Exhibit 99.1
Welcome to
Microsemi’s Analyst Day
New York, NY March 18, 2015
Disclaimer
This presentation contains projections or other forward-looking 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.
2
© 2015 Microsemi Corporation
Introduction
Rob Adams
VP Corporate Development
Today’s Agenda
9:05-9:15 Analyst Highlights
Jim Peterson, Chairman & CEO
9:15-9:35 60/30: How do we get there?
John Hohener, EVP & CFO
9:35-9:55 FPGA Growth and Opportunity
Esam Elashmawi, Corporate VP & GM, SoC Product Group
9:55-10:15 Timing Growth and Opportunity
Roger Holliday, Senior VP & General Manager, Communications Product Group
Maamoun Seido, VP & Business Unit Manager, Timing and Optical Products
10:15-10:25 Small Cell/Backhaul
Maamoun Seido, VP & Business Unit Manager, Timing and Optical Products
10:25-10:35 Residential Gateway
Roger Holliday, Senior VP & General Manager, Communications Product Group
4
Today’s Agenda
10:35-10:45 Aerospace
Siobhan Dolan Clancy, VP, Worldwide Business Development, Aerospace
10:45-10:55 Space/Satellite
Siobhan Dolan Clancy, VP, Worldwide Business Development, Aerospace
10:55-11:00 Acquisition Overview
Steve Litchfield, EVP & Chief Strategy Officer
11:00-11:15 Executive Summary
Paul Pickle, President & COO
11:15-11:30 Q&A
11:30-1:00 Management Luncheon
5
Investor Highlights
James J. Peterson
Chairman & CEO
Microsemi Shareholder Value Proposition
Maximizing Profitability
Focus Products Driving SAM Expansion Increasing Strategic Customer Importance End Markets Built for Growth, Stability, Cash Flow Commitment to Deliver Shareholder Value
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60/30: How do we get there?
John Hohener
EVP & CFO
Maximizing Profitability
Historical P&L, Q2 Guidance
FY14 FY15
Q1 Q2 Q3 Q4 Q1 Q2 Guidance
Net Sales 255.6 287.0 292.3 303.3 303.6 Revenue $289.9—303.6 Gross Profit 143.1 158.3 163.7 171.0 170.5 Gross Margin 56.5%—56.7% Gross Margin 56.0% 55.2% 56.0% 56.4% 56.2% EPS 0.64—0.68 Operating Income 54.1 59.3 66.2 72.8 74.2
Operating Margin 21.2% 20.7% 22.6% 24.0% 24.4%
EBITDA 61.1 67.3 73.6 81.0 82.5
Net Income 42.9 47.7 54.8 61.4 61.9
Diluted EPS 0.46 0.51 0.58 0.64 0.65
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Maximizing Profitability
The 60/30 Model
FY15 FY15 2016
Q1 Q2* 60/30
Net Sales 303.3 297 325
Gross Profit 170.5 168 195
Gross
Margin 56.2% 56.6% 60%
Operating
96.3 92.5 97.5
Expense
Operating
Income 74.2 75.5 97.5
Operating
Margin 24.4% 25.4% 30%
*FQ2:15 guidance numbers reflect midpoint of guided range, rounded
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Gross Margins
A History of Improving Acquired Margins
GM acquisition acquisition acquisition guidance
11
Maximizing Profitability
Gross Margins, Getting There
60%
50%
2014 2015YTD 2016E
Consolidations
12
Maximizing Profitability
Gross Margins, Getting There
60%
Consolidations
50%
2014 2015YTD 2016E
Consolidations
13
Maximizing Profitability
Gross Margins, Getting There
60%
Mix
Consolidations
50%
2014 2015YTD 2016E
Consolidations, mix
14
Maximizing Profitability
Gross Margins, Getting There
60%
Absorption
Mix
Consolidations
50%
2014 2015YTD 2016E
Consolidations, mix, absorption
15
Maximizing Profitability
Operating Margins
Majority GM fall through
– Infrastructure already in place
Targeted R&D reductions, redeployment
– Focus groups: FPGA, timing, MS/RF
Ongoing back end transfer offshore
Real estate consolidations
Strategic customer focus
16
Maximizing Profitability
60/30 Drives 25% Increase in Profitability
FY15 2016 2016 Status Q1 Quo 60/30
Net Sales 303.6 325 325 Gross Profit 170.5 182.7 195 Gross Margin 56.2% 56.2% 60%
Operating
74.2 79.3 97.5
Income Operating
24.4% 24.4% 30%
Margin
110 FQ1:15A
105
Status Quo 100 60/30
95 90 85 80 75 70
Operating Income, $ millions
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Maximizing Profitability
Growing Cash Flow Trends, % of Revenue
30%
OCF % 25% FCF %
20% 15% 10% 5%
0%
Q1:13 Q2:13 Q3:13 Q4:13 Q1:14 Q2:14 Q3:14 Q4:14 Q1:15
*As percent of revenue on fiscal quarter year to date basis
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Credit Facility Metrics
TLB-1 5.00% 3.75% 5.75% 4.00% 3.75% 3.25%
TLB-2 3.50%
Credit facility balance was $849.6 million at the acquisition of Zarlink in Q1 2012.
