North America Equity Research

29 January 2020

Underweight
Xilinx XLNX, XLNX US
Price (28 Jan 20): $98.61
Miss on Guidance On Weakness in Wired/Wireless
▼ Price Target (Dec-20): $85.00
And Slower Reacceleration in Datacenter; Reit UW Prior (Dec-20): $88.00

Xilinx reported mixed results for F3Q20 (Dec-Q) with revenue below the midpoint Semiconductors,Semiconductor
of guidance / consensus and EPS above the midpoint of guidance / consensus Cap Equipment & Tech Hardware
driven by an expected pause in Data Center along with expected declines in Harlan Sur AC
Wired/Wireless due to the ongoing transition of FPGAs to ASICs for 5G base (1-415) 315-6700
stations, and declines in AIT and low SD% growth in ABC due to muted demand [email protected]
trends across its broad customer base. Revenue of $723M was down 10% Y/Y and Bloomberg JPMA SUR <GO>
down 13% Q/Q with gross margin of 68.0% and above consensus of 67.5% due to Bill Peterson
an increase in ABC (higher GMs) and a decline in WWG (lower GMs). Advanced (1-415) 315-6766
products declined 4% Y/Y (down 18% Q/Q), accounting for 70% of sales, but [email protected]
there was continued broad-based growth in the Zynq SoC platforms (+26% Y/Y) Andrew Nguyen
despite a weaker Wireless business. F4Q20 (Mar-Q) revenue guidance of ~$765M (1-415) 315-5611
(up 6% Q/Q) was well below consensus of $827M and previously stated guidance [email protected]
of up 15% Q/Q while GM guidance of 69.5% was above consensus of 68.4% due Alexander Kim
to lower than expected WWG revenue (lower GMs) offset by moderate growth in (1-415) 315-8828
DCG (higher GMs) and strong Q/Q growth from AIT and ABC (higher GMs). The [email protected]
miss in guidance is due to greater than expected declines in WWG (Wired and J.P. Morgan Securities LLC
Wireless both down) due to a slowdown in the 5G rollout, the ongoing transition
of FPGAs to ASICs for baseband products, and broad-based weakness across the Key Changes (FYE Mar)
Wired business. This is being offset by broad based growth across Xilinx’s Prev Cur
different businesses with DCG returning to moderate growth vs. original guidance Adj. EPS - 20E ($) 3.28 3.37
of strong growth due to a slower ramp with Xilinx’s storage and network Revenue - 20E ($ mn) 3,216 3,169
customers along with growth in AIT (A&D and ISM are expected to be up as Revenue - 21E ($ mn) 3,483 3,354
multiple programs ramp) and in ABC (auto expected to recover as ADAS demand
improves vs. F3Q20). We are lowering our FY20 and FY21 estimates and our new Quarterly Forecasts (FYE Mar)
PT moves from $88 to $85 which assumes that the stock trades at a premium 22- Adj. EPS ($)
24x multiple times 2HFY21 earnings power of $3.70 and we remain UW. 2019A 2020E 2021E
Q1 0.75 0.97A 0.80
Q2 0.87 0.94A 0.87
 Mixed Dec-Q results driven by declines in Wired/Wireless and temporary Q3 0.92 0.68A 0.91
pause in Datacenter as expected. Xilinx reported Dec-Q sales of $723M Q4 0.94 0.79 0.94
(down 10% Y/Y, down 13% Q/Q), below the midpoint of guidance / consensus FY 3.48 3.37 3.52
of $725M with mixed results across end-markets. Data Center increased 8% Style Exposure
Y/Y and decreased 16% Q/Q, in-line with management expectations of a
Quant Current Hist %Rank (1=Top)
temporary pause in the Dec-Q and benefitted from sales of compute and
Factors %Rank 6M 1Y 3Y 5Y
networking products to hyperscale customers. WWG was down 18% Y/Y and
Value 67 73 75 76 64
down 29% Q/Q as expected due to the continued transition from FPGAs to 58 52 68 75 80
Growth
ASICs at key basestation customers and some program related delays with one Momentum 83 11 15 57 82
of Xilinx's OEM customers. AIT was down 5% Q/Q and ABC was up 2% Q/Q Quality 4 12 25 25 6
as expected due to muted demand trends across its broad customer base. GM of Low Vol 57 57 35 12 29
68.0% was above consensus/JPMe of 67.5%/ 68.1% due to declines in WWG 13 14 8 5 8
ESGQ
(lower GMs) and an increase in ABC (higher GMs). Opex was $318M (guide
$330M) and EPS of $0.68 was well above consensus of $0.61 on higher than
expected margins and lower than expected OpEx. Zynq platform revenues grew
26% Y/Y, despite the negative impact of a weaker Wireless business.

Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.

See page 10 for analyst certification and important disclosures.

J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.

www.jpmorganmarkets.com
This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

Price Performance Summary Investment Thesis and Valuation

1. Our Underweight thesis on XLNX is based on longer
time to revenue in focus (data center) and key
(wireless infrastructure markets) versus our prior
expectation. We also believe M&A is unlikely.
Therefore we believe reduction in multiple is likely
and there is no/limited upside in the stock.

2. We believe Xilinx should trade at an above-average

multiple due to its higher profitability compared to
YTD 1m 3m 12m
most semiconductor peers with gross margin near
Abs 0.9% 0.2% 4.1% -9.8% 70%, and high payout ratio of near or greater than
Rel -0.5% -0.9% -3.7% -33.7% 100%.
Company Data
3. Our new PT is $85, which assumes that the stock
Shares O/S (mn) 253 trades at a premium 22-24x multiple times 2HFY21
52-week range ($) 141.60-87.56
Market cap ($ mn) 24,929.40 earnings power of $3.70. Given the stock is still
Exchange rate 1.00 trading above our fair value PT, we remain UW the
Free float(%) 99.8% stock.
3M - Avg daily vol (mn) 2.95
3M - Avg daily val ($ mn) 282.9
Volatility (90 Day) 30 Performance Drivers
Index S&P 500
BBG BUY|HOLD|SELL 10|14|3

