Buy: Target: Upside: $129 $165 28%

BUY: QUALCOMM Inc. (NYSE: QCOM) Technology Sector

Technology Sector Technology Sector Head: Jacob Hochheiser – Junior Analyst: Kyle Buff, Kathryn Bamman, Alex Rivera, Olu Alamutu

2020 2020 October 8, 2020

October, Stock Pitch 19 19 Pitch Stock Agenda

Qualcomm Overview

Industry Overview

Investment Thesis

Catalyst

Technology Sector Technology – Valuation

Risks and Mitigants Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Qualcomm Overview

QCOM Background Stock Performance

Qualcomm is a global leader of semiconductor products most known for the smartphone integrated fabless chip made for Apple and Samsung QCOM QCOM outsources their production which allows for low CAPEX and high SPY operational leverage as opposed to their competitors

Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTl), and Qualcomm Strategic Initiatives (QSI) Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20 Oct-20

Financial Snapshot Revenue by Business Unit ($ in billions)

Technology Sector Technology – Market Cap 145.07 B QCT QTI QSI

52 Week Change 4.55% 2019 Q4

Beta (5Y Monthly) 0.99 2019 Q3 TTM EV/EBITDA 27.66 2019 Q2 TTM P/E 54.60 2019 Q1 EPS TTM 2.36

Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock 0 1 2 3 4 5 6 7 Industry Overview

Competitor Overview QCOM Overwhelming 5G Market Share

Supplier of most of the same companies however, Intel still focuses on computer chips while QCOM is QCOM HiSilicon Other a leader in smartphone chips specifically 5G 29% QCOM 41%

Leader in fabless chips, but cannot put a Intel Other Intel mmWave solution, a 5G ‘performance band’, 14% on the market HiSilicon 16%

Favorable 5G Chip Trends Strategic Partnerships

Technology Sector Technology – • • 5G technology market size is anticipated to grow 123.3% by Apple: six-year licensing contract with two-year extension 2026, projected to reach $667.90 billion dollars. possibility for chip supply • • Autonomous vehicle industry is experiencing rapid growth, Samsung: QCOM is only tightly aligned chip maker that which can only be powered by 5G semiconductor chips supplies Samsung. • • Increasing number of IoT devices and edge computing will Chip performance difference was shown between need higher data speeds that only 5G chips can provide QCOM and Exynos chips that leaned towards • Introduction of 5G satellite communication and development QCOM • of strategic partnerships with network integrators in GuangDong OPPO Mobile: QCOM is their most used international chip maker which supplies most of China’s Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock developing countries create attractive growth opportunities 5G devices Stock Pitch 19 October, 2020 – Technology Sector Investment Thesis • • • electronically. more digital accelerated Covid The technology the needthe for is indicativeof technology 5G of growth The drivendata communication Society is becoming relianton services are providedare services transformation where transformation - 19Pandemic has Demand • growing is rapidly adoption 5G Expansion • • • positionedisQCOM to: effectiveacquisitions leadershipwith Retain industry numerousapplications to to bring 5G technology LeverageSnapdragon markets5G 5G for Tapinto the increasingdemand and c and apture high growth high growth apture Deployment Cat. 1: QCOM Capture of High Growth 5G Markets

Rapidly Growing 5G Areas Future 5G Tech Business Contracts

Transportation: 5G will allow improved vehicle-to-vehicle 1 communication, enabling greater integration of self driving cars. 32 multi- Gaming: 5G promises to deliver means that developers and game 75+ 5G delivery platforms can offload most of the heavy computational year 2 license work to datacenters anchor contracts Public Services: 5G will help governments make policy and agreements infrastructure decisions that drive useful innovations, providing 3 access to unprecedented levels of real time information

Notably, Qualcomm entered a worldwide licensing agreement to cover 4 Manufacturing: 5G technology will allow for high flexibility, single-mode and multimode devices manufactured and marketed by

lower cost, and shorter lead times for factory floor production Huawei worth $1.8 billion Technology Sector Technology – Strategic Gaming Industry Focus Projected growth rates various areas

