Significant Increase in Q3 Sales Year-On-Year Driven by Growth Mainly in Automotive and Industrial Businesses and Integration of Intersil. Achieved Improvements in Year-On-Year Q3 Gross and Operating Margins

• Q3 2017: Non-GAAP⁽¹⁾ semiconductor sales of 192.3 billion yen, up 29.6% year-on-year. Non-GAAP gross margin of 47.7%, up 5.2 points year-on-year and Non-GAAP operating profits (margin) of 35.9　 billion yen (18.4%), up 19.4 billion yen (up 7.5 points) year-on-year
• Outlook for Q4 2017: Non-GAAP semiconductor sales of 197.6 billion yen, up 22.4% year-on-year, Non-GAAP gross margin of 46.3%, up 0.7 point year-on-year and Non-GAAP operating margin of 12.9%, down 0.8 point year-on-year
• Outlook for the full year 2017: Non-GAAP semiconductor sales of 756.7 billion yen, up 22.0% year-on-year, Non-GAAP gross margin of 46.3%, up 2.7 points year-on-year and Non-GAAP operating margin of 15.5%, up 3.3 points year-on-year

TOKYO — (BUSINESS WIRE) — November 1, 2017 — Renesas Electronics Corporation (TSE:6723, “Renesas”), a premier supplier of advanced semiconductor solutions, today reported financial results for the third quarter ended September 30, 2017.

“We have been continuously improving our gross and operating margins by pursuing sales growth and cost efficiency”, said Bunsei Kure, President and CEO, Renesas Electronics Corporation. “Our third quarter non-GAAP semiconductor sales increased by 29.6% year on year, driven by increased sales mainly in the automotive and industrial businesses, and the dissipation of the impact from the Kumamoto earthquake that occurred in the same period a year ago, in addition to the integration of Intersil. We expect to achieve traction in semiconductor sales and gross margin during the coming quarter on a year-on-year basis.”

Quarterly Financial Summary (Billion yen)

Non-GAAP basis			Q3 2017 (Jul-Sep 2017)			Q2 2017 (Apr-Jun 2017)			Q2 2016 (Jul-Sep 2016)			QoQ			YoY
Net Sales			195.5			198.1			152.6			-1.3%			+28.1%
Semi. Sales			192.3			194.3			148.3			-1.1%			+29.6%
Gross Margin			47.7%			45.7%			42.5%			+2.1pts			+5.2pts
Operating Income			35.9			29.0			16.6			+6.9			+19.4
Operating Margin			18.4%			14.6%			10.8%			+3.7pts			+7.5pts
EBITDA (2)			55.0			47.5			31.5			+7.5			+23.6

Japan GAAP basis			Q3 2017 (Jul-Sep 2017)			Q2 2017 (Apr-Jun 2017)			Q2 2016 (Jul-Sep 2016)			QoQ			YoY
Net Sales			195.5			197.3			152.6			-0.9%			+28.1%
Semi. Sales			192.3			193.5			148.3			-0.6%			+29.6%
Gross Margin			47.5%			41.5%			41.2%			+6.1pts			+6.3pts
Operating Income			24.9			9.3			14.6			+15.6			+10.3
Operating Margin			12.7%			4.7%			9.5%			+8.0pts			+3.2pts
EBITDA			54.1			38.0			29.5			+16.1			+24.6

(1)

Non-GAAP Basis: Results excluding non-recurring and certain other items. Non-GAAP basis excludes the impact of sales and profit/loss of Renesas SP Drivers, impact of profit/loss of LTE modem business and profit/loss from inventory buildup until the end of FY2016 ended December 2016. Starting from FY2017 ending December 2017, Non-GAAP definition was revised to exclude amortization of goodwill, amortization of purchased intangible assets, costs related to the Intersil acquisition, stock-based compensation cost, costs related to the offering, and PPA (purchase price allocation) effects associated with the Intersil acquisition. (Reference: The impact on the operating income from the inventory buildup in FY2017 Q3 was negative 0.3 billion yen.) See page 5 for reconciliation of Japan GAAP and Non-GAAP.

(2)	EBITDA: Operating income + Depreciation and amortization + Amortization of long-term prepaid expenses. Amortization of goodwill is also included for Japan GAAP-based EBITDA.

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