Key Metrics (FYE Mar)

$ in millions FY19A FY20E FY21E
Financial Estimates
Revenue 3,059 3,169 3,354
Adj. EBIT 957 804 907
Adj. EBITDA 1,029 940 1,028
Adj. net income 892 861 904
Adj. EPS 3.48 3.37 3.52
BBG EPS 3.77 3.39 3.79
Cashflow from operations 1,091 1,003 107
FCFF 1,002 876 7
Margins and Growth
Revenue growth 24.0% 3.6% 5.9%
EBIT margin 31.3% 25.4% 27.0%
EBIT growth 39.5% (16.0%) 12.9%
EBITDA margin 33.6% 29.7% 30.7%
EBITDA growth 31.5% (8.7%) 9.4%
Net margin 29.2% 27.2% 27.0%
Adj. EPS growth 95.2% (3.0%) 4.5%
Ratios
Adj. tax rate 8.1% 3.5% 8.3%
Interest cover NM NM -
Net debt/Equity NM NM NM
Net debt/EBITDA NM NM NM
ROE 34.4% 23.0% 20.3%
Valuation
FCFF yield 4.0% 3.5% 0.0%
Dividend yield 1.5% 1.5% 1.5%
EV/EBITDA 22.3 23.0 21.4
Adj. P/E 28.3 29.2 28.0

Sources for: Performance Drivers – Bloomberg, J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.
2

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

 Miss on the Mar-Q guide due to greater than expected decline in WWG offset by
broad based strength in core vertical markets and moderate growth in
Datacenter. Xilinx guided Mar-Q revenue to $765M (up 6% Q/Q) and well-below
consensus estimate of $827M and original guidance of ~15% Q/Q growth. The miss in
guidance is due to greater than expected declines in WWG (Wired and Wireless both
down) due to a slowdown in the 5G rollout, the ongoing transition of FPGAs to ASICs
for baseband products, and broad-based weakness across the Wired business offset by
broad based growth across Xilinx’s different businesses with DCG returning to
moderate growth vs. original guidance of strong growth due to a slower ramp with
Xilinx’s storage and network customers along with growth in AIT (A&D and ISM are
expected to be up as programs for multiple emulation and prototyping customers ramp)
and in ABC (auto expected to recover as ADAS demand improves vs. F3Q20).
Consumer is expected to be weaker. GM guide of 69.5% was above JPMe/Street
estimates of 69.2%/68.4%, respectively, and opex guide was $318M. Implied EPS of
$0.81 was below consensus of $0.87 but above JPMe ($0.76).

 The FPGAs to ASIC transition has continued in 5G, as expected, but we see
attractive long term growth trends in core vertical markets and in Datacenter.
While we anticipate the RFSoC wins that Xilinx has won for remote radio head (RRH)
platforms will generate strong and sustainable 5G related revenues (more antennas and
more compute required), the modem/control/data plane processor functionality on the
BBU/Basestation that is currently being run on FPGAs (many from Xilinx) will
continue to transition to custom/semi-custom ASIC solutions from Broadcom (ZTE,
Nokia, Ericsson), Marvell (Samsung, Nokia), Intel (Ericsson), and HiSilicon (Huawei).
Xilinx expects this ASIC transition for the baseband side to wind down by 4Q20 but
there is potential for this transition to take longer than originally expected. While we
don’t know the mix of RRU to BBU revenue contribution to Xilinx’s 5G revenue mix,
the inevitable transition to ASIC solutions will be a drag on growth. Although the
inevitable transition from FPGAs to ASICs is occurring for 5G base stations, Xilinx
has other parts of its business that are doing well such as its Zynq platform, which
continues to gain more adoption from its auto customers such as its Zynq MPSoC
powering automated valet parking. Also its strong datacenter wins with hyperscale
customers such as Amazon, Alibaba, Baidu, and Tencent should provide a strong offset
to potential growth headwinds in its 5G business. Recently, Alibaba Cloud announced
that Xilinx is powering their data centers, which are being used by Alibaba’s cloud
services enterprise customers.

 Lowering PT from $88 to $85 which assumes that the stock trades at a premium
22-24x multiple times 2HFY21 earnings power of $3.70. Given the stock is still
trading above our fair value PT, we remain UW the stock.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

Table 1: Xilinx F3Q20 Earnings Summary and F4Q20 Outlook

$ in millions, except per share data
F3Q20 F4Q20E
JPM Est Actual Delta Consensus Guidance Consensus
Revenue ($B) $725.3 $723.5 ($1.8) $725.4 $765.0 $827.4
Q/Q Change -13.0% -13.2% -0.2% N/A 5.7% N/A
NG Gross Margin 68.1% 68.0% -0.1% 67.5% 69.5% 68.4%
NG Net Income $156.7 $212.2 $55.5
Non-GAAP EPS $0.61 $0.68 $0.07 $0.61 $0.81 $0.87
Source: Company reports, Bloomberg, and J.P. Morgan estimates.

Table 2: Xilinx F3Q20/FY19 and FY18 End Market Mix

%, $ in millions
Product Revenue FY18 FY19 F3Q20
A&D, Industrial, and TME (AIT) 1,161 1,225 286.5
% of revenues 47% 40% 40%
Y/Y 20% 6% -10%
Q/Q -5%
Automotive, Broadcast, and 401 470 136.6
Consumer (ABC)
% of revenues 16% 15% 19%
Y/Y 3% 17% 10%
Q/Q 2%
Wired and Wireless Group 818 1,092 226.4
(WWG)
% of revenues 33% 36% 31%
Y/Y -7% 33% -18%
Q/Q -29%
Data Center Group 159 232 70.4
% of revenues 6% 8% 10%
Y/Y 38% 46% 8%
Q/Q -16%

Channel (72.0) 40 3.6

% of revenues -3% 1% 1%
Y/Y
Q/Q 0%
Total Revenues 2,467 3,059 723.6
Y/Y 5% 24% -10%
Q/Q -13%
Source: Company reports and J.P. Morgan estimates.

