CHROMA - Annual Report 2019 | FinancialReports.eu

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Spokesperson of Chroma ATE Inc.

Name: Paul Ying

Position: Vice President, Finance & Administration Center

TEL: (03)327-9999 ext. 2001

Email: [email protected]

Deputy spokesperson of Chroma ATE Inc.

Name: Jennifer Chien

Position: Director, Investor Relation & Corporate Investment, Finance & Administration Center

TEL: (03)327-9999 ext. 2701

Email: [email protected]

Addresses and telephone numbers of company headquarters and subsidiaries:
Company HQ address: 66 Huaya 1st Road, Guishan, Taoyuan 33383, Taiwan TEL: (03)327-9999

Factory address: 68 Huaya 1st Road, Guishan, Taoyuan 33383, Taiwan

TEL: (03)327-9999

Hsinchu Branch office address: 6F, No. 5, Technology Rd., Science Park, Hsinchu City 30078, Taiwan

TEL: (03)563-5788

Kaohsiung Branch office address: No.1, Beineihuan E. Rd., Nanzi Dist., Kaohsiung City

81170, Taiwan

TEL: (07)365-6188

Stock transfer agent
Name: Taishin International Bank

Address: B1, No. 96, Section 1, Jianguo North Road, Taipei City 10499, Taiwan Website: http://www.taishinbank.com.tw

TEL: (02)2504-8125

Certified Public Accountant (CPA) for the most recent financial report
Name: CPA Cheng-Ming Lee and CPA Wen-Chi Kuo

Name of accounting firm: Deloitte & Touche

Address: 20F, Taipei Nan Shan Plaza, No. 100, Songren Rd., Xinyi Dist., Taipei 11073, Taiwan Website: http://www.deloitte.com.tw

TEL: (02)2725-9988

Name of any overseas securities trading agency and search name in the said overseas securities trading agency: None
Company website: http://www.chromaate.com

Critical financial indicators (consolidated)

		Unit:	NT$ millions
			.
	2017	2018	2019
Consolidated operating revenue	14,901	16,931	13,910
Net income (attributable to the owner of the parent company)	2,558	2,546	1,854
Earnings per share, EPS (NT$)	6.41	6.22	4.48
Capital stock	4,119	4,168	4,193
Total assets	22,018	23,202	25,437
Total equity	13,463	14,690	14,785
Return on total assets	12.68	11.37	7.80
Return on total equity	21.46	18.42	12.83

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Net income after tax for the 5
Consolidated revenue for the 5
most recent years
most recent years
18000 16931 3000
17000 2800
16000 14901 2558 2546
2600
15000 13910
14000 2400
13000 11624 2200
12000 2000 1854
11000 9692 1800 1720
10000
1600
9000
8000 1400 1237
7000 1200
6000 1000
5000
800
4000
3000 600
2000 400
1000 200
0
0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
Unit: million NT$
Unit: million NT$
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Earnings per share for the 5 most
recent years
7.0 6.41
6.5 6.22
6.0
5.5
5.0 4.53 4.48
4.5
4.0
3.5 3.28
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2015 2016 2017 2018 2019
Unit: NT$
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		Table of Contents	Table of Contents
Chapter	1	Report to Shareholders ................................................................................................ 1
Chapter	2	Company Introduction
		I.	Date of founding ................................................................................................ 2
		II.	Company overview ............................................................................................ 2
Chapter	3	Corporate Governance Report
		I.	Organization ....................................................................................................... 4
		II.	Directors, CEO, general managers, vice presidents, assistant vice
			presidents, and heads of various departments and branches .............................. 6
		III.	Operation of corporate governance .................................................................. 16
		IV.	CPA fees .......................................................................................................... 50
		V.	Replacement of CPAs ...................................................................................... 50
		VI.	The Corporation's Chairman, CEO, or any managerial officer in charge
			of finance or accounting matters who has held a position at the
			accounting firm of its CPAs or at an affiliated company in the most recent
			year ................................................................................................................... 50
		VII.	Shareholding transfer and equity pledge changes of Directors or
			Managerial Officers Holding More Than ten percent (10%) of Company
			shares during the Year of the Publication Date of Annual Report .................. 51
		VIII.	Information on the 10 largest shareholders who are related parties or each
			other's spouses and relatives within the second degree of kinship .................. 52
		IX.	Number of Shares Held and Combined Shareholdings Percentage in the
			Same Investment Business by the Company, the Company's Directors,
			Managers, and Companies Directly or Indirectly Controlled by the
			Company .......................................................................................................... 53
Chapter	4	Financing Status
		I.	Capital and shares ............................................................................................ 55
		II.	Corporate bond ................................................................................................. 62
		III.	Preferred shares ................................................................................................ 62
		IV.	Overseas depositary receipt ............................................................................. 62
		V.	Employee stock warrant ................................................................................... 63
		VI.	New restricted employee shares ....................................................................... 65
		VII.	Issuance of new shares in connection with the merger or acquisition of other
			companies ........................................................................................................ 67
		VIII.	Implementation of capital utilization plan ....................................................... 68

Chapter	5	Operation Summary	Operation Summary
		I.	Business content ............................................................................................... 70
		II.	Market, production and sales summary ........................................................... 79
		III.	Employee information in the two most recent years up to the publication
			date of this annual report .................................................................................. 87
		IV.	Environmental protection expenditure ............................................................. 87
		V.	Labor relations ................................................................................................. 88
		VI.	Important contracts .......................................................................................... 90
Chapter	6	Financial Summary
		I.	Condensed balance sheet and statement of comprehensive income in the
			five most recent years ...................................................................................... 91
		II.	Financial analysis in the five most recent years ............................................... 94
		III.	Audit Committee's audit report on financial statements in the most recent
			year ................................................................................................................... 97
		IV.	Financial report in the most recent year ........................................................... 98
		V.	Corporation-only financial report audited and attested by a CPA from the
			most recent year ............................................................................................... 98
		VI.	Financial condition of the Corporation and affiliated companies .................... 98
Chapter	7	Review and Analysis of Financial Condition and Performance, and Relevant Risk
		Events
		I.	Financial condition ........................................................................................... 99
		II.	Financial performance ................................................................................... 100
		III.	Cash flow ....................................................................................................... 101
		IV.	Impact of material expenditures on the Corporation's finances and
			operations in the most recent year ................................................................. 102
		V.	Investment policies in other companies, main reasons for profit / losses
			resulting therefrom, improvement plan, and investment plans for the
			upcoming year ................................................................................................ 102
		VI.	Risk analysis and assessment of the most recent year up to the publication
			date of this annual report ................................................................................ 104
		VII.	Other important matters ................................................................................. 109
Chapter	8	Special Notes
		I.	Information on affiliated companies .............................................................. 110
		II.	Private placement of securities in the most recent year up to the
			publication date of this annual report ............................................................. 116
		III.	Holding or disposition of the Corporation's shares by subsidiaries in the
			most recent year up to the publication date of this annual report .................. 116
		IV.	Other supplementary matters ......................................................................... 116
		V.	Any event that results in substantial impact upon shareholders’ equity or
			prices of the Corporation’s securities as prescribed by Article 36,
			Paragraph 3, Subparagraph 2 of the Securities and Exchange Act that
			have occurred in the most recent year up to the publication date of this
			annual report .................................................................................................. 116

Chapter 1 Report to Shareholders

Business results

The market sentiment in 2019 was continued from 2018, the trade war tension between U.S. and China still existed, which increased uncertainty to high-tech industries. As a result of impact from adopting manufacturing diversification and production shift out of China, most of capacities were ramp up in second half of 2019. Chroma ATE Inc. the consolidated sales revenues in year 2019 was NTD 13.9 billion, while the parent company sales revenues were 8.1 billion, with net income of 1.9 billion equaled to earnings per share of NTD 4.48.

In year 2019, Chroma consolidated testing equipment business was presented a growth of 10%. Particularly, the Semiconductor / Photonics sector sales revenues were increased 22%, mainly presence in 5G network infrastructure and AI related semiconductor demand increased. Despite of China cuts to EV subsidies, the test instruments & automatic testing system sector still presented a steady growth of 4%, due to the demand of EV related components, battery module / pack and related high power testing equipment and system. On the other hand, MAS business in year 2019 presented a large decline of 79%, due to solar industry slowing down. Hence, Chroma consolidated sales were declined by 18%. Other consolidated financial ratio stated as below:

Financial Performance for Year 2018 ~ 2019

Financial Performance for Year 2018 ~ 2019	Financial Performance for Year 2018 ~ 2019
Items		2019	2018
Capital Structure Analysis(%)	Debt Ratio(%)	41.87	36.69
	Long-term Fund to Fixed Assets Ratio(%)	557.61	508.27
Liquidity Analysis (%)	Current Ratio(%)	168.74	221.54
	Quick Ratio(%)	129.77	163.98
Profitability Analysis (%)	Return on Total Assets(%)	7.80	11.37
	Return on Equity Attributable to Shareholders of the Parent(%)	12.83	18.42
	Net Profit Margin(%)	13.33	15.04

Business plan, development strategies, external competition and environment, legal environment, and macro-business environment

Look forward to year 2020, U.S.-China trade war, technology warfare still continues, plus COVID-19 impact, which may cause supply chain disruption. The global economy remains a lot of uncertainty. To face those challenges, the Company’s strategies to secure sales growth and maximize shareholders’ returns are:

Focus on the demand of production relocation out of China.
Increase tier-one customers’ satisfaction through integrated Test Turnkey Solutions.
Active development of related testing equipment needs for megatrend of advanced semiconductor migration, AIOT and 5G communications.

Finally, we would like to express our gratitude to all our shareholders for their unstinted support and encouragement. We wish everyone good health and all the best.

Chairman & CEO Leo Huang

Chapter 2 Company Introduction

I. Date of founding: November 8, 1984

II. Company overview

November 8, 1984 Founded in Taipei city with a capital of NT$2 million. The first Chinese-invented programmable video signals generator (65MHz) was officially launched.
November 1986 The world's first synchronous parallel test architecture developed to automatically test switching power supplies.
February 1993 Invested in Chroma ATE Inc., a subsidiary in the US to set up the Corporation's sales office based in the United States.
December 1993 Official opening and operation of the new Wugu factory. February 1993 Invested in Neworld Electronics Ltd., a subsidiary in Hong Kong to expand the Corporation’s base in the Mainland China market.
December 1994 Granted the ISO9002 quality certification. November 1995 Successfully obtained the Chinese National Laboratory Accreditation (CNLA) from the Central Bureau of Standards.
December 1996 The Corporation was listed in the stock market for trading on December 21. August 1997 Granted the ISO9001 quality certification. December 1997 The 9107 Uninterruptible Power Supply and the 3203 Memory IC Tester won the 6th Taiwan Excellence Award.
April 1998 Honored with the 6th Industrial Technology Development Outstanding Performance Award from the Ministry of Economic Affairs (MOEA). Invested in DynaScan Technology Corp.
July 1998 The 7100 Color Analyzer won the Outstanding Photonics Product Award during the 2nd Photonics Festival in Taiwan.
September 1998 Invested in Adlink Technology Inc. December 1998 The 2225 and 2235 Series Video Pattern Generators and the 9105 Uninterruptible Power Supply won the 7th Taiwan Excellence Award.
May 1999 The 9105/9107 Uninterruptible Power Supply won the Excellent Product Design Award.
June 1999 Acquired Hita Technology Co., Ltd. September 1999 Invested in Chroma ATE Europe B.V., a subsidiary in the Netherlands to set up the Corporation's sales office based in Europe.
November 1999 Official opening and operation of the new Linkou factory. June 2000 First issuance of unsecured convertible corporate bonds in Taiwan worth NT$ 1.5 billion.
August 2000 Invested in EVT Technology Co., Ltd. January 2001 Acquired Zentech Tech Inc. March 2003 Set up a branch office in Hsinchu Science Park. September 2003 Set up the Global Corporate HQ in Taiwan. March 2004 Donated a 360-degree LED display to National Chiao Tung University, the first of its kind in a Taiwanese university.
December 2004 20th Anniversary of the Corporation and grand opening of the Linkou Operational HQ.
June 2005 Expiration and delisting of the first unsecured convertible corporate bonds issued in Taiwan Spun off the Special Material Business Unit (BU) to form a new subsidiary,
August 2006 Chroma New Material Corp.
September 2006 Grand opening of the Chroma ATE Suzhou plant in China.
2 -

January 2007	Invested in Wei Kuang Automatic Equipment (Nanjing) Co., Ltd., Mou Kuan	Invested in Wei Kuang Automatic Equipment (Nanjing) Co., Ltd., Mou Kuan
	Technologies (Nanjing) Co., Ltd., Sajet Technology Co., Ltd., and MAS
	Automation Corp.
February 2007	Invested in Wei Kuang Automation (Xiamen) Co., Ltd.
March 2007	Invested in Testar Electronics Corp.
April 2007	Established Manufacturing Execution System (MES) Business Unit.
March 2008	Simplified merger with subsidiary Silver Town Electronic Co., Ltd.
May 2008	Established Chroma Japan Corp.
March 2009	Granted the ISO 9001:2008 certification.
September 2009	Established Kaohsiung branch.
September 2009	Invested in Chroma Systems Solutions, Inc. to set up a sales location in the US.
August 2010	Acquired several prestigious awards from Finance Award in 2010, including the
	Best Managed Corporation Award, the Best Corporate Governance Award, and
	the Best Medium-sized Enterprise in Taiwan.
October 2010	Granted the ISO/TS 16949 certification.
August 2011	Acquired Wise Life Technology Co., Ltd.
January 2012	Successfully acquired the tender for the Industrial Development Zone (Tender A)
	in the Taoyuan International Airport Access MRT Station A7 Transit-Oriented
	Development Zone.
January 2012	The High Precision LED Rapid 2D Light and Color Measurement Technology
	Development Project successfully won the Excellent Industrial Contribution
	Award in the 2011	Technical Excellence Program from MOEA.
November 2012	Simplified merger of subsidiary Novatest Electronics Co., Ltd.
December 2012	Successfully acquired the world’s first SAE J1772 certification from UL for
	automated communication protocol testing system.
February 2013	Honored with the 1st Taiwan Mittelstand Award from the Industrial
	Development Bureau, MOEA.
February 2013	Invested in Adivic Technology Co., Ltd.
May 2014	Second issuance of unsecured convertible corporate bonds in Taiwan worth NT$
	2 billion.
January 2016	Invested in Quantel Private. Ltd. in Singapore to establish a sales location in
	Southeast Asia
January 2017	Received the Distinguished Enterprise Innovation Award, the highest honor from
	the 5th National Industrial Innovation Award.
August 2017	Established Innovative Nanotech, Inc.
September 2017	Established a subsidiary in Germany.
October 2017	Invested in Touch Cloud Inc.
October 2017	Honored with the “Best Trade Contribution Award” delivered by MOEA.
January 2018	The 61800 Series Regenerative Grid Simulator and the 3160C Tri-Temp Quad-
	Site Handler won the 26th Taiwan Excellence Award.
February 2018	Established Chroma Korea, a branch office in South Korea.
May 2018	Chroma Germany GmBH was granted the ISO 9001 certification.
January 2019	The 17040 Regenerative Battery Pack Test System and the 2238 Video Pattern
	Generator won the 27th Taiwan Excellence Award.
February 2019	Invested in Camtek Ltd. in Israeli.
September 2019	The Corporation entered into a joint building contract with Fu Yu
	Construction Co., Ltd.
October 2019	Chroma ATE in top 35 Best Taiwan Global Brands.
November 2019	Honored with the “	2019 Taiwan Corporate Sustainability Awards ”

Chapter 3 Corporate Governance Report

I. Organization
(I) Organizational structure

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(II) Responsibilities and functions of major departments


Department	Responsibilities
CEO Office	Establish the Corporate Marketing Department, the Legal Affairs Department, and the Safety and Health Center. Formulate company-wide administrative and business objectives, implement communication and coordination, product planning, new business development and planning, patent management and contract review, environmental protection, and occupational safetyand health(OSH)management.
Internal Auditor	Establish, update, and revise internal audit and control systems. Review,revise,and audit internal control systems.
Semiconductor Test Equipment BU	Responsible for the planning, research, and development (R&D), and marketingof semiconductor test equipment andproducts.
Test & Measurement BU	Responsible for the R&D and marketing of measurement instruments. In charge of calibration services as well as operations of calibration labs for measurement instruments.
Integrated System Solution BU	R&D of automated mechatronic systems used for measurement purposes. Responsible for the planning, R&D, and marketing of modular instruments and products. Responsible for the planning, R&D, and marketing of system integration solutions.
Intelligent Manufacturing System BU	Responsible for the R&D and marketing of MES systems.
Optical Inspection Solution BU	Responsible for the R&D and marketing of optical inspection system.
Manufacturing Center	Responsible for the raw material purchasing and production for the entire corporation. Responsible for theplanningand maintenance ofproductqualitysystem.
Advanced Technology Research Center	New technology planning and development, and supporting various BUs in understandingthe future development of new industries.
Finance & Administration Center	Consisting of the Financial Department, Accounting Department, HR Department, General Affairs Department, and Facilities Department. Financial Department: Responsible for capital planning and utilization for the entire corporation, assessing investment plans, and providing support for certain operations. Accounting Department: Responsible for establishing and implementing an accounting system, and handling various taxations and accounting affairs. HR Department: Planning HR resources, organizational development, and training for the entire company. General Affairs Department: Responsible for the purchase of routine equipment and items, as well as the management of equipment and fixed assets for the entire corporation. Facilities Department:Responsible for factorymaintenance and safety.
Operation Management Center	Responsible for building and managing the Company's operations management system. Establish the IT Department (including the IT System Development Section, the IT System Management Section, and the Data Control Section), carry out planning and safety controls for IT equipment and application systems throughout the entire corporation, and issuance and control of rules and regulations.

II. Directors, CEO, general managers, vice presidents, assistant vice presidents, and heads of various departments and branches (I) Director Information

																April 12,2020	April 12,2020	April 12,2020	April 12,2020
Title	Nationality or place of registration	Name	Gender	Date elected	Final date of term of office	Date of first election	Shares held when elected		Number of shares currently held		Shares held by spouse or minor children		Number/ percentage of shares held in the name of other persons	Major experience/academic background	Positions currently assumed in this Corporation or other companies	Any managerial officer, director, or supervisor who is a spouse or relative within the second degree of kinship			Remark
							Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage				Title	Name	Relation
Chairman	Republic of China	Leo Huang	Male	2017.06.08	2020.06.07	1984.10.23	23,419,897	5.78%	20,763,897	4.94%	9,294,362	2.21%	0	Bachelor of Electronics Engineering, National Chiao Tung University General Manager,Ko MaoCorp.	General Manager of the Company Director, I-Sheng Electric Wire & Cable Co., Ltd. Director, Leadtek Research Inc. Independent Director, Ichia Technologies, Inc. Representative of Corporate Director, Tian Zheng International Precision Machinery. Director, Twoway Communications Inc. Chairman, DynaScan Technology Corp. Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	Note 1
Independent director	Republic of China	Tsung- Ming Chung	Male	2017.06.08	2020.06.07	2002.05.21	0	0	0	0	0	0	0	Master of Business Administration, National Chengchi University Certified Public Accountant, Republic of China Licensed Accountant, State of Connecticut, USA Accountant, Deloitte & Touche Part-time Instructor, Department of Accounting, National Chengchi University Applied Accounting Instructor, College of Management, National Taiwan University	Chairman, Dynapack International Technology Corp. Representative of Corporate Director, Far Eastern International Bank Director, Vactronics Technologies Inc.	None	None	None	None
Independent director	Republic of China	Quincy Lin	Male	2017.06.08	2020.06.07	2005.05.18	0	0	0	0	0	0	0	Ph.D. in Business Administration, University of Kentucky, USA Senior Vice President, Taiwan Semiconductor Manufacturing Co., Ltd Chairman, Neo Solar Power Corporation	Chairman, Rafael Microelectronics Inc. Chairman, V5 Technologies Co., Ltd. Director, Co-founder and Strategy Consultant, United Renewable Energy Co., Ltd. Independent director, Powertech Technology Inc.	None	None	None	None
Independent director	Republic of China	Tai-Jen George Chen	Male	2017.06.08	2020.06.07	2017.06.08	0	0	0	0	0	0	0	Department of Atmospheric Sciences, State University of New York, USA Academic Vice President of National Taiwan University Vice President for Academic Affairs, National Taiwan University Professor, Department of Atmospheric Sciences, National Taiwan University	Chair Professor, National Taiwan University Independent Director, Ichia Technologies Inc.	None	None	None	None

Director	Republic of China	I-Shih Tseng	Male	2017.06.08	2020.06.07	2012.06.06	383,548	0.09%	424,548	0.10%	238,722	0.06%	0	PhD, Mechanical Engineering, Pennsylvania State University, US Project Manager, Institute for Information Industry	BU President of the Company Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None
Director	Republic of China	Tsun-I Wang	Male	2017.06.08	2020.06.07	2005.05.18	19,339	0	19,339	0	936	0	0	Ph.D., Institute of Electro- Engineering, National Chiao Tung University Vice President, Tailyn Technologies, Inc. Vice President, Champion-Lighting Technologies Limited	Chief Technology Officer, DynaScan Technology Corp. Independent Director, Dynapack International Technology Corp. Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None
Director	Republic of China	Chung- Ju Chang	Male	2017.06.08	2020.06.07	2012.11.01	0	0	0	0	0	0	0	PhD of Electrical Engineering,	Lifetime Chair Professor, Department of Electrical Engineering, National Chiao Tung University Director, Ting-Shiun Telecommunication Development Foundation Director, National Information Infrastructure Enterprise Promotion Association	None	None	None	None
														National Taiwan University
														Chair Professor, Department of Electrical and Computer Engineering, National Chiao Tung University Vice President for R&D, Office of Research and Development, National Chiao Tung University
														Chairman and Director, the Institute
														of Communications Engineering,
														National Chiao Tung University

Note 1: If the chairman of the Board and the CEO or their equivalent (chief manager) are the same person, each other’s spouse, or a relative of the first degree of kinship, the reason, reasonableness, necessity, and response measures (e.g. increase the number of independent directors and more than half of the directors do not concurrently serve as employees or managers) shall be stated: (1) The chairman of the Company holds the concurrent position as the CEO to enhance the overall operating efficiency and decision execution of the Group. In order to reinforce the independence of the Board, the Company has set up three independent directors, representing 3/7 of the total number of directors of the Company.

(2) In order to enhance the functions of the Board and strengthen the supervisory function, the Company has the following measures: 2. The three independent directors of the Company have extensive working experience in financial accounting, operation management, and electronics industry, respectively, and can carry out their supervisory functions effectively. 3. Members of the Audit Committee and the Remuneration Committee of the Company consist of independent directors, and all committees can thoroughly discuss and make recommendations for the Board’s decision to implement corporate governance.

Director Information

Criteria Name	Does the individual have more than 5 years of professional experience and the following qualifications?	Does the individual have more than 5 years of professional experience and the following qualifications?	Does the individual have more than 5 years of professional experience and the following qualifications?	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Currently serving as an independent director in other public companies
	Currently serving as an instructor or in higher positions in a private or public college or university in the field of business, law, finance, accounting, or the business sector of the Company	Currently serving as a judge, prosecutor, lawyer, certified public accountant or other professional or technician that must undergo national examinations and specialized license	Professional experience necessary for business administration, legal affairs, finance, accounting or company sales	1	2	3	4	5	6	7	8	9	10	11	12
Leo Huang																1
Tsung-Ming Chung																0
QuincyLin																1
Tai-Jen George Chen																1
I-Shih Tseng																0
Tsun-I Wang																1
Chung-Ju Chang																0

Note: Please check “ ✓ ” the corresponding boxes if the directors meet the following conditions during the two years prior to the nomination and during the term of office. 

(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or is ranked in the top 10 in shareholdings.
(4) Not a manager in (1) or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in (2) and (3).
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the company or of a corporate shareholder that ranks among the top five in shareholdings. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(6) Not a director, supervisor, or employee of another company that holds director seats in the Company or more than half of the shares with voting rights and is controlled by the same person. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(7) Not a director (a member of the governing board), supervisor (a member of the supervising board) or employee of a company or institution which is the same person or spouse as the chairman, general manager, or equivalent of the Company. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(8) Not a director (a member of the governing board), supervisor (a member of the supervising board), managerial officer or shareholder who holds more than 5% of the shares of a specified company or institution that has a financial or business relationship with the Company. Not applicable in cases where the specified company or institution holds more than 20% of the total number of issued shares of the Company and not more than 50% and the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(9) Not a professional individual or owner, partner, director (a member of the governing board), supervisor (a member of the supervising board), managerial officer and his/her spouse of a professional, sole proprietorship, partnership, company or institution that provides audit services to the Company or an affiliated enterprise or has received remuneration in the 2 most recent years not exceeding NT$500,000 for business, legal, financial and accounting related services. However, members of the special committee on remuneration, public acquisition review, or merger and acquisition who perform their functions and powers in accordance with the provisions of the Securities and Exchange Act or Business Mergers and Acquisitions Act and other relevant regulations shall not be subject to this provision.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Where none of the circumstances in the subparagraphs of Article 30 of the Company Act applies.
(12) Where the person is not elected in the capacity of the government, a juristic person, or a representative thereof as provided in Article 27 of the Company Act
8 -

(II) CEO, general managers, vice presidents, assistant managers, and heads of various departments and branches

													April 12,2020	April 12,2020	April 12,2020	April 12,2020
Title	Nationality	Name	Gender	Date of appointment	Shares held		Shares held by spouse or minor children		Shares held in the name of other persons		Major experience/academic background	Positions currently assumed in other companies	Any managerial officer who is a spouse or a relative within the second degree of kinship			Remark
					Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage			Title	Name	Relation
CEO	Republic of China	Leo Huang	Male	1984.11.08	20,763,897	4.94%	9,294,362	2.21%	0	0	Bachelor of Electronics Engineering, National Chiao Tung University	Director of I-Sheng Electric Wire & Cable Co., Ltd, Director ofLeadtek Research Inc.,Independent Director of Ichia Technologies, Inc. Representative of Legal Person Director of Tian Zheng International Precision Machinery, and Director of Twoway Communications Inc, Chairman, DynaScan Technology Corp. Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	Note 2
General Manager, Test & Measurement BU	Republic of China	David Yang	Male	1992.08.14	62,352	0.01%	0	0	0	0	Bachelor of Electronics Engineering, National Chiao Tung University Teaching Assistant, Department of Information Technology, College of Engineering, Chung Hua University	Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None
General Manager, Integrated System Solution BU	Republic of China	I-Shih Tseng	Male	1998.07.16	424,548	0.10%	238,722	0.06%	0	0	Mechanical Engineering, Pennsylvania State University, US Project Manager, Institute for Information Industry	Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None
General Manager, Intelligent Manufacturing System BU	Republic of China	Joe Lin	Male	2007.04.01	92,143	0.02%	0	0	0	0	Bachelor of Information Sciences, Cal Poly Pomona, USA General Manager, Sajet Technology Co., Ltd.	Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None
General Manager, Semiconductor Test Equipment BU	Republic of China	George Chang	Male	2006.08.01	38,600	0.01%	0	0	0	0	Master of Electrical and Control Engineering, National Chiao Tung University Manager, Business Department, Lian Li Co., Ltd.	None	None	None	None	None
Vice President, Finance & Administration Center	Republic of China	Paul Ying	Male	1999.05.03	189,969	0.05%	0	0	0	0	Master of Business Administration, New York Institute of Technology Vice President of Finance, Hsin Yu Energy Development Co.,Ltd.	Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None
Vice President, Operation Management Center	Republic of China	Benjamin Huang	Male	1992.06.22	174,723	0.04%	0	0	0	0	Bachelor of Electrical Engineering, National Taiwan University Vice President, R&D Department, Test & Measurement BU of the Company	None	None	None	None	None
Vice President, Manufacturing Center	Republic of China	Steven Liu	Male	1991.08.22	148,012	0.04%	738	0	0	0	Bachelor of Information & Communications, Chinese Culture University Department Manager, Property and Product Management Department of the Company	None	None	None	None	None
Vice President, Sales Department 1, Integrated System Solution BU	Republic of China	Herbert Tsai	Male	2005.07.01	1,974	0	0	0	0	0	Department of Machinery and Automation Engineering, Nanya Institute of Technology Vice President,Dasike TechnologyCompany	None	None	None	None	None
Vice President, CEO Office	Republic of China	C. C. Fan	Male	2010.08.01	276,235	0.07%	0	0	0	0	Bachelor of Industrial Engineering and Management, Minghsin University of Science and Technology Vice President, R&D Department, MAS Automation Corp.	None	None	None	None	None

Title	Nationality	Name	Gender	Date of appointment	Shares held	Shares held	Shares held by spouse or minor children	Shares held by spouse or minor children	Shares held in the name of other persons	Shares held in the name of other persons	Major experience/academic background	Positions currently assumed in other companies	Any managerial officer who is a spouse or a relative within the second degree of kinship	Any managerial officer who is a spouse or a relative within the second degree of kinship	Any managerial officer who is a spouse or a relative within the second degree of kinship	Remark
					Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage			Title	Name	Relation
Vice President, Planning Department, Test & Measurement BU	Republic of China	Bobby Tseng	Male	2001.01.01	6,000	0	0	0	0	0	Bachelor of Electrical Engineering, Waseda University Manager, Product Planning Department, Measurement Instrument BU of this Company	None	None	None	None	None
Vice President, Greater China Area Sales Department, Test & Measurement BU	Republic of China	Vincent Chen	Male	2001.01.01	66,260	0.02%	0	0	0	0	Bachelor of Electrical Engineering, Lunghwa University of Science and Technology Department Manager, Greater China Area Sales Department,Test & Measurement BU	Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None
Vice President, Technical Service Department, Test & Measurement BU	Republic of China	Tony Yang	Male	2003.07.01	92,554	0.02%	0	0	0	0	Department of Electrical Engineering, National Taitung Junior College Manager, Engineering Department, Tiger Power Co.,Ltd.	None	None	None	None	None
Vice President, R&D Department, Test & Measurement BU	Republic of China	Vincent Wu	Male	2003.07.16	80,465	0.02%	903	0	0	0	Master of Electrical and Control Engineering, National Chiao Tung University Department Manager, R&D Department, Test & Measurement BU of the Company	None	None	None	None	None
Vice President, R&D Department 1, Integrated System Solution BU	Republic of China	Lance Ouyang	Male	2009.07.01	30,500	0.01%	0	0	0	0	Master of Mechanical Engineering, National Chiao Tung University Vice President,Global Target Company	None	None	None	None	None
Vice President, Sales Department 2, Integrated System Solution BU	Republic of China	Jeff Lee	Male	2007.01.01	68,500	0.02%	0	0	0	0	Department of Electrical Engineering, Hsinpu Institute of Technology Department Manager, Product Planning Department, Integrated System Solution BU of the Company	None	None	None	None	None
Vice President, Planning Department, Test & Measurement BU	Republic of China	Kenny Wang	Male	1993.04.23	445,528	0.11%	0	0	0	0	Department of Electrical Engineering, Hsinpu Institute of Technology Manager, Product Planning Department, Measurement Instrument BU of this Company	None	None	None	None	None
Vice President, Planning Department, Test & Measurement BU	Republic of China	Cindy Tai	Female	2009.11.01	62,536	0.01%	0	0	0	0	Bachelor of Chemical Engineering Manager, Product Planning Department, Test & Measurement BU of the Company	None	None	None	None	None
Vice President, Planning Department, Test & Measurement BU	Republic of China	Galen Chou	Male	1996.07.01	21,000	0.01%	0	0	0	0	Master of Electrical and Control Engineering, National Chiao Tung University Manager, Product Planning Department, Measurement Instrument BU of this Company	None	None	None	None	None
Vice President, Marketing Department, the Smart Manufacturing System BU	Republic of China	Arno Wu (Note 1)	Male	2007.04.01	13,450	0	0	0	0	0	Department of Business Management, Tamkang University Assistant Vice President, Sajet Technology	Refer to Page 113 to 114 for details on positions assumed in affiliated companies	None	None	None	None

Note 1: Promoted to Vice President on 2020.2.1.

Note 2: If the chairman of the Board and the CEO or their equivalent (chief manager) are the same person, each other’s spouse, or a relative of the first degree of kinship, the reason, reasonableness, necessity, and response measures (e.g. increase the number of independent directors and more than half of the directors do not concurrently serve as employees or managers) shall be stated:

(1) The chairman of the Company holds the concurrent position as the CEO to enhance the overall operating efficiency and decision execution of the Group. In order to reinforce the independence of the Board, the Company has set up three independent directors, representing 3/7 of the total number of directors of the Company. The Chairman also maintains adequate communication with each director on the Company’s operating status and performance in order to implement corporate governance.

(2) In order to enhance the functions of the Board and strengthen the supervisory function, the Company has the following measures: 2. The three independent directors of the Company have extensive working experience in financial accounting, operation management, and electronic related industry and are able to effectively carry out their supervisory functions. 3. Members of the Audit Committee and the Remuneration Committee of the Company consist of independent directors, and all committees can thoroughly discuss and make recommendations for the Board’s decision to implement corporate governance.

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(III) Remuneration paid to directors, CEO, general managers and vice presidents in the most recent year

1. Remuneration for directors (including independent directors)

	1.	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)	Remuneration for directors (including independent directors)
												Unit: NT$thousands
Title	Name (Note 1)	Director’s remuneration								Proportion of NIAT after summing four items: A, B, C, and D (Note 4)		Remuneration paid to concurrent employee								Proportion of NIAT after summing the seven items of A, B, C, D, E, and F (Note 4)		Compensation paid to directors from an invested company other than the Company’s subsidiaries or parent company (Note 7)
		Remuneration (A)		Retirement pension (B)		Bonus for directors (C) (Note 2)		Allowances (D) (Note 3)				Salaries, bonuses, and special expenses (E) (Note 5)		Retirement pension (F)		Employee bonus (G) (Note 6)
		The Company	All companies listed in the financial statements (Note 8)	The Company	All companies listed in the financial statements (Note 8)	The Company	All companies listed in the financial statements (Note 8)	The Company	All companies listed in the financial statements (Note 8)	The Company	All companies listed in the financial statements (Note 8)	The Company	All companies listed in the financial statements (Note 8)	The Company	All companies listed in the financial statements (Note 8)	The Company		All companies listed in the financial statements (Note 8)		The Company	All companies listed in the financial statements (Note 8)
																Amount of cash	Amount of shares	Amount of cash	Amount of shares
Director	Leo Huang	0	0	0	0	6,000	6,685	450	450	0.35%	0.38%	9,429	9,429	291 (Note 9)	291 (Note 9)	16,050	0	17,420	0	1.74%	1.85%	4,525
	I-Shih Tseng
	Tsun-I Wang
	Chung-Ju Chang
Independent director	Tsung-Ming Chung	0	0	0	0	3,600	3,600	360	360	0.21%	0.21%	0	0	0	0	0	0	0	0	0.21%	0.21%	0
	Quincy Lin
	Tai-Jen George Chen
1. Description of the policies, systems, standards, and structure of the remuneration packages of independent directors and their correlations with the amount of remuneration paid, taking into account their responsibilities, risks, and time commitment: Bonus paid by the Company mainly comprises bonus for directors. According to Article 34 of the Company's Articles of Incorporation, bonus distributed to directors shall not be greater than 1.5% of the Company's net income before taxes before deducting bonus distributed to employees and directors in the current year. The independent directors' bonus distribution policy not only takes into account the operating performance of the entire corporation, but also individual director's contributions to the performance of the Company. The Remuneration Committee and the Board review the remuneration of the Directors, and the remuneration system is reviewed from time to time based on actual operating conditions, to strike a balance between the Company’s sustainable operation and risk control. 2. Except for information disclosed above, remuneration paid for services rendered by Directors of the Company to all consolidated entities (e.g. serving as a non-employee consultant) in the most recent fiscal year: NT$ 360,000.

Remuneration range

	Remuneration range	Remuneration range	Remuneration range	Remuneration range
Remuneration range for each director in the Company	Name of director
	Sum of the first 4 items(A+B+C+D)		Sum of the first 7 items(A+B+C+D+E+F+G)
	The Company	Parent company and all reinvested businesses(Note 7)	The Company	Parent company and all reinvested businesses (Note 7)
Less than NT$1,000,000
NT$ 1,000,000 (inclusive) to 2,000,000 (not inclusive)	I-Shih Tseng, Tsun-I Wang, Chung-Ju Chang, Tsung-Ming Chung, Quincy Lin, Tai-Jen George Chen	I-Shih Tseng, Tsun-I Wang, Chung-Ju Chang, Tsung-Ming Chung, Quincy Lin, Tai-Jen George Chen	Tsun-I Wang, Chung-Ju Chang, Tsung-Ming Chung, Quincy Lin, Tai-Jen George Chen	Chung-Ju Chang, Quincy Lin, Tsung-Ming Chung, Tai-Jen George Chen
NT$2,000,000(inclusive)to 3,500,000(not inclusive)	Leo Huang	Leo Huang
NT$3,500,000(inclusive)to 5,000,000(not inclusive)
NT$5,000,000(inclusive)to NT$10,000,000(not inclusive)			I-Shih Tseng	I-Shih Tseng,Tsun-I Wang
NT$10,000,000(inclusive)to NT$15,000,000(not inclusive)			Leo Huang
NT$15,000,000(inclusive)to NT$30,000,000(not inclusive)				Leo Huang
NT$30,000,000(inclusive)to NT$50,000,000(not inclusive)
NT$50,000,000(inclusive)to NT$100,000,000(not inclusive)
NT$100,000,000 and above
Total	7	7	7	7

2. Remuneration for CEO, general managers and vice presidents

Unit: NT$ thousands

Title	Name	Salary (A)	Salary (A)	Retirement pension (B)	Retirement pension (B)	Bonuses and special expenses (C)(Note 1)	Bonuses and special expenses (C)(Note 1)	Employee bonus (D)(Note 2)	Employee bonus (D)(Note 2)	Employee bonus (D)(Note 2)	Employee bonus (D)(Note 2)	Proportion of NIAT after summing the 4 items of A, B, C, and D (%) (Note 6)	Proportion of NIAT after summing the 4 items of A, B, C, and D (%) (Note 6)	Compensation paid to the president and vice presidents from an invested company other than the Company’s subsidiaries or parent company (Note 3)
		The Company	All companies listed in the financial statements (Note 4)	The Company	All companies listed in the financial statements (Note4)	The Company	All companies listed in the financial statements (Note4)	The Company		All companies listed in the financial statements (Note 4)		The Company	All companies listed in the financial statements (Note4)
								Amount of cash	Amount of shares	Amount of cash	Amount of shares
CEO	Leo Huang	39,983	40,835	2,434 (Note 5)	2,434 (Note 5)	19,194	20,079	59,370	0	60,740	0	6.52%	6.69%	None
General Manager, Test & Measurement BU	David Yang
General Manager, Integrated System Solution BU	I-Shih Tseng
President	C. C. Ho (Note9)
General Manager, Intelligent ManufacturingSystem BU	Joe Lin
General Manager, Semiconductor Test Equipment BU	George Chang
Vice President, Finance & Administration Center	Paul Ying
Vice President, Operation Management Center	Benjamin Huang
Vice President, Manufacturing Center	Steven Liu
Vice President, R&D Department, Semiconductor Test Equipment BU	Max Chang (Note 10)
Vice President, Sales Department 1, Integrated System Solution BU	Herbert Tsai
Vice President, CEO Office	C. C. Fan
Vice President, Planning Department, Test & Measurement BU	Bobby Tseng
Vice President, Greater China Area Sales Department,Test & Measurement BU	Vincent Chen
Vice President, Technical Service Department,Test & Measurement BU	Tony Yang
Vice President, R&D Department, Test & Measurement BU	Vincent Wu
Vice President, R&D Department 1, Integrated System Solution BU	Lance Ouyang
Vice President, Sales Department 2, Integrated System Solution BU	Jeff Lee
Vice President, Planning Department, Test & Measurement BU	Kenny Wang
Vice President, Planning Department, Test & Measurement BU	Cindy Tai
Vice President, Planning Department, Test & Measurement BU	Galen Chou

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Remuneration range

	Remuneration range	Remuneration range
Remuneration range for CEO, general managers and vice presidents in the Company	Name of CEO, general managers and vice presidents
	The Company (Note 7)	All companies listed in the financial statements (Note 8)
Less than NT$ 1,000,000	C. C. Ho (Note 9), Max Chang (Note 10)	C. C. Ho (Note 9), Max Chang (Note 10)
NT$ 1,000,000 (inclusive) to 2,000,000 (not inclusive)
NT$ 2,000,000 (inclusive) to 3,500,000 (not inclusive)	C. C. Fan	C. C. Fan
NT$ 3,500,000 (inclusive) to 5,000,000 (not inclusive)	Vincent Chen, Tony Yang, Vincent Wu, Herbert Tsai, Lance Ouyang, Jeff Lee, Bobby Tseng, KennyWang,Galen Chou,CindyTai	Vincent Chen, Tony Yang, Vincent Wu, Herbert Tsai, Lance Ouyang, Jeff Lee, Bobby Tseng, KennyWang,Galen Chou,CindyTai
NT$5,000,000 (inclusive) to NT$10,000,000 (not inclusive)	David Yang, I-Shih Tseng, Joe Lin, George Chang,Paul Ying,Steven Liu,Benjamin Huang	David Yang, I-Shih Tseng, Joe Lin, George Chang,Paul Ying,Steven Liu,Benjamin Huang
NT$10,000,000 (inclusive) to NT$15,000,000 (not inclusive)	Leo Huang
NT$15,000,000 (inclusive) to NT$30,000,000 (not inclusive)		Leo Huang
NT$30,000,000 (inclusive) to NT$50,000,000 (not inclusive)
NT$50,000,000 (inclusive) to NT$100,000,000 (not inclusive)
NT$100,000,000 and above
Total	21	21

Note 1: It includes the amount of various bonuses, rewards, transport fees, special expenses, various allowances, accommodation, provision of physical items such as vehicles, and other types of remuneration for CEO, general managers, and vice presidents in the most recent year. Salary expenses recognized under IFRS 2 - “Share-based Payment”, including employee stock warrant, new restricted employee shares, and participation in subscription of stocks in cash capital increase, shall also be included in the calculation of remuneration.
Note 2: Employee bonus for CEO, general managers and vice presidents as approved by the Board of Directors in 2019 is to be distributed according to the percentage of actual bonus distribution percentage in the previous year.
Note 3: a. If this Company's CEO, general managers or vice presidents receive remuneration from investments in other companies that are not subsidiaries of this Company or the parent companies, the said remuneration shall be included in the remuneration range table. The name of the column shall also be changed to “All investments in the parent companies and other companies”.
b. Remuneration in this case refers to remuneration, bonuses (including employee, director, or supervisor bonuses), and allowances received by the president and vice presidents of the Company as the directors, supervisors, or managerial officers of invested companies other than subsidiaries or parent company.
Note 4: Total remuneration in various items paid out to this Company's CEO, general managers and vice presidents by all companies (including this Company) listed in the consolidated statement shall be disclosed.
Note 5: It refers to the amount of retirement pension contributed.
Note 6: Net income after taxes (NIAT) refers to net income after taxes in the most recent year. If the International Financial Reporting Standards (IFRS) has been adopted, NIAT refers to net income after taxes stated in the parent company-only financial statements for the most recent year.
Note 7: The name of CEO, general managers, and vice presidents shall be disclosed in the remuneration ranges to which the amount of remuneration paid to CEO, each general manager and each vice president by the Company correspond, respectively.
Note 8: The name of CEO, general managers, and vice presidents shall be disclosed in the remuneration ranges to which the amount of remuneration paid to CEO, each general manager and each vice president by all the companies (including the Company) listed in the financial statements correspond, respectively.
Note 9: As a result of the removal from the position on June 1, 2019, and accordingly remuneration up to that date is provided.
Note 10: Resigned on January 31, 2019, and accordingly remuneration up to this date is provided.
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(IV) Compare and analyze the total remuneration paid to the directors, supervisors, CEO, general managers, and vice presidents of the Company in the two most recent years by all companies listed in the Company's parent company-only and consolidated financial statements as a percentage of NIAT listed in the parent company-only financial statements, and describe the policies, standards, and packages for payment of remuneration, the procedures for determining remuneration, and its connection to business performance and future risk exposure.

ll companies listed in the Company's parent company-only and consolidated financial tatements as a percentage of NIAT listed in the parent company-only financial tatements, and describe the policies, standards, and packages for payment of emuneration, the procedures for determining remuneration, and its connection to business performance and future risk exposure.	ll companies listed in the Company's parent company-only and consolidated financial tatements as a percentage of NIAT listed in the parent company-only financial tatements, and describe the policies, standards, and packages for payment of emuneration, the procedures for determining remuneration, and its connection to business performance and future risk exposure.	ll companies listed in the Company's parent company-only and consolidated financial tatements as a percentage of NIAT listed in the parent company-only financial tatements, and describe the policies, standards, and packages for payment of emuneration, the procedures for determining remuneration, and its connection to business performance and future risk exposure.	ll companies listed in the Company's parent company-only and consolidated financial tatements as a percentage of NIAT listed in the parent company-only financial tatements, and describe the policies, standards, and packages for payment of emuneration, the procedures for determining remuneration, and its connection to business performance and future risk exposure.
1. Analysis of total remuneration paid to this Company’s directors, CEO, general managers, and vice presidentsinthe2 mostrecent years as a percentage ofNIAT:
Total remuneration paid to directors, CEO, general managers, and vice presidents as a percentage of NIAT in 2019		Total remuneration paid to directors, CEO, general managers, and vice presidents as a percentage of NIAT in 2018
The Company	All companies listed in the financial statements	The Company	All companies listed in the financial statements
7.08%	7.28%	4.96%	5.34%

Policies, standards, and packages for payment of remuneration, the procedures for determining remuneration, and its connection to business performance and future risk exposure:
(1) Directors:

Bonus paid by the Company mainly comprises bonus for directors. According to Article 34 of the Company's Articles of Incorporation, bonus distributed to directors shall not be greater than 1.5% of the Company's net income before taxes before deducting bonus distributed to employees and directors in the current year. The remuneration policy of the Directors is to provide reasonable remuneration, taking into account the Company’s overall operating performance, future operating risks and development trends in the industry, and individual contribution to the Company’s performance. The Remuneration Committee and the Board have reviewed the director-related remuneration, and review at any time the remuneration system in line with real operating conditions and laws and regulations, so as to strike a balance between risk control and sustainable management of the Company.

In 2019 and 2018, the fixed amount of bonuses for directors and supervisors was NT$9,600,000, respectively, accounting for approximately 0.30% and 0.39% of the Company's net income before taxes each year. The Company also paid attendance fees to directors each time a Board of Directors' meeting is convened. (2) CEO, general managers, and vice presidents: The Company has established the "Regulations Governing Compensation for Senior Executives", which stipulates that when a CEO, a general manager or a vice president is appointed, he/she shall be paid a fixed monthly salary based on the pay standards for similar positions in the industry. Any proposal to change employee bonus shall be made according to the Company's operational performance for the current year and by taking into individual performance appraisal. Such proposal shall first be submitted to the Remuneration Committee for review before it is delivered to the Board of Directors for resolution.

(3) The Company shall, at the end of the current year, generate a budget for the following year. The current state of economy and market environment, as well as forecasts of overall business performance and risk exposure in the following year, shall be referenced to make suitable adjustments to compensation paid to managerial officers.
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Names of managerial officers who receive employee bonus, and distribution of employee bonus

As of March 31, 2020 (Unit: NT$ thousands)

	Title	Name	Amount of shares	Amount of cash (Note 2)	Total	Total amount of bonus as a percentage of NIAT (%)
Managerial officer	CEO	Leo Huang	0	59,370	59,370	3.2%
	General Manager, Test & Measurement BU	David Yang
	General Manager, Integrated System Solution BU	I-Shih Tseng
	General Manager, Intelligent Manufacturing System BU	Joe Lin
	General Manager, Semiconductor Test Equipment BU	George Chang
	Vice President, Finance & Administration Center	Paul Ying
	Vice President, Operation Management Center	Benjamin Huang
	Vice President, Manufacturing Center	Steven Liu
	Vice President, Sales Department 1, Integrated System Solution BU	Herbert Tsai
	Vice President, CEO Office	C. C. Fan
	Vice President, Planning Department, Test & Measurement BU	Bobby Tseng
	Vice President, Greater China Area Sales Department, Test & Measurement BU	Vincent Chen
	Vice President, Technical Service Department, Test & Measurement BU	Tony Yang
	Vice President, R&D Department, Test & Measurement BU	Vincent Wu
	Vice President, R&D Department 1, Integrated System Solution BU	Lance Ouyang
	Vice President, Sales Department 2, Integrated System Solution BU	Jeff Lee
	Vice President, Planning Department, Test & Measurement BU	Kenny Wang
	Vice President, Planning Department, Test & Measurement BU	Cindy Tai
	Vice President, Planning Department, Test & Measurement BU	Galen Chou
	Vice President, Marketing Department, the Smart Manufacturing System BU	Arno Wu

Note 1: Allocation of profit-sharing employee bonus approved by the board of directors in 2019 for CEO and Vice president is based on the actual allocation sum ratio of the previous year.

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III. Operation of corporate governance

(I) Operation of Board of Directors

A total of 8 Board of Directors' meetings were held in 2019 with the following attendance records from directors:

Title	Title	Name	Name	Attendance inperson	Attendance by proxy	Percentage of attendance inperson(%)	Percentage of attendance inperson(%)	Percentage of attendance inperson(%)
Chairman		Leo Huang		8	-	100%
Independent director		Tsung-Ming Chung		8	-	100%
Independent director		Quincy Lin		8	-	100%
Independent director		Tai-Jen GeorgeChen		8	-	100%
Director		I-Shih Tseng		6	-	75%
Director		Chung-Ju Chang		8	-	100%
Director		Tsun-IWang		8	-	100%
Other matters to be noted: I. If any of the following applies to the operation of Board of Directors, the date and session of the Board of Directors' meeting, the content of proposals, independent directors’ opinions and the Company's actions in response to independent directors’ opinions shall be stated. (I) Items listed in Article 14-3of theSecurities and Exchange Act: Board of Directors Meeting Date Session Proposal All independent directors' opinions the Company's actions in response to independent directors’ opinions 2019.02.11 1st Meeting in 2019 (1) Discussed the investment in the shares of Israeli company, Camtek Ltd. No opinion Proposals approved 2019.02.21 2nd Meeting in 2019 (1) Annual remuneration for directors, and attendance fees for directors and supervisors who attended the Board of Directors' meetings (2) 2019 remuneration for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings (3) 2019 salary adjustment for managerial officers (4) Approved the 2018 employee reward distribution plan. (5) Approve 2018 internal control system statement of the Company. (6) Capital loan for Chroma Japan Corp. (7) Propose to provide endorsements and guarantees for reinvested companies in Mainland China. (8) Approved the amendments to the "Procedures for Acquisition and Disposal No opinion Proposals approved
Board of Directors Meeting Date	Session		Proposal				All independent directors' opinions	the Company's actions in response to independent directors’ opinions
2019.02.11	1st Meeting in 2019		(1) Discussed the investment in the shares of Israeli company, Camtek Ltd.				No opinion	Proposals approved
2019.02.21	2nd Meeting in 2019		(1) Annual remuneration for directors, and attendance fees for directors and supervisors who attended the Board of Directors' meetings (2) 2019 remuneration for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings (3) 2019 salary adjustment for managerial officers (4) Approved the 2018 employee reward distribution plan. (5) Approve 2018 internal control system statement of the Company. (6) Capital loan for Chroma Japan Corp. (7) Propose to provide endorsements and guarantees for reinvested companies in Mainland China. (8) Approved the amendments to the "Procedures for Acquisition and Disposal				No opinion	Proposals approved

16 -

		of Assets" and the "Procedures for Derivatives Trading".
2019.04.30	3rd meeting in 2019	(1) Endorsement and guarantee for Chroma ATE Inc. (USA). (2) Endorsement and guarantee for Chroma ATE Europe B.V. (3) Increase capital for Adivic Technology Co.	No opinion	Proposals approved
2019.06.24	4th meeting in 2019	(1) The Company proposed to distribute to the Manager the employee’s compensation distribution for theyear of 2018.	No opinion	Proposals approved
2019.07.31	5th meeting in 2019	(1) Capital loans to Chroma Systems Solutions, Inc. (2) Endorsement and guarantee for Chroma ATE (Suzhou) Co., Ltd. (3) 2019 CPA fees.	No opinion	Proposals approved
2019.09.25	6th meeting in 2019	(1) Joint construction of land A7 for partial ownership of surface rights.	No opinion	Proposals approved
2019.10.31	7th meeting in 2019	(1) Capital loan for Chroma Japan Corp. (2) Endorsement and guarantee for Chroma Japan Corp. (3) Endorsement and guarantee for Chroma ATE Inc. (USA).	No opinion	Proposals approved
2019.12.19	8th meeting in 2019	(1) Formulate the audit plan for the year of 2020. (2) Formulate amendments to the Company's Internal Control System and Implementation Rules for Internal Audit (3) Capital loans to Chroma Systems Solutions, Inc. (4) Propose to provide endorsements and guarantees for reinvested companies in Mainland China. (5) Proposal of investment increase in Chroma Japan Corp.	No opinion	Proposals approved

17 -
I. Participation in the operation of the Company. II. Improvement of the quality of the Board's decision-making; III. Composition and structure of the Board; IV. Election and continuing education of the Directors. V. Internal control. Self-evaluation of director performance shall comprise at least the six following dimensions: I. Alignment of the goals and missions of the Company. II. Awareness of the duties of a Director. III. Participation in the operation of the Company.
IV. Management of internal relationship and communication. V. The Director's professionalism and continuing education. The measurement items for the performance evaluation of functional committees shall at least include the following five dimensions:
I. Participation in the operation of the Company. II. Their recognition of the duties of the functional committee. III. Improvement in the quality of decision making by the functional committee.
IV. The composition of the functional committee, and election and appointment of committee members.
V. Internal control.

The implementation units use internal questionnaires for the overall operation of the Board, assessment of the Directors’ participation, operation of the Remuneration Committee, and operation of the Audit Committee. The results of the above performance appraisal shall be reported to the Board.

IV. Goals for enhancing the functions of the Board of Directors (such as establishing an Audit Committee or increasing information transparency) for the current year and most recent year as well as the assessment of the actions implemented:

The Company has set up the Audit Committee, and has formulated the “Audit Committee Charter”. The operation of the Audit Committee complies with the relevant laws and regulations. The Company's website also discloses important resolutions of the Board of Directors in the most recent year to safeguard the rights and interests of the shareholders.

In addition, the Company has established and operated the Remuneration Committee in accordance with the law. This committee assesses the salary and remuneration policy and system for directors and managerial officers, and provides recommendations to the Board of Directors for reference during decision-making. For the operation of corporate governance, refer to “Operation of corporate governance - (IV) Operation of Remuneration Committee”.

Note: (1) If Directors resign before the end of the year, the date of resignation should be included in the notes. The actual attendance (%) shall be calculated based on the number of meetings held by the Board of Directors and the actual presence (attendance) during the term of service.

(2) In case any seat of director has been re-elected before the end of the year, both the previous and current director shall be filled, and the Remarks column shall indicate whether a director was from a previous term, newly appointed, or re-appointed, and the date of re-election. The director's percentage of attendance in person (%) shall be calculated based on the number of Board of Directors' Meetings held and the actual attendance in person during his/her term of office.

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(II) Operation of Audit Committee

A total of 7 meetings were convened by the Audit Committee in 2019, with the attendance of independent directors listed as follows:

Title	Name	Attendance in person	Attendance by proxy	Percentage of attendance inperson(%)
Chairperson	Tsung-Ming Chung	7	-	100%
Member	QuincyLin	7	-	100%
Member	Tai-Jen GeorgeChen	7	-	100%
Other matters to be noted: I. If any of the following applies to the operation of Audit Committee, the date and session of the Board of Directors' meeting, the content of proposals, resolutions of the Audit Committee and the Company's actions in response to opinions from the Audit Committee shall be stated. (I)Items listed in Article5of theSecurities and Exchange Act: Date of meeting Session Proposal Resolution of the Audit Committee The Company's actions in response to the opinions of the Audit Committee 2019.02.11 1st Meeting in 2019 (1) Approved investment in the shares of Israeli company, Camtek Ltd. The 11th session of the first (February 11, 2019) audit committee approved by the whole committee. Proposals approved 2019.02.21 2nd Meeting in 2019 (1) 2018 business report and financial statements (2) Approve 2018 internal control system statement of the Company. (3) Capital loan for Chroma Japan Corp. (4) Propose to provide endorsements and guarantees for reinvested companies in Mainland China. (5) Approved the amendments to the "Procedures for Acquisition and Disposal of Assets" and the "Procedures for Derivatives Trading". The 12th session of the first (February 21, 2019) audit committee approved by the whole committee. Proposals approved 2019.04.30 3rd meeting in 2019 (1) Endorsement and guarantee for Chroma ATE Inc. (USA). (2) Endorsement and guarantee for Chroma ATE Europe B.V. (3) Increase capital for Adivic Technology Co. The 13th session of the first (April 30, 2019) audit committee approved by the whole committee. Proposals approved 2019.07.31 5th meeting in 2019 (1) Capital loans to Chroma Systems Solutions, Inc. (2) Endorsement andguarantee for Chroma The 14th session of the first (July 31, 2019) audit Proposals approved

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		ATE (Suzhou) Co., Ltd.	committee
		(3) 2019 CPA fees.	approved by the
			whole
			committee.
2019.09.25 6th		(1) Joint construction of land A7 for partial	The 15th session		Proposals
meeting	in	ownership of surface rights.	of the first		approved
2019			(September 25,
			2019) audit
			committee
			approved by the
			whole
			committee.
2019.10.31 7th		(1) Capital loan for Chroma Japan Corp.	The 16th session		Proposals
meeting	in	(2) Endorsement and guarantee for Chroma	of the first		approved
2019		Japan Corp.	(October 31,
		(3) Endorsement and guarantee for Chroma	2019) audit
		ATE Inc. (USA).	committee
			approved by the
			whole
			committee.
2019.12.19 8th		(1) Formulate the audit plan for the year	The 17th session		Proposals
meeting	in	2020.	of the first		approved
2019		(2) Formulate amendments to the Company's	(December 19,
		Internal Control System and	2019) audit
		Implementation Rules for Internal Audit	committee
		(3) Capital loans to Chroma Systems	approved by the
		Solutions, Inc.	whole
		(4) Propose to provide endorsements and	committee.
		guarantees for reinvested companies in
		Mainland China.
		(5) Proposal to increase investment in Chroma
		Japan Corp.
(II) Except the aforementioned matters, other resolutions approved by two-thirds or more of
all the directors but yet to be approved by the Audit Committee: None.
II. With regard to the recusal of independent directors from voting due to conflict					of interests,
the name of independent directors, the content of proposals, reasons for recusal due to
conflict of interests and participation in voting shall be stated: None.
III. Communication	between directors and the internal auditing		officer and CPAs (including
material issues,	audit methods and results relating to the Company's finances and business).
1. Communication between independent directors and Internal Auditing Officer:
(1) The Internal		Auditing Officer shall complete an audit report at the end of every month
and submit the aforesaid report to the independent directors and they				may request
clarification from the Internal Auditing Officer upon any inquiry.
(2) The Head	of	Internal Audit shall attend the meetings of	the Audit Committee at least
once a quarter to give an internal audit business report, which shall					include the
description of audit projects, significant items for improvement of internal audit and
improvement policies, etc., so the independent directors may have immediate access
for consultation and communication.
Date of		Content of the communication	Results
meeting
2019.02.21	(1) Reporting on internal audit activities.		The independent
	(2) Discussed the 2018 Statement on Internal Control directors have no
		System.	opinion and approve.
2019.04.30	(1) Reporting on internal audit activities.		The independent
			directors have no

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		opinion and approve.
2019.06.24	(1) Reporting on internal audit activities.	The independent directors have no opinion and approve.
2019.07.31	(1) Reporting on internal audit activities.	The independent directors have no opinion and approve.
2019.10.31	(1) Reporting on internal audit activities.	The independent directors have no opinion and approve.
2019.12.19	(1) Reporting on internal audit activities. (2) Discussed the audit plan for 2020. (3) Amendments to the Company's Internal Control System and Implementation Rules for Internal Audit	The independent directors have no opinion and approve.
2020.02.26	(1) Reporting on internal audit activities. (2) To discuss the Company’s statement of the internal control system for theyear 2019.	The independent directors have no opinion and approval.

Note: *If independent directors are re-elected before the end of the year, new and former independent directors shall be listed accordingly and the "Remark" column shall indicate whether the status of an independent director is “Former”, “New” or “Re-elected” and the date of re-election. Percentage of attendance in person (%) shall be calculated based on the number of meetings held by the Audit Committee and the actual number of meetings attended during his/her term of office.

