Topsil Semiconductor Materials A/S LD SmallCap Seminar 7 October 2010
AGENDA 3 Topsil s s markets and market drivers 7 Insulated gate bipolar transistors (IGBTs) fuelling growth 14 Update on strategy 2010-20122012 implementation 19 Appendix: Topsil in brief LINDEGAARD ANDERSEN (CEO) +45 2170 8772, KLA@TOPSIL.COM JENS CHRISTIAN NIELSEN (CFO) +45 2010 2320, JCN@TOPSIL.COM COMPANY PRESENTATION 10-10-07 Page 2
THE FOUR TOPSIL GROUP MARKETS 100 Revenue split for Topsil Group (2009) 90% 3% 2% 5% Source: Yole Developpement and the Topsil Group, 2009 COMPANY PRESENTATION 10-10-07 Page 3
PRODUCT RANGE MATCHES THE MOST SIGNIFICANT GROWTH DRIVERS According to Yole Developpement, annual growth rates in the Topsil Group s four semiconductor markets from 2009 to 20122 will be between 8% and 20% (CAGR) CAGR for the Power market is expected to be 11% Above 3.3kV: 9% for NTD-based components used e.g. for the distribution of energy, a not so cyclical segment 2kV-3.3kV: 15% for NTD and partly for other substrates used in e.g. industrial or transport applications or in wind turbines 1.2kV-1.7kV: More than 15% for PFZ, and in some cases also CZ-EPI and CZ used in industrial applications, medical equipment and the automobile industry Less than 900V: Around 10% for applications based mainly on CZ substrates Core products FZ-NTD, FZ-PFZ and CZ-EPI expected to generate the highest growth rates COMPANY PRESENTATION 10-10-07 Page 4
MARKET DRIVERS 100 INDUSTRY: Focus on energy-efficient solutions in industry, e.g. industrial motors ( Smart power ) TRANSPORTATION & AUTOMOTIVE: Movement towards more efficient and more climate-friendly transport of people and goods including electric vehicles ENERGY: New investments in infrastructure and integration of new energy sources in existing grids Projected world energy consumption, 1990-2030 COMPANY PRESENTATION 10-10-07 Page 5
TRANSITION FROM TODAY TO TOMORROW Today Tomorrow: Decentralised network with more power variation Gas plant Coal plant Transmission Network = Distribution Network Source: Yole Developpement and Topsil COMPANY PRESENTATION 10-10-07 Page 6
3 Topsil s s markets, market drivers 7 Insulated Gate Bipolar Transistors (IGBTs) fuelling growth 14 Update on strategy 2010-20122012 implementation 19 Appendix: Topsil in brief COMPANY PRESENTATION 10-10-07 Page 7
IGBTs BASED ON SILICON, KEY ELEMENT IN ELECTRICAL APPLICATIONS Manufactured on the basis of FZ or CZ silicon, IGBT modules are an integral part ofeg: e.g.: Photos: Yole Developpement and www.eng.wikepedia.org The insulated gate bipolar transistor (IGBT) functions as the speeder or electronic brain in various high power applications Industrial motors Pumps Ventilators High speed trains Hybrid vehicles Solar panels Wind turbines The Grid (Energy transmission) COMPANY PRESENTATION 10-10-07 Page 8
ESTIMATED MARKET VOLUME FOR SILICON WAFERS IN EV/HEV APPLICATIONS IGBT, PFZ medium voltage Market size (Units) 180 000 160 000 140 000 120 000 100 000 80 000 60 000 40 000 Market volume for Si wafers in EV/HEV 20 000 0 2008 2009 2010 2011 2012 2013 2014 2015 8" (Units) 0 2 150 10 192 28 713 55 798 98 505 132 259 163 439 6" (Units) 73 817 72 699 72 570 76 665 53 480 30 942 12 391 0 Source: Yole Developpement, 2009 COMPANY PRESENTATION 10-10-07 Page 9
ESTIMATED MARKET SIZE FOR IGBT MODULES USED IN RAIL TRACTION Marke et size (M$) $350M $300M $250M $200M $150M IGBT, NTD, very high voltage IGBT modules for rail transportation market size (M$) 6.5kV 4.5kV 3.3kV 2.5kV 1.7kV $100M $50M $M 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Yole Developpement, 2009 10-10-07 Page 10