Balance Sheet and Cash Flow

During the Dec-Q, Xilinx’s cash decreased to $2.43B in F3Q20 from $2.52B in
F2Q20. F3Q20 CFO and capex were $324M/$34M versus $224M/$34M in F2Q20,
implying FCF of $290M this quarter compared to $190M in the last quarter. The
company also paid $93M in dividends and did share buybacks of $261M.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

Investment Thesis, Valuation and Risks

Xilinx (Underweight; Price Target: $85.00)
Investment Thesis
With longer time to revenue in focus (datacenter) and key (wireless infrastructure)
markets versus our prior expectations, and an M&A expectation that we view as
unlikely to play out, we believe multiple compression is likely. Given that we see no
upside in the stock, we are Underweight on XLNX.

Valuation
Our new PT is at $85, which assumes that the stock trades at a premium 22-24x
multiple times 2HFY21 earnings power of $3.70. Given the stock is still trading
above our fair value PT, we remain UW the stock. We believe Xilinx should trade at
an above-average multiple due to its higher profitability compared to most
semiconductor peers with gross margin near 70%. However, with limited upside to
our price target, we remain Underweight.

Risks to Rating and Price Target

The communications end market is the largest end market for Xilinx at ~40% of
revenue. Therefore, an unexpected increase in spending on equipment from service
providers, carriers and business enterprises could have a dramatic positive impact on
Xilinx’s revenue, which could cause us to re-address our Underweight rating. Other
risks to upside include a faster than expected adoption and ramp of its FPGA/ACAP
products in datacenters and a potential interest in XLNX and its assets by a large
diversified buyer. Xilinx derives roughly 20% of its revenues from Europe and >40%
of its revenues from Asia (ex-Japan), and any notable macroeconomic strength in
these regions could positively impact Xilinx’s sales, resulting in upside risks to our
estimates.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

Appendix I: Comp and Group Valuation

Table 4: Semiconductor Comp and Group Valuation Table
$ in millions, except per share data
1/28/2020 Consensus Consensus Consensus Consensus
JPM Market 1/28/20 Non-GAAP EPS P/E Revenue P/S EV/Sales Non-GAAP EPS Sales P/E P/S
Rating Cap Price C19E C20E C19E C20E C19E C20E C19E C20E C19E C20E C19E C20E C19E C20E C19E C20E C19E C20E
Harlan Sur, Lead Coverage
phone: 415-315-6700, email: [email protected]
PC Semiconductors
INTC OW $294,347 $67.31 $4.87 $5.05 13.8 13.3 $71,965 $74,000 4.1 4.0 4.2 4.1 $4.87 $4.97 $72,000 $73,602 13.8 13.5 4.1 4.0
NVDA OW $153,245 $247.97 $5.56 $7.50 44.6 33.0 $10,762 $12,875 14.2 11.9 13.4 11.2 $5.28 $7.10 $10,520 $12,683 47.0 34.9 14.6 12.1
AMD N $60,030 $50.53 $0.63 $1.16 80.2 43.6 $6,731 $8,685 8.9 6.9 8.3 6.5 $0.64 $1.10 $6,731 $8,594 79.0 45.9 8.9 7.0
Memory
MU OW $63,755 $56.47 $3.82 $3.02 14.8 18.7 $20,637 $22,002 3.1 2.9 2.9 2.8 $3.35 $3.08 $20,256 $21,584 16.9 18.3 3.1 3.0
WDC N $20,249 $68.41 $1.21 $3.92 56.5 17.5 $15,509 $17,302 1.3 1.2 1.8 1.6 $1.26 $4.86 $15,571 $17,346 54.5 14.1 1.3 1.2
Enterprise/Networking/Datacenter Semiconductors
XLNX UW $24,929 $98.61 $3.52 $3.38 28.0 29.2 $3,235 $3,236 7.7 7.7 7.2 7.2 $3.82 $3.64 $3,235 $3,382 25.8 27.1 7.7 7.4
MRVL OW $17,593 $26.33 $0.65 $0.93 40.8 28.5 $2,666 $3,031 6.6 5.8 7.3 6.4 $0.68 $0.87 $2,703 $3,014 38.7 30.2 6.5 5.8
AVGO OW $132,417 $318.31 $20.92 $23.99 15.2 13.3 $22,892 $25,265 5.8 5.2 6.9 6.3 $21.17 $23.72 $22,749 $25,356 15.0 13.4 5.8 5.2
MLNX NR $6,731 $118.64 $6.48 N/A 18.3 N/A $1,286 N/A 5.2 N/A 4.6 N/A $6.50 $7.20 $1,285 $1,405 18.3 16.5 5.2 4.8
IPHI OW $3,655 $80.29 $1.58 $2.10 50.7 38.3 $363 $445 10.1 8.2 10.3 8.4 $1.58 $2.12 $363 $463 50.8 37.9 10.1 7.9
Mobile Devices
SWKS N $20,556 $119.79 $6.02 $6.99 19.9 17.1 $3,301 $3,629 6.2 5.7 5.9 5.3 $6.02 $6.91 $3,301 $3,622 19.9 17.3 6.2 5.7
QRVO OW $13,562 $113.56 $5.77 $6.69 19.7 17.0 $3,113 $3,409 4.4 4.0 4.4 4.0 $5.77 $6.29 $3,113 $3,333 19.7 18.0 4.4 4.1
KN UW $1,926 $20.52 $1.12 $1.26 18.3 16.3 $858 $909 2.2 2.1 2.3 2.2 $1.12 $1.29 $858 $906 18.3 15.9 2.2 2.1
Analog/Microcontrollers
TXN OW $121,382 $128.04 $5.24 $5.15 24.4 24.9 $14,383 $14,255 8.4 8.5 8.4 8.4 $5.47 $5.16 $14,383 $14,326 23.4 24.8 8.4 8.5
ADI N $42,590 $114.31 $4.81 $4.85 23.8 23.6 $5,750 $5,756 7.4 7.4 8.2 8.2 $4.92 $5.02 $5,832 $5,783 23.2 22.8 7.3 7.4
NXPI N $37,617 $132.68 $7.58 $8.60 17.5 15.4 $8,846 $9,370 4.3 4.0 4.8 4.5 $7.60 $8.46 $8,856 $9,367 17.5 15.7 4.2 4.0
MCHP OW $26,602 $104.20 $5.54 $6.10 18.8 17.1 $5,248 $5,416 5.1 4.9 6.6 6.4 $5.59 $6.12 $5,268 $5,532 18.7 17.0 5.0 4.8
MXIM OW $16,967 $62.09 $2.16 $2.73 28.7 22.7 $2,183 $2,388 7.8 7.1 7.4 6.7 $2.17 $2.45 $2,183 $2,313 28.6 25.4 7.8 7.3
MXL N $1,513 $21.20 $0.79 $0.82 26.7 25.8 $317 $321 4.8 4.7 5.3 5.2 $0.79 $0.82 $317 $319 26.8 25.9 4.8 4.7
Diversified/Consumer/Standard Components/Other
ON N $9,919 $24.17 $1.50 $1.60 16.1 15.1 $5,491 $5,675 1.8 1.7 2.3 2.2 $1.51 $1.60 $5,491 $5,711 16.0 15.1 1.8 1.7
MTSI UW $1,740 $26.27 N/A $0.65 N/A 40.4 $468 $518 3.7 3.4 4.8 4.4 ($0.52) $0.38 $461 $485 (50.5) 69.0 3.8 3.6
VSH N $3,106 $21.42 $1.32 $1.15 16.2 18.6 $2,659 $2,610 1.2 1.2 1.1 1.1 $1.31 $1.10 $2,659 $2,554 16.3 19.4 1.2 1.2
CY NR $9,077 $23.38 $1.11 N/A 21.0 N/A $2,216 N/A 4.1 N/A 4.1 N/A $1.11 $1.25 $2,210 $2,349 21.1 18.7 4.1 3.9
Semiconductor Capital Equipment
AMAT OW $56,037 $60.19 $3.16 $4.18 19.1 14.4 $14,955 $17,275 3.7 3.2 3.8 3.3 $3.12 $3.81 $14,842 $16,560 19.3 15.8 3.8 3.4
LRCX OW $45,459 $301.69 $14.30 $17.96 21.1 16.8 $9,466 $10,748 4.8 4.2 4.5 4.0 $14.35 $14.35 $9,476 $10,562 21.0 21.0 4.8 4.3
KLAC OW $28,172 $175.93 $8.60 $10.30 20.4 17.1 $5,244 $5,725 5.4 4.9 5.6 5.2 $8.65 $8.65 $5,255 $5,724 20.3 20.3 5.4 4.9
Large Cap Semi Average 28.6 21.0 7.1 6.6 20.7 19.7 7.1 6.6
Small-Mid Cap Semi Average 25.1 24.9 4.4 3.8 16.5 26.8 4.4 3.9
Semi Group Average (ex-outliers) 23.0 22.6 5.3 5.1 18.6 23.2 5.3 5.0
SOX Index 1,893 89 109 21.2 17.4 $403 5.2 4.7 21.2 17.4 5.2 4.7
S&P500 3,276 174 193 18.8 17.0 $1,514 2.3 2.2 18.8 17.0 2.3 2.2

