CHROMA - Annual Report 2020 | FinancialReports.eu

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Spokesperson of Chroma ATE Inc.

Name: Paul Ying Title: Senior Vice President of Finance & Administration Center

TEL: (03) 327-9999 ext. 82001 Email: [email protected] Deputy spokesperson of Chroma ATE Inc. Name: Jennifer Chieng Jui-ying Title: Director TEL: (03) 327-9999 ext. 82701 Email: [email protected]

Addresses and telephone numbers of Corporation headquarters and subsidiaries: Head Office: No. 88, Wenmao Rd., Guishan Dist., Taoyuan City 333001, Taiwan TEL: (03)327-9999

Taoyuan Huaya plant: 68 Huaya 1st Rd., Guishan Dist., Taoyuan 333411, Taiwan TEL: (03)327-9999

Hsinchu Branch: 6F, No. 5, Technology Rd., Science Park, Hsinchu City 300092, Taiwan TEL: (03)563-5788 Kaohsiung Branch: No. 1, Neihuan E. Rd., Nanzi Dist., Kaohsiung City 811623, Taiwan TEL: (07)365-6188

Stock transfer agent

Name: Share administration agency, Taishin International Bank Address: B1, No.96 Jianguo North Road, Sec. 1, Taipei City 104496, Taiwan Website: http://www.taishinbank.com.tw TEL: (02)2504-8125

Certified Public Accountant (CPA) for the most recent financial report
Name: Cheng-Ming Lee, Wen-Chi Kuo, CPA Name of accounting firm: Deloitte & Touche

20F, No. 100, Songren Rd., Xinyi Dist., Taipei City 110016, 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 (integrated)

		Unit:	NT$ million
	2018	2019	2020
Consolidated turnover	16,931	13,910	15,533
Net income (attributable to the parent Corporation)	2,546	1,854	2,324
Earnings per share, EPS (NT$)	6.22	4.48	5.56
Capital stock	4,168	4,193	4,213
Total assets	23,202	25,437	28,129
Total equity	14,690	14,785	16,389
Return on total assets	11.37	7.80	8.85
Return on total equity	18.42	12.83	15.21

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Consolidated revenue for the 5 most Net income after tax for the 5
recent years most recent years
18000 16931 3000
1700016000 14901 15533 2800 2558 2546
2600
15000 13910 2324
14000 2400
13000 11624 2200
12000 2000 1854
11000 1720
1800
10000
9000 1600
8000 1400
7000 1200
6000 1000
5000
800
4000
3000 600
2000 400
1000 200
0
0
2016 2017 2018 2019 2020
2016 2017 2018 2019 2020
Unit: million NT$
Unit: million NT$
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Earnings per share for the 5 most
recent years
7.0
6.5 6.41 6.22
6.0 5.56
5.5
5.0 4.53 4.48
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2016 2017 2018 2019 2020
Unit: NT$
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Chapter 1 Reports to Shareholders ...................................................................................................... 1

Chapter 2 Corporation Introduction	Chapter 2 Corporation 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 ........................................................................................................................... 42
V.	Replacement of CPAs ....................................................................................................... 43
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 .............................................................. 43
VII.	Shareholding transfer and equity pledge changes of directors or managerial officers
	holding more than ten percent (10%) of Company shares during the most recent
	year up to the publication date of this annual report ......................................................... 43
VIII. Ten largest shareholders who are related parties or each other's spouses and relatives within
	the second degree of kinship ............................................................................................. 45
IX.	Number of shares held and percentage of the stake of investment in other companies
	by the Company, the Company’s director, managerial officer, or an entity directly
	or indirectly controlled by the Company .......................................................................... 46
Chapter 4. Financing
I.	Capital and shares ............................................................................................................. 47
II.	Corporate bond .................................................................................................................. 54
III.	Preferred shares ................................................................................................................. 54
IV.	Overseas depositary receipt .............................................................................................. 54
V.	Employee stock warrant .................................................................................................... 55
VI.	New restricted employee shares ........................................................................................ 57
VII.	Issuance of new shares in connection with the merger or acquisition of other companies58
VIII. Implementation of capital utilization plan ........................................................................ 58

Chapter 5. Operation summary I. Business content ................................................................................................................ 59 II. Market, production, and sales summary ........................................................................... 68 III. Employee information in the two most recent years up to the publication date of this annual report ..................................................................................................................... 75 IV. Environmental protection expenditure .............................................................................. 75 V. Labor relations .................................................................................................................. 76 VI. Important contracts ........................................................................................................... 78

Chapter 6. Financial summary

I. Condensed balance sheet and statement of comprehensive income in the five most recent years ....................................................................................................................... 79 II. Financial analysis in the five most recent years ................................................................ 82 III. Audit Committee's audit report on financial statements in the most recent year .............. 85 IV. Financial statements in the most recent year .................................................................... 86 V. The Corporation's parent company-only financial statements audited and attested by CPAs in the most recent year ....................................................................................... 86 VI. Financial conditions of the Company and affiliated companies ....................................... 86

Chapter 7. Review, analysis, and risks of financial position and performance

I. Financial condition ............................................................................................................ 87 II. Financial performance ....................................................................................................... 88 III. Cash flow .......................................................................................................................... 89 IV. Impact of material expenditures on the Corporation's finances and operations in the most recent year ................................................................................................................ 89 V. Investment policies in other companies, the main reasons for profit/losses, improvement plan, and investment plans for the upcoming year ..................................... 90 VI. Risk analysis and assessment for the most recent year up to the publication date of this annual report ............................................................................................................... 90 VII. Other important matters .................................................................................................... 95

Chapter 8 Special Notes

I. Information on affiliated companies ................................................................................. 96 II. Private placement of securities in the most recent year up to the publication date of this annual report ............................................................................................................. 101 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 ....................................................... 101 IV. Other supplementary matters .......................................................................................... 101 V. Any event that results in substantial impact upon the shareholders’ equity or prices of the Company’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 report ......................................................................................... 101

Chapter 1 Reports to Shareholders

Business results

Throughout 2020, the COVID-19 epidemic has spread around the world and heavily impacted the global economy. Various countries attempted to curb the spread by local and national lockdowns or restricting commercial and social activities. Most companies maintained operation through work from home and remote business activities. However, due to Taiwan's proper control of the epidemic, the Company has been able to maintain normal operations, and business performance has even continued to grow. The operating revenue of Chroma ATE Inc. in 2019 was NTD 9.18 billion, while the Chroma Group revenue was 15.533 billion. The net income of 2.381 billion equaled to earnings per share of NTD 5.56.

The Company's overall product revenue on test equipment grew by 14% over the past year. Especially the semiconductor and photonics test systems contributed greatly, with the continuously growing demand for related semiconductors such as 5G, HPC, and laptops leading to a 31% increase in revenue. At the same time, power electronic test equipment has still been growing steadily by 5%, mainly due to the active policy-driven development of the electric vehicle industry in Europe, the United States, and China in response to environmental protection and energy saving. As a result, high-power test equipment required for electric vehicle-related parts and modules continued to grow. Within the Chroma Group, the operation of MAS Automation was severely affected by the pandemic, and last year’s performance declined by 39%. However, the gold and copper wire performance of Chroma New Material was able to grow 22% as the semiconductor industry is booming. The overall group revenue increased by 12%. Other relevant consolidated financial figures are as follows:

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Financial Performance for Year 2019 ~ 2020
Items 2020 2019
Financial Debt to Assets Ratio (%) 41.74 41.87
Structure (%) Long-term Fund to Fixed Assets Ratio (%) 624.21 557.61
Current Ratio (%) 160.57 168.74
Solvency (%)
Quick Ratio (%) 122.28 129.77
Return on Assets (%) 8.85 7.80
Profitability (%) Return on Equity (%) 15.21 12.83
Profit Margin (%) 14.96 13.33
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Business plan, development strategies, external competition and environment, legal environment, and macro-business environment

Looking forward to 2021, the epidemic continues to seriously threaten the global economy. In fact, its spread has severely harmed many industries, including aviation and tourism, and has led to a material shortage in high-tech industries and critical chain disruption. In the light of this crisis, the Company’s strategies to survive safely and continue to generate revenue and profit are:

Deploy production capacity and stay ahead of schedule to ensure timely output that meets customer demands.
Keep a close eye on European, American, and Japanese market demands after the epidemic has eased.
Accelerate the development of relevant test solutions to advance semiconductor manufacturing processes and product testing.

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 Corporation Introduction

I. Date of founding: November 8. 1984

II. Company overview:

November 1984 Founded in Taipei City with a capital of NT$2 million. Launched the first Taiwanese-invented programmable video signals generator (65MHz) . November 1986 Released the world’s first automatic testing with simultaneous and parallel testing architecture for switched-mode power supplies.

February 1993 Invested in U.S. subsidiary Chroma ATE Inc., as a sales office based in the United States. December 1993 Official opening of the new Wugu plant. February 1994 Invested in the establishment of Hong Kong subsidiary Neworld Electronics Limited as a base for expanding the Chinese market. December 1994 Granted the ISO9002 quality certification. November 1995 Passed the Chinese National Laboratory Accreditation (CNLA). December 1996 Initial public offering in Taiwan. August 1997 Granted the ISO9001 quality certification. December 1997 Received the 6th Taiwan Excellence Award for the 9107 Uninterruptible Power Supply and the 3203 Memory IC Test System.

April 1998 Received the Outstanding Performance Award during the 6th MOEA Industr Technology Development Award. Invested in DynaScan Technology Corp.
July 1998 Received the 2nd Outstanding Photonics Product Award for the 7100 Colo Analyser.
September 1998 Invested in ADLINK Technology Inc. December 1998 Received the 7th Taiwan Excellence Award for the 2225 and 2325 Series Video Pattern Generators and the 9105 Uninterruptible Power Supply.
May 1999 Received the Excellent Product Design Award for the 9105/9107 Uninterruptible Power Supply.
June 1999 Acquired Hita Technology Co., Ltd.
September 1999 Established Chroma ATE Europe B.V. subsidiary in the Netherlands as a sales office in the European market.
November 1999 Grand opening of the new Tauyuan plant. 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 headquarters in Taiwan. December 2004 20th anniversary of the Corporation and grand opening of the Taoyuan headquarters.
June 2005 Expiration and delisting of the first unsecured convertible corporate bonds issued in Taiwan.
August 2006 Spun off the Special Material business unit as new subsidiary, Chroma New Material Corp.
January 2007 Invested in Wei Kuang Automatic Equipment (Nanjin) Co., Ltd., Mou Kuan Technologies (Nanjin) Co.,Ltd., Sajet Technology Co., Ltd., and MAS Automation Corp.
February 2007 Invested in Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. March 2007 Invested in Testar Electronic Corporation. April 2007 Established the MES business unit.
March 2008 Simple merger of subsidiary Silver Town Electronic Co., Ltd. May 2008 Invested in the establishment of Chroma Japan Corp.
March 2009 Granted ISO 9001:2008 certification.

September 2009 Established the Kaohsiung branch. September 2009 Invested in Chroma Systems Solutions, Inc. as a sales office based in the United States. August 2010 Received Finance Awards as the Best Managed Company, the Best Corporate Governance, and the Best Mid-cap Company in Taiwan. October 2010 Granted ISO/TS 16949 certification. August 2011 Acquired Wise Life Technology Co., Ltd. January 2012 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 Received the Excellent Industrial Contribution Award for the LED 2D CCD Light Bar Test System in the 2011 MOEA Technical Excellence Program.
November 2012 Simple merger of subsidiary Novatest Electronics Co., Ltd. December 2012 Acquired the world’s first SAE J1772 certification from UL for automated communication protocol test system.
February 2013 Received the 1st MOEA Taiwan Mittelstand Award. Invested in Adivic Technology Co.
May 2014 Second issuance of unsecured convertible corporate bonds in Taiwan worth NT$ 2 billion.
January 2016 Invested in Quantel Private. Ltd. in Singapore as a Southeast Asia branch. January 2017 Received the Distinguished Enterprise Innovation Award, the highest honor available from the 5th National Industrial Innovation Award.
August 2017 Established Innovative Nanotech Incorporated .
September 2017 Established subsidiary Chroma Germany GmbH in Germany. October 2017 Invested in Touch Cloud Inc.. October 2017 Received the “Best Trade Contribution Award” from MOEA.
January 2018 Received the 26th Taiwan Excellence Award for the 61800 Series Regenerative Grid Simulator and 3160-C Tri-Temp Quad Sites Handler.
February 2018 Established Chroma Korea as a branch office in South Korea. January 2019 Received the 27th Taiwan Excellence Award for the “17040 Regenerative Battery Pack Test System" and "2238 Video Pattern Generator".
February 2019 Invested Camtek Ltd. in Israel.
September 2019 Approved the joint housing construction with Fu Yu Construction. October 2019 Awarded as “Top 35 of the MOEA Best Taiwan Global Brands”.
November 2019 Received Bronze Award at 12th TSCA Taiwan Corporate Sustainability Report Award.
November 2020 Awarded as “Top 40 of the MOEA Best Taiwan Global Brands”. December 2020 Headquarters relocation and expansion.

Chapter 3 Corporate Governance Report

I. Organization

(I) Organizational structure

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(II) Responsibilities and functions of main departments

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Department Responsibilities
Set up market planning center, Legal Affairs Dept., and Safety &
Health Center. Formulate Corporation-wide administrative and
business objectives, implement communication and coordination,
CEO Office
product planning, new business development and planning, patent
management, contract review environmental protection, and
occupation safety and health (OSH) management.
Establish, update, and revise internal audit and control systems.
Internal Auditor
Review, revise, and audit internal control systems.
Semiconductor Test Responsible for the planning, research, and development (R&D), and
Equipment BU marketing of semiconductor test equipment and products.
Responsible for the R&D and marketing of measurement instruments.
Test & Measurement BU In charge of calibration services as well as operations of calibration
labs for measurement instruments.
Responsible for the R&D and sales of MES systems.
Responsible for the planning, R&D, and marketing of modular
Integrated System Solution
instruments and products.
BU
Responsible for the planning, R&D, and marketing of system
integration solutions.
Intelligent Manufacturing Responsible for the R&D and marketing of MES systems.
System BU
Optical Inspection Solution Responsible for the R&D and marketing of optical inspection systems.
BU
Responsible for the raw material purchasing and production for the
entire Corporation.
Manufacturing Center
Responsible for the planning and maintenance of product quality
systems.
Advanced Technology New technology planning, development, and supporting the business
Research Center units (BU) to comprehend the future development of new industries.
Consists 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 taxation and
Finance & Administration
accounting affairs.
Center
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 factory maintenance and
safety.
Responsible for building and managing the Corporation's operations
management system. Establish the IT Department (including the IT
Operation Management System Development Section, the IT System Management Section,
Center 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.
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II. Directors, CEO, general managers, vice presidents, assistant vice presidents, and heads of various departments and branches (I) Director Information

																April 12,2021	April 12,2021	April 12,2021	April 12,2021
Position title Nationality or place of registration Name Gender				Date elected	Final date of term of office	Date of first election	Number of shares held when elected 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 the Corporation or other corporations									Any managerial officer, director, or supervisor who is a spouse or relative within the second degree of kinship			Remark
							Number of shares Shareholding ratio Number of shares Shareholding ratio Number of shares Shareholding ratio									Position title Name		Relations
President Republic of China		Leo Huang Male		2020.06.10	2023.06.09	1984.10.23	20,763,897 4.94%		20,859,897 4.95%		9,294,362 2.20%		0	Electronics Engineering Department, National Chiao Tung University General Manager, Kemao General Manager of Corporation Director, I-Sheng Electric Wire & Cable Co., Ltd. Director, Leadtek Research Inc. Independent Director, Ichia Technology Inc. Representative of Corporate Director, Tian Zheng International Precision Machinery Co., Ltd. Director, Twoway Communications, Inc. Director, DynaScan Technology Corp. Refer to page 98~99 for details on positions assumed in related companies		None None		None	Note 1
Board director Republic of China		I-Shih Tseng Male		2020.06.10	2023.06.09	2012.06.06	424,548 0.10%		360,548 0.09%		205,722 0.05%		0	PhD, Mechanical Engineering, Pennsylvania State University Project Manager,Institute for Information Industry President of the Corporation Refer to page 98~99 for details on positions assumed in related companies		None None		None	None
Board director Republic of China		Tsun-I Wang Male		2020.06.10	2023.06.09	2005.05.18	19,339 0		19,000 0		0	0	0	Ph.D., Institute of Electro-Engineering, National Chiao Tung University Vice President, Tailyn Technologies, Inc. Vice President, Champion-Lighting Technologies Limited Director of Hua Eng Optoelectronics Research Institute Dean of Electronics Department, Minghsin Universityof Science and Technology Chief Technology Officer, DynaScan Technology Corp. Independent Director, Dynapack International Technology Refer to page 98~99 for details on positions assumed in related companies		None None		None	None
Board director Republic of China		Chung- Ju Chang Male		2020.06.10	2023.06.09	2012.11.01	0	0	0	0	0	0	0	Ph.D., of Electrical Engineering, 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 Dean and Director of the Institute of Communications Engineering, National Chiao Tung University Review committee member, MOEA Leading Projects/Industrial Technology Projects Technology advisor, MOE Technologyadvisor,MOTC 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
Independent director Republic of China		Tai-Jen George Chen	Male	2020.06.10	2023.06.09	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 National Taiwan University Chair Professor Independent Director, Ichia Technology Inc.		None None		None	None
Independent director	Republic of China	Jia- Ruey Duann	Male	2020.06.10	2023.06.09	2020.06.10	0	0	0	0	0	0	0	Ph. D., Physics North Dakota State University Harvard Business School Advanced Management Program Assistant vice president, ITRI Director of Measurement Technology Developmen Center, ITRI Group leader and deputy director of Measurement Technology Development Center, ITRI Adjunct Professor, Department of Physics, Chung Yuan Christian University President of Automatic Optical Inspection Equipment Alliance Assistant Researcher of Precision Instrument Development Center, National Science Council /Plant manager of optical devices	t Distinguished Expert, ITRI CIE-Taiwan President	None	None	None	None

Independent director	Republic of China	Steven Wu	Male	2020.06.10	2023.06.09	2020.06.10	0	0	0	0	0	0	0	MBA, Georgetown University Vice President, Private Equity Business Department of CDIB Capital Group	Vice President and department head, Private Equity Business Department of CDIB Capital Group Board Director of Anhui Dongjin Resources Recycling Technology Co., Ltd. Board Director of Jiangyin Tongli Optoelectronic Technology Co., Ltd Board Director of Jiangyin Suda Huicheng Composite Materials Co., Ltd. Board Director of Jiangsu Junhui Optoelectronics Technology Co., Ltd. Board Director of Dongjin Environmental Technology Co., Ltd. Vice-Chairman of JINTEX Corporation Ltd. Chairman of Prime Express International Limited Board Director of Billion View Investments Limited Managing Director of CDIB Capital International Corporation Board Director of Dongjin Green Tech Holdings Co., Ltd. Board Director of Great Rich Technologies Limited Board Director of Prime Express Holdings Limited	None	None	None	None

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

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Does the individual have more than 5 years of
Conditions Meets the criteria for independence
professional experience and the following
(Note 1)
qualifications?
Currently serving Currently Work
as an instructor serving as a experience
or in higher judge, necessary for Currently
positions in a prosecutor, business serving as the
private or public lawyer, certified administration, independent
college or public CPA or legal affairs, director of
university in the other finance, other public-
1 2 3 4 5 6 7 8 9 10 11 12
field of business, professional or accounting, or owned
law, finance, technician that business sector corporations
accounting, or must undergo of the
the business national Corporation.
sector of the examinations
Corporation and specialized
Name
license
Leo Huang    1
I-Shih Tseng    0
Tsun-I Wang     1
Chung-Ju     0
Chang
Tai-Jen
   1
George Chen
Jia-Ruey   1
Duann
Steven Wu   0
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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 or a director, supervisor, or employee of a corporate shareholder who is appointed as a director or supervisor of the Company per paragraph 1 or 2 of Article 27 of the Companies Act. 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

(II) CEO, general managers, vice presidents, assistant managers, and supervisors at various departments and branches

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April 12, 2021
Position title Nationality Name Gender Date of 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 the Corporation a spouse or a relative within the Any managerial officer who is second degree of kinship Remark
appointment Number of Shareholding Number of Shareholding Number Shareholding Position Name Relations
shares ratio shares ratio of shares ratio title
Electronics Engineering Department, National Chiao Tung Director of Sheng Industrial (Stock Co.)
University Corporation, Director of Leadtek Technology
Corporation, Independent Director of Yi Jia
Technology (Stock Co.), Representative of Legal
President Republic of China Leo Huang Male 1984.11.08 20,859,897 4.95% 9,294,362 2.20% 0 0 Person Director of Tianzheng International Precision Machinery Co., Ltd., and Director of None None None Note 2
Dayun Optoelectronics Co., Ltd. Guangyuan
Technology (Co.) Chairman
Refer to page 98~99 for details on positions assumed
in related companies
Electronics Engineering Department, National Chiao Tung
CEO, Test & Measurement BU Republic of China David Yang Male 1992.08.14 54,000 0.01% 0 0 0 0 University Teaching Assistant, Department of Information Technology, Refer to page 98~99 for details on positions assumed in related companies None None None None
College of Engineering, Chung Hua University
CEO of Integrated System Solution
BU and concurrently CEO of Optical Inspection Solution BU Republic of China I-Shih Tseng Male 1998.07.16 360,548 0.09% 205,722 0.05% 0 0 [Mechanical Engineering, Pennsylvania State University, US] Project Manager, Institute for Information Industry Refer to page 98~99 for details on positions assumed in related companies None None None None
Manager of Intelligent Manufacturing Republic of Joe Lin Male 2007.04.01 93,743 0.02% 0 0 0 0 [Department of Information Sciences, Cal Poly Pomona ] Refer to page 98~99 for details on positions assumed None None None None
System BU China General Manager, Sajet Technology Co., Ltd. in related companies
Electrical and Control Engineering Department, National
General Manager, Semiconductor Test Equipment BU Republic of China George Chang Male 2006.08.01 40,400 0.01% 0 0 0 0 Chiao Tung University Manager, Business Department, Lian Li Co., Ltd. None None None None None
Senior Vice President of Finance & Administration Center Republic of China Paul Ying Male 1999.05.03 165,969 0.04% 0 0 0 0 School of Management, New York Institute of Technology Vice President of Finance, Hsin Yu Energy Development Co., Ltd. Refer to page 98~99 for details on positions assumed in related companies None None None None
Electrical Engineering Department, National Taiwan
Senior Vice President of Operation Republic of Benjamin Male 1992.06.22 176,723 0.04% 0 0 0 0 University None None None None None
Management Center China Huang Vice President, R&D Department, Test & Measurement BU of
the Corporation
Department of Information & Communications, Chinese
Senior Vice President of Joint Manufacturing Center Republic of China Steven Liu Male 1991.08.22 118,012 0.03% 0 0 0 0 Culture University Departmental Manager, Property and Product Management None None None None None
Department of the Corporation
Machinery and Automation Engineering, Nanya Institute of
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 Technology Vice President, Dasike Technology Corporation None None None None None
Department and Institute of Industrial Engineering and
Vice President, CEO Office Republic of China C.C.Fan Male 2010.08.01 163,235 0.04% 0 0 0 0 Management, Minghsin University of Science and TechnologyVice President, R&D Department, Wei Kuang Automation None None None None None
Co., Ltd.
Electrical Engineering, Waseda University
Vice President, Planning Department, Test & Measurement BU Republic of China Bobby Tseng Male 2001.01.01 15,000 0 0 0 0 0 Manager, Product Planning Department, Measurement None None None None None
Instrument BU of the Company
Department of Electrical Engineering, Lunghwa University of
Vice President, Greater China Area
Sales Department, Test & Measurement BU Republic of China Vincent Chen Male 2001.01.01 87,860 0.02% 0 0 0 0 Science and Technology Department Manager, Greater China Area Sales Department, Refer to page 98~99 for details on positions assumed in related companies None None None None
Test & Measurement BU
Department of Electrical Engineering, National Taitung Junior
Vice President, Technical Service Department, Test & Measurement BU Republic of China Tony Yang Male 2003.07.01 96,154 0.02% 0 0 0 0 College Manager, Engineering Department, Tiger Power Co., Ltd. None None None None None
Electrical and Control Engineering Department, National
Vice President, R&D Department, Test Republic of Vincent Wu Male 2003.07.16 95,665 0.02% 903 0 0 0 Chiao Tung University None None None None None
& Measurement BU China Department Manager, R&D Department, Test & Measurement
BU of the Corporation
Vice President, R&D Department 1, Integrated System Solution BU Republic of China Ouyang Lance Male 2009.07.01 48,500 0.01% 0 0 0 0 Mechanical Engineering Department, National Chiao Tung University Vice President, Global Target Corporation None None None None None
Department of Electrical Engineering, Hsinpu Institute of
Vice President, Sales Department 2, Republic of Jeff Lee Male 2007.01.01 86,500 0.02% 0 0 0 0 Technology None None None None None
Integrated System Solution BU China Departmental Manager, Product Planning Department,
Integrated System BU of the Corporation
Department of Electrical Engineering, Hsinpu Institute of
Vice President, Planning Department, Test & Measurement BU Republic of China Kenny Wang Male 1993.04.23 459,928 0.11% 0 0 0 0 Technology Manager, Product Planning Department, Measurement None None None None None
Instrument BU of the Company
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Vice President, Turnkey Solution Sales Bachelor of Chemical Engineering
& Marketing Division, Republic of China Cindy Tai Female 2009.11.01 17,936 0 0 0 0 0 Manager, Product Planning Department, Test & Measurement None None None None None
Test & Measurement BU BU of the Company
Electrical and Control Engineering Department, National
Vice President, Planning Department, Test & Measurement BU Republic of China Galen Chou Male 1996.07.01 11,000 0 0 0 0 0 Chiao Tung University Manager, Product Planning Department, Measurement None None None None None
Instrument BU of the Company
Vice President, Marketing Department, Republic of Arno Wu Male 2007.04.01 24,250 0.01% 0 0 0 0 [Department of Business Management, Tamkang University ] Refer to page 98~99 for details on positions None None None None
Intelligent Manufacturing System BU China Assistant Vice President, Sajet Technology assumed in related companies
Institute of Electronic Engineering, University of Warwick
Vice President, Product Planning Institute of Biomechanical Engineering, National Taiwan
Office , Optical Inspection Solution Republic of China Alex Zheng Male 2020.06.15 0 0 0 0 0 0 University None None None None None
BU Director of Asia Pacific Region and Vice President of Taiwan
Branch, Fortemedia, Inc.
Vice President, Product Planning
Office, Semiconductor Test Equipment BU Republic of China Eugene lin (Note 1) Male 2018.12.17 0 0 0 0 0 0 [Business Management Institute, National Chengchi University] Manager, Keysight Technologies Inc. None None None None None
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Note 1: Promoted to Vice President on January 1, 2021.

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 electronics-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.

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

1. Remuneration for the director (including independent directors)

Unit: Thousand NT$

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Director’s remuneration Remuneration paid to concurrent employee Proportion of NIAT after compensation
Proportion of NIAT after
summing the 7 items of A, from invested
summing the 4 items of A,
Bonus to Directors Business execution fees B, C, and D (Note 4) Salaries, bonuses, and B, C, D, E, F, and G (Note companies other
Remuneration (A) Retirement pension (B) special expenses (E) (Note Retirement pension (F) Employee remuneration (G) (Note 6) 4) than the
Position title Name (Note 1) (C)(Note 2) (D)(Note 3) 5) Company’s
All companies listed in subsidiaries or
The All companies The All companies The All companies The All companies The All companies The All companies The All companies The Compnay this financial report The All companies parent company
listed in this listed in this listed in this listed in this listed in this listed in this listed in this listed in this
Company Company Company Company Company Company Company Amount of Amount Amount Amount of Company (Note 7)
financial report financial report financial report financial report financial report financial report financial report financial report
cash of shares of cash shares
Leo Huang
I-Shih Tseng
Board 225 225
0 0 0 0 6,000 6,335 405 405 0.28% 0.29% 7,741 7,741 20,000 0 21,560 0 1.48% 1.56% 4,524
director (Note 8) (Note 8)
Tsun-I Wang
Chung-Ju Chang
Tsung-Ming
Chung (Note 9)
Quincy Lin
(Note 9)
Independent Tai-Jen George 0 0 0 0 3,600 3,600 315 315 0.17% 0.17% 0 0 0 0 0 0 0 0 0.17% 0.17% 0
director Chen
Jia-Ruey Duann
(Note 10)
Steven Wu
(Note 10)
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 Corporation mainly comprises bonuses for directors. According to Article 34 of the Corporation's Articles of Incorporation, bonuses distributed to directors shall not be greater than 1.5% of the Corporation'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 the 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.
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Table of remuneration ranges

	Table of remuneration ranges	Table of remuneration ranges	Table of remuneration ranges	Table of remuneration ranges
Remuneration range for each director in the Corporation	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	Tsung-Ming Chung, Quincy Lin, Jia-Ruey Duann, Steven Wu Tsung-Ming Chung, Quincy Lin, Jia-Ruey Duann, Steven Wu Tsung-Ming Chung, Quincy Lin, Jia-Ruey Duann, Steven Wu Tsung-Ming Chung, Quincy Lin, Jia-Ruey Duann, Steven Wu
NT$1,000,000 (inclusive) to 2,000,000 (not inclusive)	I-Shih Tseng, Tsun-I Wang, Chung-Ju Chang, Tai-Jen George Chen I-Shih Tseng, Tsun-I Wang, Chung-Ju Chang, Tai-Jen George Chen Chung-Ju Chang, Tai-Jen George Chen			Chung-Ju Chang, 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,Tsun-I Wang	I-Shih Tseng,Tsun-I Wang
NT$10,000,000(inclusive)to 15,000,000(not inclusive)
NT$15,000,000(inclusive)to NT$30,000,000(not inclusive)			Leo Huang	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	9people	9people	9people	9people

Note 8: It refers to the amount of retirement pension contributed.

Note 9: Mr. Tsung-Ming Chung and Mr. Quincy Lin stepped down after re-election of directors at the annual general meeting on June 10, 2020.

Note 10: Mr. Jia-Ruey Duann and Mr. Steven Wu were newly elected as independent directors of the Company at the annual general meeting on June 10, 2020, and their compensation disclosure period will begin on the same date.

2. Remuneration for CEO, general managers and vice presidents

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Unit: Thousand NT$
Proportion of NIAT after
Bonuses and special Compensation paid to
Salary (A) Retirement pension (B) Employee compensation (D) (Note 2) summing items A, B, C, and
expenses (C) (Note 1) D (%) the president and vice
presidents from an
Position title Name All The Company All companies listed in invested company other
companies All companies All companies this financial report All companies
The The The The than the Company’s
listed in this listed in this listed in this listed in this
Company Company Company Amount of Amount of Amount of Amount of Company subsidiaries or parent
financial financial report financial report financial report
cash shares cash shares company (Note 3)
report
President Leo Huang
CEO, Test & Measurement BU David Yang
General Manager, Integrated System Solution BU I-Shih Tseng
Manager of Intelligent Manufacturing System BU Joe Lin
General Manager, Semiconductor Test Equipment
George Chang
BU
Senior Vice President of Finance & Administration
Paul Ying
Center
Senior Vice President of Operation Management Benjamin
Center Huang
Senior Vice President of Joint Manufacturing Center Steven Liu
Vice President, Sales Department 1, Integrated
Herbert Tsai
System Solution BU
Vice President, CEO Office C.C.Fan
Vice President, Planning Department, Test &
Bobby Tseng
Measurement BU
Vice DepartmentPresident, , Test & Measurement BU Greater China Area Sales Vincent Chen 42,163 42,979 (Note 4) 2,435 (Note 4)2,435 16,490 17,025 76,769 0 78,329 0 5.93% 6.06% None
Vice President, Technical Service Department, Test
Tony Yang
& Measurement BU
Vice President, R&D Department, Test &
Vincent Wu
Measurement BU
Vice President, R&D Department 1, Integrated
Lance Ouyang
System Solution BU
Vice President, Sales Department 2, Integrated
Jeff Lee
System Solution BU
Vice President, Planning Department, Test &
Kenny Wang
Measurement BU
Vice President, Turnkey Solution Sales &
Cindy Tai
Marketing Division, Test & Measurement BU
Vice President, Planning Department, Test &
Galen Chou
Measurement BU
Vice President, Marketing Department, Intelligent Arno Wu
Manufacturing System BU (Note 7)
Vice President, Product Planning Office , Optical Alex Zheng
Inspection Solution BU (Note 8)
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Table of remuneration ranges

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Name of the General Managers and Vice Presidents
Remuneration range for each General Managers and
The Company Corporations in the consolidated financial statement
Vice Presidents in the Corporation
(Note 5) (Note 6)
Less than NT$ 1,000,000
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, Alex Zheng C. C. Fan, Alex Zheng
Herbert Tsai, Bobby Tseng, Vincent Chen, Tony Yang, Herbert Tsai, Bobby Tseng, Vincent Chen, Tony Yang,
NT$3,500,000 (inclusive) to 5,000,000 (not inclusive) Vincent Wu, Lance Ouyang, Jeff Lee, Kenny Wang, Cindy Vincent Wu, Lance Ouyang, Jeff Lee, Kenny Wang, Cindy
Tai, Galen Chou, Arno Wu Tai, Galen Chou, Arno Wu
NT$5,000,000 (inclusive) to NT$10,000,000 (not David Yang, I-Shih Tseng, Joe Lin, George Chang, Paul David Yang, I-Shih Tseng, Joe Lin, George Chang, Paul
inclusive) Ying, Benjamin Huang, Steven Liu Ying, Benjamin Huang, Steven Liu
NT$10,000,000 (inclusive) to 15,000,000 (not inclusive)
NT$15,000,000 (inclusive) to NT$30,000,000 (not
Leo Huang Leo Huang
inclusive)
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 people 21 people
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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, such as employee stock option certificates, new restricted employee shares, and participation in subscription of stocks in cash capital increase, shall also be included within the remuneration.