1200 Impact on 1003.2 1000 CAGR per 800 Gaming Industry industry 600 (In Millions of 440.8 from 400 chips) 2020-2025

200 120.3

Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock 7.5 0 2019 2020 2021 2022 Cat 1 ct’d: Snapdragon Provides Expansion Capability

Snapdragon Overview Snapdragon Utility for Autonomous Driving

Snapdragon is Qualcomm's powerful platform processor that Snapdragon Ride™ Platform is one of the automotive industry’s most enables premium mobile experiences. It features the most uctting edge advanced, scalable and fully customizable automated driving platforms. It multi-core CPU's and world wide network efficency allows automotive suppliers flexibility to deploy with safety and convenience Snapdragon hardware is designed for all 5G capabiltities including faster download/upload 5G Connectivity speeds, low latency and increased connectivity to billions of devices

The Snapdragon microprocessor allows for scalability within the market since its planned The Snapdragon autonmous driving chip C-V2X (cellular vehicle-to- Scalability integrations include autonomous vehicle everything), alone is projected to be worth USD $6.6 Billion by the year

processing and 5G cellular based cloud gaming 2027 Technology Sector Technology – Autonomous Driving Growth Increased Cloud Based Gaming Market Share

Manufactured autonomous 2020 2025

vehicles (in thousands) Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Cat. 2: Effective Acquisitions to Retain Industry Leadership

Purpose Behind Acquisitions Research and Development vs Acquisitions

The most cost 1 Acquire proper positioning within the market to scale large 5G hardware projects efficent use of R&D of 5G technology circulated Save money in reference to research and around 2 developments and seamlessly acquire the proper researching and patents 5G chip integration acquiring other

companies Technology Sector Technology

– Acquired Companies Discounted Acquisitions Due to COVID-19

New Cares Act tax laws put priority on long term potential growth and business synergies due to complications in 2020 payroll taxes and entitlement to net operating loss carryovers

The financial impact of the Covid-19 pandemic left many smaller sized companies in poor financial situations, thus

allowing them to be Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Valuation

Football Field Assumptions

Current: Target: • $129 $165 WACC – 7.1% • Terminal Growth Rate - 4.5% Multiples • Terminal EV/EBITDA – 27.6x • Beta - 0.99

Gordon Growth Sensitivities

Perpetual Growth (9 years) EV/Revenue 16142.67% 4.00% 4.20% 4.40% 4.60% 4.80% 6.60% 160.99 171.67 184.29 199.44 217.95

Technology Sector Technology 6.85% 150.02 158.87 169.16 181.28 195.76 WACC – 7.10% 140.83 148.27 156.82 166.74 178.39 EV/EBIT 7.35% 133.00 139.36 146.58 154.85 164.42 7.60% 126.26 131.76 137.94 144.95 152.95

Multiple Method EV/EBITDA $179.59 27.x 28.5x 30.x 31.5x 33.x 6.60% 160.73 167.65 174.57 181.50 188.42 6.85% 157.91 164.68 171.45 178.23 185.00 WACC 52 Week Range 7.10% 155.17 161.79 168.41 175.03 181.66 7.35% 152.49 158.96 165.44 171.92 178.40 7.60% 149.87 156.21 162.54 168.88 175.21

$60 $80 $100 $120 $140 $160 $180 $200 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Risks and Mitigants

More time spent on new generations on Rollout of 5G chips and its infrastructure chip so that when 5G is implemented, it is being slower than anticipated more effective

Security risks at the expense of the QCOM has most secure chip of all consumer due to more data necessary to companies, Snapdragon

run 5G

Technology Sector Technology –

Service providers make 5G cheaper for consumers to increase demand, but chip Near recession due to COVID-19

prices stay the same Stock Pitch 19 October 19 2020 Pitch Stock Recommendation Recap

Buy: Target: Upside: $129 $165 28%

Qualcomm creates intellectual property, semiconductors, software, and services related to wireless

technology. They are in an optimal position to …

Technology Sector Technology – • Capture the high growth 5G markets • Leverage Snapdragon technology to bring 5G to numerous applications

• Retain industry leadership with effective acquisitions Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Questions? Appendix A: Income Statement