Credit facility balance was $698.0 million at Q1 2015 – TLB-1 $646.4M and TLB-2 of 51.6M.
Term loan matures in February 2020 and moved to “covenant-lite” in Q2 2013 with no periodic reporting of financial covenants unless revolver or swingline borrowings are outstanding at the end of a fiscal quarter.
Acquisition basket of $300M + unlimited at 3.0x
Stock repurchase / dividends of $50M per annum + unlimited at 3.0x
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Uses of Cash
Shares Repurchased & Withheld
Benefit to
Cash
Activity Shares Diluted Notes
Amount
Share Count
Shares Repurchased $25.0M 1.0M 0.7M Shares repurchased in October and November at an average price of $24.08
Shares Withheld for Taxes $16.4M 0.7M 0.5M
Q1 Total $41.4M 1.7M 1.2M
Q2 Shares Repurchased $25.0M 0.8M 0.6M Shares repurchased in January and February at an average price of $28.51
Microsemi’s board of directors approved a $100 million share repurchase program and we remain active in this program.
20
FPGA Growth and Opportunity
Esam Elashmawi
Corporate VP & General Manager
FPGA SAM Growth: Density + Systems Integration
Logic Density ASSP, MSoC
$5B FPGA TAM
(KLE) Upside
FPGA Competition (28nm, 20nm) FPGA (16nm)
3000+ KLE
ARM A-Class Processors Roadmap Higher Performance Multi-SoC
Higher Density 4x A-53
$1.5B FPGA SAM 2x R5
Graphic Proc
150 KLE IGLOO2 / SmartFusion2 2.5x DSP
Hard ARM Cortex M3
Video Codec
5Gbps XCVRs
IGLOO/SmartFusion
30 KLE Cortex M3
Antifuse
3 KLE
FPGA FPGA SoC FPGA SoC Bigger, Higher Integration
+ XCVRs Performance
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Rad Tolerant FPGAs: Extending our SAM to High-Speed Processing Applications
$100M SAM
Logic Density (KLE)
150 KLE
High Speed Processing $100M SAM for Pay Load Applications
20 KLE RTAX-S / DSP (Sampling CQ2’15)
Command and Control
Medium Speed Processing >110 LCP Customer/Partners
>80 Customers with software
9 KLE RTProASIC3
Shipping dev kits NOW
2 KLE
RTSX-SU
50 MHz 100 MHz 300 MHz Frequency of Operation
23
Customers Engaged on Roadmap
Communications
Aerospace & Defense
Industrial
24
FPGA SAM Growth: Density + Systems Integration
Logic Density $5B FPGA TAM ASSP, MSoC
(KLE) Upside
High-End FPGAs FPGA vs
3000+ KLE
$3B FPGA SAM ASSPs &
Multi-SoCs
Microsemi Next-Gen FPGAs
Extend our SAM
Maintain & Grow Differentiation
Microsemi Differentiation
150 KLE Everything from the Competition, plus:
Lowest Power
SEU Immunity Best Security Single-Chip FLASH
FPGA SoC Bigger, Higher Integration
+ XCVRs Performance
25
MSCC’s Growing FPGA SAM (>$3B)
6
5
4
B) ( $
3
Next-Gen
Billions IGLOO
in SmartFusion
Dollars 2
1 IGLOO2 SmartFusion2
0
2012 2013 2014 2015 2016 2017
FPGA TAM MSCC FPGA SAM
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FPGA SAM Growth Through Differentiation
– Lowest power
– Security integration
– Reliability/SEU
– Single-chip FLASH
Expanding Density and Performance Footprint
– Further reach into mainstream FPGA designs
Entering New Markets
– Strong expansion into communications market
– Entry into space payload applications
Differentiated Mainstream FPGAs
Low Power
1/10th static power
Reduce total power by ~30-50%
Security & Reliability
SEU immune FPGA configuration
Highly secure: suitable for anti-cloning and authentication applications
Extended temperature support (125C Junction)
Lowest Total Cost of Ownership
System integration: 150K logic elements, transceivers, DSP and ARM
More resources on smaller devices
Smallest form factors
System Solutions
Communications: Secure boot, Ethernet, JESD204B
Industrial: Motor control, industrial networking, IP surveillance
Aero & Defense: MIL-STD1553, information assurance, secure boot
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Why are we displacing SRAM FPGAs
You get everything you need in a mainstream FPGA application with significantly lower power, unmatched security and reliability for the same or lower total cost of ownership
about 1000 -Care 100
10
Customer 1
1995 2000 2005 2010 2015 2020 2025
Time
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SmartFusion2 Consumes 34-53% Less Power
Total Power Consumption
4500
SRAM Competitor 2 Static power 113% more power HPS
4000
SerDes
Math Block
3500
SRAM Competitor 1 Memory 52% more power I/O
3000
Logic
Clock
2500
(mW) SmartFusion2 consumes less power Power 2000 1500
Additional 35% Lower
1000
With 1V devices (58-70% less power)
500
0
Measured at Tj = 100C, worst case conditions Note: Flash*Freeze mode will yield larger differences
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Wireless Connectivity – Are You SECURE?