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(III) Implementation of corporate governance, discrepancies between its implementation and the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and reasons for such discrepancies

Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and reasons for such discrepancies
	Yes	No	Summary
I. Has the Company formulated and disclosed its corporate governance best practice principles in accordance with the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies?	`ˇ`		The Company has stipulated the Corporate Governance Best Practice Principles. For details on the principles, visit the Market Observation Post System (MOPS) or the official website of the Company.	No discrepancies
II. Shareholder structure and shareholders' rights and interest (I) Has the Company established an internal operating procedure for handling matters related to shareholders' recommendations, doubts, disputes and lawsuits, and implemented them accordingly? (II) Does the Company maintain a list of major shareholders who have actual control over the Company and persons who have ultimate control over the major shareholders? (III) Has the Company established and implemented risk control and firewall mechanisms among its affiliated companies? (IV) Has the Company formulated internal regulations that prohibit insiders of the Company from trading securities using undisclosed information in the market?	`ˇ` `ˇ` `ˇ` `ˇ`		(I) The Company has established a system of spokespersons and deputy spokespersons for handling shareholders' proposals, inquiries, and other relevant matters. (II) The Company has delegated a dedicated person to manage the relevant information in order to effectively assess shareholding by the Company’s directors, managerial officers, and major shareholders holding more than 10% of the Company's shares, and disclosed this information in accordance with the relevant regulations. (III) The Company has established regulations for the monitoring of subsidiaries and delegated personnel for supervising the financial operations of these subsidiaries. (IV) The Company has established regulations for the prevention of insider trading, which prohibit the Company’s directors, employees, and other insiders from using information not yet disclosed to the market for trading shares. These Regulations may be downloaded from the Company’s official website.	No discrepancies
III. Composition and responsibilities of Board of Directors: (I) Has the Board of Directors drawn up policies on the diversityof its	`ˇ`		(I) The Company has formulated the CorporateGovernance Best Practice	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and reasons for such discrepancies
	Yes	No	Summary
members and implemented them? (II) Has the Company voluntarily established other functional committees, other than the remuneration committee and audit committee that are established in accordance with the law? (III) Did the Company stipulate regulations for assessing the performance of the Board and the process of assessment, conduct performance appraisals on an annual basis regularly, and submit the results of the performance appraisal to the Board? Are the results used as a reference for the remuneration of individual Directors and the nomination for re-appointment? (IV) Does the Company regularly evaluate the independence of CPAs?	`ˇ` `ˇ`	`ˇ`	Principles, which stipulate that the composition of the Board of Directors must take in consideration diversity, as well as the principles of diversity, including basic criteria, professional knowledge, and skills which correspond to the operations, business and development of the Company. The composition of the Company’s Board of Directors shall take into account the members’ professional background, skills and experiences required for the Company’s businesses, as well as the principles of diversity. The Board of Directors comprises a total of 7 members, including 3 independent directors. (II) The Company has established the Remuneration Committee and the Audit Committee in accordance with the law. (III) The Board of Directors of the Company has passed the Regulations on the Evaluation of the Performance of the Board and its evaluation methods on 26 February 2020, which stipulate that the Board shall perform performance evaluation of itself, its members, the Remuneration Committee, and the Audit Committee at least once a year.The Company's Remuneration Committee shall regularly review the policy, system, standards, and structure for the performance appraisal, salary, and remuneration of directors and managerial officers, and shall submit its recommendations to the Board of Directors' for deliberation. (IV) In addition to the Statement of Independence of Certified Public Accountants, the Company regularly assesses the independence of the CPAs on an annual basis. The major evaluation indicators are:not serving

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and reasons for such discrepancies
	Yes	No	Summary
			as a director, not a shareholder, not receiving remuneration, absence of significant interests with the Company, non-involvement in the decision-making functions of the Company, and the not in the employment of the Company for two years before the commencement of business, and reports the Board. Assessment results for the most recent year have been submitted to the Board of Directors on December 19,2019.
IV. Does the TWSE/TPEx listed company have a suitable and appropriate number of corporate governance personnel and appoint a corporate governance officer to be in charge of corporate governance-related matters (including but not limited to supplying the information requested by the directors and supervisors for the execution of their duties, assisting the directors and supervisors in compliance with legal regulations, handling matters related to board meetings and shareholders’ meetings and preparing minutes of board meetings and shareholders’ meetings)?	`ˇ`		The financial department of the Company has appointed a dedicated person to take charge of corporate governance-related affairs. This person possesses more than three years of experience engaging in finance, stock affairs and meetings-related affairs at public companies. Their main responsibilities are to provide the information needed by the directors to execute their business, handle matters related to meetings of the board of directors and shareholders, and prepare meetings. The implementation of these matters in the most recent year is listed as follows: (1) Assisted the Board of Directors and the Shareholders' Meeting in meeting proceedings and compliance with resolutions. (2) Draft the meeting agenda, inform the directors 7 days prior to the meeting, and provide meeting information. If the meeting minutes should be completed within 20 days after the meeting. (3) Handled matters related to the announcement of major messages concerning important resolutions of the Board of Directors after the meeting to ensure the lawfulness and correctness of the content of major messages so as to protect information symmetry for investor transactions. (4) Registered the date of the shareholders' meeting in advance according to the law and prepared the meeting notice, handbook, annual report, andmeetingminutes	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and reasons for such discrepancies
	Yes	No	Summary
			withinthe statutory timelimit.
V. Has the Company established channels of communication with stakeholders (including but not limited to shareholders, employees, customers, and suppliers), dedicated a section of the Company's website for stakeholder affairs and adequately responded to stakeholders' inquiries on material corporate social responsibility (CSR)issues?	`ˇ`		This Company has established a CSR area on its official website which provided contact information, emails, and other channels of communication to stakeholders so that they may raise topics that they are concerned with. These concerns would then be promptly addressed by this Company.	No discrepancies
VI. Does the Company commission a professional shareholder services agency to handle shareholders' meetings and other relevant affairs?	`ˇ`		The Company has appointed Taishin International Bank to handle affairs of the Board of Shareholders.	No discrepancies
VII. Information disclosure (I) Has the Company established a website to disclose information on financial operations and corporate governance? (II) Has the Company adopted other means of information disclosure (such as establishing a website in English, appointing specific personnel to collect and disclose company information, implementing a spokesperson system, and disclosing the process of investor conferences on the Company’s website)? (III) Has the Company published and report its annual financial report within two months after the end of a fiscal year, and publish and report its financial reports for the first, second and third quarters as well as its operating status for each month before the specified deadline.	`ˇ` `ˇ`	`ˇ`	(I) The Company has established a website with specific pages on investor services and regular updates on financial operations and corporate governance. Website: (www.chromaate.com) (II) This Company has established Chinese and English language websites as well as a special area for investor services. A professional has been charged with collecting information and providing regular updates for financial operations. The Company has delegated a spokesperson and deputy spokesperson. Investor conferences are held on a regular basis, and relevant information has been disclosed using the Company's official website. (III) The Company publishes and reports its annual financial reports and first, second, and third-quarter financial reports within the prescribed period, together with its operations.	No discrepancies
VIII. Does the Company provide other importantinformationthat	`ˇ`		1. Employee rights and interests: According to theLaborStandardsAct	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, and reasons for such discrepancies
	Yes	No	Summary
can help establish a better understanding of the state of corporate governance (including but not limited to employee rights, employee care, investor relations, supplier relations, stakeholders’ rights, continuing education among directors and supervisors, implementation of risk management policies and risk measurement standards, implementation of customer policies, and purchase of liability insurance for directors and supervisors of the Company)?			and the Company's personnel regulations; the Company takes employee rights and interests seriously and so sets up the employees' feedback mailbox, communication channels and various specific areas for discussion to provide a comprehensive selection of channels for feedback. 2. Employee care: In addition to providing a good office environment, employees also enjoy a diverse selection of recreational facilities such as swimming pools and gyms. To help uphold family virtues and to promote harmony between parents and their children, the recreational facilities are also available for the employees and their family members during weekends and public holidays. Various health seminars and subsidies to societies and clubs are also available to provide employees with a selection of recreational activities after work. 3. Investor relations: the Company's website has an investors' service page, a spokesperson and a deputy spokesperson, specifically responsible for public disclosure of company matters. The Company also organizes road show regularly to disclose relevant information on the Company's operations, and update the information in the Company's website at the same time. 4. Supplier relations: The business strategy adopted by the Company upholds trust as the highest guiding principle and respects every commitment made with both suppliers and stakeholders. The Company aims at building positive and interactive relationships with suppliers and will not delay payments without proper cause. 5. Stakeholders’ rights: To provide public investors with information transparency and prompt notification, financial and business information postedinthe Company’s website shall

26 -

Assessment Item	Status of implementation	Status of implementation	Status of implementation
	Yes	No	Summary
			be regularly updated. 6. Progress of training for directors: All directors of the Company have academic backgrounds and practical experiences in business management applicable to the business scope of the Company. The following lists financial, business, and professional courses recently taken by the Company directors and managerial officers (refer to Note 1). 7. Implementation of risk management policy and risk evaluation standards: the Company has carefully stipulated various internal control regulations to manage and evaluate various risks. 8. Execution of customer policies: the Company is involved in the sales of instruments and equipment, and provides excellent product inquiry response as well as rapid maintenance and other post-sales services to ensure that the clients’ production lines operate smoothly while maintaining positive customer relationships. 9. Purchase of liability insurance for directors: the Company has purchase liability insurance for all the directors and important staff. This action was reported to the Board of Directors on December 19,2019.
IX. Improvements made in the most recent year in response to the results of corporate governance evaluation conducted by the Corporate Governance Center of the Taiwan Stock Exchange Corporation, and prioritized matters and measures to be improved upon for matters that have not been improved. (this section need not be completed by companies not listed for evaluations) 1. Improvements made in the most recent year: (1) The Board Diversity Policy is disclosed on the Company’s website and annual report. 2.Prioritizedmatters andmeasures yet to beimproved:none.

Note 1: Progress of training for the Company's directors in 2019 up to the publication date of this annual report.

Title	Name	Training date	Organizer	Course title	Course hours
Independent director	Quincy Lin	2019/10/15	Securities and Futures Institute of Taiwan Corporate Governance Association	Operating Practices of the Remuneration Committee and the Growth Strategy Committee	3
Independent director	Tsung- Ming Chung	2019/07/23	Taiwan Academy of Banking and Finance	Seminar on the Applied Operations of the Board of Directors andSupervisors and	3

27 -

				Corporate Governance
		2019/11/14	Taiwan Academy of Banking and Finance	Seminar on the Applied Operations of the Board of Directors and Supervisors and Corporate Governance	3
Director	Tsun-I Wang	2019/09/02	Accounting Research and Development Foundation	Analysis of new knowledge on the corporate practice of “fraud detection and prevention” and “AIaudit”	6

Corporate governance training for managerial officers of the Company in 2019 up to the publication date of this annual report:

Title Accounting Manager	Name	Training date	Organizer	Course title	Course hours
	Paul Ying	2019/05/23~ 2019/05/24	Accounting Research and Development Foundation	Continuing Training Course for Principal Accounting Officers of Issuers, Securities Firms and SecuritiesExchanges	12

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(IV) Composition, duties and operation of the Remuneration Committee

Information on the members of the Remuneration Committee

Identity	Criteria Name	Does the individual have more than 5 years of professional experience and the following qualifications?	Does the individual have more than 5 years of professional experience and the following qualifications?	Does the individual have more than 5 years of professional experience and the following qualifications?	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Meets the criteria for independence (Note 1)	Number of salary and remuneration committee memberships concurrently held in other public companies
		Currently serving as an instructor or in higher positions in a private or public college or university in the field of business, law, finance, accounting, or the business sector of the Company	Currently serving as a judge, prosecutor, lawyer, certified public accountant or other professional or technician that must undergo national examinations and specialized license	Has professional experience necessary for business administration, legal affairs, finance, accounting or company sales	1	2	3	4	5	6	7	8	9	10
Independent director	Tai-Jen George Chen														3
Independent director	Tsung-Ming Chung														0
Independent director	Quincy Lin														1

Note 1: For any member who fulfills the relevant condition(s) two years before being elected or during the term of office, please tick (ü) the field under the corresponding condition(s). 
(1) Not employed by the Company or an affiliated business.
(2) Not serving as a director or supervisor of the Company or any affiliated business (this does not apply in cases where the person is an independent director of the Company, its parent or subsidiary, or a subsidiary of the same parent company established in pursuant to this law or local laws).
(3) Not a natural person shareholder who holds more than 1% of issued shares or is ranked top 10 in terms of the total quantity of shares held, including the shares held in the name of the person’s spouse, minor children, or in the name of others.
(4) Not a manager in (1), or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship in (2) and (3).
(5) Not a director, supervisor or employee of a corporate shareholder who directly holds more than 5% of the total number of issued shares of the Company or is ranked top 5 in holdings or is a legal person shareholder who is a director or supervisor of the Company per paragraph 1 or 2 of Article 27 of the Companies Act (this does not apply in cases where the person is an independent director of the Company, its parent or subsidiary, or a subsidiary of the same parent company established in pursuant to this law or local laws).
(6) Not a director, supervisor or employee of another company that is controlled by the same person but holds more than half of the shares carrying voting rights or director seats (this does not apply in cases where the person is an independent director of the Company, its parent or subsidiary, or a subsidiary of the same parent company established in pursuant to this law or local laws).
(7) Not a director (a member of the governing board), supervisor (a member of the supervising board) or employee of a company or institution which is the same person or spouse as the chairman, general manager or equivalent of the Company (except where the same person is an independent director of the Company and its parent, subsidiary or subsidiary which is the same parent company in compliance with the local laws or regulations).
(8) Not a director (a member of the governing board), supervisor (a member of the supervising board), managerial officer or shareholder who holds more than 5% of the shares of a specified company or institution that has a financial or business relationship with the Company (this does not apply in cases where the specified company or institution holds more than 20% of the total number of issued shares of the Company and does not exceed 50% of the total number of shares of the Company and the person is an independent director of the Company, its parent or subsidiary, or a subsidiary of the same parent company established in pursuant to this law or local laws)
(9) Not a professional individual or owner, partner, director (a member of the governing board), supervisor (a member of the supervising board), managerial officer and his/her spouse in respect of commercial, legal, financial, accounting, and other related services for which the audit was provided to the Company or its affiliated companies, or where the aggregate amount of remuneration in the past two years exceed NT$500,000. However, members of the special committee on remuneration, public acquisition review, or merger and acquisition who perform their functions and powers in accordance with the provisions of the Securities and Exchange Act or Business Mergers and Acquisitions Act and other relevant regulations shall not be subject to this provision.
(10) None of the circumstances in the subparagraphs of Article 30 of the Company Act apply.
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Operation of the Remuneration Committee
(1) The Company's Remuneration Committee comprises 3 members.
(2) Duration of the current term of service: June 19, 2017, until June 7, 2020, a total of 2 Salary and Remunerations Committee meetings (A) were held in 2019, members qualifications and attendance as follow:

Title	Name	Attendance in person (B)	Attendance by proxy	Percentage of attendance in person (%) (B/A) (Note)
Chairperson	Tai-Jen George Chen	2	-	100%
Member	Tsung-Ming Chung	2	-	100%
Member	Quincy Lin	2	-	100%
Other matters to be noted: I. Indicate the date of the Remuneration Committee's meeting in the most recent fiscal year, sessions, the content of proposals, resolutions of the Committee, and the results of the Company's actions in response to the opinions of the Remuneration Committee Session Date Content of Motion and Follow-up Actions Voting results the Company's actions in response to the opinions of the Remuneration Committee First time in 2018 2019.02.21 (1) Proposal for salary adjustment for senior managers of the Company in the year 2019. (2) Proposal of the annual rewards for directors, and attendance fees for directors who attended Audit Committee meetings (3) Proposal of 2019 remuneration for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings Passed by all members. Proposed by the Board of Directors and adopted with the approval of all attended Directors. Second meeting in 2018 2019.06.24 The Company proposed to distribute to the Manager the employee’s compensation for the year of 2018. Passed by all members. Proposed by the Board of Directors and adopted with the approval of all attended Directors. II. If the Board of Directors does not adopt or amend the recommendations made by the Remuneration Committee, the date and session of the Board of Directors' meeting, resolutions, voting results and handling of opinions from the Remuneration Committee by the Company shall be disclosed (if the remuneration approved by the Board of Directors is better than that recommended by the Remuneration Committee, the discrepancies and related reasons shall be stated): None. III. If members of the Remuneration Committee have any dissenting opinion or qualified opinion on the resolutions of the Remuneration Committee, where such opinions are documented or issued through written statements, the date and session of the meeting of the Remuneration Committee, resolutions, all the members' opinions and handling of these opinions shall be stated: None.

Title	Name	Attendance in person (B)	Attendance by proxy	Percentage of attendance in person (%) (B/A) (Note)
Chairperson	Tai-Jen George Chen	2	-	100%
Member	Tsung-Ming Chung	2	-	100%
Member	Quincy Lin	2	-	100%
Other matters to be noted: I. Indicate the date of the Remuneration Committee's meeting in the most recent fiscal year, sessions, the content of proposals, resolutions of the Committee, and the results of the Company's actions in response to the opinions of the Remuneration Committee Session Date Content of Motion and Follow-up Actions Voting results the Company's actions in response to the opinions of the Remuneration Committee First time in 2018 2019.02.21 (1) Proposal for salary adjustment for senior managers of the Company in the year 2019. (2) Proposal of the annual rewards for directors, and attendance fees for directors who attended Audit Committee meetings (3) Proposal of 2019 remuneration for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings Passed by all members. Proposed by the Board of Directors and adopted with the approval of all attended Directors. Second meeting in 2018 2019.06.24 The Company proposed to distribute to the Manager the employee’s compensation for the year of 2018. Passed by all members. Proposed by the Board of Directors and adopted with the approval of all attended Directors. II. If the Board of Directors does not adopt or amend the recommendations made by the Remuneration Committee, the date and session of the Board of Directors' meeting, resolutions, voting results and handling of opinions from the Remuneration Committee by the Company shall be disclosed (if the remuneration approved by the Board of Directors is better than that recommended by the Remuneration Committee, the discrepancies and related reasons shall be stated): None. III. If members of the Remuneration Committee have any dissenting opinion or qualified opinion on the resolutions of the Remuneration Committee, where such opinions are documented or issued through written statements, the date and session of the meeting of the Remuneration Committee, resolutions, all the members' opinions and handling of these opinions shall be stated: None.

III. If members of the Remuneration Committee have any dissenting opinion or qualified opinion on the resolutions of the Remuneration Committee, where such opinions are documented or issued through written statements, the date and session of the meeting of the Remuneration Committee, resolutions, all the members' opinions and handling of these opinions shall be stated: None.

Note: Where a member of the Remuneration Committee resigns before the end of the fiscal year, the "Remark" column shall be filled with the member's resignation date, whereas his/her percentage of attendance in person (%) shall be calculated based on the number of meetings held by the Remuneration Committee and the actual number of meetings attended during his/her term of office.

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(V) Corporate Social Responsibility (CSR), Deviations from "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and Reasons

Practice Principles for	TWSE/TPEx Listed Companies" and Reasons	TWSE/TPEx Listed Companies" and Reasons	TWSE/TPEx Listed Companies" and Reasons
Assessment Item	Status of implementation			Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
I. Has the Company assessed the environmental, social, and corporate governance risks related to its operations based on the principle of materiality and established related risk management policies or strategies? (Note 3)	`ˇ`		Adhering to its robust and pragmatic business strategy and the concept of sustainable operation, the Company regularly and comprehensively reviewed the overall risks of the Company and formulated various comprehensive response measures to address the risks that the Company may face in advance. Possible risks include operational risk, financial risk, environmental risk, and information security risk, etc. By establishing various risk management mechanisms to manage various potential risks that may affect our operations and profits, the Company will reduce the negative impact and loss caused by accidents or risks when they occur, reduce the Company’s operational risk and hazard impact, respond quickly when risks arise and develop response strategies and emergency response measures to safeguard the safety and interests of stakeholders on an ongoing basis. Business Risk The Company has been committed to the measurement instrument industry for an extended period, maintaining good interaction with customers and keeping abreast of industry trends. Information Security Risk The IT department reviews the risk points of information security management regularly by improving the internal information security management mechanism, and comprehensively manages and tracks the effectiveness of information security management. Building a good IT environment: introducing a host and desktop virtualization system; Power backup for server rooms and host system backup mechanisms; Regular restoration of critical testing systems and data to reduce the risk of loss of important data, and formulation of emergency response plans and staff education and training.Protection and	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
			control of cybersecurity: enhancement of cybersecurity protection and management of the Internet access mechanism; endpoint anti-virus and USB blockade; viruses and fraudulent email screening; meanwhile, the Company will also reinforce the protection of confidential documents and R&D assets, respect intellectual property rights and promote and audit software regularly. 4. Provide information security reports to the management to reduce safety risks. Occupational Safety Risk 1. The Company has an internal plan to establish an occupational safety management system and plans to introduce ISO 45001 to identify the risks of occupational hazards across the whole factory and formulate relevant control regulations to strengthen the implementation of occupational safety control. 2. Implementing contractor construction management and strict employee education and training to prevent occupational hazards. 3. Regularly review the legality of various regulations. Environmental risk 1. Actively develop green and innovative energy-saving products, develop green process technologies, and implement green energy management in the plant. 2. To save energy and reduce greenhouse gas emissions, the specific measures include (1) promoting energy-saving policy among employees. (2) Introduced ISO14064-1 greenhouse gas inventory. Supply chain risks 1. Review of quality suppliers: A strategic view of “balancing procurement competition” is adopted in cooperation with suppliers. Qualified suppliers are then selected based on the technical production capacity, quality, price, delivery conditions, and other conditions provided by suppliers to diversify risk. 2. Qualified vendor assessments twice a year. 3. Establishing good relationshipswith suppliers,seekingto

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
			establish a concept of mutual interests between cooperation and mutual trust, and achieve a win-win situation for both parties. Disaster Risk In order to prevent and manage the risks that may arise from a disaster in a positive manner, the key control points are drawn up based on the probability and severity of the hazards through 1. Risk Assessment - Prior analysis of possible hazards. 2. Risk response- In the event of a hazard, immediate crisis management, and emergency response measures will be initiated to eliminate the occurrence of hazard in order to ensure factory safety. Ensuring the safety of factory workers meets the highest standards in the technology industry.
II. Has the Company established a dedicated full-time (or part-time) unit to promote CSR? Has the Board of Directors authorized senior management to handle such matters and report its implementation to the Board of Directors?	`ˇ`		ESH unit shall concurrently implement CSR activities, integrate various CSR efforts and results from other departments, and provide summary reports on CSR activities to upper management on a regular basis. The implementation of CSR in the most recent year has been reported to the Board of Directors onOctober31,2019.	No discrepancies
III. Environmental Issues (I) Has the Company referred to the nature of its industry to establish a suitable environmental management system (EMS)? (II) Is the Company committed to improving the usage efficiency of various resources and utilizing renewable resources with reduced environmental impact?	`ˇ` `ˇ`		(I) All environmental safety operations are regulated in accordance with laws and regulations. The Company regularly tracks and declares the amount of waste generated, sets targets for waste reduction, carries out ideas for resource recycling and sets various energy saving programs to achieve the goal of energy conservation and the love for earth. The Company currently obtains ISO 14001 attestation. (II) The Company is committed to developing green products, reducing the use of hazardous substances, and generating lead-free production processes. Suitable recycling processes are applied according to the attributes of waste. Waste sorting is implemented throughpolicy	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
(III) Has the Company assessed the potential risks and opportunities arising from climate change at present and in the future and taken related countermeasures? (IV) Has the Company the calculated the greenhouse gas emissions, water consumption, and total weight of waste over the past two years and established the policies with regard to energy conservation and carbon reduction, greenhouse gas reductions, water consumption, and waste management?	`ˇ` `ˇ`		announcement and promotion, lectures, labeling, posting and secondary sorting to reduce waste and increase resource recovery rate in fulfilling the environmental protection responsibility. (III) The Company has established a greenhouse gas inventory system for the fourth year, established an inventory mechanism for all possible sources of greenhouse gases in the organization, and regularly checked the greenhouse gas emission of Scope 1 and Scope 2 of the plant in the previous year on an annual basis. By fully understanding the Company’s GHG emissions and formulating short, medium, and long-term reduction plans based on individual emissions, the Company’s actions in environmental protection are demonstrated. In the future, the Company will continue to examine the greenhouse gases emitted by the Company and formulate related reduction measures to capture the impact on the environment. (IV) The Company has introduced ISO 14001 and ISO 14064 systems and has passed external third-party inspection. The Group has implemented measures such as enhancing the efficiency of the air-conditioning cooling system, reducing energy consumption hardware improvement project, installing power- saving designs for air-conditioning containers, replacing air-conditioning temperature control system with refrigerant flow measurement system, strengthening power usage monitoring, water-saving packing device and gradually replacing all factory-wide public lighting equipment with LED lights to achieve energy saving and carbon reduction, reduce energy consumption, so as to reduce carbon emission intensityand fulfill the

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
			obligationofenvironmentalprotection.
IV. Social Issues (I) Has the Company referred to relevant laws and international human rights instruments to stipulate relevant management policies and procedures? (II) Has the Company established and offered proper employee benefits (including compensation, leave, and other benefits) and reflected the business performance or results in employee compensation appropriately? (III) Has the Company provided employees with safe and healthy work environments as well as regular classes on health and safety? (IV) Has the Company established effective career competence training plan for its employees? (V) Has the Company followed relevant laws,regulations andinternational	`ˇ` `ˇ` `ˇ` `ˇ` `ˇ`		(I) The Company has established internal management systems and procedures and reported to the competent authorities under the Labor Standards Act, Enforcement Rules of the Labor Standards Act, Labor Leave Rules, Labor Insurance Ordinance, and other labor-related regulations. (II) The Company has formulated the remuneration management regulations so that our employees are aware of the relevant rules and regulations and participate in related salary surveys on an annual basis to obtain the salary level in the industry or participate in the salary surveys of professional consulting companies to understand the level of the industry and serve as a reference for the Company’s salary standards. Annual employee benefits are paid to employees in the following year after allocation based on operating performance. (III) The Company regularly holds safety and health education and training courses, conducts periodic random inspections, fire drills and contractor management for the working environment, and organizes various seminars on physical and mental health promotion each year for employees to prevent physical and mental health issues, and sets up special safety and health management units and healthcare rooms. (IV) The Company has established education and training management regulations based on the skills, knowledge, and management capabilities required in the positions so that employees can follow educational training. (V) The Company focuses on leading manufacturersinthefield of	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
guidelines for the customer health and safety, customer privacy, and marketing and labeling of its products and services and established related consumer protection policies and grievance procedures? (VI) Has the Company established the supplier management policies requesting suppliers to comply with laws and regulations related to environmental protection, occupational safety and health or labor rights and supervised their compliance?	`ˇ`		measurement and provides customers with innovative and quality services to meet their needs. We have always been striving to achieve our never-ending goal of customer satisfaction. The satisfaction survey is to thoroughly understand customer satisfaction in all aspects of the Company’s performance. Recommendations for improvements made to customers are tracked and adjusted by business units periodically. By turning customer feedback into the driving force for improving products and services, the ultimate goal is to exceed customer expectations. The Company complies with regulations and international standards in the marketing and labeling of products and services. The Company upholds the highest principle of maintaining confidential information for business with customers. In addition to the Code of Conduct for Employees, all confidential information of the Company shall be kept by professional units in custody to ensure the safety of the property of customers. (VI) The Company has established the “Supplier Management Measures”. New suppliers of major raw materials are required to conduct on-site evaluation for the first time and approval is required before transactions can be conducted. The Company also conducts supplier assessment on a regular basis, conducts commitment, and works closely with trading partners through supply chain assessment to establish a long-term stable supply chain system. The Company’s suppliers have signed commitments for hazardous substances and prohibited the use of conflict minerals, and the overall percentage of such commitments has reached over 95%of the total suppliers.The

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
			Company will continue to track statistics and require new suppliers to sign with existing trading suppliers. The Company has gradually introduced the hazardous substance management system in 2015 and continues to improve the use of hazardous substances in products based on the needs of customers. The system has been fully implemented in 2018, ensuring that the Company’s electronic products comply with the global chemical control regulations of the European Union (such as RoHS, REACH, EU, etc.), and requires suppliers to sign the hazardous substance commitment letter to enhance the environmental qualities of the Company’s products. As of the end of 2019, the signing rate of suppliers exceeded 95%. In the future, the Group will continue to strengthen supplier assessment standards on environmental and social responsibility through the publication of the Environmental and Social Responsibility Questionnaire.
V. Did the Company, following internationally recognized guidelines, prepare and publish reports such as its Corporate Social Responsibility report to disclose non-financial information of the Company? Has the Company received assurance or certification of the aforesaid reports from a third party accreditation institution?	`ˇ`		The Company prepares the CSR Report with reference to the requirements of the GRI Standards, which is validated and certified by BSI as a third party.	No discrepancies
VI. Where the Company has stipulated its own Best Practices on CSR according to the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies, please describe any gaps between the prescribed best practices and actual activities taken by the Company: The Company has stipulated the "Corporate Social Responsibility Best Practices", which specify various specifications on environmental management, community services, human rights, stakeholder interest, and community participation, can be downloaded from the official website of the Company. For details regarding the implementation of CSR at the Company, refer to the CSR reports prepared bythe Company.
VII. Any important information useful for understanding the state of CSR operations: (I) The Company promotes corporate social responsibility in a long-term manner. Every year, the Company reveals its sustainable development status and business philosophy throughCSR reports, andreports theimplementation

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
of CSR to the public based on the concept and practice of transparency, openness and corporate social sustainability. The Company's risk issues related to the implementation of human rights are described below: 1. Diversity, inclusiveness and equal opportunities:  The Company does not exhibit language, attitude, and behavior which engage in differential treatment due to gender, race, social status, age, marital status, family status, language, religion, party affiliation, nationality, appearance, facial features, mental/physical handicap, etc.  The Company ensures equal opportunity employment policy and fairness in terms of employment, salary benefits, training, evaluation, and promotion opportunity, as well as provides effective and appropriate complaint mechanism to avoid violation of employee human rights. In addition, the Company is committed to creating equal employment, as well as eliminating prejudice and harassment in the workplace. 2. Healthy and safe workplace:  The Company conducts a full range of employee health management, establishes a professional and warm medical room, and provides employees with a wealth of medical resources. The Company shows concern for employees' health at all times via the cloud health management system. Besides, the Company also holds a wide variety of health talks.  The Company is committed to providing a safe and healthy work environment so that employees can work at ease. The Occupational Safety and Hygiene Committee has been set up to review the safety and health-related issues and plans regularly on a quarterly basis. In addition, the Company conducts regular occupational safety promotion and training for colleagues, while successfully obtaining safe workplace certification. 3. Reasonable working hours: The regulations of the Company stipulate the specifications for working hours and extension of working hours. The Company also regularly cares for and manages employee attendance. 4. Freedom of association: the Company encourages employees to cultivate interest, strengthen physical and mental health. In addition, the Company has formulated the regulations governing subsidies for clubs and societies, where all colleagues can apply for the establishment of societies in accordance with these regulations. 5. Labor-management consultation: the Company has established a smooth communication channel, and holds regular labor-management conferences to maintain the rights and interests of both parties. 6. Privacy protection: In order to fully protect the privacy of clients and stakeholders, the Company has established a comprehensive information security management system, and complies with strict control specifications and protective measures. (II) CSR activities carried out in 2019 The subjects of donation activities in 2019 are: Tainan Zhiyuan Foundation, Qiu Zaixing Cultural and Educational Foundation, Paper Windmill Cultural and Educational Foundation, Boyou Social Welfare Foundation, Taoyuan Police Friends Association, Guishan Police Friends Association , Hualien Mennonite Christian Hospital, Lifeline Association, Jiaotong University Strategy Office, Jiaotong University Everest summit project, Jiaotong University Electrical and Computer Engineering department development, laboratory and talent cultivation, etc. The total donation amount is about NT$ 8.49 million. (III)The Company was awarded the Bronze Award of the 12th TCSA Taiwan Corporate Sustainability Report (Environment, Social Governance) in 2019. The award was organized by the Taiwan Institute for Corporate Sustainability and was given based on 64 indicators and 106 key performance indicators to demonstrate corporate sustainability. In respect of the sustainable operation of the Company, apart from the pursuit of revenue growth, the Company also attaches great importance to the development of corporate social responsibility by actively developing world-class products and striving to become a world-class enterprise. In order to strengthen the communicationwith stakeholders,theCompanyissues theCorporateSocial ResponsibilityReport annually,

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
which details the performance and results of sustainable operation in economic, environmental and social aspects. In the face of global warming and to mitigate of environmental impacts caused by the manufacturing process, the Company developed test equipment for possible energy recovery, saved a large amount of electricity consumed during the power discharge process, provided clean and stable power supply returns on the grid, and achieved a recycling efficiency of more than 90% to solve the problem of energy wastage by traditional equipment. Chroma is committed to social welfare and care, taking care of the underprivileged and giving warmth to those in need. In order to strengthen the cultivation of talents in the industry, Chroma and Taiwan University of Science and Technology established a research and development center through industry-academic cooperation and exchange, jointly nurturing professional talents and enhancing research and development capabilities. In the future, we will continue to give back to the society with more concrete actions and promote the sustainable development of society. Looking ahead, the Company will continue to focus on innovation and research and development and adopt an international business model to gain insight into the future trends of the industry and the society, to benefit employees and contribute to the society,and towork towards a sustainable and bright future.	results of sustainable operation in economic, environmental and social

Note 1: If "Yes" under the "Status of Operations" is ticked off, please explain the key policies, strategies, and measures adopted and their implementation results; if "No" is ticked off, please give the reason and specify related policies, strategies, and measures to be adopted in the future.

Note 2: Companies that have compiled CSR reports may specify ways to access the report and indicate the page numbers of the cited pages.
Note 3: The principle of materiality refers to environmental, social and corporate governance issues that have significant impacts on the Company's investors and other stakeholders.
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(VI) Compliance with ethical corporate management and measures implemented

Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
I. Formulating ethical corporate management policies and programs (I) Has the Company established the ethical corporate management policies approved by the Board of Directors and specified in its rules and external documents the ethical corporate management policies and practices and the commitment of the board of directors and senior management to rigorous and thorough implementation of such policies? (II) Has the Company established a risk assessment mechanism against unethical conduct, analyze and assess on a regular basis business activities within its business scope which are at a higher risk of being involved in unethical conduct, and establish prevention programs accordingly, which shall at least include the preventive measures specified in Paragraph 2, Article 7 of the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies"? (III) Has the Company specified in its prevention programs the operating procedures, guidelines, punishments for violations, and a grievance system and implemented them and review the prevention programs on a regular basis?	`ˇ` `ˇ` `ˇ`		(I) The Company has formulated its “Ethical Corporate Management Best Practice Principles”, “Operating Rules for Ethical Corporate Management Best Practice Principles” and “Code of Ethical Conduct”, and relevant policies and proposals have been approved by the Board. (II) The Company has evaluated and prevented the risk of high dishonest behavior, and preventive measures cover at least the behaviors specified in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles of the Company. (III) In addition to communication to internal personnel of this Corporation regarding the importance of ethical conduct and prescribing various procedures for handling and forestalling unethical conducts within the "Code of Integrity Practice Rules", this Corporation also requires suppliers to sign a Supplier Commitment towards Business Integrity that clearly stipulate a prohibition against improper or unethical conduct during the process of business transaction.Meanwhile, this	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
			Corporation stipulated the Regulations for Employee Reward and Disciplinarian Actions as the basis for rewarding and penalizing employee conduct. The rewarding and penalizing of employee conduct, disciplinarian actions were taken against violations, and handling of personal appeals are implemented according to theseRegulations.
II. Implementing ethical corporate management (I) Has the Company evaluated ethical records of its counterparty? Does the contract signed by the Company and its trading counterparty clearly provide terms on ethical conduct? (II) Has the Company set up a dedicated unit under the Board of Directors to promote ethical corporate management and regularly (at least once every year) report to the Board of Directors the implementation of the ethical corporate management policies and prevention programs against unethical conduct?	`ˇ` `ˇ`		(I) To ensure that mutual trust and integrity form the basis of all business dealings, the Company’s management regulations require suppliers to sign a letter of commitment towards business integrity, which clearly prohibited any improper or unethical conduct in business activities and immediate blacklisting of any violators. Standard purchasing/sales contracts of the Company also clearly stipulate terms for business integrity and prohibition of unethical dealings and conduct. (II) The Company designated the Audit Office directly under the Board of Directors as the responsible owner for revising, implementing, interpreting, providing counseling services, reporting, registering, and filing the contents of the "Operational Rules for Ethical Corporate Management Best Practice Principles", supervising the implementation of these rules, and providing regular reports to the Board of Directors. The implementationand audit of	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
(III) Has the Company established policies to prevent conflicts of interest, provided an appropriate channel for reporting such conflicts and implemented them? (IV) Has the Company established effective accounting systems and internal control systems to implement ethical corporate management and had its internal audit unit, based on the results of assessment of the risk of involvement in unethical conduct, devise relevant audit plans and audit the compliance with the prevention programs accordingly or entrusted a CPA to conduct the audit? (V) Does the Company regularly hold internal and external training related to ethical corporate management?	`ˇ` `ˇ` `ˇ`		ethical corporate management in the most recent year has been reported to the Board of Directors on December 19, 2019. (III) The Company has established the "Ethical Corporate Management Best Principles Practice", which clearly specify the policy to prevent conflicts of interest. The official website of the Company displays independent e-mail address and dedicated telephone line as channels for internal and external personnel of the Company to make whistleblower reports. Any report shall be immediately handled by the responsible unit. (IV) To implement ethical corporate management, the Company has established an effective accounting system and internal control system according to the constituent elements of the internal system, and the internal auditing unit shall conduct audits according to the annual audit plan. (V) New recruits are regularly taught with the Company's organizational, cultural, and internal workplace morality and ethics, emphasizing the importance of individual and work integrity, in the meantime, conducts internal awareness programs conveying the importance of integrity.
III. Implementation of the Company’s whistleblowing system (I)Has the Company established a	`ˇ`		(I) The Companyhas established	No discrepancies

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
specific whistleblowing and reward system, set up convenient whistleblowing channels and designated appropriate personnel to handle investigations against wrongdoers? (II) Has the Company established the standard operating procedures for investigating reported misconduct, follow-up measures to be adopted after the investigation, and related confidentiality mechanisms? (III) Has the Company set up protection for whistleblowers to prevent them from being subjected to inappropriate measures as a result of reporting such incidents?	`ˇ` `ˇ`		and announced an independent whistleblowing email address ([email protected]) and a dedicated telephone line (03- 3279999 ext. 8301) for whistleblowers to report cases to the Company's dedicated personnel. (II) The Company has established standard operating procedures for handling whistleblowing investigations and the relevant confidentiality mechanisms. The handling personnel shall investigate cases reported by whistleblowers, generate records, submit a report, file relevant documents, and maintain the confidentiality of whistleblowers' identities and the content of reported cases. (III) The Company has established the standard operating procedures for handling whistleblowing investigations and the relevant confidentiality mechanisms to maintain the confidentiality of whistleblowers' identities and the content of reported cases.
IV. Enhancing information disclosure (I) Has the Company disclosed the contents of its best practices for ethical corporate management and the effectiveness of relevant activities upon its official website or Market Observation Post System (MOPS)?	`ˇ`		The Company has established an electronic bulletin board to provide prompt announcements related to relevant regulations and activities. Any regulations related to the Code of Business Conduct as well as compliance to ethical conduct shall also be disclosed upon this Company’s officialwebsite.	No discrepancies
V. If the Company has formulated its own principles of integrity operation based on "Code of Integrity Practice Rules for TWSE/TPEx Listed corporations", please state the difference between its principles and its operation: No difference.

V. If the Company has formulated its own principles of integrity operation based on "Code of Integrity Practice Rules for TWSE/TPEx Listed corporations", please state the difference between its principles and its operation: No difference.

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Assessment Item	Status of implementation	Status of implementation	Status of implementation	Discrepancies between its implementation and the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and reasons for such discrepancies
	Yes	No	Summary
VI. Other important information that facilitates the understanding of the implementation of ethical corporate management: (such as review and amendment of the Company's Ethical Corporate Management Best Practice Principles) To ensure that employees at the Company comply with the Company's ethical standards, the Company has established the "Ethical Corporate Management Best Practice Principles", "Operational Rules for Ethical Corporate Management Best Practice Principles", and "Code of Ethical Conduct", so that every internal employee, supervisor and member of the Board of Directors better understand the ethical standards during performance of duties, and adheres to high demands on oneself. For details regarding the operations and implementation of ethical corporate management at the Company, refer to the published "Ethical Corporate Management Best Practice Principles", "Operational management and measures implemented”. For details regarding the Company's "Ethical Corporate Management Best Practice Principles", "Code of Ethical Conduct", and "Operational Rules for Ethical Corporate Management Best Practice Principles", visit MOPS or the official website of the Company.

(VII) If the Company has established the corporate governance best practice principles and other relevant regulations, the means to search for these regulations shall be disclosed.
Refer to MOPS or the official website of the Company for details regarding the Corporate Governance Best Practice Principles formulated by the Company and specifications provided by these best practice principles with regard to protecting shareholders’ rights and interests, enhancing the functions of the Board of Directors, respecting stakeholders’ rights and interests, and enhancing information transparency.
(VIII) Other important information to enhance the understanding of the implementation of corporate governance at the Company

The Company has established the "Regulations Governing Prevention of Insider Trading" as the basis of major news and information disclosure mechanism at the Company. Besides, the Company conducts inspection from time to time to ensure compliance with the laws and regulations. These regulations can be found on the internal website of the Company.

(IX) Protective measures for the work environment and personal safety of employees
(1) Employee safety:
- Employee fire safety teams shall work with local fire departments to conduct fire safety and evacuation exercises, disaster prevention, and emergency drills.
- Establish and enforce self-inspection plans to regularly inspect, maintain, and repair high- and low-voltage electrical equipment, elevators, air conditioning, fire safety equipment, potable water, water towers, and other forms of machinery and equipment to protect employee safety.
- Commission professional cleaning companies to maintain building sanitation and implement sterilization processes.
- Commission qualified security firms to enforce access controls and security operations.
(2) Employee insurance:
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Purchase labor and health insurance for employees in accordance with the regulations and insurance for different income brackets.
Purchase social insurances for personnel stationed overseas in accordance with local laws.
Provide employees with regular life insurance, accidental injury insurance, accident and health insurance, hospitalization insurance, cancer health care insurance, and workplace accident insurance.
(3) Physical and mental health care for employees:
Entrust qualified medical institutions to regularly perform employee health checks, apply health checks that are superior to laws and regulations, and establish a sound health management system to implement and implement health management to safeguard employees' health.
Incorporate the Sexual Harassment Prevention Act in employees’ work regulations, establish the Sexual Harassment Prevention Committee, and designate dedicated personnel for handling such matters.
Set up a nursing room equipped with a complete breastfeeding environment and equipment to offer a high-quality breastfeeding environment for breastfeeding employees and protect their privacy during breastfeeding.
Carry out four cancer screenings and special health check-ups each year to promote employee health care and early detection of diseases.
AED automatic external defibrillators, first-aid kits and qualified first-aid personnel are set up at each factory site, and first-aid and AED education training courses are conducted. Branch offices have also reached the level of safe workplace applied, thereby enhancing workplace safety.
Establish employee recreation centers, which are equipped with swimming pools, spa, gyms, dance classrooms, equipment and other materials for employee use.
Conduct health promotion courses from time to time, such as emotional management, interpersonal communication, parenting, healthy eating, and health care.
Regularly organize health promotion activities, promote healthy meals, conduct a diverse range of sports instruction courses, organize health promotion talks, and organize health testing activities, etc. every year, to provide employees with disease prevention and health promotion measures for physical and mental relaxation, physical management, and weight control.
Regularly organize health promotion activities, promote healthy meals, and conduct a diverse range of sports and dancing areas within the perimeter of the factory.
Establish the Employee Welfare Committee to regularly organize various employee welfare activities, such as domestic travel, festival vouchers or gift delivery, free movie tickets, etc. A total of 14 clubs and societies have been established at the Company, including hiking club, badminton club, movie club, dance club, board game club, basketball club, etc. to provide employees with different leisure and health channels.
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(X) Implementation of internal control system

1. Statement on Internal Control System

Chroma ATE Inc. Statement on Internal Control System

Date: February 26, 2020
The Statement of Internal Control System is issued based on the self-assessment of the Company in 2019: I. The Company acknowledges that the establishment, implementation, and maintenance of the internal control system are the responsibilities of the Company’s Board of Directors and managerial officers, and have established such a system. The objectives of this system are to meet various goals including achieving operational benefits and efficiency (including profitability, performance, as well as asset and safety protection), and ensuring the reliability, timeliness, transparency and regulatory compliance of reporting, thereby providing reasonable assurance.
II. An internal control system has inherent constraints. No matter how comprehensive its design may be, an effective internal control system is only capable of providing adequate assurance for achieving the abovementioned objectives. In addition, the effectiveness of an internal control system may change with the environment and under different situations. However, the Company's internal control system is equipped with self-monitoring mechanisms, thereby allowing the Company to take immediate remedial actions in response to any identified deficiency.
III. The Company determines whether or not the design and implementation of its internal control system is effective according to the items for determining the effectiveness of internal control system as stated in the Regulations Governing Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the "Regulations"). The internal control system is divided into 5 key components according to the process of management control to generate internal control system assessment items adopted by the Regulations, including: 1. control environment; 2. risk assessment; 3. control operations; 4. information and communications and; 5. monitoring operations. Each key component also includes a number of items. Refer to the Regulations for more information on the abovementioned items.
IV. The Company has adopted the aforementioned internal control system assessment items to evaluate the effectiveness of its ICS design and implementation.
V. Based on the findings of such evaluation, the Company believes that, on December 31, 2019, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws, and regulations.
VI. The Statement shall be a major content of the Company that the design and implementation shall be publicly disclosed. Should the abovementioned content contain illegalities such as fraudulent and hidden information, the Corporation shall be subject to legal responsibilities provided in Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchange Act.
VII. This statement has been approved by the Board of Directors on February 26, 2020, amongst the 7 directors that attended the meeting, none objected, and the remaining have all agreed with the contents of this statement. Chroma ATE Inc. Chairman: Leo Huang signature CEO: Leo Huang signature
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If a CPA has been hired to carry out a special audit of the internal control system, please furnish the CPA audit report: None.
(XI) Penalties imposed on the Corporation and its internal staff, penalties imposed on its internal staff by the Company for violation of internal control regulations, major deficiencies and status of improvements made in the most recent year up to the publication date of this annual report: None.
(XII) Major resolutions of the Shareholders' Meeting and the Board of Directors in the most recent year up to the publication date of this annual report
Major resolutions of the Shareholders' Meeting and status of implementation

Date 2019 Annual Meeting of Shareholders convened 2019.06.18 1. Approved the 2018 Business Report and Financial Statements. Status of implementation: The resolution was passed. 2. Approval of 2018 earnings distribution proposal. State of implementation: Approved by resolution. The ex-dividend date was set to August 3, 2019. The cash dividend for the shareholders was completely paid on August 15, 2019. (NTD 4.17782622 per share). 3. Approved amendments to the Company's Articles of Incorporation. Status of implementation: The resolution was passed. On July 17, 2019, the Ministry of Economic Affairs approved the registration of these amendments. These amendments were announced on the official website of the Company. 4. Approve amended "Procedure for Acquisition and Disposal of Assets" of the Company. Implementation status: The resolution was passed and the amended “Procedures for Acquisition or Disposal of Assets” was implemented, which was published on the Company’s website. 5. Adoption of the amendment to the "Procedure for Engaging in Transaction Processing of Derivative Commodities". Implementation status: The resolution was passed and the procedure for engaging in derivatives trading was carried out in accordance with the revised Procedures for Engaging in Derivatives Trading, which was published on the Company’s website.

Key resolutions of the Board of Directors

2019.02.11 Approved the investment in the shares of the Israeli company, Camtek Ltd. 2019.02.21 1. Approved the annual rewards for directors, and attendance fees for directors who attended Board of Directors' meetings

Approved the 2019 rewards for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings
Approved the 2019 salary adjustment for managerial officers. 4. Approved the 2018 employee reward distribution plan. 5. Approved the 2018 business report and financial statements. 6. Approved the proposal for distribution of 2018 profits.
Approved the issuance of the 2018 Statement on Internal Control System. 8. Approved capital loan for Chroma Japan Corp.
Approved the endorsement and guarantee for subsidiaries in Mainland China.
Approved the amendments to the "Procedures for Acquisition and Disposal of Assets" and the "Procedures for Derivatives Trading".
Approved amendments to the Company's Articles of Incorporation. 12. Approved the 2019 business plan.
47 -
Approved the date of capital decrease through the extinguishment of new restricted employee shares. 14. Approved the convening of the 2019 Annual General Meeting and the issues raised by the shareholders. 2019.04.30 1. Q1 2019 financial statements. 2. Approved the endorsement and guarantee for Chroma ATE Inc. (USA). 3. Approved the endorsement and guarantee for Chroma ATE Europe BV. 4. Approved capital increase for Adivic Technology Co. 5. Approved the proposal for the base date for capital increase of employee stock options. 6. Approve line of credit extension proposal from financial institution of the Company. 7. Approval of the establishment of Standard Procedures for Disposal of Directors’ Requirements. 2019.06.24 1. To approve the resolution on the distribution of employee’s compensation to the Manager for year 2018. 2. Matters pertaining to adjustment of the subscription price of employee stock warrants by setting the record date for the dividend distribution in 2019. 3. Approved the date of capital decrease through the extinguishment of new restricted employee shares. 4. Approve line of credit extension proposal from financial institution of the Company. 2019.07.31 1. Q2 2019 financial statements. 2. Approved capital loan for Chroma Systems Solutions, Inc. 3. Approved the endorsement and guarantee for Chroma Electronics (Suzhou) Co., Ltd. 4. Approved the 2019 CPA fees. 5. Approved the date of capital decrease through the extinguishment of new restricted employee shares. 6. Approved the proposal for the base date for capital increase of employee stock options. 7. Approved the application for credit extension to financial institution. 2019.09.25 Approved joint construction of land A7 for partial ownership of surface rights. 2019.10.31 1. Q3 2019 financial statements. 2. Approved capital loans to Chroma Japan Corp. 3. Approved the endorsement and guarantee for Chroma Japan Corp. 4. Approved the endorsement and guarantee for Chroma ATE Inc. (USA) 5. Approved the proposal for the base date for capital increase of employee stock options. 2019.12.19 1. Approved the 2020 audit plan. 2. Approved the amendments to the “Internal Control System” and the “Implementation Rules for Internal Audit”. 3. Approved capital loan for Chroma Systems Solutions, Inc. 4. Approved endorsements and guarantees for reinvested companies in Mainland China. 5. Approve investment increase for Chroma Japan Corp. 6. Approved the Company’s 2018 Retained Earnings Plow Back Plan. 2020.2.26 1. Approved the annual rewards for directors, and attendance fees for directors who attended Board of Directors' meetings 2. Approved the 2020 rewards for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings - 48 -
Approved the 2020 salary adjustment for managerial officers.
Approved the formulation of the Regulations Governing the Evaluation of the Performance of the Board of Directors.
Approved the 2019 employee reward distribution plan.
Approved the 2019 business report and financial statements.
Approval of 2019 earnings distribution proposal.
Approved the issuance of the 2019 Statement on Internal Control System. 9. Approved capital loan for Chroma Japan Corp.
Approved the amendments to the Company’s “Operational Procedures for Endorsements/Guarantees for Others” and “Procedures for Lending Funds to Other Parties”.
Approved the amendments to the "Audit Committee Charter," "Remuneration Committee Charter" and "Board Meeting Rules" of the Company.
Approved the 2020 business plan.
Approved the proposal for the base date for capital increase of employee stock warrants.
Approved the handling of director re-election and director candidacy (including those for independent directors).
Approved the proposal of the removal of the non-competition restrictions for newly appointed Directors.
Approved the convening of the 2020 Annual General Meeting and the issues raised by the shareholders.
(XIII) Dissenting Opinions or Qualified Opinions on Resolutions Passed by the Board of Directors Which are Made by Directors and are Documented or Issued through Written Statements, in the Most Recent Year Up to the Publication Date of This Annual Report: None
(XIV) Any resignation or dismissal of the Company's chairperson of the board, general manager, accounting manager, financial executive, internal audit manager, and research and development executive in the most recent year up to the publication date of this report: None.
49 -

IV. CPA fees

(I) Amount of audit and non-audit fees paid to CPAs, accounting firm and its affiliated companies, and content of non-audit services

Range of CPA fees

	Range of CPA fees	Range of CPA fees
Name of accountingfirm	Name of CPA		Audit period	Remark
Deloitte & Touche	Cheng-Ming Lee	Wen-Chi Kuo	2019.01.01~2019.12.31

Note: If the Company has replaced the CPAs or accounting firm in the current year, the audit period shall be listed separately, and the reason for replacement shall be stated in the Remark column.

			Unit: NT$ thousands	Unit: NT$ thousands
Fee	Fee item range	Audit fee	Non-audit fee	Total
1	Less than NT$2,000,000		1,568	1,568
2	NT$2,000,000 (inclusive) to NT$4,000,000 (not inclusive)
3	NT$4,000,000 (inclusive) to NT$6,000,000 (not inclusive)
4	NT$6,000,000 (inclusive) to NT$8,000,000 (not inclusive)	6,210		6,210
5	NT$8,000,000 (inclusive) to NT$10,000,000 (not inclusive)
6	NT$10,000,000 and above

Information on CPA fees

Unit: NT$ thousands

Name of accounting firm	Name of CPA	Audit fee	Non-audit fee	Non-audit fee	Non-audit fee	Non-audit fee		Audit period	Remark
			System design	Business registration	Human resources	Others (Note 1)	Subtotal
Deloitte & Touche	Cheng- Ming Lee Wen-Chi Kuo	6,210				1,568	1,568	2019.01.01 ~ 2019.12.31

  - Note 1: Advance payment, subsidiary audit disbursement, English report, direct credit check, accounting standards advisory service, and employee salary information check etc.

(II) Where the accounting firm was replaced, and the audit fees for the year when replacement was made was less than that in the previous fiscal year before replacement, the amount of audit fees paid before replacement and the reasons for paying such an amount shall be disclosed: None.
(III) Where the audit fees for the year were reduced by more than 15% compared to the previous year, the amount and percentage of decrease in audit fees, as well as the reason for such decrease shall be disclosed: None.
V. Replacement of CPAs: None.
VI. The Corporation's Chairman, CEO, or any managerial officer in charge of finance or accounting matters who has held a position at the accounting firm of its CPAs or at an affiliated company in the most recent year: None.
50 -
VII. Shareholding transfer and equity pledge changes of Directors or Managerial Officers Holding More Than ten percent (10%) of Company shares during the Year of the Publication Date of Annual Report
Transfer of shares and changes in equity pledge relating to the directors, managers and primary shareholders:

Title	Name	2019	2019	In the year of 2020, as of April 12th	In the year of 2020, as of April 12th
		Increase (decrease) in the number of shares held	Increase (decrease) in the number of sharespledged	Increase (decrease) in the number of shares held	Increase (decrease) in the number of sharespledged
Chairman and CEO	Leo Huang	272,000	0	0	0
Independent director	QuincyLin	0	0	0	0
Independent director	Tsung-MingChung	0	0	0	0
Independent director	Tai-Jen George Chen	0	0	0	0
Director and General Manager, Integrated System Solution BU	I-Shih Tseng	127,000	0	0	0
Director	Tsun-I Wang	0	0	0	0
Director	Chung-Ju Chang	0	0	0	0
General Manager,Test & Measurement BU	David Yang	110,000	0	(93,000)	0
President	C.C. Ho(Note 1)	0	0	-	-
General Manager,Intelligent ManufacturingSystem BU	Joe Lin	54,200	0	0	0
General Manager,Semiconductor Test Equipment BU	George Chang	(19,400)	0	(28,000)	0
Vice President, Finance & Administration Center	Paul Ying	71,000	0	(54,000)	0
Vice President,ManufacturingCenter	Steven Liu	74,000	0	(5,000)	0
Vice President,Operation Management Center	Benjamin Huang	104,000	0	0	0
Vice President, R&D Department, Semiconductor Test Equipment BU	Max Chang (Note 2)	0	0	-	-
Vice President, Sales Department 1, Integrated System Solution BU	Herbert Tsai	(1,500)	0	(9,000)	0
Vice President,CEO Office	C. C. Fan	22,000	0	(37,000)	0
Vice President, Planning Department, Test & Measurement BU	Bobby Tseng	(19,000)	0	(9,000)	0
Vice President, Greater China Area Sales Department, Test & Measurement BU	Vincent Chen	18,000	0	0	0
Vice President, Technical Service Department, Test & Measurement BU	Tony Yang	48,000	0	(12,000)	0
Vice President, R&D Department, Test & Measurement BU	Vincent Wu	11,000	0	(47,000)	0
Vice President, R&D Department 1, Integrated System Solution BU	Lance Ouyang	25,500	0	0	0
Vice President, Sales Department 2, Integrated System Solution BU	Jeff Lee	13,500	0	0	0
Vice President, Planning Department, Test & Measurement BU	Kenny Wang	22,000	0	0	0
Vice President, Planning Department, Test & Measurement BU	Cindy Tai	12,000	0	(9,000)	0
Vice President, Planning Department, Test & Measurement BU	Galen Chou	15,000	0	0	0
Vice President, Sales Department , Intelligent ManufacturingSystem BU	Arno Wu (Note 3)	-	-	0	0

Note 1: On June 1, 2019, due to dismissal of the position, the change in shareholding as of that date was provided.

Note 2: Mr. Max Chang resigned on January 31, 2019. Therefore, changes in equity held by Mr. Max Chang are provided as of this date.

Note 3: Mr. Galen Chou was promoted to the position of Vice President on February 1, 2020. Therefore, changes in equity held by Mr. Arno Wu is provided as of this date.

2. Where the counterparty for equity transfer is a related person:

Name (Note 1)	Reason for equity transfer	Date of transaction	Counterparty	Relationship between trading counterparties and corporations, directors, supervisors and shareholders with shareholding percentage exceeding10%	Number of shares held	Transaction price
C. C. Fan	Gift	2019.4.24	Fan Jiang Yi	Children	8,000	Not applicable

Note 1: Fill in the name of the Company's directors, supervisors, managers and shareholders with shareholding percentage exceeding 10%.

Where the counterparty of equity pledged is a related party: None.
51 -

VIII. Information on the 10 largest shareholders who are related parties or each other's spouses and relatives within the second degree of kinship

Information on the relationships between the 10 largest shareholders

Name (Note 1)	Shares held by the person	Shares held by the person	Shares held by spouse or minor children	Shares held by spouse or minor children	Shares held in the name of other persons	Shares held in the name of other persons	Title or name and relationship of the 10 largest shareholders who are related parties or each other's spouses and relatives within the second degree of kinship (Note 2)	Title or name and relationship of the 10 largest shareholders who are related parties or each other's spouses and relatives within the second degree of kinship (Note 2)
	Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage	Number of shares held	Shareholding percentage	Name	Relation
Leo Huang	20,763,897	4.94%	9,294,362	2.21%	0	0	Shu-Chuan Chen	Spouse
JPMorgan Chase Bank N.A., Taipei Branch in custody for Stichting Depositary APG Emerging Markets EquityPool	16,410,000	3.90%	0	0	0	0	None	None
Chun-Sheng Chen	15,113,308	3.59%	11,074,646	2.63%	0	0	Yu-Mei Hsueh	Spouse
JPMorgan Chase Bank N.A., Taipei Branch in custody for Schroder International Selection Fund - Asian Absolute Return	13,082,000	3.11%	0	0	0	0	None	None
Yu-Mei Hsueh	11,074,646	2.63%	15,113,308	3.59%	0	0	Chun-Sheng Chen	Spouse
First State Asia Pacific Leaders fund, a sub- fund of First State Investment	9,459,000	2.25%	0	0	0	0	None	None
Shu-Chuan Chen	9,294,362	2.21%	20,763,897	4.94%	0	0	Leo Huang	Spouse
Nan Shan Life Insurance Co., Ltd Representative: Ying- tsungTu	8,662,000	2.06%	0	0	0	0	None	None
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	7,061,121	1.68%	0	0	0	0	None	None
Government of Singapore - GOS - EFM C	6,082,524	1.45%	0	0	0	0	None	None

Note 1: The 10 largest shareholders shall be listed. For corporate shareholders, the title of the corporate shareholder as well as the name of the representative shall be indicated.

Note 2: Shareholders to be disclosed in the preceding item shall include legal persons and natural persons. Relationships between shareholders shall be disclosed according to the financial reporting standards used by the issuer.