Qualcomm Income Statement

$ in millions 2017 2018 2019 Equipment and services $16,647 $17,400 $14,611 Licensing 5, 644 5, 211 9, 662 Total revenues $22,291 $22,611 $24,273 Cost of Goods Sold 9, 355 9, 795 8, 599 Gross Profit $12,936 $12,816 $15,674

Total Costs and Expenses 7, 722 10, 046 11, 896 R&D 5, 465 5, 619 5, 398 SG&A 2, 386 2, 659 2, 195 Other Expenses (1 29) 1, 768 4, 303 Operating Income $5,214 $2,770 $3,778

Interest Expense 494 768 627 Investment and Other Income, net (902) (2 ,591) (797)

EBT Exc. Unusual Items $5,622 $4,593 $3,948 Technology Sector Technology

– Merger/Acquisitoin Expense 783 836 418 Legal Settlement - 1, 310 (4 ,464) Restructuring 38 687 213 Other Unusual Items 1, 781 1, 368 300 EBT Inc. Unusual Itms $3,020 $392 $7,481

Income Tax Expense 543 5, 356 3, 095 Net Income (loss) $2,477 ($4,964) $4,386

Shares used in per share calculations: Basic 1,477 1,463 1,210

Diluted 1,490 1,463 1,220 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix B: Balance Sheet A

Qualcomm Balance Sheet

$ in millions 2017 2018 2019 ASSETS Cash and cash equivalents $ 35,029 $ 11, 777 $ 11, 839 Marketable securities 2,279 311 421 Accounts receivable, net 3,576 2, 904 1, 046 Inventories 2,035 1, 693 1, 400 Other current assets 674 699 2, 059

Total Current Assets $ 43,593 $ 17 ,384 $ 16 ,765

Technology Sector Technology – Property, plant and equipment, net $ 3, 216 $ 2,975 $ 3,081 Long term investments & receivables 1,873 402 343 Other assets 16, 804 11, 957 12, 768

Total Assets $ 65,486 $ 32, 718 $ 32,957 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix B: Balance Sheet B

LIABILITIES Accounts Payable $ 1, 971 $ 1, 825 $ 1, 368 Other Payables and Accruals 1,183 1, 081 1, 048 Short-term debt 2,495 1, 005 2, 496 Other current liabilities 5,258 7, 478 4, 023 Total Current Liabilities $ 10,907 $ 11,389 $ 8,935

Unearned revenues $ 2, 003 $ 1, 620.00 $ 1, 160.00 Long-term debt 19398 15, 365.00 13, 437.00 Other liabilities 2432 3, 537.00 4, 516.00 Total Liabilities $ 34,740 $ 31,911 $ 28,048

STOCKHOLDER'S EQUITY

Technology Sector Technology Common Stock 274 - 343 – Retained earnings 30, 088 542 4, 466 Accumulated other comprehensive income 384 265 100 Total Stockholders’ Equity 30, 746 807 4, 909

Total Stockholders’ Equity 30, 746 807 4, 909

Total Liabilities and Stockholders’ Equity 65, 486 32,718 32,957 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix C: Statement of Cash Flows A

Qualcomm Statement of Cash Flows

$ in millions 2017 2018 2019 Cash Flow from Operations Net income (loss) $ 2, 444.00 $ (4 ,964.00) $ 4, 386.00 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expense 1, 461.00 1, 561.00 1, 401.00 Income tax provision in excess of (less than) income tax payments (4 12.00) 4, 481.00 1, 976.00 Non-cash portion of share-based compensation expense 914. 00 883. 00 1, 037.00 Net gains on marketable securities and other investments (5 30.00) (1 24.00) (3 56.00) Indefinite and long-lived asset impairment charges 76. 00 273. 00 203. 00 Impairment losses on marketable securities and other investments 177. 00 75. 00 135. 00 Other items, net (2 6.00) (4 9.00) (2 72.00) Changes in assets and liabilities:

Accounts receivable, net (1 ,104.00) 734. 00 1, 373.00 Technology Sector Technology