You must be secure from:
– Trojan Horses (Stuxnet Worm)
Safety risk
– Tampering/Phishing
Stolen passwords/keys
– Hacking (Blackhat 2011)
Smart/Connected Car Financial Investments
Insulin pumps
Point-of-sale terminals
– Industrial Espionage (Energetic Bear)
IP theft/code-lifting
Cloning
– Persistent Access (Target Breach)
Routers and hubs
Automobiles
Connected Home & Office
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Scalable Security Solutions and Services
Scalable Military-Grade Security
NIST-certified, root-of-trust secure hardware
Hard IP for design and data security – DPA, PUF, SHA, …
Single-chip FLASH FPGAs – most secure key verification
Tunable for evolving threats in all markets & applications
Ecosystem and Design Services
In-house design expertise
Systems security solutions (services, firmware & software)
Secure computing and storage (services & IP)
3rd party soft IP
Cloud-based Public Key Infrastructure (PKI)
Comprehensive Solutions
Anti-tamper and cryptography
Information assurance
Secure boot – uP, uC, DSP, FPGA at system power-on
Machine-to-machine communications
IP theft prevention
Secure supply chain
31
The Most Reliable FPGAs in the Industry
Alpha / • Flash FPGA Fabric
Neutron
– SEU immune zero FIT rate particles configuration strike routing matrix • Error Corrected Memories
Embedded 32 Kbyte SRAM
–
(eSRAM)
– Built-in DDR controllers
– MSS
CAN, USB, TSE
HPMS/MSS memories Flash FPGA SRAM FPGA constructed from standard cell
No Error Functional Failure components, not SRAM
Reliability for Safety Critical or Mission Critical Systems
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Most Reliable Solution: No Configuration Failures
FIT = number of errors in 109 hours – Acceptable FIT rates for high-reliability applications are < 20 Testing of Microsemi FPGAs, Xilinx and Altera 90nm, 130nm, and 150nm performed by IROC Technologies Xilinx 45nm, 40nm, and 28nm based on Xilinx reliability data, Altera 65nm and 60nm estimated at 100 Fit / Mbit
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Many Reasons Why Customers Engage, Many Reasons Why We Win
Geography Market Segment Primary Reason for Secondary Reasons for Win
Engagement
Americas Communications (Router) SEU More PCIe
More I/O
Americas Communications (Secure Router) Security Small parts with mainstream features
Small footprint
China Communications (SFP) SEU Low power
Small footprint
China Communications Low power 1588
Americas Automotive (ECM) Reliability SEU
China Automotive (Cloud based control) Security Small parts with mainstream features
Americas Defense (Secure Communications) Low power Small footprint
Multi PCIe end points (090)
Europe Defense (Secure Communications) Low power Security
China Industrial Security Small parts with MCU and PCIe
Japan Industrial (POS) PCIe @ 10K LE Lower cost than ASIC
Europe Industrial (Networking) Single chip ASIC Security
replacement
Americas Consumer (Mobile Platform) Security Security
Europe Consumer (Gaming) Small chip with Security
transceiver Small parts with MCU and XCVR
VQ package
34
SmartFusion2 / IGLOO2 Design Win Rate
FY13-FY15 ($) Opportunities Design Ins Design Wins
Grand Total $337,001,918 $92,682,687 $40,626,274
3000
Cumulative Design Opportunities
2500 2000 1500 1000 500 0
Growing Opportunities
– >2500 count
– $337M in value
>$90M of Design Ins
– Customers have chosen MSCC over competitors
>$40M of Design Wins
– Customers have purchased >$1K silicon
35
High Win Rate at New Customer Base for SmartFusion2 / IGLOO2
Design In + Design Win Values by Market
$2,023,179 $8,053,307
Commercial Aviation $30,213,513 Communications $51,224,022 Defense
Industrial
Space/Satellite $41,685,748
42% of opportunities are with new customers
– 3,785 total opportunities
– 1,589 with new customers
58% of customer designs choose MSCC
– 808 Design in/design wins
– 569 Design losses
24% of design win values now in communications market
36
Communications Design Win Examples
Application
Secure Boot CPU of Networking Equipment
SFP Modules for Network Monitoring
Small Cell / Backhaul Equipment
Why We Win
Highly secure FPGA with builtin clone resistance and tamper resistance Lower TCO
Only FPGA that can enable 1.5W module Most logic (90KLE) in 11mm package
Lowest power FPGA Highly secure FPGA with builtin clone resistance and tamper resistance
37
Defense & Security Design Win Examples
Application
Secure Boot SRAM FPGA of RADAR/EW Systems
Secure Communications
Secure Embedded Systems
Why We Win
Highly secure FPGA with Root-of-Trust capabilities
Customized Security at a Lower Cost
Lowest Power baseband processing solutions
Lowest Power & Most Secure Cryptographic solutions
Highly Integrated Secure System-on-Chip FPGA
The Most Advanced Anti-Tamper FPGA available
38
Timing Growth and Opportunity
Roger Holliday & Maamoun Seido
Senior VP & General VP & Business Unit Manager, Manager, Communications Timing and Optical Products Product Group
Bandwidth Demand Driving Infrastructure Upgrade
Wireless Backhaul
$8.8B
Backhaul Equipment Market 2015
23%
LTE cellsite deployment CAGR
Data Center Interconnect
$600M
DCI Market 2015
40%
DCI CAGR
Carrier Ethernet and Routing
$14B
Carrier Ethernet and Routing Equipment 2015
22%
10/40/100G ports CAGR
Infonetics -Macrocell Mobile Backhaul Equipment Market Size, Share, and Forecasts: 2nd Edition 2014 The Rise of Optical Data Center Networks An Infonetics Research / IHS Webinar Co-produced with Infinera Infonetics—Carrier Ethernet Equipment Annual Market Size and Forecasts: 2014 Edition 1G/10G/40G/100G Networking Ports Biannual Market Size and Forecasts: 2nd Edition 2014
40
Applications Driving the Demand for Bandwidth
Over 1B unique visitors per month
4.9M daily •Over 4B videos active users viewed per