52 -
IX. Number of Shares Held and Combined Shareholdings Percentage in the Same Investment Business by the Company, the Company's Directors, Managers, and Companies Directly or Indirectly Controlled by the Company

Combined shareholding percentage

Unit: thousand shares / thousand units of foreign currency

Other companies invested by this Company (Note 1)	Investments by this Corporation	Investments by this Corporation	Investments of Directors and managers and directly or indirectly controlled businesses	Investments of Directors and managers and directly or indirectly controlled businesses	Total investments	Total investments
	Number of shares held	Shareholding percentage (%)	Number of shares held	Shareholding percentage (%)	Number of shares held	Shareholding percentage (%)
Neworld Electronics Ltd.	64,013	100.0	0	0	64,013	100.0
Adlink TechnologyInc.	24,502	11.3	13	0	24,515	11.3
Chroma New Material Corporation	25,000	100.0	0	0	25,000	100.0
Chroma Investment Co.,Ltd.	14,000	100.0	0	0	14,000	100.0
Dynascan TechnologyCorp.	9,841	27.3	5,100	14.2	14,941	41.5
Sensational HoldingLtd.	1,200	100.0	0	0	1,200	100.0
Chroma ATE Europe B.V.	1	100.0	0	0	1	100.0
Chroma ATE Inc.	1,000	100.0	0	0	1,000	100.0
Chroma Systems Solutions, Inc. (Note 2)	120	25.0	240	50.0	360	75.0
Chen Hwa TechnologyInc.	3,085	100.0	0	0	3,085	100.0
CHI Incorporation Ltd.	3,830	100.0	0	0	3,830	100.0
San Eagle Development Corp	2,050	100.0	0	0	2,050	100.0
Testar Electronic Corporation	20,160	67.2	5,414	18.1	25,574	85.3
MAS Automation Corp.	10,000	100.0	0	0	10,000	100.0
DeepRed HoldingCo., Ltd.	215	100.0	0	0	215	100.0
Chroma Japan Corp.	9	100.0	0	0	9	100.0
Chih Ho Shun Development Co., Ltd.	1,750	35.0	0	0	1,750	35.0
Adivic TechnologyCo., Ltd.	12,590	74.1	0	0	12,590	74.1
EVT TechnologyCo., Ltd.	9,412	85.6	89	0.8	9,501	86.4
Quantel Private Ltd.	1,914	60.0	0	0	1,914	60.0
Innovative Nanotech, Inc.	14,214	71.1	700	3.5	14,914	74.6
Touch Cloud Inc.	5,700	78.1	0	0	5,700	78.1
Camtek Ltd.	7,817	20.2	0	0	7,817	20.2
Adivic HoldingCorporation	0	0	1,000	100.0	1,000	100.0
Wei Da Electric Vehicle Co., Ltd.	0	0	375	75.0	375	75.0
Wei KuangMech.Eng.Inc.	0	0	4,475	100.0	4,475	100.0
Quantel Technologies India Private Ltd.	0	0	65	100.0	65	100.0
Quantel Global Vietnam Co.,Ltd. (Note 3)	0	0	US$200	100.0	US$200	100.0
Quantel Global Sdn. Bhd.	0	0	600	100.0	600	100.0
Quantel Global Philippines Corporation	0	0	99	100.0	99	100.0
Chroma GermanyGmbH	0	0	30	100.0	30	100.0
Sajet System Technology (Suzhou) Co., Ltd. (Note 3)	0	0	RMB$8,374	100.0	RMB$8,374	100.0

53 -

Other companies invested by this Company (Note 1)	Investments by this Corporation	Investments by this Corporation	Investments of Directors and managers and directly or indirectly controlled businesses	Investments of Directors and managers and directly or indirectly controlled businesses	Total investments	Total investments
	Number of shares held	Shareholding percentage (%)	Number of shares held	Shareholding percentage (%)	Number of shares held	Shareholding percentage (%)
Chroma Electronics (Shenzhen) Co., Ltd.(Note 3)	0	0	HK$30,000	100.0	HK$30,000	100.0
Chroma Electronics (Shanghai) Co., Ltd.(Note 3)	0	0	US$3,000	100.0	US$3,000	100.0
Chroma (Shanghai) Trading Co., Ltd.(Note 3)	0	0	US$2,700	100.0	US$2,700	100.0
Chroma ATE(Suzhou)Co., Ltd.	0	0	US$3,800	100.0	US$3,800	100.0
Mou Kuan Technologies (Nanjing) Co., Ltd.	0	0	RMB$1,737	100.0	RMB$1,737	100.0
Wei Kuang Automatic Equipment (Nanjing)Co., Ltd.(Note 3)	0	0	RMB$11,871	100.0	RMB$11,871	100.0
Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. (Note 3)	0	0	RMB$11,417	100.0	RMB$11,417	100.0

Note 1: Reinvested companies are invested by the Company using the equity method.

Note 2: Consolidated shareholding percentage of this Company and its subsidiary CHROMA ATE INC. was 75%.

Note 3: These invested companies have yet to issue any share. Therefore, only the amount and percentage of capital contribution are indicated.

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Chapter 4 Financing Status

I. Capital and shares

(I) Source of shares

Year and month	Price at issuance	Authorized capitalstock	Authorized capitalstock	Paid-incapital	Paid-incapital	Remark
		Number of shares held (thousand shares)	Amount (thousand dollars)	Number of shares held (thousand shares)	Amount (thousand dollars)	Source of share capital	Equity contributions made in the form of assets other thancash	Others
1996.08	10	70,000	700,000	54,365	543,650	Recapitalizationof retained earnings	None	Note1
1997.08	10	100,000	1,000,000	79,300	793,000	Recapitalization of retained earnings: NT$149,350,000 Cash capital increase: NT$100,000,000	None	Note 2
1998.06	10	150,000	1,500,000	115,200	1,152,000	Recapitalization of retained earnings: NT$259,000,000 Cash capital increase: NT$100,000,000	None	Note 3
1999.05	10	200,000	2,000,000	152,160	1,521,600	Recapitalization of retained earnings: NT$312,000,000 Recapitalization of capital reserve: NT$57,600,000	None	Note 4
2000.06	10	250,000	2,500,000	201,300	2,013,000	Recapitalization of retained earnings: NT$415,320,000 Recapitalization of capital reserve: NT$76,080,000	None	Note 5
2001.01	10	250,000	2,500,000	208,358	2,083,588	Capital increase in connection with merger: NT$70,580,000	None	Note 6
2001.03	10	250,000	2,500,000	201,358	2,013,588	Treasury stock extinguished: NT$70,000,000	None	Note 7
2001.07	10	320,000	3,200,000	234,300	2,343,000	Recapitalization of retained earnings: NT$269,000,000 Recapitalization of capital reserve: NT$60,400,000	None	Note 8
2002.07	10	320,000	3,200,000	252,690	2,526,900	Recapitalization of retained earnings: NT$19,890,000 Recapitalization of capital reserve: NT$164,010,000	None	Note 9
2003.07	10	360,000	3,600,000	272,289	2,722,892	Recapitalization of retained earnings: NT$195,990,000	None	Note 10
2004.03	10	360,000	3,600,000	252,579	2,525,787	Treasury stock extinguished: NT$200,000,000 Stocks converted from stock warrants: NT$2,890,000	None	Note 11
2004.07	10	360,000	3,600,000	262,705	2,627,052	Recapitalization of capital reserve: NT$96,520,000 Stocks converted from stock warrants: NT$4,750,000	None	Note 12
2004.10	10	360,000	3,600,000	263,405	2,634,047	Stocks converted from stock warrants: NT$7,000,000	None	Note 13
2005.01	10	360,000	3,600,000	263,882	2,638,819	Stocks converted from stock warrants: NT$4,770,000	None	Note 13
2005.03	10	360,000	3,600,000	264,171	2,641,709	Stocks converted from stock warrants: NT$2,890,000	None	Note 13
2005.07	10	360,000	3,600,000	272,374	2,723,744	Recapitalization of retained earnings: NT$75,130,000 Stocks converted from stock warrants: NT$6,910,000	None	Note 14
2005.10	10	360,000	3,600,000	272,693	2,726,929	Stocks converted from stock warrants: NT$3,190,000	None	Note 15
2006.01	10	360,000	3,600,000	274,258	2,742,584	Stocks converted from stock warrants: NT$15,660,000	None	Note 15
2006.03	10	360,000	3,600,000	274,932	2,749,317	Stocks converted from stock warrants: NT$6,730,000	None	Note 15
2006.06	10	360,000	3,600,000	284,344	2,843,442	Recapitalizationof retained earnings:	None	Note16

55 -

Year and month	Price at issuance	Authorized capitalstock	Authorized capitalstock	Paid-incapital	Paid-incapital	Remark
		Number of shares held (thousand shares)	Amount (thousand dollars)	Number of shares held (thousand shares)	Amount (thousand dollars)	Source of share capital	Equity contributions made in the form of assets other thancash	Others
						NT$81,370,000 Stocks converted from stock warrants: NT$12,760,000
2006.10	10	360,000	3,600,000	285,154	2,851,542	Stocks converted from stock warrants: NT$8,100,000	None	Note 15
2007.01	10	360,000	3,600,000	286,378	2,863,779	Stocks converted from stock warrants: NT$12,240,000	None	Note 15
2007.03	10	360,000	3,600,000	287,410	2,874,099	Stocks converted from stock warrants: NT$10,320,000	None	Note 15
2007.08	10	400,000	4,000,000	302,311	3,023,114	Recapitalization of retained earnings: NT$142,490,000 Stocks converted from stock warrants: NT$6,520,000	None	Note 17
2007.10	10	400,000	4,000,000	302,713	3,027,134	Stocks converted from stock warrants: NT$4,020,000	None	Note 15
2008.01	10	400,000	4,000,000	304,244	3,042,441	Stocks converted from stock warrants: NT$15,310,000	None	Note 15
2008.03	10	400,000	4,000,000	305,058	3,050,581	Stocks converted from stock warrants: NT$8,140,000	None	Note 15
2008.08	10	400,000	4,000,000	329,542	3,295,419	Recapitalization of retained earnings: NT$234,820,000 Stocks converted from stock warrants: NT$10,020,000	None	Note 18
2008.10	10	400,000	4,000,000	329,664	3,296,644	Stocks converted from stock warrants: NT$1,230,000	None	Note 15
2009.01	10	400,000	4,000,000	329,915	3,299,151	Stocks converted from stock warrants: NT$2,510,000	None	Note 15
2009.03	10	400,000	4,000,000	331,600	3,316,004	Stocks converted from stock warrants: NT$16,850,000	None	Note 15
2009.07	10	450,000	4,500,000	348,909	3,489,089	Recapitalization of retained earnings: NT$166,100,000 Stocks converted from stock warrants: NT$6,990,000	None	Note 19
2009.10	10	450,000	4,500,000	349,598	3,495,984	Stocks converted from stock warrants: NT$6,900,000	None	Note 15
2010.01	10	450,000	4,500,000	349,767	3,497,674	Stocks converted from stock warrants: NT$1,690,000	None	Note 15
2010.03	10	450,000	4,500,000	350,076	3,500,756	Stocks converted from stock warrants: NT$3,080,000	None	Note 15
2010.07	10	450,000	4,500,000	362,077	3,620,771	Recapitalization of retained earnings: NT$105,500,000 Stocks converted from stock warrants: NT$14,520,000	None	Note 20
2010.10	10	450,000	4,500,000	362,144	3,621,441	Stocks converted from stock warrants: NT$670,000	None	Note 15
2011.01	10	450,000	4,500,000	362,269	3,622,691	Stocks converted from stock warrants: NT$1,250,000	None	Note 15
2011.07	10	450,000	4,500,000	376,760	3,767,599	Recapitalization of retained earnings: NT$144,910,000	None	Note 21
2014.12	10	450,000	4,500,000	378,086	3,780,862	Stocks converted from convertible corporate bonds: NT$13,260,000	None	Note 22
2015.01	10	450,000	4,500,000	378,782	3,787,821	Stocks converted from convertible corporate bonds: NT$6,960,000	None	Note 22
2015.05	10	450,000	4,500,000	378,786	3,787,862	Stocks converted from convertible corporate bonds: NT$40,000	None	Note 22
2015.11	10	450,000	4,500,000	379,030	3,790,300	Stocks converted from stock warrants: NT$2,440,000	None	Note 23
2016.01	10	450,000	4,500,000	379,170	3,791,698	Stocks converted from stock warrants: NT$1,400,000	None	Note 23
2016.05	10	450,000	4,500,000	379,693	3,796,934	Stocks converted from convertible corporate bonds: NT$2,890,000	None	Note 22 to Note

56 -

Year and month	Price at issuance	Authorized capitalstock	Authorized capitalstock	Paid-incapital	Paid-incapital	Remark
		Number of shares held (thousand shares)	Amount (thousand dollars)	Number of shares held (thousand shares)	Amount (thousand dollars)	Source of share capital	Equity contributions made in the form of assets other thancash	Others
						Stocks converted from stock warrants: NT$2,350,000		23
2016.07	10	450,000	4,500,000	383,373	3,833,732	Stocks converted from convertible corporate bonds: NT$4,620,000 Stocks converted from stock warrants: NT$1,180,000 New restricted employee shares: NT$31,000,000	None	Note 22 to Note 24
2016.12	10	450,000	4,500,000	387,158	3,871,576	Stocks converted from convertible corporate bonds: NT$28,500,000 Stocks converted from stock warrants: NT$9,350,000	None	Note 22 to Note 23
2017.01	10	450,000	4,500,000	389,887	3,898,872	Stocks converted from convertible corporate bonds: NT$23,820,000 Stocks converted from stock warrants: NT$3,470,000	None	Note 22 to Note 23
2017.05	10	450,000	4,500,000	405,090	4,050,904	Stocks converted from convertible corporate bonds: NT$149,580,000 Stocks converted from stock warrants: NT$2,450,000	None	Note 22 to Note 23
2017.06	10	450,000	4,500,000	405,275	4,052,754	New restricted employee shares: NT$1,850,000	None	Note 24
2017.07	10	450,000	4,500,000	405,263	4,052,631	New restricted employee shares extinguished: NT$120,000	None	Note 24
2017.08	10	450,000	4,500,000	408,051	4,080,513	Stocks converted from convertible corporate bonds: NT$27,220,000 Stocks converted from stock warrants: NT$670,000	None	Note 22 to Note 23
2017.11	10	450,000	4,500,000	409,410	4,094,101	Stocks converted from convertible corporate bonds: NT$4,300,000 Stocks converted from stock warrants: NT$9,290,000	None	Note 22 to Note 23
2018.01	10	450,000	4,500,000	411,894	4,118,942	Stocks converted from convertible corporate bonds: NT$20,420,000 Stocks converted from stock warrants: NT$4,430,000	None	Note 22 to Note 23
2018.05	10	450,000	4,500,000	412,953	4,129,532	Stocks converted from convertible corporate bonds: NT$220,000 Stocks converted from stock warrants: NT$10,910,000 New restricted employee shares extinguished: NT$540,000	None	Note 22 to Note 25
2018.09	10	450,000	4,500,000	414,359	4,143,594	Stocks converted from convertible corporate bonds: NT$80,000 Stocks converted from stock warrants: NT$14,070,000 New restricted employee shares extinguished: NT$90,000	None	Note 22 to Note 25
2018.11	10	450,000	4,500,000	416,443	4,164,431	Stocks converted from convertible corporate bonds: NT$14,940,000 Stocks converted from stock warrants: NT$6,100,000 New restricted employee shares extinguished: NT$210,000	None	Note 22 to Note 25
2019.01	10	450,000	4,500,000	416,779	4,167,794	Stocks converted from convertible corporate bonds: NT$900,000 Stocks converted from stock warrants: NT$2,460,000	None	Notes 22, 23, and 25
2019.03	10	450,000	4,500,000	416,717	4,167,174	New restricted employee shares extinguished: NT$620,000	None	Note 24
2019.05	10	450,000	4,500,000	417,394	4,173,942	Stocks convertedfromstock	None	Notes23

57 -

Year and month	Price at issuance	Authorized capitalstock	Authorized capitalstock	Paid-incapital	Paid-incapital	Remark
		Number of shares held (thousand shares)	Amount (thousand dollars)	Number of shares held (thousand shares)	Amount (thousand dollars)	Source of share capital	Equity contributions made in the form of assets other thancash	Others
						warrants: NT$ 6,770,000		and25
2019.07	10	500,000	5,000,000	417,382	4,173,823	New restricted employee shares extinguished: NT$120,000	None	Note 24
2019.08	10	500,000	5,000,000	419,093	4,190,926	Stocks converted from stock warrants: NT$17,370,000 New restricted employee shares extinguished: NT$270,000	None	Note 23~25
2019.11	10	500,000	5,000,000	419,296	4,192,961	Stocks converted from stock warrants: NT$2,040,000	None	Note 25
2020.03	10	500,000	5,000,000	419,526	4,195,256	Stocks converted from stock warrants: NT$2,300,000	None	Note 25
2020.04	10	500,000	5,000,000	420,490	4,204,902	Stocks converted from stock warrants: NT$ 9,650,000	None	Note 26

Note 1: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (85) Taiwan-Finance-Securities (I) 41514 dated July 8, 1996 Note 2: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (86) Taiwan-Finance-Securities (I) 45915 dated June 25, 1997 Note 3: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (87) Taiwan-Finance-Securities (I) 46094 dated June 8, 1998 Note 4: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (88) Taiwan-Finance-Securities (I) 48548 dated May 24, 1999

Note 5: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (89) Taiwan-Finance-Securities (I) 49542 dated June 8, 2000 Note 6: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (89) Taiwan-Finance-Securities (I) 83405 dated December 18, 2000 Note 7: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (89) Taiwan-Finance-Securities (III) 102418 dated December 22, 2000 Note 8: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. (90) Taiwan-Finance-Securities (I) 137773 dated June 13, 2001 9 Note 9: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. Taiwan-Finance-Securities (I) 0910132477 dated June 14, 2002 Note 10: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. Taiwan-Finance-Securities (I) 0920125022 dated June 9, 2003

Note 11: Approved by the Securities and Exchange Commission, Ministry of Finance as per letters with Ref. No. Taiwan-Finance-Securities (III) 0920162383 dated January 2, 2004, and (90) Taiwan-Finance-Securities (I) 143348 dated July 16, 2001.
Note 12: Approved by the Securities and Exchange Commission, Ministry of Finance as per letters with Ref. (90) No Taiwan-Finance-Securities (I) 143348 dated July 16, 2001 and Taiwan-Finance-Securities (I) 0930128437 dated June 28, 2004.
Note 13: Approved by the Securities and Exchange Commission, Ministry of Finance as per letters with Ref. (90) No Taiwan-Finance-Securities (I) 143348 dated July 16, 2001 and Taiwan-Finance-Securities (I) 0910132478 dated June 14, 2002.
Note 14: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0940122455 dated June 3, 2005.
Note 15: Approved by the Securities and Exchange Commission, Ministry of Finance as per letters with Ref. (90) No Taiwan-Finance-Securities (I) 143348 dated July 16, 2001, Taiwan-Finance-Securities (I) 0910132478 dated June 14, 2002, and Taiwan-Finance-Securities (I) 0920127281 dated June 19, 2003.
Note 16: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0950122451 dated June 2, 2006.
Note 17: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0960030405 dated June 14, 2007.
Note 18: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0970031743 dated June 25, 2008.
Note 19: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-SecuritiesCorporate0980027677 dated June 5, 2009.
Note 20: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-SecuritiesCorporate0990029749 dated June 9, 2010.
Note 21: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-SecuritiesCorporate1000028222 dated June 20, 2011.
Note 22: Approved by the Financial Supervisory Commission as per letter with Ref. No. Financial-Supervisory-Securities-Corporate-1030012130 dated April 17, 2014.
Note 23: Approved by the Financial Supervisory Commission as per letter with Ref. No. Financial-Supervisory-Securities-Corporate-1010042558 dated September 17, 2012
Note 24: Approved by the Financial Supervisory Commission as per letter with Ref. No. Financial-Supervisory-Securities-Corporate-1050024281 dated June 27, 2016.
Note 25. Approved by the Financial Supervisory Commission per letter Ref. No. Financial-Supervisory-Securities-Corporate-1010036382 of September 7, 2015.
Note 26. Approved by the Financial Supervisory Commission per letter Ref. No. Financial-Supervisory-Securities-Corporate-1010036382 of September 7, 2015. (Changes to capital amount are yet to be implemented)
58 -

Unit: shares, April 12, 2020

				Unit:shares,April 12,2020
Type of shares	Authorized capitalstock			Remark
	Number of shares outstanding(listed)	Number of shares not issued	Total
Common shares	420,490,187	79,509,813	500,000,000	30,000,000 shares have been reserved for employee stock warrants.

Information on the shelf registration system: None.

(II) Shareholder structure

) Shareholder structure	) Shareholder structure
		April 12,2020
Shareholder structure Quantity	Governme nt agencies	Financial institutions	Other legal persons	Per individual	Overseas institutions and individuals	Total
Patients	5	48	55	9,556	441	10,105
Number of shares held	6,602,000	28,297,550	15,931,493	97,305,557	272,353,587	420,490,187
Shareholding percentage	1.57%	6.73%	3.79%	23.14%	64.77%	100.00%

(III) Distribution of equity ownership

1. Common shares

1. Common shares
			April 12,2020
Shareholding range	Number of shareholders	Number of shares held	Shareholding percentage
1 to999	3,958	725,245	0.17%
1,000 to 5,000	4,730	8,820,729	2.10%
5,001 to 10,000	509	3,820,943	0.91%
10,001 to 15,000	185	2,310,371	0.55%
15,001 to 20,000	86	1,524,945	0.36%
20,001 to 30,000	102	2,568,294	0.61%
30,001 to 40,000	52	1,800,614	0.43%
40,001 to 50,000	29	1,350,112	0.32%
50,001 to 100,000	123	8,878,256	2.11%
100,001 to 200,000	79	10,966,678	2.61%
200,001 to 400,000	74	20,483,001	4.87%
400,001 to 600,000	37	17,856,285	4.25%
600,001 to 800,000	27	18,759,748	4.46%
800,001 to 1,000,000	18	16,078,686	3.82%
1,000,001 and above	96	304,546,280	72.43%
Total	10,105	420,490,187	100.00%

Preferred shares: None.
59 -

(IV) List of major shareholders

Name of shareholders who hold more than 5% of the shares or are the 10 largest shareholders, as well as number and percentage of shares held by them:

(IV) List of major shareholders Name of shareholders who hold more than 5% of the shares or are the 10 largest shareholders, as well as number and percentage of shares held by them:	(IV) List of major shareholders Name of shareholders who hold more than 5% of the shares or are the 10 largest shareholders, as well as number and percentage of shares held by them:	(IV) List of major shareholders Name of shareholders who hold more than 5% of the shares or are the 10 largest shareholders, as well as number and percentage of shares held by them:
April 12,2020
Shares Name of major shareholder	Number of shares held	Shareholding percentage
Leo Huang	20,763,897	4.94%
JPMorgan Chase Bank N.A., Taipei Branch in custody for StichtingDepositaryAPGEmergingMarkets EquityPool	16,410,000	3.90%
Chun-Sheng Chen	15,113,308	3.59%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Schroder InternationalSelection Fund - Asian Absolute Return	13,082,000	3.11%
Yu-Mei Hsueh	11,074,646	2.63%
First State Asia Pacific Leaders fund a sub-fund of First State Investment	9,459,000	2.25%
Shu-ChuanChen	9,294,362	2.21%
NanShan Life InsuranceCo.,Ltd	8,662,000	2.06%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of VanguardStar Funds	7,061,121	1.68%
Government of Singapore – GOS – EFMC	6,082,524	1.45%

(V) Prices, net asset value per share (NAVPS), earnings per share (EPS), and dividends per share (DPS), and related information of the 2 most recent years.

Item	Year	Year	2018	2019	As of March 31, 2020
Market price per share(Note 1)	Max		197.00	163.50	170.50
	Min		99.10	112.00	95.00
	Average		150.53	141.50	142.31
Net asset value per share(NAVPS)	Before distribution		34.57	34.55	-
	After distribution		30.37	31.54	-
Earnings per share	Weighted average		409,438,272	414,077,766	-
	Earningsper share		6.22	4.48	-
Dividend per Share	Cash dividend		4.17782622	3.0(Note 2)	-
	Free allotment	Dividends from surplus earnings	-	-	-
		Dividends from capital reserve	-	-	-
	Accumulated unpaid dividend		-	-	-
Return on investment	Price/earnings ratio		24.20	31.58	-
	Price/dividend ratio		35.84	47.17	-
	Cash dividendyield ratio		2.79	2.12	-

Note 1: The highest and lowest market price of ordinary shares for each year are listed, while the average market price for each year is calculated based on trading value and volume in each year.

Note 2: Distribution of earnings for the year 2019 has been approved by the Board of Directors on February 26, 2020 to issue cash dividends in the total amount of NT$1,265,000,000, which will subsequently affect the number of outstanding shares as a result of exercise of employee share options or for other reasons.

(VI) Dividend policy of the Corporation and its implementation
Dividend policy stipulated in the Articles of Incorporation

If such statutory reserve amounts to the Corporation’s total paid-up capital, this provision shall not apply. In addition, based on the special reserves set aside as required by the law

60 -

or the competent authority, the balance shall then be combined with the undistributed earnings at the beginning of the same period. The Board of Directors shall propose a surplus allocation plan to be submitted to the Shareholders' Meeting for approval. No share dividends and bonuses shall be allocated when the Corporation does not post a profit.

The Board is authorized to make a special resolution to distribute and report to the Shareholders’ Meeting if the distribution of earnings as mentioned in the preceding paragraph shall be in the form of cash dividends.

When the Company has no loss, it may distribute new shares or cash out of the statutory surplus reserve and all or part of the capital reserve that meets the requirements of the Companies Act, to the extent of 25% of the excess of the statutory surplus reserve over the paid-in capital.

Subject to the provisions of the preceding paragraph, the Board of Directors shall be authorized, by special resolution, to distribute cash out of the statutory surplus reserve and the whole or part of the capital reserve which complies with the requirements of the Companies Act, and to report such distribution at the next general meeting.

Dividend payout shall be implemented according to the business condition of the Corporation and consider both future capital budgets and capital requirements of future development plans of the Corporation as well as shareholders’ interests. The Board of Directors shall formulate the category and amount of dividend payout, which shall, by principle, be no less than 60% of NIAT for the year. The Corporation's dividend payout ratio in 2019 and 2018 were 67% and 68%, respectively.

Since the Corporation is still in the growth stage, cash dividend distributed each year shall be no less than 20% of the total cash and stock dividends distributed for the year in consideration of funding needs of the Corporation’s future development plans.

Dividend payout plans proposed during the most recent Shareholder's Meeting

Pursuant to Article 34-1 of the Articles of Association of the Company, the distribution of the surplus shall be in the form of cash dividends, and the Board is authorized to make a special resolution for the distribution and report to the shareholders’ meeting. On February 26, 2020, the Board of Directors resolved to approve the distribution of cash dividend of NT$1,265,000,000 to the shareholders of the Company of approximately NT$3 per share. The distribution proposal will be reported in the annual general shareholders meeting of the Company for the year ended December 31, 2019 and the Board of Directors will set a separate base date for the distribution.

If the provision of employee stock options or any other reasons affects the number of outstanding shares, thereby leading to changes in the dividend payout ratio, it is proposed that the Board of Directors fully authorizes the Chairman to handle the relevant issue.

(VII) Impact of stock dividends proposed by the Shareholders' Meeting on the Corporation's business performance and earnings per share (EPS): Not applicable.
(VIII) Rewards for employees and directors
Percentage or range of employee rewards and directors' rewards as stipulated in the Company's Articles of Incorporation.

If the Corporation records a profit, 5% to 20% of the said profit shall be set aside for employee rewards. The Board of Directors shall determine whether to issue rewards in the form of stocks or cash. Recipients of the said rewards shall include employees at the Corporation who satisfy specific criteria. The Corporation permits the Board of Directors to set aside no more than 1.5% of the aforementioned profit as directors' rewards. Proposals for the distribution of employee rewards as well as directors' rewards shall be submitted to the Shareholder’s Meeting.

Accounting treatment for the basis of estimating the amount of employee rewards and directors’ rewards, the basis of calculating the number of shares to be distributed as employee rewards, and for any discrepancy between the actual amount distributed and the estimated figures.
61 -
- (1) According to the Corporation's Articles of Incorporation as well as past experience on the number of rewards that may be distributed, the number of employee rewards and directors' rewards in 2019 were NT$290,000,000 and NT$9,600,000, respectively, making up for 11.84% and 0.39% of the Corporation's net income before taxes (the amount before deducting employee rewards and directors' rewards), respectively, thus fulfilling the limits prescribed by the Articles of Incorporation.
- (2) Number of shares issued for employee rewards: 0.
- (3) Accounting treatment for any discrepancy between the actual amount distributed and the estimated figures: Where the Board of Directors approved to make major changes to the amount of rewards issued before the approval and issuance of the financial statements, the said change shall be adjusted as annual expenses listed for the year. Where changes were still made to the said amount after approval and issuance of financial statements, the changes shall be treated as changes to accounting estimates, and be adjusted and entered into the accounts for the following year.
Distribution of rewards as approved by the Board of Directors
- (1) Where the value of the employee rewards as well as directors' rewards distributed in the form of cash or shares exhibit discrepancies with the recognized expenses and annual estimates, the sum, cause, and treatment of such discrepancies shall be disclosed:
  - On February 26, 2020, the Board of Directors of the Corporation has approved cash distributions of NT$290,000,000 and NT$9,600,000 for employee rewards and directors' rewards, respectively. There was no discrepancy with recognized expenses and annual estimates.
- (2) Amount of employee rewards distributed in the form of shares and its proportion of NIAT provided in the parent company-only financial statements and total sum of employee rewards: 0.
If there is any discrepancy between the actual amount of rewards distributed to employees and directors (including the number and dollar amount of shares distributed, as well as share price) and the recognized amount of rewards for employees and directors in the previous fiscal year, the amount, causes and treatment of such discrepancies shall be stated: In 2018, the Corporation distributed employee rewards totaled NT$240,000,000,

whereas rewards for directors totaled NT$9,600,000. There was no discrepancy between the actual amount of rewards distributed and the recognized amount of rewards.

(IX) Repurchase of the Corporation's own shares: None.
II. Corporate Bond: None.
III. Preferred shares: None.
IV. Overseas depositary receipt: None.
62 -
V. Employee stock warrant
(I) Status of employee stock warrants of the Corporation that are yet to mature

		April 12,2020
Type of employee stock warrant		Employee stock warrant in 2015
Date of effective registration		September 7,2015
Issue date		March 25,2016
Number of units issued		7,900,000 units
Ratio of subscribable shares to total issued and outstanding shares		1.8831%
Subscriptionperiod		6years
Method for exercising stock warrant		Issuance of new shares
Restricted duration of stock subscriptions and ratio		Exercise period End of Year 2 40% End of Year 3 70% End of Year 4 100%
Number of subscribed shares		5,263,000 shares
Amount of unsubscribed shares		NT$325,490,500
Cumulative number of expired shares		465,600 shares
Number of unsubscribed shares		2,171,400 shares
Subscription price per share of unsubscribed shares		NT$ 59.8
Proportion of the quantity of unsubscribed shares of total issued and outstandingshares		0.5176%
Impact on shareholders' equity		The Corporation may only refer to the period to issue new stock warrants two years after the issue date of these stock warrants. The warrant exercise period was also 6 years, meaning that they would have a limited impact on the dilution of shareholder equity.

63 -

(II) Name and subscription status of managerial officers who have obtained employee stock warrants and employees ranked in the top 10 employees with the highest number of shares to which they have subscription rights through employee stock warrants acquired, up to the publication date of this annual report

					April 12,2020	April 12,2020	April 12,2020	April 12,2020	April 12,2020	April 12,2020	April 12,2020	April 12,2020
	Title (Note 1)	Name	Stock subscriptions obtained (thousand shares)	Proportion of subscribed shares acquired of total issued and outstanding shares (%) (Note 2)	Implemented				Not implemented
					Number of subscribed shares (thousand shares)	Price of subscribed share (NT$)	Amount of subscribed shares (NT$ thousand)	Proportion of the number of subscribed shares to the total number of shares issued (%) (Note 2)	Number of unsubscribed shares (thousand shares)	Price of unsubscribed share (NT$)	Amount of unsubscribed shares (NT$ thousands)	Proportion of the number of unsubscribed shares to the total number of shares (%) (Note 2)
Managerial officer	None	None	-	-	-	-	-	-	-	-	-	-
Employee (Note 3)	Employee	Kuo-Wei, Huang	770	0.1835	489	59.8~ 63.4	30,231	0.1166	281	59.8	16,804	0.0670
	Employee	Chouyu Chuang
	Employee	Nick Wu
	Employee	Kevin Weng
	Employee	Ethan Wu
	Employee	Chun-Kuo, Chen
	Employee	Hans Yi
	Employee	Mark Chien
	Employee	James Lee
	Employee	Wen Shieh
	Employee	Bill Tsou
	Employee	John Lee
	Employee	Liwei Liu
	Employee	Hsiang- Wen,Shih
	Employee	Kuo-Cheng, Wang
	Employee	Chien-I, Cheng
	Employee	Chih-Wen, Tsou
	Employee	Sheng-Kai, Cheng
	Employee	Wen-Chung Chen

Note 1: It includes managerial officers and employees (special notes shall be provided for those who have resigned or deceased). Individual names and job positions shall be displayed. A summary sheet may be used to disclose the means of acquisition and subscription.

Note 2: The total quantity of issued shares shall be based upon the number of shares listed on the change registration information of the Ministry of Economic Affairs (MOEA). (On March 13, 2020, the number of shares listed in the change registration information held by MOEA was 419,525,587 shares) Note 3: It refers to a non-managerial employee ranked in the top 10 employees with the highest number of stock warrants acquired.

64 -

VI. New restricted employee shares

(I) Implementation of new restricted employee shares

April 12, 2020

		April 12, 2020
Type of new restricted employee share	First issuance of new restricted employee shares in 2016	Second issuance of new restricted employee shares in 2016
Date of effective registration	June 27, 2016	June 27, 2016
Issue date	July 8, 2016	June 20, 2017
Number of new restricted employee shares issued	3,100,000 shares	185,000 shares
Issueprice	NT$10	NT$10
Ratio of Restricted employee shares Issued to Total Shares Issued (%)	0.7389%	0.0441%
Vesting conditions for new restricted employee shares	An employee must be employed for a period of one year after subscribing for new restricted employee shares and at maturity in each vesting period. Subscription of new restricted employee shares must also comply with the overall financial performance of the Corporation and personal performance assessment indicators. The proportion of shares that may be issued according to the fulfillment of respective vesting conditions shall be distributed according to regulations for the issuance of new restricted employee shares. Ratio of shares to be issued under various vesting conditions are listed as follows: End of Year 1: 10% End of Year 2: 20% End of Year 3: 30% End of Year 4: 40%	An employee must be employed for a period of one year after subscribing for new restricted employee shares and at maturity in each vesting period. Subscription of new restricted employee shares must also comply with the overall financial performance of the Corporation and personal performance assessment indicators. The proportion of shares that may be issued according to the fulfillment of respective vesting conditions shall be distributed according to regulations for the issuance of new restricted employee shares. Ratio of shares to be issued under various vesting conditions are listed as follows: End of Year 1: 10% End of Year 2: 20% End of Year 3: 30% End of Year 4: 40%
Restricted rights to new restricted employee shares	1. An employee may not sell, pledge, transfer, provide as a gift to other party, set up or using other means to dispose of new restricted employee shares. 2. New restricted employee shares may partake in dividend payouts and cash capital increase subscriptions. Dividend payout that may be acquired is not subject to vesting period restrictions. Dividend payout to be issued shall be remitted from a trust account to a personal bank account of the employee on the date of issuance without any surcharge. 3. For an employee who has yet to meet the vesting conditions, attendance, proposal, speech, voting rights, and other matters related to shareholder equity in the Shareholders’ Meeting shall be commissioned to a trust custodian shall be commissioned to exercise matters related	1. An employee may not sell, pledge, transfer, provide as a gift to other party, set up or using other means to dispose of new restricted employee shares. 2. New restricted employee shares may partake in dividend payouts and cash capital increase subscriptions. Dividend payout that may be acquired is not subject to vesting period restrictions. Dividend payout to be issued shall be remitted from a trust account to a personal bank account of the employee on the date of issuance without any surcharge. 3. For an employee who has yet to meet the vesting conditions, attendance, proposal, speech, voting rights, and other matters related to shareholder equity in the Shareholders’ Meeting shall be commissioned to a trust custodian shall be commissioned to exercise matters related

65 -

Type of new restricted employee share	First issuance of new restricted employee shares in 2016	Second issuance of new restricted employee shares in 2016
	to attendance, proposal, speech, voting rights, as well as other matters related to shareholder equity in the Shareholders’ Meetingon behalf of the employee.	to attendance, proposal, speech, voting rights, as well as other matters related to shareholder equity in the Shareholders’ Meetingon behalf of the employee.
Safekeeping of new restricted employee shares	Once issued, the new restricted employee shares shall be submitted to a trust for custody. Before meeting the vesting conditions, an employee may not, for any reason or by any means, ask the custodian to return the said shares.	Once issued, the new restricted employee shares shall be submitted to a trust for custody. Before meeting the vesting conditions, an employee may not, for any reason or by any means, ask the custodian to return the said shares.
Actions for handling allotments or subscription of new shares by employees who have yet to meet the vestingconditions	Before meeting the vesting conditions, the Corporation may refer to law to buy back new restricted employee shares that have been issued at the price of the original issuance and extinguish the shares accordingly.	Before meeting the vesting conditions, the Corporation may refer to law to buy back new restricted employee shares that have been issued at the price of the original issuance and extinguish the shares accordingly.
Number of new restricted employee shares recovered or repurchased	158,300 shares	38,900 shares
Number of new restricted shares extinguished	1,757,700 shares	44,600 shares
Number of new restricted shares yet to be extinguished	1,184,000 shares	101,500 shares
Proportion of new restricted shares remaining restricted as part of total equities issued	0.2822%	0.0242%
Impact on shareholders' equity	Overall evaluation of the vesting conditions, periods, and proportions listed in the regulations for issuing shares reveal that the said issuance had a limited impact and dilution on the earnings per share (EPS) of the Corporation from 2016 to 2020, and will not significantlyaffect shareholders' equity.	Overall evaluation of the vesting conditions, periods, and proportions listed in the regulations for issuing shares reveal that the said issuance had a limited impact and dilution on the earnings per share (EPS) of the Corporation from 2017 to 2021, and will not significantlyaffect shareholders' equity.

66 -
(II) Name of managerial officers and top 10 employees with the highest number of new restricted employee shares, and status of acquisition

											April 12,2020	April 12,2020
	Title (Note 1)	Name	New restricted employee shares acquired (thousand shares)	Proportion of the number of new restricted employee shares to the total number of shares issued (%) (Note 3)	Restricted	shares extinguished			Restricted shares yet to		be extinguished
					Quantity of shares that were no longer restricted (thousand shares)	Issue price (NT$)	Issue Amount (thousand dollars)	Proportion of the number of restricted shares to the total number of shares issued (%) (Note 3)	Number of restricted shares yet to be extinguished (thousand shares)	Issue price (NT$)	Issue Amount (thousand dollars)	Proportion of the number of restricted shares yet to be extinguished to the total number of shares issued (%) (Note 3)
Managerial officer	CEO	Leo Huang	1,390	0.3313	816	10	8,160	0.1945	556	10	5,560	0.1325
	President	I-Shih Tseng
	President	David Yang
	President	Joe Lin
	President	George Chang
	Vice President	Paul Ying
	Vice President	Steven Liu
	Vice President	Benjamin Huang
	Vice President	Herbert Tsai
	Vice President	Jeff Lee
	Vice President	Bobby Tseng
	Vice President	Vincent Chen
	Vice President	Tony Yang
	Vice President	Vincent Wu
	Vice President	Lance Ouyang
	Vice President	Kenny Wang
	Vice President	Cindy Tai
	Vice President	Galen Chou
	Vice President	Arno Wu
Employee (Note 2)	Employee	C.-F. Huang	450	0.1073	266	10	2,658	0.0634	180	10	1,800	0.0429
	Employee	Amy Huang
	Employee	Addin Chuang
	Employee	Elia Huang
	Employee	Glen Yang
	Employee	Vincent Chen
	Employee	Lawrence Wu
	Employee	Ray Chi
	Employee	Jih-Hsiung Hsieh
	Employee	Yung-Lung Hsiao

Note 1: It includes managerial officers and employees (special notes shall be provided to those who have resigned or deceased). Individual names and job positions shall be displayed. A summary sheet may be used to disclose the means of receiving an allocation or subscription.

Note 2: It refers to a non-managerial employee ranked in the top 10 employees with the highest number of new restricted employee shares acquired.

Note 3: The total number of shares issued refers to the number of shares listed in the change registration information held by MOEA. (On March 13, 2020, the number of shares listed in the change registration information held by MOEA was 419,525,587 shares)

VII. Issuance of new shares in connection with the merger or acquisition of other companies: None.

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VIII. Implementation of capital utilization plan

(I) Content of the plan
Where various issuance or private placements of securities have yet to be completed, or have been completed in the three most recent years but the benefits of the plan have yet to be realized:
Second issuance of unsecured convertible corporate bonds in Taiwan
- (1) Content of the plan

Total amount of capital required for this plan: NT$2,180,372,000

Source:  Issuance of corporate bonds worth NT$2,000,000,000 with a maturity of 5 years and an interest of 0%.

Method for acquiring the remaining NT$180,372,000: Own funds or others.

(2) Capital utilization plan and expected progress

Unit: NT$ thousands

			Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Item	Expected completion date	Total amount of capital required	Expectedprogress of capital utilization
			2014		2015				2016
			Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Construction of factory building	Q4 2016	2,180,372	50,000	60,000	100,000	150,000	150,000	150,000	620,000	300,000	320,000	280,372
Total		2,180,372	50,000	60,000	100,000	150,000	150,000	150,000	620,000	300,000	320,000	280,372

(3) Anticipated possible benefits

The second issuance of unsecured convertible corporate bonds in Taiwan have raised a total of NT$2,000,000,000. This plan requires a total of NT$2,180,372,000 for the construction of new factory building. The remaining NT$180,372,000 shall be paid for using own funds or other methods. The construction of factory building will increase usable space. Expected adjustments to spatial layouts and production line configurations will improve the production and sales of precision electronic measurement instruments and integrated automated measurement system, thereby benefiting future development plans and reduce business risks facing the Corporation. Expected increase in production volume, value, profitability, and net operating profit are provided as follows:

Unit: units, sets; NT$ thousands

Year 2017 2018 2019 2020	Item	Production volume	Sales volume	Sales value	Gross profit	Net operating profit
	Precision electronic measurement instruments	515	515	1,010,000	555,500	202,000
	Integrated automatic measurement systems	20	20	600,000	240,000	90,000
	Precision electronic measurement instruments	725	725	1,371,000	740,340	274,200
	Integrated automatic measurement systems	25	25	1,000,000	390,000	150,000
	Precision electronic measurement instruments	905	905	1,622,500	859,925	324,500
	Integrated automatic measurement systems	28	28	1,120,000	442,400	168,000
	Precision electronic measurement instruments	1,080	1,080	1,804,500	956,385	360,900
	Integrated automatic measurement systems	35	35	1,550,000	596,750	232,500
	Precision electronic measurement instruments	1,314	1,314	2,029,700	1,055,444	405,940
2021	Integrated automatic measurement systems	40	40	1,520,000	577,600	228,000

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(II) Status of implementation

	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Project item	Status of implementation		Q1 2020	Up to Q1, 2020	Reason for project being ahead of schedule or behind schedule, and improvementplans
Construction of factory building	Expenses	Expected	`－`	2,180,372	Due to the government's delay in land acquisition, the construction of the plant proceeded in stages after negotiations in the third quarter of 2015. At present, the construction of the plant was approved. The payment made in Q1 2020 included the entrusted construction management and supervision services phase 16, curtain wall works phase 9, fitting works phase 2, air-conditioning works phase 10, electrical and mechanical engineering phase 20- 21, project acceptance phase 24- 25, landscape engineering phase 3- 4, crane engineering phase 4, partition wall installation phase 1, interior design phase 5, additional civil engineering phase 2, and construction prepayments. The construction of the Company's plant is expected to be completed in the fourth quarter of 2020. Although the progress is behind schedule, the construction of the plant continues as planned. There's currently no major anomaly.
		Actual	195,868	2,322,526
	Progress	Expected	`－`	100.00%
		Actual	2.46%	100.00%
Total	Expenses	Expected	`－`	2,180,372
		Actual	195,868	2,322,526
	Progress	Expected	`－`	100.00%
		Actual	2.46%	100.00%

The second issuance of domestic unsecured convertible corporate bonds was aimed for the plant construction. Due to delays in the land requisition by the Ministry of Interior, after negotiations, the land will be transferred by stages. The construction of the plant was commenced in the third quarter of 2015. By the end of the first quarter of 2020, payment made by the Company included the entrusted construction management and supervision services phase 16, curtain wall works phase 9, fitting works phase 2, air-conditioning works phase 10, electrical and mechanical engineering phase 20-21, project acceptance phase 24-25, landscape engineering phase 3-4, crane engineering phase 4, partition wall installation phase 1, interior design phase 5, additional civil engineering phase 2, and construction prepayments. The accumulated payment is $2,322,526 thousand with cumulative funds implementation progress of 100.00%. Although the implementation progress of the Company was slightly delayed as compared to the original plan, which was mainly affected by the delay of land handover from the Ministry of the Interior, the Company continued to carry out the construction of the plant as planned after the delivery, and there was no material abnormality.

(III) Analysis of discrepancies between expected and actual benefits

Due to delays in the land requisition by the Ministry of Interior, after negotiations, the land will be transferred by stages. As of the end of this quarter, the construction progress of the factory has now obtained the license issued by the competent authority, and construction of the license has started. Therefore, the actual funds are used and the reason for the delay in the benefits compared with the scheduled benefits is still reasonable.

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Chapter 5 Operation Summary

I. Business content
(I) Scope of business
Major content of business

The Corporation and its subsidiaries mainly engage in the design, assembly, manufacturing, trading, repair, maintenance, calibration and distribution of computer and peripheral equipment hardware and software, computer automated test systems, electronic test equipment, signal generators, power supplies and communication power supply equipment; trading of special materials; and the design, manufacture and installation of automatic equipment. The Corporation's current production lines include: 1. test instruments; 2. special materials; 3. automatic equipment.

Proportion of various businesses Consolidated revenue:

supply equipment; trading of special materials; and the design, manufacture and installation of automatic equipment. The Corporation's current production lines include: 1. test instruments; 2. special materials; 3. automatic equipment. 2. Proportion of various businesses Consolidated revenue:	supply equipment; trading of special materials; and the design, manufacture and installation of automatic equipment. The Corporation's current production lines include: 1. test instruments; 2. special materials; 3. automatic equipment. 2. Proportion of various businesses Consolidated revenue:	supply equipment; trading of special materials; and the design, manufacture and installation of automatic equipment. The Corporation's current production lines include: 1. test instruments; 2. special materials; 3. automatic equipment. 2. Proportion of various businesses Consolidated revenue:	supply equipment; trading of special materials; and the design, manufacture and installation of automatic equipment. The Corporation's current production lines include: 1. test instruments; 2. special materials; 3. automatic equipment. 2. Proportion of various businesses Consolidated revenue:	supply equipment; trading of special materials; and the design, manufacture and installation of automatic equipment. The Corporation's current production lines include: 1. test instruments; 2. special materials; 3. automatic equipment. 2. Proportion of various businesses Consolidated revenue:
Unit: NT$thousands Year Product category 2018 2019 Amount Percentage of revenue(%) Amount Percentage of revenue(%) Test instrument 9,724,331 57.43 10,545,586 75.82 Special materials 2,005,001 11.84 2,097,065 15.08 Automatic equipment 4,862,323 28.72 1,009,058 7.25 Others 339,473 2.01 257,925 1.85 Total net operatingrevenue 16,931,128 100.00 13,909,634 100.00
Year Product category	2018		2019
	Amount	Percentage of revenue(%)	Amount	Percentage of revenue(%)
Test instrument	9,724,331	57.43	10,545,586	75.82
Special materials	2,005,001	11.84	2,097,065	15.08
Automatic equipment	4,862,323	28.72	1,009,058	7.25
Others	339,473	2.01	257,925	1.85
Total net operatingrevenue	16,931,128	100.00	13,909,634	100.00