Note 2: The amount of employee compensation approved by the Board of Directors for the distribution of the CEO and Vice President in 2020 is based on the proportion of the actual distribution amount last year to calculate the proposed distribution amount for this year.

Note 3: a. If the Company's CEO, general managers or vice presidents receive remuneration from investments in other companies that are not subsidiaries of the 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: It refers to the amount of retirement pension contributed.

Note 5: The name of CEO, CEOs, and vice presidents shall be disclosed in the compensation ranges to which the amount of compensation paid to each CEO and each vice president by the company correspond, respectively.

Note 6: The name of CEO, CEOs, and vice presidents shall be disclosed in the compensation ranges to which the amount of compensation paid to each CEO and each vice president by all the companies (including the company) listed in the financial statements correspond, respectively.

Note 7: He was promoted to Vice President on February 1, 2020, so his compensation since that date is provided.

Note 8: He assumed the post on June 15, 2020, so his compensation since that date is provided.

(IV) Compare and analyze the total remuneration paid to the directors, CEO, general managers, and vice presidents of the Corporation in the two most recent years by all companies listed in the Corporation'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.
Analysis of total remuneration paid to the Company’s directors, CEO, general managers, and vice presidents in the 2 most recent years as a percentage of NIAT:

Total compensation paid to directors, CEO, and Vice President as apercentage of NIAT in 2020	Total compensation paid to directors, CEO, and Vice President as apercentage of NIAT in 2020	Total compensation paid to directors, CEO, and Vice President as apercentage of NIAT in 2019	Total compensation paid to directors, CEO, and Vice President as apercentage of NIAT in 2019
The Company	Consolidated financial statement of all corporations	The Company	Consolidated financial statement of all corporations
6.38%	6.52%	6.55%	6.71%

Note: The amount of directors and employee compensation allocated for 2020 has been approved by the Board of Directors on February 25, 2021.
Policies, standards, and packages for payment of remuneration, the procedures for determining remuneration, and its linkage to business performance and future risk exposure.
(1) Directors:
Bonus paid by the Corporation mainly comprises bonuses for directors. According to Article 34 of the Corporation's Articles of Incorporation, the bonus distributed to directors shall not be greater than 1.5% of the Corporation'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 2020 and 2019, the fixed amount of bonuses for directors was both NT$9,600,000, accounting for approximately 0.30% and 0.39% of the Company’s net income before taxes in each fiscal year. The Company also paid attendance fees to directors each time when the Board of Directors' meeting is convened. The attendance fees for 2020 and 2019 were NT$720 thousand and NT$810 thousand respectively.
(2) Managerial officer:
The company has established the “Regulations Governing compensation for Senior Executives,” which stipulates that when a managerial officer 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 alter employee bonus shall be made according to the Company's operational performance for the current year and individual performance appraisal. Such proposal shall first be submitted to the Compensation Committee for review before it is delivered to the Board of Directors for resolution.
(3) Employee:
The Company's compensation policy takes into account the salary levels of benchmark companies in the market, and provides differentiated and competitive salaries to employees based on the achievement of performance indicators to reflect employee abilities and to measure salary and bonus levels. The salary composition includes the salary and allowances, bonuses and employee compensation, welfare, etc.; the welfare system is designed on the premise that it is better than the laws and regulations for better talent attraction, motivation, and retention.
(4) The Company shall generate a budget for the following year at the end of the current

year. The following shall be referenced, including the current state of the economy and market environment and forecasts of overall business performance and risk exposure in the following year, to make suitable adjustments to compensation paid to managerial officers.

Names of managerial officers who receive employee bonus, and distribution of employee bonus As of March 31, 2021 (Unit: NT$ thousands)

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Total
Amount
Amount amount of
of
Position title Name of Total bonus as a
Cash
shares percentage
(Note)
of NIAT
President Leo Huang
CEO, Test & Measurement BU David Yang
General Manager, Integrated System
I-Shih Tseng
Solution BU
Manager of Intelligent Manufacturing
Joe Lin
System BU
General Manager, Semiconductor Test George
Equipment BU Chang
Senior Vice President of Finance &
Paul Ying
Administration Center
Senior Vice President of Operation Benjamin
Management Center Huang
Senior Vice President of Joint
Steven Liu
Manufacturing Center
Vice President, Sales Department 1,
Herbert Tsai
Integrated System Solution BU
Vice President, CEO Office C.C. Fan
Vice President, Planning Department, Test
Bobby Tseng
& Measurement BU
Vice President, Greater China Area Sales
Vincent Chen
Department, Test & Measurement BU
0 76,769 76,769 3.30%
Vice President, Technical Service
Tony Yang
Department, Test & Measurement BU
Vice President, R&D Department, Test &
Vincent Wu
Measurement BU
Vice President, R&D Department 1, Lance
Integrated System Solution BU Ouyang
Vice President, Sales Department 2,
Jeff Lee
Integrated System Solution BU
Vice President, Planning Department, Test
Kenny Wang
& Measurement BU
Vice President, Turnkey Solution Sales &
Marketing Division, Test & Measurement Cindy Tai
BU
Vice President, Planning Department, Test
Galen Chou
& Measurement BU
Vice President, Marketing Department,
Arno Wu
Intelligent Manufacturing System BU
Vice President, Product Planning Office ,
Alex Zheng
Optical Inspection Solution BU
Vice President, Product Planning Office,
Eugene Lin
Semiconductor Test Equipment BU
Managerial Officer
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Note: Allocation of profit-sharing employee bonus approved by the Board of Directors in 2020 for managerial officers is based on the actual allocation sum ratio of the previous year.

III. Operation of corporate governance

(I) Operation of Board of Directors

A total of 7 Board of Directors’ meetings were held in 2020 with the following attendance records from directors:

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Attendance in Delegated Actual presence (attendance)
Title Name Remark
person presence rate (%) (Note)
President Leo Huang 7 - 100% Reappointed
Board director I-Shih Tseng 7 - 100% Reappointed
Board director Chung-Ju Chang 6 - 86% Reappointed
Board director Tsun-I Wang 7 - 100% Reappointed
Tai-Jen George Reappointed
Independent director 7 - 100%
Chen
Independent director Jia-Ruey Duann 5 - 100% New elect
Independent director Steven Wu 5 - 100% New elect
Previously
Independent director Tsung-Ming Chung 2 - 100%
Appointed
Previously
Independent director Quincy Lin 2 - 100%
Appointed
Note: On June 10, 2020, the annual general meeting re-elected directors. The Board of Directors held 2 and 5
meetings before and after the re-election, respectively.
Other mandatory items:
I 、 Where one of the following circumstances apply for the operations of the Board of Director meetings, the date,
session, topics discussed, opinions of every independent director, and the Corporations’ handling of the
opinions of the independent directors shall be explained:
(I) Items listed in Article 14-3 of the Securities and Exchange Act:
The
Corporation's
All
actions in
independent
Board date Session Proposal response to
directors'
independent
opinions
directors’
opinions
2020.02.26 1st (1) Annual remuneration for directors, and attendance fees for No Proposal
Meeting in directors and supervisors who attended the Board of objection approved
2020 Directors' meetings
(2) 2020 compensation for members of the Audit Committee,
and attendance fees for members who attended Audit
Committee meetings
(3) Proposal of salary adjustment for the Company’s
managerial officers in 2020.
(4) Issuance of the Company’s 2019 statement of the internal
control system.
(5) Capital loans for Chroma Japan Corp.
(6) Amendments to the Company’s “Operational Procedures
for Endorsements/Guarantees for Others” and “Procedures
for Lending Funds to Other Parties”.
2020.04.29 2nd (1) Endorsement and guarantee for Chroma ATE Inc. (USA). No Proposal
Meeting in (2) Endorsement and guarantee for Chroma ATE Europe B.V. objection approved
2020 (3) Examine the qualifications of directors for candidates.
2020.07.03 4th Proposal of the Company’s disposal of the property and No Proposal
meeting in acquisition of the property’s right-of-use asset from its related objection approved
2020 party, ADLINK TECHNOLOGY INC.
2020.07.30 5th (1) Capital loans to Chroma Systems Solutions, Inc. No Proposal
meeting in (2) Endorsement and guarantee for Chroma ATE (Suzhou) objection approved
2020 Co., Ltd.
(3) 2020 CPA fees.
(4) Proposal of 2019 bonus distribution to managerial officers.
2020.10.29 6th (1) Endorsement and guarantee for Chroma Japan Corp. No Proposal
meeting in (2) Capital loans for Chroma Japan Corp. objection approved
2020
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I 、 Where one of the following circumstances apply for the operations of the Board of Director meetings, the date, session, topics discussed, opinions of every independent director, and the Corporations’ handling of the opinions of the independent directors shall be explained:

	2020.12.23	7th	(1) Amendments to the Company’s “Internal Control	No	Proposal
		meeting in	System”, “Implementation Rules for Internal Audit”, and	objection	approved
		2020	“Implementation Rules for Code of Business Conduct”.
			(2) Proposal of the acquisition of property’s right-of-use
			asset from the related party, ADLINK TECHNOLOGY
			INC.
			(3) Capital loans to Chroma Systems Solutions, Inc.
			(4) Propose to provide endorsements and guarantees for
			reinvestment companies in Mainland China.
			(5) Endorsement and guarantee for Chroma Japan Corp.
			(6) Intention to invest in Environmental Stress Systems, Inc.
			(7) Proposal of 2021 fixed salary adjustment for the
			Company’s managerial officers.
	(2) In	addition to the aforementioned matters, any other resolutions from the Board of Directors where an
	independent director expressed a dissenting or qualified opinion that has been recorded or stated by writing:
	None.
II`、`During the execution process where the Director abstains from being a stakeholder, the name of					the director, the
	content	of the proposal, the reason for abstinence, and the results of the voting should be stated:
	On April 29, 2020, the Board of Directors passed the qualification review of director candidates. According to
	Article	206 of the	Company Act, relevant directors do not participate in discussions and voting of the
	qualification review of individual directors. The proposal was approved without			objection after the chairman
	consulted all directors eligible in voting.

III 、 TWSE/TPEx listed companies shall disclose information such as the evaluation cycle and period, scope, method, and items of the Board’s self (or peer) evaluation, and fill out the implementation status of evaluation of the Board in Table 2(2). The Board of Directors of the Company passed the “Rules for Evaluation of the Performance of the Board” on February 26, 2020, which stipulates that the Board shall perform performance evaluation of itself, its members, the Remuneration Committee and the Audit Committee at least once a year. The performance evaluations of the Board of Directors shall be completed before the end of the first quarter in the following year. Internal questionnaires were used by the meeting staff and four areas were covered including overall operation of the Board, assessment of the Directors’ participation, operation of the Compensation Committee, and operation of the Audit Committee. The Company’s 2020 Board of Directors assessment results had been submitted on February 25, 2021.

The results of performance self-assessment regarding the Board of Directors and its members were between 4.57 to 5.00 (out of 5) on average. Among them, the scores for “directors’ attendance to shareholders meetings” and “directors’ continuing education” are relatively lower. Functional committees include the Audit Committee and the compensation Committee, and their overall performance assessment results averaged between 4.75 and 5.00 (out of 5). Among them, the scores for “internal control” and “improving the decision-making quality of compensation committee” are relatively lower. On the whole, the board of directors is operating well and will continue to strengthen based on the results of this Board of Directors' assessment to enhance the effectiveness of corporate governance. 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 Corporation'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 compensation Committee in accordance with the law. The Committee assesses the salary and compensation 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 - (V) Operation of Remuneration Committee”.

(II) Assessment of Board of Directors

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Frequency Period Scope Method Content
Assessment Items for the board of directors
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(II) Assessment of Board of Directors	(II) Assessment of Board of Directors	(II) Assessment of Board of Directors	(II) Assessment of Board of Directors	(II) Assessment of Board of Directors
Frequency Period Scope Method Content
				Assessment Items for the board of directors
Once a year	2020.1.1~ 2020.12.31	The entire Board of Directors, individual directors, audit committee, and compensation committee	Self- assessment	(1) Degree of participation in the Company's operations (2) Quality of decision-making by the board of directors. (3) The composition and structure of the BOD. (4) The election of the directors and their continuing professional education. (5) Internal control. Assessment items for individual Board Directors (1) Control of the Company's goals and missions. (2) Their recognition of the Director's responsibilities. (3) Their degree of participation in CMP's operations. (4) Their internal relationship management and communication. (5) Their professionalism and continuing professional education. (6) Internal control. Performance evaluation of functional committees (1) Degree of participation in the Company's operations (2) Duty awareness of the functional committees (3) Decision making quality of the functional committees (4) Composition of the functional committees, and committee member election and appointment. (5)Internalcontrol.

(III) Operation Overview of the Audit Committee:

A total of 6 meetings were convened by the Audit Committee in 2020, with the attendance of independent directors listed as follows:

Position title Name Attendance in person	Delegated presence	Percentage of attendance in person(%) (Note)	Remark
Committee chair Steven Wu 4	-	100%	New elect
Committee member Jia-Ruey Duann 4	-	100%	New elect
Committee member Tai-Jen George Chen 6	-	100%	Reappointed
Committee chair Tsung-Ming Chung 2	-	100%	Previously Appointed
Committee member Quincy Lin 2	-	100%	Previously Appointed
Note: On June 10, 2020, the annual general meeting re-elected directors. The audit committee held 2 and 4 meetings
before and after the re-election, respectively.
Other mandatory items:
I. If any of the following applies to the operation of the Audit Committee, the date and session of the
Board of Directors' meeting, the content of proposals, resolutions of the Audit Committee and the
Corporation's actions in response to opinions from the Audit Committee,shall be stated.

(I) Items listed in Article 14-5 of the Securities and Exchange Act:

Board date	Session Proposal Resolution of the Audit Committee	Session Proposal Resolution of the Audit Committee	Session Proposal Resolution of the Audit Committee	The Corporation's actions in response to the opinions of the Audit Committee
2020.02.26	1st Meeting in 2020 (1) The Company’s 2019 business report and financial statements (2) Issuance of the Company’s 2019 statement of the internal control system. (3) Capital loans for Chroma Japan Corp. (4) Amendments to the Company’s “Operational Procedures for Endorsements/Guarantees for Others” and “Procedures for Lending Funds to Other Parties”. The 18th session of the first (February 26, 2020) audit committee was approved by the whole committee.			Proposal approved
2020.04.29	2nd Meeting in 2020 (1) Endorsement and guarantee for Chroma ATE Inc. (USA). (2) Endorsement and guarantee for Chroma ATE Europe B.V. The 19th session of the first (April 29, 2020) audit committee was approved by the whole committee.			Proposal approved
2020.07.03	4th meeting in 2020 Proposal of the Company’s disposal of the property and acquisition of the property’s right-of-use asset from its related party, ADLINK TECHNOLOGY INC. The 1st session of the second (July 03, 2020) audit committee was approved by the whole committee.			Proposal approved
2020.07.30	5th meeting in 2020 (1) Capital loans to Chroma Systems Solutions, Inc. (2) Endorsement and guarantee for Chroma ATE (Suzhou) Co., Ltd. (3) 2020 CPA fees. The 2nd session of the second (July 30, 2020) audit committee approved by the whole committee.			Proposal approved
2020.10.29	6th meeting in 2020 (1) Endorsement and guarantee for Chroma Japan Corp. (2) Capital loans for Chroma Japan Corp. The 3rd session of the second (October 29, 2020) audit committee was approved by the whole committee.			Proposal approved
2020.12.23	7th meeting in 2020	(1) Amendments to the Company’s “Internal Control System”, “Implementation Rules for Internal Audit”, and “Implementation Rules for Code of Business Conduct”. (2) Proposal of the acquisition of property’s right-of- use asset from the related party, ADLINK TECHNOLOGY INC. (3) Capital loans to Chroma Systems Solutions, Inc. (4) Propose to provide endorsements and guarantees for reinvestment companies in Mainland China. (5) Endorsement and guarantee for Chroma Japan Corp. (6) Intention to invest in Environmental Stress Systems,Inc.	The 4th session of the second (December 23, 2020) audit committee was approved by the whole committee.	Proposal approved

(II) Except for the aforementioned matters, other resolutions were approved by two-thirds or more of all the directors but have yet to be approved by the Audit Committee: None. II. Execution process where the independent director abstains from being a stakeholder, the name of the director, the content of the proposal, the reason for abstinence, and the results of the voting should be stated: None.

III. Communication between directors and head of internal audit and CPA (including material issues, audit methods, and results relating to the Corporation's finances and business).
Communication methods between independent directors and internal audit director:
(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 meeting	Content of the communication	Results
2020.02.26	(1) Reporting on internal audit activities. (2) To discuss the Company’s statement of the internal controlsystem for the year 2019.	Approved by independent directors withoutobjections
2020.04.29	Briefing of Internal audit activities.	Approved by independent directors withoutobjections
2020.07.03	Briefing of Internal audit activities.	Approved by independent directors withoutobjections
2020.07.30	Briefing of Internal audit activities.	Approved by independent directors withoutobjections
2020.10.29	Briefing of Internal audit activities.	Approved by independent directors withoutobjections
2020.12.23	(1) Reporting on internal audit activities. (2) Discussion of the 2021 audit plan. (3) Amendments to the Company’s “Internal Control System”, “Implementation Rules for Internal Audit”, and “Implementation Rules for Code of Business Conduct”.	Approved by independent directors without objections
2021.02.25	(1) Reporting on internal audit activities. (2) Discussion of the Company’s statement of the internalcontrolsystem for 2020.	Approved by independent directors withoutobjections
Date Content of the communication Results
2021.2.25 (1)Audit results of 2020 consolidated and parent company only financial statements (2) Key audit matters in 2020 (3) Brief on Corporate Governance 3.0. The Audit Committee approved 2020 financial statements and submitted them to the Boardfor approval.

(IV) The state of the Company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure.

	Status of implementation Gaps with the	Status of implementation Gaps with the	Status of implementation Gaps with the
Assessment Items	Corporate Governance Best Practice Principles for TWSE/TPEx Listed corporations, and the cause of the saidgaps Yes No Summary and Explanation
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 ListedCompanies? `ˇ` The Corporation has stipulated the Corporate Governance Best Practice Principles. Please visit the MOPS or the official website of the Corporation to peruse the details. No differences
2. Equity structure and shareholders’rights of the Corporation (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) Did the Corporation establish and enforce risk control and firewall systems with its related corporation? (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 perused at the Corporation’s official website. No differences
III. Composition and responsibilities of Board of Directors: (I) Has the Board of Directors drawn up policies on the diversity of its members and implemented them?	`ˇ`	(I) The Corporation stipulated Best Practice Principles for Corporate Governance that the composition of the Board of Directors must consider the diversity as well as principles of diversity that including basic criteria, professional knowledge, and skills which correspond to the operations, business, and development required by the Corporation. The composition of the Corporation’s Board of Directors shall consider the members’ professional	No differences

(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` background, skills and experiences required for the Corporation’s businesses, and principles of diversity. There is a total of 7 members on the Board of Directors, including 3 independent directors. (II) The Company has established the Compensation 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 February 26, 2020, which stipulate that the Board shall perform performance evaluation of the Board, its members, the compensation 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. 2020 Board of Directors assessment results had been submitted on February 25, 2021. ( IV) Except for obtaining the independent declaration from CPA, the Company regularly evaluates the independence of the appointed CPA every year, and submits the evaluation results to the Board of Directors. Assessment results for the most recent year (detailed in Note 1) have been submitted to the Board of Directors on December 23,2020.	(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` background, skills and experiences required for the Corporation’s businesses, and principles of diversity. There is a total of 7 members on the Board of Directors, including 3 independent directors. (II) The Company has established the Compensation 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 February 26, 2020, which stipulate that the Board shall perform performance evaluation of the Board, its members, the compensation 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. 2020 Board of Directors assessment results had been submitted on February 25, 2021. ( IV) Except for obtaining the independent declaration from CPA, the Company regularly evaluates the independence of the appointed CPA every year, and submits the evaluation results to the Board of Directors. Assessment results for the most recent year (detailed in Note 1) have been submitted to the Board of Directors on December 23,2020.	(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` background, skills and experiences required for the Corporation’s businesses, and principles of diversity. There is a total of 7 members on the Board of Directors, including 3 independent directors. (II) The Company has established the Compensation 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 February 26, 2020, which stipulate that the Board shall perform performance evaluation of the Board, its members, the compensation 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. 2020 Board of Directors assessment results had been submitted on February 25, 2021. ( IV) Except for obtaining the independent declaration from CPA, the Company regularly evaluates the independence of the appointed CPA every year, and submits the evaluation results to the Board of Directors. Assessment results for the most recent year (detailed in Note 1) have been submitted to the Board of Directors on December 23,2020.	(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` background, skills and experiences required for the Corporation’s businesses, and principles of diversity. There is a total of 7 members on the Board of Directors, including 3 independent directors. (II) The Company has established the Compensation 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 February 26, 2020, which stipulate that the Board shall perform performance evaluation of the Board, its members, the compensation 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. 2020 Board of Directors assessment results had been submitted on February 25, 2021. ( IV) Except for obtaining the independent declaration from CPA, the Company regularly evaluates the independence of the appointed CPA every year, and submits the evaluation results to the Board of Directors. Assessment results for the most recent year (detailed in Note 1) have been submitted to the Board of Directors on December 23,2020.	(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` background, skills and experiences required for the Corporation’s businesses, and principles of diversity. There is a total of 7 members on the Board of Directors, including 3 independent directors. (II) The Company has established the Compensation 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 February 26, 2020, which stipulate that the Board shall perform performance evaluation of the Board, its members, the compensation 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. 2020 Board of Directors assessment results had been submitted on February 25, 2021. ( IV) Except for obtaining the independent declaration from CPA, the Company regularly evaluates the independence of the appointed CPA every year, and submits the evaluation results to the Board of Directors. Assessment results for the most recent year (detailed in Note 1) have been submitted to the Board of Directors on December 23,2020.
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 Corporation 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 most recent annual business performance is as follows: (1)Assisting the Board of Directors and shareholders in the 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 meetingminutes should	No differences

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be completed within 20 days after the
meeting. (3) Issues concerning the issuance
of major messages concerning important
resolutions of the Board of Directors after
the meeting to ensure the correctness and
correctness of the content of the re-
information so as to protect the equivalence
of investor transaction information. (4)
Preparation of the meeting notice,
handbook, annual report, and meeting
minutes within statutory deadlines.
V. Has the Company established channels ˇ The Company has established a CSR area
of communication with stakeholders on its official website which provided
(including but not limited to contact information, emails, and other
shareholders, employees, customers, channels of communication to stakeholders
and suppliers), dedicated a section of so that they may raise topics that they are
No differences
the Company's website for concerned with. These concerns would then
stakeholder affairs, and adequately be promptly addressed by the Company.
responded to stakeholders' inquiries
on material corporate social
responsibility (CSR) issues?
VI. Does the Company commission a ˇ The Corporation has appointed Taishin
professional shareholder services International Bank to handle affairs of the
No differences
agency to handle shareholders' board of shareholders.
meetings and other relevant affairs?
VII. Information disclosure
(I) Has the Company established a ˇ (I) The Corporation has set up a website with
website to disclose information on special pages on investor services and
financial operations and corporate regular updates on financial operations and
governance? corporate governance. Inquiry URL:
(www.chromaate.com).
(II) Has the Company adopted other ˇ (II)The Company has established Chinese and
means of information disclosure (such English language websites as well as a
as establishing a website in English, special area for investor services. A
appointing specific personnel to professional has been charged with
collect and disclose company collecting information and providing
information, implementing a regular updates for financial operations.
spokesperson system, and disclosing This Corporation has delegated a
No differences
the process of investor conferences on spokesperson and deputy spokesperson.
the Company’s website)? Investor conferences are held on a regular
basis, and relevant information has been
disclosed using the Corporation's official
website.
(III) Has the Company published and ˇ (III)The Company publishes and reports its
report its annual financial report annual financial reports and first, second,
within two months after the end of a and third-quarter financial reports within
fiscal year, and publish and report its the prescribed period, together with its
financial reports for the first, second, operations.
and third quarters as well as its
operating status for each month
before the specified deadline.
VIII. Does the Company provide other ˇ 1. Employees' equity: According to the Labor
important information that can help Standards Act and the Corporation's
establish a better understanding of the personnel regulations; the Corporation
state of corporate governance takes the employees' equity seriously and
(including but not limited to employee so sets up the employees' feedback mail
rights, employee care, investor box, communications channels and various No differences
relations, supplier relations, specific areas for discussion to provide a
stakeholders’ rights, continuing comprehensive selection of channels for
education among directors and feedback.
supervisors, implementation of risk 2. Employee care: In addition to providing a
management policies and risk good office environment, employees also
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measurement standards, enjoy a diverse selection of recreational implementation of customer policies, facilities such as swimming pools and and purchase of liability insurance for gyms. The Company also subsidizes club directors and supervisors of the activities to provide employees with a Company)? variety of after-work leisure options. 3. Investor relations: The Corporation's website has an investors' service page, a spokesperson, and a deputy spokesperson, specifically responsible for public disclosure of the Corporation matters. The Corporation will also organize road-shows regularly to disclose relevant information regarding the Corporation's operations, at the same time update that information on the Corporation's website.
1. Supplier relations: The business strategy adopted by the Corporation upholds trust as the highest guiding principle and respects every commitment made with both suppliers and stakeholders. The Corporation aims at building positive and interactive relationships with suppliers and will not delay payments without proper cause.
1. Stakeholders’ rights: To provide public investors with information transparency and prompt notification, financial and business information posted on the Corporation’s website shall be regularly updated.
1. All directors of the Company have academic backgrounds and practical experiences in business management applications 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 2).
1. Implementation of risk management policy and risk evaluation standards: The Corporation has carefully stipulated various internal control regulations to manage and evaluate various risks.
1. Execution of customer policies:The Corporation 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.
The Company has purchase liability insurance for all the directors and important staff. This action was reported to the Board of Directors on December 23, 2020.

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 corporations not listed for evaluations)

Improvements made in the most recent year:
(1) Independent directors shall hold no more than 3 consecutive terms.

(2) The annual report reveals the compensation committee’s agenda and resolution, and the Company’s decisions on committee members’ recommendations.
Prioritised matters and measures yet to be improved:
(1) Providing refresher course information to the directors, and increasing the number of directors' refresher hours. (2) Inviting directors to attend the shareholders meeting, and improving the attendance.
(3) Revealing the assessment procedures for assessing the independence of CPA in the annual report.

Note 1: Assessment of independence and qualification for the Company's CPA

Note 1: Assessment of independence and qualification for the Company's CPA (3)Revealingthe assessmentprocedures for assessingthe independence of CPA in	Note 1: Assessment of independence and qualification for the Company's CPA (3)Revealingthe assessmentprocedures for assessingthe independence of CPA in	the annual report.
Assessment Items Y/N		Whether it meets the required independence and competence
1. TheCPA did not serve as directors and supervisors of theCompany Y		
2. TheCPA is not a shareholder of theCompany Y		
3. The CPA does not work part-time in the Company or is engaged in regular work,and ispaid Y		
4. TheCPA has no significant financial interest in theCompany Y		
5. TheCPA has no borrowingfrom or lendingto theCompany Y		
6. The CPA is not involved in the management function of the Company’s decisions making Y		
7. TheCPA has not served in theCompanyin the first twoyears ofpracticing Y		
8. Receipt of a declaration of independence bytheCPA Y		
9. The CPA has not provided the Company’s audit certification service for 7 consecutiveyears Y		
10. There are no interaction issues between CPA and management, governance units,and the internal audit supervisor. Y		
11. The quality of audit and tax services meets the requirements in a timely and effective manner Y		
12. The Company’s financial report has not been litigated or corrected by the competent authority	Y	

Note 2: Progress of FY2020 training for the Company’s directors up to the publication date of this annual report.

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Position Training Training
Name Organizer Curriculum
title date hours
2020 Annual Meeting of Taiwan
Institute of Directors: Looking for
2020/09/18 Taiwan Institute of Directors 3
Board Leo new growth drivers in the year of
director Huang strategic turning
2020/07/22 [Taiwan Academy of Banking and ] Corporate Governance and Corporate 3
Finance Sustainability Workshop
Analysis of practical issues internal
Accounting Research and
audit personnel face in terms of
Board Tsun-I Development Foundation of
2020/09/15 compliance and prevention regarding 6
director Wang Taiwan Corporate Governance
"information security" and "personal
Association
privacy" regulations
Securities and Futures Institute of 2020 Prevention of Insider Trading
Independent Jia-Ruey
2020/09/11 Taiwan Corporate Governance and Insider Equity Trading Publicity 3
director Duann
Association Seminar
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Corporate governance training for the Company’s managerial officers in 2020 up to the publication date of this annual report:

	Training date Organizer	Training date Organizer	Curriculum Training hours	Curriculum Training hours
Paul Ying	2020/08/27~2020/08/28	Accounting Research and Development Foundation of Taiwan Corporate Governance Association	Continuing Training Course for Principal Accounting Officers of Issuers, Securities Firms, and Securities Exchanges	12

(V) Composition, duties, and operation of the compensation Committee

1. Information on the members of the Salary and Remuneration Committee

	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee	1. Information on the members of the Salaryand Remuneration Committee
Identity	Conditions Name Does the individual have more than 5 years of professional experience and the following qualifications? Independence Criteria (Note) Instructor or higher post in a private or public college or university in the field of business, law, finance, accounting, or the business sector of the Corporation Currently serving as a judge, prosecutor, lawyer, certified public CPA or other professional or technician that must undergo national examinations and specialized license Has professional experience necessary for business administratio n, legal affairs, finance, accounting, or business sector of the Corporation. 1 2 3 4 5 6 7 8 9 10														Number of salary and remuneration committee memberships concurrently held in other public corporations	Remark
		Instructor or higher post in a private or public college or university in the field of business, law, finance, accounting, or the business sector of the Corporation	Currently serving as a judge, prosecutor, lawyer, certified public CPA or other professional or technician that must undergo national examinations and specialized license	Has professional experience necessary for business administratio n, legal affairs, finance, accounting, or business sector of the Corporation. 1 2 3 4 5 6 7 8 9 10
Independent director	Tai-Jen George Chen			          											2
Independent director	Jia-Ruey Duann			          											1
Independent director	Steven Wu														0

Note: For any member who fulfills the relevant condition(s) two years before being elected or during the term of office, please tick “” 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 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 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 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 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.

2. Operations of the Salary and Remuneration Committee

(1)The Corporation has a Salary and Remuneration Committee composed of 3 members.

