2006111506 stanford growth - diodes incorporated · 15 yrs with diodes & 7 yrs at lite-on 5 yrs...

Discrete Solutions for Advancing Technologies

Stanford Growth Conference November 15, 2006

1www.diodes.com / Nasdaq: DIOD

Project Next Step RS v18_Dr. Lu.ppt

Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.

Potential risks and uncertainties include, but are not limited to, such factors as fluctuations in product demand, the introduction of new products, the Company's ability to maintain customer and vendor relationships, technological advancements, impact of competitive products and pricing, growth in targeted markets, risks of foreign operations, and other information detailed from time to time in the Company's filings with the United States Securities and Exchange Commission.

Safe Harbor Statement



Management Representatives

Carl WertzCFO

13 years with DiodesCPA

21 years of relevant industry experience



Fast Facts

Founded in 1959

2,150 employees worldwide

Profitable growth utilizing our innovative discrete semiconductor devices combined with recent

expansion into analog and mixed signal technologies

US headquarters; 14 global locations

5-year revenue growth approx. 23.2% CAGR (2001 – 2005)

”

“



Management Representative

Experience:President of Texas Instruments – AsiaSenior Vice President of TIGeneral Manager of TI Worldwide Mixed-Signal and Logic ProductsManager of TI worldwide memory business

Education:•Master's degree and doctorate in electrical engineering

Texas Tech University•Bachelor's degree in engineering

National Cheng Kung University in Taiwan

Dr. Keh-Shew Lu President and CEO

4 years as Diodes Director27 years at Texas Instruments



Strong Financial Performance as of September 30, 2006

3Q 2006 3Q06 YTDRevenues up 71% YOY and 12% sequentially to $92.6 million

Gross profit up 63% YOY and 12% sequentially to $30.7 million

GAAP Net income up 52% YOY to $12.8 million

Pro forma* net income up 69% YOY to $14.2 million

Revenues up 62% YOY to $248.9 million

Gross profit up 56% YOY to $82.3 million

GAAP Net income up 44% YOY to $33.5 million

Pro forma* net income up 62% YOY to $37.8 million

Cash flow from operations increased 23% YOY to $46.0 million

* Without stock option expense



Industry and Media Recognition2006

Recognized in Forbes’ 2006 List of 200 Best Small Companies (ranking 37th)

Recognized in Standard and Poor’s Top 300 Growth Companies (ranking 51st)

Recognized in Fortune’s 100 Fastest-Growing Companies (ranking 82nd)

Recognized in Business 2.0 Magazine’s Fastest-Growing Technology Companies (ranking 26th, up from previous year ranking of 45th).

Recognized in BusinessWeek’s List of 100 Best Small Companies(ranking 52nd).

Recognized again in Electronics Business Magazine’s List of 30 Best Small Electronics Companies (ranking 29th).

Added to the S&P SmallCap 600 Index and the S&P GICS Semiconductors Sub-Industry Index.



Diodes stock price has increased dramatically over last 5 years

0

400

800

1200

1600

2000

2400

Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06

Inde

xed

Perf

orm

ance

(%)

Diodes Inc. NASDAQ Composite Index Discretes Index Analog/Mixed Signal Index SOXX Index

`

Note:1 As of 10/20/2006; Indexed prices are equal-weighted2 Discretes Index includes: FCS, ONNN, SYXI, VSH3 Analog / Mixed Signal Index includes: AATI, ADI, IRF, ISIL, LLTC, MXIM, MSCC, SMTC

CompanyLast Five

YearsDiodes Inc. 1428.7%

Discrete ComparablesON Semiconductor 313.7%IXYS Corp. 63.1%Fairchild Semiconductor (15.1%)Vishay Intertechnology (31.6%)Mean 82.5%Median 24.0%

Analog Mixed SignalMicrosemi 5.5%Intersil (28.1%)Linear Technology (17.7%)Maxim (33.4%)Semtech (62.3%)International Rectifier 13.3%Mean (20.4%)Median (22.9%)