– Inventories (2 00.00) 337. 00 273. 00 Other assets 136. 00 24. 00 78. 00 Trade accounts payable (4 5.00) (9 4.00) (4 43.00) Payroll, benefits and other liabilities 2, 341.00 1, 005.00 (2 ,376.00) Unearned revenues (2 31.00) (2 34.00) (1 29.00)

Net cash provided by operating activities $ 5, 001.00 $ 3, 908.00 $ 7, 286.00 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix C: Statement of Cash Flows B

Cash Flow from Investing Activities: Capital expenditures $ (6 90.00) $ (7 84.00) $ (8 87.00) Net Change in LT Investment 41,005.00 9, 139.00 139.00 Net Cash From Acq & Div (1 ,544.00) (3 26.00) (2 52.00) Other Investing Activities (2 0,308.00) (5 ,648.00) 194. 00 Net cash (used) provided by investing activities 18,463 2,381 (806)

Cash Flow from Financing Activities: Proceeds from short-term debt $ 8, 558.00 $ 11, 131.00 $ 5, 989.00 Repayment of short-term debt (9 ,309.00) (11,127.00) (6,492.00) Proceeds from long-term debt 10, 953.00 - - Repayment of long-term debt - (5 ,513.00) - Proceeds from issuance of common stock 497. 00 603. 00 414. 00 Repurchases and retirements of common stock (1 ,342.00) (2 2,580.00) (1 ,793.00)

Technology Sector Technology Dividends paid (3 ,252.00) (3 ,466.00) (2 ,968.00) – Payments of tax withholdings related to vesting of share-based awards (2 68.00) (2 80.00) (2 66.00) Payment of purchase consideration related to RF360 Holdings (1 15.00) (1 57.00) (1 ,163.00) Other items, net (151.00) (111.00) (107.00) Net cash (used) provided by financing activities $ 5, 571.00 $ (3 1,500.00) $ (6 ,386.00)

Net increase (decrease) in total cash and cash equivalents $ 29, 083.00 $ (2 5,252.00) $ 62. 00 Total cash and cash equivalents at beginning of period $ 5, 946.00 $ 37, 029.00 $ 11, 777.00

Total cash and cash equivalents at end of period $ 37, 029.00 $ 11, 777.00 $ 11, 839.00 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix D: Revenue Forecast Model

Revenue Forecast Model by Segment

(Millions $$) 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Equipment and services 16,647 17,400 14,611 12,491 16,572 18,229 19,870 21,459 22,962 24,339 25,556 26,578 27,376 Growth Rate 5% -16% -15% 33% 10% 9% 8% 7% 6% 5% 4% 3% % of Total Revenue 75% 77% 60% 59% 57% 57% 57% 57% 57% 57% 57% 57% 57%

Licensing 5,644 5,211 9,662 8,681 12,336 13,816 15,198 16,414 17,563 18,617 19,547 20,329 20,939 Growth Rate -8% 85% -10% 13% 12% 10% 8% 7% 6% 5% 4% 3%

% of Total Revenue 25% 23% 40% 41% 43% 43% 43% 43% 43% 43% 43% 43% 43% Technology Sector Technology

– Total Revenue 22,291 22,611 24,273 21,172 28,908 32,046 35,068 37,873 40,524 42,956 45,104 46,908 48,315 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix E: Income Statement Projections

Qualcomm Income Statement

$ in millions 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Equipment and services $16,647 $17,400 $14,611 $ 12,491 $ 16,572 $ 18,229 $ 19,870 $ 21,459 $ 22, 962 $ 24, 339 $ 25, 556 $ 26, 578 $ 27, 376 Licensing 5, 644 5, 211 9, 662 8,681 12,336 13,816 15,198 16,414 17,563 18,617 19,547 20,329 20,939 Total revenues $22,291 $22,611 $24,273 $21,172 $28,908 $32,046 $35,068 $37,873 $40,524 $42,956 $45,104 $46,908 $48,315 Cost of Goods Sold 9, 355 9, 795 8, 599 $8,519.15 $11,631.95 $12,894.42 $14,110.51 $15,239.35 $16,306.10 $17,284.47 $18,148.69 $18,874.64 $19,440.88 % of Total Revenue 42% 43% 35% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% Gross Profit $12,936 $12,816 $15,674 $12,653 $17,276 $19,151 $20,957 $22,634 $24,218 $25,671 $26,955 $28,033 $28,874