Source: Company reports, Bloomberg, and J.P. Morgan estimates. Prices as of market close 01/28/2020.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

Appendix II: Financial Tables

Table 5: Xilinx Income Statement
$ in millions, except per share data
$ millions, except per share data ** Restated for ASC 606
Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q
FY end: March F17 1Q18 2Q18 3Q18 4Q18 F18 1Q19 2Q19 3Q19 4Q19 F19 1Q20 2Q20 3Q20 4Q20E F20E 1Q21E 2Q21E 3Q21E 4Q21E F21E
Total Revenue 2,349.3 602.8 627.4 598.6 638.2 2,467.0 684.4 746.3 800.1 828.4 3,059.0 849.6 833.4 723.5 762.2 3,168.7 790.9 824.2 858.6 880.6 3,354.2
% Change Y/Y 6.1% 4.8% 8.3% 2.2% 4.7% 5.0% 13.5% 18.9% 33.7% 29.8% 24.0% 24.1% 11.7% -9.6% -8.0% 3.6% -6.9% -1.1% 18.7% 15.5% 5.9%
% Change Q/Q -1.1% 4.1% -4.6% 6.6% 7.2% 9.0% 7.2% 3.5% 2.6% -1.9% -13.2% 5.4% 3.8% 4.2% 4.2% 2.6%

Cost of Sales 708.2 190.8 185.7 178.0 188.9 743.4 206.9 231.6 247.9 269.5 955.9 286.8 293.1 240.0 242.4 1,062.3 255.0 265.0 285.0 295.0 1,100.0
% Change Y/Y 5.4% 13.4% 5.6% -0.1% 1.7% 5.0% 8.4% 24.7% 39.3% 42.6% 28.6% 38.6% 26.5% -3.2% -10.0% 11.1% -11.1% -9.6% 18.7% 21.7% 3.6%
% Change Q/Q 2.7% -2.7% -4.2% 6.2% 9.5% 12.0% 7.0% 8.7% 6.4% 2.2% -18.1% 1.0% 5.2% 3.9% 7.5% 3.5%
Gros s Margin % 69.9% 68.3% 70.4% 70.3% 70.4% 69.9% 69.8% 69.0% 69.0% 67.5% 68.8% 66.2% 64.8% 66.8% 68.2% 66.5% 67.8% 67.8% 66.8% 66.5% 67.2%
Non-GAAP COGS 283.5 285.6 231.2 235.0 248.0 258.0 278.0 288.0
Non-GAAP Gross Margin 66.6% 65.7% 68.0% 69.2% 67.3% 68.6% 68.7% 67.6% 67.3% 68.0%