(2) Duration of the current term of service: July 3, 2020, until June 9, 2023, a total of 3 Salary and compensations Committee meetings were held in 2020, members qualifications and attendance as follow:

attendanceasfollow:
Title Name Attendance in person Delegated presence	Percentage of attendance inperson(%) (Note) Remark
Committee chair Tai-Jen George Chen 3 -	100% Reappointed
Committee member Jia-RueyDuann 2 -	100% New elect
Committee member StevenWu 2 -	100% New elect
Committee member Tsung-Ming Chung 1 -	100% Previously Appointed
Committee member Quincy Lin 1 -	100% Previously Appointed
Note: The 2020 annual general meeting re-elected and appointed directors. The compensation committee held 1 and		2
meetings before and after the re-election, respectively.
Other mandatory items:
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
RemunerationCommittee
Session Date Content of Motion and Follow-up Actions	Voting results the Company's actions in response to the opinions of the Remuneration Committee
The 1st meeting in 2020 2020.02.26 (1) Proposal of 2020 salary adjustment for the Company’s senior managerial officers. (2) Proposal of the annual rewards for directors, and attendance fees for directors who attended Audit Committee meetings (3) Proposal of 2020 compensation for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings (4) Approval of the formulation of the Regulations Governing the Evaluation of the Performance of the Board of Directors.	Approved by all members Proposed by the Board of Directors and adopted with the approval of all attended Directors
The 2nd Meeting in 2020 2020.07.20 Proposal of 2019 bonus distribution to the Company’s managerial officers.	Approved by all members Proposed by the Board of Directors and adopted with the approval of all attended Directors
The 3rd 2020.12.23 Proposal of 2021 fixed salary adjustment for the	Approved by Proposed by the
Meeting Company’s managerial officers.	all members Board of Directors
in 2020	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. Where resolutions of the Salary and Remuneration Committee include dissenting or qualified opinion which is on
record or stated in a written statement, the date, session, contents discussed, opinions from every member, and
disposition of the members’ opinions shall be described in detail: None.

Note: The 2020 annual general meeting re-elected and appointed directors. The compensation committee held 1 and 2 meetings before and after the re-election, respectively. Other mandatory items:

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. Where resolutions of the Salary and Remuneration Committee include dissenting or qualified opinion which is on record or stated in a written statement, the date, session, contents discussed, opinions from every member, and disposition of the members’ opinions shall be described in detail: None.

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

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Assessment Items	Yes	Summary and Explanation	Responsibility Best Practice Principles for TWSE/TPEx Listed corporations and root causes

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 2)	`ˇ`	The Company has formulated the “Code of Practice for Corporate Governance” and “Code of Practice for Corporate Social Responsibility”, which have been approved by the Board of Directors for management and all employees to follow and managing the Company's impact on the environment, society and corporate governance. The Company compiled the questionnaires on various issues raised by stakeholders, including: corporate governance, economic performance,	No differences
		environmental protection, employees, human rights,
		and product and service. A total of 15 substantial issues and their stewardship approaches were
		identified and stated in the Company’s CSR report
		on: www.chromaate.com Sustainable development strategies Pursue technological improvement, implement pollution prevention, create a safe working environment, protect employees' physical and mental health, fulfill legal responsibilities, social obligations, and corporate responsibilities of environmental protection. Risk Management Adhering to its prudent 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 face the risks that the Company may face in advance. Energy and greenhouse gas management, wast management The Company is committed to developing green products, reducing the use of hazardous substances, and generating lead-free production processes. In the process of operation, we are committed to reducing energy and resource consumption, regularly tracking and reporting the amount of waste generated, setting waste reduction goals, and propagating the concept of resource recycling to achieve the goal of saving energy and loving the earth. Employment relations management Provide various employee welfare measures, further education, training, retirement system, as well as the agreement between labor and management and various employee rights protection measures, and establish a smooth communication channel, and regularly hold labor and management meetings to ensure the rights and interests of both parties. Green products and services Actively introduce the concept of green environmental protection industry from the manufacturing process, products, services, and concepts,in order to effectivelyutilize energy

	Status of implementation Gaps with the Corporate Social	Status of implementation Gaps with the Corporate Social	Status of implementation Gaps with the Corporate Social
Assessment Items	Responsibility Best Practice Principles for TWSE/TPEx Listed corporations and root causes Yes No Summary and Explanation
	resources or reduce the environmental impact caused by-product activities and services, and contribute to environmental protection. Customer relationship and product tracking Provide customers with innovative and high-quality services meeting customer needs, and provide customers with satisfactory product quality, complete sales services, and regularly review customer feedback for follow-upimprovements.
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 corporate social responsibility in the most recent year has been submitted to the Board of Directors on October 29, 2020. It mainly focuses on corporate governance, environmental protection, and social aspects of corporate social responsibility and performance, and responds to the concerns of stakeholders and other projects. No differences
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? (III) Has the Company assessed the potential risks and opportunities arising from climate change at present and in the future and taken related countermeasures?	`ˇ` `ˇ` `ˇ`	(I) All environmental safety operations are regulated in accordance with laws and regulations. The Corporation 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 love for the earth. The Company currently obtains ISO 14001 attestation. (II) The Corporation is dedicated to developing green products, reduce the use of hazardous substances (HS), and generate lead-free production processes. Suitable recycling processes are applied according to the attributes of waste. Waste sorting is implemented through policy 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 fifth 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, and it has been verified by a third-party external verification agency and obtained the ISO14064-1 certification. By fully understanding the Company’s GHG emissions and formulatingshort,medium,and long-term	No differences

	Status of implementation Gaps with the Corporate Social	Status of implementation Gaps with the Corporate Social	Status of implementation Gaps with the Corporate Social
Assessment Items	Responsibility Best Practice Principles for TWSE/TPEx Listed corporations and root causes Yes No Summary and Explanation
(IV) Has the Company 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` 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 intensity and fulfill the obligation of environmentalprotection.
IV. Social Issues (I) Does the Company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (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)Does the Company provide a	`ˇ` `ˇ` `ˇ`	(I) The Company abides by the laws and regulations where it operates around the world, respects and supports recognized international norms and principles of human rights, including the “International Code of Human Rights”, “Universal Declaration of Human Rights” and the International Labor Organization’s “Declaration of Fundamental Principles and Rights at Work”, treats with dignity and respects all employees, contract and temporary personnel, interns, etc., and formulates the Company’s internal management policies and related procedures accordingly. (II) In addition to providing employees with various leave according to the law, the Company also allows paid sick leave up to five days and one-day birthday leave that are superior to the law. Formulate a competitive salary plan that is superior to legal standards, and allocate employee rewards based on annual operating performance. The Company operating performance and employee personal performance are appropriately reflected in employee compensation policies to ensure the recruitment, retention, and incentives of human resources, achieving the sustainable operation goal. (III)In order to fulfill its corporate social	No differences

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healthy and safe working environment and organize training on health and safety for its employees on a regular basis? (IV) Has the Company established an effective career competence training plan for its employees? (V) Has the Company followed relevant laws, regulations and international 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 environmentalprotection,	`ˇ` `ˇ` `ˇ`		responsibilities and protect all colleagues, the Company regularly implements in-service employee education and training, new employee education and training, and fire drills. In addition, a dedicated safety and health management unit and medical room are set up to provide on-site Chinese and Western doctors services. First aid personnel and first aid kits are set up in each plant to provide a friendly, safe and healthy working environment for colleagues. (IV) The Company regards talent cultivation and development as a competitive advantage, plans a complete education and training system and development training courses to help employees improve their professionalism, management capabilities, and self-growth. Formulate the "Education and Training Management Measures", and introduce education and training courses every year, put forward training plans according to the needs of various departments, and continue to optimize the professional functions of employees. (V) The Company focuses on leading manufacturers in the field of measurement and provides customers with innovative and quality services to meet their needs. Also, provide customers with satisfactory product quality, complete sales services, and conduct regular customer satisfaction surveys every year, regard customer satisfaction evaluation and survey results as an important basis for improving customer relationship development, review customer feedback through questionnaire analysis, and make follow-up improvements . 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 Business 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) At present, through a comprehensive supply chain management approach, the supplier evaluation standard is implemented based on the Q (Quality), C (Cost), D (Delivery), and S (Service) evaluation standards. Develop commitments and close cooperation with

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Gaps with the
Status of implementation
Corporate Social
Responsibility Best
Assessment Items Practice Principles
Yes No Summary and Explanation for TWSE/TPEx
Listed corporations
and root causes
occupational safety and health trading partners, and establish a long-term
or labor rights and supervised stable supply chain system through supply
their compliance? chain management generated by vertical
integration of upstream and downstream.
Suppliers are important partners of the
Company's operations, and both parties work
together to pursue sustainable business
operations and growth. In recent years, the
local procurement policy has been actively
implemented. The proportion of local
procurement in Taiwan is more than 94%,
ensuring a highly efficient and flexible supply
chain.
The Company promises not to purchase or use
conflict metals from conflict areas in the
Democratic Republic of Congo. Suppliers are
required not to purchase or use conflict metals
from conflict areas in the Democratic Republic
of Congo, and sign the “Conflict Metals &
Environmental Declaration".
There were 53 new suppliers in 2020, 49 of
which have signed the “Conflict Metals &
Environmental Declaration", accounting for
92% of the total.
To comply with the global environmental
protection trend, in line with
RoHS/REACH/Dodd-Frank Act of 2010, HR
4173 (avoid the use of Conflict Minerals, ban
on Conflict Metals) and other environmental
protection related laws and requirements, the
company’s suppliers are not only required to
submit verification on restricted chemical
substances for the raw materials, dyes,
solvents, consumables, packaging and
manufacturing processes used in all products
sold to the company in the future, but also
promises to comply with the detection values
of components and hazardous substances in
the provided verification report. An
environmental statement shall be made.
In 2019, we completed the introduction of the
ISO 14001:2015 environmental management
system and incorporated the supplier's
environmental safety and health management
performance into the evaluation specification.
Suppliers with M/H risk level or transaction
amount above 5 million will be evaluated in
2020. A total of 90 supplier evaluations were
completed, and the evaluation results were all
between M and L in the low to medium risk
range. The company expects to cooperate with
suppliers to create the highest product quality,
service and sustainable value at the lowest
cost.
V. Did the Company, following ˇ The Company prepares the CSR Report with No differences
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Gaps with the
Status of implementation
Corporate Social
Responsibility Best
Assessment Items Practice Principles
Yes No Summary and Explanation for TWSE/TPEx
Listed corporations
and root causes
internationally recognized reference to the requirements of the GRI Standards,
guidelines, prepare and which is validated and certified by BSI as a third
publish reports such as its party.
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?
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 corporation has stipulated Best Practices on Corporate Social Responsibility which provided various specifications
on environmental management, community services, human rights, stakeholders’ rights, and participation in community
services. These Best Practices may be perused on the corporation's website. For the status of CSR operations of the
corporation,poration,oration,, please peruse the CSR reports compiled by the corporation. lease peruse the CSR reports compiled by the corporation. peruse the CSR reports compiled by the corporation. eruse the CSR reports compiled by the corporation. ports compiled by the corporation. orts compiled by the corporation. piled by the corporation. iled by the corporation. y the corporation. the corporation. poration. oration.
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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 corporation has stipulated Best Practices on Corporate Social Responsibility which provided various specifications on environmental management, community services, human rights, stakeholders’ rights, and participation in community services. These Best Practices may be perused on the corporation's website. For the status of CSR operations of the corporation,poration,oration,, please peruse the CSR reports compiled by the corporation. lease peruse the CSR reports compiled by the corporation. peruse the CSR reports compiled by the corporation. eruse the CSR reports compiled by the corporation. ports compiled by the corporation. orts compiled by the corporation. piled by the corporation. iled by the corporation. y the corporation. the corporation. poration. oration.
VII. Any important information useful for understanding the state of CSR operations:
(I) The Corporation promotes corporate social responsibility in a long-term manner. Every year, the Corporation reveals its sustainable development status and business philosophy through CSR reports, and reports the implementation of CSR to the public based on the concept and practice of transparency, openness, and corporate social sustainability. The Corporation's risk issues related to the implementation of human rights are described below:
1.Multiple inclusive and equal opportunities:
 No difference treatment in language, attitude, and behavior towards one's gender, race, social status, age, marital status, family status, language, religion, party affiliation, nationality, appearance, facial features, mental/physical handicap, etcetera.
 The Corporation 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 Corporation is committed to creating equal employment, as well as eliminating prejudice and harassment in the workplace.
2.Healthy and safe workplace:
 The Corporation conducts a full range of employee health management, has a professional and warm medical room, provides employees with a wealth of medical resources, through the cloud health management system, always concerned about the health of employees; held a 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 quarterly. In addition, the Company conducts regular occupational safety promotion and training for colleagues, while successfully obtaining safe workplace certification.
Reasonable working hours: The regulations of the Corporation stipulate the specifications for working hours and extension of working hours. The Corporation also regularly cares for and manages employee attendance.
Freedom of association: The Corporation encourages employees to cultivate interest, strengthen physical and mental health. In addition, the Corporation 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.
Labour-management consultation: Establish a smooth communication channel and hold regular labor and capital conferences to ensure the rights and interests of both parties.
Privacy protection: In order to fully protect the privacy of clients and stakeholders, the Corporation has established a comprehensive information security management system, and complies with strict control specifications and protective measures.
(II) CSR activities carried out in 2020
2020 donations are as follows: Taoyuan Police Friends Association, Guishan Police Friends Association, Boyou Social Welfare Foundation, National Chiao Tung University USR Wenwen Cup, ROC Chubby Weili Patient Care Association, Taipei City Bereavement Children’s Welfare Foundation, New Taipei City Bethel Holistic Care Association, National Chiao Tung University Disadvantaged Student Counseling Q557, Qiu Zaixing Culture and

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Gaps with the
Status of implementation
Corporate Social
Responsibility Best
Assessment Items Practice Principles
Yes No Summary and Explanation for TWSE/TPEx
Listed corporations
and root causes
Education Foundation Art Museum. The total donation amount was approximately NT$6.12 million.
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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: The principle of materiality refers to environmental, social and corporate governance issues that have significant impacts on the Company's investors and other stakeholders. (VII) Compliance with ethical corporate management and measures implemented

( VII) Compliance with ethical corporate management and measures implemented

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	Yes	No	Summary and Explanation	Listed corporations, and the cause of the said gaps

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 activities within its business scope which are at a higher risk of being involved in unethical conduct regularly, 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 regularly?	`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 the Corporation regarding the importance of ethical conduct and prescribing various procedures for handling and forestalling unethical conducts within the "Code of Integrity Practice Rules", the Corporation also requires suppliers	No differences

Items assessed	Status of implementation Gaps with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed corporations, and the cause of the said gaps	Status of implementation Gaps with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed corporations, and the cause of the said gaps	Status of implementation Gaps with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed corporations, and the cause of the said gaps
	Yes No Summary and Explanation
	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, the 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 accordingto these Regulations.
II. Implementing ethical corporate management (I) Has the Company evaluated the 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? (III) Has the Company established policies to prevent conflicts of interest,	`ˇ` `ˇ` `ˇ`	(I)To ensure that mutual trust and integrity form the basis of all business dealings, the Company’s management regulations have provided that suppliers must 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 Corporation designated the Auditing 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 Best Practices for Ethical Corporate Management, supervising the implementation of these rules, and providing regular reports to the Board of Directors. The implementation and audit of ethical corporate management in the most recent year has been reported to the Board of Directors on December 23, 2020. (III)The Company has established the "Ethical Corporate Management Best	No differences

Items assessed	Status of implementation Gaps with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed corporations, and the cause of the said gaps	Status of implementation Gaps with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed corporations, and the cause of the said gaps	Status of implementation Gaps with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed corporations, and the cause of the said gaps
	Yes No Summary and Explanation
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 an 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` Principles Practice", which clearly specifies the policy to prevent conflicts of interest. The official website of the Company displays an 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 Corporation 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 mean time, conducts internal awareness programs conveying the importance of integrity. A total of 6 sessions be held in 2020, with a total of 146participants.
III. Implementation of the Company’s whistleblowing system (I) Has the Company established a 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?	`ˇ` `ˇ`	(I) The Company has established and announced an independent whistleblowing email address ([email protected]) and a dedicated telephone line (03-3279999 ext.88301) for whistleblowers to report cases to the Company's dedicated personnel. (II) The Corporation stipulated standard operation procedures for handling whistle-blowing investigations as well as confidentiality mechanisms. The handling personnel shall investigate the case being exposed by the whistle- blower, generate records, submit a report, file relevant documents, and ensure confidentiality of the identity of the whistle-blower and the content of	No differences

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Gaps with the
Ethical
Corporate
Management
Best Practice
Status of implementation Principles for
Items assessed
TWSE/TPEx
Listed
corporations,
and the cause of
the said gaps
Yes No Summary and Explanation
the reported case.
(III) Has the Company set up protection for (III) The Company has established the
whistleblowers to prevent them from ˇ standard operating procedures for
being subjected to inappropriate handling whistleblowing
measures as a result of reporting such investigations and the relevant
incidents? 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 ˇ The Corporation has established an
of its best practices for ethical electronic bulletin board, providing prompt
corporate management and the announcements to relevant regulations and
effectiveness of relevant activities activities. Any regulations related to the No differences
upon its official website or Market Code of Business Conduct as well as
Observation Post System (MOPS)? compliance to ethical conduct shall also be
disclosed upon the Company’s official
website.
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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.
VI. Other important information that facilitates the understanding of the implementation of ethical corporate management: (such as review and amendment of the Corporation's Ethical Corporate Management Best Practice Principles)

To ensure that employees at the Corporation comply with the Corporation's ethical standards, the Corporation 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 understands 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 Corporation'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 Corporation.

(VIII) 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 Corporation for details regarding the Corporate Governance Best Practice Principles formulated by the Corporation 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.
(IX) Other important information to enhance the understanding of the implementation of corporate governance at the Company

The Corporation has stipulated "Prevention Management of Insider Trading" as the basis of the Corporation's major news and information disclosure mechanism. It is also inspected

irregularly to ensure compliance with statutory laws and regulations and is published on the Corporation's internal website for inquiries.

(X) 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 practical disaster response 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.
- Commissioned professional cleaning corporations to maintain building sanitation and implement sterilization processes.
- Commissioned qualified security firms to enforce access controls and security operations.
(2) Employee insurance:
- Used relevant laws and table of insurance ranges as the basis to provide employees with labor and health insurance.
- Purchase social insurances for personnel stationed overseas following local laws.
- Provided employees with regular life insurance, accidental injury insurance, accident, and health insurance, hospitalization insurance, cancer healthcare 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 to configure a complete breastfeeding environment and equipment to provide a quality breastfeeding environment for women breastfeeding staff and maintain their breastfeeding privacy.
- 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 were set up at each factory site, and first-aid and AED education training courses were conducted. The branch office also reached the level of application for peace of mind and workplace safety.
- Established employee recreation centers 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 organizes health promotion activities, promotes healthy meals, diverse sports instruction courses, health promotion lectures, and health testing activities, etc. Every year, it provides measures for physical and mental relaxation, physical management, and weight control of disease prevention and health promotion.
- 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. Clubs and societies have been established at the Company, including hiking club, badminton club, dance club, board game club, basketball club, etc. to provide employees with different leisure and health channels.

(XI) Implementation of internal control system

1. The Statement on Internal Control System

Chroma ATE Co., Ltd.

The Statement on Internal Control System

Date: February 25, 2021

The Statement of Internal Control System is issued based on the Company’s 2020 self-assessment:
I. The Corporation acknowledges that the establishment, implementation, and maintenance of the internal control system are the responsibilities of the Corporation’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 Corporation’s internal control system has been furnished with self-monitoring systems. The Corporation shall also initiate corrective actions for any verified defects.
III. The Corporation determines whether or not the design and implementation of its internal control system are 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 several sub-items. Refer to the Regulations for more information on the abovementioned items.
IV. The Corporation 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, 2020, 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 Corporation that the design and implementation shall be publicly disclosed. Where any of the disclosed content contains misrepresentations, nondisclosures, or other illegal acts, the Company shall be subject to legal responsibilities provided in Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
VII. This statement has been approved by the Board of Directors on February 25, 2021, amongst the 7 directors that attended the meeting, none objected, and the remaining have all agreed with the contents of this statement.

Chroma ATE Co., Ltd.

Chairman: Leo Huang signature CEO: Leo Huang signature

Where CPAs are commissioned to audit the Corporation's internal control system, the audit report prepared by the CPAs shall be disclosed: None.
(XII) 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.

(XIII) 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 2020 Annual Meeting of Shareholders convened 2020.06.10 1. Acceptance of 2019 business report and financial statements. Status of implementation: The resolution was passed. 2. Approval of 2019 earnings distribution proposal. State of implementation: Approved by resolution. The ex-dividend date was set to August 1, 2020. The cash dividend for the shareholders was completely paid on August 12, 2020. (Dividend per share of NT$3.00654711). 3. Approval of amendments to the Company’s “Operational Procedures for Endorsements/Guarantees for Others”. Implementation status: The resolution was passed and the amended “Operational Procedures for Endorsements/Guarantees for Others” was implemented, which was published on the company’s website. 4. Approved of the amendments to this Company’s Provision of Financial Loans to Other Parties. Implementation status: The resolution was passed and the amended “Procedures for Lending Funds to Other Parties” was implemented, which was published on the Company’s website. 5 Proposal of Board Director re-election. Elected list: Board Directors: Leo Huang, I-Shih Tseng, Tsun-I Wang, Chung-Ju Chang Independent directors: Tai-Jen George Chen, Jia-Ruey Duann, Steven Wu And on July 6, 2020, the Ministry of Economic Affairs approved the change of registration. 6. Approval of lifting non-competition restrictions for newly appointed Directors. Status of implementation: The resolution was passed.

Key resolutions of the Board of Directors 2020.02.26 1. Approved the annual rewards for directors and supervisors, and attendance fees for directors who attended Audit Committee meetings 2. Approved the 2020 rewards for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings 3. Approved the 2020 salary adjustment for managerial officers. 4. Approved the formulation of the Regulations Governing the Evaluation of the Performance of the Board of Directors. 5. Approved the 2019 employee reward distribution plan. 6. Approved the 2019 business report and financial statements. 7. Approval of 2019 earnings distribution proposal. 8. Issuance of the Company’s 2019 statement of the internal control system. 9. Approved capital loan for Chroma Japan Corp. 10.Approval of amendments to the Company’s “Operational Procedures for Endorsements/Guarantees for Others” and “Procedures for Lending Funds to Other Parties”. 11.Approval of amendments to the Audit Committee Charter, compensation Committee Charter, and Board Meeting Rules of the Company. 12.Approved the 2020 business plan. 13.Approval of the capital increase base date for employee stock warrants. 14.Approved the handling of director re-election and director candidacy (including those for independent directors). 15.Approved the proposal of the removal of the non-competition restrictions for newly appointed Directors. 16.Convening of 2020 Annual General Meeting and collection of shareholders’ proposals.

2020.04.29 1. Q1 2020 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. Approval of qualification review for director candidates. 5. Approval of the convening of the 2020 Annual General Meeting. 6. Approval of capital reduction base date for cancellation of new restricted share for employees. 7. Approval of the capital increase base date for employee stock warrants. 8. Approval of line of credit extension between financial institutions and the Company. 2020.06.12 Chairman election of this term. 2020.07.03 1. Approval of 2020 base day of the dividend distribution and subscription price adjustment of employee stock warrants. 2. Approval of capital reduction base date for cancellation of new restricted share for employees. 3. Approval of the capital increase base date for employee stock warrants. 4. Approval of the member appointment for the fourth compensation committee. 5. Approval of the Company’s disposal of the property and acquisition of the property’s right-of-use asset from its related party, ADLINK TECHNOLOGY INC. 2020.07.30 1. Q2 2020 financial statements. 2. Approved capital loan for Chroma Systems Solutions, Inc. 3. Approved the endorsement and guarantee for Chroma Electronics (Suzhou) Co., Ltd. 4. Approval of 2020 CPA fees. 5. Approval of 2019 bonus distribution to the Company’s managerial officers. 6. Approval of the financial institution application for credit of line. 2020.10.29 1. Q3 2020 financial statements. 2. Approval of change of the Company’s registered location. 3. Approval of capital reduction base date for cancellation of new restricted share for employees. 4. Approval of the capital increase base date for employee stock warrants. 5. Approval of the endorsement and guarantee for Chroma Japan Corp. 6. Approval of capital loans to Chroma Japan Corp. 7. Approval of that the Company’s receivables overdue for more than 90 days are not of a fund loan nature. 8. Approval of amendments to the Audit Committee Charter, Compensation Committee Charter, Board Meeting Rules, and Code of Business Conduct of the Company. 2020.12.23 1. Approval of the 2021 audit plan. 2. Approval of amendments to the Company’s “Internal Control System”, “Implementation Rules for Internal Audit”, and “Implementation Rules for Code of Business Conduct”. 3. Approval of the acquisition of the property’s right-of-use asset from the related party, ADLINK TECHNOLOGY INC. 4. Approval of capital loan for Chroma Systems Solutions, Inc. 5. Approval of endorsements and guarantees for reinvestment companies in Mainland China. 6. Approval of the endorsement and guarantee for Chroma Japan Corp. 7. Approval of investment in ENVIRONMENTAL STRESS SYSTEMS, INC. 8. Approval of 2021 fixed salary adjustment for the Company’s managerial officers. 9. Approval of the capital increase base date for employee stock warrants. 2021.02.25 1. Approved the annual rewards for directors and supervisors, and attendance fees for directors who attended Audit Committee meetings 2. Approval of 2021 compensation for members of the Audit Committee, and attendance fees for members who attended Audit Committee meetings 3. Approval of 2020 employee bonus distribution plan. 4. Approval of 2020 business report and financial statements.

Approval of 2020 earnings distribution.
Issuance of the Company’s 2020 statement of internal control system.
Approval of capital loans to Chroma Japan Corp.
Approval of that the Company’s receivables overdue for more than 90 days are not of a fund loan nature.
Approval of 2021 business plan. 10. Convening of 2021 Annual General Meeting and collection of shareholders’ proposals.
(XIV) 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
(XV) Any resignation or dismissal of the Company's chairperson of the Board, CEO, 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.

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

Table on the range of professional charge of the CPA

Name of the accounting firm	Name of the CPA	Name of the CPA	Audit period	Remark
Deloitte & Touche	Cheng-Ming Lee	Wen-Chi Kuo	2020.01.01~2020.12.31

Unit: Thousand NT$

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Professional charge
Audit fee Non-audit fee Total
Fee range
1 Less than NT$2,000,000 1,533 1,533
NT$2,000,000 (inclusive) to NT$4,000,000
2
(not inclusive)
NT$4,000,000 (inclusive) to NT$6,000,000
3
(not inclusive)
NT$6,000,000 (inclusive) to NT$8,000,000
4 6,160 6,160
(not inclusive)
NT$8,000,000 (inclusive) to NT$10,000,000
5
(not inclusive)
6 NT$10,000,000 and above
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Information on the CPA’s professional charge

							Unit:ThousandNT$	Unit:ThousandNT$
N f h	N f			Non-audit fee				Pid f
ame o te accounting firm	ame o the CPA	Audit fee System design		Business registration	Human resources Others (Note)		Subtotal	ero o CPA audit Remark
Deloitte & Touche	Cheng- Ming Lee Wen-Chi Kuo	6,160	-	-	-	1,533	1,533	2020.01.01~ 2020.12.31

Note : TP payment, subsidiary audit disbursement, English report, direct credit check, accounting standards advisory service, 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. Changes in independent Auditors: 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.
VII. Shareholding transfer and equity pledge changes of directors or managerial officers holding more than ten percent (10%) of Company shares during the most recent year up to the publication date of this annual report
Transfer of shares and changes in equity pledge relating to the directors, managers and primary shareholders:

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2020 2021, as of April 12
Increase
Increase Increase Increase
(decrease)
Position title Name (decrease) in in the (decrease) in (decrease) in
the number the number the number
number of
of shares of shares of shares
shares
held held pledged
pledged
Chairperson and General Manager Leo Huang 96,000 0 0 0
Director and General Manager, Integrated
I-Shih Tseng 8,000 0 (72,000) 0
System Solution BU
Board director Tsun-I Wang 0 0 (339) 0
Board director Chung-Ju Chang 0 0 0 0
Tai-Jen George
Independent director 0 0 0 0
Chen
Jia-Ruey Duann
Independent director 0 0 0 0
(Note 1)
Steven Wu
Independent director 0 0 0 0
(Note 1)
Independent director Quincy Lin 0 0 - -
(Note 2)
Independent director Tsung-Ming 0 0 - -
Chung (Note 2)
CEO, Test & Measurement BU David Yang (59,352) 0 (42,000) 0
Manager of Intelligent Manufacturing
Joe Lin 1,600 0 0 0
System BU
General Manager, Semiconductor Test
George Chang (17,200) 0 (9,000) 0
Equipment BU
Senior Vice President of Finance &
Paul Ying (55,000) 0 (23,000) 0
Administration Center
Senior Vice President of Joint
Steven Liu (17,000) 0 (18,000) 0
Manufacturing Center
Senior Vice President of Operation
Benjamin Huang 17,000 0 (15,000) 0
Management Center
Vice President, Sales Department 1,
Herbert Tsai (8,000) 0 (1,000) 0
Integrated System Solution BU
Vice President, CEO Office C.C.Fan (133,000) 0 (17,000) 0
Vice President, Planning Department, Test
Bobby Tseng 0 0 0 0
& Measurement BU
Vice President, Greater China Area Sales
Vincent Chen 21,600 0 0 0
Department, Test & Measurement BU
Vice President, Technical Service
Tony Yang (8,400) 0 0 0
Department, Test & Measurement BU
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Note 1: He was newly elected as a Board Director in the annual general meeting on June 10, 2020. Therefore, changes in equity held are provided as of this date.

Note 2: He stepped down from the Board Director position after re-election in the annual general meeting on June 10, 2020. Therefore, changes in equity held 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. Galen Chou are provided as of this date.
Note 4: He assumed the post on June 15, 2020. Therefore, changes in equity held are provided as of this date.
Note 5: He was promoted to Vice President on January 1, 2021, so his changes in shareholding since that date are provided.
Where the counterparty for equity transfer is a related person: None.
Where the counterparty of equity pledged is a related party: None.

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

Relationship information between the 10 largest shareholders

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Title or name and
relationships of the 10
largest shareholders where
Shares held by the person [Shares held by spouse or ] Shares held in the name they are related parties,
minor children of other persons
spouses, or relatives within
Name (Note) the second degree of Remark
kinship.
Number of Shareholding Number of Shareholding Number of Shareholding
Name Relations
shares ratio shares ratio shares ratio
Leo Huang 20,859,897 4.95% 9,294,362 2.20% 0 0 Shu-Chuan Chen Spouse
JPMorgan Chase
Bank N.A., Taipei
Branch in custody
for Stichting 18,175,000 4.31% 0 0 0 0 None None
Depositary APG
Emerging Markets
Equity Pool
Chun-Sheng Chen 15,113,308 3.58% 11,074,646 2.63% 0 0 Yu-Mei Hsueh Spouse
JPMorgan Chase
Bank N.A., Taipei
Branch in custody
for Schroder
13,082,000 3.10% 0 0 0 0 None None
International
Selection Fund -
Asian Absolute
Return
Yu-Mei Hsueh 11,074,646 2.63% 15,113,308 3.58% 0 0 Chun-Sheng Chen Spouse
First State Asia
Pacific Leaders
fund a sub fund of 9,459,000 2.24% 0 0 0 0 None None
First State
Investment
Shu-Chuan Chen 9,294,362 2.20% 20,859,897 4.95% 0 0 Leo Huang Spouse
Nan Shan Life
Insurance Co., Ltd
8,662,000 2.05% 0 0 0 0 None None
Representative:
Tang Chen
JPMorgan Chase
Bank N.A., Taipei
Branch in custody
for Schroder
8,177,000 1.94% 0 0 0 0 None None
International
Selection Fund-
Global Climate
Change Equity
Citibank as
custodian of
Singapore 7,382,436 1.75% 0 0 0 0 None None
Government -
GOS - EFM C
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Note: 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.

