43
www.fairchildsemi.com 1 Fairchild Semiconductor International, Inc. April 2010 Investor Presentation
www.fairchildsemi.com
1
Fairchild Semiconductor
International, Inc.
April 2010
Investor Presentation
www.fairchildsemi.com2
Notes on Forward Looking Statements
and Non-GAAP Measures
• Comments in this presentation other than statements of historical fact may constitute forward looking statements and are based on Fairchild’s management’s estimates and projections and are subject to various risks and uncertainties
• These risks and uncertainties are described in the Company’s periodic reports and other filings with the Securities and Exchange Commission (see the Risk Factors section) and are available at http://sec.gov and investor.fairchildsemi.com
• Actual results may differ materially from those projected in the forward looking statements
• Some data in this presentation may include non-GAAP measures that we believe provide useful information about the operating performance of our businesses that should be considered by investors in conjunction with GAAP measures that we also provide. You can find a reconciliation of non-GAAP to comparable GAAP measures at the Investor Relations section of our web site at http://investor.fairchildsemi.com
Recent additions to our website at http://investor.fairchildsemi.com
Updated Financials (through Q1 2010, with segment revenue/gross margin breakouts)
• Quarterly Fact Sheet with Q4 2010 highlights
• This investor presentation
www.fairchildsemi.com3
Highlights of the Quarter – Q1 2010
Sales were $378m, up 7% QoQ and 69% YoY... Solid performance in what is typically a down sales quarter
Demand was higher across a broad range of end markets and regions
Under-shipped POS to reduce channel inventory 2% QoQ or 1/2 week to record low 7.8 weeks supply
Internal inventory held at very lean 69 DOI…higher sales more than offset the $9m increase in raw materials
& WIP
Generated $36m in free cash flow (cash from operation – capex) due to margin and earnings growth coupled
with strong asset management…Net cash positive…as cash & securities top $481m at the end of Q1
Adjusted gross margin was 32.5%, up >2 points QoQ, due to ramp of new products, mix out of less profitable
products, and higher factory loadings
Pricing remained better than typical at down <1% QoQ as customers continue to focus on product availability
Utilization increased again in Q1 causing lead times to extend. Using capacity reservations for top tier
customers (75% of sales) to continue to provide them the product support they need
www.fairchildsemi.com4
Q2 Forward Guidance
• Sales expected to be $395 – 400m…current scheduled backlog covers low end of
this range
• Gross margin expected to improve to 33 – 34%
• R&D and SG&A forecast at $82 – 84m…<21% of sales at mid-point…making
good progress towards our target of 20% of sales
• Net interest expense anticipated at $2 – 3m per quarter this year
• Blended tax rate forecast to be 15 – 20% in Q1
www.fairchildsemi.com
5
Fairchild Overview
www.fairchildsemi.com6
• Wireless Convergence and Energy
Efficiency mega-trends
• Power silicon content grows
faster than end market sales –
premium paid for efficiency
• Segment structure increases our
apps knowledge and ability to
sell solutions
• Large customers dominate these
markets and align well with
Fairchild’s strengths in SCM,
global presence and wide product
breadth
Markets That Drive Our Business
www.fairchildsemi.com7
Power Silicon Content GrowthHandsets
• Handset growth still impressive as market hits 1.5B units in 2013
• Voltage regulator CAGR of 19% reflects greater power management value in the handset to support new features, better resolution displays and 3G/4G
Source: iSuppli, Jan 2010
0
1,000
2,000
3,000
4,000
5,000
0
200
400
600
800
1,000
1,200
1,400
1,600
2009 2010 2011 2012 2013
M $
M U
nit
s
Silicon Content Growth - Handsets
Handset Units Voltage Regs/Refs & Interface Sales
8% Handset Unit CAGR19% Voltage Regs/Refs & Interface Sales CAGR
www.fairchildsemi.com8
Power Silicon Content Growth Notebook PC
• Notebook unit growth projected to be robust through 2013
• Power transistor/FET sales growth remains strong even as CULV and netbooksrequire fewer power rails but place greater value on size and weight
Source: iSuppli, Jan 2010
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013
M $
M U
nit
s
Silicon Content Growth - Notebook PCs
Notebook Units Power Transistor Sales
17% Notebook PC Unit CAGR
9% Power Transistor Sales CAGR
www.fairchildsemi.com9
Power Silicon Content GrowthLCD TV