SG&A 335.2 89.2 91.1 92.8 89.3 362.3 90.5 97.7 103.0 107.2 398.4 107.4 111.6 109.6 113.0 441.6 113.0 113.0 113.0 113.0 452.0
% Total Revenue 14.3% 14.8% 14.5% 15.5% 14.0% 14.7% 13.2% 13.1% 12.9% 12.9% 13.0% 12.6% 13.4% 15.2% 14.8% 13.9% 14.3% 13.7% 13.2% 12.8% 13.5%
R&D 601.4 153.1 158.0 166.2 162.5 639.8 170.8 183.4 189.3 199.5 743.0 204.1 223.0 211.5 215.0 853.6 217.0 220.0 223.0 227.0 887.0
% Total Revenue 25.6% 25.4% 25.2% 27.8% 25.5% 25.9% 25.0% 24.6% 23.7% 24.1% 24.3% 24.0% 26.8% 29.2% 28.2% 26.9% 27.4% 26.7% 26.0% 25.8% 26.4%
Am ortization of Intangibles/Other 5.1 0.7 0.5 0.4 33.9 35.5 0.4 0.8 1.9 1.9 4.9 0.4 2.2 2.9 2.0 7.5 2.0 2.0 2.0 2.0 8.0
942 243 250 259 286 1,038 262 282 294 308.53 1,146 312 337 324 330 1,303 332 335 338 342 1,347
Non-GAAP Operating Expenses 259.9 278.9 289.2 298.2 1,126 302.5 321.0 306.4 318.0 1,248 320.0 323.0 326.0 330.0 1,299
Non-GAAP Operating Income 217.6 235.8 263.0 258.8 975.2 259.978 217.1 174.2 209.2 860.5 222.9 243.2 254.6 262.6 983.2
Non-GAAP Operating Margin % 31.8% 31.6% 32.9% 31.5% 32% 30.6% 26.3% 24.5% 26% 27% 27% 29% 29% 29% 28%

Goodwill Amortization*** 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating Income 699.4 169.1 192.2 161.3 163.5 686.0 215.8 232.7 257.9 250.4 956.8 250.9 203.5 159.4 189.8 803.7 203.9 224.2 235.6 243.6 907.2
% Total Revenue 29.8% 28.0% 30.6% 26.9% 25.6% 27.8% 31.5% 31.2% 32.2% 30.2% 31.3% 29.5% 24.4% 22.0% 24.9% 25.4% 25.8% 27.2% 27.4% 27.7% 27.0%
Interest Income/(Expense) (8.3) 1.8 1.8 5.5 (3.8) 5.4 (2.8) 6.4 (1.3) 9.3 11.5 11.6 12.3 6.4 8.0 38.4 0.0 0.0 0.0 0.0 0.0
Pretax Income 691.1 170.9 194.0 166.8 159.7 691.4 212.9 239.1 256.6 259.7 968.3 262.6 215.8 165.8 197.8 842.1 203.9 224.2 235.6 243.6 907.2
% Total Revenue 29.4% 28.3% 30.9% 27.9% 25.0% 28.0% 31.1% 32.0% 32.1% 31.3% 31.7% 30.9% 25.9% 22.9% 26.0% 26.6% 25.8% 27.2% 27.4% 27.7% 27.0%
Income Taxes 68.6 13.7 20.3 179.3 14.2 227.4 22.9 23.4 17.2 15.0 78.6 21.1 (11.1) 3.8 15.9 29.7 17.0 18.5 19.3 20.2 75.0
Tax Rate 9.9% 8.0% 10.4% 107.5% 8.9% 32.9% 10.7% 9.8% 6.7% 5.8% 8.1% 8.0% -5.2% 2.3% 8.0% 3.5% 8.3% 8.3% 8.2% 8.3% 8.3%
Net Income 622.5 157.2 173.8 (12.5) 145.5 464.0 190.0 215.7 239.4 244.6 889.8 241.5 227.0 162.0 181.9 812.4 186.9 205.7 216.3 223.4 832.2
% Total Revenue 26.5% 26.1% 27.7% -2.1% 22.8% 18.8% 27.8% 28.9% 29.9% 29.5% 29.1% 28.4% 27.2% 22.4% 23.9% 25.6% 23.6% 25.0% 25.2% 25.4% 24.8%

Income/(Loss) from JV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Avg. No. of Com mon Shares 268.6 265.8 258.2 254.1 257.9 260.8 255.9 255.5 256.4 258.2 256.6 257.9 255.3 252.8 252.8 255.0 252.7 252.7 252.7 252.7 252.7

Proforma EPS $2.32 $0.59 $0.67 ($0.05) $0.56 $1.78 $0.74 $0.84 $0.93 $0.95 $3.47 $0.94 $0.89 $0.64 $0.72 $3.19 $0.74 $0.81 $0.86 $0.88 $3.29
% Change Y/Y 13.1% -3.4% 10.8% -109.4% -1.8% -23.2% 25.5% 25.5% NM 68.0% 94.9% 26.1% 5.3% NM -24.0% -8.1% -21.0% -8.5% NM 22.8% 3.4%
% Change Q/Q 3.0% 13.7% -107.3% NM 31.6% 13.7% 10.6% 1.5% -1.2% -5.0% -27.9% 12.3% 2.8% 10.0% 5.2% 3.3%
Acquistion-related costs 1.5 2.2 3.2 8.4 15 9.0 13.6 14.8 10.0 47 10.0 10.0 10.0 10.0 40
Other adjustments 0.5 1.9 5.7 (2.4) (2.4) 2.7 7.6 13.1 8.8 19.0 48.5 18.0 18.0 18.0 18.0 72.0
Options expense adjustment 122.9 32.0 36.4 36.8 32.0 137.2 35.6 34.9 38.6 38.7 147.9 42.8 49.8 50.2 50.4 193.1 50.6 50.8 51.0 51.2 203.4
Adjusted EPS $0.59 $0.67 ($0.05) $0.56 $1.78 $0.75 $0.87 $0.92 $0.94 $3.48 $0.97 $0.94 $0.68 $0.79 $3.37 $0.80 $0.87 $0.91 $0.94 $3.52
Fully Adjusted EPS (no Options) $2.78 $0.71 $0.81 $0.10 $0.69 $2.31 $0.88 $0.98 $1.08 $1.10 $4.04 $1.10 $1.08 $0.84 $0.79 $3.81 $0.80 $0.87 $0.91 $0.93 $3.52
% Change Y/Y 12.5% -1.5% 13.4% -85.0% -1.3% -16.8% 23.8% 20.5% ###### 59.5% 75.1% 25.0% 10.5% -22.6% -28.3% -5.8% -27.3% -19.6% 8.4% 18.7% -7.8%
% Change Q/Q 2.2% 14.3% -88.2% 619.0% 28.1% 11.3% 10.5% 1.2% 0.4% -1.6% -22.6% -6.3% 1.9% 8.8% 4.4% 2.6%

Source: Company reports and J.P. Morgan estimates.

