200µA) Long Battery Life Battery Less (<10µW) Conventional MCU Target of SOTB 0.1 10 100 1,000 Active Current (µa/mhz) 2017 Renesas Electronics Corporation. All rights reserved. Page 18
FUTURE SPARK SOTB Disruptive Ultra Low Power Performance of SOTB Conventional Circuit SOTB Battery Normal MCU SOTB realizes Operating Current x 0.1 Standby Current x 0.01 Battery-free SOTB Light (Solar) Temperature Vibration Water flow Wind Power supply = Battery Operated by Environment Power 2017 Renesas Electronics Corporation. All rights reserved. Page 19
SOTB A TECHNOLOGY WHICH CAN CHANGE OUR LIFE Realize Battery-less system with Energy Harvesting Solution Maintenance free device enables Autonomous World Wind Vibration Water flow Light Solar SOTB Pressure ΔTemp. 2017 Renesas Electronics Corporation. All rights reserved. Page 20
TAKE AWAY Strong Industrial Customer Footprint Sustainable high profit growth Real Time e-ai As future growth driver SOTB Can change our life 2017 Renesas Electronics Corporation. All rights reserved. Page 21
Renesas creates leading semiconductor solutions VISION that spark innovation for a connected world, building a trusted brand we can be proud of. 2017 Renesas Electronics Corporation. All rights reserved. Page 22