1.39B active day with 6B users per month hours of video with 1.19B
Over 1B hours watched per mobile users watched per month month
Over 57M 300M users subscribers in 2014 Launched in $5.5B revenue 2010
Number of monthly active Instagram users from January 2013 to December 2014 (in millions) http://blog.netflix.com/2014/01/new-isp-performance-data-for-december.html http://venturebeat.com/2014/10/15/netflix-beats-expectations-with-3m-new-subscribers-in-q3-0-96-earnings-per-share/ http://ir.netflix.com/results.cfm http://venturebeat.com/2015/01/28/facebook-passes-1-39b-monthly-active-users-and-890m-daily-active-users/ http://www.adweek.com/socialtimes/datapoint-microsofts-skyp e-dau-gains-82-from-a-year-ago-mau-gains-just-1-25/297800red=if http://www.youtube.com/yt/press/statistics.html
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Microsemi’s End-to-End Precise Time Solutions
GrandMaster Systems
Uses GPS to distribute “Precise Time” using the IEEE 1588 protocol
Network Supervision & Management
Timing problem notification, analysis and SLA compliance
Packet Timing ICs
Field proven high performance Time and Frequency
Synchronization solutions for Packet Networks
Optical Transport Network (OTN) Timing ICs
Most flexible and highest monolithic density OTN timing solutions
Clock Management Timing ICs
Clock synthesis, rate conversion, jitter attenuation and fan-out buffer timing solutions to ease deign and increase reliability
Data Centers
Wireless Backhaul
Carrier Ethernet & Routing
42
Microsemi Timing & Synchronization Leadership
Market Leaders in Timing
Broadest Product Portfolio
Thoroughly Field Proven
Industry 1st SyncE/IEEE 1588
Industry 1st Optimized OTN
Clock Management
Trusted long-term supplier
25M+ PLLs sold, with double digit year on year growth
Leading ITU-T, Telcordia, IEEE timing standards
> 60% share of world-time, NTP & classified systems
150+ products in production
OTN, IEEE-1588, SyncE, SONET, SDH, PDH and synthesis, clock distribution solutions
Shipping to all major carriers world wide
Proven long term commitment with products still shipping after 10 years
Industry-leading: over 5.5M devices shipped
First to market with dedicated SyncE devices
Industries most complete and proven IEEE 1588 devices
Quad-channel PLLs support any rate on any port
Market leader in number of OTN PLLs shipped
Driving standards for synchronous OTN
Ultra–low jitter (160fs) synthesizers and jitter attenuators
Application specific with custom configuration
Ultra-low additive jitter cost efficient buffers
43
Bandwidth Demand Driving Infrastructure Upgrade
Wireless
Backhaul
“Precise Time” in basestations avoid dropped calls
Bandwidth shared using multiple frequency bands and cannot collide
LTE employs TDMA requiring accurate time
Data Center
Interconnect
Frequency precision enables WDM interconnections (using OTN)
“Precise Time” used for data analytics that optimize network efficiency
Carrier Ethernet and Routing
“Precise Time” used to enable various end user services such as: mobile traffic power smartgrid substations cable service (modular CMTS with edge QAM)
Developing Leading Products and Solutions
Packet Timing Solutions:
Delivers Time and Frequency Synchronization through Packet Networks for use by the Wireless Infrastructure
OTN Timing Solutions:
Highly integrated clock synchronizer that accept, filter & generate any client frequency rate for different services
Clock Management Products:
Ease design and increase reliability of timing solutions, create multiple copies of ultra low-jitter clock signals at different frequencies
Ethernet/IP
SyncE & IEEE158 SyncE & IEEE1588 8
425MHz
148.5MHz OTN
125MHz
155.52MHz
PLL per OTN Client
Synthesis—Clock Generation
PHY
Buffer—
Clock Distribution
NPU SRA M
DRA M
FPG A
Bridge
45
Competitive Landscape
“Precise Time” Solution
(IEEE 1588 & SyncE)
Jitter Performance – Clocks Driving 100G links
Flexibility & Programmability
End-to-End Timing Solutions
Clock Management Solutions
46
Microsemi’s Success in Delivering Precise Time Solutions to Market Makers
Wireless Backhaul Data Center Interconnect Carrier Ethernet and Routing
Other
Other
Other
Macrocell Mobile Backhaul Market Share12 OTN Hardware Market Share13 Worldwide SP Edge+Core+ CES Market Share14
47
“Precise Time” Emerging Market Opportunities
Industry Mobile and IP Phones
Cable Automotive Financial
Market Shift
Wide adoption of mobile phones and IP-based landline phones lead to: —degrading 911 service —limiting location based services
Deployment of de-centralized modular CMTS and remote PHY systems
Addition of non-critical infotainment within cars using Ethernet/IP communications
Necessity for accurate record keeping, with impact from high frequency trading, based on new regulations
“Precise Time” Impact
IEEE 1588 timing is critical to assist GPS for accurate location of users
Align remote nodes for users to send upstream data at proper timeslots
Align sensors and audio systems for Quality of Service
Accurately record stock transaction records
48
“Precise Time” Emerging Market Opportunities
Industry Power
Industrial Automation
Broadcast Video
Market Transition
Transition to Ethernet/IP-based communications (SmartGrid) in substations and across wide area network
Transition to Ethernet/IP-based communications, replacing legacy process buses on factory floor
Transition to Ethernet/IP-based communications, from legacy wired infrastructure in broadcast studios
“Precise Time” Impact
Replacement of legacy time busses (e.g. IRIG-B) for accurate network monitoring & measurements
Synchronize robotics in an assembly line
Video frame alignment
49
Microsemi Timing
Timing expertise and
execution has provided
growth
Established leader and
footprint in the market
continues to expand vs.