Current products of the Corporation
Power electronic test solutions
1. DC electrical load
2. AC electrical load
3. Regenerative AC load
4. AC power source
5. DC power source
6. Digital power meter
7. Switching power supply automatic test system
8. Battery simulator
9. Chroma soft panel (graphic user interface)
Electric vehicle test solution
1. Automatic diagnostics and testing system for power electronics and devices
2. Battery simulator
3. Battery test system
4. Electric propulsion system
5. DC power source
6. Electronic load
7. Motor test
8. Automatic transformer test system/automatic components analyzer
Battery test & automation solutions
Battery pack/battery module automatic test system
Battery testing and formation system
Battery pack manufacture test solution
Battery pack after service test system
Electrical safety test solution
Automatic optical inspection system
Cell voltage and temperature measurement
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Automatic optical inspection system
Passive components test solution 1. LCR meter/auto transformer test system
Electrolytic capacitor tester
High frequency AC tester
Components test scanner
Insulation tester
Milliohm tester
Passive components automatic test system
Microchip inductor production testing
Electrical safety test solution
Partial discharge tester
Lead-acid battery cell tester
Electrical safety test solution
High potential tester/safety tester
Ground bond tester
Electrical safety test scanner
Impulse winding tester
Calibrator
Automatic test system
Motor test solution
Video & color test solutions 1. Video pattern generator 2. Color analyzer 3. Automatic test system
- Flat panel display test solutions 1. Flat panel display tester
OLED test system
SHK 8K test solution
LED & driver test solution
LED total power test system
ESD test system
LED power driver test solution
Photonics test solution
Wafer level test
Package level test
Automatic optical inspection system
Automatic optical inspection system
Solar cell AOI system
Photovoltaic/inverter test & automation solution 1. Automatic optical inspection system
Thermoelectric cooling chip controller
Thermal data logger
PV inverter testing solution
Semiconductor/IC test solutions
SoC test system
VLSI test system
IC test handler
Metrology system
RF & wireless test solution
Wireless test solution
RF recorder / player
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```
 3. GPS simulator
```
- PXI test & measurement solution
  1. PXI SMU/power supply instrument
  2. PXI semiconductor/IC test system
- Intelligent manufacturing system solution
  1. Intelligent manufacturing system
- Turnkey test & automation solution
  1. Assembly & test automation solution
- Other solutions and services
  1. Electric vehicle powertrain solution
  2. General purpose instrument
New products under development
- Next generation bi-direction and high power density DC Source
- Next generation bi-direction power module platform
- Next generation high Accuracy Linear DC Load Module
- High performance Elelctrical Motor Emulator
- Dual alxe Dynamomete
- Next generation Regenerative Battery Pack Test System
- Next generation high performance Battery Formation Power
- HDMI 8K Media Player
- Lab grade high precision battery cell and material testing systemLab grade high precision battery cell and material testing system
High frequency/large current magnetic component's key parameter analyzer
(II) State of the industry 1. Current state and development of the industry
- A. Instruments industry

In 2019, as a result of the US-China trade war and the science and technology war, IT electronics manufacturers were all required rethink their global investment allocation strategies, which drove demand for equipment to be invested in transferring production capacity to a different location. Also, the communications industry has been moving toward 5G with greater efficiency and more in-depth applications.

In the US and China, the deployment of communications drives another wave of demand for equipment. Among these, 5G related equipment benefited the most. At the beginning of 2020, coronavirus pandemic occurred in Wuhan, China and swept across the globe, casting a shockwave over the economy and affecting the deployment of equipment investment.

Power electronic test solution

Power supplies represent a basic and core component of electronic equipment, and are widely utilized in various electronic products such as PC, servers, rechargers, displays, and industrial power supplies.

The mobile communications, mobile power, mobile charging and battery industries are all booming. Power supplies are of critical importance to the LED industry and the solar photovoltaic and automotive electronics industries, leading to emerging demand for power supply test equipment. Power supply test equipment provided by the Corporation and its subsidiaries is not only used in PC, servo or telecom power supplies, chargers, and backlight inverter, but can also be applied to LED lighting, solar photovoltaics, and electric vehicle chargers. In response to the increasingly ubiquitous automation of manufacturing, the Corporation has also independently developed automatic test systems for power supply, as well as provided a software platform with powerful functions. Test solutions with built-in applications can offer a variety of industry application

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tests to maintain the Corporation's competitive advantage of its product lines. Due to wide range of applications, its product lines were able to sustain stable development.

Video and color test solutions

As Japan's NHK began testing its Super 8K (Super-Hi Vision) ultra-highdefinition resolution video in August 2016, the display area entered the 8K era in 2019. To meet this requirement, the video and color test solutions must focus on the 8K Super-Hi Vision (7680x4320/8192 x 4320) tests for the upcoming panel and display industry. In the meantime, a modular architecture design must be adopted so that the solution can be combined flexibly with different signals or power modules and required test conditions. High flexibility, strong scalability, and the ability to support a variety of mainstream industry communication interfaces, enable this solution to be in line with the development of the industry.

Passive component and safety test solutions

The passive component industry experienced a price drop due to its significant expansion in 2018 and reduced demand in 2019. Enhancing data management, quality, and efficiency is a trend in equipment development. Therefore, a new automation testing technology has to consolidate multiple test functions for the tests of the passive components and safety, such as the dualfrequency tester 11022 LCR Meter. For electrolytic and plastic film capacitors, a single unit can complete different frequency measurements, which reduces the number of test stations used. The automatic test system for components provides multi-step and multichannel test programs to meet diverse test applications. Semiconductor/IC test solutions

Semiconductor products are the engine of the ICT industry. With the development of 5G, artificial intelligence (AI), and the Internet of Things (IoT) applications, as well as significant increase in the demand for advanced semiconductor technologies, advanced manufacturing processes continue to develop rapidly. From raw materials to process processing offered by suppliers, even minor defects are not allowed, hence the increasing importance of testing equipment. Therefore, a variety of test programs are available in order to carry out the parallel tests that will be increasing the amount of output per unit of time and this is a test equipment manufacturer's R&D trend. Customized test equipment capable of satisfying specific requirements may be directly utilized to replace the general-purpose testers achieving significant reduction in costs. - Battery test and automation solutions

In 2019, the battery safety issue will become even more critical as Tesla has dramatically reduced selling prices after mass production in China, driving demand for batteries. The Company’s long-term commitment to the new energy sector guides its continuous efforts in test automation and efficiency in the battery industry and in providing customers with performance, environmental reliability, and safety testing certification services for motive battery cells, modules, battery packs, and battery system. The key factors in the evolution of electric vehicles depend on the advancement of battery functions. With batteries becoming increasingly important, the quality and stability of batteries not only affect the range of electric vehicles, but also their safety. Hence, battery automation testing is an important part of the current development of electric vehicles.

B. Special materials

In recent years, technical issues associated with copper wire packaging have gradually been overcome and improved, and downstream package manufacturers

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have accelerated the introduction and certification of copper wire packaging. Copper wires have replaced most of the packaging wires which use gold wires. Chroma New Material Corp., a subsidiary of the Corporation, will combine technical services provided by a Japanese company, Nippon Micrometal Corporation to increase the added value of its products to consolidate the market share of high-tech threshold packaging products in the Taiwanese market.

Correlation with upstream, midstream and downstream sectors of the industry
A. Measuring instruments and equipment

These instruments and equipment belong to the test instrument sector in the information electronics industry. The Corporation primarily purchases parts and components from upstream suppliers, and assembles them to produce the test instrument and equipment, which are marketed and sold to customers under the Corporation’s brand name. The Corporation and its subsidiaries offer an extensive selection of solutions for product testing and validation purposes to customers in many fields such as video surveillance, passive components, LCD modules, LED, semiconductor, solar photovoltaics, and electric vehicle industries.

The following diagram describes the relationship between the upstream, midstream, and downstream sectors in this industry:

Upstream Boxes and cases Printed circuit boards (PCB) IC Other components	Midstream Assembly Testing Sales	Downstream
Boxes and cases Printed circuit boards (PCB) IC Other components	Assembly Testing Sales	Video surveillance, power supply, passive components, IC design, IC testing, LED, solar photovoltaic and solar power cells, and electric vehicles industries

B. Special materials

The main products in the special materials business are gold wires, copper wires, and lead-free solder balls. Gold and copper wires are bonding wires used in the process of bonding semiconductor packaging wires. The primary business engaged by the Corporation’s subsidiary, Chroma New Materials Corp., is trading of special materials, and the downstream industry is the IC packaging industry.

C. Automatic equipment

Automatic equipment, which consists of metrology equipment, automation systems, and MES software capabilities, provide customers with automation solutions (turnkey solution). The main products offered by MAS Automation Corp., a subsidiary of the Corporation, are automated production and system integration for photovoltaic and TFTLCD, as well as clean room equipment planning and system integration.

Development trends and competition for various products
A. Development trends of various products
- (A) Instruments industry
  - Power electronics testing industry

The following describes the current product development trends for power supply testing solutions in response to the aforementioned production, R&D, and quality requirements:

Low voltage load characteristics and high current switching technology in response to point-of-load converter power supply and fast switching properties.
Simulation of input and electrical grid distortion in response to regulatory requirements for testing of power supplies.
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Discontinuous, low power measurements in response to energy saving requirements for power supplies in standby mode.
DC power supplies covering high voltage and current levels are able to reduce the required number of DC power supplies with DC/DC converter input, thus reducing testing costs.
High voltage, high frequency testing technology and low parasitic capacitance test fixtures for LCD Inverter testing can greatly improve the testing speed and stability.
Network data capture functions enable manufacturers to establish real-time production capacity control and perform quality statistical analysis.
Video testing industry

The display industry continues to develop with high resolution. With the NHK's 8K (Super-Hi Vision) ultra-high-definition video broadcasting test started in August 2016, the display entered the 8K era in 2019. Therefore, the resolution and interactive functions of displays are important, which rely on test equipment to provide the quality assurance. Adopting the product development trend of modular design, this test solution can be combined flexibly with different signals or power modules together with free combinations of test conditions. High flexibility, strong scalability, and the ability to support a variety of mainstream industry communication interfaces, enable this solution to the panels and displays with 8K super hivision resolution (7680x4320/8192x4320) for the current and future applications in the video industry.

Passive component testing industry

At present, electronic products are becoming lighter, thinner, and smaller. As a result, the manufacturing, R&D, and quality of passive components used in these products are also moving towards high efficiency and precision levels. The following describes the trends for developing test equipment for passive components:

High speed precision measurement, integration equipment automation to improve production efficiency while reducing human negligence to enhance reliability.
Integrated testing of multiple parameters to reduce the production equipment and labor hours required, thereby lowering the production costs.
Provide complete test solutions for specific applications that help users establish systems rapidly to fulfill their test requirements, and receive comprehensive technical support.
Provide network data log functions so that manufacturers can build up realtime production capacity control and perform quality statistical analysis.
Electric vehicle/battery test equipment

The most important component in mobile devices and electric vehicles is battery module. Safety is the key factor of battery modules reliability that makes the testing of battery reliability is vital. As the battery production is extremely energy-consuming, automated instruments which are energy saving, high efficiency, high stability and safety have become an important trend in the development of the instruments industry.

Semiconductor/IC test solutions

Since the rise of 5G, smart manufacturing, and the Internet of Things (IoT), the integration of test instruments and automation has become a competitive landscape in the instrument industry. In response, the Company and its subsidiaries have actively integrated technologies in various fields

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such as electronics, electrical machinery, machinery, software, information, and communication over the year to provide a full range of test solutions for different semiconductor products in production and process. New models feature a wide range of functions, while greatly reducing labor costs by automating test machines and significantly enhancing product quality, thereby fully highlighting the economic benefits of testing.

Photonics test solution

Since Apple Inc. amazed the technology community by incorporating the facial recognition function into iPhone X, its key laser diode has become an important element for 3D sensing. This technology has recently been widely used, especially in face recognition, autonomous vehicles and existing fiber-optic communications. With the increase in demand for laser diodes, the quality and reliability of laser diodes become relatively important. Thus, the needs for various related test instruments are in the ascendant. Photonics test solutions include a wafer-level test for laser diodes and package-level test for active optical communication components.

(B) Special materials

The following lists the major development trends of IC packaging wire materials and technologies in response to the changes in semiconductor packaging technologies and product applications:

Gradual replacement of gold wire with copper wire due to cost considerations.
Need for copper wires with even smaller diameters and higher strength in response to miniaturization, high frequency, and high speed for final products.
• Bonding capability and precision of wire bonding process in response to ever decreasing bonding pad areas on the die as a result of miniaturization.
Increasing use of fine pitch and low-loop bonding profiles for stacked packaging with better ASP performance.
B. Product competition

As the Company and its subsidiaries have been developing the instruments and automation industry for many years, there are high barriers of entry in terms of product technology, and each product technology can maintain its leading position. However, as new products continue to be introduced, the Company shall continue to expand its product base and technical product capability, collaborate with tier-one manufacturers, and improve its R&D technical skills to support its product advantages, in order to maintain its competitiveness. In addition, with rampant counterfeiting in third region due to relocation of industries in recent years, products of the Corporation and its subsidiaries also suffer from price competition involving counterfeit products. Hence, in order to maintain the competitive advantage of its products, the Corporation and its subsidiaries invested a considerable amount of manpower to apply for patents and safeguard the brand value. As production processes become increasingly automated, integrated test instruments and automatic equipment will provide the instruments industry with high levels of competitive advantages.

(III) Technologies and recent R&D efforts

R&D expenses invested in the two most recent years

		Unit: NT$thousands
Item\Year	2018	2019
	1,254,553	1,283,422
R&D expenses

Net operating revenue	16,931,128	13,909,634
Proportion of R&D expenses to net operatingrevenue
	7%	9%

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Major R&D outcomes

◎2238 Video Pattern Generator

◎2918 Flat Panel Display Tester

◎7505-05 Multi-Functional Optical Measuring System

◎61509 Programmable AC Power Source

◎63000 Programmable DC Electronic Load

◎62000L Programmable DC Power Supply

◎66205 Digital Power Meter

◎1870D Inductor Test and Packing Machine

◎1871 Inductor Layer Short Automatic Test System

◎11210 Battery Cell Insulation Tester

◎11050 High Frequency LCR Meter

◎19501-K Partial Discharge Tester

◎19311 Battery Cell Surge Tester

◎33010 PXIe Digital IO Card

◎3680 Advanced SoC Test System

◎3160C Tri Temp Quad Site Handler3160C

◎3660C Tri Temp System Board Handler3660C

◎7940 Wafer Chip Inspection System

◎58620 Laser Diode Characterization System

◎58604 Laser Diode Burn-in and Reliability Test System

◎7505-K006 Cylindrical Battery Cell Automated Optical Inspection System

◎7505-K007 Thin Film Thickness Automated Optical Metrology System

◎3730-E Solar Cell Inspection Test/Sorting System

◎3760 Solar Cell Inspection Test/Sorting System

◎17011 Battery Cell Charge/Discharge Test System

◎17040 Regenerative Battery Pack Test System

◎7925 TO-CAN Inspection System
◎8000 Electric Vehicle AC Charging Compatibility Automatic Test System

3. Future R&D plans

After the introduction of the nano-particles monitoring system for semiconductorgrade solutions by the Company’s subsidiaries, the Company has successfully entered into the semiconductor testing field. In mid-2019, the Company invested in CAMTEK, an Israeli semiconductor testing equipment manufacturer, expanding into the field of semiconductor optical measurement through technical cooperation. How to expand the scope in semiconductor testing will be the research and development goal of the Company in the coming years.

The recent development trends in the IT industry include 3D applications, smart communications, and the development of the Internet of Things (IoT), which involve the use of various equipment in wireless communications to enter into the era of electric vehicles, autonomous vehicles and smart cities, lead the emergence of Industry 4.0 in the manufacturing industry and Finance 3.0 in the financial industry.

Therefore, the Corporation's R&D plan has also evolved with various industries, promoting the related automation equipment of Industry 4.0 and the development and integration of Turnkey Solutions, as well as the establishment of Industry 4.0 smart manufacturing related solutions. In response to the trend of IoT, electric vehicle-related equipment and test equipment, battery testing equipment, wireless communication testing equipment, as well as test equipment that meets VR and AR requirements are

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developed. The Corporation and its subsidiaries are also committed to the R&D of products related to clean technology with the aim of developing relevant automatic test equipment.5G

(IV) Long-term and short-term business development plans
Short-term development plans
- (1) Fully seizing the new “Non-China” manufacturing demand

In response to the US-China trade war, the manufacturing industries continue to explore production bases outside China. Meeting the new equipment demand as best we could will be the vital short-term sales target of the Company.

(2) Actively collaborate with 1st Tier customers for Test Turnkey Solutions

In recent years, the many of the Company’s products are being recognized by 1st tier customers. Receiving first-tier customer endorsement is essential for marketing and promotion. Therefore, the Company has actively collaborated with 1st tier customers for Test Turnkey Solution. It has a profound influence on the Company as a market leader and a pioneer in technology development, which is an essential project for the Company’s growth.

(3) Accelerate the development of advanced semiconductor manufacturing process, AIoT, and 5G communication-related test solutions

The investment in advanced semiconductor process equipment is increasingly larger in scale. It is an area coveted by many equipment manufacturers; however, the entry barriers are very high. Therefore, the Company’s commitment to equipment development in the semiconductor sector has always been an essential project for product development. AIoT and 5G will also drive large-scale utilization in the coming years, and the active development of its related equipment has become an important development issue in recent years.

Long-term development plans

The Corporation’s long term goal and vision is to aggressively develop worldclass products and strive to become a world-class enterprise. world-class products are "precise, reliable and unique", offering test solutions with more value to customers in various electronic technology industries. Meanwhile, world-class enterprises are advancing toward three major directions, namely "innovative technologies, own brands, and internationalization." Thus, the Corporation invests a lot in R&D each year to ensure that the Corporation maintains its lead with its core technologies and highly integrated capabilities in optics, machinery, electronics, temperature control and software, in order to maintain its competitive advantage and growth, thereby achieving the goal of sustainable development.

(1) Marketing plans

With the rise of work specialization at international level, manufacturing bases for the IT industry have started expanding outward. In order to provide customers with services of the highest quality, the Corporation and its subsidiaries have also established a sales network composed of overseas subsidiaries, as well as sales agents and dealers. With Taiwanese companies heading to Southeast Asia for investment in recent years, the Corporation has also formulated plans to set up sales and marketing locations in Southeast Asia through its subsidiary in Singapore. Besides, the headquarters provides support to various activities, in hopes of increasing revenue in this region. The Corporation fully promotes products with its own brand, and sets up strategic alliances with well-known international brands to serve as an agent to sell professional instruments through online market, in order to increase overall efficiency.

(2) Human resource plans

Developing niche products has long been a goal of the Corporation and its subsidiaries. Having been engaging in technology-intensive industries, the

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Corporation and its subsidiaries must continuously nurture professional talents and strengthen employee training by establishing a knowledge management platform and learning database helping employees quickly gain competence in the field of professional technology through resource sharing, so as to effectively enhance human resources and reduce learning time.

(3) Product development plans

Innovation is the DNA of the Company. Innovative technology provides customers with greater added value and services to meet their needs. It is the Company’s product development strategy and is aligned with the development of the industry. In addition to testing products developed for semiconductors and the 5G industry, this Company also invested in modular instruments, system integration, and other automated and customized products. With the rising labor costs and aged population, intelligent networks, industrial automation, and health care industries are becoming increasingly important. The Corporation's long-term product development plans will therefore focus upon the development of test equipment related to products in intelligent network systems in order to develop equipment related to industrial automation and health care. The Corporation will also be aggressively integrating the upstream and downstream industries, and utilize the merger and acquisition strategy to create opportunities for expanding relevant product lines.

II. Market, production and sales summary

(I) Market analysis
Major products by sales area

Area			2018	2018	2018			Unit: NT$ thousands 2019	Unit: NT$ thousands 2019	Unit: NT$ thousands 2019
			Amount	Percentage of net operatingrevenue				Amount	Percentage of net operatingrevenue
Internal sales External sales Total		$3,921,874 13,009,254 $16,931,128			23% 77% 100%		3,662,839 10,246,795 $13,909,634			26% 74% 100%

State of the market

The US-China trade war extended to the realm of technology in 2019. Since the launch of 5G communications by Huawei, the containment strategy of the US government has significantly impacted supply, demand and landscape of the ICT industry. In 2019, under the concept of the new layout of the technology industry, and the Chinese technology industry has advanced to prevent the United States from intensifying trade barriers, which has driven the demand of the equipment industry. Since the 2020 pneumonia outbreak in Wuhan, countries have implemented city scale lockdowns to prevent the spread of the disease. It has put the global economy into a predicament and is expected to significantly impact equipment investment.

State and growth of market supply and demand

Since the end of 2019, the global economy has been deeply affected by the USChina trade war. In 2020, countries have implemented lockdowns to prevent the spread of the pneumonia disease which significantly reduced demand. Despite monetary easing policies to boost the market, it is still difficult to estimate the extent of its impact on the economy before the end of the pandemic. Under such circumstances, the manufacturing industry is expected to slow the pace of investment expansion, and the equipment industry will only look for new equipment for new technology and applications.

Favorable and unfavorable factors affecting competitive niches and long-term development, as well as response measures
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A. Test instrument equipment

(A) Competitive niche and favorable factors:

The Company has long invested in research and development of critical technologies and products with unparalleled reliability. In the early stage, the Company cooperated with the world’s first-tier manufacturers to gain trust and experience so that the Company can keep abreast of industry trends and timely introduce new measurement equipment in response to the mass production requirements of the market. The corporation accumulated a variety of key technologies over the years, and developing a number of technologically advanced products, allowing the corporation and its subsidiaries to stay ahead of the test market. Competitive niches of this Company and its subsidiaries include effective control over sales channels and acquisition of the latest information about the industry. The business group has ample resources in the sectors of testing, automation, and factory management systems to provide customers with Turnkey Solutions required, providing this Company and its subsidiaries with various advantages to maintain market competitiveness.

(B) Unfavorable factors:

Instrument products are typically produced in small amounts and wide varieties, making mass production difficult. Production processes are often complicated and difficult to manage. Other unfavorable factors include complexity of test instruments, and a diverse range of material types required which results in high warehousing costs.

Since products are manufactured in small amount and wide varieties, the Corporation and its subsidiaries have adopted modular designs during the stage of product development, in which products with different specifications in a product line are centralized in the same module, while designs with common features in a product line are common modules to increase the production volume of common modules and reduce the amount of materials required for sections with different features. Besides, in order to strengthen production and inventory management, the IMS BU and the Information Center at the Corporation and its subsidiaries have also built a complete information management system according to the nature of industries to which they belong, with a view to enhancing management efficiency.

B. Special materials
(A) Competitive niche and favorable factors:

The Corporation's subsidiaries are the largest suppliers in Taiwan, and are able to provide customers with overall competitive value, including quality, price, delivery, technical support and other services, thereby serving as important competitive niches for the Corporation, which are responsible for helping the Corporation and its subsidiaries secure a growing market share.

(B) Unfavorable factors:

Key materials had to be imported, which offer a certain degree of uncertainty.

Chroma New Material Corp., a subsidiary of the Corporation, has built a long-term partnership with Nippon Micrometal Corporation from Japan to supply materials to Chroma New Material Corp., so as not to affect its development.

(II) Major uses and production process of primary products
Major uses of primary products
- Power electronic test solutions
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In addition to applications in IT, communications, aerospace, defense, and other industries, the power supply test solutions provided by Chroma ATE Inc. are also applied to hybrid vehicles, LED lighting, solar power, fuel cells, and other energy saving products that were actively developed as natural resources become increasingly scarce. The Corporation also provides various industries with customized test solutions.

The Corporation offers a wide variety of test equipment, including programmable AC power source, programmable DC power supply, DC electronic load, AC electronic load, digital power meter, and frequency response analyzer, which are required for specification tests and dynamic simulation for both input and output terminals of power supplies. Exclusive graphic operating software (Softpanel) and NI Labview drivers are also provided to help users conveniently utilize these solutions.

The Corporation and its subsidiaries have independently developed an automatic testing system which includes a software platform that comes with powerful built-in functions, and integrates the necessary hardware instruments into the system so that users can independently edit the test items and analyze vast amounts of test data, which can then be used as a basis for R&D or quality assurance (QA) to make changes to products or improve factory processes. In addition to recent applications in PC, servo or telecom power sources, adapters, and chargers, other areas such as backlight inverters, LED drivers, energy-saving lamp ballasts, and even UPS, PV inverters, and electric vehicle supply equipment (EVSE) are also part of its scope of application. Also, the Corporation and its subsidiaries have a global technical applications support team, which us capable of providing customized plans for automation systems and production of testing fixtures.

Video & color test solutions

LCD modules are equipped with different signal transforming panels. Once assembled, the final products can be used with different signal outputs in various products. These complex outputs and input interfaces require a video pattern generator which provides various international standard signal testing screens for testing purposes to analyze the performance of the display in processing video signals. Precision is a key requirement since output signals of the video pattern generator is the standard source.

Color analyzers use advanced digital signal processors and photoelectric conversion technology and combined them with precision optical components and circuit design to accurate measure the energy, calibrated color, brightness, and white balance of the light projected by the display to meet international standards and specifications.

For large scale monitors and projectors, optical color analysis probes can be used to achieve simultaneous measurements of multiple points. This can then be integrated with the video pattern generator as well as a software operation interface for video signal analysis. All programmed tests could be carried out quickly using single button operations, making it the most competitive video and color testing solution available. - Passive component and safety test solutions

Testing equipment for passive components include tests for capacitors, inductors, resistors, and other basic passives as well as tests conducted for various electronic components that were assembled using these components (such as wound components, communication and power source filters) or have similar properties (such as switches, connectors, conducting wires, metallic materials, dielectric materials, magnetic materials, and semiconductor components). Tests can be used to analyze the properties of the tested objects and provide design optimization for integrated applications such as automated production inspection, feed/discharge inspection, QA verification, and R&D analysis in order to satisfy the customer’s requirements for cost reduction and

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achieving better efficiency.

Electrical regulatory test equipment is widely employed in various types of electronic components, electrical products, or health care products. Major tests include AC/DC withstanding voltage and insulation resistance testing for electronic components as well as earth connection and grounding leakage current tests for electrical products or medical electronics. In addition to verifying product compliance with various safety specifications such as the UL (United States), CE (Europe), and TUV (Germany), the primary purpose of testing is to ensure personal safety of the users as well as long-term reliability of the products. To create an international sales channel, safety regulations must be regarded as a major concern.

General test instruments include multi-functional calibrators, resistors, and capacitor meters. In addition to single unit operations, these solutions can also be connected and used with other testers for R&D, design verification, and QA testing purposes. These test solutions were capable of fulfilling basic testing requirements of different units.

Flat panel display test solutions

LCD module test solutions may be used in the assembly phase with shorting-bar signals to test for various defects in the panel and initiate laser reparations. During module processing, the dimensions of the panel as well as backlight properties (CCFL or LED BLU) are referenced. The source of the video signal and programmable power supply are then used to implement voltage, current, and power testing through an ergonomic testing interface on PC. An analysis application that uses both hardware and software features is then used to identify any bright pixels, defective pixels, color, resolution and other properties. Production line designs with automated conveyor belts can also be used to employ system-based controls to provide integrated network management functions for data analysis.

Semiconductor/IC test solutions

The Corporation has established a strong foundation in the field of semiconductor wafer testing for many years, and thus has a large number of product lines. Equipment required from the R&D to mass production stages such as ATE large-scale test system, IC sorter, and PXI/PXIe miniaturization test platform are all complete. Corresponding products provide customers with the most suitable choice. Semiconductor solutions cover different wafer test applications such as: consumer wafers (microprocessors, audio chips, peripherals for computers/mobile devices, etc.), power management chips (linear regulators, DC converters, AC converters, LEDs Drivers, etc.), RF chips (wireless networks, Bluetooth, mobile communications, etc.), and specific areas of testing (image sensors, radio frequency identification, etc.). Handlers used in backend production of ICs could also work with different IC packaging types and sort out defective products from conforming ones. After IC packaging and testing, automatic system function testers can be used to rapidly screen completed IC packages, replacing simulated test environments with actual usage environments for product testing to provide low cost and high coverage tests that will greatly improve the quality of the delivered product.

LED/lighting test solutions

LED test equipment of the Corporation would be employed during midstream process before or after die singulation or die separation. Tests include electrical, optical, and electrostatic discharge (ESD) properties of the die. These solutions can be integrated with ergonomic operation interface of the probe testers to achieve rapid LED testing. For downstream packaging processes, tests such as electrostatic discharge, thermal resistance, and temperature control (tri-temperature) can be carried out with simulated changes of environmental temperature and humidity and measuring the electrical and optical properties of the LED module. Test requirements for LED

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modules were primarily lifespan tests for LED Flash Lights, LED Light Bars, and OLEDs. Customized test solutions for electrical properties of LEDs and optical testing are also provided to satisfy various kinds of test requirements.

Photovoltaic test solutions

Solar cell test solutions include a number of different testers and testing equipment developed primarily for test requirements during the cell phase and module phase of photovoltaic manufacturing. I-V testers could be used to measure cell conversion efficiency of solar cells and sort these cells according to conversion efficiency. Automatic optical testing is then performed to detect any color, top side, and back side printing defects of the solar cell. Finally, the category of the solar cell is used to implement relevant sorting. When assembling a PV system, the system inverter would convert DC into AC currents while controlling the direction of current flow and calculate the reverse current delivered. AC/DC power supply and electronic load of Chroma ATE can be used to simulate and measure output power supply to ensure its quality.

Battery test & automation solutions

The Corporation's battery testing and automation solutions cover a wide range of products that possess features of dynamic charge and discharge, energy recovery battery module test systems for real-world current simulation applications, battery discharge energy recovery and reuse, power saving, environmental protection, and low thermal output, which helps save on electricity and air conditioning costs and reduce production costs. Scope of application for these solutions includes electric vehicle manufacturers, energy storage system vendors, and battery module plants. These solutions are suitable for battery management system testing, battery pack endurance testing, product shipment inspection, design verification research, and battery pack production line capacity learning and DC internal group testing and other purposes.

Photonics test solution

Photonics test solutions include a wafer-level test for laser diodes and packagelevel test for active optical communication components. With the Corporation's superior power electronics and optical measurement technology, alongside the integration of institutions and temperature control, the optical components can be burned in at different ambient temperatures for testing. The semiconductor laser characteristic detection system is designed specifically for laser diodes, and the AllIn-One design concept is used for automatic detection. It can be used for simultaneous testing of different test items; it can be used together with high-capacity vehicle designs. A large number of chips are used to perform various tests. In addition, AOI can increase the speed and reliability of automated inspections. The design of a highly stable temperature control platform enables the R&D engineers to accurately understand the relationship between laser semiconductor characteristics and temperature.

Manufacturing execution system (MES)

This solution provides an integrated system for collecting various manufacturing data from the production floor. Various electronic equipment can be used to automatically collect assorted production data and integrate data required by processes in various units (such as material, production, manufacturing, quality control (QC), and warehousing) so that every unit could rapidly acquire the needed information to enhance production efficiency.

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2. Production process

==> picture [412 x 172] intentionally omitted <==

(III) Supply of primary raw materials

The Corporation and its subsidiaries manufacture a large variety of products in small quantities. A large quantity of raw materials would be required, with primary materials including programmable logic gate array IC, converter IC, memory, relays, structural materials, and PCB. The following describes the state of material supply:

Primary raw material category	Main supplier	State of supply
Programmable logic gate array IC	Galaxy Far East Corp., Weikeng Industrial Co., Ltd., and Answer Technology Co., Ltd.	The three suppliers above, which serve as agents for distributing and selling products made by world-renowned manufacturers, are vendors which the Corporation collaborates in the long run, and offers products with stable quality and supply ofgoods.
Inverter IC	Answer Technology Co., Ltd., Morrihan International Corp., and World Peace Industrial Group	The three suppliers above, which serve as agents for distributing and selling products made by world-renowned manufacturers, are vendors which the Corporation collaborates in the long run, and offers products with stable quality and supply ofgoods.
Memory	Weikeng Industrial Co., Ltd., Transcend Information, Inc., and Arrow Electronics, Inc.	The three suppliers above, which serve as agents for distributing and selling products made by world-renowned manufacturers, are vendors which the Corporation collaborates in the long run, and offers products with stable quality and supply ofgoods.
Electric relay	Sumchip Technology Co., Ltd., IC-Hi Technology Co., Ltd., and Bright Toward Industrial Co., Ltd.	The three suppliers above, which serve as agents for distributing and selling products made by world-renowned manufacturers, are vendors which the Corporation collaborates in the long run, and offers products with stable quality and supply ofgoods.
Structural materials	Chyuan Jyh Industry Co.,Ltd., Gao Jing Jhun Metal Co,Ltd.,	The three suppliers above, whose manufacturing quality and supply of goods are relatively stable, are responsible for supplying goods,and have

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	and Chang Yang Electronics Co.,Ltd.	established good long-term relationship with the Corporation.
PCB	Lin Genius Enterprise Co. Ltd., Speed Circuits Co., Ltd., and Golden Sum Co., Ltd.	The three suppliers above, whose manufacturing quality and supply of goods are relatively stable, are responsible for supplying goods, and have established good long-term relationship with the Corporation.
Gold wire and copper wire for IC	NIPPON	These materials are mainly supplied by Nippon. Nippon has established a positive and long-term collaborative partnership with the Corporation’s subsidiary,Chroma New Material Corp.

Given the large variety of raw materials and components needed by the Corporation and its subsidiaries to manufacture precision instruments, all local and overseas purchases are handled by a single purchasing unit. Where possible, 2 or more suppliers were selected to ensure supplier replaceability, acquire competitive pricing, distribute purchasing risks, achieve reasonable cost reductions, and provide better services. The purchasing unit shall regularly review quotations offered by the supplier. QC and purchasing personnel shall conduct audits at the supplier end to ensure the stability of product quality while assessing the process capability of suppliers.

(IV) List of suppliers and customers accounting for 10 percent or more of the Corporation’s total purchases (sales) of goods in either of the two most recent years, amount and percentage of total purchases (sales) of goods, and reason for changes in these figures.
List of suppliers accounting for 10 percent or more of the Corporation's total purchases of goods in either of the two most recent years

Information on major suppliers in the two most recent years

Unit: NT$ thousands

					Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Item	2018				2019
	Name	Amount	Proportion to net purchase of goods for the entire year(%)	Relationship with the issuer	Name	Amount	Proportion to net purchase of goods for the entire year(%)	Relationship with the issuer
1	NMC	1,085,331	11.73	None	NMC	1,292,073	18.93	None
2	NMC (Philippines)	794,434	8.58	None	NMC (Philippines)	763,695	11.19	None
	Others	7,374,992	79.69	-	Others	4,768,991	69.88	-
	Net purchase	9,254,757	100.00		Net purchase	6,824,759	100.00

Explanation for any changes:

NMC and NMC (Philippines) are the major suppliers of Chroma New Material Corp., a subsidiary of the Company, which is mainly due to the proportional increase in sales of specialty materials in 2019 consolidated revenue and hence a relatively higher purchase ratio.

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List of customers accounting for 10 percent or more of the Corporation's total sales of goods in either of the two most recent years

Information of major customers for the two most recent years

Unit: NT$ thousands

	2018	2018	2018	2018	2019	2019	2019	2019
Item	Name	Amount	Proportion to net sales of goods for the entire year(%)	Relationship with the issuer	Name	Amount	Proportion to net sales of goods for the entire year(%)	Relationship with the issuer
1	Customer A	2,646,345	15.63	None	Others	13,909,634	100.00	-
	Others	14,284,783	84.37	-				-
	Net sales	16,931,128	100.00		Net sales	13,909,634	100.00

Explanation for any changes:

It was mainly due to the shipment of the Group’s automated transportation engineering projects in 2018, Customer A was a significant sales customer of MAS Automation, and the sales from this company amounted to 15.63% of the total revenue of the Group.

(V) Production volume in the two most recent years

Unit: km, m, feet, g, units, sets, NT$ thousands

(V) Production volume	in the two most recent years Unit:	in the two most recent years Unit:	in the two most recent years Unit:	km,m,feet, g,units,sets,NT$thousands	km,m,feet, g,units,sets,NT$thousands	km,m,feet, g,units,sets,NT$thousands
Year Production volume and value Majorproduct	2018			2019
	Production capacity (Note 1)	Production volume	Production value	Production capacity (Note 1)	Production volume	Production value
Test instrument	-	80,981	2,741,528	-	82,203	2,917,231
Special materials	-	-	-	-	-	-
Automatic equipment	-	178	4,001,230	-	159	666,192
Others	-	153	6,103	-	-	-
Total	-	81,312	6,748,861	-	82,362	3,583,423

Note 1: The Corporation and its subsidiaries adopt a production model of producing small amounts in wide varieties instead of mass production using automated production lines. No single product has an exclusive product line. Hence, general assessments for capacity utilization rates cannot be used for this production model. For production processes, flexible manufacturing work stations are assembled based upon the number of man hours contributed by operators and test personnel, along with machinery and equipment. Production volume and capacity for various products shall be arranged according to the product market or purchase order requirements. Expected production volume is used to flexibly adjust production capacity in order to achieve maximum benefits using limited economic resources. Hence, stable capacity utilization rate can be maintained for all primary products listed above. The most flexible production plan can also be applied to products with market advantage in order to achieve optimal capacity utilization rate.

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(VI) Sales volume in the two most recent years

Unit: km, m, feet, g, units, sets, NT$ thousands

Year Sales value Majorproduct	2018	2018	2018	2018	2019	2019	2019	2019
	Internal sales		External sales		Internal sales		External sales
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Test instrument	20,354	1,628,748	95,358	8,095,583	43,366	1,380,438	90,730	9,165,148
Special materials	3,034,452,325	1,969,686	71	35,315	2,768,664,211	2,066,146	74	30,919
Automatic equipment	107	147,298	71	4,715,025	90	107,186	18	901,872
Others	-	176,142	-	163,331	-	109,069	-	148,856
Total	3,034,472,786	3,921,874	95,500	13,009,254	2,768,668,637	3,662,839	90,822	10,246,795

III. Employee information in the two most recent years up to the publication date of this annual report

	Year	2018	2019	Current year up to February 28, 2020
Number of employees	Management and sales personnel	1,341	1,372	1,363
	Manufacturing personnel	854	820	810
	R&Dpersonnel	791	797	797
	Total	2,986	2,989	2,970
	Average age	33.7	33.65	34.13
Average worktenure		6.71	6.92	7.23
Distribution and proportion of academic	PhD.	0.97%	1.05%	1.09%
	Master's	21.40%	22.14%	21.82%
	Colleges and universities	68.46%	67.87%	68.27%
	Senior highschool	7.55%	7.38%	7.22%
backgrounds	Below high school	1.63%	1.55%	1.61%

IV. Environmental protection expenditure

(I) Total losses and fines from environmental pollution from the most recent year up to the publication date of this annual report: None.

In 2019, there were no environmental violations regarding environmental pollution after inspections, nor were there any external or internal personnel or property losses caused by environmental pollution.

(II) Future response strategies

Located in the Huaya Technology Park in Linkou, the Corporation engages in a high tech and low polluting industry in the IT sector, which does not cause public hazards or pollution issues during the production process. Hence, there is no need for the Corporation to apply for a permit to establish pollution control facilities. For waste water and sewage issues, the Corporation only generates domestic sewage which undergoes preliminary treatment in this factory before being discharged into the wastewater treatment system of the technology park. Domestic waste is cleared and disposed of properly by a waste removal and treatment company approved by the competent environmental protection agency. The waste removal and treatment company approved by the competent environmental protection authority is also entrusted to carry out proper disposal or recycling of business waste. The Corporation and its subsidiaries place great importance on environmental issues and comply with the relevant laws. Landscaping and aesthetics were considered when constructing factory buildings to provide green, spacious, clean, healthy, and comfortable areas for employees.

The Corporation and its subsidiaries also actively participate in activities related to green and environmental protection industries, and actively incorporate or develop greener operations and products for processes, products, services, and principles in order to fulfill laws and requirements related to RoHS and toxic chemical substances of the customers and countries where the products are being sold to. These laws and requirements are also used as guidelines to achieve continuous improvements and sustainable management to achieve the

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final objective of green industries.

When pursuing and maintaining the overall ecology and sustainable development, the Corporation and its subsidiaries are committed to technical improvements and breakthrough while fulfilling corporate responsibilities such as compliance with the law, social duties, and environmental protection. Stringent approaches are adopted to actively promote environmental management systems (EMS), safety and health related activities, and pollution prevention measures in order to create an excellent, safe, and healthy work environment to safeguard employees’ physical and mental health.

V. Labor relations
(I) Various employee welfare measures, continuing education and training, retirement systems, and their implementation, as well as various labor-management agreements and measures for safeguarding employee rights and interests.
Employee welfare measures

The Corporation has established the Employee Welfare Committee in charge of coordinating and managing employee welfare funds, organizing employee social clubs and trips, ball games, social activities, and festive gifts for fellow employees. The plan also includes subsidies for employee marriage, passing of immediate family, and other celebrations and festivals, subsidies for employee tours, labor, health insurance, and group insurances, establishing employee restaurants, employee dormitories and recreation centers, providing a diverse selection of recreational and entertainment facilities for employees, and preparing employees’ parking spaces.

Continuing education and training

To promote the employees’ competence, knowledge, and management skills required for their duties, the Corporation stipulated the Education and Training Management Regulations. The Corporation's business objectives, as well as results of departmental surveys, were compiled to formulate the annual training plan. Newly hired staff was provided with work orientation training. On-job training, specialization training, or professional external training were provided every now and then for employees to train professional and talented personnel, improve business performance, and achieve effective utilization of human resources.

The following lists the results for the implementation of training in 2019:

Number of employees trained	Trainingexpenses(NT$thousands)
3,629	2,387

The content of education and training is provided according to the overall corporate operation strategy, job requirements and employees’ perspective, including professional, managerial and general knowledge courses, etc., and implemented according to the employees’ development plans, such as communications, innovation, leadership, project, and sales capabilities, to provide employees with comprehensive training planning.

Retirement system

Following the Labor Standards Act, the Company has formulated the “Labor Retirement Rules” and made the legally required 4% monthly contributions for the retirement reserve funds to the Trust Department of Bank of Taiwan. Since the implementation of the Labor Pension Act, 6% of the gross proceeds of labor pension shall be allocated to the individual account of labor pension monthly in compliance with the new system. For those who voluntarily contribute pension funds, the voluntary contribution shall be withheld from their monthly salary and deposited to the individual pension account set up by the Bureau of Labor Insurance, starting from 1[st ] of July, 2005. The provisions applicable to employee retirement are as follows:

(1) Voluntary retirement:

An employee may voluntarily apply for retirement in any of the following

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situations:

a. Those who have served for more than 15 years and are over 55 years old.
b. Having served FST for more than 25 years.
c. Aged 60 or above and having completed at least 10 years of service.
(2) Forced retirement:

Unless any one of the following circumstances is met, the Company shall not force an employee to retire:

a. Having reached the age of 65
b. Those with mental disorders or physical disabilities that prevent them from working.

The Company may request the central competent authority to adjust the age prescribed above if the specific job entails risk, requires substantial physical strength or otherwise of a special nature; provided. However, the age criteria must be no less than 55.

(3) Pension standards:
- a. Employees who have service seniority accumulated before or after the application of the Labor Standards Act, and choose to be applicable to the Labor Standards Act in accordance with Labor Pension Act or service seniority preserved before the application of the Labor Pension Act, shall have their retirement benefit paid in accordance with Article 55 and Article 84-2 of the Labor Standards Act.
- b. Employees who have service seniority calculated according to the preceding pension payment standard and are forced to retire in accordance with Subparagraph 2 of Paragraph 1 of Article 54 of the Labor Standards Act, an additional 20% on top of the amount calculated according to the preceding pension payment standard shall be given to the worker forced to retire due to disability incurred from the execution of their duties, as set forth in Subparagraph 2 of Paragraph 1 of Article 55.
- b. The length of service and the receipt and calculation of pensions under the Labor Pension Act shall follow per Articles 23 to 28 of the Labor Pension Act.
(4) Pension benefits:
- Pensions under the Labor Standards Act are payable within 30 days from the date of employee retirement.
Labor-management agreement

The Corporation and its subsidiaries place great importance on employee welfare and established a harmonious employee-employer relationship. In addition to complying with Labor Standards Act and relevant laws, welfare measures considered superior to statutory regulations are also established. Additionally, it promotes the efficiency of internal communication and encourages fellow employees to propose various recommendations. In addition to regular internal communication meetings between various units, communication channels for employee relations were also established. Any employee inquiry or suggestions can be communicated using the “Employee Communication Helpline”, “Employee Communication Email”, and “Employee Communication Feedback Mailbox” in order to learn about the issues faced by employees, thereby preventing any possible labor disputes.

Measures for safeguarding employee rights and interests

To safeguard the employees’ rights and improve the living standards of fellow employees, additional labor-management communication channels have been established. The Corporation has also established the Employee Welfare Committee to plan the allocation, payment, preservation, and utilization of the employee welfare fund and to provide laws specified by relevant laws. Protection of employees’ rights and

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implementation of welfare systems shall comply with the relevant laws and regulations.

(II) Any loss suffered due to labor disputes, estimated loss for current or future incidents that may occur, and response measures from the most recent year up to the publication date of this annual report, and reasons why a reasonable estimate cannot be made: None.

VI. Important contracts

Nature of contract	Contracting party	Start and end date of contract	Major content	Restrictive terms
Land purchase and sale contract	Ministry of the Interior	After signing the contract on April 18, 2012 until the advance registration of land for this project is fully terminated in accordance with the contract	The Corporation entered into a contract with Heran Co., Ltd. and Dynapack Corp. to participate in the "Tender for the Industrial Development Zone in the Taoyuan International Airport Access MRT Station A7 Transit- Oriented Development Zone". The total sum of this contract was NT$ 10,088,889,990, and the project covered a total land area of 222,300 square meters. Shares held by each member of the tender are as follow: Chroma ATE Inc. 35%, Heran Co., Ltd. 35%, and Dynapack International Technology Corporation 30%.	When transferring land property rights, the seller requested the buyer to agree to the condition of providing notice land registration to this land as undeveloped and unused land.
Construction contract	Best Giving Construction Corporation	(1) February 24, 2017 to the project acceptance date (2) August 15th, 2017 to the project acceptance date	(1) New construction of the Corporation's Station A7 building. (2) Electrical and mechanical works for the Corporation's Station A7 building.	None
Construction contract	Evergreen Steel Corporation Ltd.	March 2017 to the project acceptance date	Steel structure works for the construction of the Corporation's Station A7 building	None
Construction contract	Li Fu Co., Ltd.	August 15, 2017 to the project acceptance date	Glass curtain works for the construction of the Corporation's Station A7 building	None
Medium and long-term loan contract	Mega International Commercial Bank	2018.3.1~2023.3.1	Medium and long-term loan	Credit lines cannot be used to purchase real estate.
Medium and long-term loan contract	KGI Bank Co., Ltd.	2019.6.17~2022.6.17	Medium-term loan credits	None
Medium and long-term loan contract	Agricultural Bank of Taiwan	2018.12.12~2021.12. 12	Medium-term running capital	None
Overseas Investment and loan contracts	The Export–	2019.6.17~-2026.6.17	Equity investment in Camtek Ltd Israel	None
	Import Bank of
	the Republic of
	China

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Chapter 6 Financial Summary

I. Condensed balance sheet and statement of comprehensive income in the five most recent years
Condensed consolidated balance sheet and statement of comprehensive income

Unit: NT$ thousands

		Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item		Financial information of the 5 most recentyears
		2015(Note 1)		2016		2017		2018		2019
Current assets		9,632,600		11,212,692		14,105,784		13,231,273		12,612,242
Property,plant and equipment		2,767,608		2,714,127		2,664,584		3,389,889		3,221,431
Intangible assets		200,576		227,503		278,036		274,095		268,601
Other assets		3,459,655		4,478,456		4,969,208		6,307,207		9,334,798
Total assets		16,060,439		18,632,778		22,017,612		23,202,464		25,437,072
Current liabilities	Before distribution	3,112,654		4,723,411		6,922,901		5,972,513		7,474,187
	After distribution	4,020,607		6,037,618		8,774,705		7,723,085		8,739,187
Non-current liabilities		3,416,489		3,121,516		1,631,882		2,539,602		3,177,425
Total liabilities	Before distribution	6,529,143		7,844,927		8,554,783		8,512,115		10,651,612
	After distribution	7,437,096		9,159,134		10,406,587		10,262,687		11,916,612
Equity attributable to the owner of theparent company		9,410,104		10,616,627		13,230,679		14,410,020		14,488,761
Capital stock		3,791,699		3,898,872		4,118,942		4,167,794		4,192,961
Capital surplus		1,302,269		1,960,159		3,187,289		3,469,637		3,629,471
Retained earnings	Before distribution	3,952,185		4,735,275		5,972,296		6,795,059		6,875,970
	After distribution	3,044,232		3,421,068		4,120,492		5,044,487		5,610,970
Other equity		399,665		58,035		(12,134)		13,244		(187,651)
Treasurystock		(35,714)		(35,714)		(35,714)		(35,714)		(35,714)
Non-controllinginterests		121,192		171,224		232,150		280,329		296,699
Total liabilities	Before distribution	9,531,296		10,787,851		13,462,829		14,690,349		14,785,460
	After distribution	8,623,343		9,473,644		11,611,025		12,939,777		13,520,460

Item		Year	Financial information of the 5 most recent years
			2015(Note 1)		2016		2017		2018		2019
Operatingrevenue			9,692,365		11,624,369		14,901,346		16,931,128		13,909,634
Gross profit (Note2)			4,221,340		5,428,322		7,068,872		7,458,293		6,580,690
Profitfromoperations			1,219,999		2,013,181		3,043,081		3,039,633		2,059,459
Non-operating income and expenses			262,673		28,876		78,986		268,457		279,147
Profit beforeincome tax			1,482,672		2,042,057		3,122,067		3,308,090		2,338,606
Netincomefromcontinuing operations			1,194,542		1,695,566		2,548,823		2,547,179		1,889,476
Lossfromdiscontinued operations			─		─		─		─		─
Net profit			1,194,542		1,695,566		2,548,823		2,547,179		1,889,476
Other comprehensive income (net value after tax)			(131,740)		(223,152)		(138,228)		3,487		(249,805)
Totalcomprehensiveincome			1,062,802		1,472,414		2,410,595		2,550,666		1,639,671
Net profit attributable to the owner of the parent company			1,236,557		1,719,935		2,558,401		2,546,275		1,854,481
Net profit attributable to non-controlling interests			(42,015)		(24,369)		(9,578)		904		34,995
Total comprehensive income attributable to the owner of the parent company			1,102,621		1,501,612		2,425,174		2,546,584		1,608,601
Total comprehensive income attributable to non-controllinginterests			(39,819)		(29,198)		(14,579)		4,082		31,070
Earningsper share(NT$)			3.28		4.53		6.41		6.22		4.48

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Note 1: In 2015, the Corporation began to adopt the Regulations Governing the Preparation of Financial Reports by Securities Issuers as well as the 2013 version of IFRS and International Accounting Standards (IAS) as well as interpretations and announcements thereof approved by the Financial Supervisory Commission (FSC), and traced applicable items in previous financial statements to adjust those items that may be affected by these adoptions.
Note 2: Values listed are net realized gross profit from which unrealized gross profit were deducted from.
Note 3: The Board of Directors resolved on February 26, 2020, to distribute a cash dividend of NT$1,265,000,000 to shareholders.

2. Condensed parent company-only balance sheet and statement of comprehensive income

Unit: NT$ thousands

		Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item		Financial information of the 5 most recent years
		2015 (Note 1)	2016	2017	2018	2019
Current assets		5,999,691	7,709,289	8,212,509	6,640,159	6,544,302
Property, plant and equipment		1,844,215	1,805,031	1,789,099	2,493,620	2,406,545
Intangible assets		94,424	94,424	94,424	94,424	94,424
Other assets		6,026,586	6,977,507	8,463,667	10,098,682	12,757,869
Total assets		13,964,916	16,586,251	18,559,699	19,326,885	21,803,140
Current liabilities	Before distribution	1,310,706	3,037,002	3,877,087	2,551,737	4,347,102
	After distribution	2,220,906	4,351,427	5,731,511	4,302,633	5,612,102
Non-current liabilities		3,244,106	2,932,622	1,451,933	2,365,128	2,967,277
Total liabilities	Before distribution	4,554,812	5,969,624	5,329,020	4,916,865	7,314,379
	After distribution	5,465,012	7,284,049	7,183,444	6,667,761	8,579,379
Equity attributable to the owner of theparent company		9,410,104	10,616,627	13,230,679	14,410,020	14,488,761
Capital stock		3,791,699	3,898,872	4,118,942	4,167,794	4,192,961
Capital surplus		1,302,269	1,960,159	3,187,289	3,469,637	3,629,471
Retained earnings	Before distribution	3,952,185	4,735,275	5,972,296	6,795,059	6,875,970
	After distribution	3,041,985	3,420,850	4,117,872	5,044,163	5,610,970
Other equity		399,665	58,035	(12,134)	13,244	(187,651)
Treasurystock		(35,714)	(35,714)	(35,714)	(35,714)	(35,714)
Non-controllinginterests		─	─	─	─	─
Total liabilities	Before distribution	9,410,104	10,616,627	13,230,679	14,410,020	14,488,761
	After distribution	8,499,904	9,302,202	11,376,255	12,659,124	13,223,761

Year Item	Financial information of the 5 most recent years	Financial information of the 5 most recent years	Financial information of the 5 most recent years	Financial information of the 5 most recent years	Financial information of the 5 most recent years
	2015(Note 1)	2016	2017	2018	2019
Operatingrevenue	4,539,441	7,233,315	8,018,006	7,546,840	8,111,033
Grossprofit(Note 2)	2,519,834	3,763,579	4,116,862	3,916,720	4,092,554
Profit from operations	825,721	1,726,398	1,759,378	1,514,112	1,690,390
Non-operatingincome and expenses	548,464	281,123	1,106,336	1,414,496	459,985
Profit before income tax	1,374,185	2,007,521	2,865,714	2,928,608	2,150,375
Net income from continuingoperations	1,236,557	1,719,935	2,558,401	2,546,275	1,854,481
Loss from discontinued operations	─	─	─	─	─
Netprofit	1,236,557	1,719,935	2,558,401	2,546,275	1,854,481
Other comprehensive income (net value after tax)	(133,936)	(218,323)	(133,227)	309	(245,880)
Total comprehensive income	1,102,621	1,501,612	2,425,174	2,546,584	1,608,601
Net profit attributable to the owner of theparent company	1,236,557	1,719,935	2,558,401	2,546,275	1,854,481

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Net profit attributable to non-controlling interests	─	─	─	─	─
Total comprehensive income attributable to the owner of theparent company	1,102,621	1,501,612	2,425,174	2,546,584	1,608,601
Total comprehensive income attributable to non-controllinginterests	─	─	─	─	─
Earningsper share (NT$)	3.28	4.53	6.41	6.22	4.48

Note 1: In 2015, the Corporation began to adopt the Regulations Governing the Preparation of Financial Reports by Securities Issuers as well as the 2013 version of IFRS and International Accounting Standards (IAS) as well as interpretations and announcements thereof approved by the Financial Supervisory Commission (FSC), and traced applicable items in previous financial statements to adjust those items that may be affected by these adoptions.

Note 2: Unrealized profits with subsidiaries and related businesses were removed. The only values listed are realized gross profit.
Note 3: The Board of Directors resolved on February 26, 2020, to distribute a cash dividend of NT$1,265,000,000 to shareholders.

3. Names of CPA and audit opinion for the five most recent years

(1) Name of CPA and audit opinion for the five most recent years

Year	Accountingfirm	Name of CPA	Audit opinion
2015	Deloitte & Touche	Yi-Wen Wang, Wen-Chi Kuo	Unqualified opinion
2016	Deloitte & Touche	Yi-Wen Wang, Wen-Chi Kuo	Unqualified opinion
2017	Deloitte & Touche	Cheng-Ming Lee, Wen-Chi Kuo	Unqualified opinion
2018	Deloitte & Touche	Cheng-Ming Lee, Wen-Chi Kuo	Unqualified opinion
2019	Deloitte & Touche	Cheng-Ming Lee, Wen-Chi Kuo	Unqualified opinion

(2) Accounting firm, former and successor CPAs, and reasons for the replacement of CPAs in the five most recent years
①Reasons for changing the CPAs in 2015
- a. Name of former and successor CPAs:
  - Former CPAs: Cheng-Ming Lee, Li-Wen Kuo Successor CPAs: Yi-Wen Wang, Wen-Chi Kuo
- b. Reason for change: To ensure the independence of CPAs and comply with the internal rotation system of Deloitte & Touche.
- c. Date of occurrence: December 23, 2015
- d. Any disagreement related to accounting principles or audit items between former and successor CPAs: None.

②Reasons for changing CPAs in 2017

a. Name of former and successor CPAs:

Former: CPA I-Wen, Wang and CPA Wen-Chi, Kuo

Successor: CPA Cheng-Ming, Lee and CPA Wen-Chi, Kuo

b. Reason for change: To comply with the internal rotation system of Deloitte & Touche.
c. Date of occurrence: December 27, 2017
d. Any disagreement related to accounting principles or audit items between former and successor CPAs: None.
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II. Financial analysis in the five most recent years

1. Consolidated financial analysis

	Year	Financial analysis for the five most recentyears	Financial analysis for the five most recentyears	Financial analysis for the five most recentyears	Financial analysis for the five most recentyears
Analysis item(Note 3)		2015(Note 1)	2016	2017	2018 2019
Capital	Debt ratio	40.65	42.10	38.85	36.69 41.87
Structure Analysis (%)	Proportion of long-term capital to property, plant, and equipment	467.83	512.48	566.49	508.27 557.61
Liquidity	Current ratio	309.47	237.39	203.76	221.54 168.74
Analysis	Quick ratio	248.58	190.86	161.87	163.98 129.77
(%)	Interest coverage ratio	39.02	49.56	138.04	105.13 44.29
	Receivables turnover(times)	3.23	3.92	4.04	3.72 2.80
	Average collection days	113	93	90	98 130
	Inventoryturnover(times)	2.73	2.77	2.97	2.95 2.59
Operating	Payable turnover(times)	4.02	3.62	3.15	3.45 2.82
ability	Average inventoryturnover days	134	132	123	124 141
	Property, plant and equipment turnover(times)	3.54	4.24	5.54	5.59 4.21
	Total asset turnover(times)	0.62	0.67	0.73	0.75 0.57
	Return on assets(%)	8.18	10.12	12.68	11.37 7.80
	Return on equity (%)	13.25	17.18	21.46	18.42 12.83
Profitability Analysis	Ratio of income before tax to paid- in capital(%)	39.10	52.38	75.80	79.37 55.77
	Netprofit margin(%)	12.76	14.80	17.17	15.04 13.33
	Earningsper share(NT$)	3.28	4.53	6.41	6.22 4.48
	Cash flow ratio(%)	72.88	42.36	39.71	21.19 18.26
Cash flow	Cash flow adequacyratio(%)	89.78	84.19	89.99	77.28 68.13
	Cash re-investment ratio(%)	9.82	8.31	10.36	(Note 2) (Note 2)
Degree of leverage	Degree of operating leverage (DOL) Degree of financial leverage(DFL)	1.27 1.03	1.17 1.02	1.10 1.01	1.10 1.22 1.01 1.03

Explain the reasons for changes in various financial ratios in the two most recent years (analysis is not required if the change is within 20%). The following describes the reason for changes to financial ratios that exceed 20% in the two most recent years:

Decrease in liquid ratio and quick ratio: Mainly due to the increase in short-term loans in 2019 as compared to the previous period.
Decrease in interest coverage ratio: Mainly due to increase in interest expenses and decrease in profit before tax, resulting in decrease in interest coverage ratio.