ESTIMATED MARKET SIZE OF IGBT + DIODE PACKS FOR PV $800 M $700 M IGBT, PFZ medium voltage IGBT Pack market size for PV business $600 M Market (M$) $500 M $400 M $300 M $200 M $100 M $ M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 IGBT pack market (M$) $32.9 M $47.9 M $81.5 M $108.5 M $132.4 M $161.2 M $209.4 M $272.2 M $345.4 M $424.0 M $538.4 M $683.7 M Yole Developpement 2009: Based on full-bridge IGBT pack with: 2-legs, single-phase for small inverters and 3-legs, 3-phases for med & large inverters COMPANY PRESENTATION 10-10-07 Page 11
ESTIMATED MARKET SIZE FOR IGBT + DIODE PACKS FOR WIND TURBINE $35 M IGBT, PFZ medium voltage IGBT pack market for wind turbines $30 M Market (M$) $25 M $20 M $15 M $10 M $5 M $ M 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 6 pack market (M$) 9.85 M$ 12.48 M$ 11.16 M$ 11.68 M$ 13.02 M$ 13.51 M$ 15.64 M$ 16.46 M$ 20.30 M$ 23.91 M$ 25.28 M$ 26.88 M$ 31.51 M$ Source: Yole Developpement, 2009 COMPANY PRESENTATION 10-10-07 Page 12
ESTIMATED MARKET SIZE FOR TRANSMISSION OF ENERGY Market size in M$ $80M $70M $60M $50M $40M $30M $20M $10M $M IGBT, NTD, high + very high voltage Market for Thyristor & IGBT packs in HVDC IGBTMarket (M$) Thyristor Market (M$) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Yole Developpement, 2009 HVDC: High voltage direct current COMPANY PRESENTATION 10-10-07 Page 13
AGENDA 3 Topsil s s markets, market drivers 7 Insulated gate bipolar transistors (IGBTs) fuelling growth 14 Update on strategy 2010-20122012 implementation 19 Appendix: Topsil in brief COMPANY PRESENTATION 10-10-07 Page 14
STRATEGY 2010-20122012 SEIZING THE OPPORTUNITY Situation Opportunities Strategy chosen Objectives Market growth Access to raw material & competitive prices Expansion Four strategic focus areas 1 Improve Topsil s customer satisfaction 2 A stronger Cemat 3 Reduce Topsil s costs 4 A stronger financial position for the group Significant expansion of competitive position during the strategy period New customer contracts (increased volumes) Customer requirements: Reduced costs Stable quality Shorter production time Increased automation Improvements & expansion related Closely The Topsil Group: Greenfield (Topsil) Wafering (Cemat) R&D (8 ) Build up scalable production capacity, capacity to be increased by four to five times Profitable growth EBITDA margin of at least 25% by the end of 2012 COMPANY PRESENTATION 10-10-07 Page 15
NEW FUTURE PROOF FLOAT ZONE MACHINES INSTALLED Installation completed June 2010. Tested and running according to plan. New pullers improved in a number of ways, compared to earlier models. Designed to be able to manufacture 8 FZ wafers. COMPANY PRESENTATION 10-10-07 Page 16
GREENFIELD PLANNING PROGRESSES AS SCHEDULED Greenfield time schedule 2010 2011 2012 md 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Financing, sketch, site 4 Financing ok Green light 2 VVM screening 3 Local community plan 9 Project approval by authorities 6 Engineering and procurement 6 Erection of building 7 Clean room and installations 5 Machines in (FZ, etch, mechanical) 1 Moving and closing old site 5 COMPANY PRESENTATION 10-10-07 Page 17
TOPSIL TO MEET INCREASING DEMAND 100 Positive market outlook to continue for the coming years Share issue completed + New bank arrangement with committed loan facilities for three years New machinery to secure increased level of activity in 2011, overlap between existing and new facility in 2012 Topsil to accommodate to continuous growth, both in terms of equipment and in terms of human resources, including training COMPANY PRESENTATION 10-10-07 Page 18
APPENDIX Topsil in brief COMPANY PRESENTATION 07-10-2010 Page 19
