Vanguard International Semiconductor : 8/1, 2Q23 Management Report

Contact

Amanda Huang/ Janey Liu

Public Relations & Investor Relations Division [e-mail]

886-3-577-0355 ext. 1421

VIS Reports 2023 Second Quarter Results

Second Quarter 2023 Overview:

• Revenue increased about 20.4% QoQ to NT$9,854 million
• Gross profit margin was around 30.0%, operating profit margin was around 18.3%
• Net income of NT$1,995 million
• Diluted earnings per share was NT$1.21

Hsinchu, Taiwan, August 1, 2023 - Vanguard International Semiconductor Corporation today announced consolidated revenue of NT$ 9,854 million, net income of NT$1,995 million, and earnings per share of NT$1.21 for the second quarter ended June 30, 2023.

On a sequential basis, due to the increase in wafer shipments and NTD depreciation were partially offset by price erosion, second quarter revenue increased around 20.4% to NT$9,854 million from NT$8,187 million in previous quarter. Gross profit margin stayed flat at 30.0%; operating profit margin was around 18.3%. Net income in 2Q23 was NT$1,995 million compared to NT$1,364 million in 1Q23. The results met our guidance given on May 3, 2023.

VIS spokesperson and Vice President of Finance, Ms. Amanda Huang said, "Due to the slow end market demand, we see a muted recovery in 3Q23. We forecast our third quarter of 2023, wafer shipment to increase by 4% to 6% QoQ, blended ASP to be about flat QoQ, and gross profit margin to be between 25% and 27%."

Safe Harbor Statements

Except for statements in respect of historical matters, the statements in this release contain "forward-looking statements" involve known and unknown risks, uncertainties and other factors that may cause the actual performance to be materially different from those contained in such forward-looking statements.

VIS undertakes no obligation to update these forward-looking statements for events or circumstances that occur after such date or to reflect the occurrence of unanticipated events.

1

I. COGS and Operating Expense

(In NT$ million)	2Q23		1Q23		2Q22
Net Revenue	9,854		8,187		15,301
Cost of Revenue	(6,895)	(5,728)	(7,656)
Gross Profit	2,959	2,459	7,645
Gross Profit Margin (%)	30.0%	30.0%	50.0%
Total Operating Exp.	(1,154)	(1,093)	(1,734)
G&A	(512)	(444)	(789)
Sales & Marketing	(106)	(87)	(199)
R&D	(536)	(562)	(746)
Operating Income	1,806	1,365	5,912
Operating Profit Margin (%)	18.3%	16.7%	38.6%

II. Non-Operating Items:

(In NT$ million)	2Q23 1Q23 2Q22
Net Non-operating Income	402	335	197
Investment Gains (Losses)	27	(3)	34
Net Interest Income	374	340	54
Others	1	(2)	109

Due to the increase in wafer shipments, revenue grew by 20.4% to NT$9,854 million sequentially.

Gross margin was 30.0% in 2Q23, similar with in 1Q23, mainly due to the benefit from higher capacity utilization and NTD depreciation was offset by unfavorable selling price and higher manufacturing cost.

Operating expenses for 2Q23 was NT$1,154 million, increased from NT$1,093 million in previous quarter, mainly attributed to the higher employee compensation. As a results, operating income for 2Q23 was NT$1,806 million, represented 18.3% of net sales.

Net non-operating income was NT$402 million in 2Q23, largely resulted from interest income.

2

III. Financial Condition Review

(In NT$ million)	2Q23	1Q23	2Q22
Cash & Financial Instruments	33,058	33,927	39,586
Accounts Receivable	6,385	4,800	10,318
Inventories	6,354	6,160	4,635
Total Current Assets	46,724	45,629	55,166
Notes and Accounts Payable	1,201	1,097	1,703
Cash Dividends Payable	7,375	0	7,375
Accrued Liabilities and Others	19,357	20,301	19,413
Total Current Liabilities	27,933	21,398	28,491
Total Non-current Liabilities	32,649	33,769	36,063
Current Ratio	167%	213%	194%
Net Working Capital	18,791	24,231	26,675
A/R Turnover Days	57	54	63
Inventory Turnover Days	88	96	54

IV. Cash Flow

(In NT$ million)	2Q23	1Q23	2Q22
Cash - Begin of Period	28,428	30,857	29,426
Cash Flow from Operation	297	2,766	11,467
Cash Flow from Investment	(1,850)	(5,115)	(6,388)
Cash Flow from Financing	(81)	(44)	2,905
Net Cash Flow	(1,634) (2,393)	7,984
Effect of Exchange Rate Changes	83	(37)	102
Cash - End of Period	26,876	28,428	37,512

VIS ended the quarter with NT$46,724 million in total current assets, compared to NT$45,629 million at the end of the previous quarter, increased NT$1,095 million sequentially.

Total current liabilities increased NT$6,535 million to NT$27,933 million at the end of 2Q23, primarily resulting from increase in cash dividends payable.

As a result, net working capital decreased to NT$18,791 million in 2Q23, down NT$5,440 million sequentially, with a current ratio of 167%. A/R turnover days increased 3 days to 57 days, and inventory turnover days decreased 8 days to 88 days sequentially

Cash inflow from operation was NT$297 million, primarily reflecting changes in notes and account receivable of NT$1,678 million and income taxes paid of NT$2,326 million. The investment cash outflow was NT$1,850 million, mainly reflecting the CAPEX of NT$1,621 million. The financing cash outflow was NT$81 million. As a result, the net cash outflow was NT$1,634 million in 2Q23, and VIS ended the quarter with a cash balance of NT$26,876 million.

3

V. Revenue Analysis

Revenue Breakdown by Technology

By Technology	2Q23	1Q23	2Q22
<=0.18μm	45%	38%	56%
0.25μm	11%	13%	14%
0.35μm	22%	25%	13%
0.5μm	22%	24%	17%

Revenue Breakdown by Platform

By Platform	2Q23	1Q23	2Q22
Driver IC (Large)	23%	20%	24%
Driver IC (Small)	10%	6%	11%
Power Management	63%	69%	60%
Others	4%	5%	5%

VI. Wafer Shipments

Wafer Shipments

2Q23 1Q23 4Q22 3Q22 2Q22

Wafer

Shipments 511 414 441 634 773

(Kpcs)

By technology, 0.18μm and advanced process technology contributed 45% of total wafer revenue, while 0.25μm, 0.35μm and 0.5μm accounted for 11%, 22% and 22% of total wafer revenue, respectively.

By platform, Power Management represented 63% of total wafer revenue, while LDDIC, SDDIC and Others accounted for 23%, 10% and 4% of total wafer revenue respectively.

Wafer shipments increased 23.5% QoQ to 511 thousand 8-inch wafers in 2Q23.

4