Decrease in receivables turnover rate and increase in average collection days: Mainly due to decrease in operating income in 2019 and increase in average receivables resulting in decrease in receivables turnover and increase in average collection days.
Decrease in property, plant, and equipment turnover ratio: Mainly due to the decrease in revenue in 2019 as compared to the previous period.
Decrease in total asset turnover rate: Mainly due to decrease in operating revenue in 2019 and increase in total assets resulting in decrease in total asset turnover rate.
Decrease in return on assets and return on equity: Mainly due to decrease in profit in 2019, resulting in decrease in return on assets and return on equity.
Decrease in the ratio of net profit before tax to paid-in capital: Mainly due to the decrease in net profit before tax in 2019 as compared to the previous period.
Decrease in earnings per share: Mainly due to the decrease in earnings per share as a result of the sharp decline in operation of MAS Automation in last year and the decrease in profit for the period.
Note 1: In 2015, the Corporation began to adopt the Regulations Governing the Preparation of Financial Reports by Securities Issuers as well as the 2013 version of IFRS and International Accounting Standards (IAS) as well as interpretations and announcements thereof approved by the Financial Supervisory Commission (FSC), and traced applicable items in previous financial statements to adjust those items that may be affected by these adoptions.
94 -

Note 2: Net cash flow from operating activities - cash dividends is negative. Therefore, the relevant ratio is not applicable. Note 3: The following lists the formulas used for performing the financial analysis:

Financial structure
- (1) Debt ratio = Total liabilities/Total assets.
- (2) Proportion of long-term capital to property, factory and equipment ratio = (Total equity + Non-current liabilities)/Net property, plant and equipment.
Debt-paying ability
- (1) Current ratio = Current assets/Current liabilities.
- (2) Quick ratio = (Current assets – Inventory – Prepaid expense)/Current liabilities.
- (3) Interest coverage ratio = Net income before income tax and interest expense/Current interest expense for the period.
Operating ability
- (1) Receivables turnover rate (including bills receivable resulting from accounts receivable and business operations) = Net sales/Average accounts receivable in various periods (including bills receivable resulting from accounts receivable and business operations).
- (2) Average collection days = 365/Receivables turnover ratio.
- (3) Inventory turnover ratio = Cost of goods sold/Average inventory value.
- (4) Payable turnover rate (including bills payable resulting from accounts payable and business operations) = Cost of goods sold/Average accounts payable in various periods (including bills payable resulting from accounts payable and business operations).
- (5) Average inventory turnover days = 365/Inventory turnover ratio.
- (6) Property, plant and equipment (PP&E) turnover ratio = Net sales/Average value of PP&E.
- (7) Total asset turnover rate = Net sales/Average total assets.
Profitability
- (1) Return on assets ＝ [Net income after taxes + Interest expense (1– Tax rate)]/Average total assets.
- (2) Return on equity = Net income after taxes/Average total equity.
- (3) Net profit margin = Net income after taxes/Net sales.
- (4) Earnings per share = (Net profit (loss) attributable to the owners of the parent company – Preferred dividends) / Weighted average number of shares outstanding.
Cash flow
- (1) Cash flow ratio = Net cash flow from operating activities/Current liabilities.
- (2) Net cash flow adequacy ratio = Net cash flow from operating activities for the five most recent years/(Capital expenditure + Inventory increase + Cash dividend) for the most recent five years.
- (3) Cash reinvestment ratio = (Net cash flow from operating activities – Cash dividend)/Gross value of PP&E + Long-term investments + Other non-current assets + Working capital).
Degree of leverage
- (1) Degree of operating leverage = (Net operating revenue - Change in operating costs and operating expenses)/Operating income.
- (2) Degree of financial leverage = Operating income/(Operating income - Interest expenses).
Note 4: The following shall be taken note of when using the abovementioned formula for calculating earnings per share:
Calculation is made based upon the weighted average of common shares and not the number of issued shares at the end of the year.
Where cash capital increase or transaction of treasury stock is involved, weighted average number of shares shall be calculated by taking into consideration circulation period.
Where recapitalization of retained earnings or recapitalization of Capital surplus is involved, retrospective adjustment shall be made according to the proportion of recapitalization when calculating annual and semiannual earnings per share. There is no need to consider the period of issuance for the said recapitalization.
If preferred shares cannot be converted into cumulative preferred shares, then dividends for the year (issued or not) shall be deducted from NIAT or increase net loss after tax. If preferred shares are non-cumulative, dividends for preferred shares shall be deducted from any NIAT resulting from this period. No readjustment is required for losses.
Note 5: The following items shall be taken note of during cash flow analysis:
Net cash flow from operating activities refers to the net cash inflows from operating activities in the statement of cash flows.
Capital expenditure refers to the amount of cash outflows from capital investments every year.
Inventory increase is only included in the calculation when the ending balance is greater than the beginning balance. Inventory decrease at the end of the year shall be calculated as zero.
Cash dividends include cash dividends for common shares and preferred shares.
Gross value of property, plant and equipment (PP&E) refers to the total value of PP&E before deducting accumulated depreciation.
Note 6: The issuer shall categorize operating costs and operating expenses as fixed and variable based on the nature of these items. Where estimates or subjective judgments must be made, care must be taken to ensure their validity and consistency.
Note 7: Where the share of the Corporation have no par value or its par value is not NT$10 per share, the abovementioned ratio of income before tax to paid-in capital shall be replaced with ratio of income before tax to equity attributable to the owner of the parent company listed in the balance sheet.
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2. Parent company-only financial analysis

Analysis item	Year (Note 3)	Financial analysis for the five most recentyears	Financial analysis for the five most recentyears	Financial analysis for the five most recentyears	Financial analysis for the five most recentyears	Financial analysis for the five most recentyears
		2015(Note 1)	2016	2017	2018	2019
Capital Structure Analysis(%)	Debt ratio	32.62	35.99	28.71	25.44	33.55
	Proportion of long-term capital to property, plant, and equipment	686.16	750.64	820.67	672.72	725.36
Liquidity Analysis (%)	Current ratio	457.74	253.85	211.82	260.22	150.54
	Quick ratio	354.57	204.82	161.19	184.01	100.28
	Interest coverage ratio	48.66	74.97	230.44	135.59	61.27
Operating ability	Receivables turnover(times)	2.25	3.58	2.91	2.58	2.69
	Average collection days	162	102	125	141	136
	Inventoryturnover(times)	1.34	2.13	2.07	1.75	1.82
	Payable turnover(times)	3.55	3.94	3.01	3.01	3.54
	Average inventoryturnover days	272	171	176	209	201
	Property, plant and equipment turnover(times)	2.42	3.96	4.46	3.52	3.31
	Total asset turnover(times)	0.33	0.47	0.46	0.40	0.39
Profitability Analysis	Return on assets(%)	9.25	11.41	14.62	13.53	9.16
	Return on equity (%)	13.25	17.18	21.46	18.42	12.83
	Ratio of income before tax to paid-in capital(%)	36.24	51.49	69.57	70.27	51.29
	Netprofit margin(%)	27.24	23.78	31.91	33.74	22.86
	Earningsper share(NT$)	3.28	4.53	6.41	6.22	4.48
Cash flow	Cash flow ratio(%)	116.19	65.03	17.05	71.13	35.36
	Cash flow adequacyratio(%)	74.59	72.41	61.09	63.58	59.71
	Cash re-investment ratio(%)	4.46	8.88	(Note 2)	(Note 2)	(Note 2)
Degree of leverage	Degree of operating leverage (DOL)	1.24	1.14	1.12	1.12	1.16
	Degree of financial leverage (DFL)	1.04	1.02	1.01	1.01	1.02
Explain the reasons for changes in various financial ratios in the two most recent years (analysis is not required if the change is within 20%). The following describes the reason for changes to financial ratios that exceed 20% in the two most recent years: 1. Increase in debt to assets ratio: Mainly due to the increase in bank borrowings in 2019 as compared to the previous period. 2. Decrease in current ratio and quick ratio: Mainly due to increase in bank borrowings in 2019 as compared to the previous period, resulting in decrease in current ratio and quick ratio. 3. Decrease in interest coverage ratio: Mainly due to decrease in profit before tax in 2019 as compared to the previous period. 4. Decrease in return on assets and return on equity: Mainly due to decrease in net profit in 2019, resulting in decrease in return on assets and return on equity. 5. Decrease in the ratio of net profit before tax to paid-in capital: Mainly due to the decrease in net profit before tax in 2019 as compared to the previous period. 6. Decrease in net profit margin and earnings per share: The decrease in net profit margin and earnings per share was mainly due to the significant decrease in profit for the period as a result of the sharp decline in operation of MAS Automation in last year. 7. Decrease in cash flow rate: Mainly due to decrease in operating activities cash and increase in liquid liability in 2019.

1.Increase in debt to assets ratio: Mainly due to the increase in bank borrowings in 2019 as compared to the previous period.
2.Decrease in current ratio and quick ratio: Mainly due to increase in bank borrowings in 2019 as compared to the previous period, resulting in decrease in current ratio and quick ratio.
3.Decrease in interest coverage ratio: Mainly due to decrease in profit before tax in 2019 as compared to the previous period.
4.Decrease in return on assets and return on equity: Mainly due to decrease in net profit in 2019, resulting in decrease in return on assets and return on equity.
5.Decrease in the ratio of net profit before tax to paid-in capital: Mainly due to the decrease in net profit before tax in 2019 as compared to the previous period.
6.Decrease in net profit margin and earnings per share: The decrease in net profit margin and earnings per share was mainly due to the significant decrease in profit for the period as a result of the sharp decline in operation of MAS Automation in last year.
7.Decrease in cash flow rate: Mainly due to decrease in operating activities cash and increase in liquid liability in 2019.

Note 2: Net cash flow from operating activities - cash dividends is negative. Therefore, the relevant ratio is not applicable.
96 -

III. Audit Committee's audit report on financial statements in the most recent year

Chroma ATE Inc.

Audit Committee’s Audit Report

This audit report was generated after a complete audit of the Corporation's 2019 business report, parent company-only and consolidated financial statements, and surplus allocation plan submitted by the Board of Directors, where the parent company-only and consolidated financial statements have been audited by CPAs Cheng-Ming Lee and Wen-Chi, Kuo of Deloitte & Touche. No discrepancies were found upon review of the abovementioned documents by the Audit Committee. This audit report is hereby submitted for review in accordance with Article 14-4 of the Securities and Exchange Act and Article 2019 of the Company Act.

Sincerely yours, Chroma ATE Inc.

Annual shareholders’ meeting 2020

Chairman of Audit Committee: Tsung-Ming Chung

Date: 03/09/2020

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IV. Financial report in the most recent year: Please peruse pages 117 to 199 of this Report.
V. Corporation-only financial report audited and attested by a CPA from the most recent year: Please peruse pages 200 to 272 of this Report.
VI. Any financial difficulties experienced by the Corporation and its affiliated companies during the most recent year up to the publication date of this annual report as well as the impact of the said difficulties on the financial condition of the Corporation: None.
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Chapter 7 Review and Analysis of Financial Condition and Performance, and Relevant Risk Events

I. Financial condition

Comparative analysis of financial conditions


Year			Differences
	December 31, 2019	December 31, 2018
Item			Amount	%

Current assets	12,612,242	13,231,273	(619,031)	(5%)
Property, plant and equipment	3,221,431	3,389,889	(168,458)	(5%)
Investment property	3,137,187	3,137,187	0	0%
Intangible assets	268,601	274,095	(5,494)	(2%)
Other assets	6,197,611	3,170,020	3,027,591	96%
Total assets	25,437,072	23,202,464	2,234,608	10%
Current liabilities	7,474,187	5,972,513	1,501,674	25%
Non-current liabilities	3,177,425	2,539,602	637,823	25%
Total liabilities	10,651,612	8,512,115	2,139,497	25%
Capital stock	4,192,961	4,167,794	25,167	1%
Capital surplus	3,629,471	3,469,637	159,834	5%
Retained earnings	6,875,970	6,795,059	80,911	1%
Other equity	(187,651)	13,244	(200,895)	(1,517%)
Treasury stock	(35,714)	(35,714)	0	0%
Non-controlling interests	296,699	280,329	16,370	6%
Total shareholders' equity	14,785,460	14,690,349	95,111	1%
1. Major reasons and impact of any material change to the Corporation's assets, liabilities, or equity in the two most recent years: (analysis of changes whose percentage exceeds 20%, and whose amount reaches NT$10 million shall be provided) (1) Increase in other assets: Mainly due to the equity acquisition of Camtek Ltd. accounted for using the equity method. (2) Increase in non-current liabilities: It was mainly due to the increase in long-term borrowings. (3) Increase in non-current liabilities: It was mainly due to the increase in short-term borrowings. (4) Increase in total liabilities: Mainly due to increase in bank borrowings. (5) Decrease in other equity: mainly due to the change in exchange rate resulting in increased exchange loss on translation of financial statements of foreign operations. 2. Future response plan:These changes were considered part of normal business operations, and would not lead to severe negative impacts upon overall financial operations of the Corporation and its subsidiaries. 3. Futures responseplans: Not applicable.

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II. Financial performance

Analysis of financial performance

				Unit: NT$thousands;%	Unit: NT$thousands;%
Item	Year	2019	2018	Amount of change	Percentage of change(%)
Operating revenue		13,909,634	16,931,128	(3,021,494)	(18%)
Gross profit (Note)		6,580,690	7,458,293	(877,603)	(12%)
Profit from operations		2,059,459	3,039,633	(980,174)	(32%)
Non-operating income and expenses		279,147	268,457	10,690	4%
Profit before income tax		2,338,606	3,308,090	(969,484)	(29%)
Net income		1,889,476	2,547,179	(657,703)	(26%)
Other comprehensive income(net value after tax)		(249,805)	3,487	(253,292)	(7,264%)
Total comprehensive income		1,639,671	2,550,666	(910,995)	(36%)
Net profit attributable to the owner of theparent company		1,854,481	2,546,275	(691,794)	(27%)
Total comprehensive income
attributable to the owner	of	1,608,601	2,546,584	(937,983)	(37%)
theparent company

Major reasons and impact of any material change to the Corporation’s operating revenue, operating profit, and earnings before tax (EBT) in the two most recent years: (analysis of changes whose percentage exceeds 20%, and whose amount reaches NT$10 million shall be provided)
(1) Decrease in operating profit and loss: Mainly due to decrease in turnover and increase in operating expenses in 2019.
(2) Decrease in net profit before tax and net profit for the period: Mainly due to decrease in consolidated operating income and increase in operating expenses in 2019, resulting in decrease in net profit before tax and net profit for the period.
(3) Decrease in other comprehensive profit or loss for the period: Mainly due to increase in exchange loss on translation of financial statements of foreign operations and increase in other comprehensive loss of associates and joint ventures accounted for using the equity method.
(4) Decrease in total comprehensive profit or loss, net profit attributable to owners of the parent company and total comprehensive profit or loss attributable to owners of the parent company for the current period: Mainly due to the decrease in net profit as a result of the decline in consolidated operating income in 2019 and decrease in other comprehensive profit or loss for the current period.
Expected sales volume and relevant data, possible impact on the company’s financial operations, and response plans:
Under the influence of the pneumonia pandemic, uncertainties cloud the overall 2020 economy, and the manufacturing industry is expected to slow the pace of investment expansion. The Company will actively work towards the new areas of 5G, AI and IoT related applications, and continue to collaborate with leading international manufacturers, with the aim expanding product lines and improving business performance within new application sectors.

Note: Net amounts listed are calculated based on net realized operating gross profit after deducting the unrealized operating profit.

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III. Cash flow

Analysis of cash liquidity

(I) Analysis and explanations of changes in cash flow in the most recent year

Unit: NT$ thousands

				Unit: NT$thousands	Unit: NT$thousands
Initial cash balance	Net cash inflow from operating activities throughout the year	Total net cash inflow (outflow) from investing and financing activities throughout the year (Note)	Amount of cash surplus (deficit)	Remedial measures for cash inadequacy
				Investment plan	Financing plan
2,923,957	1,364,514	(2,026,940)	2,261,531	─	─
Note: Net cash outflow from investing and financing activities was NT$1,981,837 thousand, and the effect of the exchange rate was NT$45,103 thousand. 1. Analysis of change in cash flow in the most recent year: (1) Operating activities: Net cash inflow from operating activities in 2019 was NT$1,364,514 thousand, which came mainly from business profits. (2) Investing activities: Net cash outflow from investing activities for the year ended on December 31, 2019, was NT$2,266,469 thousand, which was mainly attributable to the purchase of equity in Camtek Ltd and payment for the construction of the new A7 building. (3) Financing activities: Net cash inflow from financing activities amounted to NT$284,632 thousand for the year ended on December 31, 2019, mainly from bank borrowings, resulting in net cash inflow. The bank borrowings were mainly for the payment of equity in Camtek and cash dividends to shareholders. 2. Remedial measures and liquidityanalysis for cash inadequacy: Not applicable.

Note: Net cash outflow from investing and financing activities was NT$1,981,837 thousand, and the effect of the exchange rate was NT$45,103 thousand.

(II) Analysis of cash liquidity for the following year

Unit: NT$ thousands

				Unit: NT$thousands	Unit: NT$thousands
		Expected total		Remedial measures for
	Expected net cash inflow from	net cash inflow (outflow) from	Expected	expected cash	inadequacy
Beginning cash	operating	investing and	amount of
balance	activities throughout the year	financing activities throughout the	cash surplus (deficit)	Investment plan	Financing plan
		year
2,261,531	1,405,000	(1,765,000)	1,901,531	─	─

Analysis of changes in cash flow in the most recent year
(1) Operating activities: It mainly refers to cash inflow generated by business profits.
(2) Investment activities: Mainly refer to cash outflow for expected payments constructing the new A7 office building.
(3) Financing activities: It mainly refers to cash outflow due to expected distribution of cash dividends and cash inflow generated by long-term borrowings.
Remedial measures and liquidity analysis for expected cash inadequacy: Not applicable.
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IV. Impact of material expenditures on the Corporation's finances and operations in the most recent year

On 17 January 2012, the Company, Dynapack International Technology Corp. and Heran Co., Ltd. jointly acquired the “Tender A of the Action Plan for Developing Land Surrounding the MRT Airport Station to Improve Civilians' Life” by the Ministry of the Interior. The total transaction amount of this tender was NT$10,088,890 thousand, with a total land area of 222,300 square meters, 35% of which were held by the Company. The 77,805 square meters owned by the Company are subject to a bidding amount of NT$3,531,112 thousand. The Company entered into a land transaction contract with the Ministry of the Interior on 18 April 2012 and completed the payment of the entire land in June 2018. The registration of land equity transfer has completed.

The Company's Board of Directors approved, on December 27, 2016, the plans to invest NT$ 3.5 billion for expanding and constructing a new A7 factory building. The construction will increase usable space. Expected adjustments to spatial layouts and production line configurations would improve the production and sales of precision electronic measurement instruments and integrated automated measurement systems, thereby benefiting future development plans and reduce the business risks of this Corporation.

The Corporation invested in the construction of the Station A7 factory building to expand production capacity and increase experiment area for R&D, and incorporated more R&D resources to develop more key technologies and products, in order to offer all-round turnkey test and automation solutions, in hopes of maintaining the long-term competitiveness of the Corporation, thereby providing the industry with products which are faster, more accurate and more reliable.

V. Investment policies in other companies, main reasons for profit / losses resulting therefrom, improvement plan, and investment plans for the upcoming year
(I) Reinvestment policy in the most recent year: Reinvestment is in line with the Company’s operational needs and in consideration of future development strategies.
(II) Analysis of profit or loss of reinvestment companies accounted for using the equity method in 2019

provement plan, and investment plans for the upcoming year ) Reinvestment policy in the most recent year: Reinvestment is in line with the Company’s operational needs and in consideration of future development strategies. I) Analysis of profit or loss of reinvestment companies accounted for using the equity method in 2019	provement plan, and investment plans for the upcoming year ) Reinvestment policy in the most recent year: Reinvestment is in line with the Company’s operational needs and in consideration of future development strategies. I) Analysis of profit or loss of reinvestment companies accounted for using the equity method in 2019	provement plan, and investment plans for the upcoming year ) Reinvestment policy in the most recent year: Reinvestment is in line with the Company’s operational needs and in consideration of future development strategies. I) Analysis of profit or loss of reinvestment companies accounted for using the equity method in 2019	provement plan, and investment plans for the upcoming year ) Reinvestment policy in the most recent year: Reinvestment is in line with the Company’s operational needs and in consideration of future development strategies. I) Analysis of profit or loss of reinvestment companies accounted for using the equity method in 2019
As of December 31,2019 Unit: NT$thousands Name of company Shareholding percentage Investment gain(loss) Description Neworld Electronics Ltd. 100.0% 208,409Gain resulting from excellent sales Chroma New Material Corporation 100.0% 28,905 Gain resulting from excellent sales Chroma Investment Co., Ltd. 100.0% (1,904) Net profit in 2019 was NT$6,099 thousand, which was due to the deduction of dividend income from the parent company, thereby resultingin investment loss for theperiod. Adlink Technology Inc. 11.3% 52,141 Good R&D capabilities and business performance. San Eagle Development Corp. 100.0% 70,075 Mainly derived from investment gain recognized usingthe equitymethod MAS Automation Corp. 100.0% 21,811 Gain resulting from sales CHI Incorporation LTD 100.0% 26,992 Mainly derived from investment gain recognized usingthe equitymethod Testar Electronic Corporation 67.2% (14,511) Loss resulting from failure to meet revenue expectations and risingcost Chroma ATE Inc. 100.0% (49,451) Loss resulting from poor sales Sensational Holding Ltd 100.0% 612 Mainly derived from rental income Chroma Systems Solutions, Inc. 25.0% 33,602 Establishment of a comprehensive sales network withgood businessperformance.
Name of company	Shareholding percentage	Investment gain(loss)	Description
Neworld Electronics Ltd.	100.0%	208,409	Gain resulting from excellent sales
Chroma New Material Corporation	100.0%	28,905	Gain resulting from excellent sales
Chroma Investment Co., Ltd.	100.0%	(1,904)	Net profit in 2019 was NT$6,099 thousand, which was due to the deduction of dividend income from the parent company, thereby resultingin investment loss for theperiod.
Adlink Technology Inc.	11.3%	52,141	Good R&D capabilities and business performance.
San Eagle Development Corp.	100.0%	70,075	Mainly derived from investment gain recognized usingthe equitymethod
MAS Automation Corp.	100.0%	21,811	Gain resulting from sales
CHI Incorporation LTD	100.0%	26,992	Mainly derived from investment gain recognized usingthe equitymethod
Testar Electronic Corporation	67.2%	(14,511)	Loss resulting from failure to meet revenue expectations and risingcost
Chroma ATE Inc.	100.0%	(49,451)	Loss resulting from poor sales
Sensational Holding Ltd	100.0%	612	Mainly derived from rental income
Chroma Systems Solutions, Inc.	25.0%	33,602	Establishment of a comprehensive sales network withgood businessperformance.

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Name of company	Shareholding percentage	Investment gain(loss)	Description
Chroma ATE Europe B.V.	100.0%	37,015	Establishment of a comprehensive sales network withgood businessperformance.
Chen Hwa Technology Inc.	100.0%	1,647	Mainly derived from dividend income.
Dynascan Technology Corp.	27.3%	9,679	Gain resulting from excellent sales
Deep Red Holding Co., Ltd.	100.0%	13,587	Mainly derived from investment gain recognized usingthe equitymethod
Chroma Japan Corp.	100.0%	(41,636)	Loss resulting from poor sales
Chih Ho Shun Development Co.,Ltd.	35.0%	(43)	As a result, the Group recorded a loss due to the increase in major expenses.
Adivic Technology Co., Ltd.	74.1%	(19,739)	New products are still subject to customer recognition and research and development expenses are high, resulting in operating loss.
EVT Technology Co., Ltd.	85.6%	(9,841)	Losses resulting from product conversion and incomplete R&D for newproducts
Quantel Private Ltd.	60.0%	29,202	Establishment of a comprehensive sales network withgood businessperformance.
Innovative Nanotech, Inc.	71.1%	(1,853)	It is a startup company so there are fewer shipments.
Touch Cloud Inc.	78.1%	(9,197)	Still in the stage of product development
Camtek Ltd	20.2%	35,415	Thanks to the advanced technology and products, a complete distribution network with good operating performance and profitability.

(III) Improvement plan

  1. Testar Electronics Corp: Expanded from LED testing to semiconductors and laser diodes testing in 2019. It should have a better operating result in 2020.

  2. CHROMA USA: Will strengthen the sales coverage of the product lines to enhance operating performance.

  3. Chroma Japan Corp: The high operating expenses are because of long approval time on the customer side. Shall meet the customers' requirements for approval to improve operating performance.

  4. Adivic Corp.: The Wi-Fi testing instruments developed by ADIVIC integrate with the Company’s semiconductor equipment for customer approval. There were many successfully approved cases in 2019, and the 2020 revenue shall increase, resulting in performance improvement.

  5. EVT Technology: EVT is now working with our corporation to develop production lines for electric vehicles' parts, expected improvement in business performance upon completion, and release of R&D products in the market.

  6. Innovative Nanotech Inc.: The products have been certified by first-tier customers, and shipments were made in 2019. It is expected to be profitable in 2020.

  7. Touch Cloud Company: Many customers have certified its big-data analytics software, and the sales shall increase in 2020.

(IV) Investment plans for the coming year: In principle, the Company will increase investment to existing invested enterprises and establish marketing networks.
VI. Risk analysis and assessment of the most recent year up to the publication date of this annual report
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(I) Changes to interest rates, currency exchange fluctuations, and inflation and how these may impact the Corporation penetrate loss as well as future response measures
Changes to interest rates and resulting impact to the Corporation's gain or loss as well as future response measures
(1) Changes to interest rates and impact on the gain or loss of the Corporation and its subsidiaries

Unit: NT$ thousands

Item/Year	2018	2019
Interest expense	31,768	54,020
Net operatingrevenue	16,931,128	13,909,634
Operating profit	3,039,633	2,059,459
Interest expense/Operatingrevenue (%)	0.19	0.39
Interest expense/Operating profit (%)	1.05	2.62

The interest expenses of the Company and its subsidiaries for 2018 and 2019 were NT$31,768 thousand and NT$54,020 thousand respectively. The interest expenses accounted for 1.05% and 2.62% of the operating profit, respectively. The changes are highly associated with changes in the profit or loss of the Company and its subsidiaries.

(2) Future response measures

The Corporation and its subsidiaries have been carrying out capital planning based on the principle of stability and conservativeness, and focus primarily on safety and liquidity. Finance personnel of the Group maintains close contact with financial institutions the Group has business with, in order to achieve greater awareness to the trends and changes in market interest rates at all times, negotiate interest rates with various banks, and to actively reduce the cost of working capital to reduce the impact of interest rate fluctuations on the Company’s profitability.

Currency exchange fluctuations and resulting impact to the Corporation's gain or loss as well as future response measures
(1) Currency exchange fluctuations and its impact on the gain or loss of the Corporation and its subsidiaries

subsidiaries	subsidiaries	subsidiaries
Unit: NT$thousands
Item/Year	2018	2019
Net exchange gain (loss)	97,928	(85,663)
Net operating revenue	16,931,128	13,909,634
Operating profit	3,039,633	2,059,459
Profit before income tax	3,308,090	2,338,606
Proportion of net profit (loss) on exchange net to operating revenue (%)	0.58	(0.62)
Proportion of net profit (loss) on exchange to operating profit (%)	3.22	(4.16)
Proportion of net profit (loss) on exchange to earnings before tax (EBT) (%)	2.96	(3.66)

The Corporation and its subsidiaries have provided accounts payable and receivable calculating value in US dollar. Hence, fluctuations in the US dollar exchange rate correlate with changes in exchange gain (loss) of the Corporation and its subsidiaries. The exchange gain (loss) was NT$97,928 thousand, and NT$(85,663) thousand for the years ended on December 31, 2018, and 2019, respectively, representing a pre-tax net profit ratio of approximately 2.96% and (3.66)%, respectively.

(2) Future response measures

In response to the risk of changes in foreign exchange rates, the Company and its subsidiaries maintain natural hedging by offsetting the foreign currency payables arising from the purchases

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and short-term bank borrowings in foreign currencies with increased foreign currency receivables in US dollar. The financial department also maintains close contact with financial institutions, collecting daily exchange rate information, and keeping abreast of exchange rate trends and changes. Adjustments are made to foreign currency positions promptly, reducing the impact of exchange rate fluctuations on the Company’s profit and loss.

Inflation and its impact on the Corporation’s gain or loss as well as future response measures
(1) Inflation and its impact to the gain or loss of the Corporation and its subsidiaries

The Corporation and its subsidiaries have not been affected by inflation severely enough to result in major impact to the gains or losses to the Corporation and its subsidiaries during the period of the most recent year up to the publication date of this annual report.

(2) Future response measures

The Corporation and its subsidiaries are minimally affected by inflation, but will continue to monitor changes in the prices of upstream and downstream products to reduce its impact on their gains or losses as a result of cost changes.

(II) Policies on high risk, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives trading, main reasons for the profits or losses generated thereby, and future response measures to be undertaken.
Main reasons for engaging in high risk, highly leveraged investments and future response measures
(1) Main reasons for engaging in high risk, highly leveraged investments

The Corporation and its subsidiaries have not engaged in any high risk, highly leveraged investment from the most recent year up to the publication date of this annual report.

(2) Future response measures
The Corporation and its subsidiaries focus upon specialized businesses and adopt a conservative and stable financial operation in principle. No capital is used in high risk, highly leveraged investments.
Loans to other parties, endorsements, and guarantees
(1) Reasons for providing loans to other parties, endorsements, and guarantees
Loans, endorsements, and guarantees shall be, in principle, provided to affiliated companies or companies that the Corporation and its subsidiaries have business dealings with. Interest rates of loans provided by the Corporation and its subsidiaries shall be, by principle, higher than short term loan interest rates provided by financial institutions to the Corporation and its subsidiaries.
(2) Future response measures
The Corporation has stipulated Provision of Financial Loans to Other Parties as well as Endorsement and Guarantee Operations Procedure and refer to the relevant provisions to provide relevant public disclosures.
Policies on derivatives trading, major reasons for profits or losses as well as future response measures
(1) Policies when engaging in derivatives trading and major reasons for profits or losses All derivatives trading engaged by the Corporation and its subsidiaries include hedging of foreign exchange risks generated by the assets or liabilities. No derivatives trading has been implemented in the most recent fiscal year up to the publication date of this annual report.
(2) Future response measures
The Corporation and its subsidiaries shall adopt a conservative business principle and seek stable growth, and shall continue to assess impacts to profits or losses resulting from exchange rate fluctuations. To manage transaction risks, the Corporation and its subsidiaries shall refer to regulations prescribed in the Procedure for Handling Derivatives Trading, and activate foreign exchange risk avoidance tools and avoid improper and high risk transactions.
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(III) Future R&D projects and planned budget:

Research and Development Project	Current progress	Expected completion time	Additional investments required(NT$)
Next generation bi-direction and high power density DC Source	Design planning phase	2021/Q1	10 million
Next generation bi-direction power module platform	Design verification phase	2020/Q3	15 million
Next generation high Accuracy Linear DC Load Module	Design planning phase	2020/Q4	10 million
High performance Elelctrical Motor Emulator	Design planning phase	2021/Q2	10 million
Dual alxe Dynamometer	Design planning phase	2021/Q1	20 million
Next generation Regenerative Battery Pack Test System	Design planning phase	2021/Q2	20 million
Next generation high performance Battery Formation Power	Design planning phase	2020/Q4	12 million
HDMI 8K Media Player	Concept planning phase	2020/Q4	8 million
Lab grade high precision battery cell and material testingsystem	Design planning phase	2021/Q4	20 million
High frequency/large current magnetic component's key parameter analyzer	Design planning phase	2021/Q1	15 million

(IV) Changes to local and overseas policies and laws that impact corporate financial operations, and response measures:

No changes to local and overseas policies and laws have resulted in major impact to the financial operations of the Corporation and its subsidiaries.

(V) Changes in technology and industry that will impact the Corporation's financial operation with countermeasures

The Corporation produces instruments for the technology sector which enjoy longer life cycles. The Corporation also has a wide selection of product lines and would not be easily affected by changes to the technology or industry.

(VI) Changes in corporate image that will impact the Corporation's risk management with countermeasures

The Corporation and its subsidiaries enjoy good business images and would not be subject to changes that negatively affect their corporate images.

(VII) Expected benefits, possible risks and response measures for merger and acquisition

On February 11, 2019, the Company’s Board of Directors resolved to acquire 7,817,440 ordinary shares of Camtek Ltd., holding 20.5% equity interests, with a total investment amount of US$74,265,680. It is hoped that this investment can enhance the Corporation's AOI and 3D metrology test technology capabilities, and penetrate into the foundry and advanced packing market, thereby enhancing the Group's international operational capabilities and increasing financial efficiency.

Potential risks: (1) Product competitiveness: Camtek focuses highly on white-light triangulation. At the same time, competitors are developing various metrologies, and such differences in strategy may lead to potential gaps in competitiveness. (2) Market changes: Semiconductor foundries are moving towards high-end advanced packaging while traditional packaging manufacturers move towards lower-end products. Although the current market size of low-end products is still huge, the structure of high-end packaging is becoming smaller, and the trend is moving towards the sub-micron scale. (3) Equity price

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risk and financial obligation.

(VIII)Expected benefits, possible risks and response measures of expanding factory buildings Expansion of factory buildings allows the Corporation and its subsidiaries to increase
its productivity, gain the ability to receive more purchase orders, improve revenue and profitability, and increase market share. Expansion of factory buildings by the Corporation and its subsidiaries has been carefully reviewed to ensure that customers’ requirements are met while achieving optimal use of corporate capital.
(IX) Risks resulting from consolidation of purchase or sales operations and response measures 1. Purchasing risks
Purchases from NMC by the Company and its subsidiaries accounted for 30.12%
and 20.31%, respectively, of the total purchases for each of the years ended on December 31, 2019, and 2018. There was a sign of concentrated purchases in the same group, mainly due to the specialty materials such as gold wire and copper wire provided by NMC, which are having the best quality compared to other Japanese and Korean manufacturers such as Tanaka, NKE, and Heesung. It is to meet the product quality requirements of downstream semiconductor packaging customers. The amount of purchases made from various suppliers by the Corporation and its subsidiaries may increase or decrease in response to changes in profitability of relevant products. Given the large variety of raw materials and components needed by the Corporation and its subsidiaries to produce their products, all local and overseas purchases are handled by a single purchasing unit. Where possible, two or more suppliers are selected to ensure supplier replaceability, acquire competitive pricing, spread purchasing risks, achieve reasonable cost reductions, and provide better services. Also, the Corporation and its subsidiaries have established positive partnerships with external suppliers to eliminate any concerns of material shortage. Material preparation for special materials and automated conveying and engineering equipment of the Corporation and its subsidiaries would only be initiated after receiving a purchase order to establish inventory levels for raw materials. Positive relationships have been established with upstream suppliers to reduce purchasing risks. Given the long-term partnerships and positive collaboration between the Corporation and its subsidiaries and their main suppliers, no major nonconformities have been identified so far. Since establishment, the Corporation and its subsidiaries have achieved positive interaction with their main suppliers. Hence, no material shortage or supply interruption has yet to occur.
Sales risks

The Corporation and its subsidiaries offer a large variety of product categories. Product sales were mainly based upon the state of the industry, customer requirements, as well as changes to marketing strategies adopted by the Corporation and its subsidiaries. Hence, the Corporation and its subsidiaries are actively developing new customers to achieve business stability and growth. Currently, most customers were listed companies or renowned companies in Taiwan and other countries. No income from a single customer in 2019 has exceeded 10% of the total income of the combined Company. In 2018, the revenue of automatic equipment amounted to NT$4,862,323 thousand. As a result of the shipment of automatic equipment projects, the income from a single customer accounted for more than 10% of the Group’s total revenue.

(X) Impacts, risks, and response measures resulting from major equity transfer or replacement of directors, supervisors, or shareholders holding more than 10% of the company's shares The Corporation and its subsidiaries did not encounter any major equity transfer or
replacement of directors, supervisors, or shareholders holding more than 10% of the Corporation’s shares from 2019 up to the publication date of this annual report.
(XI) Impact, risk, and response measures related to any change in governance rights in the company
The Corporation and its subsidiaries did not undertake any major change to its
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governance team and did not undertake any major change to business strategies or guidelines. Hence, the Corporation and its subsidiaries did not experience any changes their governance rights.

(XII) If there has been any substantial impact upon shareholders' equity or prices for the Company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving the company that was finalized or remained pending, the facts in dispute, amount in dispute, commencement date, main parties involved, and current status of the case up to the publication date of this annual report shall be disclosed:

MAS Automation Corp. (MAS), a subsidiary of the Company, entered into an equipment sale and purchase agreement with Linco Technology Co., Ltd. (Linco) in 2017 to manufacture a set of equipment entrusted by MAS. Still, Linco did not deliver a large number of critical parts and refused to cooperate during the installation. MAS, therefore, claimed against Linco a default payment of $2,503,659 thousand (approximately US$83,455 thousand) for the delay. On November 12, 2018, MAS filed a lawsuit against NT$440,000 thousand and reserved the right to seek future compensation for the remaining amount. To protect the MAS's interest, MAS filed a provisional attachment against Linco to the Court and provided a court guarantee of $440,000 thousand. However, Linco claimed that MAS had defaulted the final payment of the contract and the breach of the undertaking, and filed a claim on 30 October 2019 for compensation of $255.64 million (approximately US$8.42 million) and the interest thereon, which is currently being heard in the Taiwan Taoyuan District Court. Linco also requested MAS to pay at least NT$505,521 thousand as compensation for Linco's loss due to the provisional attachment filed by MAS, which is in the process of the Taiwan Central District Court. As the procedures related to the claim by Linco against MAS are still at an early stage, the outcome or impact cannot be assessed at this time.

(XIII) Other material risks and response measures: None.
Organizational context and risk management
- (1) Risk management organization: The highest-ranking officer at various business units and centers are responsible for promoting organizational context and stakeholder needs and expectation analyses, risk identification and assessment, as well as handling and communicating organizational context and stakeholder needs and expectation analyses.
- (2) Information Security Risk Management and Response Measures (On-going Operation Risk Management and Response Measures)

To protect R&D assets and maintain information security, a high availability remote backup mechanism has been planned for the Corporation's information system architecture according to its risk level, so as to ensure that important information systems are not interrupted. In addition, important data is stored in different places by the remote backup mechanism. With regard to confidential information, the Corporation also introduces an appropriate encryption mechanism to reduce the risk of information leakage. Some of the colleagues' work environment involves the use of virtual desktop environment, which centralizes operating systems and data in the machine room to enhance security.

For Internet and email virus threats, we have adopted relevant information security solutions to prevent cyber-attacks from any third party. The Company has established an advanced threat protection mechanism within its internal network to detect and respond to internal, external, and horizontal proliferation-specific attacks, ensuring the security of the Company’s internal network. In addition to undergoing basic information security training when new employees join the Corporation, the Corporation also regularly promotes information security to increase awareness toward information security among colleagues at the Corporation.

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The information department constantly follows the latest security threats. Every year, the department conducts analysis of organizational context and risk management, and performs operational risk impact analysis using information risk analysis map. In addition, the department carries out design planning and increases appropriate software and hardware equipment resources based on risk level, in order to improve response measures such as operating procedures.

With regard to abnormal disasters that may happen to equipment and host machines in machine rooms, the Corporation monitors the environment of machine rooms on a regular basis, and conducts various simulation tests and emergency drills in machine rooms in order to ensure the normal operation of various facilities and information systems in machine rooms, with a view to preventing the risks of various disasters or human errors without warning.

VII. Other important matters: None

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Chapter 8 Special Notes

I. Information on affiliated companies

(I) Consolidated business report As of December 31, 2019
Diagram of affiliated companies

Neworld Electronics Ltd. Shareholding percentage: 100%		Chroma Electronics (Shenzhen) Co., Ltd. Shareholding percentage: 100%
Chroma ATE Inc. Shareholding percentage: 100%	Shareholding percentage: 50% Chroma Electronics (Shanghai) Co., Ltd. Shareholding percentage: 100% Chroma Germany GmbH Shareholding percentage: 100% Shareholding percentage: 15%
		Chroma Electronics (Shanghai) Co., Ltd. Shareholding percentage: 100%


Chroma New Material Corporation Shareholding percentage: 100%


Chroma ATE Europe B.V. Shareholding percentage: 100%		Chroma Germany GmbH Shareholding percentage: 100%

Chroma Investment Co., Ltd. Shareholding percentage: 100%


Chroma Japan Corp. Shareholding percentage: 100%

Sensational Holding Ltd. Shareholding percentage: 100%

Chroma Systems Solutions ,Inc . Shareholding percentage: 25%

Testar Electronic Corporation Shareholding percentage: 67.2%

CHI Incorporation Ltd. Shareholding percentage: 100%		Chroma ATE (Suzhou) Co., Ltd. Shareholding percentage: 100%
	Sajet System Technology (Suzhou) Co., Ltd. Shareholding percentage: 100% Chroma (Shanghai) Trading Co., Ltd. Shareholding percentage: 100% Wei Kuang Mech Eng Inc. Shareholding percentage: 100% Adivic Holding Corporation Shareholding percentage: 100%
		Sajet System Technology (Suzhou) Co., Ltd. Shareholding percentage: 100%
		Adivic Holding Corporation Shareholding percentage: 100%
EVT Technology Co., Ltd. Shareholding percentage: 85.6%		Wei Da Electric Vehicle Co., Ltd. Shareholding percentage: 75%
Quantel Private Ltd. Shares held: 60%		Quantel Global Vietnam Co., Ltd. Shareholding percentage: 100%

Innovative Nanotech, Inc. Shareholding percentage: 71.1%		Quantel Technologies India Pvt Ltd Shareholding percentage: 100%

Touch Cloud Inc. Shareholding ratio: 78.1%		Quantel Global Sdn. Bhd. Shareholding percentage: 100%
	Quantel Global Philippines Corporation Shareholding percentage: 100%
		Quantel Global Philippines Corporation Shareholding percentage: 100%

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2. Basic information of various affiliated companies

December 31, 2019. Unit: Thousand NT$ or other foreign currency

Name of enterprise	Date established	Address	Paid-in capital	Primary business or product
Neworld Electronics Ltd.	1994.02.17	Unit 606,,Shui Hing Centre,No.13,Sheung Yuet Rd., Kowloon Bay,Kowloon,H.K.6F	HK$64,013	Sale and maintenance of electronic test instruments
Chroma Electronics (Shenzhen) Co., Ltd.	1998.03.10	8F,No.4,Nanyou Tian An Industrial Estate, Shenzhen, China	HK$30,000	Sale and maintenance of electronic test instruments, etc.
Chroma Electronics (Shanghai) Co., Ltd.	2000.11.10	3FBuilding 40, No.333,Qin Jiang Rd., Shanghai, China	US$3,000	Sale and maintenance of electronic test instruments, etc.
Chroma ATE Inc.	1993.02.18	7 Chrysler CA92,618Irvine	US$1,000	Sale and maintenance of electronic test instruments
Chroma ATE Europe B.V.	1999.09.17	Morsestraat 32,6716 AH ,TheEdeNetherlands	EUR$45	Sale and maintenance of electronic test instruments
Chroma Germany GmbH	2017.09.04	Südtiroler Str. 9 86165 Augsburg Germany	EUR$30	Sale and maintenance of electronic test instruments
Chroma Investment Co., Ltd.	1997.01.14	9F,No.66,Huaya 1st Road, Guishan District, Taoyuan City	NT$140,000	Investment
Chroma New Material Corporation	2006.08.11	4F, No. 68, Huaya 1st Road, Guishan District, Taoyuan City	NT$250,000	Processing and sale of gold wire
Testar Electronic Corporation	2007.03.09	4F, No. 68, Huaya 1st Road, Guishan District, Taoyuan City	NT$300,000	Testing of LED products
Sensational Holding Ltd.	1997.07.11	Citco Buildings, Tortola,P.O.Box 662,Road TownBritish Virgin Island	US$1,200	Investment
Chroma Systems Solutions, Inc.	2001.04.01	19772 Pauling, Foothill Ranch, CA 92610	US$5	Sale and maintenance of electronic test instruments
CHI Incorporation Ltd.	1998.04.03	P.O.Box 957 Offshore Incorporations Centre, Tortola, Road TownBritish Virgin Islands	US$3,830	Test of inductance, capacitance and resistance equipment and sale of parts.
Chroma ATE (Suzhou) Co., Ltd.	2006.03.15	Building 7, No.855, New District Zhujiang Rd., Suzhou, Jiang Su,China	US$3,800	Sale and maintenance of electronic test instruments, etc.
Chen Hwa Technology Inc.	1998.04.03	P.O.Box 957 Offshore Incorporations Centre, Tortola, Road TownBritish Virgin Islands	US$3,085	Test of inductance, capacitance and resistance equipment and sale of parts.
Chroma (Shanghai) Trading Co., Ltd.	2004.01.05	Rm 1102B, Building 1, No.18, Tai Gu Rd., Waigaoqiao Free Trade Zone, Shanghai	US$2,700	International and transit trading, simple commercial processing, commercial consultingservices,etc.
San Eagle Development Corp.	2006.07.04	Offshore Chambers, Tortola, Road TownBritish Virgin Islands	US$2,050	Investment
Wei Kuang Mech Eng Inc.	2002.01.10	608 St. James Court, St. Denis Street Port Louis, Mauritius	US$4,475	Investment
Mou Kuan Technologies (Nanjing) Co., Ltd.	1997.09.27	No 811, ,Jiangning District, Hushan Road Nanjing City, China	RMB$1,737	Assembly, sale and maintenance of factory conveyors and related systems and rendering after-sales services
Wei Kuang Automation (Nanjing) Co., Ltd.	2005.06.30	No 811, ,Jiangning District, Hushan Road Nanjing City, China	RMB$11,871	Sale and maintenance of electronic equipment and factoryconveyor systems
Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	2007.02.01	Floor 1, Building A4, No. 20, ,Houxi, Jinhui Road Jimei District ,Xiamen	RMB$11,417	Sale and maintenance of electronic equipment and factory conveyor systems

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Name of enterprise	Date established	Address	Paid-in capital	Primary business or product
MAS Automation Corp.	1975.11.26	No.6,Lane 17,Niupu S Rd., Hsinchu City , Taiwan	NT$100,000	Design, manufacturing, installment and testing of automated factory conveyor systems
Chroma Japan Corp.	2008.05.30	888 Nippa-cho, Kouhoku-ku, Yokohama-shi, Kanagawa,223-0057Japan	JPY$99,500	Sale and maintenance of electronic test instruments
Deep Red Holding Co., Ltd.	2004.04.29	2F,Felix House, ,24 Dr .Joseph Riviere Street ,Port Louis Republic of Mauritius	US$215	Investment
Sajet System Technology (Suzhou) Co., Ltd.	2004.08.24	503-1, 4th Floor Genway LOHASTOWN, 88 Building, 999 Xinghu Road, SIP Suzhou	RMB$8,374	R&D and design of computer network safety systems and data management systems
Adivic Technology Co., Ltd.	2009.04.07	6F, No. 345, Xinhu 2nd Road, Neihu District, Taipei City	NT$170,000	Sale and research of RF device
Adivic Holding Corp	2015.01.15	Offshore Chambers,, .P.O.Box 217, ApiaSamoa	US$1,000	Sale and research of RF device
EVT Technology Co., Ltd.	1999.08.19	No. 68, Huaya 1st Road, Guishan District, Taoyuan City	NT$110,000	Manufacturing of motorcycles and itsparts
Wei Da Electric Vehicle Co., Ltd.	2012.02.14	No. 5, Gongye 5th Road, Pingtung City	NT$5,000	Distribution and rental services of scooters
Quantel Private Ltd.	1989.02.15	25 Kallang Ave #05-02 Singapore 339416	SG$3,190	Sale of test and measuring instruments
Quantel Global Vietnam Co., Ltd	2017.01.03	Floor 10, CIC Tower lane 219 Trung Kinh, Yen Hoa, Cau Giay,Hanoi	VND4,526,506	Sale of test and measuring instruments
Quantel Technologies India Pvt Ltd	2016.10.05	326, 3rd Floor MGF Metropolis Sector-28 MG Road gurgaon-122002 India	INR6,500	Sale of test and measuring instruments
Quantel Global Sdn. Bhd.	2016.07.20	Unit 802, 8th Flr, Blk A Damansara Intan, No. 1 Jalan SS20/27,47400,PetalingJaya,Selangor,Malaysia	MYR600	Sale of test and measuring instruments
Quantel Global Philippines Corporation	2017.07.24	Unit 2401-2402 The Orient Square Building, F. Ortigas Jr Rd. Ortigas Centre, Pasig City Manila Philippines 1605	PHP9,910	Sale of test and measuring instruments
Innovative Nanotech Incorporated	2017.08.09	5F, No. 6-2, Du Sing Rd, East District, Hsinchu City, Taiwan	NT$200,000	Nanoparticles monitoring equipment
Touch Cloud Inc.	2016.02.03	10F-4, No. 148, Section 4, Zhongxiao East Road, Taipei City, Taiwan	NT$72,995	Cloud platform development and IoT system integration

Information of shareholders with corporate governance power while working in the Corporation: None.
Overall business scope of every affiliated company

The overall business scope of every affiliated company of the Corporation primarily focuses upon specialized manufacturing services for measurement instruments. There are also a small number of affiliated companies that focus on investments in its scope of business. In general, specialization of work among affiliated companies focus on mutual support in technology, production capacity, sales, and services to maximize synergy so that the Corporation could keep providing the best manufacturing services for professional measurement instruments for customers throughout the world and ensure the Corporation’s leadership in the global market.

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5. Directors, supervisors, CEO and general managers of Chroma ATE Inc. and affiliated companies

			December 31, 2019	December 31, 2019
Name of enterprise	Title	Name or representative	Shares held
			Number of shares held	Shareholding percentage
Neworld Electronics Ltd.	Director	Chroma ATE Inc.(Representatives: Leo Huang and MingChang)	64,012,815 shares	100%
Chroma Electronics (Shenzhen) Co., Ltd.	Director Director Director CEO	Neworld Electronics (Representative:Leo Huang) Vincent Chen Jackie Liao Vincent Chen	(Note 1) - - -	100% - - -
Chroma Electronics (Shanghai) Co., Ltd.	Director Director Director Supervisor CEO	Neworld Electronics(Representative: Leo Huang) Paul Ying Vincent Chen Amy Huang Paul Ying	(Note 1) - - - -	100% - - - -
Chroma ATE Inc.	Director Director Director	I-Shih Tseng Cheng Ying Yi-Shen Wang	Chroma holds 1,000,000 shares	100%
Chroma ATE Europe B.V.	Director	Chroma ATE Inc. (Representative: David Yang, Paul Ying,I-Shih Tseng)	1,000 shares	100%
Chroma Germany GmbH	Director	Chroma ATE Europe BV (Representative: Cheng Ying)	(Chroma BV holds 30,000 shares)	100%
Chroma Investment Co., Ltd.	Director Supervisor	Chroma ATE Inc. (Representative: Leo Huang, Paul Ying, Ming Chang) Chroma ATE Inc.(Representative: AmyHuang)	14,000,000 shares	100%
Chroma New Material Corporation	Director Supervisor CEO	Chroma ATE Inc. (Representative: Leo Huang, C. C. Ho, Amy Huang) Chroma ATE Inc. (Representative: Paul Ying) Yuan-Yuan Cheng	25,000,000 shares -	100% -
Testar Electronic Corporation	Director Supervisor CEO	Chroma ATE Inc. (Representative: Leo Huang, I- Shih Tseng, Tsun-I Wang) Amy Huang Chih-MingChen	20,159,600 shares 1,000 shares 36,000 shares	67.2% - 0.1%
Sensational HoldingLtd.	Director	Chroma ATE Inc.(Representative: Leo Huang)	1,200,000 shares	100%
Chroma Systems Solutions, Inc	Director Director Director	Fred Joseph Sabatine Cheng Ying Tai-Wei Yang	Fred holds 120,000 shares Chroma holds 120,000 shares CHROMA USA holds 240,000 shares	25% 25% 50%
CHI Incorporation Ltd.	Director	Leo Huang	(Chroma holds 3,830,000 shares)	100%
Chroma ATE (Suzhou) Co., Ltd.	Director Director Director Supervisor CEO	CHI (Representative: Leo Huang) Paul Ying Emma Chen Qin Wang Vincent Chen	(Note 1) - - - -	100% - - - -
Chen Hwa Technology Inc.	Director	Leo Huang	(Chroma holds 3,085,000 shares)	100%
Chroma (Shanghai) Trading Co.,Ltd.	Director	Chen Hwa (Representative: Leo Huang)	(Note 1)	100%
San Eagle Development Corp.	Director	Chroma ATE Inc. (Representative: Leo Huang)	2,050,000 shares	100%
Wei Kuang Mech Eng Inc.	Director	San Eagle (Representative: Leo Huang)	4,475,000 shares	100%
Mou Kuan Technologies (Nanjing)Co.,Ltd.	Chairman Director	Wei Kuang (Representative: Leo Huang) C.-F. Huang、AmyHuang	(Note 1) -	100% -

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Name of enterprise	Title	Name or representative	Shares held
			Number of shares held	Shareholding percentage
Wei Kuang Automation (Nanjing)Co.,Ltd.	Director Director	Wei Kuang (Representative: Leo Huang) C.-F. Huang、AmyHuang	(Note 1) -	100% -
Wei Kuang Automatic Equipment (Xiamen) Co.,Ltd.	Director Director	Wei Kuang (Representative: Leo Huang) C.-F. Huang、Amy Huang	(Note 1) -	100% -
MAS Automation Corp.	Director Supervisor CEO	Chroma ATE Inc. (Representative: Leo Huang, C. F. Huang, I-Shih Tseng) Chroma ATE Inc. (Representative: Amy Huang) C.-F.Huang	10,000,000 shares -	100% -
Chroma Japan Corp.	Director	Leo Huang	(Chroma holds 8,980 shares)	100%
Deep Red Holding Co., Ltd.	Director	Leo Huang	(Chroma holds 215,000 shares)	100%
Sajet System Technology (Suzhou) Co., Ltd.	Director Director Director Supervisor CEO	Deep Red Holding Co., Ltd. (Representative: Joe Lin) Arno Wu Paul Ying Amy Huang Joe Lin	(Note 1) - - - -	100% - - - -
Adivic Technology Co., Ltd.	Director Director Supervisor CEO	Chroma ATE Inc. (Representative: IShih Tseng, Leo Huang) AIT group (representative: Michael Sheu) Amy Huang Jason Huang	12,590,000 shares 4,410,000 shares - -	74.1% 25.9% - -
Adivic Holding Corporation	Director	Adivic Technology Co., Ltd. (Representative: I- Shih Tseng)	1,000,000 shares	100%
EVT Technology Co., Ltd.	Director Director Director Supervisor CEO	Leo Huang Joey Chang Tsun-I Wang Chroma ATE Inc. (Representative: Paul Ying) Leo Huang	54,023 shares 1,339 shares 34,838 shares 9,412,412 shares 54,023 shares	0.5% - 0.3% 85.6% 0.5%
Wei Da Electric Vehicle Co., Ltd.	Director Supervisor CEO	EVT Technology Co., Ltd. (Representative: Leo Huang, Hatch Huang, Joey Chang) Bill Shiau Leo Huang	375,000 shares - -	75% - -
Quantel Private Ltd.	Director Director	Chroma ATE Inc. (Representative: Leo Huang, Paul Ying) YipHin Lay	1,914,000 shares 1,276,000 shares	60% 40%
Quantel Global Vietnam Co.,Ltd	Director	Phan Sy Dung	Quantel Private holds 100%	100%
Quantel Technologies India Pvt Ltd	Director	Yip Hin Lay	Quantel Private holds 64,999shares	100%
Quantel Global Sdn. Bhd.	Director	NA	Quantel Private holds 600,000 shares	100%
Quantel Global Philippines Corporation	Director	Yip Hin Lay	Quantel Private holds 99,095 shares	100%
Innovative Nanotech, Inc.	Director Supervisor CEO	Chroma ATE Inc. (Representative: Leo Huang, I-Shih Tseng, Tsun-I Wang) Amy Huang Po-JenWu	14,214,000 shares 100,000 shares 100,000 shares	71.1% 0.5% 0.5%
Touch Cloud Inc.	Director Director Director Supervisor	Chroma ATE Inc. (Representative: Leo Huang) Kun-Shan Lu Cheng-Hsun Li AmyHuang	5,700,000 shares - 360,000 shares -	78.1% - 4.9% -

Note 1: Limited liability company

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6. Business operating conditions of Chroma ATE Inc. and its affiliated companies

December 31, 2019. Unit: Thousand NT$

Name of enterprise	Paid-in capital	Total assets	Total liabilities	Net worth	Operatin g revenue for this period	Operating profit for this period	Profit and loss (after tax)	Earnings per share (NT$)
Neworld Electronics Ltd.)	246,385	1,913,302	808,269	1,105,033	2,926,468	41,474	208,415	3.26
Chroma Electronics (Shenzhen) Co., Ltd.	115,470	1,184,574	442,634	741,940	1,929,338	145,824	118,342	Not applicable
Chroma Electronics (Shanghai) Co., Ltd.	89,940	342,313	180,882	161,431	532,373	59,853	48,577	Not applicable
Chroma ATE Inc.	29,980	783,458	678,530	104,928	533,185	(139,727)	(49,353)	(49.35)
Chroma Systems Solutions, Inc.	144	954,006	547,625	406,381	1,072,927	184,728	134,407	Not applicable
Chroma Investment Co., Ltd.	140,000	379,328	120	379,208	0	(198)	6,099	0.44
Chroma New Material Corporation	250,000	1,120,622	689,107	431,515	2,097,072	33,754	28,906	1.16
Chroma ATE Europe B.V.	1,524	578,971	368,316	210,655	492,450	32,019	37,068	Not applicable
Chroma Germany GmbH	1,008	88,544	78,865	9,679	199,973	17,558	12,985	Not applicable
Chroma (Shanghai) Trading Co., Ltd.	80,946	83,344	3,110	80,234	1,374	(4,499)	(918)	Not applicable
Chroma ATE (Suzhou) Co., Ltd.	113,924	500,525	275,548	224,977	665,797	24,210	26,897	Not applicable
MAS Automation Corp.	100,000	2,201,320	1,722,956	478,364	666,192	(49,563)	21,811	2.18
Mou Kuan Technologies (Nanjing) Co.,Ltd.	7,478	19,093	1,437	17,656	5,009	332	506	Not applicable
Wei Kuang Automation (Nanjing) Co., Ltd.	51,105	389,528	186,095	203,433	161,324	33,079	38,572	Not applicable
Wei Kuang Automatic Equipment (Xiamen)Co.,Ltd.	49,150	622,766	153,797	468,969	520,923	286,462	45,136	Not applicable
Sajet System Technology (Suzhou) Co.,Ltd.	36,050	121,100	7,406	113,694	81,597	7,714	13,552	Not applicable
Testar Electronic Corporation	300,000	231,668	187,103	44,565	250,661	(19,682)	(21,607)	(0.72)
Chroma Japan Corp.	27,462	155,703	257,444	(101,741)	287,461	(44,172)	(41,212)	Not applicable
Sensational HoldingLtd.	35,976	53,466	239	53,227	0	(1,710)	612	0.51
Chen Hwa TechnologyInc.	92,488	101,224	19	101,205	0	(360)	1,647	0.53
CHI Incorporation Ltd.	114,823	224,007	0	224,007	0	0	26,992	7.05
San Eagle Development Corp.	61,459	875,321	20	875,301	0	(79)	84,959	41.44
Wei KuangMech.Eng.Inc.	134,161	868,138	20	868,118	0	(63)	84,999	18.99
DeepRed HoldingCo., Ltd.	6,446	113,190	0	113,190	0	0	13,587	63.20
Adivic TechnologyCo., Ltd.(Note 1)	170,000	138,149	14,754	123,395	52,816	(28,965)	(28,441)	(1.67)
EVT TechnologyCo., Ltd.(Note 1)	110,000	61,508	2,891	58,617	620	(10,231)	(11,500)	(1.05)
Quantel Private Ltd.(Note 1)	71,711	347,270	116,531	230,739	531,020	34,583	50,531	15.84
Innovative Nanotech, Inc.	200,000	226,728	61,273	165,455	50,100	(4,460)	(2,607)	(0.13)
Touch Cloud Inc.	72,995	29,866	611	29,255	7,462	(11,986)	(11,778)	(1.61)

Note 1: Expressed per the consolidated financial statement.

Note 2: The following lists the exchange rates for the statement of assets and liabilities:

US$ 1 = NT$29.980; HKD1 = NT$ 3.849; EUR 1 = NT$ 35.590; RMB 1 = NT$ 4.305; JPY 1 = NT$ 0.276;SGD 1 = NT$ 22.48

The following lists the exchange rates for the profit and loss statement:

1 USD = NT$30.912, 1 HKD = NT$3.945, 1 EUR = NT$34.610, 1 RMB = NT$4.472, 1 JPY = NT$0.284, 1 SGD = NT$22.660

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(II) Consolidated financial statements of affiliated companies

For 2019 (January 1 to December 31, 2019), affiliated companies of the Corporation that shall be included according to the rules prescribed by the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” were the same as those companies that shall be included into the parent and subsidiary consolidated financial statement as prescribed by IFRS 10. All information to be disclosed in the consolidated financial statements of affiliated companies has been disclosed in the consolidated financial statements of the parent company and subsidiaries. Hence, consolidated financial statements of affiliated companies were therefore not prepared separately.

(III) Affiliation report

According to Article 369-12 of the Company Act, separate affiliation reports are not required for subsidiaries of the Corporation that have not been publicly listed.

II. Private placement of securities in the most recent year up to the publication date of this annual report: None.
III. Holding or disposition of the Corporation's shares by subsidiaries in the most recent year up to the publication date of this annual report

								Unit: NT$thousand;shares;%	Unit: NT$thousand;shares;%	Unit: NT$thousand;shares;%	Unit: NT$thousand;shares;%
Name of subsidiary	Paid-in capital	Source of capital	Shareholding of the Corporation	Date of acquisition or disposal	Number and amount of shares acquired	Number and amount of shares disposed	Investment gain (loss)	Number and amount of shares up to the publication date of this annual report (Note 1)	Status of pledge	Amount of endorsements and guarantees provided to subsidiaries by the Corporation	Loans provided to subsidiaries by the Corporation
Chroma Investment Co., Ltd.	140,000	Disposal funds	100%	2019	0	0	0	1,915,579 shares NT$243,279 thousand	None	0	0
				Current year up to the publication date of this annual report	0	0	0		None	0	0

Note 1: The sum held is calculated using the closing price of NT$127 of April 10, 2020.

IV. Other supplementary matters: None.

V. Any event that results in substantial impact upon shareholders’ equity or prices of the Corporation’s securities as prescribed by Article 36, Paragraph 3, Subparagraph 2 of the Securities and Exchange Act that have occurred in the most recent year up to the publication date of this annual report: None.
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Chroma ATE Inc. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

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DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The entities required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2019 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standards 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we did not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

CHROMA ATE INC.

LEO HUANG Chairman February 26, 2020

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Chroma ATE Inc.

Opinion

We have audited the accompanying consolidated financial statements of Chroma ATE Inc. and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

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Key audit matters of the consolidated financial statements for the year ended December 31, 2019 are stated as follows:

Impairment of Trade Receivables

As indicated in Notes 5 and 10, trade receivables are a significant accounts in the consolidated balance sheets of the Group. The process of determining an impairment loss is subject to continuous assessment of uncollectible accounts. Management recognizes a loss allowance for lifetime Expected Credit Loss (ECL) on trade receivables under the regulations of IFRS 9 “Financial Instruments”. The measurement of ECL model involves management’s subjective judgements and assumptions regarding the credit risks which may have a significant impact on the loss allowance recognized from trade receivables; thus, we identified the impairment of trade receivables as a key audit matter.

We assessed the rationale of the Group’s policy on estimating allowance for trade receivables, tested the loss rates of ECL, inspected individual overdue receivables and made relevant inquiries, to draw a conclusion on lifetime ECL of trade receivables.

Valuation of Inventory Write-down

The Group’s inventories are consisted primarily of test instruments, which are widely used in technology industries such as power supply, passive components, semiconductor, LED, and solar energy. The Group adjusts its product portfolio in response to the rapid change in market and business cycle. Technological change or competition may result in the risk of inventories becoming unmarketable or prices fall due to lack of demand. As stated in Note 5, inventory valuation includes the consideration of whether such test instruments are obsolete or unmarketable and the estimation of their future demand. Since the valuation process involved significant assumptions and estimates from management, the valuation of inventories was deemed to be a key audit matter.

We assessed the rationale of the Group’s policy on estimating allowance for inventory valuation and obsolescence losses, and tested the accuracy of inventory aging report. In addition, we tested the recent selling prices of inventories and participated in an annual inventory count to observe the condition of inventories in order to evaluate the reasonableness of net realizable value of inventories.

Refer to Note 11 to the consolidated financial statements for the detailed information on inventories.

Other Matter

We have also audited the parent company only financial statements of Chroma ATE Inc. as of and for the years ended December 31, 2019 and 2018 on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, IAS, IFRIC and SIC endorsed and issued into effect by the FSC of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with statements that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Cheng-Ming Lee and Wen-Chi Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China February 26, 2020

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Financial assets at amortized cost - current (Notes 9 and 31) Contract assets - current (Note 23) Notes receivable (Note 10) Trade receivables (Notes 5 and 10) Trade receivables - related parties (Notes 10 and 30) Inventories (Notes 5 and 11) Prepayments Other current assets (Note 30) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Investments accounted for using the equity method (Note 13) Property, plant and equipment (Notes 14 and 31) Right-of-use assets Investment properties (Note 16) Goodwill (Note 17) Other intangible assets (Note 18) Deferred tax assets (Note 25) Prepayments for land and equipment (Note 32) Refundable deposits Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 19 and 31) Contract liabilities - current (Note 23) Notes payable Notes payable - related parties (Note 30) Trade payables Trade payables - related parties (Note 30) Other payables (Note 20) Current tax liabilities Lease liabilities - current Current portion of long-term borrowings (Notes 19 and 31) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 19 and 31) Lease liabilities - non-current Deferred tax liabilities (Note 25) Net defined benefit liabilities (Note 21) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 22) Ordinary share capital Advance receipts for share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity attributable to owners of the Corporation NON-CONTROLLING INTERESTS Total equity TOTAL		2019 Amount % $ 2,261,531 9 489,745 2 703,368 3 1,258,046 5 174,921 1 4,580,488 18 27,108 - 2,664,658 10 248,583 1 203,794 1 12,612,242 50 4,762 - 612,367 2 2,911,230 11 3,221,431 13 146,462 1 3,137,187 12 225,996 1 42,605 - 317,569 1 2,066,847 8 23,413 - 114,961 1 12,824,830 50 $ 25,437,072 100 $ 2,352,800 9 706,857 3 38,031 - 3,054 - 2,589,773 10 3,008 - 1,340,917 6 323,323 1 60,059 - 27,763 - 28,602 - 7,474,187 29 2,422,051 10 88,138 - 484,147 2 163,089 1 20,000 - 3,177,425 13 10,651,612 42 4,192,961 17 13,724 - 3,629,471 14 2,407,039 10 86,888 - 4,382,043 17 6,875,970 27 (187,651) (1) (35,714) - 14,488,761 57 296,699 1 14,785,460 58 $ 25,437,072 100		2018
				Amount % $ 2,923,957 13 1,345,944 6 418,886 2 845,164 4 96,163 - 4,686,789 20 51,818 - 2,416,814 10 175,801 1 269,937 1 13,231,273 57 6,807 - 618,271 3 649,709 3 3,389,889 15 - - 3,137,187 13 227,961 1 46,134 - 250,150 1 1,082,451 5 466,748 2 95,884 - 9,971,191 43 $ 23,202,464 100 $ 807,348 4 888,333 4 132,773 1 14,556 - 2,404,279 10 8,953 - 1,258,976 5 410,208 2 - - 13,240 - 33,847 - 5,972,513 26 1,954,021 8 - - 424,561 2 160,054 1 966 - 2,539,602 11 8,512,115 37 4,167,794 18 - - 3,469,637 15 2,152,411 9 86,888 - 4,555,760 20 6,795,059 29 13,244 - (35,714) - 14,410,020 62 280,329 1 14,690,349 63 $ 23,202,464 100

The accompanying notes are an integral part of the consolidated financial statements.

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET OPERATING REVENUE (Notes 23 and 30) OPERATING COSTS (Notes 11, 24 and 30) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES REALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES AND JOINT VENTURES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 24 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit impairment losses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Finance costs (Note 24) Share of profits of associates and joint ventures (Note 13) Interest income Dividend income Other income (Note 30) Gain (loss) on disposal of property, plant and equipment, net Net foreign exchange (loss) gain (Note 34) Gain on financial assets at fair value through profit or loss, net Other expenses Total non-operating income and expenses		2019 Amount % $ 13,909,634 100 7,329,023 53 6,580,611 47 - - 79 - 6,580,690 47 2,140,645 15 1,019,799 7 1,283,422 9 77,365 1 4,521,231 32 2,059,459 15 (54,020) - 97,192 1 25,904 - 41,532 - 238,362 2 15,468 - (85,663) (1) 3,460 - (3,088) - 279,147 2		2018
