“powerful sensing solutions for a better life” -...
TRANSCRIPT
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Forward-Looking Statement
This presentation contains forward-looking statements within the meaning of Section27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of1934. These statements are subject to risks and uncertainties that could cause theCompany’s actual operating results to differ materially from those indicated by theforward-looking statements. For further information on risk factors affecting theCompany’s business, please refer to the “Risk Factors” section of our Form 10-K andother filings with the Securities and Exchange Commission. The Company expresslydisclaims any obligation to update and revise publicly any forward-looking statements,whether as a result of new information, future events or otherwise.
MEMSIC Introduction
� A standalone pure-play MEMS sensor & solution company that has:
� Complete capability in MEMS product design, process development, and high-volume, low-cost manufacturing
� Sensing system integration differentiates MEMS
� Global customer base and wide range of market penetration
� Provides state-of-the-art, cost-effective MEMS IC sensors and multi-sensor system solutions
� MEMS sensors will be the largest growth driver in IC’s for the next decade
� Market for MEMS sensors will grow to 3B+ annual units by 2015 at >30% CAGR
� Executing diversification strategy for long term gross margin growth
� The consumer market by nature has lower margin
� Diversifying into high-precision, high-end industrial and automotive application
� Investing in industrial level multi-sensor solution products
� MEMSIC has accumulated many fundamental patents in MEMS process and applications
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$8.7
$10.2$11.4
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$17.3
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2010 2011E 2012E 2013E 2014E 2015E
$ in
Billio
ns
Fast-Growth MEMS Market
MEMS Sensor Market Forecast (2010-2015)(1)
�Fastest growing sub-segment of semiconductors
�Consumer / mobile phone will constitute >50% of all MEMS sales in 2015
�Integrated sensor systems forecasted to drive substantial share of additional growth
MEMS Market Forecasted to Grow at ~2x the Broader Semiconductor Market through 2015
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(1) Source: Yole Developpement, March 2011
MEMSIC Addressable Markets
Handset Market
� Handset market projected to grow to 2.3B+ units by 2015
� Sensor systems are a de-facto standard in handsets
Consumer Market
� Cameras (DSCs/SLRs); Projectors; Toys
� DSC camera market forecasted to grow to $150MM units by 2015
Automotive Market
� Automotive MEMs - growing content in multiple car applications
� Global market for automotive MEMS grew by 22% in 2011 to $2.2B; forecasted to grow to $3.1B by 2015
Industrial Market
� Large and stable
� Increasing need for flexible, intelligent, distributed and wireless monitoring & control in industrial manufacturing, avionics, agricultural and defense applications
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Wide Product and Technology Range
Technology and Product Application Market
MEMS Sensors
� eCompass
� Accelerometers
� Gas Flow Sensors and modules
�Mobile Phones
�Automotive
� LBS
�Consumer
� Industrial
Inertial Navigation
System & Solution
� Inertial Sensing
� Navigation System
� Flight Display
�Aerospace
� Industrial Control
�Robot
�High-Speed Trains
Wireless Sensing
Network (WSN)
� X-mesh Network
� Sensor Integration
� Transceivers
�Environmental Monitoring
�Green Living
�Smart GRID
�Agricultural
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3x growth in device shipments
$6.9$9.1
$13.1
$25.3$20.1
$28.4
$38.7
$68.2
Washing machineProjector customers:
Rollover application
1st CMOS monolithic accelerometer
1st MEMS company listed on
Company founded - 1999
The most reliable sensor for
automotive
Company Milestones
Product Milestones
Bu
sin
ess
Fin
an
cia
lP
rod
ucts
Desig
n W
ins
Honored for world’s smallest accelerometer
Revenue
Stability control application
HDD Protection
Profitable for 6 out of 8 years (from 2004-2011)
1st MEMS sensor fusion IMU with GPS
1st MEMS-based AHRS with FAA certification
1st cell phone application for AMR compass
1st cell phone application for accelerometer
Acquired IP for sensor fusion & system technology
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1H12
$34.4
Introduced gas flow sensor module
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MEMSIC eCompass ProductBeats Every Competition by Performance
(1) Source: Yole Developpement, March 2011
�Definition - Device that measures the strength and/or direction of magnetic fields
Applications
• Compass in Mobile
Devices
• Position Sensing
• Current Sensing
• Automotive
• Medical
• Mineral
Exploration
• Military
• Gesture
Recognition
� Unique AMR technology enables:
• Highest accuracy