Table 6: Xilinx Balance Sheet

$ in millions
$ m illions
Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q
FY end: March 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20E 1Q21E 2Q21E 3Q21E 4Q21E
ASSETS
Cash & short-term investments 3,647.6 3,560.2 3,541.6 3,447.6 3,364.2 3,280.6 3,469.7 3,175.7 2,883.1 2,515.8 2,425.2 4,506.2 4,436.2 4,368.7 4,291.9 4,130.0
Accounts receivable, net 268.3 286.9 352.8 372.1 456.9 373.0 359.4 335.2 306.0 335.5 253.5 253.5 253.5 253.5 253.5 253.5
Inventories 215.2 215.4 226.5 236.1 247.0 243.6 283.3 315.4 336.8 335.3 328.2 230.3 242.3 251.8 270.8 280.3
Deferred income taxes & other current assets 96.9 109.8 76.9 88.7 57.4 68.1 60.0 65.8 63.7 71.4 121.1 121.1 121.1 121.1 121.1 121.1
Total Current Assets 4,227.9 4,172.2 4,197.9 4,144.5 4,125.5 3,965.3 4,172.4 3,892.0 3,589.6 3,258.0 3,128.0 5,111.1 5,053.1 4,995.1 4,937.3 4,784.9
Quick Assets 3,915.8 3,847.1 3,894.4 3,819.7 3,821.1 3,653.5 3,829.0 3,510.8 3,189.1 2,851.3 2,678.7 4,759.8 4,689.7 4,622.3 4,545.5 4,383.5
Fixed Assets 303.2 304.1 304.0 304.1 312.1 312.8 317.3 328.9 350.6 362.2 378.2 381.9 380.6 379.3 378.0 376.7
Investments & others 106.9 99.9 102.4 97.9 91.7 91.6 83.8 53.4 54.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Goodwill, Intangibles, Other 449.1 454.6 515.4 509.2 525.9 777.8 781.3 877.0 972.9 1,399.7 1,445.0 1,445.0 1,445.0 1,445.0 1,445.0 1,445.0
Total Assets 5,087.1 5,030.9 5,119.6 5,055.7 5,055.2 5,147.5 5,354.8 5,151.3 4,967.9 5,019.9 4,951.2 6,938.0 6,878.7 6,819.4 6,760.3 6,606.5
LIABILITIES
Accounts payable, accrued liabilities
& deferred incom e 396.1 372.3 429.4 412.9 372.0 431.9 453.0 475.0 497.1 505.8 515.9 515.9 515.9 515.9 515.9 515.9
Deferred Income on Shipm ents to Distributors 43.8 51.0 33.0 25.2 71.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Convertible Debt + Deferred Tax Liabilities 0.0 0.0 0.0 499.2 499.4 499.6 499.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Current Liabilities 439.8 423.2 462.4 937.2 942.6 931.5 952.9 475.0 497.1 505.8 515.9 515.9 515.9 515.9 515.9 515.9
Deferred tax liabilities 346.6 359.3 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Long term debt 1,737.4 1,738.7 1,730.2 1,214.4 1,207.4 1,201.9 1,221.4 1,234.8 1,245.3 1,245.6 1,246.0 1,246.0 1,246.0 1,246.0 1,246.0 1,246.0
Other 25.0 23.6 562.3 573.7 586.6 569.2 543.3 580.0 612.9 572.5 548.2 548.2 548.2 548.2 548.2 548.2
Total Stockholders' Equity 2,538.3 2,486.1 2,364.6 2,330.2 2,318.6 2,444.9 2,637.2 2,861.5 2,612.6 2,695.9 2,641.2 4,628.0 4,568.6 4,509.3 4,450.2 4,296.5
Total Liabilities & Stockholders' Equity 5,087.1 5,030.9 5,119.6 5,055.7 5,055.2 5,147.5 5,354.8 5,151.3 4,967.9 5,019.9 4,951.2 6,938.0 6,878.7 6,819.4 6,760.3 6,606.5

Source: Company reports and J.P. Morgan estimates.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

Table 7: Xilinx Cash Flow Statement

$ in millions
$ millions
Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q Jun-Q Sep-Q Dec-Q Mar-Q
FY end: March 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20E 4Q20E 1Q21E 2Q21E 3Q21E 4Q21E
GAAP Net income (loss) 157.2 173.8 (12.5) 193.9 190.0 215.7 239.4 244.6 241.5 227.0 162.0 (21.3) (18.2) (18.3) (18.4) (113.2)
Change in accounting principle
Pro-forma net income
Depreciation and amortization 15.0 15.2 16.9 49.7 22.4 24.2 26.0 32.9 31.7 41.6 30.3 30.3 30.3 30.3 30.3
Deferred income taxes (9.0) (24.0) 11.3
Stock compensation 32.0 36.4 36.8 48.6 35.6 34.9 38.6 38.7 42.8 49.8 50.2 50.4 50.6 50.8 51.0 51.2
Tax benefit from stock options
Other 27.3 13.6 (398.8) 15.3 (7.1) 14.4 1.4 30.0 (12.4) (7.2) (28.8)
Changes in working capital
Account receivable (24.3) (18.6) (66.0) (19.3) (74.7) 83.9 13.6 24.2 29.2 (23.7) 82.0 0.0 0.0 0.0 0.0 0.0
Inventories 11.7 (0.2) (11.1) (9.5) (10.9) 4.0 (39.7) (32.0) (21.4) 6.7 7.0 97.9 (12.0) (9.5) (19.0) (9.5)
Deferred income taxes
Other current as sets (5.0) (13.4) 9.7 (1.1) 2.1 (7.9) 18.9 (17.8) 0.6 (2.5)
Other ass ets (8.7) (4.0) (14.6) 5.0 (7.8) (9.8) (7.5) (2.3) (13.4) 0.9
Account payable (3.0) (17.5) 1.6 2.3 9.3 (4.8) 6.5 0.1 (9.1) (10.7) 10.1 0.0 0.0 0.0 0.0 0.0
Other accrued liabilities 2.5 20.9 35.1 (9.6) (32.4) 45.6 17.5 15.9 (13.8) 13.9
Income tax payable (12.9) (5.1) 581.1 3.0 49.5 (87.1) 8.3 12.4 21.3 (73.5)
Deferred income on shipment to distributors (10.8) 7.2 (18.0) (7.8) 0.0 0.0 0.0 0.0 0.0
Net cash from operating activities 180.9 208.4 160.3 270.5 176.2 313.1 313.9 288.0 298.2 223.7 324.0 157.3 50.7 53.3 43.9 (41.2)