limited competition
End-to-End engagement
offering “Precise Time”
solutions drives
innovation
Continued emergent
markets requiring “Precise
Time” will fuel quality
growth opportunities
MSCC Timing IC Revenue Growth
($M)
900
800
700
M)
600
( $ M)
500
( $
Revenue TAM 400 300 Timing 200 MSCC
100
0 0 FY12 FY13 FY14 FY15 FY16 FY17
MSCC Timing Revenue (not to scale)
Comms Semiconductor Timing Market
TAM source: Databeans- Q2-2014 Timing Devices Market Tracker Analog Service
50
Driving Growth in Key Applications: Small Cell/Backhaul
Maamoun Seido
VP & Business Unit Manager, Timing and Optical Products
Small Cells – Integral to Future Deployments
The existing macrocell infrastructure is not easily scalable for future 4G/LTE deployments Small Cells offer a way to complement the macrocell architectures providing cost effective, heterogeneous solutions for high user locations Small cells are defined (by the SmallCellForum): number of users and location
Urban Enterprise Home Rural
www.microsemi.com
52
Why Small Cells
Data hungry applications are driving the bandwidth growth
Mobile users of these applications are driving the need for densification of the wireless infrastructure
Over 1Bn
unique visitors
per month
4.9M Daily
1.39Bn active Active Users6
Users per
month with
Over 1Bn 1.19Bn mobile
hours Users5
watched per
Month2
300M
users1
Small cells are cost effective, easy and fast to deploy solutions to increase coverage and bandwidth in dense user locations
– Examples are stadiums and new office buildings
User experience is key to customer retention; this experience is now driven more by data services than voice
www.microsemi.com
53
Growth of Small Cells & Backhaul
Small Cells Outdoor
(rural/urban) 46%
Small Cells Indoor
(enterprise) CAGR
Femtocell
(home and 37%
enterprise)
CAGR
Small Cell Backhaul
Equipment 125%
CAGR
References: 2014 Infonetics Research: Small Cell Equipment Market Share and Forecast, 2 nd Edition; September 2014
2014 Infonetics Research: Residential and Enterprise Femtocell Equipment Market Share and Forecast, 2 nd Edition; December 2014 2014 Infonetics Research: Outdoor Small Cell Mobile Backhaul Equipment Market Size and Forecast, 2 nd Edition; December 2014
Small Cells Revenues & Shipments 2
$3,500 8.0
$3,000 7.0
$2,500 6.0
5.0
$2,000
Millions 4.0 Millions
$1,500
$ 3.0
US $1,000 Units
2.0
$500 1.0
$0 0.0
CY12 CY13 CY14 CY15 CY16 CY17 CY18
Enterprise Urban/Rural M Units
Femtocell (Home & Enterprise) Revenues & Shipments 3
$2,500 25.0
$2,000 20.0
Millions $1,500 15.0 Millions
US $ $1,000 10.0 Units
$500 5.0
$- 0.0
CY13 CY14 CY15 CY16 CY17 CY18
Revenue Units
$3,000 Small Cell Backhaul Equipment 4 2.5
$2,500 2
$2,000
1.5
Millions $1,500 Millins
$ 1
US $1,000 Units
$500 0.5
$- 0
CY13 CY14 CY15 CY16 CY17 CY18
Revenue Units
www.microsemi.com
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Small Cells Design & Deployment Challenges
Issue Challenge
Locations • Complete lack of normal facilities for
equipment installations
Unusual and inaccessible locations • Alternatives required for power and
synchronization
Power • Power efficient designs for fanless
Limited or no conventional power outlets operation
• Use of Power-over-Ethernet is essential
Footprint
Limited space for new equipment • Small design footprint to enable wide
installations range of deployments
Cost
• System solution needs to be low cost of
Low cost to facilitate large volumes
manufacture and operation
Security
Limited security locations with untrusted • System solution require low cost high
network connections security mechanisms
www.microsemi.com
55
Microsemi Product Solutions
Enterprise
Urban
IEEE1588 SW
Rural Home
Network Synchronization Equipment, ICs and SW
Power-over-Ethernet Equipment and ICs
Secure FPGA ICs
Focused on specific small cell applications
Home, enterprise, urban and rural
www.microsemi.com
56
Microsemi Value Proposition
Integrated Grandmaster (IGM)
Indoor GPS with low cost of deployment Local 1588 GM
IEEE 1588 SW & PLL
Well-established solutions with +5M devices shipped
Synchronization
End-to-end
Power over Ethernet
Simple, low cost and efficient
Security
Secure solutions at the
network edge
Flash-based FPGA
Providing low power, highly secure solution
PoE Midspans
Broadest portfolio for all
small cell deployments
PoE ICs
Highest power efficiency
www.microsemi.com
57
Timing Solutions Synchronize Small Cells
Integrated Circuits
Industry’s broadest range of synchronization
technologies for small cells, including GPS, SyncE,
1588, NTP
Leader in SyncE and 1588 deployments with
established solutions
Highest density, lowest jitter PLL IC solutions with
RF phase noise capabilities for cost efficient
Systems
Integrated GrandMaster for indoor deployments
providing for cost effective deployments
Market leader in GrandMaster deployments
Baseband Processor PHY
RF
Security and
Timing PoE
Management
Grandmaster
Backhaul
Small Cell
Small Cell
Industry’s ONLY end-to-end synchronization solutions
www.microsemi.com
58
PoE Solutions Power Small Cells
Integrated Circuits
Most efficient