• LCD TVs expected to continue to grow rapidly
• Power analog & transistor sales forecasted to grow even faster as screen resolution and backlighting requirements advance and concern over energy efficiency of these devices increases
Source: iSuppli, Jan 2010
0
200
400
600
800
1000
1200
1400
0
50
100
150
200
250
2009 2010 2011 2012 2013
M $
M U
nit
s
Silicon Content Growth - LCD TV
LCD TV Units Power Analog & Transistor Sales
15% LCD TV Unit CAGR
18% Power Analog & Transistor Sales CAGR
www.fairchildsemi.com10
Power Silicon Content GrowthPower Supplies
• Greater power supply efficiency requires more advanced topologies and greater power silicon content
Source: Climate Savers Computing Initiative 2008
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
80%+ 82%+ 85%+ 87%+
Efficiency
Total Discrete Content ($/supply)
Total IC Content ($/supply)
Power Silicon Content versus Efficiency
www.fairchildsemi.com11
Capitalizing on these Market Trends
• Engage with industry-leading customers in key markets to build our
applications expertise (ex. Handsets, power supplies)
• Leverage our technology leadership in analog switches, HF Voltage
Regulators to expand content and increase integration level in handsets &
ultra-portable apps
• Leverage silicon-based technology leadership in power MOSFETs and
IGBTs to gain share and deliver industry-leading margins
• Accelerate share gains in power conversion business driven by new products
and transition to higher efficiency power supply designs
• Expand SPM business beyond Japan to support transition to variable speed
motors in appliances
www.fairchildsemi.com
12
Mobile, Computing, Consumer &
Communications (MCCC) Group
Overview
www.fairchildsemi.com13
MCCC Strategy Summary
Package
Technology
Leadership
Dedicated
Field
Marketing and
Applications
Teams
High Quality,
Low Cost
Manufacturing
and SCM
Focused
Product Line
Teams
Building Capabilties to enable profitable growth
Foundation
Focus
Areas
Anticipating Customer and Global Trends
MobileAnalog
Smart & Feature
Phones
ComputingMOSFET
Notebook
ConsumerMOSFET & Analog
Display
Set top Box
Networking
Focus on Mobile and
Power Efficiency
Process
Technology
Leadership
www.fairchildsemi.com14
MCCC Mobile ProductsExtend Battery Life, Enable Greater Functionality
• MOSFET
• IntelliMAX™
• Building Block Regulators
• ASSP Regulators
• Analog Switches
• USB
• µSerDes™
• Mixed Signal ASSP
Base Band and
Application Processor
PMIC
Memory
Display
Sub Display
LMU
Camera
Audio DataVideo
Display &
Camera
“uSerDes
Signal Path
Subsystems
GPSPower
SubsystemsLMU
DC:DC
RF
SD cardHDMI
Camera
DC:DC
Microphone
Power
PM
IC
www.fairchildsemi.com15
Increasing Power Consumption
3G 3.5G Pre 4G 4G2.75G2G
GPRS
UMTS
WCDMA
TD-SCDMA
HSDPA
HSPAGSM
WiMax / WiFi
WiBroLTEEDGE
70M172M
14Mbps
384K180k56k9.6k
DATA RATE (bps)
VOICE
SMS
Internet
Browsing
Video call
Video Download
Interactive Gaming
Video Conference
Video Broadcast
VOIP
HDTV
Multiview Video
Digital TV
10hr 5hr 2:30hr 1:00hr ?hr
Talk / Connection time
www.fairchildsemi.com16
USB Switch
WLAN
Module
Mobile Handset Targeted Subsystems
Audio
Connectors
Distributed Architecture Drivers :
• Dissimilar Process Technology
• Dissimilar IC lifecycles
• Optimized power consumption/efficiency
• Improved Time to Market (modularity)
• Differentiation (feature sets and user experience)
FAIRCHILD FOCUS: Distributed Signal Path
Subsystems and Power
OVPT
X
MU
S
Bluetooth
Module
SDIO
SwitchDACCodecADCAMPAMP AMP
Application
ProcessorPMIC
Broadband
ProcessorRF Power
Chipset
LCDBacklight
Driver
DisplayGPS
Mobile TV
FeaturesMP3
Other
P
P
P1
PN
P
www.fairchildsemi.com17
Mobile Power Solutions
We strive for excellence in electrical performance:
• Ultra Low standby current
• Highest Efficiency
• Fast transient response
• Low EMI
• High precision regulation
• Digital control
www.fairchildsemi.com18
IP migrated from consumer Applications
Second generation portable video filter
• 3 Channel Video Filter / Driver
• Ideal for handsets, Personal media players (PMP), and other mobile platforms
Low power / small size
• 30% lower power than existing solutions
• Utilizes FCS SOI process
• <2mm2 Chip Scale Package
Supports (SD) and (ED) Enhanced Definition
(up to 480p)
Composite and Component outputs
Ultra-Portable Video Filter Driver
www.fairchildsemi.com19
USB Opportunity
USB is the standardized Data and Power Interface for Mobile
•Data: 1.5Mb/s, 12Mb/s, 480Mb/s, 4.8Gb/s
•Power: 500mA 5V
USB is the wired Interface for Mobile products
•85% of handsets today support USB
What’s changing?