Sales/(Purchas es) of ST investments (219.3) 108.9 (161.7) (898.6) (403.9) 365.0 (220.3) (1,703.9) 346.1 440.7
Property, plant and equipment (9.9) (12.2) (6.8) (21.0) (26.4) (14.2) (20.3) (28.2) (29.2) (33.6) (34.1) (30.0) (25.0) (25.0) (25.0) (25.0)
Other (3.0) (5.5) (9.3) 2,186.7 (13.9) (234.9) (22.7) 1,633.2 3.5 (9.0)
Net cash from investing activitites (232.2) 91.2 (177.8) 1,267.1 (444.2) 115.9 (263.2) (99.0) 295.3 (31.4) (34.1) (30.0) (25.0) (25.0) (25.0) (25.0)

Acquisition of treasury s tock (67.1) (170.5) (73.3) (163.4) (137.3) (23.2) (1.0) 0.0 (445.0) (32.3) (260.9) 0.0 0.0 0.0 0.0 0.0
Proceeds from issuance of com mon stock 1.1 18.3 0.2 27.9 0.2 18.2 0.0 30.2 0.0 19.8 (3.6) 0.0 0.0 0.0 0.0 0.0
Payment of dividends (87.3) (87.0) (89.5) (89.3) (90.7) (91.1) (91.1) (91.4) (94.0) (93.5) (92.9) (92.9) (95.7) (95.7) (95.7) (95.7)
Other/Repurchase of debt 287.3 (43.4) (3.0) (16.6) (6.2) (35.7) (3.7) (512.9) (9.0) (72.6)
Net cash from financing activities 134.0 (282.5) (165.6) (241.5) (233.9) (131.8) (95.8) (574.0) (548.0) (178.5) (357.4) (92.9) (95.7) (95.7) (95.7) (95.7)

Net change in cash 82.7 17.1 (183.2) 1,296.1 (501.9) 297.2 (45.1) (385.0) 45.5 13.8 (67.6) 34.4 (70.0) (67.5) (76.8) (161.9)
Cash and equivalents at beginning of period 966.7 1,049.4 1,066.4 883.2 2,179.3 1,677.4 1,974.6 1,929.5 1,544.5 1,590.0 1,603.8 1,536.2 1,570.6 1,500.6 1,433.1 1,356.3
Cash and equivalents at end of period 1,049.4 1,066.4 883.2 2,179.3 1,677.4 1,974.6 1,929.5 1,544.5 1,590.0 1,603.8 1,536.2 1,570.6 1,500.6 1,433.1 1,356.3 1,194.4

Source: Company reports and J.P. Morgan estimates.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