SOXX Index 5.5%

NASDAQ Composite Index 40.1%

Five Year Price Performance



Expanded Management Team Name & Title Background

Mark KingSr. VP Sales & Marketing

15 yrs with Diodes & 7 yrs at Lite-OnSales, marketing & finance background

Richard WhiteSr. VP Finance

25 yrs with Texas InstrumentsController for TI’s global MOS memory operationController for TI’s Asia Pacific Division

Promoted from Global Product Manager, May 200625 yrs experience in analog, mixed signal and SOC product design and development

Francis TangVP, Product Development

Ed TangVP, Corporate Administration

25 yrs at Texas InstrumentsVP for TI’s global MOS memory operationVP and GM for TI’s Asia memory operations

15 yrs with Diodes & 7 yrs at Lite-On5 yrs with Texas InstrumentsProduction, planning & purchasing background

Steven Ho VP, Asia Sales

Carl WertzCFO

13 yrs with Diodes21 yrs of relevant industry experienceCPA

Dr. Keh-Shew LuPresident, CEO and Director

4 yrs Diodes Director27 yrs at Texas Instruments

Joseph LiuSr. VP Operations

16 yrs with Diodes19 yrs with Texas Instruments MBA



$57 bn$38 bn

$16 bn

$21 bn$127 bn

Focus on Discrete and Standard Analog MarketsDiscrete and Standard Analog

Ubiquitous “building block” semiconductors contain a single or few circuits and provide power regulation or switching functionality for a wide-range of electronic devices

Contrasted with integrated circuits or “ICs” containing thousands or millions of transistors

Packaging is key element in discrete and standard analog semiconductor

Discrete semiconductor types include diodes, transistors and rectifiers

Standard analog semiconductor types include data converters, voltage regulators, interface and amplifiers

Executing on strategy of entering standard analog market

2006E Total Semiconductor Market ($259bn)

Source: Gartner, May 2006

Diodes’ SAM: $5bn - $6bn

Discrete

Memory

Logic

Analog

Opto/Sensors

Diodes’ SAM

$10bn - $11bn

Semiconductor Market Growth

2005 to 2010E CAGR: 8.5%



Mobility

Miniaturization

Power EfficiencyLow

Cost

Ease of Use

IP ProtectionOpportunity

for

Diodes’ Market Dynamics



Focused Platform

DFN family

SOD family

Miniaturized Products

High Power Density Products

Multi-chip Packaging Products (Application-Specific Multi-chip Circuit “ASMCC”)

PowerDI™123

PowerDI™5

Standard Arrays

Function Specific Arrays

End Equipment Specific Arrays

SMC PowerDI™5

SOT-23 DFN1006-3

1/5 the size of SOT-23

Load Switch Consolidates 5 parts into 1



Deep Manufacturing Expertise

Significant package unit expansion, to approximately 12 billion units in 2006

Flexible and optimized manufacturing process resulting in low packaging cost

Innovative in-house packaging design and development

5” wafer fab

50,000 per month capacity

In-house design and development

Economies of Scale: Production Units in China (bn)

2 Shanghai-based Manufacturing Facilities Kansas City Fab (FabTech)

0

2

4

6

8

10

12

1998 1999 2000 2001 2002 2003 2004 2005 2006 (est.)

5.4 bn8.2 bn

11.6 bn1998 – 2006 CAGR: 49%



38%

14%

35%

12%2%Automotive

Comfort controls, audio/video players, GPS navigation, satellite radios

Diverse End-Markets

Computing

Notebooks, flat panel monitors, PDAs, printers

Consumer Electronics

Digital audio players, set-top boxes, digital cameras, mobile handsets, LCD TVs, game consoles, portable GPS

Diodes Revenues by End Market as of September 30, 2006

Communications

Gateways, routers, switches, hubs, fiber optics

Industrial

Lighting, power supplies, DC-DC conversion, security systems, motor control DC fans