Ideal diode bridge saves up to 2.5W per small cell
PD devices save up to 300mW
Single port PSE to power backhaul systems
End-to-end support up to 95W per port
Systems
Complete portfolio for indoor and outdoor products
1, 2 & 4 port outdoor PoE systems
Unique UL-compliant surge protection for outdoor
applications
6, 12 & 24 port managed indoor midspan
Avoids the need to upgrade Ethernet switches
Up to 95W per port
Baseband Processor PHY
RF
Security and
Timing PoE
Management
Grandmaster
Backhaul
Small Cell
Small Cell
www.microsemi.com
59
FPGAs Provide Security for Small Cells
Baseband Processor PHY
RF
Security and Management
Timing PoE
Most secure, clone and tamper resistant
– Provides the ability to verify the authenticity of remotely located small cells
– Provides the ability to defend against attempts at network intrusions
Lowest power with up to 50% power savings compared to SRAM FPGAs
– Critical for Small Cell applications
Extended temperature range (up to 85oC ambient) with no performance degradation
– For outdoor deployments
www.microsemi.com
60
Driving Growth in Key Applications: Residential Gateway
Roger Holliday
Senior VP & General Manager, Communications Product Group
Broadband Gateway 101
The Broadband Gateway
– Deployed by operators to terminate a packet-based access network
Twisted pair (VDSL and G.Fast)
Cable (DOCSIS)
Fiber (PON)
Wireless (LTE)
Operators use the gateway to offer and bundle services
– Voice over IP
– High speed internet access
– OTT (Over The Top) video
– Home security and automation
Gateways are integral to operators revenue worldwide
– Strong new engagements for MSCC
Asia Pacific
EMEA
North
America
Central &
Latin America
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Why Gateways?
Broadband Subscriptions
1,000 747 782 816 847
800 707
144 167 191 217
Millions 600 123
117 120 122 124 126 PON
400 CABLE
Subscribers 200 467 483 494 501 504 DSL
0
2014* 2015* 2016* 2017* 2018*
Operators transitioning from TDM to packet-based infrastructure New features to drive new services
– Home security, home automation
In addition, massive new upgrade cycles started in CY14 and will continue over the next few years
– DSL ? G.FAST or GPON
– Cable ? DOCSIS 3.0 to DOCSIS 3.1
– Fiber ? EPON to GPON
Replacement boxes to existing subscribers
Connectivity targets from megabits to gigabits and demand for enhanced wireless
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The Race to One Gigabit Continues
DSL—40Mbps Cable – 300Mbps Fiber – 1Gbps
Healthy competition between Operators driven by…
– Triple play deployments Video, data, voice
– Connected home MoCA, HPNA, G.hn, Wi-Fi, BLE, Zigbee…
– Multi-screen services Video capable gateways
– Cloud-based services DVR, backups…
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Broadband Gateway Technology Evolution
Low Power WiFi
PC Wireless 802.11
Zigbee, BLE
USB
Broadband Internet
4 x SoC
Printer RJ-45
2-CH FXS
Line RJ-11
Circuit
Ethernet F
Switch /
LAN Home Network
Router MoCA, HPNA,
Homplug, G.HN
Powered
Wireline
Ethernet
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MSCC SAM in Broadband Gateways
MSCC Gateway SAM
$500
Strong roadmap alignment and increasing content $455
$450
$400
$356
$350
$300
$250
$250
$188
$200 $162
$150
$100
$50
$0
2014 2015 2016 2017 2018
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MSCC Solutions for Broadband Gateways
Voice:
– Dominant market share leader
– Demand upside across all geographies
WiFi PA/LNA:
– Strong offering in high power, high efficiency, high integration
Line Drivers:
– VDSL and G.Fast
– PLC – HomePlug® AV2, G.HN
Powered Wireline Ethernet (PoE):
– Pioneer and market leader for PoE
Reverse Power Feed (RPF):
– Leader in innovative powering mechanism enabling FTTdp
The Connected Home
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Solidifying Microsemi’s Market Leadership
Microsemi provides world class broadband gateway solutions
Strong engagement with leading gateway suppliers
Delivering voice solutions today
– Over 1 billion lines shipped
High performance Wi-Fi and 802.11AC
Providing line driver and power solutions for tomorrows enhanced DSL services
PoE for “2-Box” gateway architectures
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Microsemi RPF Reference Design Activities
Broadcom VDSL2 DPU
DPU—8 ports power aggregation – PD70101
Power share
Broadcom G.FAST DPU
DPU – 16 ports power aggregation – PD70101
Power share
Broadcom G.FAST CPE – RPF Daughter Card
1 line RPF PSE IC – PD81001
12V to 55V isolated boost – LX7309
Marvell G.HN
Distribution Point Unit (DPU) – 6-port power aggregation – PD70101
Power share
RPF injector
Sckipio G.FAST:
G.Fast 16-ports MDU – PD70101
RPF injector
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Strong Partnership Program and Go To Market
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Microsemi Gateway Leadership
Growing market
– New subscribers
– Existing subscriber hardware replacement needs
– Increasing silicon content
Systems engineering brings substantial value to operators.