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

Consolidated shareholding percentage

Unit: thousand shares / thousand units of foreign currency

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Investments of Directors
Investments by the and managers and directly
Total investments
Other corporations invested by the Corporation (Note Company or indirectly controlled
1) businesses
Number of Shareholding Number of Shareholding Number of Shareholding
shares ratio (%) shares ratio (%) shares held ratio (%)
Neworld Electronics Limited 64,013 100.0 0 0 64,013 100.0
ADLINK Technology Inc. 24,492 11.3 13 0 24,505 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 Technology Corp. 9,841 27.3 4,626 12.8 14,467 40.1
SENSATIONAL HOLDING LTD. 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 TECHNOLOGY INC. 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 5,064 16.9 25,224 84.1
MAS Automation Corp. 10,000 100.0 0 0 10,000 100.0
Deep Red Holding Co.,Ltd 215 100.0 0 0 215 100.0
CHROMA JAPAN CORP. 10 100.0 0 0 10 100.0
Chih Ho Shun Development Co., Ltd. 1,750 35.0 0 0 1,750 35.0
Adivic Technology Co. 12,590 74.1 0 0 12,590 74.1
EVT Technology Co., 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 Incorporated 14,214 71.1 700 3.5 14,914 74.6
Touchcloud 5,700 78.1 0 0 5,700 78.1
Camtek Ltd. 7,817 18.1 0 0 7,817 18.1
ADIVIC HOLDING CORPORATION 0 0 1,000 100.0 1,000 100.0
WEI KUANG MECH.ENG.INC. 0 0 4,475 100.0 4,475 100.0
Quantel Technologies India Private Limited 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 Germany GmbH 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
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. (Note 3) 0 0 US$3,800 100.0 US$3,800 100.0
Mou Kuan Technologies (Nanjin) Co., Ltd.(Note 3) 0 0 RMB$1,737 100.0 RMB$1,737 100.0
Wei Kuang Automatic Equipment (Nanjin) Co., Ltd.(Note 3) 0 0 [RMB$11,87] 1 100.0 RMB$11,871 100.0
Wei Kuang Automatic Equipment (Xiamen) Co., Ltd.(Note 3) 0 0 [RMB$11,41] 7 100.0 RMB$11,417 100.0
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Note 1: The equity method was employed for the Corporation's investments. Note 2: Consolidated shareholding percentage of the Company and its subsidiary Chroma ATE Inc. was 75%. Note 3: These investee companies have yet to issue any share. Therefore, only the amount and percentage of capital contribution are indicated.

Chapter4 Financing

I. Capital and shares

(I) Source of shares

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Authorized stock Paid-in capital Remark
Equity
Year
Price at Number of Amount Number of Amount contributions
and
issuance shares (NT$ shares (NT$ Source of shares made in the Others
month
(thousands) thousands) (thousands) thousands) form of assets
other than cash
1996.08 10 70,000 700,000 54,365 543,650 Recapitalization of retained earnings None Note 1
Recapitalization of retained earnings:
1997.08 10 100,000 1,000,000 79,300 793,000 NT$149,350,000 None Note 2
Cash capital increase by NT$100 ,000,000
Recapitalization of retained earnings:
1998.06 10 150,000 1,500,000 115,200 1,152,000 NT$259,000,000 None Note 3
Cash capital increase by NT$100 ,000,000
Recapitalization of retained earnings:
NT$312,000,000
1999.05 10 200,000 2,000,000 152,160 1,521,600 None Note 4
Recapitalization of capital reserve:
NT$57,600,000
Recapitalization of retained earnings:
NT$415,320,000
2000.06 10 250,000 2,500,000 201,300 2,013,000 None Note 5
Recapitalization of capital reserve:
NT$76,080,000
2001.01 10 250,000 2,500,000 208,358 2,083,588 [Capital increase in connection with merger: ] None Note 6
NT$70,580,000
stock extinguished:
2001.03 10 250,000 2,500,000 201,358 2,013,588 [Treasury ] None Note 7
NT$70,000,000
Recapitalization of retained earnings:
NT$269,000,000
2001.07 10 320,000 3,200,000 234,300 2,343,000 None Note 8
Recapitalization of capital reserve:
NT$60,400,000
Recapitalization of retained earnings:
NT$19,890,000
2002.07 10 320,000 3,200,000 252,690 2,526,900 None Note 9
Recapitalization of capital reserve:
NT$164,010,000
of retained earnings:
2003.07 10 360,000 3,600,000 272,289 2,722,892 [Recapitalization ] None Note 10
NT$195,990,000
Treasury stock extinguished:
NT$200,000,000
2004.03 10 360,000 3,600,000 252,579 2,525,787 None Note 11
Stocks converted from stock warrants:
NT$2,890,000
Recapitalization of capital reserve:
NT$96,520,000
2004.07 10 360,000 3,600,000 262,705 2,627,052 None Note 12
Stocks converted from stock warrants:
NT$4,750,000
2004.10 10 360,000 3,600,000 263,405 2,634,047 [Stocks converted from stock warrants: ] None Note 13
NT$7,000,000
2005.01 10 360,000 3,600,000 263,882 2,638,819 [Stocks converted from stock warrants: ] None Note 13
NT$4,770,000
2005.03 10 360,000 3,600,000 264,171 2,641,709 [Stocks converted from stock warrants: ] None Note 13
NT$2,890,000
Recapitalization of retained earnings:
NT$75,130,000
2005.07 10 360,000 3,600,000 272,374 2,723,744 None Note 14
Stocks converted from stock warrants:
NT$6,910,000
2005.10 10 360,000 3,600,000 272,693 2,726,929 [Stocks converted from stock warrants: ] None Note 15
NT$3,190,000
2006.01 10 360,000 3,600,000 274,258 2,742,584 [Stocks converted from stock warrants: ] None Note 15
NT$15,660,000
2006.03 10 360,000 3,600,000 274,932 2,749,317 [Stocks converted from stock warrants: ] None Note 15
NT$6,730,000
Recapitalization of retained earnings:
NT$81,370,000
2006.06 10 360,000 3,600,000 284,344 2,843,442 None Note 16
Stocks converted from stock warrants:
NT$12,760,000
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Authorized stock Paid-in capital Remark
Equity
Year
Price at Number of Amount Number of Amount contributions
and
issuance shares (NT$ shares (NT$ Source of shares made in the Others
month
(thousands) thousands) (thousands) thousands) form of assets
other than cash
2006.10 10 360,000 3,600,000 285,154 2,851,542 [Stocks converted from stock warrants: ] None Note 15
NT$8,100,000
2007.01 10 360,000 3,600,000 286,378 2,863,779 [Stocks converted from stock warrants: ] None Note 15
NT$12,240,000
2007.03 10 360,000 3,600,000 287,410 2,874,099 [Stocks converted from stock warrants: ] None Note 15
NT$10,320,000
Recapitalization of retained earnings:
NT$142,490,000
2007.08 10 400,000 4,000,000 302,311 3,023,114 None Note 17
Stocks converted from stock warrants:
NT$6,520,000
2007.10 10 400,000 4,000,000 302,713 3,027,134 [Stocks converted from stock warrants: ] None Note 15
NT$4,020,000
2008.01 10 400,000 4,000,000 304,244 3,042,441 [Stocks converted from stock warrants: ] None Note 15
NT$15,310,000
2008.03 10 400,000 4,000,000 305,058 3,050,581 [Stocks converted from stock warrants: ] None Note 15
NT$8,140,000
Recapitalization of retained earnings:
NT$234,820,000
2008.08 10 400,000 4,000,000 329,542 3,295,419 None Note 18
Stocks converted from stock warrants:
NT$10,020,000
2008.10 10 400,000 4,000,000 329,664 3,296,644 [Stocks converted from stock warrants: ] None Note 15
NT$1,230,000
2009.01 10 400,000 4,000,000 329,915 3,299,151 [Stocks converted from stock warrants: ] None Note 15
NT$2,510,000
2009.03 10 400,000 4,000,000 331,600 3,316,004 [Stocks converted from stock warrants: ] None Note 15
NT$16,850,000
Recapitalization of retained earnings:
NT$166,100,000
2009.07 10 450,000 4,500,000 348,909 3,489,089 None Note 19
Stocks converted from stock warrants:
NT$6,990,000
2009.10 10 450,000 4,500,000 349,598 3,495,984 [Stocks converted from stock warrants: ] None Note 15
NT$6,900,000
2010.01 10 450,000 4,500,000 349,767 3,497,674 [Stocks converted from stock warrants: ] None Note 15
NT$1,690,000
2010.03 10 450,000 4,500,000 350,076 3,500,756 [Stocks converted from stock warrants: ] None Note 15
NT$3,080,000
Recapitalization of retained earnings:
NT$105,500,000
2010.07 10 450,000 4,500,000 362,077 3,620,771 None Note 20
Stocks converted from stock warrants:
NT$14,520,000
2010.10 10 450,000 4,500,000 362,144 3,621,441 [Stocks converted from stock warrants: ] None Note 15
NT$670,000
2011.01 10 450,000 4,500,000 362,269 3,622,691 [Stocks converted from stock warrants: ] None Note 15
NT$1,250,000
of retained earnings:
2011.07 10 450,000 4,500,000 376,760 3,767,599 [Recapitalization ] None Note 21
NT$144,910,000
converted from convertible
2014.12 10 450,000 4,500,000 378,086 3,780,862 [Stocks ] None Note 22
corporate bonds: NT$13,260,000
converted from convertible
2015.01 10 450,000 4,500,000 378,782 3,787,821 [Stocks ] None Note 22
corporate bonds: NT$6,960,000
converted from convertible
2015.05 10 450,000 4,500,000 378,786 3,787,862 [Stocks ] None Note 22
corporate bonds: NT$40,000
2015.11 10 450,000 4,500,000 379,030 3,790,300 [Stocks converted from stock warrants: ] None Note 23
NT$2,440,000
2016.01 10 450,000 4,500,000 379,170 3,791,698 [Stocks converted from stock warrants: ] None Note 23
NT$1,400,000
Stocks converted from convertible
corporate bonds: NT$2,890,000 Note
2016.05 10 450,000 4,500,000 379,693 3,796,934 None
Stocks converted from stock warrants: 22~23
NT$2,350,000
converted from convertible Note 22
2016.07 10 450,000 4,500,000 383,373 3,833,732 [Stocks ] None
corporate bonds: NT$4,620,000 to Note
----- End of picture text -----

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Authorized stock Paid-in capital Remark
Equity
Year
Price at Number of Amount Number of Amount contributions
and
issuance shares (NT$ shares (NT$ Source of shares made in the Others
month
(thousands) thousands) (thousands) thousands) form of assets
other than cash
Stocks converted from stock warrants: 24
NT$1,180,000
New restricted employee shares:
NT$31,000,000
Stocks converted from convertible
corporate bonds: NT$28,500,000 Note
2016.12 10 450,000 4,500,000 387,158 3,871,576 None
Stocks converted from stock warrants: 22~23
NT$9,350,000
Stocks converted from convertible
corporate bonds: NT$23,820,000 Note
2017.01 10 450,000 4,500,000 389,887 3,898,872 None
Stocks converted from stock warrants: 22~23
NT$3,470,000
Stocks converted from convertible
corporate bonds: NT$149,580,000 Note
2017.05 10 450,000 4,500,000 405,090 4,050,904 None
Stocks converted from stock warrants: 22~23
NT$2,450,000
restricted employee shares:
2017.06 10 450,000 4,500,000 405,275 4,052,754 [New ] None Note 24
NT$1,850,000
2017.07 10 450,000 4,500,000 405,263 4,052,631 [Write-off NT$120,000 of new restricted ] None Note 24
shares for employee
Stocks converted from convertible
corporate bonds: NT$27,220,000 Note
2017.08 10 450,000 4,500,000 408,051 4,080,513 None
Stocks converted from stock warrants: 22~23
NT$670,000
Stocks converted from convertible Note
corporate bonds: NT$4,300,000 22~23
2017.11 10 450,000 4,500,000 409,410 4,094,101 None
Stocks converted from stock warrants:
NT$9,290,000
Stocks converted from convertible Note
corporate bonds: NT$20,420,000 22~23
2018.01 10 450,000 4,500,000 411,894 4,118,942 None
Stocks converted from stock warrants:
NT$4,430,000
Stocks converted from convertible
corporate bonds: NT$220,000
Stocks converted from stock warrants: Note
2018.05 10 450,000 4,500,000 412,953 4,129,532 None
NT$10,910,000 22~25
New restricted employee shares
extinguished: NT$540,000
Stocks converted from convertible
corporate bonds: NT$80,000
Stocks converted from stock warrants: Note
2018.09 10 450,000 4,500,000 414,359 4,143,594 None
NT$14,070,000 22~25
New restricted employee shares
extinguished: NT$90,000
Stocks converted from convertible
corporate bonds: NT$14,940,000
Stocks converted from stock warrants: Note
2018.11 10 450,000 4,500,000 416,443 4,164,431 None
NT$6,100,000 22~25
New restricted employee shares
extinguished: NT$210,000
Stocks converted from convertible
Notes
corporate bonds: NT$900,000
2019.01 10 450,000 4,500,000 416,779 4,167,794 None 22~ 23,
Stocks converted from stock warrants:
and 25
NT$2,460,000
restricted employee shares
2019.03 10 450,000 4,500,000 416,717 4,167,174 [New ] None Note 24
extinguished: NT$620,000
Notes 23
2019.05 10 450,000 4,500,000 417,394 4,173,942 [Stocks converted from stock warrants: NT$ ] None
6,770,000 and 25
2019.07 10 500,000 5,000,000 417,382 4,173,823 [Write-off NT$120,000 of new restricted ] None Note 24
shares for employee
Note
2019.08 10 500,000 5,000,000 419,093 4,190,926 [Stocks converted from stock warrants: ] None
NT$17,370,000 23~25
----- End of picture text -----

Year and month	Price at issuance Authorized stock Paid-in capital Remark Number of shares (thousands) Amount (NT$ thousands) Number of shares (thousands) Amount (NT$ thousands) Source of shares Equity contributions made in the form of assets other than cash	Authorized stock Paid-in capital Remark	Authorized stock Paid-in capital Remark	Authorized stock Paid-in capital Remark	Authorized stock Paid-in capital Remark	Authorized stock Paid-in capital Remark	Authorized stock Paid-in capital Remark
								Others
		New restricted employee shares extinguished: NT$270,000
2019.11	10	500,000 5,000,000 419,296 4,192,961Stocks converted from stock warrants: NT$ 2,040,000 None						Note 25
2020.03	10	500,000 5,000,000 419,526 4,195,256Stocks converted from stock warrants: NT$ 2,300,000 None						Note 25
2020.05	10	500,000 5,000,000 419,821 4,198,212 Stocks converted from stock warrants: NT$3,080,000 Write-off NT$120,000 of new restricted shares for employee None						Note 24~25
2020.08	10	500,000 5,000,000 420,748 4,207,484 Stocks converted from stock warrants: NT$10,330,000 Write-off NT$1,060,000 of new restricted shares for employee None						Note 24~25
2020.11	10	500,000 5,000,000 421,094 4,210,944 Stocks converted from stock warrants: NT$3,520,000 Write-off NT$60,000 of new restricted shares for employee None						Note 24~25
2021.01	10	500,000 5,000,000 421,295 4,212,945Stocks converted from stock warrants: NT$2,000,000 None						Note 25
2021.04	10	500,000	5,000,000	421,632	4,216,315	Stocks converted from stock warrants: NT$3,370,000	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 on 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 on 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 on 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 on 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 on 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 on 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 on 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 on June 13, 2001. Note 9: Approved by the Securities and Exchange Commission, Ministry of Finance as per letter with Ref. No. Taiwan-Finance-Securities (I) 0910132477 on 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 on 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 on January 2, 2004 and (90) Taiwan-Finance-Securities (I) 143348 on July 16, 2001 . Note 12: Approved by the Securities and Exchange Commission, Ministry of Finance as per letters with Ref. No. (90) Taiwan-Finance-Securities (I) 143348 on July 16, 2001 and Taiwan-Finance-Securities (I) 0930128437 on June 28, 2004. Note 13: Approved by the Securities and Exchange Commission, Ministry of Finance as per letters with Ref. No. (90) Taiwan-Finance-Securities (I) 143348 on July 16, 2001 and Taiwan-Finance-Securities (I) 0910132478 on June 14, 2002. Note 14: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0940122455 on June 3, 2005. Note 15: Approved by the Securities and Exchange Commission, Ministry of Finance as per letters with Ref. No. (90) No Taiwan-Finance-Securities (I) 143348 on July 16, 2001, Taiwan-Finance-Securities (I) 0910132478 on June 14, 2002, and Taiwan-Finance-Securities (I) 0920127281 on June 19, 2003. Note 16: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0950122451 on June 2, 2006. Note 17: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0960030405 on June 14, 2007. Note 18: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities (1) 0970031743 on June 25, 2008. Note 19: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities-Corporate- 0980027677 on June 5, 2009. Note 20: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-Securities-Corporate- 0990029749 on June 9, 2010. Note 21: Approved by the Financial Supervisory Commission, Executive Yuan as per letter with Ref. No. Financial-Supervisory-SecuritiesCorporate- 1000028222 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-1040036382 of September 7, 2015.

Note 26. Approved by the Financial Supervisory Commission per letter Ref. No. Financial-Supervisory-Securities-Corporate-1040036382 of September 7, 2015. (changes to capital sum not yet implemented)

	Unit: shares,April 12,2021	Unit: shares,April 12,2021	Unit: shares,April 12,2021	Unit: shares,April 12,2021
Type of shares	Authorized stock Remark Outstanding shares(listed) Unissued shares Total
Common shares	421,631,537	78,368,463	500,000,000	30,000,000 shares were reserved for employeepurchase of stock warrants.

Information on the shelf registration system: None.

(II) Shareholder structure

	April 12,2021	April 12,2021
Individuals	Overseas institutions and individuals	Total
8,595	466	9,150
91,018,099	294,725,075	421,631,537

				April 12,2021	April 12,2021	April 12,2021
Shareholder structure Quantity Government agencies Financial institutions Other legal persons				Individuals Overseas institutions and individuals Total
Number of individuals 2 36 51				8,595 466 9,150
Stocks owned 396,000 19,654,570 15,837,793				91,018,099 294,725,075 421,631,537
Shareholding ratio	0.09%	4.66%	3.76%	21.59%	69.90%	100.00%

(III) Distribution of equity ownership

1. Common shares

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April 12, 2021
Number of
Shareholding range Stocks owned Shareholding ratio
shareholders
1 to 999 4,053 707,984 0.17%
1,000 to 5,000 3,920 7,097,912 1.68%
5,001 to 10,000 375 2,796,203 0.66%
10,001 to 15,000 154 1,945,200 0.46%
15,001 to 20,000 88 1,600,604 0.38%
20,001 to 30,000 74 1,835,590 0.44%
30,001 to 40,000 40 1,391,188 0.33%
40,001 to 50,000 30 1,382,021 0.33%
50,001 to 100,000 105 7,725,723 1.83%
100,001 to 200,000 87 12,648,675 3.00%
200,001 to 400,000 62 17,442,130 4.14%
400,001 to 600,000 35 17,470,308 4.14%
600,001 to 800,000 18 12,341,149 2.93%
800,001 to 1,000,000 13 11,844,423 2.81%
> 1,000,001 96 323,402,427 76.70%
Total 9,150 421,631,537 100.00%
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Preferred shares: None.

(IV) List of major shareholders

Name, number of shares held, and shareholding percentage of shareholders who hold more than 5% of the shares or the 10 largest shareholders:

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April 12, 2021
Shares Shareholding
Stocks owned
Name of major shareholder ratio
Leo Huang 20,859,897 4.95%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Stichting
18,175,000 4.31%
Depositary APG Emerging Markets Equity Pool
Chun-Sheng Chen 15,113,308 3.58%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Schroder
13,082,000 3.10%
International Selection Fund - Asian Absolute Return
Yu-Mei Hsueh 11,074,646 2.63%
First State Asia Pacific Leaders fund a sub fund of First State
9,459,000 2.24%
Investment
Shu-Chuan Chen 9,294,362 2.20%
Nan Shan Life Insurance Co., Ltd 8,662,000 2.05%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Schroder
8,177,000 1.94%
International Selection Fund-Global Climate Change Equity
Citibank as custodian of Singapore Government - GOS - EFM C 7,382,436 1.75%
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(5) 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.

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Year
2019 2020 As of March 31,2021
Items
Market price Max 163.50 186.50 230.00
per share Min 112.00 95.00 167.00
(Note 1) Average 141.50 149.28 200.64
Net asset value
Before issuance 34.55 38.13 -
per share
(NAVPS) After issuance 31.54 33.63 -
Earnings per Weighted average 414,077,766 417,761,066 -
share (EPS) Earnings per share (EPS) 4.48 5.56 -
Cash dividend 3.00654711 4.5 (Note 2) -
Surplus allotment - - -
Dividend per Free
Dividends from
share (DPS) allotment - - -
capital reserve
Cumulative unpaid dividends - - -
Price/earnings ratio 31.58 26.85 -
Return on
Price/dividend ratio 47.06 33.17 -
investment
Cash dividend yield ratio 2.12 3.01 -
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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: 2020 earning distribution proposal was approved by the Board of Directors on February 25, 2021. The total cash dividend was NT$1,897,175,417. If an employee’s exercise of stock options or other reasons affect the number of outstanding shares, the shareholder dividend rate, and result in a change, the chairman is authorized to deal with full authority.

(VI) Dividend policy of the Corporation and its implementation

1. Dividend policy stipulated within the articles of association

Where the annual general final accounts indicate a surplus, the said surplus shall be first used to pay taxes and cumulated losses (dues), and shall then set aside 10% of the said surplus as legal reserve. Where such legal reserve amounts to the total authorized capital, this provision shall not apply. The corporation may review business requirements or

refer to statutory regulations to set aside or reversed the surplus as special reserves. Any remaining surplus shall then be combined with the cumulated undistributed earnings of the previous year and the Board of Directors shall formulate a plan for distributing the earnings. The plan shall then be provided to the Board of Shareholders to resolve on the distribution of this sum. Share dividends and bonuses shall not be allotted if the Corporation has no surplus.

The Board is authorised 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 authorised, 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 the shareholders’ interests. The Board of Directors shall formulate the category and sum of dividend payout which shall, by principle, be no less than 60% of the net income after tax (NIAT) of the year. The Company’s 2020 and 2019 dividend distribution rates were approximately 81% and 67%, respectively.

Since the Corporation is still in the growing phase, capital requirements of future development plans of the Corporation shall be considered. Cash dividend distributed each year shall be no less than 20% of the total cash and stock dividends distributed for the year.

Dividend payout plans proposed during the most recent shareholder's meeting According to Article 34-1 of the Company’s Articles of Association, the earning distribution proposal is based on cash dividends, and the Board of Directors is authorized to distribute by a special resolution and report to the shareholders meeting. The Company’s 2020 earnings distribution proposal was approved by the Board of Directors on February 25, 2021, to distribute shareholders cash dividends of NT$1,897,175,417, with a distribution of about NT$4.5 per share. This distribution plan will be reported to the 2021 regular meeting of shareholders and the Board of Directors will decide the 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.
(1)The possible amount is estimated based on the Company’s Articles of Association and past experience. The estimated amounts of 2020 employee compensation and directors compensation are NT$383,845,000 and NT$9,600,000, respectively. It is estimated at 12.04% and 0.30% of the profit before tax (amount before deduction of compensation for employees and directors), which is in line with the figures set in the articles of association.
(2)Number of shares issued for employees’ compensation: 0.
(3)Accounting treatment for any discrepancy between the actual amount distributed and the estimated figures: Where the Board of Directors resolved to enact major changes to the sum issued before the approval and issuance of the financial report, the said change shall be adjusted as annual expenses listed for the year. Where changes were still made to the said sum after approval and issuance of the financial report, the changes shall be treated as changes to accounting estimates, and be adjusted and entered into account for the following year.
Status of compensation distribution 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 25, 2021, the Company’s Board of Directors approved a cash distribution of NT$383,845,000 for employees compensation and NT$9,600,000 for directors compensation, which is the same as the estimated annual amount of recognized expenses.
(2)Sum of employees’ compensation provided in distributed shares and its proportion of the net income after tax (NIAT) provided in the individual financial report and the total sum of employees’ compensation: 0.
4.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:
The Company’s FY2019 employees cash bonus was NT$290,000,000 and directors compensation was NT$9,600,000. There was no difference between the actual distribution amount and the recognized amount.
(IX) Repurchase of the Corporation's own shares: None.

II. Corporate Bonds: None.

III. Preferred shares: None.

Ⅳ. Overseas depositary receipt: None.

V. Employee stock warrant

(I) Status of employee stock warrants of the Corporation that are yet to mature

		April 12,2021
Type of employee stock warrant		Employee stock warrant in 2015
Date of effective registration		September 7,2015
Issue date		March 25,2016
Quantity issued		7,900,000 units, each unit is eligible for subscribing to 1 share.
Ratio of subscribable shares to total issued and outstandingshares		1.8752%
Warrant exerciseperiod		6 Years
Method for exercisingthe warrant		Issuance of new shares
Restricted duration of stock subscriptions and ratio		Period Ratio of subscribable shares End of Year 2 40% End of Year 3 70% End of Year 4 100%
Number of subscribed shares		6,527,900 shares
Total value of shares already obtained through exercise of warrant rights		NT$400,153,510
Cumulative number of expired shares		471,600 shares
Number of unsubscribed shares		900,500 shares
Subscription price per share of unsubscribed shares		NT$ 58.7
Proportion of the quantity of unsubscribed shares of total issued and outstanding shares		0.2137%
Influence on shareholders’ equity		The Corporation may only refer to the period to issue new stock warrants 2 years after the issuing date of these stock warrants. The warrant exercise period was also 6 years, which meant that dilution effects upon the shareholder equitywould be limited.

(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

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April 12, 2021
Number of Proportion of Implemented Not yet implemented
subscribed subscribed Number of Price of Total Ratio of Quantity of Price of Total value Ratio of
shares shares subscribed subscribed value of subscriptions unsubscribed unsubscribed of outstanding
Title (thousand acquired of shares shares (NT$) subscribed executed to the shares shares (NT$) unsubscribed shares to the
Name shares) total issued (thousand shares total shares (thousand shares total shares
(Note 1)
and shares) (thousand issued (%) shares) (thousand issued (%)
outstanding NT$) (Note 2) NT$) (Note 2)
shares (%)
(Note 2)
None None - - - - - - - - - -
Employee [Kuo-Wei, ]
Huang
Chouyu
Employee
Chuang
Employee Nick Wu
Kevin
Employee
Weng
Hsin-i
Employee
Wu
Chun-
Employee Kuo,
Chen
Employee Hans Yi
Mark
Employee
Chien
James
Employee
Lee
Yu-wen
Employee
Hsieh
Ming- 58.7~
Employee Ying 770 0.1828 630 63.4 38,527 0.1495 140 58.7 8,218 0.0332
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
Wen-
Employee chung
Chen
Officer
Managerial
Employee (Note 3)
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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 January 25, 2021, the number of registered shares with MOEA was changed to 421,294,537 shares) Note 3: Refers to a non-managerial employee in the top-10 employees for the number of stock subscriptions acquired.

VI. New restricted employee shares

(I) Implementation of new restricted employee shares

April 12, 2021

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Type of new restricted employee share Second issuance of new restricted employee shares in 2016
Date of effective registration June 27, 2016
Issue date June 20, 2017
Number of Restricted employee shares
185,000 shares
Issued
Issuing price NT$10
Ratio of Restricted employee shares
0.0439%
Issuedto Total Shares Issued (%)
An employee must be employed for a period of one year after subscribing to the
new restricted employee shares and at the maturation of every vesting period.
The employee must also fulfill 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
Vesting conditions for new restricted
restricted employee shares.
employee shares
The following provides the proportion of shares to be issued for various vesting
conditions:
End of Year 1: 10%
End of Year 2: 20%
End of Year 3: 30%
End of Year 4: 40%
1.An employee may not sell, pledge, transfer, provide as a gift to another party,
set up, or use other means to dispose of the 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
Restrictions and privileges for receiving
the date of issuance without any surcharge.
new restricted employee equities
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 trusted custodian
shall be commissioned to exercise matters related to attendance, proposal,
speech, voting rights, as well as other matters related to shareholder equity in
the Shareholders’ Meeting on behalf of the employee.
Once issued, the new restricted employee shares shall be submitted to a trust for
Safekeeping of new restricted employee
custody. Before meeting the vesting conditions, an employee may not, for any
shares
reason or by any means, ask the custodian to return the said shares.
Actions for handling allotments or
Before meeting the vesting conditions, the Corporation may refer to the law to
subscription to new equities by
buy back new restricted employee shares that have been issued at the price of
employees who have yet to attain the
the original issuance and extinguish the shares accordingly.
prerequisite conditions
Quantity of new restricted employee
equities that have been recovered or 49,250 shares
repurchased
Quantity of new restricted equities that
83,750 shares
were extinguished
Quantity of new restricted equities not yet
52,000 shares
extinguished
Proportion of new restricted shares
remaining restricted as part of total 0.0123%
equities issued
Overall evaluation of the vesting conditions, periods, and proportions listed in
the regulations for issuing shares reveal that the said issuance had a limited
Influence on shareholders’ equity
impact and dilution on the earnings per share (EPS) of the Corporation from
2017 to 2021, and will not significantly affect shareholders' equity.
----- End of picture text -----

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

==> picture [540 x 408] intentionally omitted <==

----- Start of picture text -----

April 12, 2021
Restricted shares extinguished Restricted shares yet to be extinguished
Ratio of new
New
restricted restricted Number of Issue Amounts Ratio of Number of Issue Amounts Ratio of shares
Title employee shares for shares price issued shares with shares price issued without
(Note 1) Name shares employees to with (NT$) (NT$) restriction without (NT$) (NT$) restriction
acquired the total restriction lifted to the restriction lifted to total
(shares) shares issued lifted total shares lifted shares issued
(Note 3) (shares) issued (shares) (Note 3)
(Note 3)
None None - - - - - - - - - -
Employee [Zhi-Xiang Xu ]
(Note 1)
Employee Yu-Zho Chen
Employee Jia-Chen Lin
Zhi-Qing
Employee
Zhong
Employee [Bo-Yi Huang ]
(Note 1)
Yu-Quan
Employee
Huang
Wen-Yue 185,000 0.0439% 83,750 10 837,500 0.0199% 52,000 10 520,000 0.0123%
Employee
Zhuang
You-Qing
Employee
Zhang
Employee Zhi-Shi Cai
Employee Shi-Chao Lin
Employee Cai-De Liao
Employee Lin, Chien-
Liang
Employee [Ming-Chong ]
Qiu (Note 1)
Officer
Managerial
Employees (Note 2)
----- End of picture text -----

Note 1: 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.

Zhi-Xiang Xu resigned on January 31, 2019; Bo-Yi Huang resigned on August 4, 2020; Ming-Chong Qiu resigned on April 30, 2019. Note 2: Refers to a non-managerial employee in the top-10 employees for new restricted employee shares acquired. Note 3: Total number of issued shares shall refer to the number of shares issued in the change registry information of the Ministry of Economic Affairs (MOEA) (On January 25, 2021, the number of registered shares with MOEA was changed to 421,294,537 shares)

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

VIII. Implementation of capital utilization plan: None.

Chapter 5 Operation summary

I. Business content

(I) Scope of business

Major contents of the businesses engaged in

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 automated equipment. The Corporation's current product lines include: 1.test instrument equipment; 2. special materials; 3. automated equipment.