				Amount % $ 16,931,128 100 9,472,788 56 7,458,340 44 (47) - - - 7,458,293 44 2,010,963 12 1,144,245 7 1,254,553 7 8,899 - 4,418,660 26 3,039,633 18 (31,768) - 48,015 - 41,793 - 24,146 - 102,784 1 (5,510) - 97,928 1 6,571 - (15,502) - 268,457 2 (Continued)

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity investments designated as at fair value through other comprehensive income Share of the other comprehensive loss of associates and joint ventures accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Share of the other comprehensive loss of associates and joint ventures accounted for using the equity method Total other comprehensive (loss) income TOTAL COMPREHENSIVE INCOME NET PROFIT ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests		2019 Amount % $ 2,338,606 17 449,130 3 1,889,476 14 (14,163) - (5,455) - (40) - (115,190) (1) (114,957) (1) (249,805) (2) $ 1,639,671 12 $ 1,854,481 14 34,995 - $ 1,889,476 14 $ 1,608,601 12 31,070 - $ 1,639,671 12		2018
				Amount % $ 3,308,090 20 760,911 5 2,547,179 15 (4,794) - 12,847 - (521) - (3,035) - (1,010) - 3,487 - $ 2,550,666 15 $ 2,546,275 15 904 - $ 2,547,179 15 $ 2,546,584 15 4,082 - $ 2,550,666 15

(Continued)

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

EARNINGS PER SHARE (NT$; Note 26) Basic Diluted	2019 Amount % $ 4.48 $ 4.42	2018
		Amount % $ 6.22 $ 6.08

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

	Equity Attributab	le to Owners of the	Corporation	Corporation
Ordinary Capital Collected in Share Capital Advance Capital Surplus $ 4,118,942 $ - $ 3,187,289 - - - - - - - - (267 ) - - - - - - - - - 16,141 - 84,486 - - - (840 ) - - - - 8,572 33,551 - 189,557 - - - - - - - - - - - - 4,167,794 3,469,637 - - - - - - - - 10,250 - - - - - - - - - - - - (1,009 ) - - - - 8,003 26,176 13,724 119,085 - - 22,496 - - - - - - $ 4,192,961 $ 13,724 $ 3,629,471	Retained Earnings	Total $ 6,107,426 - (1,854,424 ) - 2,546,275 (5,322) 2,540,953 - - - - - - (2,107 ) 4,241 (1,030) 6,795,059 - (1,750,896 ) - 1,854,481 (14,132) 1,840,349 - - - - - - (8,542) $ 6,875,970	Other Equity		Total Treasury Shares $ (39,618 ) $ (35,714 ) - - - - - - - - 5,631 - 5,631 - - - - (840 ) - 840 - - 51,472 - - - - - (4,241 ) - - - 13,244 (35,714 ) - - - - - - - - (231,748) - (231,748) - - (1,009 ) - 1,009 - - - - 30,853 - - - - - $ (187,651) $ (35,714)
			Exchange Differences on Translating the Financial Unrealized Gain (Loss) on Financial Assets at Fair Value through Other Statements of Comprehensive Un Foreign Operations Income $ (97,633 ) $ 151,864 - - - - - - - - (7,239) 12,870 (7,239) 12,870 - - - - - - - - - - - - - - - (4,241 ) - - (104,872 ) 160,493 - - - - - - - - (226,201) (5,547) (226,201) (5,547) - - - - - - - - - - - - - - $ (331,073) $ 154,946	earned Employee Benefit $ (93,849 ) - - - - - - - - - - 51,472 - - - - (42,377 ) - - - - - - - - - - 30,853 - - $ (11,524)
	Unappropriated Legal Reserve Special Reserve Earnings $ 1,896,570 $ 86,888 $ 4,123,968 255,841 - (255,841 ) - - (1,854,424 ) - - - - - 2,546,275 - - (5,322) - - 2,540,953 - - - - - - - - - - - - - - - - - - - - (2,107 ) - - 4,241 - - (1,030) 2,152,411 86,888 4,555,760 254,628 - (254,628 ) - - (1,750,896 ) - - - - - 1,854,481 - - (14,132) - - 1,840,349 - - - - - - - - - - - - - - - - - - - - (8,542) $ 2,407,039 $ 86,888 $ 4,382,043

The accompanying notes are an integral part of the consolidated statements.

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Net gain on financial liabilities at fair value through profit or loss Finance costs Interest income Dividend income Compensation costs of share-based payment Share of profit of associates and joint ventures accounted for using the equity method (Gain) loss on disposal of property, plant and equipment, net Write-downs of inventories Unrealized gain on transactions with associates and joint ventures Realized gain on transactions with associates and joint ventures Net loss (gain) on foreign currency exchange Net changes in operating assets and liabilities Contract assets Notes receivable Trade receivables Inventories Prepayments Other current assets Contract liabilities Notes payable Trade payables Other payables Receipts in advance Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments to acquire financial assets at fair value through other comprehensive income Cash returned of capital reduction of financial assets at fair value through other comprehensive income (Increase) decrease in financial assets at amortized cost Payments to acquire financial assets at fair value through profit or loss	2019 $ 2,338,606 440,062 6,140 77,365 (3,460) 54,020 (25,904) (41,532) 53,004 (97,192) (15,468) 39,364 - (79) 11,741 (412,882) (78,758) (30,629) (370,531) (72,782) 74,210 (181,476) (106,244) 325,805 (58,348) 92 (5,340) (11,128) 1,908,656 (544,142) 1,364,514 - - (291,899) (571,116)	2018 $ 3,308,090 308,923 6,491 8,899 (6,571) 31,768 (41,793) (24,146) 78,596 (48,015) 5,510 22,933 47 - (90,474) (642,629) 153,622 (937,810) (107,544) 90,143 (91,806) 335,806 (168,462) (209,964) 95,036 (247,029) 3,478 (10,566) 1,822,533 (556,746) 1,265,787 (67,800) 5,262 479,482 (1,989,000) (Continued)

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Acquisition associate Proceeds from disposal of financial assets at fair value through profit or loss Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Payments to acquire intangible assets Net cash inflows from business combination (Increase) decrease in other non-current assets Increase in prepayments for equipment Interest received Dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Increase in guarantee deposits Repayment of lease principal Cash dividends paid Exercise of employee stock options Payments for buy-back of ordinary shares Interest paid Increase in non-controlling interests Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ (2,342,340) 1,432,820 (101,132) 50,585 443,335 (2,614) - (20,695) (1,007,162) 28,874 114,875 (2,266,469) 1,547,730 1,600,000 (1,114,008) 19,034 (110,398) (1,750,572) 158,985 (1,009) (53,880) (11,250) 284,632 (45,103) (662,426) 2,923,957 $ 2,261,531	2018 $ - 1,701,003 (135,775) 13,877 (439,309) (2,850) 8,477 1,703 (1,517,801) 47,292 60,899 (1,834,540) 332,835 900,000 (1,216,046) 128 - (1,851,804) 195,755 (840) (41,034) 49,669 (1,631,337) 47,636 (2,152,454) 5,076,411 $ 2,923,957

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHROMA ATE INC. AND SUBSIDIARIES

1. GENERAL INFORMATION

Chroma ATE Inc. (the “Corporation”) was incorporated in the Republic of China (ROC) in November 1984. The Corporation mainly designs, assembles, calibrates, manufactures, sells, repairs and maintains software/hardware for computers and peripherals, computerized automatic test systems, electronic test instruments, signal generators, power supplies, telecom power supplies, etc. as well as serves as an agent to sell these products. The Corporation’s shares have been listed on the Taiwan Stock Exchange since December 21, 1996.

The consolidated financial statements of the Corporation and its subsidiaries are presented in the Corporation’s functional currency, the New Taiwan dollar (NTD).

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Corporation’s board of directors on February 26, 2020.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Group’s accounting policies:

● IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

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The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows.

The Group elected to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized in retained earnings on January 1, 2019. Comparative information was not restated.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities. The Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

1) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
2) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
3) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
4) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.00%-4.35%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption for short-term leases Less: Recognition exemption for leases of low-value assets Undiscounted amounts on January 1, 2019 Lease liabilities recognized on January 1, 2019 The Group as lessor	$ 216,984 (18,048) (10,188) $ 188,748 $ 168,654

The Group does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

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The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

			Adjustments	Adjustments
	As Originally		Arising from
	Stated On			Initial	Restated On
	January 1, 2019		Application		January 1, 2019
Right-of-use assets	$	-	$	168,654	$	168,654
Total effect on assets	$	-	$	168,654	$	168,654
Lease liabilities - current	$	-	$	82,145	$	82,145
Lease liabilities - non-current		-		86,509		86,509
Total effect on liabilities	$	-	$	168,654	$	168,654

b. The IFRSs endorsed by the FSC for application starting from 2020

Effective Date New IFRSs Announced by IASB Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 1) Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark January 1, 2020 (Note 2) Reform” Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 3)

Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Group shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

Amendments to IFRS 3 “Definition of a Business”

The amendments clarify that, to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process applied to the input that together significantly contribute to the ability to create outputs. The amendments narrow the definitions of outputs by focusing on goods and services provided to customers, and the reference to an ability to reduce costs is removed. Moreover, the amendments remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs. In addition, the amendments introduce an optional concentration test that permits a simplified assessment of whether or not an acquired set of activities and assets is a business.

Amendments to IAS 1 and IAS 8 “Definition of material”

The amendments are intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRSs. The concept of “obscuring” material information with immaterial information has been included as part of the new definition. The threshold for materiality influencing users has been changed from “could influence” to “could reasonably be expected to influence”.

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Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2022 Non-current”

Note: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that for a liability to be classified as non-current, the Group shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Group will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Group must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date.

The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Group’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Group’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32: Financial Instruments: Presentation, the aforementioned terms would not affect the classification of the liability.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
c. Classification of current and noncurrent assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Corporation and the entities controlled by the Corporation (its subsidiaries). Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Corporation and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Corporation.

Refer to Note 12 for detailed information on subsidiaries (including percentage of ownership and main business).

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e. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not translated using the exchange rate at the date of the transaction.

For the purpose of presenting consolidated financial statements, the functional currencies of the Corporation and the group entities (including subsidiaries, associates, joint ventures and branches in other countries that use currencies different from the currency of the Corporation) are translated into the presentation currency - the New Taiwan dollar as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Corporation and non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Corporation’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Corporation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Corporation losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

f. Inventories

Inventories consist of raw materials, semi-finished goods, work-in-process, finished goods and inventory in transit, which are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date.

g. Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

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The Group uses the equity method to account for its investments in associates and joint ventures.

Under the equity method, investments in an associate and a joint venture are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Group also recognizes the changes in the Group’s share of the equity of associates and joint ventures attributable to the Group.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Group subscribes for additional new shares of an associate and joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate and joint venture. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates and joint ventures accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate and joint venture, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Group’s net investment in the associate and joint venture), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate and the joint venture on the same basis as would be required had that associate directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and does not remeasure the retained interest.

When a group entity transacts with its associate and joint venture, profits and losses resulting from the transactions with the associate and joint venture are recognized in the Group’s consolidated financial statements only to the extent that interests in the associate and the joint venture are not related to the Group.

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h. Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If a lease term is shorter than the assets’ useful lives, such assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties also include land held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

Investment properties under construction are measured at cost less accumulated impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Depreciation of these assets commences when the assets are ready for their intended use.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

j. Goodwill

Goodwill arising from the acquisition of a business is measured at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized on goodwill is not reversed in subsequent periods.

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If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

k. Intangible assets

1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

2) Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

3) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

l. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

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m. Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI.

i. Financial assets at FVTPL

The Group recognizes a financial asset at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL, including investments in equity instruments which are not designated as at FVTOCI.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 29.

ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, financial assets at amortized cost, trade receivables at amortized cost and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and
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ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.
A financial asset is credit impaired when one or more of the following events have occurred:
i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets and contract assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables) that are measured at FVTOCI, as well as contract assets.

The Group always recognizes lifetime expected credit losses (i.e. ECLs) for trade receivables and contract assets. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset is more than 90 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. Starting from 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Corporation’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Corporation’s own equity instruments.

3) Financial liabilities
a) Subsequent measurement

Except for financial liabilities at FVTPL, all financial liabilities are measured at amortized cost using the effective interest method.

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Financial liabilities at FVTPL are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any interest or dividend paid on such financial liability. Fair value is determined in the manner described in Note 29.

b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

n. Warranty provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions for the expected cost of warranty obligations to assure that products comply with agreed-upon specifications are recognized on the date of sale of the relevant products at the best estimate by the management of the Group of the expenditures required to settle the obligations.

o. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

1) Revenue from the sale of goods

Revenue from sale of goods comes from sales of test instruments and other products. Revenue is recognized when the goods are delivered to the customer’s specific location or the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and bears the risks of obsolescence. Trade receivables are recognized concurrently. The transaction price received is recognized as a contract liability until the goods are delivered to the customer.

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

2) Revenue from the rendering of services

Revenue from the rendering of services comes from wafer level test and development of cloud platform. The Group acquires enforceable right to payment for services rendered in accordance with customer contracts only upon completion of the services; thus, the Group recognizes revenue from rendering of services upon completion of the contract.

3) Construction contract revenue

For construction contracts to build customized production line, the Group recognizes revenue over time. The Group measures the progress on the basis of costs incurred relative to the total expected costs as there is a direct relationship between the costs incurred and the progress of satisfying the performance obligations. Contract assets are recognized during the construction and are reclassified to trade receivables at the point at which the customer is invoiced. If the milestone payments exceed the revenue recognized to date, then the Group recognizes contract liabilities for the difference. Certain payment retained by the customer as specified in the contract is intended to ensure that the Group adequately completes all of its contractual obligations. Such retention receivables are recognized as contract assets until the Group satisfies its performance obligations.

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p. Leases

2019

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or others, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

1) The Group as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

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q. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time that the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

r. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable.

s. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Group’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

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t. Share-based payment arrangements

Employee share options and restricted shares for employees granted to employee and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value at the grant date of the employee share options and restricted shares for employees is expensed on a straight-line basis over the vesting period, based on the Group's best estimate of the number of the shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options and other equity - unearned employee benefits. It is recognized as an expense in full at the grant date if vested immediately.

When restricted shares for employees are issued, other equity - unearned employee benefits is recognized on the grant date, with a corresponding increase in capital surplus - restricted shares for employees. If restricted shares for employees are granted for consideration and should be returned once the employee resigns, they are recognized as payables. Dividends paid to employees on restricted shares that do not need to be returned if employees resign in the vesting period are recognized as expenses when the dividends are declared with a corresponding adjustment in retained earnings and capital surplus - restricted shares for employees.

At the end of each reporting period, the Group revises its estimate of the number of employee share options and restricted shares for employees expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus - employee share options and capital surplus - restricted shares for employees.

u. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

According to the Income Tax Law in the ROC, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

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The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences based on the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from a business combination, the tax effect is included in the accounting for the business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects only that period or in the period of the revision and future periods if the revisions affect both current and future periods.

a. Estimated impairment of trade receivables

The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Group uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 10. Where the actual future cash flows are less than expected, a material impairment loss may arise.

b. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of net realizable value is based on current market conditions and the historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of net realizable value.

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6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents Time deposits with maturities less than 3 months		December 31	December 31
		2019 $ 4,300 2,173,071 84,160 $ 2,261,531	2018 $ 4,515 2,728,749 190,693 $ 2,923,957

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Mandatorily at FVTPL-current Non-derivative financial assets Domestic listed shares Open-end beneficiary certificates Mandatorily at FVTPL-non-current Non-derivative financial assets Open-end beneficiary certificates		December 31	December 31
		2019 $ 4,070 485,675 $ 489,745 $ 4,762	2018 $ 3,653 1,342,291 $ 1,345,944 $ 6,807

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments-non-current Domestic listed ordinary shares Domestic unlisted ordinary shares Foreign unlisted ordinary shares		December 31	December 31
		2019 $ 407,798 200,037 4,532 $ 612,367	2018 $ 431,797 182,039 4,435 $ 618,271

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Refer to Table 3 for the detailed information. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

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9. FINANCIAL ASSETS MEASURED AT AMORTIZED COST - CURRENT

Time deposits with original maturities of more than 3 months Pledge deposits (Notes 31 and 32)		December 31	December 31
		2019 $ 218,734 484,634 $ 703,368	2018 $ 188,951 229,935 $ 418,886

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

Gross carrying amount at amortized cost Less: Allowance for impairment loss Gross carrying amount at amortized cost - related parties		December 31	December 31
		2019 $ 4,943,476 (188,067) 4,755,409 27,108 $ 4,782,517	2018 $ 4,909,282 (126,330) 4,782,952 51,818 $ 4,834,770

The average credit period for sales of goods is 60 to 90 days from the date when the goods were inspected and accepted by customers, and no interest was charged on trade receivables. Before accepting any new customer, the Group uses an external credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer. Customers’ limits and scores are reviewed irregularly every year. Most of the trade receivables that are neither past due nor impaired have the best credit score under the external credit scoring system used by the Group.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate. As the Group’s historical credit loss experience does not show other factors that matter significantly, the expected credit loss rate is based on past due status of trade receivables.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The aging schedule of notes receivable and trade receivables based on the past due days was as follows:

Not past due 1- 60 days 61-180 days 181-365 days Over 365 days		December 31	December 31
		2019 $ 3,275,402 485,492 332,789 512,691 337,102 $ 4,943,476	2018 $ 3,735,538 629,731 230,296 142,845 170,872 $ 4,909,282

148 -

The movements of the loss allowance of notes receivable and trade receivables were as follows:

For the Year Ended 2019 Balance at January 1, $ 126,330 Add: Impairment loss recognized on receivables 77,365 Less: Amounts written off (14,752) Foreign exchange gains and losses (876) Balance at December 31, $ 188,067	December 31 2018 $ 127,707 8,899 (10,545) 269 $ 126,330

11. INVENTORIES

Finished goods Semi-finished products Work in process Raw materials		December 31	December 31
		2019 $ 607,211 380,866 682,687 993,894 $ 2,664,658	2018 $ 482,436 381,704 613,007 939,667 $ 2,416,814

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018 was $6,365,056 thousand and $6,032,195 thousand, respectively. The cost of goods sold included inventory write-downs of $39,364 thousand and $22,933 thousand, respectively.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

Investor
Investee
Business
The Corporation
Neworld Electronics Ltd.
Sale and maintenance of electronic test
instruments, etc.
Chroma Investment Co., Ltd.
Investment
Sensational Holding Ltd.
Investment
Chroma ATE Europe B.V.
Sale and maintenance of electronic test
instruments, etc.
Chroma ATE Inc. (“Chroma USA”)
Sale and maintenance of electronic test
instruments, etc.
Chen Hwa Technology Inc.
Test of inductance, capacitance and resistance
equipment and sale of parts
CHI Incorporation Ltd.
Test of inductance, capacitance and resistance
equipment and sale of parts
Chroma New Material Corporation
Processing and sale of gold wire
San Eagle Development Corp.
Investment
Wei Kuang Automatic Equipment Co.,
Ltd.
Design, manufacturing, installment and testing of
automated factory conveyor systems
Testar Electronics Corporation
Testing of LED products
Deep Red Holding Co., Ltd.
Investment
Chroma Japan Corp.
Sale and maintenance of electronic test
instruments, etc.
Chroma Systems Solutions, Inc.
Sale and maintenance of electronic test
instruments, etc.
Adivic Technology Co.
Sale and research of RF device
EVT Technology Co., Ltd.
Manufacturing of motorcycles and its parts
Quantel Private Ltd.
Sale and maintenance of test instruments, etc.
Innovative Nanotech Incorporated
Monitoring instruments of nanoparticles
Touch Cloud Incorporation
Development of cloud platform and Internet of
Things systems

Percentage of
Ownership as of
December 31
2019
2018
Remark
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
67.2
67.2
100.0
100.0
100.0
100.0
25.0
25.0
Note 1
74.1
51.0
Note 2
85.6
85.6
Note 3
60.0
60.0
71.1
71.1
Note 4
78.1
78.1

(Continued)

149 -

Investor
Investee
Business
Neworld Electronics Ltd.
Chroma Electronics (Shenzhen) Co.,
Ltd.
Sale of computerized automatic test systems,
peripherals and electronic test instruments
Chroma Electronics (Shanghai) Co.,
Ltd.
Sale of computerized automatic test systems,
peripherals and electronic test instruments
Chroma ATE Inc. (“Chroma
USA”)
Chroma Systems Solutions, Inc.
Sale and maintenance of electronic test
instruments, etc.
Chen Hwa Technology Inc.
Chroma (Shanghai) Trading Co., Ltd.
International and transit trading, simple
commercial processing, commercial
consulting services, etc.
CHI Incorporation Ltd.
Chroma ATE (Suzhou) Co., Ltd.
Sale of computerized automatic test systems,
peripherals and electronic test instruments
San Eagle Development
Corp.
Wei Kuang Mech. Eng. Inc.
Investment
Wei Kuang Mech. Eng. Inc. Mou Kuan Technologies (Nanjin) Co.,
Ltd.
Assembly, sale and maintenance of factory
conveyors and related systems and rendering
after-sales services
Wei Kuang Automatic Equipment
(Nanjin) Co., Ltd.
Sale and maintenance of electronic equipment
and factory conveyor systems
Wei Kuang Automatic Equipment
(Xiamen) Co., Ltd.
Sale and maintenance of electronic equipment
and factory conveyor systems
Deep Red Holding Co., Ltd. Saject System Technology (Suzhou)
Co., Ltd.
Research, development and design of computer
network security systems and information
management
EVT Technology Co., Ltd.
Wei Da Electric Vehicle Co., Ltd.
Sale and lease of motorcycles
Adivic Technology Co.
Adivic Holding Corporation
Sale and research of RF device
Quantel Private Ltd.
Quantel Technologies India Private
Ltd.
Sale and maintenance of test instruments, etc.
Quantel Global Vietnam Co., Ltd.
Sale and maintenance of test instruments, etc.
Quantel Global Sdn. Bhd.
Sale and maintenance of test instruments, etc.
Quantel Global Philippines
Corporation
Sale and maintenance of test instruments, etc.
Chroma ATE Europe B.V.
Chroma Germany GmbH
Sale and maintenance of electronic test
instruments, etc.
Chroma Investment Co., Ltd. Testar Electronics Corporation
Testing of LED products

Percentage of
Ownership as of
December 31
2019
2018
Remark
100.0
100.0
100.0
100.0
50.0
50.0
Note 1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75.0
75.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Note 5
100.0
100.0
Note 5
100.0
100.0
15.0
-
Note 6
(Concluded)

Note 1: The Corporation and the Corporation’s subsidiary, Chroma USA, held 75% equity interest in Chroma Systems Solutions, Inc.
Note 2: In May 2019, Adivic Technology Co. (“Adivic”) decreased its capital by $150,000 thousand to make up for losses and subsequently increased its capital by $80,000 thousand. The Corporation’s board of directors resolved to participate in the capital injection. The Corporation’s equity interest in Adivic increased to 74.1% after the cash injection.
Note 3: In August 2018, EVT Technology Co., Ltd. (“EVT”) decreased its capital by $30,000 thousand to make up for losses and subsequently increased its capital by $50,000 thousand to strengthen its capital structure. The Group’s board of directors resolved to participate in the capital injection. The Group’s equity interest in EVT increased to 85.6% after the cash injection.
Note 4: In May 2018, Innovative Nanotech Incorporated increased its capital. The Group participated in the cash injection and held 71.1% equity consequently.
Note 5: Quantel Private Ltd. resolved to set up Quantel Global Sdn. Bhd. and Quantel Global Philippines Corporation in 2018 to be engaged in the sale of test instruments.
Note 6: The Group’s subsidiary, Chroma Investment Co., Ltd., acquired 15% equity interest of Testar Electronics Corporation from WI Harper Fund VII LP in January 2019 to strengthen its capital structure.
150 -

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates Investments in joint ventures		December 31	December 31
		2019 $ 2,893,609 17,621 $ 2,911,230	2018 $ 632,045 17,664 $ 649,709

a. Investments in associates

Associates that are not individually material Adlink Technology Inc. Dynascan Technology Corp. Camtek Ltd.		December 31	December 31	December 31
		2019 Amount Percentage of Equity Interest (%) $ 538,926 11.3 123,748 27.3 2,230,935 20.2 $ 2,893,609		2018
				Amount Percentage of Equity Interest (%) $ 517,852 11.3 114,193 27.3 - - $ 632,045

Aggregate information of associates that are not individually material:

The Group’s share of: Profit from continuing operations Other comprehensive loss Total comprehensive income for the year	For the Year Ended	For the Year Ended	December 31
		2019 $ 97,235 (114,997) $ (17,762)	2018 $ 47,977 (1,531) $ 46,446

Fair values (Level 1) of investments in associates with available published price quotations are summarized as follows:

Name of Associate Adlink Technology Inc. Camtek Ltd.		December 31	December 31
		2019 $ 1,176,108 $ 2,538,193	2018 $ 775,496 $ -

In view of future development strategy and improvement of operating performance, the Group’s board of directors resolved on February 11, 2019, to subscribe equity interest of Camtek Ltd. for US$9.5 per share. Included in the cost of investment in associates was goodwill of $658,931 thousand recognized from the acquisition of Camtek Ltd.

Refer to Table 8 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

151 -

The Group is able to exercise significant influence over Adlink Technology Inc. although the percentage of shares held is less than 20%. Therefore, the Group recognizes the gain and loss under the equity method.

Except for Adlink Technology Inc., the investments in associates accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements which have been audited. Management believes there is no material impact on the equity method accounting or the calculation of the share of profit or loss and other comprehensive income from the financial statements of Adlink Technology Inc., which have not been audited.

b. Investments in joint ventures

Joint ventures that are not individually material Chih Ho Shun Development Co., Ltd.		December 31	December 31	December 31
		2019 Amount Percentage of Equity Interest (%) $ 17,621 35.0		2018
				Amount Percentage of Equity Interest (%) $ 17,664 35.0

Aggregate information of joint ventures that are not individually material:

The Group’s share of: Profit from continuing operations Other comprehensive income Total comprehensive income for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (43) - $ (43)	2018 $ 38 - $ 38

For the investment and development plan, “The Action Plan for Developing Land Surrounding the MRT Airport Station to Improve Civilians’ Life,” the board of directors resolved to invest jointly with Dynapack International Corporation and Heran Co., Ltd. to set up Chih Ho Shun Development Co., Ltd. (“Chih Ho Shun”). The Corporation invested for a 35% entity interest in Chih Ho Shun but did not have control over this investee.

The investments in joint ventures accounted for using the equity method and the share of profit or loss and other comprehensive income of the investment for the years ended December 31, 2019 and 2018 was based on the joint ventures’ financial statements which have been audited.

152 -

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2018 Additions Disposals Transferred from prepayments for land and equipment Transferred from inventories Reclassification Exchange differences Balance, December 31, 2018 Accumulated depreciation Balance, January 1, 2018 Depreciation Disposals Reclassification Exchange differences Balance, December 31, 2018 Carrying value at December 31, 2018 Cost Balance, January 1, 2019 Additions Disposals Transferred to inventories Transferred from inventories Reclassification Exchange differences Balance, December 31, 2019 Accumulated depreciation Balance, January 1, 2019 Depreciation Disposals Transferred to inventories Reclassification Exchange differences Balance, December 31, 2019 Carrying value at December 31, 2019	Land $ 520,347 - - 688,331 - - 2,550 $ 1,211,228 $ - - - - - $ - $ 1,211,228 $ 1,211,228 - - - - - (1,468) $ 1,209,760 $ - - - - - - $ - $ 1,209,760	Buildings $ 2,526,395 41,136 - - - - 5,526 $ 2,573,057 $ 1,073,428 85,011 - - 363 $ 1,158,802 $ 1,414,255 $ 2,573,057 3,671 (1,800) - - - (6,256) $ 2,568,672 $ 1,158,802 91,743 (1,746) - - (3,082) $ 1,245,717 $ 1,322,955	Machinery Miscellaneous Equipment $ 784,898 $ 1,645,342 71,384 147,796 (36,088) (58,788) - - 12,936 86,542 (323) 323 1,722 (7,698) $ 834,529 $ 1,813,517 $ 637,681 $ 1,101,289 61,951 161,961 (34,428) (41,061) (210) 210 1,115 (4,868) $ 666,109 $ 1,217,531 $ 168,420 $ 595,986 $ 834,529 $ 1,813,517 35,481 83,354 (75,570) (97,265) (3,133) (15,589) 14,646 70,713 634 (634) (3,261) (19,507) $ 803,326 $ 1,834,589 $ 666,109 $ 1,217,531 67,188 168,929 (74,115) (63,657) (2,739) (15,589) 357 (357) (2,701) (11,757) $ 654,099 $ 1,295,100 $ 149,227 $ 539,489	Total $ 5,476,982 260,316 (94,876) 688,331 99,478 - 2,100 $ 6,432,331 $ 2,812,398 308,923 (75,489) - (3,390) $ 3,042,442 $ 3,389,889 $ 6,432,331 122,506 (174,635) (18,722) 85,359 - (30,492) $ 6,416,347 $ 3,042,442 327,860 (139,518) (18,328) - (17,540) $ 3,194,916 $ 3,221,431

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings Primary buildings 55 years Mechanical and electrical equipment 10 years Clean room equipment 10 years Others 2-50 years Machinery 2-6 years Miscellaneous equipment 3-16 years

153 -

Refer to Note 31 for property, plant and equipment that have been pledged to secure borrowings of the Group.

15. LEASE ARRANGEMENTS

The Group leases certain buildings, machinery and miscellaneous equipment which qualify as short-term leases and low-value asset leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases. Right-of-use assets recognized is mainly offices, factory buildings and equipment. Refer to Note 24 for interest incurred from lease liabilities.

16. INVESTMENT PROPERTIES

Cost January 1, 2019 and December 31, 2019	Land $ 3,137,187

The Group acquired the land ownership certificates of the investment and development plan, “The Action Plan of Developing Land Surrounding the MRT Airport Station to Improve Civilian’s Life” in the third quarter of 2018 and transferred the parts of land held for undetermined future use to investment properties. Refer to Note 32. The determination of fair value was performed by independent qualified professional valuers, and the fair value was measured by using Level 3 inputs. The valuation was arrived at by reference to market evidence of transaction prices for similar properties. The significant unobservable inputs used include discount rates and the fair value as appraised.

Fair value		December 31	December 31
		2019 $ 13,727,067	2018 $ 13,588,172

On September 25, 2019, the Group entered into a co-building contract with Fu Yu Construction Co., Ltd. (Fu Yu Construction) to jointly build a building located in Lejie section, Guishan District, Taoyuan City. The construction project adopts a jointly constructed manner. The Group provided the lands and Fu Yu Construction provided fund to construct. The area will be distributed to the Group and Fu Yu Construction for 47% and 53%, respectively. According to the co-building contract, Fu Yu Construction should pay $20,000 thousand (recognized as guarantee deposit received) and $240,000 thousand guaranteed note to the Group when signing the contract. Additional $20,000 thousand guarantee deposit should be paid within five business days after the building construction registration is approved and within five business days after the approval of underground bottom plate inspection, respectively.

17. GOODWILL

Cost Balance, beginning of the year Net effect of exchange differences Balance, end of the year	For the Year Ended	For the Year Ended	December 31
		2019 $ 227,961 (1,965) $ 225,996	2018 $ 225,408 2,553 $ 227,961

154 -

For assessing goodwill for impairment at the end of reporting period, the Group took value in use as basis for calculating the recoverable amount of goodwill. The Group used the cash flows of a five-year financial forecast as the basis for calculating value in use to reflect the specific risk of cash-generating units. After this evaluation, the Group did not recognize any impairment loss on goodwill for the years ended December 31, 2019 and 2018.

18. OTHER INTANGIBLE ASSETS

Cost Balance, January 1, 2018 Disposals Exchange differences Balance, December 31, 2018 Accumulated amortization Balance, January 1, 2018 Amortization expenses Disposals Balance, December 31, 2018 Carrying value at December 31, 2018 Cost Balance, January 1, 2019 Disposals Exchange differences Balance, December 31, 2019 Accumulated amortization Balance, January 1, 2019 Amortization expenses Disposals Balance, December 31, 2019 Carrying value at December 31, 2019	Patents Licenses and Franchises Core Technology Customer Relationships $ 16,088 $ 32,662 $ 317,931 $ 5,592 - - (317,931 ) - - - - - $ 16,088 $ 32,662 $ - $ 5,592 $ 268 $ 136 $ 317,428 $ 1,957 3,218 1,633 503 1,118 - - (317,931) - $ 3,486 $ 1,769 $ - $ 3,075 $ 12,602 $ 30,893 $ - $ 2,517 $ 16,088 $ 32,662 $ - $ 5,592 - 2,500 - - - - - - $ 16,088 $ 35,162 $ - $ 5,592 $ 3,486 $ 1,769 $ - $ 3,075 3,217 1,772 - 1,119 - - - - $ 6,703 $ 3,541 $ - $ 4,194 $ 9,385 $ 31,621 $ - $ 1,398	Computer Software $ 164 - (3) $ 161 $ 20 19 - $ 39 $ 122 $ 161 144 (6) $ 269 $ 39 32 (3) $ 68 $ 201	Total $ 372,437 (317,931 ) (3) $ 54,503 $ 319,809 6,491 (317,931) $ 8,369 $ 46,134 $ 54,503 2,614 (6) $ 57,111 $ 8,369 6,140 (3) $ 14,506 $ 42,605

Other intangible assets were amortized on a straight-line basis over their estimated useful lives as follows:

Patents 5 years Licenses and franchises 20 years Core technology 5 years Customer relationships 5 years Computer software 10 years

155 -

19. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Bank loans		December 31	December 31
		2019 $ 2,352,800	2018 $ 807,348

As of December 31, 2019 and 2018, the interest rate on the bank loans was 0.72%-4.75% and 0.86%-5.50% per annum, respectively.

b. Long-term borrowings

Secured borrowings Bank loans (1) (Note 31) Unsecured borrowings Bank loans (2) Less: Current portions Long-term borrowings		December 31	December 31
		2019 $ 449,814 2,000,000 2,449,814 27,763 $ 2,422,051	2018 $ 467,261 1,500,000 1,967,261 13,240 $ 1,954,021

1) Secured by the Group’s financial assets amortized at cost, debt investments with no active market and property, plant and equipment. The final repayment period of those bank loans will be due in January 2022 to November 2025. As of December 31, 2019 and 2018, the effective interest rate on the bank loans were 1.16%-5.00% and 1.17%-5.75% per annum, respectively.
2) The bank loans are for the purpose of general operation with due date on June 2026. As of December 31, 2019 and 2018, the interest rates on the bank loans were 1.00%-1.07% and 1.08%-1.20% per annum, respectively.

20. OTHER PAYABLES

Salaries and bonus (including employee’s compensation and remuneration of directors) Others		December 31	December 31
		2019 $ 816,871 524,046 $ 1,340,917	2018 $ 915,728 343,248 $ 1,258,976

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21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation and its subsidiaries in the ROC adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

Employees of the Group’s subsidiaries in the People’s Republic of China, USA, Europe, Singapore, Japan and branches in Korea are under the retirement benefit plans operated by their respective local governments. Subsidiaries have to contribute amounts at certain percentages of salaries to the retirement benefit plans to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

b. Defined benefit plans

The defined benefit plans adopted by the Corporation and its subsidiaries, Chroma New Material Corp. and Adivic Technology Co. in accordance with the Labor Standard Law is operated by the government of the ROC. Pension benefits are calculated on the basis of length of service and average monthly salaries of the 6 months before retirement. The Corporation and its subsidiaries mentioned above contribute amount equal to 4% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of year, the Corporation and its subsidiaries assess the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Corporation and its subsidiaries are required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December 31	December 31
		2019 $ 486,655 (323,566) $ 163,089	2018 $ 470,802 (310,748) $ 160,054

157 -

Movements in net defined benefit liabilities were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liabilities
Balance at January 1, 2018	$ 459,640	$ (293,814)	$ 165,826
Current service cost	4,030	-	4,030
Net interest expense (income)	6,325	(4,149)	2,176
Recognized in profit or loss	10,355	(4,149)	6,206
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(7,472)	(7,472)
Actuarial loss - changes in demographic
assumptions	442	-	442
Actuarial loss - changes in financial
assumptions	7,047	-	7,047
Actuarial loss - experience adjustments	4,777	-	4,777
Recognized in other comprehensive income	12,266	(7,472)	4,794
Contributions from employer	-	(16,772)	(16,772)
Benefits paid	(11,459)	11,459	-
Balance at December 31, 2018	470,802	(310,748)	160,054
Current service cost	3,694	-	3,694
Net interest expense (income)	5,883	(3,983)	1,900
Recognized in profit or loss	9,577	(3,983)	5,594
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(9,923)	(9,923)
Actuarial loss - changes in demographic
assumptions	10	-	10
Actuarial loss - changes in financial
assumptions	27,501	-	27,501
Actuarial loss - experience adjustments	(3,425)	-	(3,425)
Recognized in other comprehensive income	24,086	(9,923)	14,163
Contributions from employer	-	(16,722)	(16,722)
Benefits paid	(17,810)	17,810	-
Balance at December 31, 2019	$ 486,655	$ (323,566)	$ 163,089

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
158 -

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase	December 31
	2019 2018 0.63%-1.00% 0.88%-1.38% 1.50%-2.50% 1.50%-2.50%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		December	31
		2019 $ (14,219) $ 14,819 $ 14,326 $ (13,822)	2018 $ (13,988) $ 14,593 $ 14,173 $ (13,659)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that the changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		December	31
		2019 $ 16,526 12.2 years	2018 $ 16,615 12.7 years

22. EQUITY

a. Ordinary share capital

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 500,000 $ 5,000,000 419,296 $ 4,192,961	2018 450,000 $ 4,500,000 416,779 $ 4,167,794

The authorized shares include 30,000 thousand shares allocated for the exercise of employee share options. The change in the Corporation’s share capital is mainly due to the exercise of employee share options.

159 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (Note) Additional paid-in capital Treasury share transactions Consolidation excess May be used to offset a deficit only Employee share options expired Share of changes in capital surplus of associates or joint ventures May not be used for any purpose Employee share options Employee restricted shares		December 31	December 31
		2019 $ 3,098,803 187,804 146,976 13,564 54,360 46,438 81,526 $ 3,629,471	2018 $ 2,860,255 179,801 146,976 12,421 44,110 87,000 139,074 $ 3,469,637

Note: Such capital surplus may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Corporation’s capital surplus and once a year).

c. Retained earnings and dividend policy

Under the dividend policy as set forth in the Corporation’s Articles of Incorporation (the “Articles”), where the Corporation made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Corporation’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on distribution of employees’ compensation and remuneration to directors, refer to d. employees’ compensation and remuneration of directors in Note 24.

Taking into account future capital expenditure requirements and its cash position, the total of cash dividends paid in any given year may not be less than 20% of total dividends distributed in that year. The final amount, type and percentage of the cash dividends and stock dividends are subject to actual earnings and capital requirements of the Corporation in a particular year.

An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Corporation’s paid-in capital. The legal reserve may be used to offset deficits. If the Corporation has no deficits and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Corporation.

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The appropriations of earnings for 2018 and 2017 have been approved in the annual shareholders’ meeting on June 18, 2019 and June 8, 2018, respectively, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2018 For Fiscal Year 2017 $ 254,628 $ 255,841 1,750,896 1,854,424	Dividend Per Share (NT$)
		For Fiscal Year 2018 For Fiscal Year 2017 $ 4.2 $ 4.5

The appropriations of earnings for 2019 had been proposed by the Corporation’s board of directors on February 26, 2020. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	185,448
Special reserve		89,240
Cash dividends		1,265,000	$3.0

The aforementioned cash dividends had been resolved by the Corporation’s board of directors, and the rest is subject to the resolution of the shareholders in the shareholder’s meeting to be held on June 10, 2020.

d. Special reserves

If a special reserve appropriated on the first-time adoption of IFRSs relates to exchange differences on translation of the financial statements of foreign operations (including the subsidiaries of the Corporation), the special reserve will be reversed on a proportionate basis according to the Corporation’s disposal of foreign operations; on the Corporation’s loss of significant influence, however, the entire special reserve will be reversed. Additional special reserve should be appropriated for the amount equal to the difference between net debit balance reserves and the special reserve appropriated on the first-time adoption of IFRSs. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and, thereafter, distributed.

e. Other equity items

Exchange
Differences on
Translating
Foreign
Operations
Unrealized
Gain (Loss) on
Financial Assets
at FVTOCI
For the year ended December 31, 2019
Balance at January 1, 2019
$ (104,872)
$ 160,493

Exchange differences on translating foreign
operations
(111,244)
-
Unrealized loss arising from equity
investment
-
(5,515)
Share of other comprehensive loss of
associates accounted for using the equity
method
(114,957)
(32)
Share-based payment transaction

-

-

Balance at December 31, 2019
$ (331,073)
$ 154,946

Unearned
Employee
Benefit
$ (42,377)
-
-
-

30,853
$ (11,524)
(Continued)

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f.	Exchange Differences on Translating Foreign Operations For the year ended December 31, 2018 Balance at January 1, 2018 $ (97,633) Exchange differences on translating foreign operations (6,229) Unrealized gain arising from equity investment - Share of other comprehensive (loss) gain of associates accounted for using the equity method (1,010) Disposal of investments in equity instruments designated as at FVTOCI - Share-based payment transaction - Balance at December 31, 2018 $ (104,872) Non-controlling interests Balance, beginning of the year Share of non-controlling interests Net profit Exchange difference on translating the financial statements of foreign entities Remeasurement on defined benefit plans Unrealized gain on available-for-sale financial assets Capital increase of subsidiaries Changes in percentage of ownership interest in subsidiaries Acquisition of non-controlling interests in subsidiary, Testar Electronics Corp. Cash dividends distributed by subsidiaries Balance, end of the year	Unrealized Gain (Loss) on Financial Assets at FVTOCI $ 151,864 - 12,847 23 (4,241) - $ 160,493 For the Year Ended	Unrealized Gain (Loss) on Financial Assets at FVTOCI $ 151,864 - 12,847 23 (4,241) - $ 160,493 For the Year Ended	Unearned Employee Benefit $ (93,849) - - - - 51,472 $ (42,377) (Concluded) December 31
			2019 $ 280,329 34,995 (3,946) (39) 60 7,218 - (9,926) (11,992) $ 296,699	2018 $ 232,150 904 3,194 (16) - 49,669 2,107 - (7,679) $ 280,329

g. Treasury shares

The Corporation’s shares held by its subsidiaries at the end of the reporting periods were as follows:

Number of shares held (in thousand shares) Carrying amount Market price		December 31	December 31
		2019 1,916 $ 35,714 $ 277,759	2018 1,916 $ 35,714 $ 226,038

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Forfeited employee restricted shares of 101 thousand were returned to the Corporation and canceled during 2019. Forfeited employee restricted shares of 84 thousand were returned to the Corporation and canceled during 2018.

Under the Securities and Exchange Act, the Corporation shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as the rights to dividends and to vote. The subsidiaries holding treasury shares, however, retain shareholders’ rights, except the rights to participate in any share issuance for cash and to vote.

23. REVENUE

Revenue from contracts with customers Revenue from sale of goods Construction contract revenue Other revenue	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 12,895,560 1,009,058 5,016 $ 13,909,634	2018 $ 11,733,130 4,862,323 335,675 $ 16,931,128

a. Contract balances

Contract assets - construction contract Contract liabilities -construction contract Contract liabilities - sale of goods		December 31	December 31
		2019 $ 1,258,046 $ 59,440 647,417 $ 706,857	2018 $ 845,164 $ 645,135 243,198 $ 888,333

The changes in the balance of contract liabilities primarily result from the timing difference between the Group’s performance and respective customer’s payment.

b. Disaggregation of revenue

Refer to Note 36 for the information on disaggregation of revenue.

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24. ADDITIONAL INFORMATION ON EXPENSES

a. Finance costs

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2019 $ 48,410 5,610 - 54,020 - $ 54,020 $ - - For the Year Ended			2018 $ 40,442 - 935 41,377 (9,609) $ 31,768 $ 9,609 1.58% December 31
2019 $ 84,062 356,000 $ 440,062 $ 6,140 For the Year Ended			2018 $ 75,359 233,564 $ 308,923 $ 6,491 December 31
	2019 $ 3,334,905 53,004 91,318 5,594 66,117 $ 3,550,938 $ 558,887 2,992,051 $ 3,550,938	2018 $ 3,386,786 78,596 93,653 6,206 70,500 $ 3,635,741 $ 630,029 3,005,712 $ 3,635,741

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d. Employees’ compensation and remuneration of directors

According to the Article of Incorporation of the Corporation, the Corporation accrued employees’ compensation and remuneration of directors at the rates of 5%-20% and no higher than 1.5%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2019 and 2018, which have been approved by the Corporation’s board of directors on February 26, 2020 and February 21, 2019, respectively, were as follows:

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2019 Amount Rate % $ 290,000 11.84 9,600 0.39	2018
		Amount Rate % $ 240,000 7.55 9,600 0.30

If there is a change in the amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in accounting estimate.

There is no difference between the actual amounts of the employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2019 and 2018.

Information on the employees’ compensation and remuneration of directors resolved by the Corporation’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

25. INCOME TAXES

a. Major components of income tax expense recognized in profit or loss

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments to deferred tax attributable to changes in tax rates and law Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 476,797 36,105 (54,103) 458,799 (9,669) - (9,669) $ 449,130	2018 $ 605,469 45,612 8,685 659,766 73,527 27,618 101,145 $ 760,911

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A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax Income tax expense calculated at the statutory rate Adjustment items in determining taxable income Tax-exempt income Others Income tax on unappropriated earnings Investment credits Unrecognised loss deduction Temporary differences Additional income tax under the Alternative Minimum Tax Act Effect of tax rate changes Adjustments for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,338,606 $ 527,387 (24,927) 47,546 36,105 (78,629) 15,057 (19,306) - - (54,103) $ 449,130	2018 $ 3,308,090 $ 953,833 (191,423) 17,678 45,612 (101,193) 2,153 (2,605) 553 27,618 8,685 $ 760,911

The Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings was reduced from 10% to 5%.

b. Deferred tax assets and liabilities

For the year ended December 31, 2019

Deferred Tax Assets Unrealized intercompany gain Tax losses Inventory reserve Tax credit Allowance for impaired receivables Net defined benefit liability Unrealized exchange loss Others Deferred Tax Liabilities Unappropriated earnings of foreign subsidiaries Goodwill Unrealized exchange gain Others	Opening Balance Recognized in Profit or Loss Exchange Differences and Other $ 110,754 $ 9,672 $ - 45,265 31,852 (1,774) 43,685 7,982 - 24,893 - (595) 11,149 11,586 - 8,446 (2,243) - 25 10,360 - 5,933 606 (27) $ 250,150 $ 69,815 $ (2,396) Opening Balance Recognized in Profit or Loss Exchange Differences and Other $ 381,758 $ 63,259 $ - 29,067 3,556 (53) 8,341 (7,850) - 5,395 1,181 (507) $ 424,561 $ 60,146 $ (560)	Closing Balance $ 120,426 75,343 51,667 24,298 22,735 6,203 10,385 6,512 $ 317,569 Closing Balance $ 445,017 32,570 491 6,069 $ 484,147

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For the year ended December 31, 2018

Deferred Tax Assets Unrealized intercompany gain Tax losses Inventory reserve Tax credit Allowance for impaired receivables Net defined benefit liability Unrealized exchange loss Others Impairment loss Deferred Tax Liabilities Unappropriated earnings of foreign subsidiaries Goodwill Unrealized exchange gain Others	Opening Balance Recognized in Profit or Loss Exchange Differences and Other $ 92,296 $ 18,458 $ - 39,636 4,638 991 33,561 10,124 - 18,757 5,434 702 9,562 1,569 18 8,991 (545) - 5,302 (5,277) - 2,838 4,083 (988) 19,465 (19,465) - $ 230,408 $ 19,019 $ 723 Opening Balance Recognized in Profit or Loss Exchange Differences and Other $ 272,636 $ 109,122 $ - 21,593 7,455 19 219 8,122 - 9,374 (4,535) 556 $ 303,822 $ 120,164 $ 575	Closing Balance $ 110,754 45,265 43,685 24,893 11,149 8,446 25 5,933 - $ 250,150 Closing Balance $ 381,758 29,067 8,341 5,395 $ 424,561

c. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets

Loss carryforwards Expiry in 2019 Expiry in 2020 Expiry in 2021 Expiry in 2022 Expiry after 2023 Deductible temporary differences		December 31	December 31
		2019 $ - 41,517 68,584 109,443 581,234 $ 800,778 $ -	2018 $ 49,907 44,523 71,191 109,666 411,678 $ 686,965 $ 3,502

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d. Information about unused investment credits, unused loss carryforwards and tax-exemptions

Loss carryforwards as of December 31, 2019 were as follows:

Unused Amount	Unused Amount	Expiry Year
$	41,517	2020
	68,584	2021
	109,443	2022
	60,909	2023
	54,928	2024
	92,125	2025
	112,300	2026
	81,815	2027
	102,186	2028
	76,971	2029
	57,017	2033
	25,546	2034
	16,769	2036
	58,317	2038
	147,391	2039
$	1,105,818

e. Income tax assessments

As of December 31, 2019, the Corporation’s tax returns through 2017 had been assessed by the tax authorities.

The tax returns through 2017 of the Corporation’s subsidiary - Wei Kuang Automatic Equipment Co., Chroma New Material Corp., Adivic Technology Co., Chroma Investment Co., Testar Electronics Corp., EVT Technology Co., and Wei Da Electric Vehicle Co. had been assessed by the tax authorities.

26. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share are as follows:

Net Profit for the Year

Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Interest on convertible bonds and valuation gain on conversion option Earnings used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,854,481 - $ 1,854,481	2018 $ 2,546,275 966 $ 2,547,241

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(In Thousands of Shares)

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Convertible bonds Employee share options Employees’ compensation Employee restricted shares Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 414,078 - 2,424 2,242 1,120 419,864	2018 409,438 961 4,395 2,313 1,882 418,989

If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

27. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan of the Corporation

The Corporation had not granted employee share options for the nine months ended September 30, 2019 and 2018. Information on employee share options is as follows:

Balance at January 1 Options exercised Options forfeited Balance at December 31 Options exercisable, end of the year	For the Year Ended December 31	For the Year Ended December 31
	2019 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 6,006 $ 59.0 (2,847) 55.8 (23) - 3,136 59.8 906	2018
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 9,463 $ 60.1 (3,354) 58.4 (103) - 6,006 59.0 1,532

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Information on outstanding options as of December 31, 2019 and 2018 is as follows:

December 31	December 31
2019 Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) $ - - 59.8 2.24	2018
	Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) $ 45.4 0.52 61.6 3.24

Compensation costs recognized were $22,860 thousand and $29,810 thousand for the years ended December 31, 2019 and 2018, respectively.

b. Employee share option plan of subsidiaries

Adivic Technology Co. granted its employees share options of 1,360 thousand units on March 12, 2014, with each option eligible to subscribe for one common share of Adivic Technology Co. when exercised. The options are valid for 8 years and exercisable at certain percentages subsequent to the second year of the grant date.

Employee share options issued were all 785 units (in thousand) with weighted-average exercise price of NT$10, there were no change for the nine months ended September 30, 2019 and 2018.

c. Restricted shares for employees

In the shareholders’ meeting on June 7, 2016, the shareholders approved a Restricted Share Unit Plan (“RSU” Plan) for employees with a total amount of $36,000 thousand, consisting of 3,600 thousand shares with issuance price of $10 dollars per share. It can be issued at one time or several times depending on the circumstance. The RSU Plan is approved under Rule No. 1050024381 issued by the FSC on June 27, 2016. The Corporation issued 3,100 thousand and 185 thousand shares on July 8, 2016 and June 20, 2017, the subscription date. The details of RSU Plan are as follows:

1) Employees who are granted RSUs, upon meeting the Corporation’s financial performance and personal performance indicators, are eligible to be vested 10, 20, 30 and 40 percent of the RSUs granted after 1, 2, 3 and 4 years of tenure after the subscription date, respectively.
2) The restrictions on the rights of the employees who are granted RSUs but have not met the vesting conditions are as follows:
a) The employees are not eligible to sell, pledge, transfer, donate or to dispose any RSUs in any form.
b) The employees holding RSUs are entitled to receive dividends and similar purchasing rights to ordinary shares during capital increase. Dividends from RSUs are not restricted during the vesting period and are appropriated to the employees’ personal account from trust account after the dividend distribution date.
c) Before the restricted shares are vested to the employees, the right of attendance, proposal, speech, voting and other rights of shareholders are acted by the custodian.
d) The RSUs should be delivered to trust custodians upon grant date. The employees cannot request for return in any manner before vesting conditions are met.
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3) If an employee fails to meet the vesting conditions, the Corporation will recall or buy back and cancel the restricted shares at issued price. If an employee voluntarily resigns, retires, disabled or decease due to occupational hazards, dismissed, be transferred to another post, violates labor contracts or working protocols substantially or abandons restricted shares, related guidelines of RSU Plan will be followed accordingly.

Information relating to outstanding employee restricted shares as of December 31, 2019 and 2018 was as follows:

Restricted shares at the beginning of the year Shares vested Shares canceled Restricted shares at the end of the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 2,273 (887) (101) 1,285	2018 2,975 (618) (84) 2,273

Compensations costs of share-based payment arising from the RSU Plan were $30,144 thousand and $48,786 thousand for the years ended December 31, 2019 and 2018, respectively.

28. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group’s capital management aims to maintain the sufficiency of financial resources and the soundness of operating strategies to meet the needs for operating capital, capital expenditure, R & D expenses, debt handling, dividend disbursement, etc.

29. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

Management believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximates their fair values or their fair value could not be assessed reliably.

b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2019 Financial assets at FVTPL Domestic listed equity securities Open-end beneficiary certificates	Level 1 $ 4,070 485,675 $ 489,745	Level 2 $ - - $ -	Level 3 $ - 4,762 $ 4,762	Total $ 4,070 490,437 $ 494,507 (Continued)

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Financial assets at FVTOCI Domestic listed equity securities Domestic unlisted equity securities Foreign unlisted equity securities December 31, 2018 Financial assets at FVTPL Domestic listed equity securities Open-end beneficiary certificates Financial assets at FVTOCI Domestic listed equity securities Domestic unlisted equity securities Foreign unlisted equity securities	Level 1 $ 407,798 - - $ 407,798 $ 3,653 1,342,291 $ 1,345,944 $ 431,797 - - $ 431,797	Level 2 $ - - - $ - $ - - $ - $ - - - $ -	Level 3 $ - 200,037 4,532 $ 204,569 $ - 6,807 $ 6,807 $ - 182,039 4,435 $ 186,474	Total $ 407,798 200,037 4,532 $ 612,367 $ 3,653 1,349,098 $ 1,352,751 $ 431,797 182,039 4,435 $ 618,271 (Concluded)

There were no transfers between Levels 1 and 2 for the years ended December 31, 2019 and 2018.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2019

Financial Assets Balance at January 1, 2019 Recognized in profit or loss (included in valuation gains and losses) Recognized in other comprehensive income (included in unrealized gain on financial assets at FVTOCI) Balance at December 31, 2019	Financial Assets at FVTPL Equity Instruments $ 6,807 (2,045) - $ 4,762	Financial Assets at FVTOCI Equity Instruments $ 186,474 - 18,095 $ 204,569	Total $ 193,281 (2,045) 18,095 $ 209,331

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For the year ended December 31, 2018

Financial Assets Balance at January 1, 2018 Recognized in profit or loss (included in valuation gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Purchases Cash returned of capital reduction Transfers out of Level 3 Balance at December 31, 2018	Financial Assets at FVTPL Equity Instruments $ 6,013 794 - - - - $ 6,807	Financial Assets at FVTOCI Equity Instruments $ 295,449 - (15,269) 67,800 (5,262) (156,244) $ 186,474	Total $ 301,462 794 (15,269) 67,800 (5,262) (156,244) $ 193,281

3) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair values of domestic unlisted equity securities and open-end beneficiary certificates are determined by using the asset approach and the market approach. Asset approach evaluates the total market value of individual asset and liability of the evaluated target, taking into account the risk factors (lack of marketability, etc.) to estimate the fair value. Market approach refers to the transaction prices in active market of the listed companies engaging in similar business, related price multiplier, transaction and information implied by the transaction price, to arrive at the fair value.

c. Categories of financial instruments

Financial assets Financial assets at FVTPL Mandatorily at FVTPL Financial assets at amortized cost (1) Financial assets at FVTOCI Equity instruments Financial liabilities Financial liabilities at amortized cost (2)	December 31
	2019 2018 $ 494,507 $ 1,352,751 7,934,228 8,882,741 612,367 618,271 8,797,397 6,595,112

1) The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, financial assets measured at amortized cost, notes receivable, trade receivables, other receivables (classified as other current assets) and refundable deposits.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term loans, notes payable, trade payables, other payables, long-term loans (including current portion of long-term borrowings) and guarantee deposits received.
173 -

d. Financial risk management objectives and policies

The Group’s major financial instruments consist of equity investments, cash and cash equivalents, receivables, long-term and short-term borrowings, trade payables and convertible bonds. The Group’s financial risk management pertains to financial risks relating to the operations of the Group, including currency risk, interest rate risk, credit risk and liquidity risk. The Group seeks to identify, evaluate and hedge against market uncertainties to lower the effect of market changes on the Group’s financial performance.

The Group manages foreign exchange risk through setting up of foreign currency deposit bank accounts and through the use of foreign currency directly received from sale to pay for purchases in foreign currency to reduce the impact of foreign exchange fluctuation and to achieve a natural hedge effect. The Group actively observes the exchange rate information to fully control the foreign currency hedge.

1) Market risk

The Group’s activities expose it primarily to the financial risks of changes in exchange rates (see Item (a) below), interest rates (see Item (b) below) and price (see Item (c) below).

There has been no change to the Group’s exposure to market risks or the manner in which these risks are managed and measured.

a) Foreign currency risk

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period are set out in Note 34.

Sensitivity analysis

The Group was mainly exposed to USD and RMB.

Had the NTD strengthened/weakened by 5% against the relevant currency, the pre-tax profit would have decreased/increased by $197,621 thousand and $256,386 thousand for the years ended December 31, 2019 and 2018, respectively. The 5% sensitivity rate is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency-denominated monetary items and their translation at period-end is adjusted for a 5% change in foreign-currency rates.

b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds both at fixed and floated interest rates. The Group evaluates hedging activities regularly to align with interest rate views and defined risk appetite and ensures that the most cost-effective hedging strategies are applied.

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The carrying amounts of the financial assets and liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2019 2018 $ 787,528 $ 609,579 1,494,735 278,637 2,173,071 2,728,644 3,456,076 2,495,972

Sensitivity analysis

The sensitivity analysis below has been determined on the basis of the exposure to interest rates for both derivative and non-derivative instruments at balance sheet dates. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the balance sheet dates was outstanding for the whole year. A 50 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2019 and 2018 would increase/decrease by $6,415 thousand and $1,163 thousand, respectively, which was mainly attributable to the Group’s exposure to interest rates on its variable rate deposits and bank loans.

c) Price risk

The Group is exposed to equity price risks mainly arising from the followings:

i. Investment in financial assets at FVTOCI (mainly investment in domestic and foreign stocks), which are held for strategic rather than trading purposes. The Group does not actively trade these investments.
ii. Financial assets at FVTPL (mainly investment in domestic and foreign open-ended beneficiary certificates and listed stocks in Taiwan)

The Group manages risk through holding various investment portfolios and having each equity investment to get prior approval from the Group’s management.

Sensitivity analysis

The sensitivity analysis below was determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 5% higher/lower, the pre-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $24,725 thousand and $67,638 thousand respectively, as a result of the changes in fair values of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2019 and 2018 would have increased/decreased by $30,618 thousand and $30,914 thousand, respectively, as a result of the changes in fair values of financial assets at FVTOCI.

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2) Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Corporation. As at the end of the reporting period, the Group’s maximum exposure to credit risk, which would cause a financial loss to the Group due to the failure of the counterparty to discharge its obligation, could arise from:

a) The carrying amount of trade receivables from operating activities; and
b) The amount of bank deposits, fixed-income and other financial instruments from investing activities.

The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

Trade receivables involve a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of trade receivables, including the evaluation of internal credits, historical transaction records, present economic circumstances, etc. which affect the customers’ payment ability.

The credit risk of bank deposits, fixed-income financial instruments and other financial instruments are evaluated, managed and controlled by the Group’s financial department. The Group’s exposure to credit risk was limited because the Group adopted a policy of only dealing with creditworthy counterparties.

3) Liquidity risk

The Group manages liquidity risk by managing and maintaining sufficient cash and cash equivalents to supply the Group’s demand and mitigate the effects of fluctuations in cash flow. The Group continuously monitors the use of credit lines and conformity to loan terms.

The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2019 and 2018, the Group’s available unutilized bank loan facilities were $3,518,960 thousand and $2,972,285 thousand, respectively.

Liquidity and interest risk tables for non-derivative financial liabilities

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay.

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Bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

Non-derivative financial liabilities Non-interest bearing Fixed interest rate instruments Floating interest rate instruments Lease liabilities Non-derivative financial liabilities Non-interest bearing Fixed interest rate instruments Floating interest rate instruments	December 31, 2019	December 31, 2019
	Within 1 Year 1-5 Years More Than 5 Years $ 3,974,783 $ - $ - 1,184,603 121,187 95,784 1,232,195 1,942,083 720,000 72,912 85,054 8,271 $ 6,464,493 $ 2,148,324 $ 824,055 December 31, 2018