Roadmap and trends provide strong growth for the second half of the year and beyond
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Driving Growth in Key Applications: Aerospace
Siobhan Dolan Clancy
VP, Worldwide Business Development, Aerospace
Commercial Aviation Market Dynamics
Market Demand
World traffic annual growth predicted at 4.7% (Airbus GMF 2014-2033)
Demand for 30K + new aircraft by 2033
Single-aisle aircraft represents 70% demand in units
Fuel efficiency will continue to drive profitability
Technology Drivers for “More Electric” Aircraft
Environmental impact
Weight
Reliability, safety, cost
Operational efficiencies
Supply Chain Efficiency
Manufacturability – 10 year OEM backlog
Traceability
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More Electric Aircraft Driving Content
Aircraft Electrical Power Conversion Systems
$20
$18
$16
$14
Bn) $12
$
( $10
Revenue $8
$6
$4
$2
$0
2014 2015 2016 2017 2018 2019 2020
Power Generation Power Distribution Auxillary Power Unit (APU) Actuation Systems
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Electrical Power Conversion System Drivers
Power
Generation
Power
Distribution
Actuation
Technology Drivers
Power optimisation
Reliability, safety, cost
Power quality and thermal control
Eco friendly, zero emissions
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Challenges Facing More Electric Actuation
Economic
Cost effectiveness
Design to cost
Standardisation
Reliability
Heritage
Maturity
Technology
Optimized for weight
State of the art technology
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Actuation Power Drive Electronics System
Single Aisle Content by 2020
PCM SAM $100M
CMM + SAM $100M
Increasing SAM from 15% of the PDE today to 90% by 2020
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Capturing a Growing Percentage of Value
700 Actuation System Power Drive Electronics
600
Million 500
$
US 400
in 300
Revenue 200
100
0
2014 2015 2016 2017 2018 2019 2020
TAM SAM
Single aisle adoption of electrical actuators driving TAM Microsemi growth initiatives driving SAM
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Technology Leadership Driving Content
FPGA
Integration, power, reliability and security
SEU immune
Motor control IP and development platform
Power Discretes
SiC technology, extended temperature range
Broadest portfolio of TVS technology
Higher Level Integration
ASIC/SoC
Power core modules (PCM) & sub-systems
Potential to offer full PDE
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Microsemi Aircraft Electrical Power Conversion System Revenue Projections
80
70
60
Millions 50
$
US 40
in
30
Revenues 20
10
0
2015 2016 2017 2018 2019 2020
Actuation Power Distribution Power Generation
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Solid Engagements with Market Leaders
Airframers Electrical Power Actuation
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Competitive Landscape
Industry Competitors
FPGA Xilinx, Altera
ASICs BAE, Raytheon, Aeroflex
TVS Vishay, Sensitron
Power devices, MOSFETs, IGBTs Infineon, IXYS, Rohm
Modules Semelab, Powerex, Fuji
Customers
Make or Buy Decision
Microsemi Differentiation
Building “solutions” capability based on core competencies (PCM/PDE)
Scale and breadth of product line
Significant footprint with market leaders
Reliability
Technology leadership
Aviation heritage
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Summary
Microsemi is well positioned to be a key partner for aircraft electric power conversion systems
Key growth initiatives based on double digit growth applications
Microsemi a “solutions partner”
Impressive technology and capabilities roadmap from semiconductor material to packaging, integration and test
Scale and breadth to drive the best “cost of ownership”
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Driving Growth in Key Applications: Space/Satellite
Siobhan Dolan Clancy
VP, Worldwide Business Development, Aerospace
Continued Growth in Satellite Demand
Two Decades of World Demand For Satellite Manufacturing & Launch Services
# of Satellites 2004-2013 2014-2023 Growth
(Completed) (Most Likely) Rate
Satellites launched and to be launched* 817 satellites 1,155 satellites +41%
Total mass launched and to be launched 1,923 tons 2,485 tons +29%
Space industry market for the decade+ $198 billion $248 billion +25%
Satellite market value for the decade+ $151 billion $188 billion +25%
Launch market value for the decade+ $47 billion $60 billion +28%
* Satellites with unit launch mass over 50 kg at launch date
+ Current $ value (see Parts 3 and 4 for assumptions on specifc prices)
Strongest Growth Markets
56% growth in civilian government satellites
Earth observation, satcom, space science
59% growth in commercial satellites
Non-GEO comsat
Earth observation
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Capitalizing on Growth Drivers in Space
Remote Sensing
Growing requirements for imaging for commercial and government purposes ? Increasingly complex sensor data processing on board the spacecraft
Commercial Satellites
Redesigns of GEO communications platforms to support larger payloads and greater versatility
Digital Communications
Flexible reconfigurable repeaters
LEO constellations and GEO platforms
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Microsemi Technology Leader in Space
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Growing Space Market