•Mechanical standardization
•System repartitioning
•Migration from 2.0 to OTG and USB 3.0
The Opportunity?
•FSC provides a complete USB solution (less the integrated controller)
•Leverages the our power and signal capabilities
•Improve our ASP per port
•Integrated and Block Solutions
Micro
Mini
www.fairchildsemi.com20
LV MOSFETLeading Technology = Best in Class Margins
1998 2000 2002 2003 2005 2006 2007 2008 2009 2010 2011
• Process technology learning curve
rejuvenated
• Scale learning curve resumed
• Move to next-gen packages lower
costs and improves performance
• Technology leverage is greater
than scale leverage
$-
$10
$20
$30
$40
$50
$60
$70
0 1 2 3 4 5 6 7Volume Scenario
Pa
cka
ge
Co
st
Next Gen
Current Pkg
Current Pkg
Next Gen
Next Gen
Long Term Die Cost Trends
Relative Package Cost Curve
www.fairchildsemi.com21
Summary
• Our focused investment in Analog for mobile is working
• LV MOSFET is a great EPS growth driver
www.fairchildsemi.com
22
Power Conversion,
Industrial & Auto (PCIA)
Group Overview
www.fairchildsemi.com23
What Drives our Business?
“Green Power” needs will fuel future growth
FCS provides key technology solutions to both convert and save energy
• PFC, PWM IC’s, Low Resistivity MOSFET’s, and IGBT’s improve conversion efficiency in power supplies
• PSR controllers minimize standby energy consumption of small chargers
• LED power supplies and electronic ballast controllers drive Solid State and Compact Florescent Lighting
• Controllers, Modules and MOSFET’s/IGBT’s spin Brushless DC Motors
• IGBT’s and High Voltage Drivers invert power
• IGBT’s start a car and Modules steer it
We are a complete solutions provider in the segments that we serve
• Full family of products: discrete switches, and IC’s
• Leverage our packaging expertise to sell integrated modules (SPM, FPS, EZ family)
US Residential Energy Consumption per capita, 1990-2030,
source: EIA, Annual Energy Outlook 2008
(index, 1990 = 1)
0.800
0.850
0.900
0.950
1.000
1.050
1.100
1990 2000 2010 2020 20302006
Projected consumption with
2008 technology
Projected consumption with
improved technology
Historical consumption
www.fairchildsemi.com24
Energy Efficiency Will Fuel
Our Growth
• In desktop computing total units are projected to be flat, but more demanding efficiency
requirements (80+ 82+ 85+ 87+) drive newer technology and increased content
• For lighting, LED’s and CFL’s are expected to grow substantially, while more traditional
technologies will shrink or maintain share
LED Incandescent Halogen CFL LF
Lighting efficiency
(lm/W)59 10 20 50 75
Efficiency of
lighting equip (%)80~90 30~50 30~50 50~60 50~70
Total efficiency
(lm/W)42 4 8 23 38
Life expectancy
(Hr)10K~50K 1k 3k 10k 15k
(Source : LEDs Magazine, 2007 May)
LED Incandescent Halogen CFL LF
Lighting efficiency
(lm/W)59 10 20 50 75
Efficiency of
lighting equip (%)80~90 30~50 30~50 50~60 50~70
Total efficiency
(lm/W)42 4 8 23 38
Life expectancy
(Hr)10K~50K 1k 3k 10k 15k
(Source : LEDs Magazine, 2007 May)
Efficiency (%) 80+ 82+ 85+ (1) 85+ (2) 87+
Total IC ($/set) 0.78 0.78 1.43 4.80 7.90
Total Discrete ($/set) 3.85 4.09 6.13 3.35 2.15
www.fairchildsemi.com25
Complexity Increases with PowerWe Provide Solutions Across this Range
watts
100
500
1000
50
10
Induction
Heating
Complexity
Desk Top
PC
Game
Console
Server/
Telecom
Air-Con/
Inverters &
Indus system
Cell Phone
Chargers
DVD/STB
Consumer
CFL
Lighting
LFL
Lighting
LED
Lighting
HID
Lighting
LCDTV
(> 46”)
PDP TVWashing
Machine
Note PC,
LCDTV
(< 45”)
Flyback QR Flyback /
Forward
Resonant
LLC
Soft
Switching
Multi-phase
Bridge
Hig
h E
fficiency
So
lutio
ns -
5W
to K
Ws
www.fairchildsemi.com26
Product Line Focus
HV Discretes
• Focus on margins has driven significant improvements
• Margin and revenue growth will be driven by new products and operating leverage