Total Costs and Expenses 7, 722 10, 046 11, 896 9, 039 12, 342 13, 681 14, 972 16, 169 17, 301 18, 339 19, 256 20, 027 20, 627 % of Total Revenue 35% 44% 49% 43% 43% 43% 43% 43% 43% 43% 43% 43% 43% R&D 5, 465 5, 619 5, 398 5, 053 6, 900 7, 649 8, 370 9, 040 9,673 10,253 10,766 11,196 11,532 % of Total Revenue 25% 25% 22% 24% 24% 24% 24% 24% 24% 24% 24% 24% 24% SG&A 2, 386 2, 659 2, 195 2, 224 3, 036 3, 365 3, 683 3, 978 4,256 4,511 4,737 4,926 5,074 Technology Sector Technology % of Total Revenue 11% 12% 9% 11% 11% 11% 11% 11% 11% 11% 11% 11% 11% – Other Expenses (1 29) 1, 768 4, 303 1, 762 2, 406 2, 667 2, 919 3, 152 3,373 3,575 3,754 3,904 4,021 % of Total Revenue -1% 8% 18% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8%

Operating Income $5,214 $2,770 $3,778 $3,614 $4,934 $5,470 $5,986 $6,464 $6,917 $7,332 $7,699 $8,007 $8,247 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix F: Net Working Capital Projections

Qualcomm Net Working Capital

$ in millions 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 ASSETS Current assets: Accounts Receivables $ 3,576 $ 2,904 $ 1,046 $ 893 $ 1,194 $ 1,297 $ 1,405 $ 1,503 $ 1,592 $ 1,671 $ 1,738 $ 1,790 $ 1,826 Receivables turnover 6.2 7.8 23.2 23.71 24.21 24.71 24.96 25.21 25.46 25.71 25.96 26.21 26.46 DSO 58.6 46.9 15.7 15.40 15.08 14.77 14.63 14.48 14.34 14.20 14.06 13.93 13.80 Inventories 2,035 1,693 1,400 1,343 1,778 1,941 2,093 2,227 2,349 2,454 2,541 2,606 2,648 Inventory Turnover 4.6 5.8 6.1 6.3 6.5 6.6 6.7 6.8 6.9 7.0 7.1 7.2 7.3 DIH 79.4 63.1 59.4 57.6 55.8 55.0 54.1 53.3 52.6 51.8 51.1 50.4 49.7 Other current assets 674 699 2,059 1,030 1,407 1,559 1,706 1,843 1,972 2,090 2,195 2,282 2,351 % of sales 3.02% 3.09% 8.48% 4.87% 4.87% 4.87% 4.87% 4.87% 4.87% 4.87% 4.87% 4.87% 4.87% Total current assets $ 6,285 $ 5,296 $ 4,505 $ 3,267 $ 4,379 $ 4,798 $ 5,204 $ 5,573 $ 5,913 $ 6,216 $ 6,473 $ 6,679 $ 6,825

Current liabilities: Accounts payable $ 1,971.00 $ 1,825.00 $ 1,368.00 $ 1,160.53 $ 1,542.30 $ 1,691.64 $ 1,831.84 $ 1,968.11 $ 2,094.99 $ 2,209.27 $ 2,307.86 $ 2,387.96 $ 2,447.14 Accounts Payable Turnover 11.3 12.4 17.7 18.24 18.74 18.94 19.14 19.24 19.34 19.44 19.54 19.64 19.74 DPO 32.3 29.5 20.6 20.01 19.47 19.27 19.07 18.97 18.87 18.77 18.68 18.58 18.49

Technology Sector Technology Other payables and accruals $ 1,183.00 $ 1,081.00 $ 1,048.00 $ 1,016.64 $ 1,388.11 $ 1,538.77 $ 1,683.89 $ 1,818.61 $ 1,945.91 $ 2,062.66 $ 2,165.80 $ 2,252.43 $ 2,320.00

