Power Matters
Microsemi Corporation
Jefferies 2013 Global Technology, Media & Telecom Conference
New York City
May 8, 2013
© 2013 Microsemi Corporation.
Disclaimer
 This presentation contains projections or other forwardlooking statements regarding future events or the future
financial performance of Microsemi Corporation.
 We wish to caution you that these statements are only
predictions and that actual events or results may differ
materially. We refer you to all of the documents that the
company filed with the Securities and Exchange
Commission. Please pay special attention to the Company’s
most recent Form 10-K and subsequent Form 10-Qs.
 These documents contain and identify important factors that
could cause the actual results to differ materially from those
contained in our projections or forward-looking statements.
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2
About Microsemi Corporation (Nasdaq: MSCC)
 Global provider of semiconductor solutions for
applications focused on delivering power, reliability,
security and performance.
 High-value, high barrier-entry markets:
– Communications
– Defense & Security
– Aerospace
– Industrial
Corporate headquarters in Aliso Viejo, CA
 FY 2012 Revenue: $1 billion
Power Matters
3
Strengthening Financial Results
Net Sales
Gross Profit
$600
$1,000
$500
$800
$400
$600
$300
$400
$200
$200
$100
$-
$FY07
FY08
FY 09
FY 10
FY11
FY12
Operating Income
FY07
FY08
FY 09
FY 10
FY11
FY12
EBITDA
$250
250
$200
200
$150
150
$100
100
$50
50
$-
0
FY07
FY08
FY 09
FY 10
FY11
FY12
FY07
FY08
FY 09
FY 10
FY11
FY12
(Non-GAAP, $MM)
Power Matters
4
A Model of Managed Growth
2012 SAM: $5.2B
 Network Timing & Sync
 Power-over-Ethernet
 Voice Line Circuits
Consistently Driving
SAM Expansion
 WLAN Power Amplifiers
 FPGAs/SoCs
 Anti-tamper
 Board Level Systems
 DC/DC
– ICs
– Converters
2006 SAM: $850M
2001 SAM: $500M
 GaAs Diodes
 Small Signal Transistors
 Power Switching
 Medium Signal Transistors
 Small Signal Transistors
 RF Power Amplifiers
– Subsystems
 GaAs Diodes
 LED Backlighting
 RadHard
– MOSFETS
 Inverters
– Hybrids
 LDOs
– Transistors
2001
2006
2012
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5
Macro Growth Drivers
Transportation
Power Generation
Energy Management
Electrification
Information Assurance
Counterfeiting
Anti-tamper
Security
Bandwidth
4G Deployment
Bi-directional Data
High Definition Media
The Cloud
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6
Going To Market – The Solution Engagement
Lockheed
Siemens
Timing
Leverage
Cisco
Industrial
Defense and Security
Aerospace
Communications
FPGA
RFIC/MMIC
ASIC
PMIC
Module
Power Matters
7
Real Customers and Real Programs
Engine Control and System Management
FPGA, HV MOSFET, Analog ASIC, Power Module, TVS
Server System and Power Management
Customizable SoC, DC-DC, HV MOSFET
Basestation and Backhaul Systems
IEEE 1588/SyncE, PLL, FPGA
Power Bus and System Management
FPGA, MOSFET, Analog ASIC, Power Module, TVS
Implantable Medical Device Systems
Ultra Low-Power Radio, HV IGBT/MOS FET, FPGA
Hi-Temp Down-Hole Drilling Solutions
FPGA, HV FET & IGBT, HV Power Module
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Microsemi Market Focus
Communications
Defense & Security
Aerospace
Industrial
27% of Revenue
34% of Revenue
19% of Revenue
20% of Revenue
Commercial Air
Industrial Control
Base Station
Military
Communication
Engine Control
Medical Devices
Routing & Switching
Military Aircraft
Avionics
Alternative Energy
Networking
Unmanned Vehicle
Actuation
Hybrid Vehicles
Access & CPE
Information Assurance
Space
SEMI Cap Equipment
Wireless Terminal
Security Scanners
Power Delivery
Machine to Machine
Anti-Tamper
Payload Electronics
Wireless Backhaul
Launch Systems
Based on FQ2 2013 revenue
Power Matters
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Power Matters
Communications Market
27% of Revenue
Addressing Higher Growth Communications Markets
17% CAGR OTN Infrastructure
11% CAGR Service Providers
14% CAGR Ethernet Mobile
Equipments
[2011-2016]
Routers & Switches
[2012 – 2016]
Backhaul
[2012 – 2016]
$9,000
$20,000
100.00%
$8,000
$18,000
90.00%
$7,000
$16,000
80.00%
$14,000
70.00%
$12,000
60.00%
$10,000
50.00%
$8,000
40.00%
$6,000
30.00%
$4,000
20.00%
$2,000
10.00%
$25,000
$20,000
$5,000
$4,000
$3,000
$2,000
Revenue $USM)
Revenue (US$M)
Revenue (US$M)
$6,000
$15,000
$10,000
$5,000
$1,000
$0
$0
CY11
CY12
Ethernet MBH gateways
Microwave radio--dual Ethernet/TDM
Microwave radio--Ethernet
CY13
CY14
CY15
SONET/SDH and WDM
Ethernet MBH routers
User / Mobile
CY16
CY11
IP edge routers
CY12
CY13
IP core routers
CY14
CY15
CY16
Carrier Ethernet switches
Broadband Access & Metro
Source: Databeans
$-
0.00%
CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16
SONET/SDH
WDM
OTN
Core & Storage
Power Matters
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Features, Integration & Flexibility
Leadership Position Amongst Competitors
Performance
Power Matters
12
Power Matters
Aerospace Market
19% of Revenue
Electrification Accelerating Growth Prospects
Avionics
 11% CAGR 2011-2016
 Higher speed, wider bandwidth
 Increased connectivity
 Size, weight, power
 Integration
Electrical Power Systems
 14% CAGR 2011-2016
 Power Optimisation
 Reliability, Safety, Cost
 Power Quality & Thermal Control
 Eco friendly, Zero Emissions
Revenue in US$, Billions
Source: Frost & Sullivan
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Growing Content & Capabilities
Engine Systems & Controls
FADEC
Engine start and power
conversion, and distribution
systems
Engine & APU Controls
Power system monitors
Fuel management systems
RF & Microwave Systems
Navigation & Guidance Systems
Satcom
X-Band weather radar
Communication/navigation radios
Integrated surveillance
Cabin Management Systems
Cabin lighting and control
Air conditioning and management
Systems
Flight entertainment systems
Cockpit Avionics
Flight control computer
Data management systems
Primary and secondary flight
control
Health monitoring systems
Crew interface systems
Actuation Systems
Primary actuator systems
Secondary actuation systems
High lift control and monitoring
Landing systems
Wheels and braking systems
De-icing systems
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Catering to a Growing Satellite Market
There will be more satellites for launch during the next 10 years than at any time during the
past two decades.