Automotive
• Capitalize on other FCS technology developments
Power Conversion
• System General gaining momentum
• Significant cost reduction opportunities
• New products and applications knowledge driving increased value
Segment based structure while retaining product line expertise
• Sales aligned to this structure
• Common customer and application base
www.fairchildsemi.com27
Power Conversion
Market Opportunity
• Growing demand for greater efficiency is driving
rapid adoption of advanced power conversion
solutions is a wide range of end markets from power
supplies and industrial motors to consumer
electronics, LED lighting and battery chargers
Features and Performance
• Industry leading efficiency
• Ultra-low standby power consumption
• PSR technology now 30mw vs 1.0w industry
standard just 2 – 3 years ago
• Longer product life and lower cost of ownership
• Using HV IC to drive LED lights doubles the
element life vs current discrete approaches
• Lighter, smaller, simpler form factors
• Advanced power conversion techniques
enable smaller magnetics and less copper use
in power supplies and chargers
Strategic Importance to Fairchild
• Fast growing market
• Fairchild is worlds largest supplier of power
conversion products
• Industrial design wins typically generate longer
demand flows
www.fairchildsemi.com28
BLDC Fan Motor
Drive
Compressor
Drive
Motion-SPM™
Market Opportunity
• Home appliance market is rapidly adopting inverter
technology to improve efficiency
Features and Performance
• Simple to Design
–Optimized footprint
–Built-in protection functions
–Matched component performance
• Simple to Assemble
–Reduced components
–Increases productivity and reliability
–Eliminates additional insulation material
Strategic Importance to Fairchild
• Key component in an inverter system
• Value solutions
• Growth driver for HV organization
2008
Market Size
2011
Market Size
2008 – 11
CAGR
$238M $408M 20%
Source: IMS, Fuji Chimera Institute, Fairchild
www.fairchildsemi.com29
Smart Power Integrated ModuleSystem Air Conditioning
Market Opportunity
• New energy regulations driving rapid increase
in variable speed drives
Features and Performance
• 3 phase IGBT inverter using HVIC reduces
auxiliary power parts
• Higher reliability
• Advanced IGBT technology
• Built-in sensing
Strategic Importance to Fairchild
• Increased functionality evolution of SPM
• Flexible structure easily modified
2008
Market Size
2011
Market Size
2008 – 11
CAGR
$42M $97M 32%
Source: IMS, Fuji Chimera Institute, Fairchild
www.fairchildsemi.com30
HV MOSFET – SupreMOSTM
PFC Switching
Source: iSuppli 2008
2008
Market Size
2011
Market Size
2008 – 11
CAGR
117M units 208M units 21%
AC Input
PFC
HV BLU
Switch
DC-DC
HV BLU
Driver
& FB
[LCD TV PSU & BLU board]
Market Opportunity
• Address the PFC switching needs in the LCD
TV market and other high power/efficiency
applications such as Servers
Features and Performance
• World-class deep Trench Super-junction
technology
Strategic Importance to Fairchild
• Next generation super-junction MOSFET
improves both cost and performance
www.fairchildsemi.com31
HV MOSFET - Ultra FRFETTM
HV Back Light Unit
Source: Displaybank 2008
2008
Market Size
2011
Market Size
2008 – 11
CAGR
25M units 90M units 53%
ConventionalMOSFET(trr > 200ns)
UltraFRFETTM
(Ultra fast trr)
AC Input
HV inverter with Ultra-FRFET Current CCFL HV inverter
DriverDriver
PFC
HV BLU
Switch
DC-DC
HV BLU
Driver
& FB
[LCD TV PSU & BLU board]Market Opportunity
• LCD TV makers constantly driving for reduced system
cost
•HV BLU solution is more cost effective than LV
BLU
Features and Performance
• Ultra FRFETTM supports the fastest reverse recovery of
body diode and good EMI performance
• Eliminates four external diodes in existing HV BLU