	Within 1 Year $ 3,819,537 187,606 665,291 $ 4,672,434	1-5 Years More Than 5 Years $ - $ - 35,983 107,351 1,897,191 - $ 1,933,174 $ 107,351

After considering the financial position of the Group, management does not expect the banks will execute their rights of requiring the Group to repay the bank loans immediately. In addition, management believes the operating funds of the Corporation and subsidiaries are sufficient to meet cash flow demand; thus, liquidity risk is not considered significant.

The Group’s operating funds are sufficient to meet its cash flow demand, as a result, the Group does not use its overdraft limit.

30. TRANSACTIONS WITH RELATED PARTIES

a. The related parties and relationships with the Group were as follows:

Related Party

Relationship with the Group

Dynascan Technology Corp. (“Dynascan Technology”) Adlink Technology Inc. (“Adlink”) Camtek Ltd. Chih Ho Shun Development Co., Ltd. (“Chih Ho Shun”) Dynascan Electronics (Shanghai) Co., Ltd. (“Dynascan Shanghai”) Dynascan Technology Inc. (“Dynascan USA”) Dynascan Japan Inc. (“Dynascan Japan”) Mou Kuan Industry Co., Ltd. (“Mou Kuan”) Quantel Co., Ltd. (“Quantel Thailand”) Quantel Sdn. Bhd. (“Quantel Malaysia”) Quantel Philippines Inc. (“Quantel Philippines”) PT Quantel (“Quantel Indonesia”) Quantel Pte Ltd Representative Office In Hanoi (“Quantel Vietnam”) Quantel Electronics (India) Private Limited (“Quantel India”)

Associate Associate Associate Joint venture Associate Associate Associate Other related party Other related party Other related party Other related party Other related party Other related party Other related party

177 -

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the Corporation, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and its related parties are disclosed below.

The related-party transactions were conducted under normal terms unless specified otherwise.

b. Sales

Related Party Categories Associates Other related parties	For the Year Ended	For the Year Ended	December 31
		2019 $ 51,608 67,615 $ 119,223	2018 $ 63,587 60,355 $ 123,942

c. Purchases

Related Party Categories Associates Other related parties	For the Year Ended	For the Year Ended	December 31
		2019 $ 11,944 47,392 $ 59,336	2018 $ 17,433 70,517 $ 87,950

d. Receivables from related parties (excluding loans to related parties)

Line Item Related Party Categories Trade receivables - related Associates parties Other related parties		December	31
		2019 $ 3,027 24,081 $ 27,108	2018 $ 6,990 44,828 $ 51,818

Outstanding trade receivables from related parties are unsecured.

e. Payables to related parties (excluding loans from related parties)

Line Item Related Party Categories Notes payable - related parties Other related parties Trade payables - related parties Associates Other related parties		December	31
		2019 $ 3,054 $ 2,973 35 $ 3,008	2018 $ 14,556 $ 7,438 1,515 $ 8,953

178 -

f. Others

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 $ 1,260 $ 12,600 $ - 12,279 $ 12,279 December	2018 $ 1,260 $ 12,600 $ 4,764 21,256 $ 26,020 31
2019 $ 3,898 For the Year Ended		2018 $ 3,797 December 31
	2019 $ 126,327 2,431 $ 128,758	2018 $ 118,804 2,180 $ 120,984

The remuneration of directors and key executives is determined by the remuneration committee based on the performance of individuals and market trends.

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The assets pledged as collaterals for bank loans and for product warranties were as follows:

Property, plant and equipment, net Pledge deposits (classified as financial assets measured at amortized cost)		December 31	December 31
		2019 $ 960,124 484,634 $ 1,444,758	2018 $ 971,991 229,935 $ 1,201,926

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. On January 17, 2012, the Corporation, Dynapack International Corporation and Heran Co., Ltd. won a bid for the ownership of land and the building and related facilities to be built on the land pertaining to “The Action Plan for Developing Land Surrounding the MRT Airport Station to Improve Civilians’ Life,” which had been reviewed and approved by the Ministry of the Interior (MOI).
179 -

The total bid price was $10,088,890 thousand, covering land with an area of 222,300 square meters. As a result of winning the above bid, the Corporation acquired 35%, or 77,805 square meters, of a certain piece of land for $3,531,112 thousand. On April 18, 2012, the Corporation signed the land purchase contract with the MOI; the payment schedule for this purchase is as follows:

1) The first installment of the bid amount (10% of the total bid amount, or $353,111 thousand) should be paid within 10 days from the contract date. The Corporation paid the first installment by bid deposit of $353,040 thousand in cash.
2) To meet the schedule for zone expropriation, the Corporation should pay the second installment (30% of the total bid amount) within 10 days of receiving the payment notice from the MOI. The MOI will approve the Corporation’s land usage rights as the payment is made. On September 3, 2013, the Corporation has paid the second installment of $1,059,333 thousand.
3) To help the MOI provide the compensations for land expropriation and complete the demolition and relocation of structures on the land, the Corporation should pay the third installment (40% of the total bid amount) within 10 days of the payment notice from the MOI. The MOI will then check with the Corporation to see if the demolition and relocation are completed as the payment is made. In November 2015 and July 2016, the Corporation has paid the first part of the third installment of $536,729 thousand and the remaining part of the third installment of $875,716 thousand, respectively.
4) The Corporation should accomplish the following things within four years from the time of obtaining the approval of the land usage rights:
a) Open up the main road system and build related public facilities.
b) Acquire the building license for over 50% percent of all industrial land and register with the authorities to go into operation.

After completing the above requirements, the Corporation should apply to the MOI for the approval to acquire real property rights to the structures and facilities built. The Corporation should pay the fourth installment (20% of the total bid amount) within 10 days upon obtaining the approval and receipt of the payment notice from the MOI. The Corporation has paid the fourth installment of $716,362 thousand in June 2018 and obtained the property registration over the land from the MOI. The Corporation has agreed to comply with the MOI’s requirement for the MOI’s placing of caution on undeveloped land before ownership of real property is turned over to the Corporation. The MOI will cancel this caution once it determines that the Corporation has completed all the required land development, building and facility construction and land improvements. The Corporation has recognized the land of self-use and the land of undetermined future use to property, plant and equipment and investment properties, respectively. Refer to Notes 14 and 16.

b. The unrecognized contractual commitments arose from the action plan of developing land surrounding the Airport MRT station. The contracts stipulated that the Group had to pay relevant expenses during the construction period. As of December 31, 2019, the unrecognized commitments amounted to $1,304,658 thousand.
c. Chroma’s subsidiary, MAS Automation Corporation (“MAS”), entered into an Equipment Purchase Agreement (“Agreement”) with LINCO Technology Co., Ltd (“LINCO”) in 2017, in which MAS entrusted LINCO to manufacture automation equipment. However, LINCO failed to deliver a considerable number of important parts of the equipment to MAS; furthermore, LINCO rejected to perform its installation services under the Agreement. Hence, MAS claimed for a delay penalty of $2,503,659 thousand (around US$83,455 thousand) against LINCO, of which MAS filed a civil lawsuit on November 12, 2018 for $440,000 thousand, and the remaining penalty was reserved for the right to claim in the future. In addition, MAS submitted a petition to the court for provisional attachment against LINCO to secure its right, and offered a deposit in an amount of $440,000 thousand to the court.
180 -

Whereas, LINCO conversely alleged that MAS breached its payment obligation under the Agreement. LINCO raised a counterclaim against MAS in the Taiwan Taoyuan District Court on October 30, 2019, claiming for the payment of $255,640 thousand (around US$824 million) along with the interest. On the other hand, LINCO asserted that it suffered from the provisional attachment which was submitted by MAS, and brought another civil lawsuit against MAS in the Taiwan Taichung District Court, claiming for the damage compensation of $505,521 thousand. Since the proceeding of the lawsuit filed by LINCO are still in its preliminary stage, there is no sufficient information to predict its outcome or impact to the Group.

33. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

The outbreak of severe pneumonia with novel pathogens in January 2020 caused the operations of the Group to be temporarily suspended for customers located in severely affected areas in mainland China. As major customers of the Corporation are spread around the world, the impact of outbreak on the operation is limited.

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group entities’ significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

December 31, 2019

Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 120,936
29.980 (USD:NTD)
USD

20,873
7.789 (USD:HKD)
USD

4,546
6.964 (USD:RMB)
USD

6,941
1.346 (USD:SGD)
RMB

128,179
1.118 (RMB:NTD)
RMB

99,768
4.305 (RMB:HKD)
RMB

34,308
0.144 (RMB:USD)

Non-monetary items

USD

74,414
29.980 (USD:NTD)

Financial liabilities

Monetary items

USD

33,898
29.980 (USD:NTD)
USD

20,622
7.789 (USD:HKD)
RMB

32,022
0.144 (RMB:HKD)

Carrying
Amount
$ 3,625,640

625,778

136,300

208,076

551,809

429,501

147,695
$ 5,724,799
$ 2,230,935
$ 1,016,276

618,253

137,856
$ 1,772,385

181 -

December 31, 2018

Foreign Currencies Exchange Rate Financial assets Monetary items USD $ 149,940 30.715 (USD:NTD) USD 9,634 7.833 (USD:HKD) USD 4,526 1.366 (USD:SGD) RMB 109,170 4.472 (RMB:NTD) RMB 126,780 1.141 (RMB:HKD) RMB 37,354 0.146 (RMB:USD) Financial liabilities Monetary items USD 24,643 30.715 (USD:NTD) USD 12,304 7.833 (USD:HKD)	Carrying Amount $ 4,605,398 295,902 139,018 488,209 566,962 167,048 $ 6,262,537 $ 756,911 377,909 $ 1,134,820

For the years ended December 31, 2019 and 2018, (realized and unrealized) net foreign exchange (losses) gain were $(85,663) thousand and $97,928 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions of the group entities.

35. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others: Table 1 (attached)
2) Endorsements/guarantees provided: Table 2 (attached)
3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Table 3 (attached)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4 (attached)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: Table 5 (attached).
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6 (attached)
182 -
9) Trading in derivative instruments: Note 7
10) Others: Intercompany relationships and significant intercompany transactions: Table 7 (attached)
11) Information on investees: Table 8 (attached)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 9 (attached)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: Table 5 (attached)
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 5 (attached)
- c) The amount of property transactions and the amount of the resultant gains or losses: None.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 2 (attached).
- e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: Table 1 (attached).
- f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receiving of services: None.

36. SEGMENT INFORMATION

Information reported to the Group’s chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on types of products delivered or services provided. The Group’s reportable segments are as follows:

a. Special materials department.
b. Test instrument department.
c. Automatic equipment department.
183 -

d. Other

1) Segment revenues and results

For the year ended December 31, 2019 Revenue from external customers Inter-segment revenue Segment revenue Consolidated revenue Segment income Non-operating income and expenses Profit before tax For the year ended December 31, 2018 Revenue from external customers Inter-segment revenue Segment revenue Consolidated revenue Segment income Non-operating income and expenses Profit before tax	Special Materials Department $ 2,097,065 7 $ 2,097,072 $ 33,754 $ 2,005,001 - $ 2,005,001 $ 50,741	Test Instrument Department $ 10,545,586 6,922,326 $ 17,467,912 $ 2,014,175 $ 9,724,331 6,767,600 $ 16,491,931 $ 1,723,167	Automatic Equipment Department $ 1,009,058 344,391 $ 1,353,449 $ 46,968 $ 4,862,323 755,759 $ 5,618,082 $ 1,332,796	Other $ 257,925 818 $ 258,743 $ (41,954) $ 339,473 114 $ 339,587 $ (31,253)	Elimination $ - (7,267,542) $ (7,267,542) $ 6,516 $ - (7,523,473) $ (7,523,473) $ (35,818)	Total $ 13,909,634 -
						13,909,634
						$ 13,909,634
						$ 2,059,459 279,147
						$ 2,338,606
						$ 16,931,128 -
						16,931,128
						$ 16,931,128
						$ 3,039,633 268,457
						$ 3,308,090

The sales between segments are based on fair value.

The above revenues were generated through transactions with external customers and among segments. The inter-segment revenues for the years ended December 31, 2019 and 2018 had been adjusted and eliminated from the consolidated financial statements.

Segment operating income refers to profits earned by each segment, excluding remuneration of directors, share of profits or loss of associates and joint venture, rental income, interest income, gain (loss) on disposal of property, plant and equipment, gain (loss) on disposal of investments, foreign exchange gain (loss), valuation gain (loss) on financial instruments, finance costs and income tax expense. This was the measure reported to the Group’s chief operating decision maker to allocate resources to each segment and evaluate its performance.

2) Segment assets and liabilities

Segment assets Special materials department Test instrument department Automatic equipment department Other Adjustments and eliminations Total segment assets Investments and other unallocated assets Consolidated total assets		December 31	December 31
		2019 $ 917,695 20,841,251 2,623,567 291,373 (4,307,795) 20,366,091 5,070,981 $ 25,437,072	2018 $ 863,031 18,578,300 3,856,680 353,624 (3,738,938) 19,912,697 3,289,767 $ 23,202,464 (Continued)

184 -

Segment liabilities Special material department Test instrument department Automatic equipment department Other Adjustments and eliminations Total segment liabilities Borrowings and other unallocated liabilities Consolidated total liabilities		December 31	December 31
		2019 $ 688,616 6,393,940 1,614,286 105,984 (3,443,503) 5,359,323 5,292,289 $ 10,651,612	2018 $ 561,478 6,184,236 1,369,831 115,500 (2,918,100) 5,312,945 3,199,170 $ 8,512,115 (Concluded)

For the purpose of monitoring segment performance and allocating resources between segments:

a) All assets were allocated to reportable segments other than interests in associates accounted for using the equity method, other financial assets, and deferred tax assets. Goodwill was allocated to reportable segments.
b) All liabilities were allocated to reportable segments other than borrowings and deferred tax liabilities.
3) Revenue from major products

The following is an analysis of the Group’s revenue from its major products and services:

Special material equipment Test instrument equipment Automatic equipment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,097,065 10,545,586 1,009,058 $ 13,651,709	2018 $ 2,005,001 9,724,331 4,862,323 $ 16,591,655

4) Geographical information

The Group operates in three principal geographical areas - Republic of China, other Asian countries, and others.

The Group’s revenue from external customers by location of operations and information about its non-current assets by geographical location are detailed below.

Revenue from External Customers	Revenue from External Customers	Non-current Assets	Non-current Assets
For the Year Ended December 31
		December 31
2019 $ 5,804,501 5,998,631 2,106,502 $ 13,909,634	2018 $ 8,622,514 5,823,264 2,485,350 $ 16,931,128	2019 $ 7,957,843 420,916 570,143 $ 8,948,902	2018 $ 7,465,536 531,449 449,269 $ 8,446,254

185 -

Non-current assets exclude non-current assets classified as financial instruments, investments accounted for using the equity method, right-of-use asset, prepayments for investments, and deferred tax assets.

5) Information about major customers

There was no revenue from any individual customer exceeded 10% of the Group’s revenue for the year ended December 31, 2019. Included in revenue from direct sales of automated factory conveyor systems of $4,862,323 thousand in 2018, were revenues of approximately $2,646,345 thousand, which were generated from sales to the Group’s largest customer.

186 -

TABLE 1

CHROMA ATE INC. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Party	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing (Note 5)	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limit
													Item	Value
0	The Corporation	Chroma Systems Solutions, Inc. Chroma Japan Corp.	Other receivables Other receivables	Y Y	$ 116,519 41,194	$ 116,519 41,194	$ 116,519 38,185	3.25% 1.30%	a a	$ 482,283 181,261	- -	$ - -	- -	$ - -	$ 1,448,876 (Note 1) 1,448,876 (Note 1)	$ 2,897,752 (Note 2) 2,897,752 (Note 2)
1	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd.	Other receivables	Y	43,050	-	-	2.50%	b	-	Operation	-	-	-	519,577 (Note 3)	519,577 (Note 3)
2	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd.	Other receivables	Y	43,050	-	-	2.50%	b	-	Operation	-	-	-	327,356 (Note 3)	327,356 (Note 3)

Note 1: Based on 10% of the net value of the Corporation.

Note 2: Based on 20% of the net value of the Corporation.

Note 3: Based on 70% of the net value from the latest financial statements of borrowing company that have been audited.

Note 4: The amounts listed in the table were translated into the New Taiwan dollars at the exchange rate of US$1=NT$29.980, RMB1=NT$4.305 and JPY1 = NT$0.276 as of December 31, 2019.

Note 5: Financing provided:

a. For transactions.

b. For short-term financing.

187 -

TABLE 2

CHROMA ATE INC. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements	Aggregate Endorsement Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Corporation	Chroma Japan Corp. Chroma ATE Europe B.V. Chroma ATE Inc. Sajet System Technology (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Quantel Private Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 2,173,314 2,173,314 2,173,314 2,173,314 2,173,314 2,173,314 2,173,314	$ 34,100 50,385 149,900 21,525 43,050 86,100 44,560	$ 27,600 50,385 149,900 21,525 43,050 86,100 -	$ 19,320 33,590 149,900 - 2,711 6,116 -	$ - - - - - - -	0.19% 0.35% 1.03% 0.15% 0.30% 0.59% -	$ 4,346,628 4,346,628 4,346,628 4,346,628 4,346,628 4,346,628 4,346,628	Y Y Y Y Y Y Y	- - - - - - -	- - - Y Y Y -

Note 1: According to Regulation of the “Procedures for Endorsement/Guarantee and lending of Funds”, the Corporation limits the endorsement/guarantee amount on each entity to (a) within 15% of the net value of the Corporation and (b) the capital issued of the entity endorsed/guaranteed, but 100% held subsidiary is not limited by the regulation.

Note 2: According to Regulation of the “Procedures for Endorsement/Guarantee and Lending of Funds”, the Corporation limits the endorsement/guarantee amount within the 30% of the net value of the Corporation.

Note 3: The amounts listed in columns were translated into the New Taiwan dollars at the exchange rate of US$1=NT$29.980, JPY1=NT$0.276, RMB1=NT$4.305, EUR1=NT$33.590, SGD1=NT$22.280 as of December 31, 2019.

188 -

TABLE 3

CHROMA ATE INC. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES) DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2019	December 31, 2019		Note
				Shares/Units (Thousands)	Carrying Amount	Percentage of Ownership	Fair Value
The Corporation Chroma New Material Corp. Chroma Systems Solutions Inc. Chroma Investment Co., Ltd. Adivic Technology Co. Chen Hwa Technology Inc.	Fund WI Harper INC Fund VII LP Stocks DynaColor, Inc. Chunghwa Telecom Co., Ltd. China Communications Media Group Co., Ltd. WK Technology Fund IX Ltd. Twoway Catv Service Inc. Tian Zheng International Precision Machinery Co., Ltd. WK Technology Fund IV Ltd. WK Technology Fund VI Ltd. TFBS Bioscience Inc. Taiwan Advanced Nanotech Inc. Fund Fuh Hwa You Li Money Market Fund Taishin 1699 Money Market Fund Fund Franklin California Tax Free Income FD Inc. Fund Hua Nan Kirin Money Market Fund Stocks Greatek Electronics Inc. Chroma ATE Inc. Cosmactive Broadband Networks Co., Ltd. Prance System Technology Co., Ltd. Fund Cathay Taiwan Money Market Fund Stocks Hangzhou New Material Chroma Co., Ltd.	- - - - - - - - - - - - - - - - The Corporation - - - -	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃` Financial assets at fair value through other comprehensive income - non-current `〃` `〃` Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current	- 6,050 412 26 4,614 3,561 2,681 806 723 3,280 2,700 6,829 8,139 135 4,601 85 1,916 4 111 4,016 -	$ 4,762 199,358 45,362 94 59,237 45,184 162,984 5,047 3,139 40,180 47,250 92,362 110,565 31,116 55,292 4,070 277,759 - - 50,150 4,532	- 6.1 - - 4.6 4.4 8.1 1.9 1.4 14.7 15.0 - - - - - 0.5 0.6 5.1 - 19.0	$ 4,762 199,358 45,362 94 59,237 45,184 162,984 5,047 3,139 40,180 47,250 92,362 110,565 31,116 55,292 4,070 277,759 - - 50,150 4,532	- - - - - - - - - - - - - - - - - - -
								(Continued)

189 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2019	December 31, 2019		Note
				Shares/Units (Thousands)	Carrying Amount	Percentage of Ownership	Fair Value
Innovative Nanotech Incorporated Touch Cloud Incorporation EVT Technology Co., Ltd.	Fund Mega Diamond Money Market Fund Fund Mega Diamond Money Market Fund Fund Mega Diamond Money Market Fund	- - -	Financial assets at fair value through profit or loss - current `〃` `〃`	8,577 1,439 1,595	$ 107,992 18,118 20,080	- - -	$ 107,992 18,118 20,080	- -

Note: The fair value of open-end beneficiary certificates and listed market securities was calculated based on the net asset value and closing price as of balance sheet date.

(Concluded)

190 -

TABLE 4

CHROMA ATE INC. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Number of Shares (Thousands)	Amount (Note 1)	Number of Shares (Thousands)	Amount	Number of Shares (Thousands)	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares (Thousands)	Amount (Note 1)
The Corporation	Fund Mega Diamond Money Market Fund Stocks Camtek Ltd.	Financial assets at fair value through profit or loss - current Investments accounted for using the equity method	- -	- -	44,427 -	$ 556,317 (Note 1) -	- 7,817	$ - 2,342,340	44,427 -	$ 557,855 -	$ 550,000 -	$ 7,855 -	- 7,817	$ - 2,230,935 (Note 2)

Note 1: The beginning and ending balances included adjustments for financial assets valuation gain or loss.

Note 2: The ending balances included investment income or loss for using the equity method of $35,415 thousand, capital reserve adjustment $10,253 thousand, exchange differences on translating the financial statements of foreign operations of $(115,583) thousand and cash dividends of $41,490 thousand.

191 -

TABLE 5

CHROMA ATE INC. AND SUBSIDIARIES

TOTAL PURCHASE FROM OR SALE TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase (Sale)	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Corporation Neworld Electronics Ltd. The Corporation Chroma Electronics (Shanghai) Co., Ltd. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. The Corporation Chroma Japan Corp. The Corporation Chroma ATE Inc. The Corporation Chroma Systems Solutions, Inc. The Corporation Chroma ATE Europe B.V. The Corporation Quantel Private Ltd. The Corporation Chroma ATE (Suzhou) Co., Ltd. The Corporation Wei Kuang Automatic Equipment Co., Ltd.	Neworld Electronics Ltd. The Corporation Chroma Electronics (Shanghai) Co., Ltd. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. The Corporation Chroma Japan Corp. The Corporation Chroma ATE Inc. The Corporation Chroma Systems Solutions, Inc. The Corporation Chroma ATE Europe B.V. The Corporation Quantel Private Ltd. The Corporation Chroma ATE (Suzhou) Co., Ltd. The Corporation Wei Kuang Automatic Equipment Co., Ltd. The Corporation	Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company	(Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase Purchase (Sale)	$ (2,628,273) 2,628,273 (247,712) 247,712 (395,162) 395,162 (181,261) 181,261 (336,352) 336,352 (482,383) 482,383 (364,327) 364,327 (287,288) 287,288 (117,021) 117,021 251,804 (251,804)	(32) 100 (3) 100 (4) 100 (2) 100 (4) 100 (6) 100 (4) 100 (4) 100 (1) 100 7 (100)	Net 90 days after delivery Net 90 days after delivery Net 120 days after delivery Net 120 days after delivery Net 90 days after monthly closing Net 90 days after monthly closing Net 90 days after delivery Net 90 days after delivery Net 180 days after delivery Net 180 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 120 days after delivery Net 120 days after delivery Net 90 days after monthly closing Net 90 days after monthly closing	- - - - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - - - -	$ 783,034 (783,034) 64,942 (64,942) 102,621 (102,621) 181,262 (181,262) 402,745 (402,745) 199,399 (199,399) 184,840 (184,840) 50,708 (50,708) 45,404 (45,404) (184,794) 184,794	24 (100) 2 (100) 3 (100) 5 (100) 12 (100) 6 (100) 6 (100) 2 (100) 1 (100) (15) 100	- - - - - - - - - - - - - - - - - - - -
										(Continued)

192 -

Company Name	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase (Sale)	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Neworld Electronics Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma ATE Europe B.V. Chroma Germany	Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd. Chroma ATE (Suzhou) Co., Ltd. Neworld Electronics Ltd. Chroma Germany Chroma ATE Europe B.V.	Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company	(Sale) Purchase (Sale) Purchase (Sale) Purchase	$ (960,349) 960,349 (150,262) 150,262 (138,250) 138,250	(33) 69 (5) 46 (28) 100	Net 90 days Net 90 days Net 90 days Net 90 days Net 90 days Net 90 days	- - - - - -	- - - - - -	$ 298,305 (298,305) 96,474 (96,474) 56,104 (56,104)	29 (78) 9 (46) 44 (97)	- - - - - -

(Concluded)

193 -

TABLE 6

CHROMA ATE INC. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period (Note)	Allowance for Impairment Loss
					Amount	Action Taken
The Corporation Neworld Electronics Ltd.	Neworld Electronics Ltd. Chroma ATE Inc. Chroma Systems Solutions, Inc. Chroma ATE Europe B.V. Chroma Japan Corp. Chroma Electronics (Shenzhen) Co, Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Chroma Systems Solutions, Inc. Chroma Electronics (Shenzhen) Co, Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Same parent company Subsidiary Subsidiary	Trade receivables $ 783,034 Trade receivables 402,745 Trade receivables 199,399 Trade receivables 184,840 Trade receivables 181,262 Trade receivables 102,621 Dividends receivable 300,000 Other receivables - financing provided 116,519 Trade receivables 298,305	4.27 0.77 2.88 1.66 0.90 4.53 - - -	$ - - - - - - - - -	- - - - - - - - -	$ 371,502 151,948 100,561 41,643 61,437 - - - -	$ - - - - - - - - -

Note: As of February 26, 2020.

194 -

TABLE 7

CHROMA ATE INC. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Company Name	Counterparty	Flow of Transactions (Note 1)	Transaction Details	Transaction Details		Percentage to Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
0	The Corporation	Neworld Electronics Ltd. Chroma Systems Solutions, Inc. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Europe Chroma USA Quantel Private Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Japan Chroma ATE (Suzhou) Co., Ltd. Testar Electronics Co. Wei Kuang Automatic Equipment Co., Ltd. Chroma USA Adivic Technology Co. Chroma ATE (Suzhou) Co., Ltd. Quantel Private Ltd. Chroma Electronics (Shanghai) Co., Ltd. Neworld Electronics Ltd. Chroma USA Chroma Systems Solutions, Inc. Chroma Europe Chroma Japan Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Quantel Private Ltd. Testar Electronics Co. Chroma Systems Solutions, Inc. Chroma Japan Testar Electronics Co. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Chroma Systems Solutions, Inc. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a	Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Operating revenue Purchase Purchase Purchase Commissions expense Commissions expense Commissions expense Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Trade receivables Other receivables - financing provided Other receivables - financing provided Other receivables Dividends receivable Dividends receivable Trade payables	$ 2,628,273 482,383 395,162 364,327 336,352 287,288 247,712 181,261 117,021 35,210 251,804 35,719 26,474 17,989 13,756 11,453 783,034 402,745 199,399 184,840 181,262 102,621 64,942 45,405 50,708 34,243 116,519 38,185 27,922 300,000 11,992 184,794	Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2 Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Note 3 Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	19 3 3 3 2 2 2 1 1 - 2 - - - - - 3 2 1 1 1 - - - - - - - - 1 - 1
1	Wei Kuang Automatic Equipment Co., Ltd.	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	b	Operating revenue	73,911	Based on regular terms	1

(Continued)

195 -

No.	Company Name	Counterparty	Flow of Transactions (Note 1)	Transaction Details	Transaction Details		Percentage to Consolidated Total Operating Revenues or Total Assets
				Account	Amount	Transaction Terms
2	Chroma ATE Inc.	Chroma Systems Solutions, Inc.	a	Dividends receivable	$ 23,984	Based on regular terms	-
3	Neworld Electronics Ltd.	Chroma Electronics (Shenzhen) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd.	a b a a a b a b a	Operating revenue Operating revenue Operating revenue Commissions expense Commissions expense Commissions expense Trade receivables Trade receivables Trade receivables	960,349 150,262 71,016 75,491 58,180 20,965 298,305 96,474 31,715	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	7 1 1 1 - - 1 - -
4	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma Electronics (Shanghai) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd.	b b b b b	Operating revenue Operating revenue Purchase Trade receivables Trade receivables	63,547 61,217 25,371 53,963 59,843	Based on regular terms Based on regular terms Based on regular terms Based on regular terms Based on regular terms	- - - - -
5	Chroma Electronics (Shanghai) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd.	b b	Purchase Trade payables	16,198 10,244	Based on regular terms Based on regular terms	- -
6	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Wei Kuang Automatic Equipment Co., Ltd. Wei Kuang Automatic Equipment Co., Ltd.	b b	Operating revenue Prepayments	11,943 43,149	Based on regular terms Based on regular terms	- -
7	Chroma Europe	Chroma Germany GmbH Chroma Germany GmbH	a a	Operating revenue Trade receivables	138,250 56,104	Based on regular terms Based on regular terms	1 -
8	Quantel Private Ltd.	Quantel Vietnam Quantel Malaysia	b b	Operating revenue Operating revenue	23,506 11,418	Based on regular terms Based on regular terms	- -

Note 1: a. From parent to subsidiary.

b. Between subsidiaries.

Note 2: The prices were determined after taking the selling and post-sale service expenses into consideration.

Note 3: The collection periods of about 12 months were longer than those for third parties.

(Concluded)

196 -

TABLE 8

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor	Investee	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance	as of December 31, 2019	as of December 31, 2019	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				December 31, 2019	December 31, 2018	Shares (Thousands)	Percentage of Ownership	Carrying Amount
The Corporation Chroma ATE Inc. San Eagle Development Corp. EVT Technology Co., Ltd. Adivic Technology Co., Ltd. Quantel Private Ltd. Chroma ATE Europe B.V. Chroma Investment Co., Ltd.	Neworld Electronics Ltd. San Eagle Development Corp. Adlink Technology Inc. Chroma New Material Corporation Wei Kuang Automatic Equipment Co., Ltd. CHI Incorporation Ltd. Quantel Private Ltd. Chen Hwa Technology Inc. Chroma Investment Co., Ltd. Chroma ATE Europe B.V. DynaScan Technology Corp. Chroma ATE Inc. Sensational Holding Ltd. Adivic Technology Co. Chroma Japan Corp. Chroma Systems Solutions, Inc. Deep Red Holding Co., Ltd. Chih Ho Shun Development Co., Ltd. Testar Electronics Corporation EVT Technology Co., Ltd. Innovative Nanotech Incorporated Touch Cloud Incorporation Camtek Ltd. Chroma Systems Solutions, Inc. Wei Kuang Mech. Eng. Inc. Wei Da Electric Vehicle Co., Ltd. Adivic Holding Corporation Quantel Technologies India Private Ltd. Quantel Global Vietnam Co., Ltd. Quantel Global Sdn. Bhd. Quantel Global Philippines Corporation Chroma Germany GmbH Testar Electronics Corporation	Hong Kong British Virgin Islands New Taipei, Taiwan Taoyuan, Taiwan Hsinchu, Taiwan British Virgin Islands Singapore British Virgin Islands Taoyuan, Taiwan The Netherlands Taoyuan, Taiwan USA British Virgin Islands Taipei, Taiwan Japan USA Mauritius Taoyuan, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Hsinchu, Taiwan Taipei, Taiwan Israel USA Mauritius Pingtung, Taiwan Samoa India Vietnam Malaysia Philippines Germany Taoyuan, Taiwan	Sale and maintenance of electronic test instruments, etc. Investment Manufacturing, processing and retailing of software/hardware of computers and peripherals Sale and processing of gold wire Design, manufacturing, installment and testing of automated factory conveyor systems Test of inductance, capacitance and resistance, and sale of parts Sale and maintenance of test instruments, etc. Test of inductance, capacitance and resistance, and sale of parts Investment Sale and maintenance of electronic test instruments etc. Research and manufacture of LED generators Sale and maintenance of electronic test instruments, etc. Investment Sale and research of RF device Sale and maintenance of electronic test instruments, etc. Sale and maintenance of electronic test instruments, etc. Investment Construction and development of residence, buildings and specialized field; construction and investment of public works Testing of LED products Manufacturing of motorcycles and its parts Monitoring instruments of nanoparticles Development of cloud platform and Internet of Things systems Automatic optical inspection equipment Sale and maintenance of electronic test instruments, etc. Investments Sale and lease of motorcycles Sale and research of RF device Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of electronic test instruments, etc. Testing of LED products	$ 271,873 186,514 165,146 480,715 533,000 122,884 112,328 98,217 80,000 54,026 238,746 29,895 38,301 273,800 147,125 29,628 12,217 17,500 247,096 117,311 142,140 57,000 2,342,340 64 185,686 3,750 42,245 3,056 6,219 4,199 610 1,073 11,250	$ 271,873 186,514 165,146 480,715 533,000 122,884 112,328 98,217 80,000 54,026 238,746 29,895 38,301 193,800 147,125 29,628 12,217 17,500 247,096 117,311 142,140 57,000 - 64 185,686 3,750 42,245 3,056 6,219 4,199 610 1,073 -	64,013 2,050 24,502 25,000 10,000 3,830 1,914 3,085 14,000 1 9,841 1,000 1,200 12,590 9 120 215 1,750 20,160 9,412 14,214 5,700 7,817 240 4,475 375 1,000 65 - 600 99 30 4,500	100.0 100.0 11.3 100.0 100.0 100.0 60.0 100.0 100.0 100.0 27.3 100.0 100.0 74.1 100.0 25.0 100.0 35.0 67.2 85.6 71.1 78.1 20.2 50.0 100.0 75.0 100.0 100.0 100.0 100.0 100.0 100.0 15.0	$ 1,090,020 782,959 538,926 431,515 478,363 171,580 158,915 97,192 101,449 105,878 123,748 69,756 53,227 88,636 (110,043) (47,780) 113,189 17,621 11,596 49,951 117,588 34,582 2,230,935 203,191 868,118 40 9,825 3,353 3,881 4,300 3,454 9,680 6,685	$ 208,415 84,959 462,455 28,906 21,811 26,992 50,531 1,647 6,099 37,068 35,455 (49,353) 612 (28,441) (41,212) 134,407 13,587 (124) (21,607) (11,500) (2,607) (11,778) 271,098 (Note) 134,407 84,999 - (169) 1,202 839 221 2,142 12,985 (21,607)	$ 208,409 70,075 52,141 28,905 21,811 26,992 29,202 1,647 (1,904) 37,105 9,679 (49,451) 612 (19,739) (41,636) 33,602 13,587 (43) (14,511) (9,841) (1,853) (9,197) 35,415 NA NA NA NA NA NA NA NA NA NA	Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint venture Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note: Net income (loss) of investee from June 30, 2019, which was the acquisition date, to December 31, 2019.

197 -

TABLE 9

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital (Note 2)	Method of Investment (Note 1)	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2019 (Note 3)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019 (Note 3)	Net Income (Loss) of the Investee	Percentage of Ownership in Investment	Investment Gain (Loss) (Notes 4 and 5)	Carrying Amount as of December 31, 2019 (Note 2)	Accumulated Inward Remittance of Earnings as of December 31, 2019
							Outward	Inward
Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma (Shanghai) Trading Co., Ltd. Hangzhou New Material Chroma Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Mou Kuan Technologies (Nanjin) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd.	Sale of computerized automatic test systems, peripherals and electronic test instruments Sale of computerized automatic test systems, peripherals and electronic test instruments International and transit trading, commercial simple processing and commercial consulting service and etc. Production and sale of semiconductor connecting materials Sale of computerized automatic test systems, peripherals and electronic test instruments Sale and maintenance of electronic equipment and factory conveyor systems Sale and maintenance of electronic equipment and factory conveyor systems Assembly, sale and maintenance of factory conveyors and related systems and renders related after-sales services Research, development and design of computer network security systems and information management		$ 115,470 (HK$ 30,000) 89,940 (US$ 3,000) 80,946 (US$ 2,700) 44,970 (US$ 1,500) 113,924 (US$ 3,800) 51,105 (RMB 11,871) 49,150 (RMB 11,417) 7,478 (RMB 1,737) 36,050 (RMB 8,374)	b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of CHI Incorporation Ltd. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Deep Red Holding Co., Ltd.		$ 132,178 (HK$ 1,200 US$ 3,853) 101,993 (US$ 3,000) 84,988 (US$ 2,700) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ - - - - - - - - -	$ - - - - - - - - -	$ 132,178 (HK$ 1,200 US$ 3,853) 101,993 (US$ 3,000) 84,988 (US$ 2,700) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ 118,342 48,577 (918) 25,182 26,897 38,572 45,136 506 13,552	100 100 100 19 100 100 100 100 100	$ 118,342 48,577 (918) - 26,897 38,572 45,136 506 13,552	$ 741,939 161,431 79,871 4,989 223,993 202,206 467,653 49,193 113,184	$ - - - 12,065 (US$ 368) - - - 47,504 (US$ 1,552) -

Accumulated Outward Remittance for Investments in Mainland China as of December 31, 2019		Investment Amounts Authorized by the Investment Commission, MOEA			Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$635,051 (HK$1,200, US$19,312)		$725,060 (HK$1,400, US$22,076) (Note 6)			$8,693,257 (Note 7)

(Continued)

198 -

Note 1: Methods of investment have following type:

a. Direct investment in mainland China.
b. Indirect investment in mainland China through an existing company in a third region. c. Other

Note 2: The amounts of paid-in capital and carrying value as of balance sheet date were translated into the New Taiwan dollars at the rates of HK$1=NT$3.849, US$1=NT$29.980, RMB1=NT$4.305 prevailing on December 31, 2019.

Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2019 and December 31, 2019 were translated into the New Taiwan dollar on the original outflow day.

Note 4: Based on audited financial statements.

Note 5: Investment income (loss) was translated into the New Taiwan dollar at the average rate of HK$1=NT$3.945, US$1=NT$30.912, RMB1=NT$4.472 for the year ended December 31, 2019.

Note 6:

	Approval Letter		Approved Amount	Approved Amount	Approved Amount
a.	Letter (1998) II-87710585 of Investment Commission of MOEA	NT$	5,852	(HK$	1,400)
b.	Letter (2000) II-89014726 and 89037430 of Investment Commission of MOEA	NT$	63,180	(US$	2,000)
c.	Letter (2001) II-89037430 of Investment Commission of MOEA	NT$	33,160	(US$	1,000)
d.	Letter II-91048640 of Investment Commission of MOEA	NT$	63,984	(US$	1,853) (Note 8)
e.	Letter II-90025170 of Investment Commission of MOEA	NT$	60,240	(US$	1,750)
f.	Letter II-092020235 of Investment Commission of MOEA	NT$	19,230	(US$	560)
g.	Letter II-092043358 of Investment Commission of MOEA	NT$	6,748	(US$	200)
h.	Letter II-093004076 of Investment Commission of MOEA	NT$	3,158	(US$	95)
i.	Letter II-094006092 of Investment Commission of MOEA	NT$	6,896	(US$	219)
j.	Letter II-09500052120 of Investment Commission of MOEA	NT$	81,528	(US$	2,500)
k.	Letter II-09600175700 of Investment Commission of MOEA	NT$	120,000	(US$	3,699)
l.	Letter II-096000006020 of Investment Commission of MOEA	NT$	66,580	(US$	2,000)
m.	Letter II-09600310110 of Investment Commission of MOEA	NT$	33,160	(US$	1,000)
n.	Letter II-09700186010 of Investment Commission of MOEA	NT$	46,110	(US$	1,500)
o.	Letter II-09700403210 of Investment Commission of MOEA	NT$	7,096	(US$	210) (Note 9)
p.	Letter II-10400042770 of Investment Commission of MOEA	NT$	78,240	(US$	2,500)
q.	Letter II-10600164500 of Investment Commission of MOEA	NT$	29,898	(US$	990)

Note 7: The upper limit on investment was calculated in accordance with the regulations of the Investment Commission of the Ministry of Economic Affairs for 60% of the net equity or consolidated net equity.

Note 8: The Corporation invested accounts receivable amounting to US$853 thousand in Chroma Electronics (Shenzhen) Co., Ltd. through Neworld Electronics Ltd.

Note 9: The investment in Sajet Technology Inc. (liquidated on September 15, 2008) was authorized by the Investment Commission in 2004.

(Concluded)

199 -

Chroma ATE Inc.

Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

-200-

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Chroma ATE Inc.

Opinion

We have audited the financial statements of Chroma ATE Inc. (the “Corporation”), which comprise the balance sheets as of December 31, 2019 and 2018, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

-201-

The key audit matters of the financial statements for the year ended December 31, 2019 are described as follows:

Impairment of Trade Receivables

As indicated in Notes 5 and 9, trade receivables are a significant account in the balance sheets of Chroma ATE Inc. The process of determining an impairment loss is subject to continuous assessment of uncollectible accounts. Management recognizes a loss allowance for lifetime Expected Credit Loss (ECL) on trade receivables under the regulations of IFRS 9 “Financial Instruments”. The measurement of ECL model involves management’s subjective judgements and assumptions regarding the credit risks which may have a significant impact on the loss allowance recognized from trade receivables; thus, we identified the impairment of trade receivables as a key audit matter.

We assessed the rationale of the Corporation’s policy on estimating allowance for trade receivables, tested the loss rates of ECL, inspected individual overdue receivables and made relevant inquiries, to draw a conclusion on lifetime ECL of trade receivables.

Valuation of Inventory Write-down

The Corporation’s inventories are consisted primarily of test instruments, which are widely used in technology industries such as power supply, passive components, semiconductor, LED, and solar energy. The Corporation adjusts its product portfolio in response to the rapid change in market and business cycle. Technological change or competition may result in the risk of inventories becoming unmarketable or prices fall due to lack of demand. As stated in Note 5, inventory valuation includes the consideration of whether such test instruments are obsolete or unmarketable and the estimation of their future demand. Since the valuation process involved significant assumptions and estimates from management, the valuation of inventories was deemed to be a key audit matter.

We assessed the rationale of the Corporation’s policy on estimating allowance for inventory valuation and obsolescence losses, and tested the accuracy of inventory aging report. In addition, we tested the recent selling prices of inventories and participated in an annual inventory count to observe the condition of inventories in order to evaluate the reasonableness of net realizable value of inventories.

Refer to Note 10 to the financial statements for the detailed information on inventories.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including audit committee, are responsible for overseeing the Corporation’s financial reporting process.

-202-

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Cheng-Ming Lee and Wen-Chi Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

February 26, 2020

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

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CHROMA ATE INC.

BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Notes receivable (Notes 9) Notes receivable - related parties (Notes 9 and 26) Trade receivables (Notes 5 and 9) Trade receivables - related parties (Notes 9 and 26) Other receivables - related parties (Note 26) Inventories (Notes 5 and 10) Prepayments Other current assets (Note 26) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Investments accounted for using equity method (Note 11) Property, plant and equipment (Notes 12, 27 and 28) Right-of-use assets Investment properties (Notes 13 and 28) Goodwill (Note 14) Deferred tax assets (Note 21) Prepayments for land and equipment (Note 28) Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 15) Contract liabilities - current (Note 19) Notes payable (Note 26) Trade payables Trade payables - related parties (Note 26) Other payables (Note 16) Current tax liabilities (Note 21) Lease liabilities - current Current portion of long-term borrowings (Note 15) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 15) Deferred tax liabilities (Note 21) Lease liabilities - non-current Net defined benefit liabilities (Note 17) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 18) Ordinary share capital Advance receipts for share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2019 Amount % $ 459,246 2 - - 4,261 - - - 1,263,447 6 2,054,611 9 466,695 2 2,026,079 9 158,787 1 111,176 1 6,544,302 30 4,762 - 607,835 3 6,709,803 31 2,406,545 11 45,395 - 3,137,187 14 94,424 - 185,438 1 2,062,861 10 4,588 - 15,258,838 70 $ 21,803,140 100 $ 1,600,000 7 427,357 2 - - 1,057,126 5 196,063 1 840,915 4 177,330 1 14,731 - 15,000 - 18,580 - 4,347,102 20 2,285,000 11 475,632 2 30,892 - 155,753 1 20,000 - 2,967,277 14 7,314,379 34 4,192,961 19 13,724 - 3,629,471 17 2,407,039 11 86,888 - 4,382,043 20 6,875,970 31 (187,651) (1) (35,714) - 14,488,761 66 $ 21,803,140 100		2018
				Amount % $ 915,899 5 951,456 5 9,613 - 194 - 821,676 4 1,760,760 9 162,607 1 1,897,485 10 47,177 - 73,292 - 6,640,159 34 6,807 - 613,836 3 5,082,361 26 2,493,620 13 - - 3,137,187 16 94,424 1 170,635 1 1,082,451 6 5,405 - 12,686,726 66 $ 19,326,885 100 $ 630,000 3 31,014 - 105 - 979,904 5 12,787 - 667,068 4 214,898 1 - - - - 15,961 - 2,551,737 13 1,800,000 9 412,043 2 - - 152,393 1 692 - 2,365,128 12 4,916,865 25 4,167,794 22 - - 3,469,637 18 2,152,411 11 86,888 - 4,555,760 24 6,795,059 35 13,244 - (35,714) - 14,410,020 75 $ 19,326,885 100

The accompanying notes are an integral part of the financial statements.

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CHROMA ATE INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 19 and 26) Sales Less: Sales returns Sales allowances Net operating revenue OPERATING COSTS (Notes 10, 20 and 26) GROSS PROFIT UNREALIZED LOSS ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 20 and 26) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit (gain) loss Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Finance costs (Note 20) Share of profit of subsidiaries, associates and joint ventures, net (Note 11) Interest income (Note 26) Rental income (Note 26) Dividend income Other income (Note 26) Gain on disposal of property, plant and equipment, net Net foreign exchange (loss) gain (Note 30) Gain on financial assets at fair value through profit or loss, net Other expenses Total non-operating income and expenses		2019 Amount % $ 8,134,351 100 (2,807) - (20,511) - 8,111,033 100 (3,970,120) (49) 4,140,913 51 (48,359) - 4,092,554 51 812,636 10 454,868 6 1,171,660 14 (37,000) - 2,402,164 30 1,690,390 21 (35,680) - 420,917 5 9,524 - 18,471 - 38,427 1 53,340 1 1,196 - (46,438) (1) 725 - (497) - 459,985 6		2018
				Amount % $ 7,551,259 100 (2,714) - (1,705) - 7,546,840 100 (3,619,263) (48) 3,927,577 52 (10,857) - 3,916,720 52 788,086 11 468,125 6 1,143,397 15 3,000 - 2,402,608 32 1,514,112 20 (21,760) - 1,222,318 16 8,903 - 18,327 - 22,880 1 72,902 1 1 - 84,517 1 6,493 - (85) - 1,414,496 19 (Continued)

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CHROMA ATE INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 21) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized (loss) gain on investments in equity investments designated as at fair value through other comprehensive income Share of the other comprehensive loss of subsidiaries, associates and joint ventures accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Share of the other comprehensive loss of subsidiaries, associates and joint ventures accounted for using the equity method Total other comprehensive (loss) income TOTAL COMPREHENSIVE INCOME EARNINGS PER SHARE (NT$; Note 22) Basic Diluted		2019 Amount % $ 2,150,375 27 295,894 4 1,854,481 23 (13,552) - (6,001) - (126) - (111,244) (1) (114,957) (2) (245,880) (3) $ 1,608,601 20 $ 4.48 $ 4.42		2018
				Amount % $ 2,928,608 39 382,333 5 2,546,275 34 (4,618) - 16,832 - (4,666) - (6,229) - (1,010) - 309 - $ 2,546,584 34 $ 6.22 $ 6.08

The accompanying notes are an integral part of the financial statements.

(Concluded)

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CHROMA ATE INC.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Ordinary Share Capital Collected in Capital Advance Capital Surplus BALANCE AT JANUARY 1, 2018 $ 4,118,942 $ - $ 3,187,289 Appropriation of the 2017 earnings Legal reserve - - - Cash dividends - NT$4.5 per share - - - Change in capital surplus from investments in subsidiaries, associates and joint ventures accounted for using the equity method - - (267 ) Net profit for the year ended December 31, 2018 - - - Other comprehensive income (loss) for the year ended December 31, 2018 - - - Total comprehensive income (loss) for the year ended December 31, 2018 - - - Conversion of convertible bonds 16,141 - 84,486 Buy-back of treasury shares - - - Cancelation of treasury shares (840 ) - - Adjustment of capital surplus for corporation's cash dividends received by subsidiaries - - 8,572 Changes in percentage of ownership interests in subsidiaries - - - Share-based payment transaction 33,551 - 189,557 Disposals of investments in equity instruments designated as at fair value through other comprehensive income - - - Adjustments to share of changes in equities of subsidiaries, associates and joint ventures accounted for using the equity method - - - BALANCE AT JANUARY 1, 2019 4,167,794 - 3,469,637 Appropriation of the 2018 earnings Legal reserve - - - Cash dividends - NT$4.2 per share - - - Change in capital surplus from investments in subsidiaries, associates and joint ventures accounted for using the equity method - - 10,250 Net profit for the year ended December 31, 2019 - - - Other comprehensive loss for the year ended December 31, 2019 - - - Total comprehensive income (loss) for the year ended December 31, 2019 - - - Buy-back of treasury shares - - - Cancelation of treasury shares (1,009 ) - - Adjustment of capital surplus for corporation's cash dividends received by subsidiaries - - 8,003 Changes in percentage of ownership interests in subsidiaries - - - Exercise of employee stock options 26,176 13,724 119,085 Share-based payment transaction - - 22,496 BALANCE AT DECEMBER 31, 2019 $ 4,192,961 $ 13,724 $ 3,629,471		Retained Earnings	Total $ 6,107,426 - (1,854,424 ) - 2,546,275 (5,322) 2,540,953 - - - - (2,107 ) - 4,241 (1,030) 6,795,059 - (1,750,896 ) - 1,854,481 (14,132) 1,840,349 - - - (8,542 ) - - $ 6,875,970	Other Equity	Total Treasury Shares $ (39,618 ) $ (35,714 ) - - - - - - - - 5,631 - 5,631 - - - - (840 ) - 840 - - - - 51,472 - (4,241 ) - - - 13,244 (35,714 ) - - - - - - - - (231,748) - (231,748) - - (1,009 ) - 1,009 - - - - - - 30,853 - $ (187,651) $ (35,714)	Total Equity $ 13,338,325 - (1,854,424 ) (267 ) 2,546,275 309 2,546,584 100,627 (840 ) - 8,572 (2,107 ) 274,580 - (1,030) 14,410,020 - (1,750,896 ) 10,250 1,854,481 (245,880) 1,608,601 (1,009 ) - 8,003 (8,542 ) 158,985 53,349 $ 14,488,761
				Unrealized Gain Exchange (Loss) on Differences on Financial Assets at Translating the Fair Value Financial Through Other Statements of Comprehensive Unearned Foreign Operations Income Employee Benefit $ (97,633 ) $ 151,864 $ (93,849 ) - - - - - - - - - - - - (7,239) 12,870 - (7,239) 12,870 - - - - - - - - - - - - - - - - - - 51,472 - (4,241 ) - - - - (104,872 ) 160,493 (42,377 ) - - - - - - - - - - - - (226,201) (5,547) - (226,201) (5,547) - - - - - - - - - - - - - - - - - - 30,853 $ (331,073) $ 154,946 $ (11,524)
		Unappropriated Legal Reserve Special Reserve Earnings $ 1,896,570 $ 86,888 $ 4,123,968 255,841 - (255,841 ) - - (1,854,424 ) - - - - - 2,546,275 - - (5,322) - - 2,540,953 - - - - - - - - - - - - - - (2,107 ) - - - - - 4,241 - - (1,030) 2,152,411 86,888 4,555,760 254,628 - (254,628 ) - - (1,750,896 ) - - - - - 1,854,481 - - (14,132) - - 1,840,349 - - - - - - - - - - - (8,542 ) - - - - - - $ 2,407,039 $ 86,888 $ 4,382,043

The accompanying notes are an integral part of the financial statements.

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CHROMA ATE INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit (gain) loss recognized on trade receivables Net gain on financial assets at fair value through profit or loss Finance costs Interest income Dividend income Compensation costs of share-based payments Share of profit of subsidiaries, associates and joint ventures accounted for using the equity method Gain on disposal of property, plant and equipment Write-downs of inventories Unrealized gain on transactions with subsidiaries and associates Net loss (gain) on foreign currency exchange Net changes in operating assets and liabilities Notes receivable Trade receivables Inventories Prepayments Other current assets Contract liabilities Notes payable Trade payables Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments to acquire financial assets at fair value through other comprehensive income Cash returned of capital reduction of financial assets at fair value through other comprehensive income Payments to acquire financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Payments to acquire investments accounted for using the equity method Payments for property, plant and equipment	2019 $ 2,150,375 214,414 - (37,000) (725) 35,680 (9,524) (38,427) 53,004 (420,917) (1,196) 35,076 48,359 71,524 5,546 (774,916) (193,575) (111,610) (37,857) 396,343 (105) 270,824 174,281 2,619 (10,192) 1,822,001 (284,676) 1,537,325 - - (400,000) 1,354,226 (2,342,340) (72,011)	2018 $ 2,928,608 176,530 960 3,000 (6,493) 21,760 (8,903) (22,880) 78,596 (1,222,318) (1) 21,000 10,857 (62,225) (4,237) 553,062 (761) 53,689 37,689 (30,579) (3,685) (422,570) (51,971) (168) (9,657) 2,039,303 (224,349) 1,814,954 (67,800) 5,262 (1,745,000) 1,631,577 - (133,241) (Continued)

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CHROMA ATE INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of property, plant and equipment Increase in refundable deposits (Increase) decrease in other receivables - related parties Increase in prepayments for equipment Interest received Dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Increase in guarantee deposits Repayment of the principal portion of lease liabilities Cash dividends paid Exercise of employee stock options Payments for buy-back of ordinary shares Payments to acquire subsidiary Interest paid Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ 15,503 817 (2,972) (1,003,176) 9,490 684,955 (1,755,508) 970,000 1,600,000 (1,100,000) 19,308 (17,452) (1,750,896) 158,985 (1,009) (80,000) (35,053) (236,117) (2,353) (456,653) 915,899 $ 459,246	2018 $ 6,949 (3,070) 5,409 (1,519,652) 9,173 627,585 (1,182,808) 330,000 900,000 (1,200,000) 123 - (1,854,424) 195,755 (840) (121,970) (30,989) (1,782,345) 20,027 (1,130,172) 2,046,071 $ 915,899

The accompanying notes are an integral part of the financial statements.

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

CHROMA ATE INC.

1. GENERAL INFORMATION

Chroma ATE Inc. (the “Corporation”) was incorporated in the Republic of China (“ROC”) in November 1984. The Corporation mainly designs, assembles, calibrates, manufactures, sells, repairs and maintains software/hardware for computers and peripherals, computerized automatic test systems, electronic test instruments, signal generators, power supplies, telecom power supplies, etc. as well as serves as an agent to sell these products. The Corporation’s shares have been listed on the Taiwan Stock Exchange since December 21, 1996.

The financial statements are presented in the Corporation’s functional currency, the New Taiwan dollar (NTD).

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Corporation’s board of directors on February 26, 2020.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

 IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessees and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

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Definition of a lease

The Corporation elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

The Corporation as lessee

The Corporation recognizes right-of-use assets and lease liabilities for all leases on the balance sheets except for those whose payments under low-value and short-term leases are recognized as expenses on a straight-line basis. On the statements of comprehensive income, the Corporation presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts were recognized as expenses on a straight-line basis. Cash flows for operating leases were classified within operating activities on the statements of cash flows.

The Corporation elected to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information was be restated.

The Corporation also applies the following practical expedients:

1) The Corporation applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
2) The Corporation accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
3) The Corporation excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
4) The Corporation uses hindsight, such as in determining lease terms, to measure lease liabilities.

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The Corporation as lessor

The Corporation does not make any adjustments for leases in which it is a lessor and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

			Adjustments
	As Originally		Arising from
	Stated	on	Initial	Restated on
	January 1, 2019		Application	January 1, 2019
Right-of-use assets	$	-	$ 42,875	$ 42,875
Total effect on assets	$	-	$ 42,875	$ 42,875
Lease liabilities - current	$	-	$ 15,933	$ 15,933
Lease liabilities - non-current		-	26,942	26,942
Total effect on liabilities	$	-	$ 42,875	$ 42,875

b. The IFRSs endorsed by the FSC for application starting from 2020

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2) January 1, 2020 (Note 3)

Note 1: The Corporation shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Corporation shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Corporation shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.
Amendments to IFRS 3 “Definition of a Business”

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Amendments to IAS 1 and IAS 8 “Definition of material”

Except for the above impact, the Corporation is continuously assessing the possible impact that the application of other standards and interpretations will have on the Corporation’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note)
	To be determined by IASB January 1, 2021 January 1, 2022

Note: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that for a liability to be classified as non-current, the Corporation shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Corporation will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Corporation must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date.

The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Corporation’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Corporation’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32: Financial Instruments: Presentation, the aforementioned terms would not affect the classification of the liability.

Except for the above impacts, the Corporation is continuously assessing the possible impacts that the application of other standards and interpretations will have on the Corporation’s financial position and financial performance, and will disclose the relevant impacts when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing these financial statements, the Corporation used the equity method to account for its investment in subsidiaries, associates and joint ventures. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the financial statements to be the same with the amounts attributable to the owner of the Corporation in its financial statements, adjustments arising from the differences in accounting treatment between the basis and the consolidated basis were made to investments accounted for using the equity method, share of profit or loss of subsidiaries, associates and joint ventures, share of other comprehensive income of subsidiaries, associates and joint ventures and related equity items, as appropriate, in these financial statements.

c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Corporation does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Foreign currencies

In preparing the Corporation’s financial statements, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction (i.e., not retranslated).

e. Inventories

Inventories consist of raw materials, semi-finished goods, finished goods and work-in-process, which are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date.

f. Investments accounted for using the equity method

Investments in subsidiaries, associates and joint ventures are accounted for by the equity method.

1) Investment in subsidiaries

A subsidiary is an entity that is controlled by the Corporation.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Corporation's share of the profit or loss and other comprehensive income of the subsidiary. The Corporation also recognizes the changes in the Corporation’s share of equity of subsidiaries attributable to the Corporation.

Changes in the Corporation’s ownership interest in a subsidiary that do not result in the Corporation losing control of the subsidiary are equity transactions. The Corporation recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Corporation’s share of losses of a subsidiary equals or exceeds its interest in that subsidiary (which includes any carrying amount of the investment in subsidiary accounted for using the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the subsidiary), the Corporation continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Corporation’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

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The Corporation assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Corporation recognizes reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Corporation loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Corporation accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Corporation had directly disposed of the related assets or liabilities.

Profits and losses resulting from downstream transactions are eliminated in full in the Corporation’s financial statement. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized in the Corporation’s financial statements only to the extent of interests in the subsidiaries that are not related to the Corporation.

2) Investments in associates and joint ventures

An associate is an entity over which the Corporation has significant influence and which is neither a subsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby the Corporation and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

Under the equity method, investments in an associate and a joint venture are initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Corporation also recognizes the changes in the Corporation’s share of equity of the associates and joint ventures attributable to the Corporation.

Any excess of the cost of acquisition over the Corporation’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Corporation’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Corporation subscribes for additional new shares of an associate and joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Corporation’s proportionate interest in the associate and joint venture. The Corporation records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates and joint ventures accounted for using the equity method. If the Corporation’s ownership interest is reduced due to its additional subscription of the new shares of the associate and joint venture, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

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When the Corporation’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the associate and joint venture), the Corporation discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Corporation has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

The Corporation discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Corporation accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required had that associate directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Corporation continues to apply the equity method and does not remeasure the retained interest.

When a group entity transacts with its associate and joint venture, profits and losses resulting from the transactions with the associate and joint venture are recognized in the Corporation’s financial statements only to the extent that interests in the associate and the joint venture are not related to the Corporation.

g. Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing cost eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately. If a lease term is shorter than the assets’ useful lives, such assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

h. Investment properties

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On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

i. Goodwill

For the purposes of impairment testing, goodwill is allocated to each of the Corporation’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

j. Impairment of tangible assets

At the end of each reporting period, the Corporation reviews the carrying amounts of its tangible asset, to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Corporation estimates the recoverable amount of the CGUs to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

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k. Financial instruments

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instruments.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and equity instruments at FVTOCI.

i. Financial asset at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI.

ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, trade receivables at amortized cost and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial asset; and

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ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.

iii. Investments in equity instruments at FVTOCI

On initial recognition, the Corporation may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Corporation’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Corporation recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Corporation always recognizes lifetime expected credit losses (i.e. ECLs) for trade receivables. For all other financial instruments, the Corporation recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Corporation measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECLs represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Corporation determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Corporation):

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset is more than 90 days past due unless the Corporation has reasonable and corroborative information to support a more lagged default criterion.

The Corporation recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

c) Derecognition of financial assets

The Corporation derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by the Corporation are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Corporation are recognized at the proceeds received, net of direct issue costs.

3) Financial liabilities
a) Subsequent measurement

Except for financial liabilities at FVTPL, all financial liabilities are measured at amortized cost using the effective interest method.

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b) Derecognition of financial liabilities

l. Warranty provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions for the expected cost of warranty obligations to assure that products comply with agreed-upon specifications are recognized on the date of sale of the relevant products at the best estimate by the management of the Corporation of the expenditures required to settle the obligations.

m. Revenue recognition

The Corporation identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

Revenue from sale of goods comes from sales of test instruments. Revenue is recognized when the goods are delivered to the customer’s specific location or the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and bears the risks of obsolescence. Trade receivables are recognized concurrently. The transaction price received is recognized as a contract liability until the goods are delivered to the customer.

The Corporation does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

n. Leases

2019

At the inception of a contract, the Corporation assesses whether the contract is, or contains, a lease.

1) The Corporation as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

2) The Corporation as lessee

The Corporation recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

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Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Corporation uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or others, the Corporation remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the balance sheets.

2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

1) The Corporation as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Corporation as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

o. Borrowing costs

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

p. Government grants

Government grants are not recognized until there is reasonable assurance that the Corporation will comply with the conditions attached to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Corporation recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Corporation should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

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Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Corporation with no future related costs are recognized in profit or loss in the period in which they become receivable.

q. Employee benefits
1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Corporation’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

3) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plans except that remeasurement is recognized in profit or loss.

r. Share-based Payment Arrangements

Employee share options and restricted shares for employees that are granted to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value at the grant date of the employee share options and restricted shares for employees is expensed on a straight-line basis over the vesting period, based on the Corporation's best estimate of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options and other equity - unearned employee benefits. It is recognized as an expense in full at the grant date if vested immediately.

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At the end of each reporting period, the Corporation revises its estimate of the number of employee share options and restricted shares for employees expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital surplus - employee share options and capital surplus - restricted shares for employees.

s. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

According to the Income Tax Law in the ROC, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences based on the manner in which the Corporation expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively. Where current tax or deferred tax arises from acquisition of a subsidiary, the tax effect is included in the accounting for the acquisition of a subsidiary.

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5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Corporation’s accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revision affects only that period, or in the period of the revision and future periods if the revisions affect both current and future periods.

a. Estimated impairment of trade receivables

The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Corporation uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Corporation’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 9. Where the actual future cash flows are less than expected, a material impairment loss may arise.

b. Write-down of inventories

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2019 $ 2,232 457,014 $ 459,246	2018 $ 2,434 913,465 $ 915,899

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Mandatorily at FVTPL-current Non-derivative financial assets Open-end beneficiary certificates Mandatorily at FVTPL-non-current Non-derivative financial assets Open-end beneficiary certificates		December 31	December 31
		2019 $ - $ 4,762	2018 $ 951,456 $ 6,807

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8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments-non-current Domestic listed ordinary shares Domestic unlisted ordinary shares		December 31	December 31
		2019 $ 407,798 200,037 $ 607,835	2018 $ 431,797 182,039 $ 613,836

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Refer to Table 3 for the detailed information. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Corporation’s strategy of holding these investments for long-term purposes.

9. NOTES RECEIVABLE AND TRADE RECEIVABLES

Gross carrying amount at amortized cost Less: Allowance for impairment loss Gross carrying amount at amortized cost - related parties		December 31	December 31