Proportion of various businesses Consolidated revenue:

1.test instrument equipment; 2. special materials; 3. automated equipment. 2. Proportion of various businesses Consolidated revenue:	1.test instrument equipment; 2. special materials; 3. automated equipment. 2. Proportion of various businesses Consolidated revenue:	1.test instrument equipment; 2. special materials; 3. automated equipment. 2. Proportion of various businesses Consolidated revenue:	1.test instrument equipment; 2. special materials; 3. automated equipment. 2. Proportion of various businesses Consolidated revenue:	1.test instrument equipment; 2. special materials; 3. automated equipment. 2. Proportion of various businesses Consolidated revenue:
Unit: Thousand NT$
Year Product category 2019 2020 Amount Proportion of revenue(%) Amount Proportion of revenue(%)
	Amount Proportion of revenue(%) Amount Proportion of revenue(%)
Test equipment	10,545,586 75.82 12,045,049 77.55
Special materials	2,097,065 15.08 2,551,127 16.42
Automated equipment	1,009,058 7.25 617,812 3.98
Others	257,925 1.85 318,555 2.05
Total net operatingrevenue	13,909,634	100.00	15,532,543	100.00

Current products of the Corporation
Power electronics 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 automated test system
8. Battery simulator
9. －
10. 1. Soft panel Electric vehicle test solutions
11. Automated test system for power electronic components
12. Battery simulator
13. Battery test system
14. Electric propulsion system
15. DC power source
16. Electronic load
17. Motor test
18. Automated transformer test system/automatic component analyzer
-Battery test and automation solutions
1. Battery pack/battery module automated test system
2. Battery testing and formation system
3. Battery pack manufacture test solution
4. Battery pack after service test system
5. Electrical safety test solution
6. Automated optical inspection system
Passive component test solutions

LCR meter/auto transformer test system
Electrolytic capacitor tester
High-frequency AC tester
Component test scanner
Insulation tester
Milliohm tester
Passive component automated test system
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
Automated test system
Motor test solution
Video and color test solutions
Video signal image generator
Color analyser
Automated test system
PCBA image analyzer
Signal module
Flat panel display test solutions
Flat panel display tester
OLED test system
SHV 8K test solution
LED & driver test solution
LED total power test system
ESD test system
LED power source test solution
Cooling chip controller
Temperature recorder
Photonics test solutions
Wafer-level testing
Packaging level testing
-Automated optical inspection solutions
Automated optical test system
Solar cell AOI system
Photovoltaic/inverter test & automation solutions
Automated optical test system
Thermoelectric cooling chip controller
Thermal data logger
PV inverter test solution
Semiconductor/IC test solutions
SoC test system
VLSI test system
IC test handler
Metrology system
-RF and wireless measurement and test solutions
Wireless test solutions

  2. RF recorder/player

  3. GPS simulator

PXI test & measurement solutions
1. PXI SMU/power supply instrument
2. PXI semiconductor/IC test system
3. High-precision power measurement unit
Smart manufacturing system solutions
1. Intelligent manufacturing system
Turnkey test & automation solution
1. Production line automation assembly and testing
Other solutions
1. Reliability test solution
2. Universal test solution
New products under development
New-generation regenerative battery module charging and discharging tester
New-generation high-performance battery cell reaction system R&D project
High performance electric motor emulator
Dual axle dynamometer
Critical electric vehicles components power level in-loop testing platform
80 Gbps DP 2.0 video image generator
Lab grade high precision battery cell and material test system
High frequency/large current magnetic component's key parameter analyzer
Next-generation bi-directional high power density DC source
Next-generation bidirectional high power density AC power supply
(II) State of the industry
Current state and development of the industry
A. Instruments industry

In 2020, when the COVID 19 epidemic spread rapidly worldwide, people’s overall living habits change greatly. The tourism and transportation industries have suffered a great impact. Usual business activities have been quite restricted. Most companies adapt to work from home. Remote learning and remote business activities have become mainstream, thus driving the demand for the IT industry to grow greatly. Due to Taiwan’s success in epidemic control and the trade war between China and the US, Taiwan’s electronics industry achieved good operating results in 2020. It has expanded its production capacity to meet demand, and the demand for equipment has also increased.

Power electronics test solutions

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. In 2020, the automotive electronics related to electric vehicle and battery charging station industries will flourish. The automotive electronics industry focuses on safety and tolerance and implements strict quality requirements. Therefore, the demand for test equipment is more complex and extensive. Improve the quality and speed of testing is the key issue for the development of the instrument industry. The Company and its subsidiaries' power supply test equipment are developed and are moving towards test automation, addressing complex and multitasking test requirements. With the production automation trend, the Company has also developed its own power supply automated test system to provide a powerful software platform. The establishment of widely used test items can provide various industrial application tests to maintain the competitive advantage of this product line.

Video and color test solutions The display market continues to develop towards a high-resolution and upgraded to 8K SHV (Super HI-Vision) high-resolution displays. With the introduction of highresolution applications, the video interface has improved. For example, the HDMI 2.1 specification has introduced a single HDMI signal that can transmit 8K video. Signal image capability. Video and color test solutions for the panel industry and the display industry have launched 8K Super-Hi Vision test solutions to meet the needs of 8K SHV resolution (7680x4320 / 8192 x 4320) test solutions. 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.
Test solutions for passive components and regulatory testing With the vigorous development of the information and communications industry in 2020, the passive component industry will also grow substantially. Enhancing data management, quality, and efficiency is a trend in equipment development. Therefore, we provide new automated testing technology for passive components and safety standard testing. Multiple testers are consolidated into one. To ensure power semiconductor components without continuous partial discharge under normal operating conditions is also the testing key to ensure long-term working quality.
Semiconductor/IC test solutions
The semiconductor industry exploded in 2020. As the demand for 5G communication applications, automotive electronics, long-distance high-speed computing, and servers has increased, advanced semiconductor manufacturing processes are advancing. From the supplier's raw materials to the process processing, slight defects are not allowed. 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 a significant reduction in costs.
Battery testing and automation solutions After Tesla's mass production in China, the price has been significantly reduced in the electric vehicle industry. Also, major car manufacturers have successively launched electric vehicles. The market is booming and driving the demand for batteries. Therefore, battery safety issues will become more critical. The Company has been committed to new energy for a long time, making continuous efforts for the battery industry's test automation and efficiency. We provide customers with power battery cells, modules, battery packs and battery system performance, environmental reliability, and safety testing and certification services. 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. Hence, battery automated testing is an important part of the current development of electric vehicles.
B. Special materials
In recent years, the technical problems with copper wire encapsulation have gradually been overcome and improved, and the downstream package manufacturers have accelerated the introduction and attestation of copper wire packages. Most of the packaging wire materials have been replaced by copper wires instead of gold wires. The subsidiary corporation, Chroma New Material Corp. will combine the technical services from Japan's NIPPON MICROMETAL CORPORATION to enhance the added value of its products in order to consolidate the market share of the high-tech

threshold packaging products in the Taiwan market.

Correlation with upstream, midstream, and downstream sections of the industry
A. Measurment 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 from many fields such as video surveillance, passive components., LCD modules, LED, semiconductor, photovoltaics (PV), 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		Downstream
Boxes and cases Printed circuit boards (PCB) IC Other components		Assembly Test Sales		Video surveillance, power supply, passive components., IC design, IC testing, LED, PV 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 the trading of special materials, and the downstream industry is the IC packaging industry.

C. Automated equipment

With the combination of metrology equipment, automation systems, and MES software capabilities to provide customers with automation solutions (Turnkey Solution). The various main products of MAS, a subsidiary corporation, are photovoltaic (PV) automated production and system integration, TFT-LCD automated production and system integration, and cleanroom 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 test solutions in response to the aforementioned production, R&D, and quality requirements:

Low voltage load characteristics and high current switching technology in response to the point-of-load converter power supply and fast switching properties.
Input distortion simulations and electrical grid distortion simulations in response to regulatory requirements for testing of power supplies.
Discontinuous, low power measurements in response to energy-saving requirements of power supplies under 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 testing jigs for LCD Inverter testing can greatly improve testing speed and stability.

Network data capture functions enable manufacturers to establish real-time production capacity controls and perform quality statistical analysis.
Video testing industry
The display industry develops towards high resolution, officially entering the 8K era with 8K (Super-Hi Vision) ultra-high-definition resolution images. The application drives the improvement of the video interface and the USB TYPEC integration for image transmission, bidirectional power supply, and data transmission functions, with lightness and uni-directional convenience. The Video Electronics Association of America (VESA) defines the Embedded Display Port video interface, which has been widely used because of its high bandwidth and low system power consumption characteristics. Therefore, the corresponding test specifications are also the focus of industry development. Product development adopts modular architecture design, match different signal or power module, freely combine required test conditions, high elasticity, strong expandability, support multiple mainstream industry communication interfaces, provide panel industry and display industry 8K ultra high definition resolution (7680x4320/8192x4320) to fulfill he need for test solutions to meet the needs of today's and future video-industry applications.
Passive components. testing
Electronic products are becoming lighter, thinner, and smaller. As a result, the manufacturing, R&D, and quality of passive components within these products also focused upon high efficiency and precision levels. The following describes the trends for developing testing equipment for passive components:
High speed precision measuring, integrating equipment automation to improve production efficiency while reducing human mistakes to boost reliability.
Integrated testing of multiple parameters to reduce the number of production equipment and decrease the number of labor hours required, thereby lowering production costs.
Provide comprehensive test solutions for specific applications that help users establish systems quickly to fulfill their test requirements, and receive comprehensive technical support.
Providing network data capture functions so that manufacturers can establish real-time production capacity controls and perform quality statistical analysis.
Electric vehicle/battery test equipment
The most important components of mobile devices and electric vehicles are battery modules. The reliability of battery modules is related to safety issues. Therefore, battery reliability testing is very important, and battery production is extremely energy-consuming. The equipment provides and highly efficient testing. The stability and safety of automated instrument products have become an important trend in the development of the instrument industry.
Semiconductor/IC test solutions
Since the rise of smart manufacturing and the Internet of Things, the combination of integrated test instruments and automation has become the competition in the instrument industry. To respond to the development of the trend, the Company and its subsidiaries have been actively integrating combined technologies in multiple fields such as electronics, electrical machinery, machinery, software, information, and communications. It provides a full range of test solutions for different semiconductor products in the production and manufacturing process, including semiconductor material nanoparticle monitoring, multimedia wafer testing, PXIe test platform, RF

radio frequency wafer testing, and other 5G solutions.

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. The photonics test solution mainly includes the chip sector of the laser diode and the packaging sector of the optical communication active component.
(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 for cost considerations.

  - Need for copper wires with even smaller diameters and higher strength in response to miniaturization, high frequency, and high speed requirements for final products.

  - Bonding capability and precision of wire bonding process in response to everdecreasing 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 to entry in terms of product technology, and each product technology can maintain its leading position. However, as new products continue to introduce and the Company has to maintain its competitiveness. It 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 addition, with rampant counterfeiting in the third region due to the 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 testers and automated equipment will provide instrumentation industries with high levels of competitive advantages.

(III) Technologies and recent R&D efforts

R&D expenses invested in the two most recent years

provide instrumentation industries with high levels Technologies and recent R&D efforts 1. R&D expenses invested in the two most recent years	of competitive advantages.	of competitive advantages.
	Unit:Thousand NT$
Item\Year	2019	2020
R&Dexpenses	1,283,422	1,341,956
Netoperatingrevenue	13,909,634	15,532,543
Proportionof R&Dexpensestonetoperatingrevenue	9%	9%

Major R&D outcomes
◎2238 Video Pattern Generator
◎2918 Flat Panel Display Test Solution
◎7505-05 Multi-Functional Optical Measuring System
◎61509 Programmable AC Source
◎63000 Programmable DC Load

◎62000L Programmable DC

◎66205 Digital Power Meter

◎1870D Inductor Test & Packing Machine

◎1871 Inductor Layer Short Automatic Test System

◎11210 Battery Cell Insulation Tester

◎11050 HF LCR meter

◎19501-K Partial Discharge Tester

◎19311 Battery Cell Surge Tester

◎33010 PXIe PE Card

◎3680 Advanced SoC Test System

◎3160-C Tri-Temp Quad-Site Handler

◎3660-C Tri-Temp System Board Handler

◎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 Sorting System

◎3760 Solar Cell Inspection Test/Sorting System

◎17011 Battery Charge and Discharge Test System

◎17040 Regenerative Battery Pack Test System

◎7925 TO-CAN Inspection System

◎8000 Power Supply ATS
Future R&D plans

After the sales of the semiconductor solution nanoparticle monitoring system to semiconductor fabs, the Company successfully entered the testing field of advanced manufacturing processes in semiconductor fabs. In mid-2019, the Company invested in the Israeli semiconductor test equipment company CAMTEK. Through the technical cooperation between the two parties and the integration of the Company’s optical, electromechanical, and temperature control measurement technologies, the Company will expand its test equipment in advanced semiconductor manufacturing processes. These will be the Company's research and development goals in the next few years. In recent years, the main development trends of the IT industry are toward 3D applications, smart communications, and the Internet of Things. The use of wireless communications to carry various devices has entered the era of electric vehicles, unmanned vehicles, and smart cities. While the use of various power sources has become increasingly important, the Company continues to develop towards high-power power supplies.

Therefore, the Corporation's research and development plan has also evolved with various industries, promoting related automation equipment of Industry 4.0 and the development and integration of Turnkey Solution products, and 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 test equipment, wireless communication test equipment, as well as test equipment that meets VR and AR requirements are 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 automated 5G test equipment.

(IV) Long-term and short-term business development plans

1. Short-term development plans

(1) Planning for production capacity and material preparation in advance to ensure timely output and meet customer needs
- The trade war between China and the US and the success in pandemic control have boosted Taiwan's electronics industry's on a global scale. The increasing use of electronic products has greatly increased demand. The Company moved to the new A7 plant at the end of 2020 so that the production capacity can meet demand.
(2) Keep a close eye on the needs of the European, American, and Japanese markets after the pandemic
- After the gradual vaccination in Europe, the United States, and Japan, countries in Europe, the United States, and Japan have lifted control measures one after another. The stagnant economy is expected to get on track gradually. The Company must also grasp this opportunity for recovery and actively deploy to promote the Company’s market share in Europe, the United States, and Japan.
(3) Accelerate the development of advanced semiconductor process, AIOT, and communication-related 5G test solutions.
- The investment in advanced semiconductor process equipment is increasingly enormous. It is a place for many equipment manufacturers to compete; 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. For AIOT and areas driving large-scale applications in recent years, the equipment industry's active development has become an important goal of the 5G equipment industry.
Long-term development plans

The long-term goal of the Corporation is to “develop world-class products and become a world-class enterprise” and it is the vision for the corporation's growth. World-class products are "precise, reliable and unique", providing customers with more valuable test solutions to various electronic technology industries, while world-class corporations are advancing toward the three major principles of "innovative technologies, private 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 an 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 purposes 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 parent company 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 the online market, in order to increase overall resource efficiency.
(2) Human resource plans

The Corporation and its subsidiaries have been developing niche products for its business development objectives and can thus be considered a technically-intensive business. Efforts have been invested to strengthen employee training and establish a knowledge management platform and learning database, sharing resources to help employees quickly gain competence in the professional and technological field,

improve human resources, and reduce learning time.

     - (3) Product development plans

        - Innovation is the DNA of the Company. Innovative technology provides customers with higher 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 the future, in addition to investing in semiconductor and 5G industrial developmentrelated test products, the Company will also invest in modular instruments, systematic integration, and various automated 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 longterm 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 5G product lines.

II. Market, production, and sales summary
(I) Market analysis
1. Major products by sales area

Area		2019	2019	2019		Unit: Thousand NT$ 2020 Amount % of net operating revenue $ 4,339,259 28% 11,193,284 72% $15,532,543 100%	Unit: Thousand NT$ 2020 Amount % of net operating revenue $ 4,339,259 28% 11,193,284 72% $15,532,543 100%
		Amount	% of net operating revenue			Amount
Internal sales External sales Total		$ 3,662,839 10,246,795 $13,909,634		26% 74% 100%		$ 4,339,259 11,193,284 $15,532,543

State of the market
With the outbreak of COVID-19 in early 2020, countries have implemented lockdown and isolation controls to prevent the spread of the epidemic. The global economy is in a quagmire. To maintain normal operations, the rise of long-distance business opportunities has driven the vigorous development of the IT information industry. Countries continue to promote electric vehicles, and the demand for electrical vehiclerelated electronic products such as charging equipment and battery sensor semiconductors has increased significantly. Coupled with the suspension of production due to the pandemic and disasters, it has increased the shortage of materials in the electronics industry. At the beginning of 2021, various products in the IT and electronics industry are insufficiently prepared. How to ensure the source of materials and supply to customers is the most concerned topic.
State and growth of market supply and demand In 2020, to prevent the spread of the pandemic, various countries have adopted the strategy to block cities and countries, causing industries to stop work and reduce production. However, with loose monetary policy, new technologies such as electric vehicles and 5G construction are increasingly being used. With Increased vaccinations, the economy has recovered rapidly, and demand has increased, causing a shortage of goods. From the shortage of raw materials, leading to price increases, to the shortage of electronic components. In particular, the shortage of semiconductors has caused governments to re-examine the issue of semiconductor production resources. Expanding semiconductor production capacity has become the lifeblood of international economic and military development. Therefore, ensuring the supply of raw materials in 2021 and on-time delivery to customers is the biggest challenge for the industry's growth.

Positive and negative factors affecting competitive niches and long-term development, as well as response strategies
A. Test instrument equipment
(A) Competitive niches and positive factors:
- The Company has long invested in the 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 in the market. The Corporation accumulated a variety of key technologies over the years and developed a number of technologically advanced products, allowing the Corporation and its subsidiaries to stay ahead of the test market. Competitive niches of the 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 the 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 the complexity of test instruments, and a diverse range of material types required which results in high warehousing costs.
(C) Response strategies:
- Since products are offered in many models and required in small quantities, the Corporation and its subsidiaries adopted modular designs during product research and development (R&D) phases. Differences in specifications were concentrated in a single module during the production process. Shared characteristics and designs were adopted into general modules in order to improve production volume for general modules while reducing the materials required for the unique parts. 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, intending to enhance management efficiency.
B. Special materials
(A) Competitive niches and positive factors:
- The Corporation's subsidiaries are the largest suppliers in Taiwan and can 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.

  - (C) Response strategies:

     - To safeguard business development, Chroma New Material Corp., a subsidiary of the Corporation, has built a long-term partnership with NIPPON MICROMETAL CORPORATION of Japan to supply materials to Chroma New Material Corp.

(II) Major uses and production process of primary products
Major uses of the primary products
- Power electronics test solutions

In addition to applications in information, communications, aerospace, defense, and

other industries which rely on the power electronics test solutions, under the pressure of the tightening of the earth’s resources in recent years, proactively developed energysaving products such as hybrid electric vehicles, LED lighting devices, solar energy, and fuel cells, also uses Chroma ATE' proficient technology in the field of power supply testing, introducing customized test solutions for the industry.

The Corporation provides various test equipment for programmable AC power supply, programmable DC power source, DC electronic load, AC electronic load, digital power meter, and frequency-response analyzer, offering regulatory tests for both input and output terminals as well as satisfying the requirements of dynamic simulations. Soft panel (exclusive graphic operating software) and NI Labview drivers were also provided to help users conveniently employ these solutions.

The Corporation and its subsidiaries independently developed an automated test system which would include a software platform that comes with powerful inbuilt functions and general tests which can then be integrated with the desired hardware instrument to independently edit the test items and to acquire and analyze vast amounts of test data. Analysis results could then be used as a basis for R&D or quality assurance (QA) to make changes to the product or improvements to factory processes. In addition to recent applications for PC/servo/telecom power sources, adapters, and chargers, other areas such as backlight inverters, LED drivers, ballast of energy-saving lamps, UPS, PV inverters, and even electric vehicle supply equipment (EVSE) were included within the scope of applications. Also, the Corporation and its subsidiaries have a global technical applications support team, and can provide customized plans for automation systems as well as production of testing jigs.

Video and color test solutions

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

Color analyzers employ advanced digital signal processors and photoelectric conversion technology and combined them with precision optical components and circuit design to accurately 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, the optical color analysis probe could 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 test solution available.

Test solutions for passive components and regulatory testing
Test equipment for passive components includes 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 could be used to analyze the properties of the tested objects and provide design optimization for integrated applications such as automated production inspection, incoming/outgoing inspection, QA verification, and R&D analysis in order to satisfy the customer’s requirements for cost reduction and 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 those from 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 topic.

Products that have been tested 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

Liquid crystal module test solutions can adopt a shorting-bar signal during the assembly phase to test for various defects of the panel and implement laser correction. After module assembly, different panel dimensions and backlight sources (CCFL or LED BLU) were referenced before using video signal sources and programmable power sources together with ergonomic operation interface on PC platforms to complete voltage, current, and power testing. Both software and hardware are used to analyze image bright spots, defective spots, color, and resolution. Automated conveyor belt production line designs and system-based controls will also provide integrated networkbased 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, automated system function testers could be used to rapidly screen the 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 the ergonomic operation interface of the probe testers to achieve rapid LED testing. For downstream packaging processes, tests such as ESD, thermal resistance, and temperature control (tri-temperature) could 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 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 were also provided to

satisfy various kinds of test requirements. - Solar cell test solutions

Solar cell test solutions include several different testers and test equipment developed primarily for test requirements during the cell phase and module phase of the solar cell. I-V testers could be used to measure cell conversion efficiency of solar cells and sort these cells according to conversion efficiency. Automated optical testing would then be used to determine any color, top side, and back side printing defects of the solar cell. Finally, the category of the solar cell would then be used to implement relevant sorting. When assembling PV systems, system inverters 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 and automation solution

The Corporation's battery testing and automation solutions cover a wide range of products, including 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. , Save electricity and air conditioning costs, reduce production costs. The applicable industry scope includes electric vehicle manufacturers, energy storage system vendors, and battery module plants, which are suitable for battery management system testing, battery pack endurance testing, product shipment inspection, design verification research, and battery pack production line capacity learning ( Learning) and DC internal group testing and other purposes.

Photonics Test Solution

The photonics test solution mainly includes the chip sector of the laser diode and the packaging sector of the optical communication active component. Chromao's superior power electronics and optical measurement technology, coupled with the integration of institutions and temperature control, the optical components can be burned at different ambient temperatures burned and tested. The semiconductor laser characteristic detection system is designed specifically for laser diodes, and the all-in-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 various 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 boost production efficiency.

2. Production process

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(III) Supply of primary raw materials

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

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Primary raw
material Main supplier State of supply
category
Programmable Galaxy Far East Corp., The Company maintains more than three suppliers, acting
logic gate array Weikeng, and Answer as agents for the products of world-renowned
IC Technology manufacturers, for long-term cooperation. Both quality
and supply are stable.
Power Answer Technology, The Company maintains more than three suppliers, acting
converter IC Morrihan, Texas as agents for the products of world-renowned
Instruments manufacturers, for long-term cooperation. Both quality
and supply are stable.
Memory IC Weikeng, Transcend, The Company maintains more than three suppliers, acting
and Arrow Electronics as agents for the products of world-renowned
manufacturers, for long-term cooperation. Both quality
and supply are stable.
Relay SUMCHIP, IC-Hi The Company maintains more than three suppliers, acting
Technology, Bright as agents for the products of world-renowned
Toward Industry manufacturers, for long-term cooperation. Both quality
and supply are stable.
Structural Chyuan Jyh Industry It is supplied by more than three suppliers, and its
materials Co., Ltd., GAO JING manufacturing quality and supply are very stable. The
JHUN METAL CO. company maintains a good long-term cooperation
LTD., Chang Yang relationship.
PCB SHIN PUU, SPEEDY It is supplied by more than three suppliers, and its
CIRCUITS, TAI manufacturing quality and supply are very stable. The
MOON company maintains a good long-term cooperation
ELECTRONICS relationship.
Gold wire and NIPPON These materials are mainly supplied by Nippon. Nippon
copper wire for has established a positive and long-term collaborative
IC partnership with the Corporation’s subsidiary, Chroma
New Material Corp.
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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 were 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 production capability of the supplier.

(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: Thousand NT$

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2019 2020
Proportion to Proportion
net to net
Relationship Relationship
Items purchases of purchases of
Name Amount with the Name Amount with the
goods for the goods for
issuer issuer
entire year the entire
(%) year (%)
NMC NMC
1 1,292,073 18.93 None 1,662,467 21.07 None
(Japan) (Japan)
NMC NMC
2 763,695 11.19 None 780,037 9.89 None
(Philippines) (Philippines)
Others 4,768,991 69.88 - Others 5,447,483 69.04 -
Net purchase 6,824,759 100.00 Net purchase 7,889,987 100.00
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Explanation for any changes:

NMC (Japan) and NMC (Philippines) are the main suppliers of the Company’s subsidiary Chroma New Material. This is mainly due to an increase in sales of special materials in 2020, so the purchase ratio has increased relatively.

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: Thousand NT$

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2019 2020
Proportion to Proportion to
net sales of Relationship net sales of Relationship
Items Name Amount goods for the with the Name Amount goods for the with the
entire year issuer entire year issuer
(%) (%)
1 Others 13,909,634 100.00 - Others 15,532,543 100.00 -
Net sales 13,909,634 100.00 Net sales 15,532,543 100.00
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Explanation for any changes:

No single customer’s income in the last two years has exceeded 10% of the Group’s total income.

(V) Production volume in the two most recent years

Unit: KM, M, feet, g, units, sets, thousand NT$

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Year 2019 2020
Production volume
and value Production Production Production Production Production Production
capacity capacity
volume value volume value
Primary commodity (Note 1) (Note 1)
Test equipment - 82,203 2,917,231 - 104,562 3,796,921
Special material - - - - - -
Automated equipment - 159 666,192 - 130 307,353
Others - - - - - 321
Total - 82,362 3,583,423 - 104,692 4,104,595
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Note 1:The Corporation and its subsidiaries adopted a production model of producing many product types for limited quantities 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 such production models. Production processes were based upon the processes required and the work hours provided by the testers. Machinery and equipment were then used to assemble a flexible manufacturing work station. Production volume and capacity for various products shall be sequenced according to the product market or purchase order requirements. Expected production volume was used to flexibly adjust production capacity in order to achieve maximum benefits using limited economic resources. Hence, all primary products listed above were capable of maintaining stable capacity utilization rate. Products that proved to be competitive in the market could also utilize the most flexible production plan to achieve optimal capacity utilization rate.

(VI) Sales volume in the two most recent years

Unit: KM, M, feet, g, units, sets, thousand NT$

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Year 2019 2020
Sales
Internal sales External sales Internal sales External sales
Volume and
Value
Primary Volume Value Volume Value Volume Value Volume Value
commodity
Test equipment 43,366 1,380,438 90,730 9,165,148 59,990 1,598,373 154,425 10,446,676
Special material 2,768,664,211 2,066,146 74 30,919 3,136,867,963 2,521,164 70 29,963
Automated
90 107,186 18 901,872 108 83,390 22 534,422
equipment
Others - 109,069 - 148,856 - 136,332 - 182,223
Total 2,768,668,637 3,662,839 90,822 10,246,795 3,136,928,061 4,339,259 154,517 11,193,284
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III. Employee information in the two most recent years up to the publication date of this annual report

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As of February 28,
Year 2019 2020
2021
Sales management 1,372 1,351 1,351
Number of Production 820 809 812
employees R&D personnel 797 860 858
Total 2,989 3,020 3,021
Average age 33.65 38.25 38.34
Average work tenure 6.92 7.38 7.44
Proportion for PhD 1.05% 1.14% 1.10%
the distribution Masters 22.14% 22.41% 22.57%
of academic University/college degree 67.87% 67.63% 67.69%
backgrounds High school diploma 7.38% 7.33% 7.23%
Below high school 1.55% 1.49% 1.41%
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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 2020, there was no case that caused environmental pollution and was punished by the competent authority.

(II) Future response strategies
(1)Compliance with laws and regulations: Obtain, identify, follow and comply with regulations and other requirements that can apply to Chroma ATE due to the environmental impact of products, activities, and services, and communicate relevant information to employees.
(2)Continuous improvement: Promote environmental policies, aim at pollution prevention, formulate supervision and measurement methods for the control operations and activities related to significant environmental considerations, and evaluate the effectiveness of the environmental management system as the basis for performance evaluation for continuous improvement.
(3)Reduce impact: To effectively control environmental impact, provide appropriate protective facilities and equipment or formulate operating standards for related activities to prevent environmental impacts caused by hazardous substances, wastewater, and waste management.
(4)Consultation and communication: To strengthen the interaction with employees, the public, suppliers, and stakeholders, establish channels for communicating environmental policies and related information, and provide appropriate responses.

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 an Occupational Welfare Committee in charge of coordinating and managing employee benefit funds, organizing employee social clubs and tours, ball games, social activities, and gifts for public holidays 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 of their duties, the Corporation stipulated the Education and Training Management Regulations. The Corporation's business objectives and results of departmental surveys were compiled to formulate the annual training plan. Newly hired staff were 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.

2020 training implementation are as follows:

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Number of employees trained Training costs
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Number of employees trained	Trainingcosts

External training of 295 individuals Internal training of 8,439 individuals Total 8,734 individuals	NT$2,228 thousand

2020 training topics:

The content of education and training is based on the overall business strategy, job requirements, and multiple considerations and designs from the perspective of employees, including professional, management, and general education courses, etc., and are implemented per employees' personal development plans, such as communication

skills, innovation ability, leadership ability, projectability, sales ability, etc., to provide employees with a complete training plan.

Retirement system

Following the Labor Standards Act, the Company has formulated the “Labor Retirement Rules” and made the 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 to be in line 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.July 1, 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 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. 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.
- c. The length of service, 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.
Employee-employer agreement
The Corporation and its subsidiaries place great importance on employee welfare and established a harmonious employee-employer relationship. In addition to complying with Labour Standards Act and relevant laws, welfare measures considered superior to statutory regulations were also enacted. Additionally, to promote the efficiency for internal communication and encourage 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 recommendations could be communicated using Employee

Communication Helpline, Employee Communication Email, and Employee Communication Feedback Mailbox were offered to prevent any possible employeeemployer disputes.

Measures for safeguarding employees’ rights
- 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 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

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Nature of Starting and final date of the
Party Major contents Restrictive terms
contract contract
Construction Best Giving (1) February 24, 2017 to the (1) New construction of the None
contract Construction project acceptance date. Corporation's Station A7 building.
Corporation (2) August 15, 2017, to the (2) Electrical and mechanical works
project acceptance date. for the Corporation's Station A7
building.
Construction Li Fu Co., Ltd. August 15, 2017, to the The Corporation's A7 building new None
contract project acceptance date. project glass curtain project
Medium and Mega March 1, 2018~March 1, Medium and long-term loan Credit lines cannot
long-term loan International 2023 be used to purchase
contract Commercial real estate.
Bank
Medium and KGI Bank Co., June 17, 2019~June 17, Medium-term loan credits None
long-term loan Ltd. 2022
contract
Overseas The Export– June 17, 2019~June 17, Investment in the shares of Camtek None
Investment Import Bank 2026 Ltd., Israel
and loan of the
contracts Republic of
China
Joint Fuyu September 25, 2019~ The Company provided two pieces of None
construction Construction September 25, 2023 land with No. 61 and No. 61-1 in Lejie
contract Co., Ltd. Section, Guishan District, Taoyuan,
covering an area of 15,608.13 square
meters (approximately 4,721.46
pings). It cooperated with Fuyu
Construction for a residential building.
The distribution ratio of joint
construction is 47% for the Company
and 53% for Fuyu Construction.
Property sales ADLINK From July 7, 2020 to The Company sold the old plant in The Company must
contract Technology handover Huaya Park (including buildings and rent part of the
Inc. land) to ADLINK TECHNOLOGY plant buildings
INC. for. NT$3,080,000,000 from ADLINK
TECHNOLOGY
INC., and the lease
term shall not be
less than 5 years.
Property lease ADLINK April 1, 2021~March 31, After the Company sold the old plant None.
contract Technology 2026 in Huaya Park and handover to
Inc. ADLINK, we rented 4,004 pings from
ADLINK. The monthly rent is
NT$2,902,900. The lease term is 5
years.
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Chapter 6 Financial summary

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

Unit: Thousand NT$

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Year Financial information of the 5 most recent years
Items 2016 2017 2018 2019 2020
Current asset 11,212,692 14,105,784 13,231,273 12,612,242 13,527,839
Property, plant, and equipment 2,714,127 2,664,584 3,389,889 3,221,431 3,156,634
Intangible asset 227,503 278,036 274,095 268,601 283,580
Other assets 4,478,456 4,969,208 6,307,207 9,334,798 11,160,830
Total assets 18,632,778 22,017,612 23,202,464 25,437,072 28,128,883
Current Before issuance 4,723,411 6,922,901 5,972,513 7,474,187 8,424,952
liability After issuance 6,037,618 8,774,705 7,723,085 8,739,187 10,322,127
Non-current liability 3,121,516 1,631,882 2,539,602 3,177,425 3,315,238
Total Before issuance 7,844,927 8,554,783 8,512,115 10,651,612 11,740,190
liabilities After issuance 9,159,134 10,406,587 10,262,687 11,916,612 13,637,365
Equity attributable to the owner of
10,616,627 13,230,679 14,410,020 14,488,761 16,063,223
the parent Corporation
Capital stock 3,898,872 4,118,942 4,167,794 4,192,961 4,212,945
Capital reserves 1,960,159 3,187,289 3,469,637 3,629,471 4,036,875
Retained Before issuance 4,735,275 5,972,296 6,795,059 6,875,970 7,929,190
Surplus After issuance 3,421,068 4,120,492 5,044,487 5,610,970 6,032,015
Other equity 58,035 (12,134) 13,244 (187,651) (82,101)
Treasury stock (35,714) (35,714) (35,714) (35,714) (33,686)
Non-controlling-interest 171,224 232,150 280,329 296,699 325,470
Total equity Before issuance 10,787,851 13,462,829 14,690,349 14,785,460 16,388,693
After issuance 9,473,644 11,611,025 12,939,777 13,520,460 14,491,518
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Year Financial information of the 5 most recent years
Items 2016 2017 2018 2019 2020
Operating income 11,624,369 14,901,346 16,931,128 13,909,634 15,532,543
Operating margin (Note 1) 5,428,322 7,068,872 7,458,293 6,580,690 7,544,220
Operating profit and loss 2,013,181 3,043,081 3,039,633 2,059,459 2,797,401
Non-operating income and expediture 28,876 78,986 268,457 279,147 231,606
Profit before income tax 2,042,057 3,122,067 3,308,090 2,338,606 3,029,007
Net income of continuing operations during
1,695,566 2,548,823 2,547,179 1,889,476 2,380,957
this period
Loss of discontinued operations ─ ─ ─ ─ ─
Net profit (loss) in this period 1,695,566 2,548,823 2,547,179 1,889,476 2,380,957
Other comprehensive income of the current
(223,152) (138,228) 3,487 (249,805) 78,137
period (net after tax)
Total comprehensive income or loss in this
1,472,414 2,410,595 2,550,666 1,639,671 2,459,094
period
Net profit attributable to the owner of the
1,719,935 2,558,401 2,546,275 1,854,481 2,323,776
parent Corporation
Net profit attributable to uncontrolled equity (24,369) (9,578) 904 34,995 57,181
Total comprehensive income attributable to
1,501,612 2,425,174 2,546,584 1,608,601 2,412,798
owners of the Company
Total comprehensive income or loss
(29,198) (14,579) 4,082 31,070 46,296
attributable to uncontrolled equity
Earnings per share (NT$) 4.53 6.41 6.22 4.48 5.56
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Note 1: It is presented based on the net realized operating gross profit after deducting the unrealized operating gross profit. Note 2. On February 25, 2021, the Board of Directors proposed the earnings distribution plan and cash dividend for the shareholders for FY2020 of NT$1,897,175,417.