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Microsemi Increasing our Content
Bus / Platform Payload
Solar Electronic Main Power Bus Payload
Power
Array Power System Conditioning
Telemetry
Receive
Tracking & RF Repeater
Antenna Control Payload (“Bent Pipe”)
Command & Interface
Data Unit
Transmit Handling
Antenna
Digital
Communications
Star / Sun Payload
Sensors
Attitude &
Magnetomete
Orbit r
Control Remote Sensing
Torque Rods Payload
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Growth Initiatives Driving Content
Introducing High Speed Processing Radiation Tolerant FPGA
Best-in-Class FPGA for Space
– Size, performance, power
– Radiation effects
– Microsemi heritage in space
Targeting Remote Sensing Payload Applications
– Sensor resolution increasing, downlink bandwidth not keeping pace
– Operators require on-board processing, satellites send information not raw data
Market Opportunity
– Potential up to $100M revenue per annum
TM
GOES-R Program:
4 satellites, each with 6 instruments
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Growth Initiatives Driving Content
Radiation Tolerant Telemetry Controller IC
Provides key functions for sensor monitoring, attitude and payload control
Weight reduction, board space savings, reliability
Interfaces with a radiation tolerant FPGA
Precise Timing and Frequency Solutions
Crystal oscillators provide accurate frequency and time required for timing, radar and communication functions
Power Solutions Provider
Extending our range of complementary power solutions including DC-DC converters, relays, hybrid and discrete technology
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Microsemi Growing Revenue
Revenue Projection in Millions
2014 2015 2016 2017 2018 2019 2020
FPGA Mixed Signal ASIC Power Supplies Hybrids Discretes Other Frequency & Timing
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Established Global Customer Base
World Map of Main Communication Payload Suppliers
Long-standing industry relationships
Leveraging the breadth of our product technology Heritage built over half a decade
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Competitive Environment
Microsemi positioning to capture an increasing share of payload signal processing applications
– Replacing ASICs, SRAM FPGAs
Higher levels of integration for telemetry applications
– Replacing inefficient and expensive discrete and hybrid solutions
Positioning as a credible “solutions” provider replacing in-house solutions at a higher level in the system
—Oscillators, DC-DC converters, space system managers
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Providing Solutions for Growth Applications
Remote Sensing Payload
Increasing SAM by $120M from 2016
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Providing Solutions for Growth Applications
Satellite Telemetry Tracking & Control System
Increasing SAM by $50M from 2016
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Space Satellite Summary
Leadership in space
Leveraging our product breadth
Innovative new product introductions
Focused on growth applications
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Acquisition Overview
Steve Litchfield
EVP & Chief Strategy Officer
Strategic Rationale: Microsemi + Vitesse
Addition of Vitesse:
– Furthers strategy of growing silicon content in existing applications
– Further penetration at strategic customers
– Adds unique differentiated technology with large barriers to entry
– Broadens communication portfolio
– Leadership in carrier Ethernet market
– Leverage Microsemi scale to accelerate Industrial IoT effort
– Reinforces Microsemi value proposition
Extends Portfolio Accelerate IoT
Increase Market Shares
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Transaction Overview
Total consideration per share: $5.28, all cash transaction
Commence cash tender offer. Microsemi shareholder approval is not needed.
3.2x debt/TTM adj. EBITDA at close; reduce to <2.5x ending FY16
Anticipate closing mid Q3FY2015
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Strategic and Financial Compelling Transaction
- Accelerates carrier Ethernet penetration and industrial IoT expansion
- Extends communication portfolio into existing strategic customers
- Complementary with timing portfolio further extends leadership
- Unique technology portfolio with significant barriers
- Adds world class design team to continue solving customer problems
- Anticipates $20 million of cost savings in first full year of transaction
- Adds approximately $0.16-0.20 of accretion in first fiscal year
- Accretive to non GAAP EPS in first full quarter
- Drives additional cash flow
- Supports 60/30 profitability targets
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Executive Summary
Paul Pickle
President & COO
Microsemi Shareholder Value Proposition
Maximizing Profitability
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Focus Products Driving SAM Expansion
Microsemi offers tailored feature sets for targeted applications
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Increasing Strategic Customer Importance
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Microsemi Shareholder Value Proposition
Maximizing Profitability
Focus Products Driving SAM Expansion Increasing Strategic Customer Importance End Markets Built for Growth, Stability, Cash Flow Commitment to Deliver Shareholder Value
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Q&A
Management Luncheon