– % of sales 5.31% 4.78% 4.32% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% 4.80% Other current liabilities $ 5,258.00 $ 7,478.00 $ 4,023.00 $ 5,168.39 $ 7,056.86 $ 7,822.78 $ 8,560.56 $ 9,245.40 $ 9,892.58 $10,486.13 $11,010.44 $11,450.86 $11,794.38 % of sales 23.59% 33.07% 16.57% 24.41% 24.41% 24.41% 24.41% 24.41% 24.41% 24.41% 24.41% 24.41% 24.41% Total current liabilities $ 8,412 $ 10,384 $ 6,439 $ 7,346 $ 9,987 $ 11,053 $ 12,076 $ 13,032 $ 13,933 $ 14,758 $ 15,484 $ 16,091 $ 16,562

Net Working Capital $ (2,127) $ (5,088) $ (1,934) $ (4,079) $ (5,608) $ (6,255) $ (6,872) $ (7,459) $ (8,021) $ (8,542) $ (9,011) $ (9,413) $ (9,736) Change in Net Working Capital $ (2,961) $ 3,154 $ (2,145) $ (1,529) $ (647) $ (616) $ (588) $ (561) $ (522) $ (468) $ (402) $ (324)

CapEx 690 784 887 617 842 933 1,022 1,103 1,180 1,251 1,314 1,366 1,407 % of sales 3.26% 2.71% 2.77% 2.91% 2.91% 2.91% 2.91% 2.91% 2.91% 2.91% 2.91% 2.91% 2.91% D&A 1,461.00 1,561.00 1,401.00 1,169.33 1,512.38 1,583.18 1,630.34 1,650.44 1,647.92 1,621.67 1,571.36 1,497.57 1,401.76

% of CapEx 211.74% 199.11% 157.95% 189.60% 179.60% 169.60% 159.60% 149.60% 139.60% 129.60% 119.60% 109.60% 99.60% Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix G: WACC

WACC Calculation Risk Free Rate 0.8% Expected Market Return 7.8% Market Risk Premium 7.0% Beta 0.99

CAPM Cost of Equity 7.7%

Cost of Debt 1.99% Tax Rate 21% After Tax Cost of Debt 1.6%

Technology Sector Technology Market Equity 142,393 – Market Debt 15,933 Weight of Equity 89.9% Weight of Debt 10.1%

WACC 7.1% Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix H: DCF Valuation

Free Cash Flow Valuation

FCF 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E

Total Revenues 22,291 22,611 24,273 21,172 28,908 32,046 35,068 37,873 40,524 42,956 45,104 46,908 48,315 36.54% 10.85% 9.43% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% Total COGS 9,355 9,795 8,599 8,519 11,632 12,894 14,111 15,239 16,306 17,284 18,149 18,875 19,441 Total SG&A 2,386 2,659 2,195 2,224 3,036 3,365 3,683 3,978 4,256 4,511 4,737 4,926 5,074 Total R&D 5,465 5,619 5,398 5,053 6,900 7,649 8,370 9,040 9,673 10,253 10,766 11,196 11,532 Total Other Expenses (129) 1,768 4,303 1,762 2,406 2,667 2,919 3,152 3,373 3,575 3,754 3,904 4,021

Total EBIT 5,214 2,770 3,778 3,614 4,934 5,470 5,986 6,464 6,917 7,332 7,699 8,007 8,247

Less Tax 543 5,356 3,095 759 1,036 1,149 1,257 1,358 1,453 1,540 1,617 1,681 1,732 Add D&A 1,461 1,561 1,401 1,169 1,512 1,583 1,630 1,650 1,648 1,622 1,571 1,498 1,402

Technology Sector Technology Less CapEx 690 784 887 617 842 933 1,022 1,103 1,180 1,251 1,314 1,366 1,407 – Change in NWC 0 (2,961) 3,154 (2,145) (1,529) (647) (616) (588) (561) (522) (468) (402) (324)