TOPSIL A NICHE PRODUCER OF SILICON FOR THE SEMICONDUCTOR INDUSTRY +50 years experience in the processing of silicon to the semiconductor industry Strong position within the production of float zone (FZ) and since 2008 czochralski (CZ) silicon Sells mainly to semiconductor markets, the Power market, MEMS, Optoelectronics & detectors as well as RF electronics / IPD, a market totalling USD 1.3bn or around 10% of the total silicon market for the semiconductor industry (2009) Favourable position among the four largest suppliers of silicon with a global market share of 7% of the Power market Professionalism and technological weight as core competencies Strong customer and supplier relations Niche plus strategy t focusing on high/medium h/ power products for selected customers Long-term contracts running until the end of 2015 and 2017 with the only two producers of the FZ raw material (polysilicon) Long-term contracts running until the end of 2015 with the largest and most important customers, ensuring a significant part of revenue COMPANY PRESENTATION 10-10-07 Page 20
GROUP OVERVIEW The Topsil Group TOPSIL Semiconductor Materials A/S (Denmark) Production based on FZ technology Head office with administrative functions Development of FZ-based production 82% of 2009 revenue about 100 employees 100% Cemat Silicon S.A. (Poland) 53% Cemat 70 S.A (Poland) Production based on CZ technology and in-house production of CZ and FZ wafers Development of CZ-based production 15% of 2009 revenue about 220 employees Property company non-core activity held for sale 47% owned by the Polish state (24.7%), SPEC (9.4%) and other private investors (12.9%) Earnings and cash flow neutral - 55 employees COMPANY PRESENTATION 10-10-07 Page 21
FROM SAND TO HIGH END PRODUCT FZ CZ COMPANY PRESENTATION 10-10-07 Page 22
THE TOPSIL GROUP S SILICON IS USED AS CRITICAL COMPONENTS IN NUMEROUS SMART POWER SOLUTIONS FZ market CZ market Market for high h / very high h power and high h resistivity it Low and medium power markets High-volume, low-cost market Topsil Group revenue by product, 2009 NTD 67% CZ 6% CZ+Epi 10% PFZ 7% HPS 10% Source: Yole Developpement and The Topsil Group, 2009 COMPANY PRESENTATION 10-10-07 Page 23
TOPSIL IS DEDICATED TO HIGH PERFORMANCE DEVICES High and very high power with high resistivity Low to medium power High volumes and strong price competition NTD CZ PFZ CZ EPI Source: Yole Developpement, France High Power Increasing proliferation of medium power products Low and medium power High volumes and price competition COMPANY PRESENTATION 10-10-07 Page 24
THE GROUP IS ONE OF FOUR LARGE PLAYERS IN THE POWER MARKET 300 250 200 Revenue in the Power market, 2009 Topsil has a substantial share of the FZ market and ranks as number four in the Power market with a global market share of around 7% Management believes Topsil has won substantial market share during the past few years USDm 150 100 The CZ segment is more competitive while CZ-EPI is more of a protected niche segment 50 0 The industry (especially the FZ market) is characterised by the products long life cycles and significant switching costs / barriers to entry in terms of quality Revenues SOI 09 Revenues FZ 09 Revenues CZ 09 Source: Yole Developpement, 2009 COMPANY PRESENTATION 10-10-07 Page 25
LONG TERM SUPPLIER AND CUSTOMER AGREEMENTS SIGNIFICANTLY INCREASE THE CERTAINTY OF FUTURE PROFITABILITY Suppliers Value chain Customers Two global suppliers of FZ raw material worldwide INGOT Float Zoning (pulling the crystal) In DK Core Tech. basis IRRADIATION Topsil has app.10 reactor Partner Contracts Worldwide WAFER Cutting Lapping Etching Polishing Around 100 FZ customers, the three largest account for around 60% of aggregated FZ volume Suppliers Long term agreements with both global suppliers of FZ silicon (2010-2015/2010-2017), supporting customers extensive growth plans, offering guaranteed prices and the ability to offer the widest FZ range of all FZ suppliers Customers Long term sales contracts on both minimum volumes and pricing with our six largest customers for 2010-2015 Contracts add up to around 40% of Topsil Group s forecast revenue for 2010,more than three times the amount of previous contracts Beyond the minimum levels, the contracts signal strong confidence and commitment from the customers COMPANY PRESENTATION 10-10-07 Page 26