• Highest response speed
• Low power consumption
• Lowest noise
Magnetometer / Compass
MEMSIC – A Leader in the Compass Market
MMC3140MS MMC3316MTMMC3280MA
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� Unique packaging technology enables:
• Low-cost package capturing superior performance
• High yield
• High reliability
� Worldwide volume will reach >800M units by 2014
Large TAM
(1) Source: Yole Developpement, September 2011
Mobile PhoneAutomotive Consumer Industrial
� Definition - Device that measures acceleration and tilt
� Uses heated gas molecules to detect acceleration
• Low cost, highest reliability (no moving parts)
• High shock survivability
• High accuracy and temperature performance
- World’s Smallest Accelerometer, honored by Electronic Products Magazine
• Special handling & testing not required, saving significant costs
�Electronic Stability Control �Rollover�Headlight Levelling�Alarm�Testing
�Systems�Gas Flow Meter�Equipment�Facilities Monitoring�Current Sensing
�Digital Cameras�Projectors�PMPs�Game Consoles
�Orientation Sensing�Pedometer�Picture Rotation�Image Stabilization�Gaming
�White Goods�Hard Disk Protection�Navigation Devices
MEMSIC AccelerometerBeats Every Competition by Size and Cost
Large TAMMEMSIC’s Unique Patented Thermal Technology
MEMSIC – Accelerometer / Tilt Sensor Applications
Accelerometer / Tilt Sensor
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� Projected to grow from $1.3B in 2010 to $1.8B by 2014
MEMSIC Inertial Systems and SolutionsIntegration Capability Way Ahead of Competition
Description
� High-performance inertial 11DOF systems for avionics and industrial applications
� MEMS-based solutions for measuring static and dynamic motion in challenging environments – e.g., avionics,
remotely operated vehicles, agricultural and construction vehicles, automotive test and wind power turbines
� MEMSIC: First to market with FAA-certified, MEMS-based systems flying in 600+ types of aircraft
• Anticipate 30,000 retrofit upgrades in next 5 years
� Integrated: Integrated with MEMS sensors, GPS, and wireless links to extend applications in industrial and transportation for safety and structural health monitoring
� High barriers to entry: Proprietary algorithms, FAA certification and established customer relationships
MEMSIC’sInertial Systems
MEMSIC – Inertial Systems Applications
Products:� Inertial Measurement Units� Remote magnetometer systems� Heading Reference Systems (AHRS)� Vertical gyroscopes (VG)� Fiber optic vertical gyros
Avionics Industrial
Applications:� Avionics systems� Unmanned vehicle control� Platform stabilization� Land vehicle guidance� Flight management systems� Airborne antennal control
Products:� Accelerometer systems� Magnetometer systems� Tilt sensors
Applications:� Automotive Testing� Monitoring (Condition, Vibration,� Wind Turbine, Structural Health)� Seismic Instrumentation� Antenna Stabilization� Towed sonar arrays� Construction
AHRS Family:� Vertical and
directional gyro � Measures roll,
pitch, and heading
VG Family:� Vertical gyro � Measures roll
and pitch
IMU Family:� 6DOF � Measures roll
angular rate and linear accel
NAV Family:� Mag sensors and
GPS� Full data – angles,
rates and accels
Product Features and Capabilities Select Systems
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MEMSIC at Strategic Crossroad
� Sensor unit shipments to mobile phone applications grew 3x over the past two years
� MEMSIC’s market share grew to ~15% in 2011, up from 1% in 2010
� However, mobile phone gross margin decreased
� Primarily reflected pricing pressure at one major mobile phone customer
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Gro
ss M
arg
in %
Ship
ment (m
illio
n u
nits)
Trading Rapid Revenue Growth for Stable Revenue and Higher Margin
Going Forward: Targeting Margin Growth
� Focusing on design wins at higher-margin mobile customers
� Diversified group of global Tier 1 customers
� China smart phone market (market size: 300+M units in 2013)
� Developing marketing strategy in higher-margin applications
� Industrial applications
� Automotive applications
� Investing in higher-margin products
� Integrated solutions combining components, systems and software
� High performance industrial IMUs
� Gas flow sensor module for home gas metering, medical, and industrial apps
� Magnetic sensors for automotive, industrial, and medical applications
� Accelerometers for industrial and automotive applications 13
MEMSIC Gas Flow Sensor Module –Proprietary and High-Margin Product Example
� Disruptive Technology Over the Old Mechanical Meters
� True MASS flow measurement
� >15 years reliability, with performance guaranteed
� Fully electrical and easier integration to form SMART meter
� No moving parts, no wearing
� Potential future market: $170M*
� ~$80MM: residential gas meters
� ~$50M: automotive MAF (Mass Air Flow) sensors
� ~$40M: industrial/medical (HVAC, respiration, anesthesia, etc.)