FCFF 1,152 (1,957) 5,552 6,098 5,618 5,954 6,242 6,493 6,684 6,808 6,858 6,833 Years to Discount 0.5 1.5 2.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 WACC 7.1% 7.1% 7.1% 7.1% 7.1% 7.1% 7.1% 7.1% 7.1% 7.1% Discount Factor 0.97 0.90 0.84 0.79 0.73 0.69 0.64 0.60 0.56 0.52

PV of FCF $5,365 $5,501 $4,732 $4,683 $4,583 $4,452 $4,279 $4,069 $3,827 $3,560 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix I: DCF Valuation Continued

Gordon Growth Multiples Method FCF Terminal Year 6,833 EBITDA Multiple 30.0x Perpetual Growth 4.50% Last Forecast EBITDA 9,648 Terminal Value 274,276 Terminal Value 289,454 PV of TV 142,907 PV of TV 150,816 WACC 7.1% Enterprise Value $187,959 Enterprise Value $195,867

Debt 15,933 Debt 15,933 Cash $11,839 Cash $11,839

Net Debt $4,094 Net Debt $4,094 Technology Sector Technology

– Equity Value $183,865 Equity Value $191,773 DSO 1,139 DSO 1,139

Share Price $161.43 Share Price $168.37 Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock Appendix J: Comparable Companies

Multiples TTM FY 2021E FY 2022E EV/Revenue EV/EBIT EV/EBITDA P/E EV/Revenue EV/EBIT EV/EBITDA P/E EV/Revenue EV/EBIT EV/EBITDA P/E Qualcomm Inc 7.0x 39.9x 27.7x 40.7x 5.0x 15.7x 13.3x 18.4x n/a n/a n/a n/a Mediatek 3.2x 31.3x 23.5x 36.5x 2.2x 14.6x 12.7x 18.6x n/a n/a n/a n/a Realtek Semiconductor Corp 2.4x 23.5x 18.5x 26.0x 2.0x 16.7x 14.9x 19.4x n/a n/a n/a n/a Nvidia Corp 25.5x 93.3x 76.0x 88.6x 21.1x 54.0x 52.9x 59.9x 17.8x 43.9x 40.8x 49.2x Texas Instruments 10.2x 26.4x 22.0x n/a 10.5x 27.3x 22.8x 28.6x 9.7x 23.7x 20.1x 26.6x Infineon Technologies AG 5.1x 64.6x 23.6x 88.7x 4.9x 50.6x 19.9x 45.9x 4.0x 29.2x 15.1x 29.3x Xilinx Inc 9.4x 39.7x 31.7x 41.8x 9.3x 35.6x 30.7x 40.4x 8.4x 29.7x 25.3x 34.0x Marvell Technology Group 10.8x n/a 137.3x 34.1x 10.2x 42.7x 33.9x 48.6x 8.8x 29.9x 25.2x 32.4x Intel Corp 2.9x 8.9x 6.1x 10.1x 3.1x 9.7x 6.5x 11.1x n/a n/a n/a n/a STMicorelectronics NV 3.2x 26.5x 15.3x 31.5x 3.2x 30.6x 16.5x 37.0x 2.9x 19.3x 12.1x 23.3x Broadcom Inc 8.1x 52.9x 18.4x 57.1x 7.3x 13.3x 12.1x 14.7x 7.1x 12.8x 11.5x 13.8x

Technology Sector Technology 25th Percentile 3.0x 25.7x 21.1x 31.2x 2.2x 16.2x 14.4x 19.2x 5.1x 25.1x 16.3x 27.3x

– Median 7.3x 35.5x 23.5x 41.8x 7.1x 31.4x 21.4x 34.5x 9.0x 29.4x 22.7x 31.7x 75th Percentile 14.0x 71.8x 42.8x 88.7x 13.2x 51.5x 36.2x 49.4x 15.8x 40.4x 36.9x 45.4x

Average 9.3x 46.5x 32.5x 56.3x 8.4x 33.1x 25.7x 35.5x 10.0x 31.6x 25.3x 34.8x Stock Pitch 19 October, 2020 2020 October, 19 Pitch Stock