• System cost reduction, eases assembly, and reduces PCB
sizes
Strategic Importance to Fairchild
• Unique solution for HV BLU applications with class
leading technology
AC Input
www.fairchildsemi.com32
Advanced Packaging Solutions
Extend Our Reach
www.fairchildsemi.com33
Engine Control
Ignition
Fuel Injection
Glow Plug
BLDC Motor Control
EPS
Cooling
Pumps
Body Load Control
HID
PTC-Heater
HEV
Full Hybrid
Mild Hybrid
Micro Hybrid (Start/Stop)
Transmission Control
Engine Control
Ignition
Fuel Injection
Glow Plug
BLDC Motor Control
EPS
Cooling
Pumps
Body Load Control
HID
PTC-Heater
HEV
Full Hybrid
Mild Hybrid
Micro Hybrid (Start/Stop)
Transmission Control
Automotive
Power Modules ($8.00 – $14.28)
• EPS/EHPS Modules
• Auxiliary VSD’s
Discrete Power($0.07 – $0.35)
• Low Voltage MOSFET’s
• Mid Voltage MOSFET’s
• High Efficiency Diode
Ignition ($0.30 – $4.00)
• Current Limit IGBTs
• Smart IGBT
SAM: $2.1B in 2008
$2.8B in 2011
CAGR: 10%
Functional Drivers ($0.30 – $2.15)
• Smart Switches
• Gate Drivers
• Motor Controls
Source: IMS Research 2007, Fairchild
2003 2004 2005 2006 2007 2008 YTD
Total Revenue Gross Profit%
www.fairchildsemi.com34
Summary
• Energy efficiency demands will drive demand for our products
• Segment based structure is optimized to capitalize on these
opportunities at our power supply customers
• Revenue and margin progression will occur through a combination
of new product/technology introductions and cost reductions
• Automotive is positioned for profitable growth
www.fairchildsemi.com
35
Finance Overview
www.fairchildsemi.com36
Financial Highlights
• Sales up 7% QoQ in what is typically a down quarter
• GM at 32.5% is the highest level since 2000
• Distribution sell-through up 5% driving a 2% decrease in channel
inventory $ and a half week reduction to record low 7.8 weeks
• Internal inventory flat QoQ at 69 DOI…higher sales offset $9m
increase in raw materials and WIP required to support higher run rate
• $36m in free cash flow
• Cash and securities increased $30m to $481m which now exceeds
our total debt for the first time in our history
www.fairchildsemi.com37
Adjusted Revenue & GM%
www.fairchildsemi.com38
8Qtr Rolling Adj. Revenue & GM%
www.fairchildsemi.com39
8Qtr Rolling Adjusted EPS
www.fairchildsemi.com40
Gross Margin ImprovementKey Drivers
Growth of new product families with higher margins
• USB and Mutimedia Switches, HF Voltage Regulators, PT6 & 7 LV MOSFETs, Power Conversion T-Series, primary side regulator (PSR), SupreMOS, integrated power systems (SPM), IntelliMAX™
Improved product mix
• Mix out standard products and older technology MOSFETs to free up capacity to support higher margin new products
Manufacturing cost reductions and product redesigns
• Lean manufacturing techniques
• Convert to 8” wafers…Maine done, more to follow
• Fab process upgrades/shrinks for HV & LV MOSFETs, IGBTs and Power Conversion
• Close Mountain Top fab…current schedule Q2 2011
Higher factory loadings
www.fairchildsemi.com41
Free Cash Flow % of Revenue
www.fairchildsemi.com42
8Qtr Rolling Free Cash Flow
www.fairchildsemi.com43
Fairchild: The Power Franchise®
• Wireless convergence and energy efficiency mega-trends create huge market opportunities
• New products and better mix are driving improved margins
• Profitable sales growth in analog and power management products
• Better mix of products due to more new products and reduction of low margin business
• Product cost reduction driven by efficiency gains, fab shrinks, fab consolidation and new processes
• Reduced D&A due to consolidations and long term lower CAPEX spending
• Structural changes to reduce OPEX and improve earnings
• Earnings growth coupled with capex and working capital discipline expected to continue strong cash generation in 2010