2. Individual balance sheet and comprehensive income or loss sheet - International Financial Reporting Standards

Unit: Thousand NT$

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Year Financial information of the 5 most recent years
Items 2016 2017 2018 2019 2020
Current asset 7,709,289 8,212,509 6,640,159 6,544,302 6,852,858
Property, plant, and equipment 1,805,031 1,789,099 2,493,620 2,406,545 2,352,493
Intangible asset 94,424 94,424 94,424 94,424 113,588
Other assets 6,977,507 8,463,667 10,098,682 12,757,869 15,087,123
Total assets 16,586,251 18,559,699 19,326,885 21,803,140 24,406,062
Current Before issuance 3,037,002 3,877,087 2,551,737 4,347,102 5,286,457
liability After issuance 4,351,427 5,731,511 4,302,633 5,612,102 7,183,632
Non-current liability 2,932,622 1,451,933 2,365,128 2,967,277 3,056,382
Total liabilities Before issuance 5,969,624 5,329,020 4,916,865 7,314,379 8,342,839
After issuance 7,284,049 7,183,444 6,667,761 8,579,379 10,240,014
Equity attributable to the owner of
10,616,627 13,230,679 14,410,020 14,488,761 16,063,223
the parent Corporation
Capital stock 3,898,872 4,118,942 4,167,794 4,192,961 4,212,945
Capital reserves 1,960,159 3,187,289 3,469,637 3,629,471 4,036,875
Retained Before issuance 4,735,275 5,972,296 6,795,059 6,875,970 7,929,190
earnings After issuance 3,420,850 4,117,872 5,044,163 5,610,970 6,032,015
Other equity 58,035 (12,134) 13,244 (187,651) (82,101)
Treasury stock (35,714) (35,714) (35,714) (35,714) (33,686)
Non-controlling-interest ─ ─ ─ ─ ─
Total equity Before issuance 10,616,627 13,230,679 14,410,020 14,488,761 16,063,223
After issuance 9,302,202 11,376,255 12,659,124 13,223,761 14,166,048
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Year Financial information of the 5 most recent years
Items 2016 2017 2018 2019 2020
Operating income 7,233,315 8,018,006 7,546,840 8,111,033 9,180,240
Operating margin (Note 1) 3,763,579 4,116,862 3,916,720 4,092,554 4,866,948
Operating profit and loss 1,726,398 1,759,378 1,514,112 1,690,390 2,260,437
Non-operating income and expediture 281,123 1,106,336 1,414,496 459,985 534,543
Profit before income tax 2,007,521 2,865,714 2,928,608 2,150,375 2,794,980
Net income of continuing operations during
1,719,935 2,558,401 2,546,275 1,854,481 2,323,776
this period
─ ─ ─ ─ ─
Loss of discontinued operations
Net profit (loss) in this period 1,719,935 2,558,401 2,546,275 1,854,481 2,323,776
Other comprehensive income or loss (net
(218,323) (133,227) 309 (245,880) 89,022
value after tax) in this period
Total comprehensive income or loss in this
1,501,612 2,425,174 2,546,584 1,608,601 2,412,798
period
Net profit attributable to the owner of the
1,719,935 2,558,401 2,546,275 1,854,481 2,323,776
parent Corporation
─ ─ ─ ─ ─
Net profit attributable to uncontrolled equity
Total comprehensive income attributable to
1,501,612 2,425,174 2,546,584 1,608,601 2,412,798
owners of the Company
attributable to uncontrolled eTotal comprehensive income or loss quity ─ ─ ─ ─ ─
Earnings per share (NT$) 4.53 6.41 6.22 4.48 5.56
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Note 1: It is presented as the realized operating gross profit after deducting the unrealized interests of subsidiaries and associates.

Note 2. On February 25, 2021, the Board of Directors proposed the earnings distribution plan and cash dividend for the shareholders for FY2020 of NT$1,897,175,417.

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

(1) Name of the CPA for the 5 most recent years and audit opinions

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Year Accounting firms Name of the CPA Audit opinions
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
2020 Deloitte & Touche Cheng-Ming Lee, Wen-Chi Kuo Unqualified opinion
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(2) Accounting firms, former and successor CPAs, and reasons for the replacement for any replacement of CPAs in the 5 most recent years
(1) Reasons for changing CPA in 2017
a. Names of former and successor CPAs:

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

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

b. Reasons for change: To meet the needs of internal adjustment of Qinye Zhongxin United Certified Public Accountants.
c. Date of incident: December 27, 2017
d. Any disagreement relating to accounting principles or auditing items between the former and successor CPAs: None.

II. Financial analysis in the five most recent years

1.Consolidated financial analysis - International Financial and Accounting Reporting Standards

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Year Financial information in the five most recent years
2016 2017 2018 2019 2020
Item analyzed (Note 2)
Liability to asset ratio 42.10 38.85 36.69 41.87 41.74
Financial
structure Proportion of long-term
(%) capitals to property, plant, 512.48 566.49 508.27 557.61 624.21
and equipment
Current ratio 237.39 203.76 221.54 168.74 160.57
Debt-
paying Quick Ratio (%) 190.86 161.87 163.98 129.77 122.28
ability (%)
Interest coverage ratio 49.56 138.04 105.13 44.29 52.50
Receivables turnover ratio
3.92 4.04 3.72 2.80 3.17
(times)
Average collection days 93 90 98 130 115
Inventory turnover ratio
2.77 2.97 2.95 2.59 2.51
(times)
Payables turnover ratio
Operating (times) 3.62 3.15 3.45 2.82 3.00
ability
Average inventory turnover
132 123 124 141 145
days
Property, plant, and
equipment turnover ratio 4.24 5.54 5.59 4.21 4.87
(times)
Total asset turnover ratio
0.67 0.73 0.75 0.57 0.58
(times)
Return on assets (%) 10.12 12.68 11.37 7.80 8.85
Return on equity (%) 17.18 21.46 18.42 12.83 15.21
Profitability Ratio of net income before
52.38 75.80 79.37 55.77 71.90
Analysis tax to paid-in capital (%)
Profit margin (%) 14.80 17.17 15.04 13.33 14.96
Earnings per share (NT$) 4.53 6.41 6.22 4.48 5.56
Cash flow ratio (%) 42.36 39.71 21.19 18.26 32.19
Cash flow Allowable cash flow ratio (%) 84.19 89.99 77.28 68.13 65.50
Cash reinvestment ratio (%) 8.31 10.36 (Note 1) (Note 1) 9.09
Degree of operating leverage
1.17 1.10 1.10 1.22 1.16
Degree of (DOL)
leverages Degree of financial leverage
1.02 1.01 1.01 1.03 1.02
(DFL)
Please explain the reasons for changes in various financial ratios in the last two 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 the ratio of pre-tax profit to paid-in capital was mainly due to an increase in consolidated revenue in 2020
and an increase in operating profit.
2. Increase in earnings per share: mainly due to the growth of consolidated revenue in 2020, and increase in profit for the
current period.
3.Increase in cash flow ratio and cash reinvestment ratio: mainly due to an increase in net cash inflows from operating
activities in 2020.
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Note 1: Net cash flow from operating activities - since cash dividends are negative, the relevant ratio does not apply. Note 2: The following lists the formulas used for performing the financial analysis:

Financial structure
(1) Liability to asset ratio = Total liabilities/total assets
(2) Proportion of long-term capital in property, plant, and equipment = (Total equities + non-current liabilities)/(Total net value of property, plant, and equipment).

Debt-paying ability
- (1) Current ratio = Current assets/Current liabilities.
- (2) Quick ratio = (Current asset - inventories)/Current liabilities
- (3) Interest coverage ratio = Earnings before interests and taxes (EBIT)/Interest expenses over this 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 sales / 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 inventory turnover rate = Net sales / Average total asset value.
Return on investments
- (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 rate = Gain (loss) after tax / 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 of business 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 leverages
- (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 3: The formula listed above for calculating EPS shall take special reminders of the following matters during calculations:
1. Calculation is made based upon the weighted average of common shares and not the number of issued shares at the end of the year.
2. 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.
3. 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.
4. If the preferred share cannot be converted into cumulative preferred shares, then the dividend of the year (whether it has been issued or not) shall be deducted from net income after tax (NIAT), or included as a net loss after tax. If the preferred share is non-cumulative, dividends for the preferred share shall be deducted from any NIAT resulting from this period. No readjustments would be required for losses.
Note 4: The following items shall be taken note of during cash flow analysis:
1. Net cash flow of business activities shall refer to the amount of net cash inflow for business activities indicated in the cash flow statement.
2. Capital expenditure shall refer to cash outflow for annual capital investments.
3. 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.
4. Cash dividends include those for common shares as well as preferred shares.
5. Gross value of property, plant and equipment (PP&E) refers to the total value of PP&E before deducting accumulated depreciation.
Note 5: 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 6: Where the share of the Corporation has 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 the ratio of income before tax to equity attributable to the owner of the parent company listed in the balance sheet.

2. Parent company-only financial analysis

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Year Financial information in the five most recent years
2016 2017 2018 2019 2020
Item analyzed
Liability to asset ratio 35.99 28.71 25.44 33.55 34.18
Financial
structure Proportion of long-term
(%) capitals to property, plant, and 750.64 820.67 672.72 725.36 812.74
equipment
Current ratio 253.85 211.82 260.22 150.54 129.63
Debt-
paying Quick ratio (%) 204.82 161.19 184.01 100.28 84.28
ability (%)
Interest coverage ratio 74.97 230.44 135.59 61.27 81.22
Receivables turnover ratio
3.58 2.91 2.58 2.69 2.87
(times)
Average collection days 102 125 141 136 127
Inventory turnover ratio (times) 2.13 2.07 1.75 1.82 1.79
Operating Payables turnover ratio (times) 3.94 3.01 3.01 3.54 3.83
ability
Average inventory turnover
171 176 209 201 204
days
Property, plant, and equipment
3.96 4.46 3.52 3.31 3.86
turnover ratio (times)
Total asset turnover ratio
0.47 0.46 0.40 0.39 0.40
(times)
Return on assets (%) 11.41 14.62 13.53 9.16 10.18
Return on equity (%) 17.18 21.46 18.42 12.83 15.21
Profitability Ratio of net income before tax
51.49 69.57 70.27 51.29 66.34
Analysis to paid-in capital (%)
Profit margin (%) 23.78 31.91 33.74 22.86 25.31
Earnings per share (NT$) 4.53 6.41 6.22 4.48 5.58
Cash flow ratio (%) 65.03 17.05 71.13 35.36 38.75
Cash flow Allowable cash flow ratio (%) 72.41 61.09 63.58 59.71 57.38
Cash reinvestment ratio (%) 8.88 (Note 1) (Note 1) (Note 1) 5.44
Degree of operating leverage
1.14 1.12 1.12 1.16 1.08
Degree of (DOL)
leverages Degree of financial leverage
1.02 1.01 1.01 1.02 1.02
(DFL)
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Please explain the reasons for changes in various financial ratios in the last two 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. 1.Increase in interest protection multiples: mainly due to an increase in pre-tax gain in 2020 compared with the previous period. 2. Increase in the ratio of pre-tax profit to paid-in capital was mainly due to an increase in pre-tax profit in 2020 compared to the previous period. 3. Earnings per share increase: mainly due to the revenue growth in 2020. The current profit increased, resulting in earnings per share growth. 4. Increase in cash reinvestment ratio: mainly due to an increase in net cash flow from operating activities in 2020. The decrease in cash dividends increased the cash reinvestment ratio.

Note 1: Net cash flow from operating activities - since cash dividends are negative, the relevant ratio does not apply.

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

Chroma ATE Inc.

Audit Committee’s Audit Report

The Board of Directors has prepared the Company’s 2020 Business Report, Financial Statements (consolidated financial statements included), and proposal for allocation of earnings. The CPA, Cheng-Ming Lee and Wen-Chi Kuo of Deloitte & Touche, was retained to audit the Financial Statements and has issued an audit report relating to the Financial Statements. The list of all books opened was reviewed by the Audit Committee and it was considered that there were no discrepancies. The 14th Article of the Securities Exchange Act and Article 219 of the Corporation Law were submitted for verification.

Yours sincerely Chroma ATE Co., Ltd. 2021 Annual General Meeting

Audit committee convener: Steven Wu

March 4, 2021

IV. Financial statements in the most recent year: Please refer to Page102 ~180 of this report.
V. The Company’s parent company only financial statements audited and attested by CPA in the most recent year: Please refer to Page181~252 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.

Chapter 7 Review, analysis, and risks of financial position and performance

I. Financial condition

Comparative analysis of financial conditions

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Units: Thousand NT$; %
Year Differences
Items December 31, 2020 December 31, 2019 Amount %
Current asset 13,527,839 12,612,242 915,597 7%
Property, plant, and equipment 3,156,634 3,221,431 (64,797) (2%)
Investment property 3,137,187 3,137,187 0 0%
Intangible asset 283,580 268,601 14,979 6%
Other assets 8,023,643 6,197,611 1,826,032 29%
Total assets 28,128,883 25,437,072 2,691,811 11%
Current liability 8,424,952 7,474,187 950,765 13%
Non-current liability 3,315,238 3,177,425 137,813 4%
Total liabilities 11,740,190 10,651,612 1,088,578 10%
Capital stock 4,212,945 4,192,961 19,984 0%
Capital reserves 4,036,875 3,629,471 407,404 11%
Retained earnings 7,929,190 6,875,970 1,053,220 15%
Other equity (82,101) (187,651) 105,550 56%
Treasury stock (33,686) (35,714) 2,028 6%
Non-controlling-interest 325,470 296,699 28,771 10%
Total stockholders' equities 16,388,693 14,785,460 1,603,233 11%
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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 an increase in prepaying for construction of A7 plants.
(2) Increase in other equity: Mainly due to increase in unrealized profit of financial assets measured by fair value through other comprehensive income
Future response plan: These changes were considered part of normal business operations, and would not lead to severe negative impacts upon the overall financial operations of the Corporation and its subsidiaries.
Futures response plans: Not applicable.

II. Financial performance

Financial performance analysis

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Units: Thousand NT$; %
Year Amount of Proportion of
2020 2019
Items changes changes (%)
Operating income 15,532,543 13,909,634 1,622,909 12%
Operating gross profit
7,544,220 6,580,690 963,530 15%
(note)
Net operating profit 2,797,401 2,059,459 737,942 36%
Non-operating income and
231,606 279,147 (47,541) (17%)
expediture
Profit before income tax 3,029,007 2,338,606 690,401 30%
Net profit of this period 2,380,957 1,889,476 491,481 26%
Other comprehensive
78,137 (249,805) 327,942 131%
income (loss) for the year
Total comprehensive
2,459,094 1,639,671 819,423 50%
income or loss in this period
Net profit attributable to the
owner of the parent 2,323,776 1,854,481 469,295 25%
Corporation
Total comprehensive
income attributable to 2,412,798 1,608,601 804,197 50%
owners of the Company
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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) Increase in operating profit, pre-tax profit, and profit for the current period: mainly due to an increase in consolidated operating income in 2020 and Increase in gross profit margin.
(2) Increase in other comprehensive income in the current period: mainly due to increase in unrealized appraisal gains and losses of equity instrument investment measured at fair value through other comprehensive income.
(3) Increase in total comprehensive income, profit attributable to the owners of the parent company, and total comprehensive income attributable to the owners of the parent company for the current period: mainly due to increase in profit for the current period in 2020 and other comprehensive income in the current period.
Expected sales volume and relevant data, possible impact on the Corporation’s financial operations, and response plans:

In 2021, the global economy will still be severely threatened by the pandemic. The spread of the pandemic will also lead to a shortage of materials and a crisis of disconnection in the technology industry. The Company will deploy production capacity and prepare materials ahead of schedule to ensure timely output, meet customer needs. It will accelerate the development of advanced semiconductor manufacturing processes and test solutions related to product testing, hoping to increase product lines and improve business performance in new application areas.

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

III. Cash flow

Cash liquidity analysis

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

Unit: Thousand NT$

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Total net cash inflow Remedial measures for
Net cash inflow
(outflow) from cash inadequacy
resulting from Sum of cash
investment and
Initial cash balance business activities surplus
capitalization Investment Financing
throughout the (inadequacy)
activities throughout plan plan
year
the year (Note)
2,261,531 2,711,689 (2,076,575) 2,896,645 ─ ─
----- End of picture text -----

Note: Including net cash outflow from investment and financing activities (NT$2,045,255) thousand and exchange rate impact (NT$31,320) thousand.

Analysis of changes in cash flow in the most recent year:
(1) Operating activities: Net cash inflow from operating activities in 2020 was NT$2,711,689 thousand, mainly from operating profit.
(2) Investment activities: The net cash outflow from investment activities in 2020 was NT$1,545,786 thousand, which was mainly due to the payment for the construction of A7 new building, which caused cash outflow.
(3) Financing activities: The net cash outflow from financing activities in 2020 was NT$499,469 thousand, mainly due to the cash outflow for paying cash dividends and the cash inflow from bank borrowings.
1. Remedial measures and liquidity analysis for cash inadequacy: Not applicable.

(II) Analysis of cash liquidity for the following year

Unit: Thousand NT$

Initial cash Expected net cash inflow resulting from Expected total net cash inflow (outflow) from investment and Expected sum of cash Remedial measures for expected cash inadequacy	Initial cash Expected net cash inflow resulting from Expected total net cash inflow (outflow) from investment and Expected sum of cash Remedial measures for expected cash inadequacy
balance business activities throughout the year capitalization activities throughout theyear surplus (inadequacy)	Investment plan Financing plan
2,896,645 2,700,000 (2,125,175) 3,471,470 ─ ─
1. Analysis of changes to cash flow in the most recent year (1) Operating activities: It mainly refers to cash inflow generated by business profits. (2) Investment activities: mainly due to the estimated cash outflow from payment for construction of plant buildings and cash inflow from property disposal. (3) Fund-raising activities: mainly the cash outflow of expected cash dividends and the cash outflow of repayment of bank borrowings. 2. Remedial measures and liquidityanalysis for expected cash inadequacy: Not applicable.

IV. Impact of material expenditures on the Corporation's finances and operations in the most recent year

On January 17, 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 deed with the Ministry of the Interior on April 18, 2012, and completed the payment of the entire land in June 2018. The registration of the land equity transfer has completed. In order to meet operational requirements, the Company decided on December 27, 2016 to build the A7 plant & office building in the above-mentioned industrial zone (land No. 62), and moved to the A7 plant in December 2020.

V. Investment policies in other companies, the main reasons for profit/losses, improvement plan, and investment plans for the upcoming year
(I) Investment policy: reinvestment in accordance with the Company's operational needs and consideration of future development strategies and other factors.
(II)The profit from reinvestment recognized under the equity method in 2020 was NT$540,822 thousand. The Company's investments under the equity method were all for the purpose of long-term strategic investment.
(III)Investment plan for the next year: Based on the principle of the capital increase in the original investment business and establishing a marketing network.
VI. Risk analysis and assessment of the most recent year up to the publication date of this annual report
(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
1. Changes to interest rates and the resulting impact on 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

subsidiaries	subsidiaries	subsidiaries
Unit: Thousand NT$
Item/Year 2019 2020
Interest expense 54,020 58,811
Net operatingrevenue 13,909,634 15,532,543
Operating profit 2,059,459 2,797,401
Interest expense/Operatingrevenue(%) 0.39 0.38
Interest expense/Operating profit(%)	2.62	2.10

The Company and its subsidiaries’ 2019 and 2020 interest expenses were NT$54,020 thousand and NT$58,811 thousand, respectively. Their interest expenditures accounted for 2.62% and 2.10% of operating profit, respectively. The changes have a co-related impact on the Company's and subsidiaries' profit and loss.

(2) Future countermeasures

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 its financial institutions, pays attention to the trends and changes in market interest rates at all times, negotiates interest rates with various banks, and actively reduces the cost of working capital to reduce the impact of interest rate fluctuations on the Company’s profitability.

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

Unit: Thousand NT$

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Item/Year 2019 2020
Net profit (loss) on exchange (85,663) (86,618)
Net operating revenue 13,909,634 15,532,543
Operating profit 2,059,459 2,797,401
Profit before income tax 2,338,606 3,029,007
Ratio of net profit (loss) on exchange net to operating revenue
(0.62) (0.56)
(%)
Ratio of net profit (loss) on exchange to operating profit (%) (4.16) (3.10)
Ratio of net profit (loss) on exchange to earnings before tax
(3.66) (2.86)
(EBT) (%)
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The Corporation and its subsidiaries have provided accounts payable and receivable calculating value in US dollars. Hence, fluctuations to the US dollar exchange rate would be related to changes to profit (loss) on the exchange of the Corporation and its subsidiaries. The conversion gains (losses) for 2019 and 2020 were (NT$85,663) thousand and (NT$86,618) thousand, respectively. The ratio of the conversion gains (losses) to the pre-tax profit was approximately (3.66)% and (2.86)%, respectively.

(2) Future countermeasures
- In response to the risk of exchange rate changes, the Company and its subsidiaries directly offset foreign currency payables and foreign currency short-term bank borrowings arising from purchases of increased foreign currency receivables directly through U.S. dollar transactions to achieve the effect of natural hedging; also, financial units and financial institutions maintain close contact, collect exchange rate information daily, grasp exchange rate trends and changes, and adjust foreign currency positions promptly to reduce the impact of exchange rate fluctuations on the Company's profit and loss.
Inflation and its impact on this Corporation’s gain or loss as well as future response measures
(1) Inflation and its impact on the gain or loss of the Corporation and its subsidiaries The Corporation and its subsidiaries have not been affected by inflation severe enough to result in a major impact on the gains or losses to the Corporation and its subsidiaries during the period of the most recent year to the publication date of this report.
(2) Future countermeasures

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 to the publication date of this report.
- (2) Future countermeasures

The Corporation and its subsidiaries are focused upon specialized businesses and adopt a conservative and stable financial operation by principle. No capital is applied for high risk, highly leveraged investments.

Loans to other parties, endorsements, and guarantees
(1) Reasons for providing loans to other parties, endorsements, and guarantees The Company and its subsidiaries are engaged in fund loans and endorsement guarantees based on the principle that there are business contacts or associates. The fund loan and interest rates are higher than the Company and its subsidiaries' shortterm borrowing rates from financial institutions.
(2) Future countermeasures

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 have been implemented in the most recent fiscal year up to the publication date of this annual report.

(2) Future countermeasures

This 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.

(III) Future R&D plans and expected R&D investments

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Expected Additional
R&D plans Current progress completion investments Remark
time required (NT$)
Next generation bi-direction charger Design verification
2021/Q4 NT$20 million
for battery module/Pack testing phase
Next generation high performance Design verification
2021/Q3 NT$15 million
Battery Formation System phase
High performance Elelctrical Motor Design verification
2021/Q4 NT$15 million
Emulator phase
Design verification
Dual alxe Dynamometer 2021/Q4 NT$20 million
phase
Power HIL Testbed for EV key- Design verification
2021/Q4 NT$15 million
component testing phase
80Gbps Video Generator for Concept planning
2022/Q1 NT$10 million
DisplayPort 2.0 Testing phase
Lab grade high precision battery cell Design verification
2021/Q4 NT$15 million
and material testing system phase
High frequency/large current magnetic Design verification
2021/Q3 NT$10 million
component's key parameter analyzer phase
Next generation bi-direction and high Design verification
2021/Q4 NT$15 million
power density DC Source phase
Next generation bi-direction and high Design planning
2021/Q4 NT$15 million
power density AC Source phase
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(IV) Changes to local and overseas policies and laws that impact the Corporation’s 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 to technology and industry that impact the Corporation’s financial operations, and response measures
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 to corporate image that impact the Corporation’s risk management, and response measures
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 and possible risks of mergers and response measures In consideration of the enhancement to the Company’s product strategy and competitiveness, the Company’s Board of Directors approved a resolution on December 23, 2020, to invest in ENVIRONMENTAL STRESS SYSTEMS, INC. (hereinafter referred to as ESS) for US$2 million and acquire 100% of the equity. The combination of

ESS's technical capabilities in thermally forced engineering, design, and manufacturing with the Company's products will help the Company's product in market promotion, enhancing the Company's operating performance.

(VIII) Expected benefits and possible risks of expanding factory buildings and response risks Factory building expansions allow 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. Factory building expansion undertaken by the Corporation and its subsidiaries have been carefully reviewed to ensure that customers’ requirements are met while achieving optimal use of corporate capital.
(IX) Risks resulting from the consolidation of purchasing or sales operations and response measures
Purchasing risks
- The Company and its subsidiaries in 2019 and 2020 accounted for 30.12% and 30.96%, respectively, of each year's purchases from NMC. The purchases were concentrated in the same group, mainly due to the special material products such as gold wire and copper wire provided by NMC. Compared with other Japanese and Korean manufacturers such as Tanaka, NKE, and Heesung, the quality is the best, and it meets the 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 its 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 corporations or renowned corporations in Taiwan and other countries. No single customer’s income in the last two years has exceeded 10% of the Group’s total income.
(X) Impacts, risks, and response measures resulting from major equity transfer or replacement of directors, supervisors, or shareholders holding more than 10% of the Corporation's shares
- In 2020 and as of the publication date of the annual report, the company and its subsidiaries did not have directors, supervisors or major shareholders holding more than 10% of the shares transferred or replaced in large quantities.
(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 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 in 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 NT$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 rest amount. In order to protect the rights and interests of MAS Automation, it filed a NT$440,000 thousand. However, LINCO claimed that MAS Automation owed the balance of the contract and breached its commitments. On October 30, 2019, it filed a lawsuit requesting MAS Automation for compensation of NT$255,640 thousand (approximately USD 8.24 million) and its interest. The dispute settlement procedure has been carried out, and the evidence investigation is expected to start after the dispute settlement is completed. The case has not yet been closed; LINCO also requests MAS Automation to compensate LINCO for at least NT$505,521 thousand losses due to the provisional attachment against LINCO. After the trial by the Taiwan Taichung District Court, on July 31, 2020, MAS Automation was declared in full victory; however, LINCO filed an appeal afterward, and the case shall be reviewed in Taichung Branch of Taiwan High Court, and will proceed with the debate on April 21, 2021.

(XIII) Other material risks and response measures: None.

Organizational context and risk management
(1) Risk management organization: The highest-ranking officers 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 research and development assets and ensure data security, the information department is responsible for formulating information security policies and management operations and reporting information security implementation to the operation management supervisor every month.
- The Information Department plans a high-availability remote backup mechanism based on the risk level of the information system architecture to ensure that important information system services are not interrupted and uses a remote backup mechanism to store important data in remote locations.
- The Company assesses that it will not pay for insurance information security insurance for the time being. But it has taken relative actions in response to information security, such as: for confidential data, introducing appropriate encryption mechanisms or endpoint protection measures to reduce the risk of data leakage; some colleagues’ operating environment uses a virtual desktop environment to centralize the operating system and data in the computer room host to improve security; for Internet and email virus threats, advanced continuous threat defense technology is used to strengthen the protection of email and Internet access

to avoid any third-party threats; the Company’s internal network builds an advanced threat protection mechanism to monitor the communication protocols of all network ports while monitoring and detecting and responding to targeted attacks spreading internally, externally, and horizontally, ensuring that the company’s internet security. New employees are provided with basic information security-related training when entering the job. Information security advocacy and education training are also conducted regularly to enhance colleagues' information security awareness.

The information department constantly follows the latest security threats. Every year, the department analyzes organizational context and risk management, and performs operational risk impact analysis using an 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 regularly, 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, to prevent the risks of various disasters or human errors without warning.