� Starting to sample with interested customers
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Building a Stronger Organization
� Enhanced management team by bringing on industry experts
� Paul Zavracky, President, North American & European Operations
Co-founder, President & COO of The MicroOptical Corporation and Kopin Corporation
100+ publications and named inventor in 67 issued patents
� John Newton, VP, Marketing
23 years’ experience in IC industry
9 years as Executive Director, Product Definition & Business Management, Maxim Integrated Products
� Enhanced total quality system by hiring experienced corporate QA director
� Built a marketing team focusing on automotive and industrial applications
� Investing in R&D resources
� Improving new product development process
� Driving productivity improvements by implementing lean manufacturing
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Net Sales $38.7 $68.2 $34.4
Gross Profit $15.3 $23.8 $13.2
Gross Margin 39.6% 35.0% 38.3%
Net Income (Loss) ($7.4) ($6.1) 1 $0.7
EBITDA2 ($3.9) ($1.7) $3.2
Cash, Restricted Cash & S-T Investments $61.8
Total Assets $123.0
Total Liabilities $35.2
Shareholder’s Equity $87.8
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Financial Snapshot
Income Statement
as of 06-30-12
FY 2010 FY 2011
Balance Sheet
1 Includes a $4.5 million non-cash goodwill impairment charge 2 See Appendix
1H 2012
Investment Summary
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Large
Opportunity
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Right Products
at the
Right Time
Positioned
for Growth
& Profitability
�Large and fast-growing handset market
�Large and growing automotive market
�Diversified customer base including industrial
�Volume shipments of magnetic sensor and accelerometer
�Integrated sensing system product
�Leader in emerging flow sensor technology
�Managing risk with operating efficiency and leverage
�Continuously introducing cost-competitive products
�Strong balance sheet supports new product development initiatives
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MEMSIC INC.
One Tech Drive, Suite 325
Andover, Massachusetts 01810
TEL +1-978 738-0900
FAX +1-978 738-0196
EMAIL [email protected]
www.memsic.com
Thank You!
Yang Zhao, PhD
Chairman, CEO & President
+1-781-888-8688
Patricia Niu
Chief Financial Officer
+1-978-738-0900, ext. 225
Appendix
EBITDA is a measure used by management to evaluate the Company’s ongoing operations and as a general indicator of its operating cash flow (in
conjunction with a cash flow statement that also includes, among other items, changes in working capital and the effect of non-cash charges). The
Company defines EBITDA as net income, plus interest expense, net of interest income, provision for income taxes, and depreciation and amortization.
Management believes EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the
comparative evaluation of companies. Because not all companies use identical calculations, the company's presentation of EBITDA and EBITDA per
share may not be comparable to similarly titled measures of other companies. EBITDA is not a recognized term under GAAP and does not purport to be
an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally,
EBITDA is not intended to be a measure of free cash flow for management's discretionary use as it does not reflect certain cash requirements such as
interest payments, tax payments and debt service requirements. Pursuant to the requirements of Regulation G, we have provided a reconciliation of
EBITDA to GAAP net income:
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2012 2011 2012 2011
Net income (loss) (461,414)$ (1,108,301)$ 739,090$ (2,436,482)$
Interest (income) expense, net (125,259) (98,366) (233,034) (181,855)
Income tax expense 29,355 (3,084) 97,938 114,310
Depreciation and amortization 1,305,595 1,085,682 2,613,747 2,155,002
EBITDA 748,277$ (124,069)$ 3,217,741$ (349,025)$
Three months ended June 30, Six months ended June 30,