Xilinx: Summary of Financials

Income Statement - Annual FY18A FY19A FY20E FY21E FY22E Income Statement - Quarterly 1Q20A 2Q20A 3Q20A 4Q20E
Revenue 2,467 3,059 3,169 3,354 - Revenue 850A 833A 723A 762
COGS (743) (956) (1,062) (1,100) - COGS (287)A (293)A (240)A (242)
Gross profit 1,724 2,103 2,106 2,254 - Gross profit 563A 540A 483A 520
SG&A (362) (398) (442) (452) - SG&A (107)A (112)A (110)A (113)
Adj. EBITDA 783 1,029 940 1,028 - Adj. EBITDA 284A 235A 201A 220
D&A (63) (73) (136) (121) - D&A (33)A (32)A (42)A (30)
Adj. EBIT 686 957 804 907 - Adj. EBIT 251A 204A 159A 190
Net Interest 5 12 38 0 - Net Interest 12A 12A 6A 8
Adj. PBT 691 968 842 907 - Adj. PBT 263A 216A 166A 198
Tax (227) (79) (30) (75) - Tax (21)A 11A (4)A (16)
Minority Interest - - - - - Minority Interest - - - -
Adj. Net Income 464 892 861 904 - Adj. Net Income 249A 240A 171A 201
Reported EPS 1.78 3.47 3.18 3.24 - Reported EPS 0.94A 0.89A 0.64A 0.72
Adj. EPS 1.78 3.48 3.37 3.52 - Adj. EPS 0.97A 0.94A 0.68A 0.79
DPS 1.40 1.44 1.48 1.48 - DPS 0.37A 0.37A 0.37A 0.37
Payout ratio 78.5% 41.5% 46.5% 45.6% - Payout ratio 39.5%A 41.6%A 57.7%A 51.7%
Shares outstanding 260 257 255 257 - Shares outstanding 258A 255A 253A 254
Balance Sheet & Cash Flow Statement FY18A FY19A FY20E FY21E FY22E Ratio Analysis FY18A FY19A FY20E FY21E FY22E
Cash and cash equivalents 3,448 3,176 4,506 4,130 - Gross margin 69.9% 68.8% 66.5% 67.2% -
Accounts receivable 372 335 254 254 - EBITDA margin 31.7% 33.6% 29.7% 30.7% -
Inventories 236 315 230 280 - EBIT margin 27.8% 31.3% 25.4% 27.0% -
Other current assets 89 66 121 121 - Net profit margin 18.8% 29.2% 27.2% 27.0% -
Current assets 4,144 3,892 5,111 4,785 -
PP&E 304 329 382 377 - ROE 19.2% 34.4% 23.0% 20.3% -
LT investments - - - - - ROA 9.5% 17.5% 14.2% 13.4% -
Other non current assets 607 930 1,445 1,445 - ROCE 11.5% 21.6% 15.6% 14.6% -
Total assets 5,056 5,151 6,938 6,607 - SG&A/Sales 14.7% 13.0% 13.9% 13.5% -
Net debt/equity NM NM NM NM -
Short term borrowings 499 0 0 0 -
Payables 413 475 516 516 - P/E (x) 55.3 28.3 29.2 28.0 -
Other short term liabilities 25 0 0 0 - P/BV (x) 10.9 8.9 5.4 5.8 -
Current liabilities 937 475 516 516 - EV/EBITDA (x) 29.6 22.3 23.0 21.4 -
Long-term debt 1,214 1,235 1,246 1,246 - Dividend Yield 1.4% 1.5% 1.5% 1.5% -
Other long term liabilities 574 580 548 548 -
Total liabilities 2,725 2,290 2,310 2,310 - Sales/Assets (x) 0.5 0.6 0.5 0.5 -
Shareholders' equity 2,330 2,862 4,628 4,296 - Interest cover (x) NM NM NM - -
Minority interests - - - - - Operating leverage (38.2%) 164.5% (446.2%) 220.0% -
Total liabilities & equity 5,056 5,151 6,938 6,607 -
BVPS 9.03 11.08 18.31 17.00 - Revenue y/y Growth 5.0% 24.0% 3.6% 5.9% -
y/y Growth (3.7%) 22.7% 65.2% (7.1%) - EBITDA y/y Growth 2.7% 31.5% (8.7%) 9.4% -
Net debt/(cash) (1,734) (1,941) (3,260) (2,884) - Tax rate 32.9% 8.1% 3.5% 8.3% -
Adj. Net Income y/y Growth (37.8%) 92.4% (3.5%) 5.0% -
Cash flow from operating activities 820 1,091 1,003 107 - EPS y/y Growth (35.8%) 95.2% (3.0%) 4.5% -
o/w Depreciation & amortization 63 73 136 121 - DPS y/y Growth 13.1% 2.9% 2.8% 0.0% -
o/w Changes in working capital 400 (23) 102 (50) -
Cash flow from investing activities 948 (691) 200 (100) -
o/w Capital expenditure (50) (89) (127) (100) -
as % of sales 2.0% 2.9% 4.0% 3.0% -
Cash flow from financing activities (556) (1,036) (1,177) (383) -
o/w Dividends paid (353) (364) (373) (383) -
o/w Net debt issued/(repaid) 224 (558) (82) 0 -
Net change in cash 1,213 (635) 26 (376) -
Adj. Free cash flow to firm 770 1,002 876 7 -
y/y Growth (10.7%) 30.1% (12.6%) (99.2%) -
Source: Company reports and J.P. Morgan estimates.
Note: $ in millions (except per-share data).Fiscal year ends Mar. o/w - out of which

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10

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Xilinx (XLNX, XLNX US) Price Chart Date Rating Price ($) Price Target
($)
238 27-Apr-17 N 59.99 63
N $67 UW $70 UW $74 27-Jul-17 N 65.32 65
204 26-Oct-17 N 70.72 67
N $65 UW $68 UW $70 UW $108 25-Jan-18 N 73.48 73
170
06-Apr-18 UW 70.70 68
N $63 N $73 UW $68 UW $88 UW $88
26-Apr-18 UW 63.64 70
136
Price($)
23-May-18 UW 71.67 68
26-Jul-18 UW 67.97 70
102
25-Oct-18 UW 69.04 74
68 24-Jan-19 UW 89.55 88
25-Apr-19 UW 139.72 108
34 24-Oct-19 UW 93.83 88

0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
17 17 17 17 18 18 18 18 19 19 19 19 20

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Jun 29, 2001. All share prices are as of market close on the previous business day.

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if
applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy
reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a
recommendation or a rating. In our Asia (ex-Australia and ex-India) and U.K. small- and mid-cap equity research, each stock’s expected
total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it
does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P.
Morgan’s research website, www.jpmorganmarkets.com.
Coverage Universe: Sur, Harlan: Advanced Micro Devices (AMD), Analog Devices (ADI), Applied Materials (AMAT), Broadcom Inc
(AVGO), Cypress Semiconductor (CY), Inphi (IPHI), Intel (INTC), KLA Corporation (KLAC), Lam Research (LRCX), MACOM
(MTSI), Marvell Technology Group (MRVL), Maxim Integrated Products (MXIM), Mellanox Technologies (MLNX), Microchip
Technology (MCHP), Micron Technology (MU), NVIDIA Corporation (NVDA), NXP Semiconductors (NXPI), ON Semiconductor
Corporation (ON), Texas Instruments (TXN), Vishay Intertechnology (VSH), Western Digital (WDC), Xilinx (XLNX)

J.P. Morgan Equity Research Ratings Distribution, as of January 02, 2020

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage 45% 41% 15%
IB clients* 51% 47% 39%
JPMS Equity Research Coverage 43% 42% 14%
IB clients* 75% 64% 56%
*Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided investment banking services
within the previous 12 months. Please note that the percentages might not add to 100% because of rounding.
For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating
category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
This information is current as of the end of the most recent calendar quarter.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered
companies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analyst

11

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 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

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12

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 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

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13

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 29 January 2020
[email protected]

"Other Disclosures" last revised January 01, 2020.

Copyright 2020 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold or
redistributed without the written consent of J.P. Morgan. #$J&098$#*P

14
Completed 29 Jan 2020 02:40 AM EST Disseminated 29 Jan 2020 03:11 AM EST
This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.