VII. Other important matters: None

Chapter 8 Special Notes

I. Information on affiliated companies
(I) Consolidated Business Report

As of December 31, 2020

1. Diagram of related corporation

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Neworld Electronics Limited Chroma Electronics (Shenzhen) Co., Ltd.
Shareholding percentage: 100%
Shareholding percentage: 100%
Chroma ATE Inc. Chroma Electronics (Shanghai) Co., Ltd.
Shareholding percentage: 100% Shareholding percentage: 100%
Chroma New Material Corporation
Shareholding percentage: 100%
Chroma ATE Europe B.V. Chroma Germany GmbH
Shareholding percentage: 100% 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%
MAS Automation Corp.
Shareholding percentage: 100%
CHI Incorporation Ltd. Chroma ATE (Suzhou) Co., Ltd.
Shareholding percentage: 100% Shareholding percentage: 100%
Mou Kuan Technologies (Nanjin) Co., Ltd.
Chen Hwa Technology Inc Chroma (Shanghai) Trading Co., Ltd.
Shareholding percentage: 100%
Shareholding percentage: 100% Shareholding percentage: 100%
San Eagle Development Corp.
Wei Kuang Mech Eng Inc. Wei Kuang Automation (Nanjin) Co., Ltd.
Shareholding percentage: 100%
Shareholding percentage: 100% Shareholding percentage: 100%
Deep Red Holding Co.,Ltd.
Sajet System Technology (Suzhou) Co., Wei Kuang Automation (Xiamen) Co., Ltd.
Shareholding percentage: 100%
Ltd. Shareholding percentage: 100% Shareholding percentage: 100%
Adivic Technology Co., Ltd. Adivic Holding Corporation
Shareholding percentage: 74.1% Shareholding percentage: 100%
EVT Technology Co., Ltd.
Shareholding percentage: 85.6%
Quantel Private Ltd. Quantel Global Vietnam Co., Ltd.
Shareholding percentage: 60% Shareholding percentage : 100%
Innovative Nanotech, Inc. Quantel Technologies India Private
Shareholding percentage: 71.1% Limited Shareholding percentage: 100%
TouchCloud Quantel Global Sdn. Bhd.
Shareholding percentage: 78.1% Shareholding percentage: 100%
Quantel Global Philippines Corporation
Shareholding percentage : 100%
Shares held: 50%
Shares held: 15%
Chroma ATE Inc.
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2. Basic information of various related corporation

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December 31, 2020
Units: NT$ or foreign currency in thousands
Date
Name of enterprise Address Paid-in capital Primary business or products
established
Neworld Electronics Limited 1994.02.17 Unit 606, 6F,Shui Hing Centre,No.13,Sheung HK $ 64,013 Sales and service of electronic
Yuet Rd.,Kowloon Bay,Kowloon,H.K measurment instruments
Chroma Electronics 1998.03.10 8F,No.4,Nanyou Tian An Industrial HK$30,000 Sales of computerized
(Shenzhen) Co., Ltd. Estate,Shenzhen, automation and peripheral
China equipment as well as electronic
measurement instruments
Chroma Electronics 2000.11.10 3FBuilding 40,No.333,Qin Jiang US$3,000 Sales of computerized
(Shanghai) Co., Ltd. Rd.,Shanghai,China automation and peripheral
equipment as well as electronic
measurement instruments
Chroma ATE Inc. 1993.02.18 7 Chrysler Irvine CA92618 US$1,000 Sales and service of electronic
measurment instruments
Chroma ATE Europe B.V. 1999.09.17 Morsestraat 32,6716 AH Ede,The Netherlands EUR$45 Sales and service of electronic
measurement instruments, etc.
Chroma Germany GmbH 2017.09.04 Südtiroler Str. 9 86165 Augsburg Germany EUR$30 Sales and service of electronic
measurement instruments, etc.
Chroma Investment Co., Ltd. 1997.01.14 9F, No. 66, Huaya 1st Road, Guishan District, NT$140,000 Investment
Taoyuan City
Chroma New Material 2006.08.11 4F, No. 68, Huaya 1st Road, Guishan District, NT$250,000 Processing and sale of gold
Corporation Taoyuan City wire
Testar Electronic Corporation 2007.03.09 3F., No. 68, Huaya 1st Rd., Guishan Dist., NT$300,000 Testing of LED products
Taoyuan City
Sensational Holding Ltd. 1997.07.11 Citco Buildings P.O.Box 662,Road US$1,200 Investment
Town,Tortola, British Virgin Island
Chroma Systems Solutions, 2001.04.01 19772 Pauling, Foothill Ranch, CA 92610 US$5 Sales and service of electronic
Inc. measurement instruments, etc.
CHI Incorporation Ltd. 1998.04.03 P.O.Box 957 Offshore Incorporations US$3,830 Inductance, capacitance, and
Centre,Road Town,Tortola,British Virgin resistance testing and
Islands component trading
Chroma ATE (Suzhou) Co., 2006.03.15 Building 7,No.855,Zhujiang Rd.,Suzhou New US$3,800 Sales of computerized
Ltd. District,Jiang Su,China automation and peripheral
equipment as well as electronic
measurement instruments
Chen Hwa Technology 1998.04.03 P.O.Box 957 Offshore Incorporations US$3,085 Inductance, capacitance, and
Inc. Centre,Road Town,Tortola,British Virgin resistance testing and
Islands component trading
Chroma (Shanghai) Trading 2004.01.05 Rm 1102B, Building 1, No.18, Tai Gu Rd., US$2,700 International trade,
Co., Ltd. Waigaoqiao Free Trade Zone,Shanghai intermediary trade, simple
processing for trade purposes,
and trade inquiry services.
San Eagle Development Corp. 2006.07.04 Drake Chambers,Road Town,Tortola,British US$2,050 Investment
Virgin Islands
Wei Kuang Mech Eng Inc. 2002.01.10 608 St. James Court,St.Denis Street Port Louis, US$4,475 Investment
Mauritius
Mou Kuan Technologies 1997.09.27 No 811,Hushan Road ,Jiangning District, RMB$1,737 Assembly, sale and
(Nanjin) Co., Ltd Nanjing City,China maintenance of factory
conveyors and related systems
and rendering after-sales
services
Wei Kuang Automatic 2005.06.30 No 811,Hushan Road ,Jiangning District, RMB$11,871 Assembly, sales, and after-sales
Equipment (Nanjin) Co., Ltd. Nanjing City,China service of electronic production
equipment system and transport
system
Wei Kuang Automatic 2007.02.01 Floor 1, Building A4, No. 20, Jinhui Road, RMB$11,417 Assembly, sales, and after-sales
Equipment (Xiamen) Co., Houxi,Jimei District ,Xiamen service of electronic production
Ltd. equipment system and transport
system
MAS Automation Corp. 1975.11.26 No.6,Lane 17,Niupu S Rd.,Hsinchu City , NT$100,000 Design, manufacturing,
Taiwan installment and testing of
automated factory conveyor
systems
Chroma Japan Corp. 2008.05.30 888 Nippa-cho, Kouhoku-ku, Yokohama-shi, JPY$99,500 Sales and service of electronic
Kanagawa, 223-0057 Japan measurement instruments, etc.
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Date
Name of enterprise Address Paid-in capital Primary business or products
established
Deep Red Holding Co.,Ltd 2004.04.29 2F,Felix House,24 Dr.Joseph Riviere US$215 Investment
Street ,Port Louis ,Republic of Mauritius
Sajet System Technology 2004.08.24 503-1, 4th Floor Genway LOHASTOWN, 88 RMB$8,374 R&D and design of computer
(Suzhou) Co., Ltd. Building, 999 Xinghu Road, SIP Suzhou network safety systems and
data management systems
Adivic Technology Co. 2009.04.07 6F, No. 345, Xinhu 2nd Road, Neihu District, NT$170,000 Sale and research of RF device
Taipei City
Adivic Holding Corp 2015.01.15 Offshore Chambers,P.O.Box 217, Apia, US$1,000 Sale and research of RF device
Samoa.
EVT Technology Co., Ltd. 1999.08.19 No. 68, Huaya 1st Road, Guishan District, NT$110,000 Manufacturing of vehicles and
Taoyuan City parts
Quantel Private Ltd. 1989.02.15 25 Kallang Ave #05-02 Singapore 339416 SG$3,190 Sales of testing and
measurement instruments, etc.
Quantel Global Vietnam Co., 2017.01.03 Floor 10, CIC Tower lane 219 Trung Kinh, VND4,526,506 Sales of testing and
Ltd Yen Hoa, Cau Giay, Hanoi measurement instruments, etc.
Quantel Technologies India 2016.10.05 326, 3rd Floor MGF Metropolis Sector-28 MG INR6,500 Sales of testing and
Private Limited Road gurgaon-122002 India measurement instruments, etc.
Quantel Global Sdn. Bhd. 2016.07.20 Unit 802, 8th Flr, Blk A Damansara Intan, No. MYR600 Sales of testing and
1 Jalan SS20/27, 47400, Petaling Jaya, measurement instruments, etc.
Selangor, Malaysia
Quantel Global Philippines 2017.07.24 Unit 2401-2402 The Orient Square Building, F. PHP9,910 Sales of testing and
Corporation Ortigas Jr Rd. Ortigas Centre, Pasig City measurement instruments, etc.
Manila Phililppines 1605
Innovative Nanotech 2017.08.09 5F, No. 6-2, Du Sing Rd, East District, NT$200,000 Nanoparticles monitoring
Incorporated Hsinchu City, Taiwan equipment
Touchcloud 2016.02.03 10F-4, No.148, Section 4, Zhongxiao East NT$72,995 Cloud platform development
Road, Da’an District, Taipei City, Taiwan 106 and IoT system integration
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Information of shareholders with corporate governance power while working in the Corporation: None.
Overall business scope of every related corporation
Overall business scope of every related corporation of the Corporation primarily focuses on specialized manufacturing services for measurement instruments. There is also a small number of related corporations that focus on investments in this scope of business. In general, specialization of work amongst related corporations focuses on mutual support in technology, production capacity, sales, and services to maximize synergy so that the Corporation can keep providing the best manufacturing services for professional measurement instruments to customers throughout the world and ensure the Corporation’s leadership in the global market.
Directors, supervisors, CEO, and general managers of Chroma ATE Inc. and affiliated companies

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December 31, 2020
Shares held
Name of enterprise Position title Name or representative Shareholding
Number of shares
ratio
Neworld Electronics Limited Board director Chroma (representatives: Leo Huang and Ming 64,012,815 shares 100%
Chang)
Chroma Electronics (Shenzhen) Board director Neworld (representative: Leo Huang) (Note 1) 100%
Co., Ltd. Board director Vincent Chen - -
Board director Emma Chen - -
President Vincent Chen - -
Chroma Electronics (Shanghai) Board director Neworld (representative: Leo Huang) (Note 1) 100%
Co., Ltd. Board director Paul Ying - -
Board director Vincent Chen - -
Supervisor Amy Huang - -
President Paul Ying - -
Chroma ATE Inc. Board director I-Shih Tseng Chroma holds 1,000,000 shares 100%
Board director Cheng Ying
Board director Yi-Shen Wang
Chroma ATE Europe B.V. Board director Chroma (representatives: David Yang , Paul Ying , 1,000 shares 100%
and I-Shih Tseng )
Chroma Germany GmbH Board director Chroma BV (representative: Cheng Ying) (Chroma BV holds 30,000 shares) 100%
Chroma Investment Co., Ltd. Board director Chroma (representative: Leo Huang, Paul Ying, 14,000,000 shares 100%
Ming Chang)
Supervisor Chroma (representative: Amy Huang)
Chroma New Material Board director Chroma (representatives: Leo Huang, C.C. Ho, 25,000,000 shares 100%
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Shares held
Name of enterprise Position title Name or representative Number of shares Shareholding
ratio
Corporation Amy Huang)
Supervisor Chroma (representative: Paul Ying)
President Yuan-Yuan Cheng - -
Testar Electronic Corporation Board director Chroma (representatives: Leo Huang, I-Shih Tseng, 20,159,600 shares 67.2%
Tsun-I, Wang)
Supervisor Amy Huang 1,000 shares -
President Chih-Ming Chen 36,000 shares 0.1%
Sensational Holding Ltd. Board director Chroma (representative: Leo Huang) 1,200,000 shares 100%
Chroma Systems Solutions ,Inc Board director Fred Joseph Sabatine Fred holds 120,000 shares 25%
Board director Cheng Ying Chroma holds 120,000 shares 25%
Board director Tai-Wei Yang CHROMA USA holds 240,000 share 50%
CHI Incorporation Ltd. Board director Leo Huang (Chroma holds 3,830,000 shares) 100%
Chroma ATE (Suzhou) Co., Ltd. Board director CHI (representative: Leo Huang) (Note 1) 100%
Board director Paul Ying - -
Board director Emma Chen - -
Supervisor Qin Wang - -
President Vincent Chen - -
Chen Hwa Technology Inc. Board director Leo Huang (Chroma holds 3,085,000 shares) 100%
Chroma (Shanghai) Trading Co., Board director Chen Hwa (representative: Leo Huang) (Note 1) 100%
Ltd.
San Eagle Development Corp. Board director Chroma (representative: Leo Huang) 2,050,000 shares 100%
Wei Kuang Mech Eng Inc. Board director San Eagle (representative: Leo Huang) 4,475,000 shares 100%
Mou Kuan Technologies (Nanjin) Board director Wei Kuang (representative: Leo Huang) (Note 1) 100%
Co., Ltd. Board director Chin-Fu Huang - -
Board director Amy Huang - -
Wei Kuang Automatic Equipment Board director Wei Kuang (representative: Leo Huang) (Note 1) 100%
(Nanjin) Co., Ltd. Board director Chin-Fu Huang - -
Board director Amy Huang - -
Wei Kuang Automatic Equipment Board director Wei Kuang (representative: Leo Huang) (Note 1) 100%
(Xiamen) Co., Ltd. Board director Chin-Fu Huang - -
Board director Amy Huang - -
MAS Automation Corp. Board director Chroma(representative: Leo Huang, Jin-Fu, Huang, 10,000,000 shares 100%
I-Shih Tseng)
Supervisor Chroma (representative: Amy Huang) -
President Chin-Fu Huang -
Chroma Japan Corp. Board director Leo Huang (Chroma holds 9,975 shares) 100%
Deep Red Holding Co.,Ltd Board director Leo Huang (Chroma holds 215,000 shares) 100%
Sajet System Technology Board director Deep Red Holding (representative: Joe Lin) (Note 1) 100%
(Suzhou) Co., Ltd. Board director Arno Wu - -
Board director Paul Ying - -
Supervisor Amy Huang - -
President Joe Lin - -
Adivic Technology Co. Board director Chroma (representative: I-Shih Tseng, Leo Huang) 12,590,000 shares 74.1%
Board director AIT group (representative: Michael Sheu) 4,410,000 shares 25.9%
Supervisor Amy Huang - -
President Jason Huang - -
Adivic Holding Corporation Board director Adivic Technology (representative: I-Shih Tseng) 1,000,000 shares 100%
EVT Technology Co., Ltd. Board director Leo Huang 54,023 shares 0.5%
Board director Joey Chang 1,339 shares -
Board director Tsun-I Wang 34,838 shares 0.3%
Supervisor Chroma (representative:Paul Ying) 9,412,412 shares 85.6%
President Leo Huang 54,023 shares 0.5%
Quantel Private Ltd. Board director Chroma (representative: Leo Huang, Paul Ying) 1,914,000 shares 60%
Board director Yip Hin Lay 1,276,000 shares 40%
Quantel Global Vietnam Co., Ltd Board director Phan Sy Dung Quantel Private holds 100% 100%
Quantel Technologies India Pvt Board director Yip Hin Lay Quantel Private holds 64,999 shares 100%
Ltd
Quantel Global Sdn. Bhd. Board director NA Quantel Private holds 600,000 shares 100%
Quantel Global Philippines Board director Yip Hin Lay Quantel Private holds 99,095 shares 100%
Corporation
Innovative Nanotech Board director Chroma (representative: Leo Huang, I-Shih Tseng) 14,214,000 shares 71.1%
Incorporated Board director Research Industry (representative: Bruce Han) 1,000,000 shares 5.0%
Supervisor Amy Huang 100,000 shares 0.5%
President Wu Boren 100,000 shares 0.5%
Touchcloud Board director Chroma (representative: Leo Huang) 5,700,000 shares 78.1%
Board director Kun-Shan Lu - -
Board director Li Chengxun 360,000 shares 4.9%
Supervisor Amy Huang - -
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Note 1: Limited liability Corporation

6. Business operating conditions of Chroma ATE Inc. and its related corporation

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December 31, 2020
Unit: Thousand NT$
Operating Earnings
Operating Profit and
Paid-in Total Total revenue per share
Name of enterprise capital assets liabilities [Net worth] for the profit for loss (after (NT$)
the period tax)
period (after tax)
Neworld Electronics Limited 235,119 1,944,046 551,950 1,392,096 3,430,494 41,228 350,092 5.47
Chroma Electronics (Shenzhen) Not
110,190 1,357,858 380,613 977,245 2,419,410 288,247 217,447
Co., Ltd. applicable
Chroma Electronics (Shanghai) Not
85,440 295,363 69,862 225,501 477,392 77,152 59,900
Co., Ltd. applicable
Chroma ATE Inc. 28,480 1,037,355 867,020 170,335 1,477,706 22,644 73,309 73.31
Not
Chroma Systems Solutions, Inc. 137 813,213 379,926 433,287 964,055 123,681 122,884
applicable
Chroma Investment Co., Ltd. 140,000 468,149 1,110 467,039 0 (162) 16,703 1.19
Chroma New Material
250,000 1,264,055 835,815 428,240 2,551,134 32,246 20,156 0.81
Corporation
Not
Chroma ATE B.V.Europe 1,589 394,801 180,707 214,095 472,420 6,774 (5,322)
applicable
Not
Chroma Germany GmbH 1,051 107,964 107,810 154 167,893 (11,132) (9,566)
applicable
Chroma (Shanghai) Trading Co., Not
76,896 84,056 3,229 80,826 0 (4,992) (670)
Ltd. applicable
Not
Chroma ATE (Suzhou) Co., Ltd. 108,224 757,101 474,705 282,397 860,544 62,763 52,558
applicable
MAS Automation Corp. 100,000 1,834,255 1,563,839 270,416 307,353 (204,732) (192,947) (19.29)
Mou Kuan Technologies (Nanjin) Not
7,603 3,027 123 2,904 946 104 937
Co., Ltd. applicable
Wei Kuang Automatic Equipment Not
51,959 58,784 26,556 32,228 10,010 -389 2,951
(Nanjin) Co., Ltd. applicable
Wei Kuang Automatic Equipment Not
49,972 97,159 18,941 78,218 62,191 5,243 31,729
(Xiamen) Co., Ltd. applicable
Sajet System Technology Not
36,653 154,192 12,175 142,017 85,735 19,457 28,370
(Suzhou) Co., Ltd. applicable
Testar Electronic Corporation 300,000 244,832 167,052 77,780 315,075 34,730 33,215 1.11
Not
Chroma Japan Corp. 27,462 240,413 352,385 (111,972) 261,142 (63,737) (65,391)
applicable
Sensational Holding Ltd. 34,176 50,993 228 50,765 0 (650) 208 0.17
Chen Hwa Technology Inc. 87,861 106,283 19 106,264 0 (463) 2,627 0.85
CHI Incorporation Ltd. 109,078 282,410 0 282,410 0 0 52,590 13.73
San Eagle Development Corp. 58,384 928,461 19 928,442 0 (108) 47,679 23.26
Wei Kuang Mech.Eng.Inc. 127,448 921,732 19 921,713 0 (86) 47,778 10.68
Deep Red Holding Co., Ltd. 6,123 142,022 0 142,022 0 0 28,387 132.03
Adivic Technology Co. (Note 1) 170,000 118,175 15,415 102,760 54,347 (21,189) (20,121) (1.18)
EVT Technology Co., Ltd.
110,000 48,780 1,354 47,426 321 (12,149) (11,005) (1.00)
(Note 1)
Quantel Private Ltd. (Note 1) 68,776 396,137 137,165 258,972 518,958 20,080 39,000 12.23
Innovative Nanotech Incorporated 200,000 280,284 65,790 214,494 135,470 51,193 49,039 2.45
Touchcloud 72,995 15,179 2,855 12,324 3,434 (17,754) (16,932) (2.32)
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Note 1: Expressed per the consolidated financial statement.

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

USD:NTD=1:28.480,HKD:NTD=1:3.673, EUR:NTD=1:35.020, RMB:NTD=1:4.377, JPY:NTD=1:0.276, SGD:NTD=1:21.56 The following lists the exchange rates for the profit and loss statement:

USD:NTD=1:29.549, HKD:NTD=1:3.809, EUR:NTD=1:33.710, RMB:NTD=1:4.282, JPY:NTD=1:0.277, SGD:NTD=1:21.430

100

(II) Consolidated financial statements of affiliated companies For 2020 (from January 1 to December 31, 2020), the Company's entities that are required to be included in the consolidated financial statements of affiliated enterprises under the "Criteria Governing Preparation of Consolidated Business Report of Affiliated Enterprises, Consolidated Financial Statements of Affiliated Enterprises, and Affiliation Reports" are the same as those required to be included in the parent-subsidiary consolidated financial statements under the International Financial Reporting Standards 10. Moreover, the related information required to be disclosed for the consolidated financial statements of affiliated enterprises has been fully disclosed in the aforementioned parent-subsidiary consolidated financial statements. Consequently, a separate set of consolidated financial statements of affiliated enterprises is not prepared.
(III) Affiliation report
- According to Article 369-12 of the Corporation Act, separate affiliation reports were 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: Thousand NT$;shares; %	Unit: Thousand NT$;shares; %	Unit: Thousand NT$;shares; %	Unit: Thousand NT$;shares; %
Name of subsidiary	Paid-in capital	Source of capital	Shareholding of the Corporation	Date of acquisition or disposal	Quantity and value of shares acquired	Quantity and value of shares disposed of	Investment gain (loss)	Number and amount of shares held as of the publication date of the annual report(Note)	Status of pledge	Value of endorsements and guarantees provided to subsidiaries by the Corporation Loans provided to subsidiaries by the Corporation
Chroma Investment Co., Ltd.	NT$140,000 thousands	Own capital	100%	2020	0	110,000 shares NT$18,650 thousands	NT$16,629 thouands	1,805,579 shares NT$339,449 thousands	None	0	0
				In the current year up till the publication date of this report	0	0	0		None	0	0

Note: The holding amount is calculated based on the closing price of NT$188 on April 12, 2021.

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.

101

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, 2020 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 25, 2021

102

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, 2020 and 2019, 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, 2020 and 2019, 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, 2020. 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.

103

Key audit matters of the consolidated financial statements for the year ended December 31, 2020 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. We also obtained the calculation table, assessed the calculation method, and recalculated the amounts to draw a conclusion on lifetime ECL of trade receivables.

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, 2020 and 2019 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.

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

104

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.

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, 2020 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.

105

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 25, 2021

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.

106

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(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 (Note 10) Trade receivables - related parties (Notes 10 and 30) Inventories (Note 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 (Note 15) 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 (Notes 23 and 30) 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 (Note 15) 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 (Note 15) 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		2020 Amount % $ 2,896,645 10 509,015 2 1,036,691 4 1,278,936 4 127,042 - 4,247,500 15 19,340 - 3,028,457 11 197,038 1 187,175 1 13,527,839 48 4,646 - 862,898 3 3,139,227 11 3,156,634 11 144,921 1 3,137,187 11 228,002 1 55,578 - 314,987 1 3,463,185 13 13,693 - 80,086 - 14,601,044 52 $ 28,128,883 100 $ 2,554,260 9 765,682 3 35,933 - 4,570 - 2,637,070 10 11,353 - 1,225,623 4 348,441 1 55,247 - 633,456 2 153,317 1 8,424,952 30 2,404,616 9 92,345 - 621,111 2 156,280 1 40,886 - 3,315,238 12 11,740,190 42 4,212,945 15 - - 4,036,875 14 2,592,487 9 176,128 1 5,160,575 18 7,929,190 28 (82,101) - (33,686) - 16,063,223 57 325,470 1 16,388,693 58 $ 28,128,883 100		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

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

107

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 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 on disposal of property, plant and equipment, net Net foreign exchange loss (Note 34) Gain on disposal of investment Gain on financial assets at fair value through profit or loss, net Other expenses Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET PROFIT FOR THE YEAR		2020 Amount % $ 15,532,543 100 7,988,328 51 7,544,215 49 5 - 7,544,220 49 2,080,171 13 1,080,518 7 1,341,956 9 244,174 2 4,746,819 31 2,797,401 18 (58,811) - 135,392 1 16,843 - 21,730 - 194,914 1 7,066 - (86,618) (1) 480 - 8,903 - (8,293) - 231,606 1 3,029,007 19 648,050 4 2,380,957 15		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 2,338,606 17 449,130 3 1,889,476 14 (Continued)

108

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain or loss 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 income (loss) 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 EARNINGS PER SHARE (NT$; Note 26) Basic Diluted		2020 Amount % $ (5,258) - 229,747 2 (504) - (9,756) - (136,092) (1) 78,137 1 $ 2,459,094 16 $ 2,323,776 15 57,181 - $ 2,380,957 15 $ 2,412,798 16 46,296 - $ 2,459,094 16 $ 5.56 $ 5.51		2019
				Amount % $ (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 $ 4.48 $ 4.42

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

109

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

		Equity Attributab	le to Owners of the	Corporation	Corporation
Ordinary Share Capital A f $ 4,167,794 - - - - - - - (1,009 ) - 26,176 - - - 4,192,961 - - - - - - - - (1,235 ) - - - - 21,219 - - $ 4,212,945	dvance Receipts or Share Capital Capital Surplus $ - $ 3,469,637 - - - - - 10,250 - - - - - - - - - - - 8,003 13,724 119,085 - 22,496 - - - - 13,724 3,629,471 - - - - - - - 273,530 - - - - - - - - - - - 16,629 - 5,760 - (22 ) - 6,439 (13,724 ) 105,068 - - - - $ - $ 4,036,875	Retained Earnings	Total $ 6,795,059 - (1,750,896 ) - 1,854,481 (14,132) 1,840,349 - - - - - - (8,542) 6,875,970 - - (1,265,000 ) - 2,323,776 (5,556) 2,318,220 - - - - - - - - - $ 7,929,190	Other Equity		Total Treasury Shares $ 13,244 $ (35,714 ) - - - - - - - - (231,748) - (231,748) - - (1,009 ) - 1,009 - - - - 30,853 - - - - - (187,651 ) (35,714 ) - - - - - - - - - - 94,578 - 94,578 - - (1,235 ) - 1,235 - 2,028 - - - - 10,972 - - - - - - - $ (82,101 ) $ (33,686 )
				Exchange Differences on Translating the Financial Unrealized Gain (Loss) on Financial Assets at Fair Value through Other Statements of Foreign Operations Comprehensive Income Un $ (104,872 ) $ 160,493 - - - - - - - - (226,201) (5,547) (226,201) (5,547) - - - - - - - - - - - - - - (331,073 ) 154,946 - - - - - - - - - - (134,969) 229,547 (134,969) 229,547 - - - - - - - - - - - - - - - - - - $ (466,042 ) $ 384,493	earned Employee Benefit $ (42,377 ) - - - - - - - - - - 30,853 - - (11,524 ) - - - - - - - - - - - - 10,972 - - - $ (552 )
		Legal Reserve Special Reserve Unappropriated Earnings $ 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 4,382,043 185,448 - (185,448 ) - 89,240 (89,240 ) - - (1,265,000 ) - - - - - 2,323,776 - - (5,556) - - 2,318,220 - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 2,592,487 $ 176,128 $ 5,160,575

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

110

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 on disposal of property, plant and equipment, net
Gain on disposal of investments accounted for using equity
method
Write-downs of inventories
Realized gain on transactions with associates and joint ventures
Net loss 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
Increase in financial assets at amortized cost
Decrease in financial assets at amortized cost
Payments to acquire financial assets at fair value through profit or
loss

2020
2019
$ 3,029,007
$ 2,338,606
428,009
440,062
11,225
6,140
244,174
77,365
(8,903)
(3,460)
58,811
54,020
(16,843)
(25,904)
(21,730)
(41,532)
16,968
53,004
(135,392)
(97,192)
(7,066)
(15,468)
(480)
-
46,444
39,364
(5)
(79)
36,798
11,741
(20,890)
(412,882)
47,879
(78,758)
74,720
(30,629)
(472,222)
(370,531)
32,237
(72,782)
47,114
74,210
(249,175)
(181,476)
(582)
(106,244)
58,538
325,805
(101,750)
(58,348)
900
92
123,815
(5,340)
(12,067)

(11,128)
3,209,534
1,908,656
(497,845)

(544,142)
2,711,689
1,364,514
(39,157)
-
(432,301)
(291,899)
101,432
-
(635,910)
(571,116)
(Continued)

111

CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of associate Net cash inflow on disposal of investments accounted for using equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in advance real estate receipts Decrease in refundable deposits Payments to acquire intangible assets Increase in other non-current assets Decrease (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 Proceeds from reissuance of treasury stock Interest paid Increase in non-controlling interests Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (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	2020 $ 654,738 - 688 (186,589) 41,941 308,000 9,720 (4,750) 1,579 (1,447,454) 16,435 65,842 (1,545,786) 208,310 998,506 (401,363) 20,886 (102,712) (1,288,777) 112,563 (1,235) 18,657 (64,304) - (499,469) (31,320) 635,114 2,261,531 $ 2,896,645	2019 $ 1,432,820 (2,342,340) - (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

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

112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 25, 2021.

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)

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies.

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

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Effective Date
New IFRSs Announced by IASB
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New IFRSs	Effective Date Announced by IASB
Amendments to IFRS 4 “Extension of the Temporary Exemption from	Effective immediately upon
Applying IFRS 9”	promulgation by the IASB
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16	January 1, 2021
“Interest Rate Benchmark Reform - Phase 2”
Amendment to IFRS 16 “Covid-19-Related Rent Concessions”	June 1, 2020

The above amendments of standards and interpretations did not have the material impact on the Group’s financial position, financial performance and accounting policies.

113

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

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Effective Date
New IFRSs Announced by IASB (Note 1)
----- End of picture text -----

New IFRSs	Effective Date Announced by IASB (Note 1)
“Annual Improvements to IFRS Standards 2018-2020”	January 1, 2022 (Note 2)
Amendments to IFRS 3 “Reference to the Conceptual Framework”	January 1, 2022 (Note 3)
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, 2023
Amendments to IFRS 17	January 1, 2023
Amendments to IAS 1 “Classification of Liabilities as Current or Non-	January 1, 2023
current”
Amendments to IAS 1 “Disclosure of Accounting Policies”	January 1, 2023 (Note 4)
Amendments to IAS 8 “Definition of Accounting Estimates”	January 1, 2023 (Note 5)
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds	January 1, 2022 (Note 6)
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a	January 1, 2022 (Note 7)
Contract”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 5: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 6: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 7: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

Except for the above impacts, the Group is continuously assessing the possible impacts that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impacts when the assessment is completed.

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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.

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

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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).

e. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e., 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 noncontrolling 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.

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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 make timely adjustments to ensure that they approximate to weighted-average cost.

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.

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.

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 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

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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.

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.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. 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.

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.

If goodwill has been allocated to a cash-generating unit and the Group 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.

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k. Intangible assets

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.

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.

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. 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.

For those financial assets which are measured at fair value, its fair value is determined in the manner described in Note 29.

1) Financial assets

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

The Group’s financial assets are classified into the following categories:

a) Financial asset at FVTPL

The Group’s financial assets mandatorily classified as at FVTPL are investments in equity instruments which are not designated as at FVTOCI, it was measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income and interest income, respectively; any remeasurement gains or losses on such financial assets are recognized in other gains or losses.

b) Financial assets at amortized cost

If the financial assets, which are invested by the Group, are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and 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, are subsequently measured at amortized cost.

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Subsequent to initial recognition, financial assets 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. On derecognition, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

Except for 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 financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods, interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset

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.

The Group’s financial assets at amortized cost include cash, pledge deposits, trade receivables at amortized cost and refundable deposits. 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.

c) 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.

2) Equity instruments

Debt and equity instruments issued by the Group 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.

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

Repurchase of the Group’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 Group’s own equity instruments.

3) Financial liabilities

Financial liabilities are measured at amortized cost using the effective interest method. When 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.

m.Assessment of assets impairment

1) Property, plant and equipment, right-of-use asset, investment properties and intangible assets

At the end of each reporting period, the Group reviews the carrying amounts of above assets, to determine whether there is any indication that those assets have suffered an 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.

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 assets 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, cash-generating unit or assets related to contract costs 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 on the asset, cash-generating unit or assets related to contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss.

2) Investments accounted for using the equity method

The entire carrying amount of an 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.

3) Goodwill

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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. Any impairment loss recognized for goodwill is not reversed in subsequent periods.

4) Financial assets and contract assets

The Group assesses the impairment loss of financial assets at amortized cost (including trade receivables) and contract assets by lifetime expected credit losses on each balance sheet date.

The Group always recognizes lifetime expected credit losses 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 the credit risk on a financial instrument has not increased significantly, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs. If the credit risk on a financial instrument has increased significantly, the Group measures the loss allowance for that financial instrument at lifetime expected credit losses

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, 12month 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 considers the following situations as indication that a financial asset is in default:

a) Internal or external information shows that the debtor is unlikely to pay its creditors.
b) Financial asset is more than 120 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.

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.

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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.

p. Leases

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 and lease liabilities are presented on a separate line in the balance sheets.

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 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,

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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-ofuse-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.

q. 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.

r. 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.

s. 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.

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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.

t. Taxation

Current and deferred taxes are recognized in profit or loss as income tax expense, 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.

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

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.

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

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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.

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.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents - time deposits		December 31	December 31
		2020 $ 3,282 2,753,550 139,813 $ 2,896,645	2019 $ 4,300 2,173,071 84,160 $ 2,261,531

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7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Mandatorily at FVTPL-current Non-derivative financial assets Domestic listed shares Domestic unlisted shares Open-end beneficiary certificates Mandatorily at FVTPL-non-current Non-derivative financial assets Open-end beneficiary certificates		December 31	December 31
		2020 $ 4,763 58,830 445,422 $ 509,015 $ 4,646	2019 $ 4,070 - 485,675 $ 489,745 $ 4,762

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments-non-current Domestic listed ordinary shares and emerging market shares Domestic unlisted ordinary shares Foreign unlisted ordinary shares		December 31	December 31
		2020 $ 723,973 131,196 7,729 $ 862,898	2019 $ 452,982 154,853 4,532 $ 612,367

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.