		2019 $ 1,309,077 (41,369) 1,267,708 2,054,611 $ 3,322,319	2018 $ 909,711 (78,422) 831,289 1,760,954 $ 2,592,243

The average credit period for sales of goods is 60 to 90 days from the date when the goods were inspected and accepted by customers, and no interest was charged on trade receivables. Before accepting any new customer, the Corporation uses an external credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer. Customers’ limits and scores are reviewed irregularly every year. Most of the trade receivables that are neither past due nor impaired have the best credit score under the external credit scoring system used by the Corporation.

The Corporation applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate. As the Corporation’s historical credit loss experience does not show other factors that matter significantly, the expected credit loss rate is based on past due status of trade receivables.

The Corporation writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Corporation continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

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The aging schedule of notes receivable and trade receivables based on the past due days was as follows:

Not past due 1- 60 days 61-180 days 181-365 days Over 365 days		December 31	December 31
		2019 $ 865,032 178,976 62,777 49,224 153,068 $ 1,309,077	2018 $ 410,023 284,035 78,915 55,316 81,422 $ 909,711

The movements of the loss allowance of notes receivable and trade receivables were as follows:

Balance at January 1 Add: Impairment loss recognized on receivables Less: Net remeasurement of loss allowance Less: Amounts written off Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 78,422 - (37,000) (53) $ 41,369	2018 78,288 3,000 - (2,866) $ 78,422

10. INVENTORIES

Finished goods Semi-finished products Work in process Raw materials		December 31	December 31
		2019 $ 204,107 352,574 668,656 800,742 $ 2,026,079	2018 $ 183,483 356,602 608,744 748,656 $ 1,897,485

The cost of goods sold for the years ended December 31, 2019 and 2018 included the inventory write-downs of $35,076 thousand and $21,000 thousand, respectively.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates Investments in joint venture		December 31	December 31
		2019 $ 3,798,573 2,893,609 17,621 $ 6,709,803	2018 $ 4,432,652 632,045 17,664 $ 5,082,361

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a. Investments in subsidiaries

Unlisted company Neworld Electronics Ltd. San Eagle Development Corp. Chroma New Material Corporation Wei Kuang Automatic Equipment Co., Ltd. CHI Incorporation Ltd. Quantel Private Ltd. Chen Hwa Technology Inc. Chroma Investment Co., Ltd. Chroma ATE Europe B.V. Chroma ATE Inc. (“Chroma USA”) Sensational Holding Ltd. Adivic Technology Co. Chroma Japan Corp. Chroma Systems Solutions, Inc. Deep Red Holding Co., Ltd. Testar Electronics Corporation EVT Technology Co., Ltd. Innovative Nanotech Incorporated Touch Cloud Incorporation		December 31	December 31	December 31
		2019 Amount Percentage of Equity Interest (%) $ 1,090,020 100.0 782,959 100.0 431,515 100.0 478,363 100.0 171,580 100.0 158,915 60.0 97,192 100.0 101,449 100.0 105,878 100.0 69,756 100.0 53,227 100.0 88,636 74.1 (110,043) 100.0 (47,780) 25.0 113,189 100.0 11,596 67.2 49,951 85.6 117,588 71.1 34,582 78.1 $ 3,798,573		2018
				Amount Percentage of Equity Interest (%) $ 949,027 100.0 791,854 100.0 443,073 100.0 1,206,381 100.0 164,834 100.0 130,270 60.0 101,626 100.0 124,674 100.0 60,658 100.0 134,810 100.0 53,924 100.0 35,617 51.0 (70,297) 100.0 (45,711) 25.0 104,303 100.0 24,596 67.2 59,793 85.6 119,441 71.1 43,779 78.1 $ 4,432,652

In May 2019, Adivic Technology Co., Ltd. (“Adivic”) decreased its capital by $150,000 thousand to compensate for losses and subsequently increased its capital by $80,000 thousand. The Corporation’s board of directors resolved to participate in the capital injection. The Corporation’s equity interest in Adivic increased to 74.1% after the cash injection.

In August 2018, EVT Technology Co., Ltd. (“EVT”) decreased its capital by $30,000 thousand to compensate for losses and subsequently increased its capital by $50,000 thousand to strengthen its capital structure. The Corporation’s board of directors resolved to participate in the capital injection. The Corporation’s equity interest in EVT increased to 85.6% after the cash injection.

In May 2018, Innovative Nanotech Incorporated increased its capital. The Corporation’s board of directors resolved to participate in the cash injection and held 71.1% equity consequently.

Refer to Note 31 for the detail of the subsidiaries indirectly held by the Corporation.

Refer to Table 7 “Information on Investees” for the Corporations’ share of profit of subsidiaries under equity method.

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the year ended December 31, 2019 and 2018 were calculated based on the financial statements which have been audited.

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b. Investments in associates

December 31	December 31	December 31	December 31
		2018
	Amount Percentage of Equity Interest (%) $ 517,852 11.3 114,193 27.3 - - $ 632,045 the Year Ended December 31
2019 $ 97,235 (114,997) $ (17,762)			2018 $ 47,977 (1,531) $ 46,446

Fair values (Level 1) of investments in associates with available published price quotations are summarized as follow:

Name of Associate Adlink Technology Inc. Camtek Ltd.	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,176,108 $ 2,538,193	2018 $ 775,496 $ -

In view of future development strategy and improvement of operating performance, the Corporation’s board of directors resolved on February 11, 2019, to subscribe equity interest of Camtek Ltd. for US$9.5 per share. Included in the cost of investment in associates was goodwill of $658,931 thousand recognized from the acquisition of Camtek Ltd.

Refer to Table 7 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

The Corporation is able to exercise significant influence over Adlink Technology Inc. although the percentage of shares held is less than 20%. Therefore, the Corporation recognizes the gain and loss under the equity method.

Except for Adlink Technology Inc., the investments in associate accounted for using equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements which have been audited. Management believes there is no material impact on the equity method accounting or the calculation of the share of profit or loss and other comprehensive income from the financial statements of Adlink Technology Inc., which have not been audited.

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c. Investments in joint ventures

Joint ventures that are not individually material Chih Ho Shun Development Co., Ltd.		December 31	December 31	December 31
		2019 Amount Percentage of Equity Interest (%) $ 17,621 35.0		2018
				Amount Percentage of Equity Interest (%) $ 17,664 35.0

Aggregate information of joint ventures that are not individually material:

The Corporation’s share of: (Loss) profit from continuing operations Other comprehensive income Total comprehensive (loss) income for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (43) - $ (43)	2018 $ 38 - $ 38

Refer to Table 7 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of joint ventures.

The investments in joint ventures accounted for using the equity method and the share of profit or loss and other comprehensive income of the investment for the years ended December 31, 2019 and 2018 were based on the joint ventures’ financial statements which have been audited.

12. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2018 Additions Disposals Transferred from prepayments for land and equipment Transferred from inventories Reclassification Balance, December 31, 2018	Land $ 450,575 - - 688,331 - - $ 1,138,906	Buildings $ 2,014,991 15,838 - - - - $ 2,030,829	Machinery Miscellaneous Equipment $ 124,858 $ 1,069,760 41,104 75,114 (5,040) (25,625) - - 5,608 62,004 (323) 323 $ 166,207 $ 1,181,576	Total $ 3,660,184 132,056 (30,665) 688,331 67,612 - $ 4,517,518 (Continued)

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Accumulated depreciation Balance, January 1, 2018 Depreciation Disposals Reclassification Balance, December 31, 2018 Carrying amount at December 31, 2018 Cost Balance, January 1, 2019 Additions Disposals Transferred from inventories Reclassification Balance, December 31, 2019 Accumulated depreciation Balance, January 1, 2019 Depreciation Disposals Reclassification Balance, December 31, 2019 Carrying amount at December 31, 2019	Land $ - - - - $ - $ 1,138,906 $ 1,138,906 - - - - $ 1,138,906 $ - - - - $ - $ 1,138,906	Buildings $ 983,819 68,716 - - $ 1,052,535 $ 978,294 $ 2,030,829 2,681 - - - $ 2,033,510 $ 1,052,535 71,012 - - $ 1,123,547 $ 909,963	Machinery Miscellaneous Equipment Total $ 101,930 $ 785,336 $ 1,871,085 13,701 94,113 176,530 (5,040) (18,677) (23,717) (210) 210 - $ 110,381 $ 860,982 $ 2,023,898 $ 55,826 $ 320,594 $ 2,493,620 $ 166,207 $ 1,181,576 $ 4,517,518 8,023 61,182 71,886 (1,639) (41,751) (43,390) 6,053 46,618 52,671 634 (634) - $ 179,278 $ 1,246,991 $ 4,598,685 $ 110,381 $ 860,982 $ 2,023,898 23,145 103,168 197,325 (1,638) (27,445) (29,083) 357 (357) - $ 132,245 $ 936,348 $ 2,192,140 $ 47,033 $ 310,643 $ 2,406,545 (Concluded)

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings Primary buildings 55 years Mechanical and electrical equipment 10 years Clean room equipment 10 years Others 2-50 years Machinery 2-6 years Miscellaneous equipment 3-16 years

Refer to Note 27 for property, plant and equipment have been pledged to secure borrowings of the Corporation.

13. INVESTMENT PROPERTIES

Land

Cost

January 1, 2019 and December 31, 2019

$ 3,137,187

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The Corporation acquired the land ownership certificates of the investment and development plan, “The Action Plan of Developing Land Surrounding the Airport MRT Station to Improve Civilian’s Life” in the third quarter of 2018 and transferred parts of land held for undetermined future use to investment properties. Refer to Note 28.

The fair value of investment properties was arrived at by reference to market evidence of transaction prices for similar properties. The significant unobservable inputs used include discount rates and the fair value as appraised.

Fair value		December 31	December 31
		2019 $ 13,727,067	2018 $ 13,588,172

On September 25, 2019, the Corporation entered into a joint building contract with Fu Yu Construction Co., Ltd. (Fu Yu Construction) to jointly build a building located in Lejie section, Guishan District, Taoyuan City. The construction project adopts a jointly constructed manner. The Corporation provided the lands and Fu Yu Construction provided fund to construct. The area will be distributed to the Corporation and Fu Yu Construction for 47% and 53%, respectively. According to the joint building contract, Fu Yu Construction should pay $20,000 thousand (recognized as guarantee deposit received) and $240,000 thousand guaranteed note to the Corporation when signing the contract. Additional $20,000 thousand guarantee deposit should be paid within five business days after the building construction registration is approved and within five business days after the approval of underground bottom plate inspection.

14. GOODWILL

Cost		December	31
		2019 $ 94,424	2018 $ 94,424

To reorganize the organization structure, save operating costs and improve the operating efficiency, the Corporation’s board of directors resolved to acquire Silver Town Electronic Co., Ltd. in February 2008. The goodwill was arisen from the premium acquisition.

For assessing goodwill for impairment, the Corporation took value in use as basis for calculating the recoverable amount of goodwill. The Corporation used the cash flows of a five-year financial forecast as the basis for calculating value in use to reflect the specific risk of cash-generating units. After these calculations, the Corporation did not recognize any impairment loss on goodwill for the years ended December 31, 2019 and 2018.

15. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Bank loans Interest rate (%)		December 31	December 31
		2019 $ 1,600,000 0.72%-0.87%	2018 $ 630,000 0.86%-0.88%

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b. Long-term borrowings

Secured borrowings Bank loans (1) (Note 27) Unsecured borrowings Bank loans (2) Less: Current portions		December 31	December 31
		2019 $ 300,000 2,000,000 2,300,000 15,000 $ 2,285,000	2018 $ 300,000 1,500,000 1,800,000 - $ 1,800,000

1) The Corporation applied to Mega International Commercial Bank for a credit line of $800,000 thousand and borrowed $300,000 thousand in March 2018, which will be used for increasing operating budget and repaying syndicated bank loans. The interest rate on the bank loan was 1.16% per annum on a floating basis. The bank loan will be due in March 2023, and was secured by the Corporation’s land and buildings. Refer to Note 27.
2) The Corporation applied for bank loan for repaying syndicated bank loans and increasing operating budget. The interest rate was 1.0%-1.1% per annum on a floating basis. The bank loan will be due in June 2026.

16. OTHER PAYABLES

Salaries and bonus Employee’s compensation Remuneration of directors Others		December 31	December 31
		2019 $ 329,314 328,842 9,600 173,159 $ 840,915	2018 $ 306,560 275,489 9,600 75,419 $ 667,068

17. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Corporation in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of length of service and average monthly salaries of the 6 months before retirement. The Corporation contributes amount equal to 4% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s

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name. Before the end of year, the Corporation assesses the balances in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Corporation is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Corporation has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Corporation’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities Movements in net defined benefit liability were as follows: Present Value of the Defined Benefit Obligation Balance at January 1, 2018 $ 449,301 Current service cost 4,009 Net interest expense (income) 6,178 Recognized in profit or loss 10,187 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss - changes in demographic assumptions 442 Actuarial loss - changes in financial assumptions 6,791 Actuarial loss - experience adjustments 4,821 Recognized in other comprehensive income 12,054 Contributions from employer - Benefits paid (11,459) Balance at December 31, 2018 460,083 Current service cost 3,672 Net interest expense (income) 5,751 Recognized in profit or loss 9,423 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss - changes in demographic assumptions 10 Actuarial loss - changes in financial assumptions 26,986 Actuarial loss - experience adjustments (3,603) Recognized in other comprehensive income 23,393 Contributions from employer - Benefits paid (17,810) Balance at December 31, 2019 $ 475,089		December 31
	2019 2018 $ 475,089 $ 460,083 (319,336) (307,690) $ 155,753 $ 152,393 Fair Value of the Plan Assets Net Defined Benefit Liabilities $ (291,869) $ 157,432 - 4,009 (4,118) 2,060 (4,118) 6,069 (7,436) (7,436) - 442 - 6,791 - 4,821 (7,436) 4,618 (15,726) (15,726) 11,459 - (307,690) 152,393 - 3,672 (3,943) 1,808 (3,943) 5,480 (9,841) (9,841) - 10 - 26,986 - (3,603) (9,841) 13,552 (15,672) (15,672) 17,810 - $ (319,336) $ 155,753

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Through the defined benefit plans under the Labor Standards Law, the Corporation is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

Discount rate(s) Expected rate(s) of salary increase	December 31
	2019 2018 0.63%-0.75% 0.88%-1.25% 1.50%-2.50% 1.50%-2.50%

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		December	31
		2019 $ (13,873) $ 14,459 $ 13,978 $ (13,486)	2018 $ (13,652) $ 14,243 $ 13,833 $ (13,331)

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		December	31
		2019 $ 15,477 12.2 years	2018 $ 15,568 12.4 years

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18. EQUITY

a. Ordinary share capital

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 500,000 $ 5,000,000 419,296 $ 4,192,961	2018 450,000 $ 4,500,000 416,779 $ 4,167,794

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends or transferred to share capital (Note) Additional paid-in capital Treasury share transactions Consolidation excess May be used to offset a deficit only Employee share options expired Share of changes in capital surplus of associates or joint ventures May not be used for any purpose Employee shares options Employee restricted shares		December 31	December 31
		2019 $ 3,098,803 187,804 146,976 13,564 54,360 46,438 81,526 $ 3,629,471	2018 $ 2,860,255 179,801 146,976 12,421 44,110 87,000 139,074 $ 3,469,637

c. Retained earnings and dividends policy

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An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Corporation’s paid-in capital. The legal reserve may be used to offset deficits. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Corporation.

The appropriations of earnings for 2018 and 2017 have been approved in the annual shareholders’ meeting on June 18, 2019 and June 8, 2018, respectively, were as follows:

Legal reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2018 For Fiscal Year 2017 $ 254,628 $ 255,841 1,750,896 1,854,424	Dividends Per Share (NT$)
		For Fiscal Year 2018 For Fiscal Year 2017 $ 4.2 $ 4.5

The appropriations of earnings for 2019 had been proposed by the Corporation’s board of directors on February 26, 2020,were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	185,448
Special reserve		89,240
Cash dividends		1,265,000	$3.0

d. Special reserves

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e. Other equity items

Exchange
Differences on
Translating
Foreign
Operations
Unrealized
Gain (Loss) on
Financial
Assets at
FVTOCI
For the year ended December 31, 2019
Balance at January 1, 2019
$ (104,872)
$ 160,493

Exchange differences on translating foreign operations
(111,244)
-
Unrealized gain (loss) arising from equity investments
-
(6,001)
Share of other comprehensive gain (loss) of associates and
join ventures accounted for using the equity method
(114,957)
(454)
Share-based payment transaction

-

-

Balance at December 31, 2019
$ (331,073)
$ 154,946

For the year ended December 31, 2018
Balance at January 1, 2018
$ (97,633)
$ 151,864

Exchange differences on translating foreign operations
(6,229)
-
Unrealized gain (loss) arising from equity investments
-
16,832
Share of other comprehensive gain (loss) of associates and
join ventures accounted for using the equity method
(1,010)
(3,962)
Disposal of investments in equity instruments designated
as at FVTOCI
-
(4,241)
Share-based payment transaction

-

-

Balance at December 31, 2018
$ (104,872)
$ 160,493

Unearned
Employee
Benefit
$ (42,377)
-
-
-

30,853
$ (11,524)
$ (93,849)
-
-
-
-

51,472
$ (42,377)

f. Treasury shares

The Corporation’s shares held by its subsidiaries at the end of the reporting periods were as follows:

Number of shares held (in thousand shares) Carrying amount Market price		December 31	December 31
		2019 1,916 $ 35,714 $ 277,759	2018 1,916 $ 35,714 $ 226,038

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19. REVENUE

Contract revenue of the Corporation comes from sale of goods.

a. Contract balances

Contract liabilities from sale of goods		December	31
		2019 $ 427,357	2018 $ 31,014

The changes in the balance of contract liabilities primarily result from the timing difference between the Corporation’s performance and the respective customer’s payment.

b. Disaggregation of revenue

Automatic test systems Precision electronic test instruments Others		December 31	December 31
		2019 $ 4,297,926 3,248,907 564,200 $ 8,111,033	2018 $ 3,957,776 3,120,094 468,970 $ 7,546,840

20. ADDITIONAL INFORMATION ON EXPENSES

a. Finance costs

Interest on borrowings Interest on lease liabilities Interest on convertible bonds Less: Amount included in the cost of qualifying assets Capitalized interest Capitalization rate Depreciation and amortization An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses	For the Year Ended	For the Year Ended	December 31
	2019 $ 35,089 591 - 35,680 - $ 35,680 $ - - For the Year Ended		2018 $ 30,434 - 935 31,369 (9,609) $ 21,760 $ 9,609 1.58% December 31
		2019 $ 44,018 170,396 $ 214,414 $ -	2018 $ 32,754 143,776 $ 176,530 $ 960

b. Depreciation and amortization

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c. Employee benefits expense

Short-term benefits Salary expenses Insurance expenses Remuneration of directors Share-based payments Retirement benefits Defined contribution plans Defined benefit plans Other employee benefits Total employee benefits expense			For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
			2019 Operating Expenses Total $ 1,376,017 $ 1,652,825 102,309 130,654 10,410 10,410 1,488,736 1,793,889 53,004 53,004 54,128 63,056 4,640 5,480 58,768 68,536 22,462 38,200 $ 1,622,970 $ 1,953,629			2018
		Operating Costs $ 276,808 28,345 - 305,153 - 8,928 840 9,768 15,738 $ 330,659			Operating Costs $ 277,786 28,949 - 306,735 - 9,179 961 10,140 15,896 $ 332,771	Operating Expenses Total $ 1,312,678 $ 1,590,464 98,632 127,581 10,185 10,185 1,421,495 1,728,230 78,596 78,596 52,264 61,443 5,108 6,069 57,372 67,512 22,527 38,423 $ 1,579,990 $ 1,912,761

As of December 31, 2019 and 2018, the Corporation’s average number of employees was 1,708 and 1,731 employees, respectively, among which 5 directors not concurrently holding positions in the Corporation in both years. The basis of above calculations was the same as the basis used in the calculation of employee benefits expense.

As of December 31, 2019 and 2018, the average employee benefit expenses were $1,141 thousand and $1,102 thousand, respectively; average salary expenses were $971 thousand and $921 thousand, respectively. The change in average salary expense was 5%.

d. Employees’ compensation and remuneration of directors

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2019 Amount Rate (%) $ 290,000 11.84 9,600 0.39	2018
		Amount Rate (%) $ 240,000 7.55 9,600 0.30

If there is a change in the amounts after the annual financial statements were authorized for issue, the differences are recorded as a change in accounting estimate.

There is no difference between the actual amounts of the employees’ compensation and remuneration of directors paid and the actual amounts recognized in the financial statements for the years ended December 31, 2019 and 2018.

Information on the employees’ compensation and remuneration of directors resolved by the Corporation’s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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21. INCOME TAXES

a. Major components of income tax expense recognized in profit or loss

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments to deferred tax attributable to changes in tax rates and law Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 274,702 33,740 (61,334) 247,108 48,786 - 48,786 $ 295,894	2018 $ 227,322 44,118 - 271,440 83,298 27,595 110,893 $ 382,333

A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Investment credits Adjustments for prior years’ tax Effect of tax rate changes Others (temporary differences adjustments) Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,150,375 $ 430,075 (20,086) (13,599) 33,740 (72,902) (61,334) - - $ 295,894	2018 $ 2,928,608 $ 585,722 (189,101) 1,204 44,118 (101,193) - 27,595 13,988 $ 382,333

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b. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2019

Deferred tax assets Temporary differences Unrealized intercompany gain Inventory reserve Allowance for impaired receivables Net defined benefit liability Provisions Unrealized exchange loss Deferred tax liabilities Temporary differences Unappropriated earnings of subsidiaries Goodwill Unrealized exchange gain For the year ended December 31, 2018	Opening Balance Recognized in Profit or Loss Closing Balance $ 110,754 $ 9,672 $ 120,426 40,643 7,015 47,658 10,343 (8,797) 1,546 8,022 (2,039) 5,983 873 - 873 - 8,952 8,952 $ 170,635 $ 14,803 $ 185,438 $ 381,758 $ 63,259 $ 445,017 28,009 2,606 30,615 2,276 (2,276) - $ 412,043 $ 63,589 $ 475,632

Deferred tax assets Temporary differences Unrealized intercompany gain Inventory reserve Allowance for impaired receivables Net defined benefit liability Provisions Impairment loss Unrealized exchange loss Deferred tax liabilities Temporary differences Unappropriated earnings of subsidiaries Goodwill Unrealized exchange gain	Opening Balance Recognized in Profit or Loss Closing Balance $ 92,296 $ 18,458 $ 110,754 30,976 9,667 40,643 7,897 2,446 10,343 8,460 (438) 8,022 - 873 873 19,465 (19,465) - 4,620 (4,620) - $ 163,714 $ 6,921 $ 170,635 $ 272,636 $ 109,122 $ 381,758 21,593 6,416 28,009 - 2,276 2,276 $ 294,229 $ 117,814 $ 412,043

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c. Income tax assessments

As of December 31, 2019, the Corporation’s tax returns through 2017 had been assessed by the tax authorities.

22. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share are as follows:

Net Profit for the Year

Earnings used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Interest on convertible bonds and valuation gain on conversion option Earnings used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,854,481 - $ 1,854,481	2018 $ 2,546,275 966 $ 2,547,241

Shares
Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares: Convertible bonds Employee share options Employees’ compensation Employee restricted shares Weighted average number of ordinary shares used in the computation of diluted earnings per share	(In Thousands of Shares) For the Year Ended December 31
		2019 414,078 - 2,424 2,242 1,120 419,864	2018 409,438 961 4,395 2,313 1,882 418,989

If the Corporation offered to settle compensation paid to employees in cash or shares, the Corporation assumed the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

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23. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan

The Corporation granted employee stock options 7,900 thousand units in March 2016 and 6,000 thousand units in July 2013, respectively, with each option eligible to subscribe for one common share of the Corporation when exercised. The options are valid for 6 years and exercisable at certain percentages subsequent to the second year of the grant date.

Information on employee share options was as follows:

Balance at January 1 Options exercised Options forfeited Balance at December 31 Options exercisable, end of the year	For the Year Ended December 31	For the Year Ended December 31
	2019 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 6,006 $ 59.0 (2,847) 55.8 (23) - 3,136 59.8 906	2018
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 9,463 $ 60.1 (3,354) 58.4 (103) - 6,006 59.0 1,532

Information on outstanding options as of December 31, 2019 and 2018 is as follows:

December 31

2019 Range of Exercise Price (NT$) Weighted-average Remaining Contractual Life (Years) $ - $ - 59.80 2.24	2018
	Range of Exercise Price (NT$) Weighted-average Remaining Contractual Life (Years) $ 45.40 $ 0.52 61.60 3.24

Compensation costs recognized were $22,860 thousand and $29,810 thousand for the years ended December 31, 2019 and 2018, respectively

b. Restricted shares for employees

1) Employees who are granted RSUs, upon meeting the Corporation’s financial performance and personal performance indicators, are eligible to be vested 10, 20, 30 and 40 percent of the RSUs granted after 1, 2, 3 and 4 years of tenure after the subscription date, respectively.

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2) The restrictions on the rights of the employees who are granted RSUs but have not met the vesting conditions are as follows:
a) The employees are not eligible to sell, pledge, transfer, donate or to dispose any RSUs in any form.
b) The employees holding RSUs are entitled to receive dividends and similar purchasing rights to ordinary shares during capital increase. Dividends from RSUs are not restricted during the vesting period, and are appropriated to the employees’ personal account from trust account after the dividend distribution date.
c) Before the restricted shares are vested to the employees, the right of attendance, proposal, speech, voting and other rights of shareholders are acted by the custodian.
d) The RSUs should be delivered to trust custodians upon grant date. The employees cannot request for return in any manner before vesting conditions are met.
3) If an employee fails to meet the vesting conditions, the Corporation will recall or buy back and cancel the restricted shares at issued price. If an employee voluntarily resigns, retires, disabled or decease due to occupational hazards, dismissed, be transferred to another post, violates labor contracts or working protocols substantially or abandons restricted shares, related guidelines of RSU Plan will be followed accordingly.

Information relating to outstanding employee restricted shares as of December 31, 2019 and 2018 was as follows:

Restricted shares at the beginning of the year Share vested Shares canceled Restricted shares at the end of the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 2,273 (887) (101) 1,285	2018 2,975 (618) (84) 2,273

Compensation costs of share-based payment arising from the RSU Plan were $30,144 thousand and $48,786 thousand for the years ended December 31, 2019 and 2018, respectively

24. CAPITAL MANAGEMENT

The Corporation manages its capital to ensure that it will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Corporation’s capital management aims to maintain the sufficiency of financial resources and the soundness of operating strategies to meet the needs for operating capital, capital expenditure, R&D expenses, debt handling, dividend disbursement, etc.

25. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

Management believes the carrying amount of financial assets and financial liabilities recognized in the financial statements approximates their fair values or their fair value could not be assessed reliably.

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b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2019 Financial assets at FVTPL Open-end beneficiary certificates Financial assets at FVTOCI Domestic listed equity securities Foreign unlisted equity securities December 31, 2018 Financial assets at FVTPL Open-end beneficiary certificates Financial assets at FVTOCI Domestic listed equity securities Foreign unlisted equity securities	Level 1 $ - $ 407,798 - $ 407,798 $ 951,456 $ 431,797 - $ 431,797	Level 2 $ - $ - - $ - $ - $ - - $ -	Level 3 $ 4,762 $ - 200,037 $ 200,037 $ 6,807 $ - 182,039 $ 182,039	Total $ 4,762 $ 407,798 200,037 $ 607,835 $ 958,263 $ 431,797 182,039 $ 613,836

There were no transfers between Levels 1 and 2 for the years ended December 31, 2019 and 2018.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2019

Financial Assets Balance at January 1, 2019 Recognized in profit or loss (included in valuation gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Balance at December 31, 2019	Financial Assets at FVTPL Equity Instruments $ 6,807 (2,045) - $ 4,762	Financial Assets at FVTOCI Equity Instruments $ 182,039 - 17,998 $ 200,037	Total $ 188,846 (2,045) 17,998 $ 204,799

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For the year ended December 31, 2018

Financial Assets Balance at January 1, 2018 Recognized in profit or loss (included in valuation gains and losses) Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Purchases Cash returned of capital reduction Transfers out of Level 3 Balance at December 31, 2018	Financial Assets at FVTPL Equity Instruments $ 6,013 794 - - - - $ 6,807	Financial Assets at FVTOCI Equity Instruments $ 265,884 - 9,861 67,800 (5,262) (156,244) $ 182,039	Total $ 271,897 794 9,861 67,800 (5,262) (156,244) $ 188,846

3) Valuation techniques and inputs applied for Level 3 fair value measurement

c. Categories of financial instruments

Financial assets Financial assets at FVTPL Mandatorily at FVTPL Financial assets at amortized cost (1) Financial assets at FVTOCI Equity instruments Financial liabilities Financial liabilities at amortized cost (2)	December 31
	2019 2018 $ 4,762 $ 958,263 4,358,538 3,744,311 607,835 613,836 6,014,104 4,090,556

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, other receivables (classified as other receivable - related parties and other current assets) and refundable deposits.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term loans, notes payable, trade payables, other payables, long-term loans (including current portion of long-term borrowings) and guarantee deposits received.

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d. Financial risk management objectives and policies

The Corporation’s major financial instruments consist of equity investments, cash and cash equivalents, receivables, long-term and short-term borrowings, and trade payables. The Corporation’s financial risk management pertains to financial risks relating to the operations of the Corporation, including currency risk, interest rate risk, credit risk and liquidity risk. The Corporation seeks to identify, evaluate and hedge against market uncertainties to lower the effect of market changes on the Corporation’s financial performance.

The Corporation manages foreign exchange risk through setting up of foreign currency deposit bank accounts and through the use of foreign currency directly received from sale to pay for purchases in foreign currency to reduce the impact of foreign exchange fluctuation and to achieve a natural hedge effect. The Corporation actively observes the exchange rate information to fully control the foreign currency hedge.

1) Market risk

The Corporation’s activities expose it primarily to the financial risks of changes in exchange rates (see item (a) below), interest rates (see item (b) below) and price (see item (c) below).

There has been no change to the Corporation’s exposure to market risks or the manner in which these risks are managed and measured.

a) Foreign currency risk

The carrying amounts of the Corporation’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 29.

Sensitivity analysis

The Corporation was mainly exposed to USD and RMB.

Had the NTD strengthened/weakened by 5% against the relevant currency, the pre-tax profit would have decreased/increased by $110,674 thousand and $98,527 thousand for the years ended December 31, 2019 and 2018, respectively. The 5% sensitivity rate is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency-denominated monetary items and their translation at period-end is adjusted for a 5% change in foreign-currency rates.

b) Interest rate risk

The Corporation is exposed to interest rate risk because it borrows funds both at fixed and floated interest rates. The Corporation evaluates hedging activities regularly to align with interest rate views and defined risk appetite and ensures that the most cost-effective hedging strategies are applied.

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The carrying amounts of the financial assets and liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2019 2018 $ 545,623 $ - 457,014 913,360 3,400,000 2,430,000

Sensitivity analysis

The sensitivity analysis below was determined on the basis of the exposure to interest rates for both derivative and non-derivative instruments at balance sheet dates. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the balance sheet dates was outstanding for the whole year. A 50 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Corporation’s pre-tax profit for the years ended December 31, 2019 and 2018 would have decreased/increased by $14,715 thousand and $7,583 thousand, respectively, which was mainly attributable to the Corporation’s exposure to interest rates on its variable rate deposits and bank loans.

c) Price risk

The Corporation is exposed to equity price risks mainly arising from investment in open-end beneficiary certificates and listed stocks in Taiwan, which are held for strategic rather than trading purposes. The Corporation does not actively trade these investments. The Corporation manages the risk through holding various portfolios of investment and having each equity investment to get prior approval from the Corporation’s management.

Sensitivity analysis

The sensitivity analysis below was determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 5% higher/lower, the pre-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $238 thousand and $47,913 thousand, respectively, as a result of the changes in fair values of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2019 and 2018 would have increased/decreased by $30,392 thousand and $30,692 thousand, respectively, as a result of the changes in fair values of financial assets at FVTOCI.

2) Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Corporation. As at the end of the reporting period, the Corporation’s maximum exposure to credit risk, which would cause a financial loss to the Corporation due to the failure of the counterparty to discharge its obligation, could arise from:

a) The carrying amount of trade receivables from operating activities; and

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b) The amount of bank deposits, fixed-income and other financial instruments from investing activities.

The Corporation adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The credit risk of bank deposits, fixed-income financial instruments and other financial instruments are evaluated, managed and controlled by the Corporation’s financial department. The Corporation’s exposure to credit risk was limited because the Corporation adopted a policy of only dealing with creditworthy counterparties.

3) Liquidity risk

The Corporation manages liquidity risk by managing and maintaining sufficient cash and cash equivalents to supply the Corporation’s demand and mitigate the effects of fluctuations in cash flow. The Corporation continuously monitors the use of credit lines and conformity to loan terms.

The Corporation relies on bank borrowings as a significant source of liquidity. As of December 31, 2019 and 2018, the Corporation’s available unutilized bank loan facilities were 2,661,200 thousand and $1,850,000 thousand, respectively.

Liquidity and interest risk tables for non-derivative financial liabilities

The following tables detail the Corporation’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Corporation can be required to pay.

Non-interest bearing Fixed interest rate instruments Floating interest rate instruments Lease liabilities Non-interest bearing Floating interest rate instruments	December 31, 2019	December 31, 2019
	Within 1 Year 1-5 Years $ 2,094,104 $ - 420,786 86,089 1,221,520 1,891,140 15,264 23,679 $ 3,751,674 $ 2,000,908 December 31, 2018		More Than 5 Years $ - - 363,441 8,271 $ 371,712
	Within 1 Year $ 1,659,864 654,453 $ 2,314,317	1-5 Years $ - 1,834,028 $ 1,834,028	More Than 5 Years $ - - $ -

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After considering the financial position of the Corporation, management does not expect the banks will execute their rights of requiring the Corporation to repay the bank loans immediately. In addition, management believes the operating funds of the Corporation are sufficient to meet cash flow demand; thus, liquidity risk is not considered significant.

The Corporation’s operating funds are sufficient to meet its cash flow demand, as a result, the Corporation does not use its overdraft limit.

26. TRANSACTIONS WITH RELATED PARTIES

a. The related parties and relationships with the Corporation were as follows:

Related Party

Chroma ATE Inc. (“Chroma USA”)

Neworld Electronics Ltd. (“Neworld Electronics”)

Chroma ATE Europe B.V. (“Chroma Europe”)

Chroma Investment Co., Ltd. (“Chroma Investment”)

Chroma New Material Corp. (“Chroma New Material”)

Chroma Japan Corp. (“Chroma Japan”)

Chroma Systems Solutions, Inc. (“CSS”)

Quantel Private Ltd. (“Quantel”)

Wei Kuang Automatic Equipment Co., Ltd. (“Wei Kuang
Automatic”)

Testar Electronics Corp. (“Testar Electronics”)

Adivic Technology Co. (“Adivic Tech.”)

Sajet System Technology (Suzhou) Co., Ltd. (“Sajet Suzhou”)

Chroma Electronics (Shenzhen) Co., Ltd. (“Chroma Shenzhen”)
Chroma Electronics (Shanghai) Co., Ltd. (“Chroma Shanghai”)
Chroma ATE (Suzhou) Co., Ltd. (“Chroma Suzhou”)

EVT Technology Co., Ltd. (“EVT”)

Innovative Nanotech Incorporated (“Innovative”)

Quantel Technologies India Private Ltd. (“Quantel Technologies
India”)

Chroma Germany GmbH (“Chroma Germany”)

Adlink Technology Inc. (“Adlink”)

DynaScan Technology Corp. (“DynaScan Technology”)

Camtek Ltd.

Relationship with the Corporation

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate
Associate
Associate

The related-party transactions were conducted under normal terms unless specified otherwise.

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The related-party transactions were as follows:

b. Sales

Related Party Categories Subsidiaries Neworld Electronics Chroma USA Others Associates Other related parties	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,628,273 336,352 2,112,912 13,958 850 $ 5,092,345	2018 $ 1,979,060 665,640 1,937,829 22,534 1,175 $ 4,606,238

To raise market share and expand its market in the America, Europe and mainland China, the Corporation set up Chroma USA, Chroma ATE Europe B.V. and Neworld Electronics Ltd. The selling prices for Chroma USA, CSS, Chroma Europe, Neworld Electronics, Chroma Suzhou, and Chroma Shenzhen were determined after taking the selling and post-sale service expenses into consideration.

c. Purchases

Related Party Categories Subsidiaries Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 332,098 7,624 $ 339,722	2018 $ 103,013 12,687 $ 115,700

d. Receivables from related parties (excluding loans to related parties)

Line Item Related Party Categories Notes receivable Subsidiaries Trade receivables Subsidiaries Neworld Electronics Chroma USA Chroma Europe Others Associates Other related parties Dividends receivable Subsidiaries Wei Kuang Automatic Others		December 31	December 31
		2019 $ - $ 783,034 402,745 184,840 681,013 2,979 - $ 2,054,611 $ 300,000 11,992 $ 311,992	2018 $ 194 $ 447,646 467,443 253,438 584,989 6,940 304 $ 1,760,760 $ - 7,679 $ 7,679

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e. Payables to related parties (excluding loans from related parties)

Line Item Related Party Categories Notes payable Other related parties Trade payables Subsidiaries Wei Kuang Automatic Others Associates		December 31	December 31
		2019 $ - $ 184,795 8,583 2,685 $ 196,063	2018 $ 105 $ 607 9,053 3,127 $ 12,787

f. Acquisitions of property, plant and equipment

Related Party Categories Subsidiaries Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,730 3,198 $ 5,928	2018 $ 6,533 133 $ 6,666

g. Loans to related parties
1) Other receivables

	December 31	December 31
	2019 2018 $ 116,519 $ 119,375 38,185 35,553 $ 154,704 $ 154,928 December 31
2019 2018 $ 357 $ 323 For the Year Ended December 31
	2019 $ 3,899	2018 $ 3,808

Note: Refer to Table 1 (attached) for other information related to financing provided.

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h. Endorsement guarantees provided

Note: Refer to Table 2 (attached) for other information related to endorsement guarantees provided.

i. Others

1) Commission expense

Related Party Categories Subsidiaries Chroma Suzhou Quantel Chroma Shanghai Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 17,989 13,756 11,453 2,763 $ 45,961	2018 $ 12,211 17,790 12,301 2,863 $ 45,165

Commission expense refers to the disbursements made for business introduction activities.

2) Rental income

Related Party Categories Subsidiaries Testar Electronics Others Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 13,231 1,284 1,260 $ 15,775	2018 $ 13,656 1,110 1,260 $ 16,026

The Corporation leased out some floors of the buildings in Hwa-Ya Technical Park in Taoyuan to the above related parties under operating lease contracts, and these leases were based on market prices. Rents were collected monthly.

3) Management service income

Related Party Categories Subsidiaries Chroma New Material Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 6,000 600 $ 6,600	2018 $ 6,000 600 $ 6,600

Management service income was from the Corporation’s provision of administrative services.

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4) Other income

Related Party Categories Subsidiaries Neworld Electronics Chroma Europe Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 21,903 - 4 $ 21,907	2018 $ 14,400 666 26 $ 15,092

Other income is income from repairs and maintenance.

5) Other current assets - other receivables

Related Party Categories Subsidiaries Testar Electronics Neworld Electronics Others Associates		December 31	December 31
		2019 $ 27,922 5,381 1,291 531 $ 35,125	2018 $ 23,353 5,178 1,929 521 $ 30,981

Receivables were recognized from managerial services and building rentals.

j. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 123,220 2,431 $ 125,651	2018 $ 108,652 2,180 $ 110,832

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The assets pledged as collaterals for bank loans were as follows:

Land and buildings, net		December 31	December 31
		2019 $ 692,486	2018 $ 700,115

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28. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. On January 17, 2012, the Corporation, Dynapack International Corporation and Heran Co., Ltd. won a bid for the ownership of land and the building and related facilities to be built on the land pertaining to “The Action Plan for Developing Land Surrounding the MRT Airport Station to Improve Civilians’ Life,” which had been reviewed and approved by the Ministry of the Interior (MOI).

1) The first installment of the bid amount (10% of the total bid amount, or $353,111 thousand) should be paid within 10 days from the contract date. The Corporation paid the first installment by bid deposit of $353,040 thousand in cash.
2) To meet the schedule for zone expropriation, the Corporation should pay the second installment (30% of the total bid amount) within 10 days of receiving the payment notice from the MOI. The MOI will approve the Corporation’s land usage rights as the payment is made. On September 3, 2013, the Corporation has paid the second installment of $1,059,333 thousand.
3) To help the MOI provide the compensations for land expropriation and complete the demolition and relocation of structures on the land, the Corporation should pay the third installment (40% of the total bid amount) within 10 days of the payment notice from the MOI. The MOI will then check with the Corporation to see if the demolition and relocation are completed as the payment is made. In November 2015 and July 2016, the Corporation has paid the first part of the third installment of $536,729 thousand and the remaining part of the third installment of $875,716 thousand, respectively.
4) The Corporation should accomplish the following things within four years from the time of obtaining the approval of the land usage rights:
a) Open up the main road system and build related public facilities.
b) Acquire the building license for over 50% percent of all industrial land and register with the authorities to go into operation.

b. The unrecognized contractual commitments arose from the action plan of developing land surrounding the Airport MRT station. The contracts stipulated that the Corporation had to pay relevant expense during the construction period. As of December 31, 2019, the unrecognized commitments amounted to $1,304,658 thousand.

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29. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

The outbreak of severe pneumonia with novel pathogens in January 2020 caused the operations of the Corporation to be temporarily suspended for customers located in severely affected areas in mainland China. As major customers of the Corporation are spread around the world, the impact of outbreak on the operation is limited.

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Corporation’s significant financial assets and liabilities denominated in foreign currencies were as follows:

December 31, 2019

Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 73,599
29.98 (USD:NTD)
RMB

81,511
4.305 (RMB:NTD)

Non-monetary items
Investments accounted for using the
equity method
USD

126,764
29.98 (USD:NTD)
HKD

338,746
3.849 (HKD:NTD)

Financial liabilities

Monetary items
USD

11,472
29.98 (USD:NTD)
December 31, 2018
Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 62,425
30.715 (USD:NTD)
RMB

57,246
4.472 (RMB:NTD)

Carrying
Amount
$ 2,206,504

350,907
$ 2,557,411
$ 3,722,070

1,303,828
$ 5,025,898
$ 343,932
Carrying
Amount
$ 1,917,377

256,006
$ 2,173,383
(Continued)

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Foreign Currencies Exchange Rate Non-monetary items Investments accounted for using the equity method USD $ 51,219 30.715 (USD:NTD) HKD 289,530 3.921 (HKD:NTD) Financial liabilities Monetary items USD 6,604 30.715 (USD:NTD)	Carrying Amount $ 1,509,875 1,135,246 $ 2,645,121 $ 202,848 (Concluded)

For the years ended December 31, 2019 and 2018, (realized and unrealized) net foreign exchange (losses) gains were $(46,438) thousand and $84,517 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions.

31. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others: Table 1 (attached)
2) Endorsements/guarantees provided: Table 2 (attached)
3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Table 3 (attached)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4 (attached)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6 (attached)
9) Trading in derivative instruments: Note 7.
10) Information on investees: Table 7 (attached)

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b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 8 (attached)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: Table 5 (attached)
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 5 (attached)
- c) The amount of property transactions and the amount of the resultant gains or losses: None.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 2 (attached)
- e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: Table 1 (attached)
- f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receiving of services: None.

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TABLE 1

CHROMA ATE INC.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance	Actual Borrowing Amount	Interest Rate	Nature of Financing (Note 5)	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower	Aggregate Financing Limit
													Item	Value
0	The Corporation	Chroma Systems Solutions, Inc. Chroma Japan Corp.	Other receivables Other receivables	Y Y	$ 116,519 41,194	$ 116,519 41,194	$ 116,519 38,185	3.25% 1.30%	a a	$ 482,283 181,261	- -	$ - -	- -	$ - -	$ 1,448,876 (Note 1) 1,448,876 (Note 1)	$ 2,897,752 (Note 2) 2,897,752 (Note 2)
1	Chroma Electronics (Shenzhen) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd.	Other receivables	Y	43,050	-		2.50%	b	-	Operation	-	-	-	519,577 (Note 3)	519,577 (Note 3)
2	Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.	Chroma ATE (Suzhou) Co., Ltd.	Other receivables	Y	43,050	-		2.50%	b	-	Operation	-	-	-	327,356 (Note 3)	327,356 (Note 3)

Note 1: Based on 10% of the net value of the Corporation.

Note 2: Based on 20% of the net value of the Corporation.

Note 3: Based on 70% of the net value from the latest financial statements of borrowing company that have been audited.

Note 4: The amounts listed in the table were translated into the New Taiwan dollars at the exchange rate of US$1=NT$29.980, RMB1=NT$4.305 and JPY1 = NT$0.276 as of December 31, 2019.

Note 5: Financing provided:

a. For transactions.

b. For short-term financing.

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TABLE 2

CHROMA ATE INC.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorser/ Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements	Aggregate Endorsement Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Corporation	Chroma Japan Corp. Chroma ATE Europe B.V. Chroma ATE Inc. Sajet System Technology (Suzhou) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Quantel Private Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary	$ 2,173,314 2,173,314 2,173,314 2,173,314 2,173,314 2,173,314 2,173,314	$ 34,100 50,385 149,900 21,525 43,050 86,100 44,560	$ 27,600 50,385 149,900 21,525 43,050 86,100 -	$ 19,320 33,590 149,900 - 2,711 6,116 -	$ - - - - - - -	0.19% 0.35% 1.03% 0.15% 0.30% 0.59% -	$ 4,346,628 4,346,628 4,346,628 4,346,628 4,346,628 4,346,628 4,346,628	Y Y Y Y Y Y Y	- - - - - - -	- - - Y Y Y -

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TABLE 3

CHROMA ATE INC.

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES) DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2019	December 31, 2019		Note
				Shares/Units (Thousands)	Carrying Amount	Percentage of Ownership	Fair Value
The Corporation Chroma New Material Corp. Chroma Systems Solutions Inc.	Fund WI Harper INC Fund VII LP Stocks DynaColor, Inc. Chunghwa Telecom Co., Ltd. China Communications Media Group Co., Ltd. WK Technology Fund IX Ltd. Twoway Catv Service Inc. Tian Zheng International Precision Machinery Co., Ltd. WK Technology Fund IV Ltd. WK Technology Fund VI Ltd. TFBS Bioscience Inc. Taiwan Advanced Nanotech Inc. Fund Fuh Hwa You Li Money Market Fund Taishin 1699 Money Market Fund Fund Franklin California Tax Free Income FD Inc.	- - - - - - - - - - - - - -	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income - non-current `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Financial assets at fair value through profit or loss - current `〃` Financial assets at fair value through profit or loss - current	- 6,050 412 26 4,614 3,561 2,681 806 723 3,280 2,700 6,829 8,139 135	$ 4,762 199,358 45,362 94 59,237 45,184 162,984 5,047 3,139 40,180 47,250 92,362 110,565 31,116	- 6.1 - - 4.6 4.4 8.1 1.9 1.4 14.7 15.0 - - -	$ 4,762 199,358 45,362 94 59,237 45,184 162,984 5,047 3,139 40,180 47,250 92,362 110,565 31,116	- - - - - - - - - - - - - -
								(Continued)

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Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2019	December 31, 2019		Note
				Shares/Units (Thousands)	Carrying Amount	Percentage of Ownership	Fair Value
Chroma Investment Co., Ltd. Adivic Technology Co. Chen Hwa Technology Inc. Innovative Nanotech Incorporated Touch Cloud Incorporation EVT Technology Co., Ltd.	Fund Hua Nan Kirin Money Market Fund Stocks Greatek Electronics Inc. Chroma ATE Inc. Cosmactive Broadband Networks Co., Ltd. Prance System Technology Co., Ltd. Fund Cathay Taiwan Money Market Fund Stocks Hangzhou New Material Chroma Co., Ltd. Fund Mega Diamond Money Market Fund Fund Mega Diamond Money Market Fund Fund Mega Diamond Money Market Fund	- - The Corporation - - - - - - -	`〃` `〃` Financial assets at fair value through other comprehensive income - non-current `〃` `〃` Financial assets at fair value through profit or loss - current `〃` `〃` `〃` `〃`	4,601 85 1,916 4 111 4,016 - 8,577 1,439 1,595	$ 55,292 4,070 277,759 - - 50,150 4,532 107,992 18,118 20,080	- - 0.5 0.6 5.1 - 19.0 - - -	$ 55,292 4,070 277,759 - - 50,150 4,532 107,992 18,118 20,080	- - - - - - - - - -

Note 1: Marketable securities refer to stocks, bonds, beneficiary certificates and marketable securities derived from above items under IFRS 9 “Financial Instruments”.

Note 2: The fair value of open-end beneficiary certificates and listed market securities was calculated based on the net asset value and closing price as of balance sheet date.

(Concluded)

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TABLE 4

CHROMA ATE INC.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Number of Shares (Thousands)	Amount	Number of Shares (Thousands)	Amount	Number of Shares (Thousands)	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares (Thousands)	Amount (Note)
The Corporation	Fund Mega Diamond Money Market Fund Stocks Camtek Ltd.	Financial assets at fair value through profit or loss - current Investments Accounted for Using Equity Method	- -	- -	44,427 -	$ 556,317 (Note 1) -	- 7,817	$ - 2,342,340	44,427 -	$ 557,855 -	$ 550,000 -	$ 7,855 -	- 7,817	$ - 2,230,935 (Note 2)

Note 1: The beginning and ending balances included adjustments for financial assets valuation gain or loss.

Note 2: The ending balances included investment income or loss for using the equity method of $35,415 thousand, capital reserve adjustment of $10,253 thousand, exchange differences on translating the financial statements of foreign operations of $(115,583) thousand and cash dividends of $41,490 thousand.

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TABLE 5

CHROMA ATE INC.

TOTAL PURCHASE FROM OR SALE TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase (Sale)	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Corporation Neworld Electronics Ltd. The Corporation Chroma Electronics (Shanghai) Co., Ltd. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. The Corporation Chroma Japan Corp. The Corporation Chroma ATE Inc. The Corporation Chroma Systems Solutions, Inc. The Corporation Chroma ATE Europe B.V. The Corporation Quantel Private Ltd. The Corporation Chroma ATE (Suzhou) Co., Ltd.	Neworld Electronics Ltd. The Corporation Chroma Electronics (Shanghai) Co., Ltd. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. The Corporation Chroma Japan Corp. The Corporation Chroma ATE Inc. The Corporation Chroma Systems Solutions, Inc. The Corporation Chroma ATE Europe B.V. The Corporation Quantel Private Ltd. The Corporation Chroma ATE (Suzhou) Co., Ltd. The Corporation	Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company	(Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase (Sale) Purchase	$ (2,628,273) 2,628,273 (247,712) 247,712 (395,162) 395,162 (181,261) 181,261 (336,352) 336,352 (482,383) 482,383 (364,327) 364,327 (287,288) 287,288 (117,021) 117,021	(32) 100 (3) 100 (4) 100 (2) 100 (4) 100 (6) 100 (4) 100 (4) 100 (1) 100	Net 90 days after delivery Net 90 days after delivery Net 120 days after delivery Net 120 days after delivery Net 90 days after monthly closing Net 90 days after monthly closing Net 90 days after delivery Net 90 days after delivery Net 180 days after delivery Net 180 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 90 days after delivery Net 120 days after delivery Net 120 days after delivery	- - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - - -	$ 783,034 (783,034) 64,942 (64,942) 102,621 (102,621) 181,262 (181,262) 402,745 (402,745) 199,399 (199,399) 184,840 (184,840) 50,708 (50,708) 45,404 (45,404)	24 (100) 2 (100) 3 (100) 5 (100) 12 (100) 6 (100) 6 (100) 2 (100) 1 (100)	- - - - - - - - - - - - - - - - - -
										(Continued)

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Company Name	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase (Sale)	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Corporation Wei Kuang Automatic Equipment Co., Ltd. Neworld Electronics Ltd. Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd. Chroma ATE (Suzhou) Co., Ltd. Chroma ATE Europe B.V. Chroma Germany	Wei Kuang Automatic Equipment Co., Ltd. The Corporation Chroma Electronics (Shenzhen) Co., Ltd. Neworld Electronics Ltd. Chroma ATE (Suzhou) Co., Ltd. Neworld Electronics Ltd. Chroma Germany Chroma ATE Europe B.V.	Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company Subsidiary Parent company	Purchase (Sale) (Sale) Purchase (Sale) Purchase (Sale) Purchase	$ 251,804 (251,804) (960,349) 960,349 (150,262) 150,262 (138,250) 138,250	7 (100) (33) 69 (5) 46 (28) 100	Net 90 days after monthly closing Net 90 days after monthly closing Net 90 days Net 90 days Net 90 days Net 90 days Net 90 days Net 90 days	- - - - - - - -	- - - - - - - -	$ (184,794) 184,794 298,305 (298,305) 96,474 (96,474) 56,104 (56,104)	(15) 100 29 (78) 9 (46) 44 (84)	- - - - - - - -

(Concluded)

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TABLE 6

CHROMA ATE INC.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period (Note)	Allowance for Impairment Loss
					Amount	Action Taken
The Corporation Neworld Electronics Ltd.	Neworld Electronics Ltd. Chroma ATE Inc. Chroma Systems Solutions, Inc. Chroma ATE Europe B.V. Chroma Japan Corp. Chroma Electronics (Shenzhen) Co, Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Chroma Systems Solutions, Inc. Chroma Electronics (Shenzhen) Co, Ltd.	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Same parent company Subsidiary Subsidiary	Trade receivables $ 783,034 Trade receivables 402,745 Trade receivables 199,399 Trade receivables 184,840 Trade receivables 181,262 Trade receivables 102,621 Dividends receivable 300,000 Other receivables - financing provided 116,519 Trade receivables 298,305	4.27 0.77 2.88 1.66 0.90 4.53 - - -	$ - - - - - - - - -	- - - - - - - - -	$ 371,502 151,948 100,516 41,643 61,437 - - - -	$ - - - - - - - - -

Note: As of February 26, 2020.

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TABLE 7

CHROMA ATE INC.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor	Investee	Location	Main Businesses and Products	Investment Amount	Investment Amount	Balance	as of December 31, 2019	as of December 31, 2019	Net Income (Loss) of the Investee	Investment Gain (Loss)	Note
				December 31, 2019	December 31, 2018	Shares (Thousands)	Percentage of Ownership	Carrying Amount
The Corporation Chroma ATE Inc. San Eagle Development Corp. EVT Technology Co., Ltd. Adivic Technology Co., Ltd. Quantel Private Ltd. Chroma ATE Europe B.V. Chroma Investment Co., Ltd.	Neworld Electronics Ltd. San Eagle Development Corp. Adlink Technology Inc. Chroma New Material Corporation Wei Kuang Automatic Equipment Co., Ltd. CHI Incorporation Ltd. Quantel Private Ltd. Chen Hwa Technology Inc. Chroma Investment Co., Ltd. Chroma ATE Europe B.V. DynaScan Technology Corp. Chroma ATE Inc. Sensational Holding Ltd. Adivic Technology Co. Chroma Japan Corp. Chroma Systems Solutions, Inc. Deep Red Holding Co., Ltd. Chih Ho Shun Development Co., Ltd. Testar Electronics Corporation EVT Technology Co., Ltd. Innovative Nanotech Incorporated Touch Cloud Incorporation Camtek Ltd. Chroma Systems Solutions, Inc. Wei Kuang Mech. Eng. Inc. Wei Da Electric Vehicle Co., Ltd. Adivic Holding Corporation Quantel Technologies India Private Ltd. Quantel Global Vietnam Co., Ltd. Quantel Global Sdn. Bhd. Quantel Global Philippines Corporation Chroma Germany GmbH Testar Electronics Corporation	Hong Kong British Virgin Islands New Taipei, Taiwan Taoyuan, Taiwan Hsinchu, Taiwan British Virgin Islands Singapore British Virgin Islands Taoyuan, Taiwan The Netherlands Taoyuan, Taiwan USA British Virgin Islands Taipei, Taiwan Japan USA Mauritius Taoyuan, Taiwan Taoyuan, Taiwan Taoyuan, Taiwan Hsinchu, Taiwan Taipei, Taiwan Israel USA Mauritius Pingtung, Taiwan Samoa India Vietnam Malaysia Philippines Germany Taoyuan, Taiwan	Sale and maintenance of electronic test instruments, etc. Investment Manufacturing, processing and retailing of software/hardware of computers and peripherals Sale and processing of gold wire Design, manufacturing, installment and testing of automated factory conveyor systems Test of inductance, capacitance and resistance, and sale of parts Sale and maintenance of test instruments, etc. Test of inductance, capacitance and resistance, and sale of parts Investment Sale and maintenance of electronic test instruments etc. Research and manufacture of LED generators Sale and maintenance of electronic test instruments, etc. Investment Sale and research of RF device Sale and maintenance of electronic test instruments, etc. Sale and maintenance of electronic test instruments, etc. Investment Construction and development of residence, buildings and specialized field; construction and investment of public works Testing of LED products Manufacturing of motorcycles and its parts Monitoring instruments of nanoparticles Development of cloud platform and Internet of Things systems Automatic optical inspection equipment Sale and maintenance of electronic test instruments, etc. Investments Sale and lease of motorcycles Sale and research of RF device Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of test instruments, etc. Sale and maintenance of electronic test instruments, etc. Testing of LED products	$ 271,873 186,514 165,146 480,715 533,000 122,884 112,328 98,217 80,000 54,026 238,746 29,895 38,301 273,800 147,125 29,628 12,217 17,500 247,096 117,311 142,140 57,000 2,342,340 64 185,686 3,750 42,245 3,056 6,219 4,199 610 1,073 11,250	$ 271,873 186,514 165,146 480,715 533,000 122,884 112,328 98,217 80,000 54,026 238,746 29,895 38,301 193,800 147,125 29,628 12,217 17,500 247,096 117,311 142,140 57,000 - 64 185,686 3,750 42,245 3,056 6,219 4,199 610 1,073 -	64,013 2,050 24,502 25,000 10,000 3,830 1,914 3,085 14,000 1 9,841 1,000 1,200 12,590 9 120 215 1,750 20,160 9,412 14,214 5,700 7,817 240 4,475 375 1,000 65 - 600 99 30 4,500	100.0 100.0 11.3 100.0 100.0 100.0 60.0 100.0 100.0 100.0 27.3 100.0 100.0 74.1 100.0 25.0 100.0 35.0 67.2 85.6 71.1 78.1 20.2 50.0 100.0 75.0 100.0 100.0 100.0 100.0 100.0 100.0 15.0	$ 1,090,020 782,959 538,926 431,515 478,363 171,580 158,915 97,192 101,449 105,878 123,748 69,756 53,227 88,636 (110,043) (47,780) 113,189 17,621 11,596 49,951 117,588 34,582 2,230,935 203,191 868,118 40 9,825 3,353 3,881 4,300 3,454 9,680 6,685	$ 208,415 84,959 462,455 28,906 21,811 26,992 50,531 1,647 6,099 37,068 35,455 (49,353) 612 (28,441) (41,212) 134,407 13,587 (124) (21,607) (11,500) (2,607) (11,778) 271,098 (Note) 134,407 84,999 - (169) 1,202 839 221 2,142 12,985 (21,607)	$ 208,409 70,075 52,141 28,905 21,811 26,992 29,202 1,647 (1,904) 37,105 9,679 (49,451) 612 (19,739) (41,636) 33,602 13,587 (43) (14,511) (9,841) (1,853) (9,197) 35,415 NA NA NA NA NA NA NA NA NA NA	Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Joint venture Subsidiary Subsidiary Subsidiary Subsidiary Associate Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note: Net income (loss) of investee from June 30, 2019, which was the acquisition date, to December 31,2019.

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TABLE 8

CHROMA ATE INC.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital (Note 2)	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2019 (Note 3)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019 (Note 3)	Net Income (Loss) of the Investee	Percentage of Ownership in Investment	Investment Gain (Loss) (Notes 4 and 5)	Carrying Amount as of December 31, 2019 (Note 2)	Accumulated Inward Remittance of Earnings as of December 31, 2019
						Outward	Inward
Chroma Electronics (Shenzhen) Co., Ltd. Chroma Electronics (Shanghai) Co., Ltd. Chroma (Shanghai) Trading Co., Ltd. Hangzhou New Material Chroma Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. Wei Kuang Automatic Equipment (Nanjin) Co., Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. Mou Kuan Technologies (Nanjin) Co., Ltd. Sajet System Technology (Suzhou) Co., Ltd.	Sale of computerized automatic test systems, peripherals and electronic test instruments Sale of computerized automatic test systems, peripherals and electronic test instruments International and transit trading, commercial simple processing and commercial consulting service and etc. Production and sale of semiconductor connecting materials Sale of computerized automatic test systems, peripherals and electronic test instruments Sale and maintenance of electronic equipment and factory conveyor systems Sale and maintenance of electronic equipment and factory conveyor systems Assembly, sale and maintenance of factory conveyors and related systems and renders related after-sales services Research, development and design of computer network security systems and information management		$ 115,470 (HK$ 30,000) 89,940 (US$ 3,000) 80,946 (US$ 2,700) 44,970 (US$ 1,500) 113,924 (US$ 3,800) 51,105 (RMB 11,871) 49,150 (RMB 11,417) 7,478 (RMB 1,737) 36,050 (RMB 8,374)	b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Neworld Electronics Ltd. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of Chen Hwa Technology Inc. b. Subsidiary of CHI Incorporation Ltd. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Wei Kuang Mech. Eng. Inc. b. Subsidiary of Deep Red Holding Co., Ltd.	$ 132,178 (HK$ 1,200 US$ 3,853) 101,993 (US$ 3,000) 84,988 (US$ 2,700) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ - - - - - - - - -	$ - - - - - - - - -	$ 132,178 (HK$ 1,200 US$ 3,853) 101,993 (US$ 3,000) 84,988 (US$ 2,700) 9,091 (US$ 285) 121,115 (US$ 3,800) 43,751 (US$ 1,338) 49,935 (US$ 1,500) 92,000 (US$ 2,836) (Note 9)	$ 118,342 48,577 (918) 25,182 26,897 38,572 45,136 506 13,552	100 100 100 19 100 100 100 100 100	$ 118,342 48,577 (918) - 26,897 38,572 45,136 506 13,552	$ 741,939 161,431 79,871 4,989 223,993 202,206 467,653 49,193 113,184	$ - - - 12,065 (US$ 368) - - - 47,504 (US$ 1,522) -

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2019		Investment Amounts Authorized by the Investment Commission, MOEA		Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$635,051 (HK$1,200, US$19,312)		$725,060 (HK$1,400, US$22,076) (Note 6)		$8,693,257 (Note 7)

(Continued)

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Note 1: Methods of investment have following types:

a. Direct investment in mainland China.
b. Indirect investment in mainland China through an existing company in a third region. c. Other

Note 2: The amounts of paid-in capital and carrying value as of balance sheet date were translated into the New Taiwan dollar at the rates of HK$1=NT$3.849, US$1=NT$29.980, RMB1=NT$4.305 prevailing on December 31, 2019.

Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2019 and December 31, 2019 were translated into the New Taiwan dollar on the original outflow day.

Note 4: Based on audited financial statements.

Note 5: Investment income (loss) was translated into the New Taiwan dollar at the average rate of HK$1=NT$3.945, US$1=NT$30.912, RMB1=NT$4.472 for the year ended December 31, 2019.

Note 6:

	Approval Letter		Approved Amount	Approved Amount	Approved Amount
a.	Letter (1998) II-87710585 of Investment Commission of MOEA	NT$	5,852	(HK$	1,400)
b.	Letter (2000) II-89014726 and 89037430 of Investment Commission of MOEA	NT$	63,180	(US$	2,000)
c.	Letter (2001) II-89037430 of Investment Commission of MOEA	NT$	33,160	(US$	1,000)
d.	Letter II-91048640 of Investment Commission of MOEA	NT$	63,984	(US$	1,853) (Note 8)
e.	Letter II-90025170 of Investment Commission of MOEA	NT$	60,240	(US$	1,750)
f.	Letter II-092020235 of Investment Commission of MOEA	NT$	19,230	(US$	560)
g.	Letter II-092043358 of Investment Commission of MOEA	NT$	6,748	(US$	200)
h.	Letter II-093004076 of Investment Commission of MOEA	NT$	3,158	(US$	95)
i.	Letter II-094006092 of Investment Commission of MOEA	NT$	6,896	(US$	219)
j.	Letter II-09500052120 of Investment Commission of MOEA	NT$	81,528	(US$	2,500)
k.	Letter II-09600175700 of Investment Commission of MOEA	NT$	120,000	(US$	3,699)
l.	Letter II-096000006020 of Investment Commission of MOEA	NT$	66,580	(US$	2,000)
m.	Letter II-09600310110 of Investment Commission of MOEA	NT$	33,160	(US$	1,000)
n.	Letter II-09700186010 of Investment Commission of MOEA	NT$	46,110	(US$	1,500)
o.	Letter II-09700403210 of Investment Commission of MOEA	NT$	7,096	(US$	210) (Note 9)
p.	Letter II-10400042770 of Investment Commission of MOEA	NT$	78,240	(US$	2,500)
q.	Letter II-10600164500 of Investment Commission of MOEA	NT$	29,898	(US$	990)

Note 8: The Corporation invested accounts receivable amounting to US$853 thousand in Chroma Electronics (Shenzhen) Co., Ltd. through Neworld Electronics Ltd.

Note 9: The investment in Sajet Technology Inc. (liquidated on September 15, 2008) was authorized by the Investment Commission in 2004.

(Concluded)

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Chroma ATE Inc.

==> picture [115 x 105] intentionally omitted <==

Chairman Leo Huang

==> picture [63 x 54] intentionally omitted <==

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AI assistant

CHROMA — Annual Report 2019

52029_rns_2020-06-17_90760638-a784-4a94-a2b8-0c1a8f869477.pdf

Critical financial indicators (consolidated)

Table of Contents

Chapter 1 Report to Shareholders

Business results

Business plan, development strategies, external competition and environment, legal environment, and macro-business environment

Chairman & CEO Leo Huang

Chapter 2 Company Introduction

I. Date of founding: November 8, 1984

II. Company overview

Chapter 3 Corporate Governance Report

Director Information

1. Remuneration for directors (including independent directors)

Remuneration range

2. Remuneration for CEO, general managers and vice presidents

Names of managerial officers who receive employee bonus, and distribution of employee bonus

III. Operation of corporate governance

(I) Operation of Board of Directors

(II) Operation of Audit Committee

(IV) Composition, duties and operation of the Remuneration Committee

(X) Implementation of internal control system

1. Statement on Internal Control System

IV. CPA fees

2. Where the counterparty for equity transfer is a related person:

Combined shareholding percentage

Chapter 4 Financing Status

(III) Distribution of equity ownership

1. Common shares

(IV) List of major shareholders

VI. New restricted employee shares

VIII. Implementation of capital utilization plan

(2) Capital utilization plan and expected progress

(3) Anticipated possible benefits

(II) Status of implementation

Chapter 5 Operation Summary

B. Special materials

B. Special materials

3. Future R&D plans

A. Test instrument equipment

2. Production process

(III) Supply of primary raw materials

(VI) Sales volume in the two most recent years

III. Employee information in the two most recent years up to the publication date of this annual report

IV. Environmental protection expenditure

VI. Important contracts

Chapter 6 Financial Summary

2. Condensed parent company-only balance sheet and statement of comprehensive income

3. Names of CPA and audit opinion for the five most recent years

II. Financial analysis in the five most recent years

1. Consolidated financial analysis

2. Parent company-only financial analysis

Chroma ATE Inc.

Audit Committee’s Audit Report

Chapter 7 Review and Analysis of Financial Condition and Performance, and Relevant Risk Events

I. Financial condition

II. Financial performance

III. Cash flow

(II) Analysis of cash liquidity for the following year

(III) Improvement plan

(2) Future response measures

(III) Future R&D projects and planned budget:

Chapter 8 Special Notes

I. Information on affiliated companies

2. Basic information of various affiliated companies

5. Directors, supervisors, CEO and general managers of Chroma ATE Inc. and affiliated companies

6. Business operating conditions of Chroma ATE Inc. and its affiliated companies

IV. Other supplementary matters: None.

Chroma ATE Inc. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Impairment of Trade Receivables

Valuation of Inventory Write-down

Other Matter

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

CHROMA Annual Report 2019