Number of Launches Per Year World Wide
160
140
120
100
80
60
40
20
0
Commercial Sats
Civil Sats
Military Sats
Source: Teal Group
University Sats
Power Matters
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Satellite Content
MSCC: Total Solution
Technology
Application
Product
$ Content
Power
Power Supply,
Distribution,
Conditioning
Diodes
220,000
Power
Power Supply,
Distribution,
Conditioning
Transistors
80,000
Power
Power Supply,
Distribution,
Conditioning
RadHard
Mosfets
120,000
Power
Power Supply,
Distribution,
Conditioning
Hybrids
100,000
Mixed-Signal
Bus Control
High Side
Drivers
280,000
Mixed-Signal
Bus Control
Telemetry
ASICs
325,000
Mixed-Signal
Bus Control
Digital Gate
Arrays
100,000
SoC
AOC & TT&C
FPGAs
400,000
SoC
PIU
FPGAs
60,000
PMG
Power Supply,
Control
DC/DC
Converters
320,000
PMG
SSPA Power
Supply
SSPAs
750,000
Total:
$ 2,750,000
Source: Company Data, Commercial GEO Telecom Satellite Electrical Power System
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Power Matters
Defense & Security Market
34% of Revenue
Key Defense & Security Market Drivers
 Worldwide interconnection of critical data and systems of all types
•
•
•
•
DoD weapons and systems
Navigation and timing
Electric grid, transportation and refining
Banking, finance, medical
 Evolution of unmanned systems
• Using robotics, sensors, machines and automation
 Technology of security threats not static—evolving quickly.
• Demands flexible / programmable architectures
 Expanding U.S. foreign military sales. Risk of loss of critical technology.
• UAE, Saudi, Turkey, Korea, more
Power Matters
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Defense & Security Market TAM & SAM
TAM
SAM
1800
14000
1600
12000
1400
10000
1200
8000
1000
6000
800
600
4000
400
2000
200
0
0
2012
2013
FPGA & ASICS
Systems & Subsystems
2014
2015
Integrated Solutions
2016
2012
2013
FPGA & ASICS
2014
2015
2016
Integrated Solutions
Systems & Subsystems
FPGA’s & ASICS – components, PMG-PHX+WL Complex Assemblies, RFIS - systems
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Power Matters
Industrial Market
20% of Revenue
Industrial Trends Favor Microsemi Position
 Global economic conditions and
competition forcing many into redesign
for differentiation
 Increased international standards to
ensure quality and high reliability
 Application areas such as functional
safety on the rise to protect life and
expensive operating costs
 Concerns over IP protection and
malicious attacks driving embedded
security measures
Market Sub-segment
2016 CAGR
Energy
13.7%
Factory Automation
11.1%
Building Automation
8.8%
Business Automation
3.6%
Test, Scientific, Measurement
3.6%
Source: IMS
Power Matters
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Deployment Examples at Industrial Leaders
 Factory / Building Automation
•
•
•
•
•
•
•
•
PLC controller
Servo motor control
Motor shaft wear sensor
Elevator motor control
Industrial laser
Safety laser scanner controller
Gas flow meter
Utility power service controller
 Business Automation
•
•
•
•
Point of sale terminal
Touch screen display controller
Toll tag reader
RFID reader
 Test, Scientific and Medical
•
•
•
•
•
•
•
•
Seismic data recorder
Industrial network tester
Blood analyzer
Implant telemetry
LCD monitor
Purification system
Mobile X-Ray
Patient monitoring
 Energy
•
Inverters
– PV, wind and automotive
• Battery chargers
• Battery cell tester
• Industrial LED lighting
Power Matters
Financial Strength / Target Model
FY12
FY13
Target Model
Q2
Q3
Q4
Q1
Q2
Net Sales
249.3
259.2
263.1
247.6
235.3
Revenue Growth
15%
Gross Profit
137.0
145.6
150.4
142.6
133.5
Gross Margin
60%
Gross Margin
55.0%
56.2%
57.2%
57.6%
56.7%
Operating Margin
30%
Operating Income
54.9
60.7
64.5
56.7
50.0
Operating Margin
22.0%
23.4%
24.5%
22.9%
21.2%
EBITDA
63.2
67.6
71.5
63.7
57.2
Net Income
40.3
48.3
51.8
45.0
38.9
Diluted EPS
0.46
0.55
0.58
0.50
0.43
Note: Non-GAAP, amounts in millions except EPS.
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Power Matters
Thank you