13%



Broad Customer Base

51% of Diodes’ 3Q06 YTD Revenues - Direct

49% of Diodes’ 3Q06 YTD Revenues – Through Distribution

Quanta

OEMs

Hon Hai

EMS

Indirect OEMsDistributors



Proven Strategy for Growth

Grow our portfolio of innovative discrete and standard analog solutions

Participate in high-growth end markets with short design cycles

Leverage existing customer base to drive sales of new products

Maintain cost leadership through highly efficient packaging and manufacturing

Pursue selective strategic acquisitions



Financial Highlights

2x annual revenue growth of overall discrete market

15 consecutive years of profitability

Industry leading margin profile

Focus on financial discipline

Superior earnings and returns

Strong balance sheet and cash flow



$93.2

$115.8

$136.9

$185.7

$214.8

0

25

50

75

100

125

150

175

200

2001 2002 2003 2004 2005

Revenue Growth

Revenues by Year ($mm)

2001 – 2005 (CAGR: 23.2%)225

$248.9

3Q05 YTD 3Q06 YTD

$153.4

YOY Growth 62.2%



Outperforming the Discrete Industry TAM

Annual Revenue Growth Rates

Discrete Industry(5.5%)

(19.7%)

15.6%

35.6%

18.2%

24.3%

(28.0%)

17.6%

8.3%

(1.2%)

(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

40%2001 to 2005 CAGRDiodes: 23.2% Industry: 4.4%

2001 20032002 2004 2005Source: Gartner, May 2006



Superior Earnings and ReturnsGAAP Net Income ($mm) GAAP EPS ($)

Annualized ROE (%)

$5.8$10.1

$25.6

$33.3

0

10

15

20

25

30

35

2002 2003 2004 2005 3Q06 YTD

$0.29

$0.47

$1.10 $1.29

0.0

0.4

0.8

1.2

1.6

2.0

2002 2003 2004 2005 3Q06 YTD

10.1%14.1%

22.8%

14.8%

0%

5%

10%

15%

20%

25%

2002 2003 2004 2005 3Q06 YTD

8.4%

12.4%

20.0%

13.9%

0%

5%

10%

15%

20%

25%

2002 2003 2004 2005 3Q06 YTD

$33.5

$1.19

16.1%23.3%

*ROIC defined as EBIT / (stockholders’ equity + debt)*ROE defined as net income / stockholders’ equity

Annualized ROIC (%)

W/O stock option Exp.

Pro forma NI $37.8 W/O stock option Exp.

Pro forma EPS $1.33



Third Quarter 2006 Results

Q3 2005($mm)

Net Sales 54.20 92.58 70.8

Gross Profit 18.88 30.70 62.6

Operating Profit 10.36 16.90 63.1

GAAP Net Income 8.38 12.77 52.3

GAAP EPS 0.34 0.45 34.2

Pro forma EPS 0.34 0.50 47.1

Cash Flow from Operations (YTD) 37.31 45.98 23.2

C a s h a n d S -T In ve s tm e n t 1 1 3 .6 1 0 9 .3

In ve n to ry 2 4 .6 4 5 .8

T o ta l A s s e ts 2 8 9 .5 3 6 6 .9

D e b t 1 2 .5 5 .7

T o ta l L ia b ilitie s 6 4 .0 8 9 .3

S to c k h o ld e rs ’ E q u ity 2 2 5 .5 2 7 7 .6

Q3 2006 %

Change FY 2005 3Q06 YTD

(2)

(2) On October 5, 2006, Diodes issued $200M, 2.25% convertible senior notes due 2026. Cash + Short-term investments now exceed $330M

(1)

(1) Without stock option expense



Investment Highlights

Focus on Discrete and Standard Analog Semiconductor Markets

Deep Manufacturing and Technical Expertise

Broad Customer Base

Diverse End-Markets

Strong Track Record of Growth & Profitability

Management Continuity

Thank You

This presentation includes forward-looking statements which are subject to risks and uncertainties. Actual events and results could differ materially as a result of various factors, including the risk factors described in our reports filed with the Securities and Exchange Commission.

Worldwide Headquarters3050 East Hillcrest Drive, Westlake VillageCalifornia 91362Telephone: 805-446-4800www.diodes.com

2006111506 stanford growth - diodes incorporated · 15 yrs with diodes & 7 yrs at lite-on 5 yrs...

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