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
		2020 $ 307,298 729,393 $ 1,036,691	2019 $ 218,734 484,634 $ 703,368

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10. NOTES RECEIVABLE AND TRADE RECEIVABLES

Gross carrying amount at amortized cost - unrelated parties Less: Allowance for impairment loss Gross carrying amount at amortized cost - related parties		December 31	December 31
		2020 $ 4,807,675 (433,133) 4,374,542 19,340 $ 4,393,882	2019 $ 4,943,476 (188,067) 4,755,409 27,108 $ 4,782,517

The average credit period for sales of goods is 60 to 120 days from the date when the goods were inspected and accepted by customers. 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 regularly 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 measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated by reference to the past default experience of the customers, the customers’ current financial position, economic condition of the industry in which the customers 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 the 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 Past due 1- 60 days Past due 61-180 days Past due 181-365 days Past due Over 365 days		December 31	December 31
		2020 $ 3,369,032 401,344 226,113 107,423 703,763 $ 4,807,675	2019 $ 3,275,402 485,492 332,789 512,691 337,102 $ 4,943,476

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

Balance at January 1, Add: Impairment loss Less: Amounts written off Foreign exchange gains and losses Balance at December 31,	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 188,067 244,174 (220) 1,112 $ 433,133	2019 $ 126,330 77,365 (14,752) (876) $ 188,067

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11.INVENTORIES

Finished goods Semi-finished products Work in process Raw materials Inventory in transit		December 31	December 31
		2020 $ 744,981 463,934 687,087 1,126,671 5,784 $ 3,028,457	2019 $ 607,211 380,866 682,687 993,894 - $ 2,664,658

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $7,268,112 thousand and $6,365,056 thousand, respectively. The cost of goods sold included inventory write-downs of $46,444 thousand and $39,364 thousand, respectively.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

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

Percentage of
Ownership as of
December 31
2020
2019
Remark
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
25.0
25.0
Note 1
100.0
100.0
100.0
100.0
Note 4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
67.2
67.2
74.1
74.1
Note 2
100.0
100.0
60.0
60.0
85.6
85.6
71.1
71.1
78.1
78.1
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
(Continued)

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Investor
Investee
Business
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., Ltd.
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
2020
2019
Remark
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
75.0
Note 5
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
15.0
15.0
Note 3
(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 increased its capital by $80,000 thousand subsequently. The Corporation’s board of directors resolved to participate in the capital injection. The Corporation’s equity interest in Adivic rose to 74.1% after the cash injection.
Note 3: The Group’s subsidiary, Chroma Investment Co., Ltd. purchased 15% equity interest of Testar Electronics Corporation from WI Harper Fund VII LP in January 2019 to strengthen equity structure.
Note 4: To improve financial structure and enrich working capital, the Group’s subsidiary, Chroma Japan Corp., increased its capital by $54,626 thousand in April 2020. The Group’s board of directors resolved to participate in the capital injection. After the cash injection, the Group’s equity remained the same.
Note 5: The Group’s subsidiary, Wei Da Electric Vehicle Co., Ltd., had completed its liquidation procedures on October 15, 2020.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates Investments in joint ventures		December 31	December 31
		2020 $ 3,122,336 16,891 $ 3,139,227	2019 $ 2,893,609 17,621 $ 2,911,230

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a. Investments in associates

Associates that are not individually material Adlink Technology Inc. Dynascan Technology Corp. Camtek Ltd.		December 31	December 31	December 31
		2020 Amount Percentage of Equity Interest (%) $ 514,751 11.3 141,439 27.3 2,466,146 18.1 $ 3,122,336		2019
				Amount Percentage of Equity Interest (%) $ 538,926 11.3 123,748 27.3 2,230,935 20.2 $ 2,893,609

The Group’s share of: Profit from continuing operations Other comprehensive loss Total comprehensive income for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 136,122 (136,596) $ (474)	2019 $ 97,235 (114,997) $ (17,762)

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

summarized as follows:
Name of Associate Adlink Technology Inc. Camtek Ltd.		December 31
		2020 $ 1,552,809 $ 4,878,058	2019 $ 1,176,108 $ 2,538,193

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. Although the Corporation’s equity interest in Camtek Ltd. fell below 20% in 2020, after assessment the Corporation’s number of directors in Camtek, it still have the significant influence, therefore Camtek, Ltd is still regarded as associate.

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.

Refer to Table 9 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

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.

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b. Investments in joint ventures

Joint ventures that are not individually material Chih Ho Shun Development Co., Ltd.		December 31	December 31	December 31
		2020 Amount Percentage of Equity Interest (%) $ 16,891 35.0		2019
				Amount Percentage of Equity Interest (%) $ 17,621 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
		2020 $ (730) - $ (730)	2019 $ (43) - $ (43)

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.

Refer to Table 9 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the 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, 2020 and 2019 was based on the joint ventures’ financial statements which have been audited.

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2019 Additions Disposals Reclassification Exchange differences Balance, December 31, 2019	Land $ 1,211,228 - - - (1,468) $ 1,209,760	Buildings $ 2,573,057 3,671 (1,800) - (6,256) $ 2,568,672	Machinery $ 834,529 35,481 (75,570) 12,147 (3,261) $ 803,326	Office Equipment Total $ 1,813,517 $ 6,432,331 83,354 122,506 (97,265) (174,635) 54,490 66,637 (19,507) (30,492) $ 1,834,589 $ 6,416,347 (Continued)

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Accumulated depreciation Balance, January 1, 2019 Depreciation Disposals Reclassification Exchange differences Balance, December 31, 2019 Carrying value at December 31, 2019 Cost Balance, January 1, 2020 Additions Disposals Reclassification Exchange differences Balance, December 31, 2020 Accumulated depreciation Balance, January 1, 2020 Depreciation Disposals Reclassification Exchange differences Balance, December 31, 2020 Carrying value at December 31, 2020	Land $ - - - - - $ - $ 1,209,760 $ 1,209,760 - - - (2,765) $ 1,206,995 $ - - - - - $ - $ 1,206,995	Buildings $ 1,158,802 91,743 (1,746) - (3,082) $ 1,245,717 $ 1,322,955 $ 2,568,672 17,981 (45) 3,195 (8,428) $ 2,581,375 $ 1,245,717 90,579 (41) 2,512 (1,228) $ 1,337,539 $ 1,243,836	Machinery $ 666,109 67,188 (74,115) (2,382) (2,701) $ 654,099 $ 149,227 $ 803,326 38,712 (32,358) (7,631) (1,721) $ 800,328 $ 654,099 61,897 (32,232) (18,541) (2,799) $ 662,424 $ 137,904	Office Equipment Total $ 1,217,531 $ 3,042,442 168,929 327,860 (63,657) (139,518) (15,946) (18,328) (11,757) (17,540) $ 1,295,100 $ 3,194,916 $ 539,489 $ 3,221,431 $ 1,834,589 $ 6,416,347 129,896 186,589 (207,994) (240,397) 113,093 108,657 6,514 (6,400) $ 1,876,098 $ 6,464,796 $ 1,295,100 $ 3,194,916 171,799 324,275 (173,249) (205,522) 8,361 (7,668) 6,188 2,161 $ 1,308,199 $ 3,308,162 $ 567,899 $ 3,156,634 (Concluded)

The depreciation is 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 31 for property, plant and equipment that have been pledged to secure borrowings of the Group.

15. LEASE ARRANGEMENTS

The Group’s important lease projects include lease land from other companies and government department for the use of the plants, warehouses and parking spaces, as well as leases of information systems cloud services, etc. The lease terms is 2 to 10 years. The Group does not have bargain purchase options to acquire lease items at the end of lease terms.

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The right-of-use assets increases $102,879 thousand and $86,672 thousand, the depreciation was $103,734 thousand and $112,202 thousand, the total cash out flow in lease was $175,874 thousand and $116,009 thousand for the year ended December 31, 2020 and 2019, respectively. Please refer to balance sheet for the balance of right-of-use assets and lease liabilities of lease arrangement as of balance date.

16. INVESTMENT PROPERTIES

INVESTMENT PROPERTIES
Land		December 31
		2020 $ 3,137,187	2019 $ 3,137,187

The Group 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, part of the land was co-constructed with Fu Yu Construction to build a joint building project, and part of it has not yet been decided, both of the above land were classified as 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.

discount rates and the fair value as appraised.
Fair value		December 31
		2020 $ 11,754,551	2019 $ 13,727,067

In the third quarter of 2019, the Group entered into a joint building contract with Fu Yu Construction Co., Ltd. (Fu Yu Construction) to jointly build a building located at Project No 61-0 and Project No 61-1 projects, 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 joint building contract, Fu Yu Construction should pay $20,000 thousand (recognized as guarantee deposit received) and two guaranteed notes with a denomination of $120,000 thousand 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. The joint building project started in the fourth quarter of 2020, based on the agreement, the Group received $20,000 thousand guarantee deposit within five business days after the approval of underground bottom plate inspection.

17. GOODWILL

Cost Balance, beginning of the year Net effect of exchange differences Balance, end of the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 225,996 2,006 $ 228,002	2019 $ 227,961 (1,965) $ 225,996

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.

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The Group did not recognize any impairment loss on goodwill for the years ended December 31, 2020 and 2019.

18. OTHER INTANGIBLE ASSETS

The balance of other intangible assets stands for computer software and core technology as of December 31, 2020 and 2019. Amortization expense is base on a straight-line basis over their estimated useful lives as follows:

Computer software	5-10 years
Core technology	20 years
Patents	5 years
Customer relationships	5 years

19. BORROWINGS

a. Short-term borrowings

Unsecured bank loans		December 31	December 31
		2020 $ 2,554,260	2019 $ 2,352,800

As of December 31, 2020 and 2019, the interest rate on the bank loans was 0.52%-4.75% and 0.72%4.75% per annum, respectively.

b. Long-term borrowings

Secured bank loans (1) (Note 31) Unsecured bank loans (2) Less: Current portions Long-term borrowings		December 31	December 31
		2020 $ 488,072 2,550,000 3,038,072 633,456 $ 2,404,616	2019 $ 449,814 2,000,000 2,449,814 27,763 $ 2,422,051

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 June 2022 to February 2027. As of December 31, 2020 and 2019, the effective interest rate on the bank loans were 0.85%-4.99% and 1.16%-5.00% per annum, respectively.
2) The bank loans are for the purpose of general operation with due date on June 2026. As of December 31, 2020 and 2019, the interest rates on the bank loans were 0.69%-0.89% and 1.00%1.07% per annum, respectively.

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20. OTHER PAYABLES

Salaries and bonus Employee’s compensation Remuneration of directors Others		December 31	December 31
		2020 $ 477,324 416,569 10,670 321,060 $ 1,225,623	2019 $ 475,809 330,492 10,570 524,046 $ 1,340,917

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., Ltd. 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
		2020 $ 496,002 (339,722) $ 156,280	2019 $ 486,655 (323,566) $ 163,089

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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, 2019	$ 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 (gain) loss
Changes in demographic assumptions	10	-	10
Changes in financial assumptions	27,501	-	27,501
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
Current service cost	3,601	-	3,601
Net interest expense (income)	3,663	(2,489)	1,174
Recognized in profit or loss	7,264	(2,489)	4,775
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(10,566)	(10,566)
Actuarial (gain) loss
Changes in demographic assumptions	118	-	118
Changes in financial assumptions	13,954	-	13,954
Experience adjustments	1,752	-	1,752
Recognized in other comprehensive income	15,824	(10,566)	5,258
Contributions from employer	-	(16,842)	(16,842)
Benefits paid	(13,741)	13,741	-
Balance at December 31, 2020	$ 496,002	$ (339,722)	$ 156,280

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.

137

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
	2020 2019 0.38%-0.50% 0.63%-1.00% 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
		2020 $(13,864) $ 14,427 $ 13,913 $(13,446)	2019 $(14,219) $ 14,819 $ 14,326 $(13,822)

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
	2020 2019 $ 16,762 $ 16,526 11.7 years 12.2 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
		2020 500,000 $ 5,000,000 421,295 $ 4,212,945	2019 500,000 $ 5,000,000 419,296 $ 4,192,961

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 and the cancellation of employee restricted shares.

138

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 Additional paid-in capital Employee share options exercised Employee share vested restricted 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
		2020 $ 2,919,560 210,193 146,976 200,452 197,133 13,859 327,868 16,060 4,774 $ 4,036,875	2019 $ 2,814,492 187,804 146,976 167,723 116,588 13,564 54,360 46,438 81,526 $ 3,629,471

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

The shareholders of the Corporation held their regular meeting on June 18, 2019 and in that meeting, resolved the amendments to the Corporation’s Articles of Incorporation (the “Articles”). The amendments explicitly stipulate that the board of directors is authorized to adopt a special resolution to distribute dividends and bonuses in cash and a report of such distribution should be submitted in the shareholders’ meeting.

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.

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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.

The appropriations of earnings for 2019 and 2018 have been approved in the annual shareholders’ meeting on June 10, 2020 and June 18, 2019, respectively, were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2019 For Fiscal Year 2018 $ 185,448 $ 254,628 89,240 - 1,265,000 1,750,896	Dividend Per Share (NT$)
		For Fiscal Year 2019 For Fiscal Year 2018 $ 3.0 $ 4.2

The appropriations of earnings for 2020 had been proposed by the Corporation’s board of directors on February 25, 2021. The appropriations and dividends per share were as follows:

	Appropriation	Dividends Per
	of Earnings	Share (NT$)
Legal reserve	$ 231,823
Reverse Special reserve	(89,240)
Cash dividends	1,897,175	$4.5

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, 2021.

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.

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e. Other equity items

f.	Exchange Differences on Translating Foreign Operations For the year ended December 31, 2020 Balance at January 1, 2020 $(331,073) Exchange differences on translating foreign operations 1,123 Unrealized loss arising from equity investment - Share of other comprehensive loss of associates accounted for using the equity method (136,092) Share-based payment transaction - Balance at December 31, 2020 $(466,042) For the year ended December 31, 2019 Balance at January 1, 2019 $(104,872) Exchange differences on translating foreign operations (111,244) Unrealized loss arising from equity investment - Share of other comprehensive loss of associates accounted for using the equity method (114,957) Share-based payment transaction - Balance at December 31, 2019 $(331,073) 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 assets at FVTOCI Cash dividends distributed by subsidiaries Share-based transaction payment by subsidiary Capital increase of subsidiaries Acquisition of non-controlling interests in subsidiaries Balance, end of the year	Unrealized Gain (Loss) on Financial Assets at FVTOCI Unearned Employee Benefit $ 154,946 $ (11,524) - - 229,747 - (200) - - 10,972 $ 384,493 $ (552) $ 160,493 $ (42,377) - - (5,515) - (32) - - 30,853 $ 154,946 $ (11,524) For the Year Ended December 31	Unrealized Gain (Loss) on Financial Assets at FVTOCI Unearned Employee Benefit $ 154,946 $ (11,524) - - 229,747 - (200) - - 10,972 $ 384,493 $ (552) $ 160,493 $ (42,377) - - (5,515) - (32) - - 30,853 $ 154,946 $ (11,524) For the Year Ended December 31	Unrealized Gain (Loss) on Financial Assets at FVTOCI Unearned Employee Benefit $ 154,946 $ (11,524) - - 229,747 - (200) - - 10,972 $ 384,493 $ (552) $ 160,493 $ (42,377) - - (5,515) - (32) - - 30,853 $ 154,946 $ (11,524) For the Year Ended December 31
			2020 $ 296,699 57,181 (10,879) (6) - (17,545) 20 - - $ 325,470	2019 $ 280,329 34,995 (3,946) (39) 60 (11,992) - 7,218 (9,926) $ 296,699

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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
		2020 1,806 $ 33,686 $ 303,337	2019 1,916 $ 35,714 $ 277,759

The Corporation’s subsidiary, Chroma Investment Co., Ltd. disposed 110 thousand shares of the Corporation for the ended December 31, 2020

Forfeited employee restricted shares of 123 thousand were returned to the Corporation and canceled during 2020. Forfeited employee restricted shares of 101 thousand were returned to the Corporation and canceled during 2019.

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 a. Contract balances Contract assets - construction contract (1) Contract liabilities - sale of goods (1) Contract liabilities - construction contract (1) Contract liabilities - advance receipts for real estate (2)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 2019 $ 14,596,222 $ 12,895,560 617,812 1,009,058 318,509 5,016 $ 15,532,543 $ 13,909,634 December 31
		2020 $ 1,278,936 $ 430,039 27,643 308,000 $ 765,682	2019 $ 1,258,046 $ 647,417 59,440 - $ 706,857

a. Contract balances
1) The changes in the balance of contract liabilities primarily result from the timing difference between the Group’s performance and respective customer’s payment.
2) In order to revitalize assets, increase working capital and repay debts, the Corporation’s board of directors resolved to sell the plant and land in Hwa Ya Technology Park to its related party, Adlink Technology, on July 3, 2020. The transaction price, which amounted to $3.08 billion, was determined with reference to the appraisal results of independent real estate appraisers. The transaction is expected to be settled before March 31, 2021. In addition, the Corporation will lease

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back part of the building as plant and employee’s dormitories with a lease term of at least 5 years. The Corporation, according to the contract, had received 10% of the contract price and 20% document payment as deposit in July 2020 and January 2021, respectively.

b. Disaggregation of revenue

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

24. ADDITIONAL INFORMATION ON EXPENSES

a. Finance costs

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2020 2019 $ 53,552 $ 48,410 5,259 5,610 $ 58,811 $ 54,020 For the Year Ended December 31
2020 2019 $ 80,065 $ 84,062 347,944 356,000 $ 428,009 $ 440,062 $ 11,225 $ 6,140 For the Year Ended December 31
	2020 $ 3,269,024 16,968 99,034 4,775 58,776 $ 3,448,577 $ 418,257 3,030,320 $ 3,448,577	2019 $ 3,334,905 53,004 91,318 5,594 66,117 $ 3,550,938 $ 558,887 2,992,051 $ 3,550,938

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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, 2020 and 2019, which have been approved by the Corporation’s board of directors on February 25, 2021 and February 26, 2020, respectively, were as follows:

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2020 Amount Rate % $ 383,845 12.04 9,600 0.30	2019
		Amount Rate % $ 290,000 11.84 9,600 0.39

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, 2020 and 2019.

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 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
		2020 $ 539,734 15,222 (42,936) 512,020 136,030 $ 648,050	2019 $ 476,797 36,105 (54,103) 458,799 (9,669) $ 449,130

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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 Unrecognized deductible differences Investment credits Loss carryforward Deductible temporary differences Other taxable items Income tax on unappropriated earnings Difference on basic tax payable Others Adjustments for prior years’ tax Temporary differences Others 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
		2020 $ 3,029,007 $ 721,364 (25,157) 32,663 (81,554) (5,121) 34,600 15,222 990 77 (42,936) (2,646) 548 $ 648,050	2019 $ 2,338,606 $ 527,387 (24,927) 47,546 (78,629) 15,057 - 36,105 - - (54,103) (19,306) - $ 449,130

b. Deferred tax assets and liabilities

For the year ended December 31, 2020

Deferred Tax Assets Unrealized intercompany gain Tax losses Inventory reserve Tax credit Allowance for impaired receivables Unrealized exchange loss Net defined benefit liability Others Deferred Tax Liabilities Unappropriated earnings of foreign subsidiaries Goodwill Others	Opening Balance Recognized in Profit or Loss Exchange Differences and Other $ 120,426 $ (8,404) $ - 75,343 (8,568) (2,899) 51,667 7,840 - 24,298 6,333 (1,445) 22,735 4,342 (10) 10,385 1,260 - 6,203 (2,428) - 6,512 2,114 (717) $ 317,569 $ 2,489 $ (5,071) Opening Balance Recognized in Profit or Loss Exchange Differences and Other $ 445,017 $ 120,985 $ - 32,570 15,604 (1,576) 6,560 1,930 21 $ 484,147 $ 138,519 $ (1,555)	Closing Balance $ 112,022 63,876 59,507 29,186 27,067 11,645 3,775 7,909 $ 314,987 Closing Balance $ 566,002 46,598 8,511 $ 621,111

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For the year ended December 31, 2019

Deferred Tax Assets Unrealized intercompany gain Tax losses Inventory reserve Tax credit Allowance for impaired receivables Unrealized exchange loss Net defined benefit liability Others Deferred Tax Liabilities Unappropriated earnings of foreign subsidiaries Goodwill 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 - 25 10,360 - 8,446 (2,243) - 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) 13,736 (6,669) (507) $ 424,561 $ 60,146 $ (560)	Closing Balance $ 120,426 75,343 51,667 24,298 22,735 10,385 6,203 6,512 $ 317,569 Closing Balance $ 445,017 32,570 6,560 $ 484,147

c.Information about unused loss carryforwards

Unrecognized as deferred tax assets Expiry in 2020 Expiry in 2021 Expiry in 2022 Expiry in 2023 Expiry in 2024 Expiry in 2025 Expiry in 2026 Expiry in 2027 Expiry in 2028 Expiry in 2029 Expiry in 2030 Recognized as deferred tax assets Expiry in 2033 Expiry in 2034 Expiry in 2036 Expiry in 2038 Expiry in 2039		December 31	December 31
		2020 $ - 68,584 109,443 60,909 54,928 92,125 112,300 79,327 72,735 75,039 40,123 765,513 46,150 24,268 15,930 55,399 135,808 277,555 $ 1,043,068	2019 $ 41,517 68,584 109,443 60,909 54,928 92,125 112,300 81,815 102,186 76,971 - 800,778 57,017 25,546 16,769 58,317 147,391 305,040 $ 1,105,818

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d. Income tax assessments

As of December 31, 2020, the Corporation’s tax returns through 2018 had been assessed by the tax authorities.

The income tax returns through 2018 of the Corporation’s subsidiaries - Mas Automation Corp., Chroma New Material Corp., Adivic Technology Co., Ltd., Chroma Investment Co., Testar Electronics Corp., EVT Technology Co., Ltd., Wei Da Electric Vehicle Co., Ltd., Innovative Nanotech Inc. and Touchcloud have 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 diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,323,776	2019 $ 1,854,481

(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: 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
		2020 417,761 1,248 2,575 46 421,630	2019 414,078 2,424 2,242 1,120 419,864

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.

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27.SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan of the Corporation

The Corporation had not granted employee share options for the ended December 31, 2020 and 2019. 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
	2020 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 3,136 $ 59.8 (1,892) 59.5 (6) - 1,238 58.7 1,238	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

Information on outstanding options as of December 31, 2020 and 2019 is as follows:

December 31	December 31
2020 Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) $ 58.7 1.24	2019
	Range of Exercise Price (NT$) Weighted-average Remained Contractual Life (Years) $ 59.8 2.24

Compensation costs recognized were $2,646 thousand and $22,860 thousand for the years ended December 31, 2020 and 2019, respectively.

b. Employee share option plan of subsidiaries

Adivic Technology Co., Ltd. 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., Ltd. when exercised. The options are valid for 8 years and exercisable at certain percentages subsequent to the second year of the grant date.

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Balance at January 1 Options forfeited Balance at December 31 Options exercisable, end of the year	For the Year Ended December 31	For the Year Ended December 31
	2020 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 785 $ 10.00 (160) - 625 10.00 625	2019
		Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 785 $ 10.00 - - 785 10.00 785

The qualified employees of Touchcloud were granted 470 thousand units of share options in April 2020, each option entitled the holders to subscribe for one common share of Touchcloud upon exercised. The options granted are valid for 5 years and exercisable at certain percentages from the second anniversary of the grant date. The exercise price is $10 per share according to the terms of the employee stock option plan.

Information on employee share options is as follows:

Employee Share Options Balance at January 1 Options granted Balance at December 31 Options exercisable, end of the year Weighted average fair value of share options	For the Year Ended December 31, 2020
	Number of Options (In Thousands) Weighted- average Exercise Price (NT$) - $ - 470 10.00 470 10.00 - $ 0.19

Compensation costs recognized were $20 thousand for the year ended December 31, 2020.

The above-mentioned employee stock options used Black-Scholes model to determine the fair value of the options. The valuation assumptions on the grant date were as follows:

Grant-date share price Exercise price Expected volatility Expected life (in years) Expected dividend yield Risk-free interest rate	April 2020
	$3.71 $10 36.64%- 38.24% 3.5-4.5 - 0.39%-0.42%

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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.
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 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
		2020 1,285 (1,110) (123) 52	2019 2,273 (887) (101) 1,285

Compensations costs of share-based payment arising from the RSU Plan were $14,302 thousand and $30,144 thousand for the years ended December 31, 2020 and 2019, respectively.

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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.

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

December 31, 2020 Financial assets at FVTPL Domestic listed equity securities Domestic unlisted equity securities Open-end beneficiary certificates Financial assets at FVTOCI Domestic listed ordinary shares and emerging markets shares Domestic unlisted equity securities Foreign unlisted equity securities December 31, 2019 Financial assets at FVTPL Domestic listed equity securities Open-end beneficiary certificates	Level 1 $ 4,763 - 445,422 $ 450,185 $ 376,499 - - $ 376,499 $ 4,070 485,675 $ 489,745	Level 2 $ - - - $ - $ - - - $ - $ - - $ -	Level 3 $ - 58,830 4,646 $ 63,476 $ 347,474 131,196 7,729 $ 486,399 $ - 4,762 $ 4,762	Total $ 4,763 58,830 450,068 $ 513,661 $ 723,973 131,196 7,729 $ 862,898 $ 4,070 490,437 $ 494,507

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Financial assets at FVTOCI Domestic listed ordinary shares and emerging markets shares Domestic unlisted equity securities Foreign unlisted equity securities	Level 1 $ 407,798 - - $ 407,798	Level 2 $ - - - $ -	Level 3 Total $ 45,184 $ 452,982 154,853 154,853 4,532 4,532 $ 204,569 $ 612,367 (Concluded)	Total $ 452,982 154,853 4,532
				$ 612,367

There were no transfers between Levels 1 and 2 for the years ended December 31, 2020 and 2019.

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

For the year ended December 31, 2020

Financial Assets Balance at January 1, 2020 Purchase 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, 2020 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 $ 4,762 53,000 5,714 - $ 63,476 Financial Assets at FVTPL Equity Instruments $ 6,807 (2,045) - $ 4,762	Financial Assets at FVTOCI Equity Instruments $ 204,569 21,157 - 260,673 $ 486,399 Financial Assets at FVTOCI Equity Instruments $ 186,474 - 18,095 $ 204,569	Total $ 209,331 74,157 5,714 260,673 $ 549,875 Total $ 193,281 (2,045) 18,095 $ 209,331

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

The fair values of domestic unlisted are emerging market 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
	2020 2019 $ 513,661 $ 494,507 8,439,251 7,934,228 862,898 612,367 9,547,767 8,797,397

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.
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 and trade payables. 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.

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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 $217,103 thousand and $197,621 thousand for the years ended December 31, 2020 and 2019, 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.

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
	2020 2019 $ 1,176,504 $ 787,528 1,537,030 1,494,735 2,753,550 2,173,071 4,202,894 3,456,076

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, 2020 and 2019 would increase/decrease by $7,247 thousand and $6,415 thousand, respectively, which was mainly attributable to the Group’s exposure to interest rates on its variable rate deposits and bank loans.

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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, 2020 and 2019 would have increased/decreased by $25,683 thousand and $24,725 thousand respectively, as a result of the changes in fair values of financial assets at FVTPL, and the pretax other comprehensive income for the years ended December 31, 2020 and 2019 would have increased/decreased by $43,145 thousand and $30,618 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 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.

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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, 2020 and 2019, the Group’s available unutilized bank loan facilities were $3,244,091 thousand and $3,518,960 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.

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 nonderivative 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 Lease liabilities	December 31, 2020	December 31, 2020
	Within 1 Year 1-5 Years More Than 5 Years $ 3,914,549 $ - $ - 1,314,065 32,551 83,505 1,908,542 2,182,924 176,862 59,308 89,946 5,224 $ 7,196,464 $ 2,305,421 $ 265,591 December 31, 2019
	Within 1 Year $ 3,974,783 1,184,603 1,232,195 72,912 $ 6,464,493	1-5 Years More Than 5 Years $ - $ - 121,187 95,784 1,942,083 720,000 85,054 8,271 $ 2,148,324 $ 824,055

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.

156

30. TRANSACTIONS WITH RELATED PARTIES

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

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Related Party Relationship with the Group
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Related Party	Relationship with the Group
Dynascan Technology Corp. (“Dynascan Technology”)	Associate
Adlink Technology Inc. (“Adlink”)	Associate
Camtek Ltd.	Associate
DynaScan Technology Inc. (“Dynascan USA”)	Other related party (associate
	subsidiaries)
DynaScan Japan Inc. (“Dynascan Japan”)	Other related party (associate
	subsidiaries)
Mou Kuan Industry Co., Ltd. (“Mou Kuan”)	Other related party
Quantel Co., Ltd. (“Quantel Thailand”)	Other related party
Quantel Sdn. Bhd. (“Quantel Malaysia”)	Other related party
Quantel Philippines Inc. (“Quantel Philippines”)	Other related party
Quantel Electronics (India) Private Limited (“Quantel India”)	Other related party
PT Quantel (“Quantel Indonesia”)	Other related party

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

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2020 2019 $ 18,225 $ 15,631 42,382 103,592 $ 60,607 $ 119,223 For the Year Ended December 31
	2020 2019 $ 23,987 $ 11,944 23,085 47,392 $ 47,072 $ 59,336 December 31
	2020 $ 308,000	2019 $ -

The nature of relevant information, please refer to Note 23.

157

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

Line Item Related Party Categories Trade receivables - related Associates parties Other related parties		December	31
		2020 $ 5,041 14,299 $ 19,340	2019 $ 3,027 24,081 $ 27,108

Outstanding trade receivables from related parties are unsecured.

	December	31
2020 2019 $ 4,570 $ 3,054 $ 6,613 $ 2,973 4,740 35 $ 11,353 $ 3,008 For the Year Ended December 31
	2020 $ 1,260 100 $ 1,360 $ 12,600 $ 450 3,481 $ 3,931 December	2019 $ 1,260 - $ 1,260 $ 12,600 $ 3,783 8,496 $ 12,279 31
	2020 $ 523 1,264 $ 1,787	2019 $ 3,898 - $ 3,898

158

h. 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
		2020 $ 147,577 2,435 $ 150,012	2019 $ 126,327 2,431 $ 128,758

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
		2020 $ 815,553 729,393 $ 1,544,946	2019 $ 960,124 484,634 $ 1,444,758

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).

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.

159

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, 2020, the unrecognized commitments amounted to $358,464 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. 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$8,240 thousand) 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.
d. The global economic and financial development are facing significant uncertainty due to the outbreak of COVID-19 pandemic. As of the date the consolidated financial statements were authorized for issue, the Group assessed that the pandemic did not have material impact on its ability to continue as a going concern, impairment of assets and risks arising from financing activities. The Group continuously observes and assesses the impact of the pandemic on the aforementioned aspects.

160

33. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

The Group considers the future strategy of the product and the improvement of product competitiveness, and the Group’s board of directors resolved to invest US$1.5 million and owned 100% equity in Environmental Stress Systems, Inc. in 2021. Upon completion of the investment procedures, the Group will increase its capital by US$500,000 dollars.

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, 2020

Foreign
Currencies
Exchange Rate
Financial assets
Monetary items
USD
$ 113,578
28.480 (USD:NTD)

USD
20,512
7.754 (USD:HKD)
USD
9,108
6.507 (USD:RMB)
USD
8,315
0.813 (USD:EUR)
USD
7,437
1.321 (USD:SGD)
RMB
135,694
4.377 (RMB:NTD)
RMB
132,021
1.192 (RMB:HKD)
RMB
34,682
0.154 (RMB:USD)

Non-monetary items
USD
86,592
28.480 (USD:NTD)

Financial liabilities
Monetary items
USD
31,401
28.480 (USD:NTD)

USD
13,355
7.754 (USD:HKD)
USD
8,208
0.813 (USD:EUR)

Carrying
Amount
$ 3,234,710
584,178
259,401
236,801
211,797
593,933
577,856
151,803
$ 5,850,479
$ 2,466,146
$ 894,301
380,346
233,763
$ 1,508,410

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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:USD)

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

For the years ended December 31, 2020 and 2019, (realized and unrealized) net foreign exchange losses were $86,618 thousand and $85,663 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: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: Table 5 (attached).

162

7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 7 (attached)
9) Trading in derivative instruments: None
10) Others: Intercompany relationships and significant intercompany transactions: Table 8 (attached)
11) Information on investees: Table 9 (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 10 (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 6 (attached)
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 6 (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.
c. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder: 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.

163

c.Automatic equipment department.

d.Other

1) Segment revenues and results

For the year ended December 31, 2020 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, 2019 Revenue from external customers Inter-segment revenue Segment revenue Consolidated revenue Segment income Non-operating income and expenses Profit before tax	Special Materials Department $ 2,551,127 7 $ 2,551,134 $ 32,246 $ 2,097,065 7 $ 2,097,072 $ 33,754	Test Instrument Department $ 12,045,049 8,460,756 $ 20,505,805 $ 2,870,986 $ 10,545,586 6,922,326 $ 17,467,912 $ 2,014,175	Automatic Equipment Department $ 617,812 194,311 $ 812,123 $ (170,512 ) $ 1,009,058 344,391 $ 1,353,449 $ 46,968	Other $ 318,555 275 $ 318,830 $ 5,477 $ 257,925 818 $ 258,743 $ (41,954 )	Elimination $ - (8,655,349) $ (8,655,349 ) $ 59,204 $ - (7,267,542) $ (7,267,542 ) $ 6,516	Total $ 15,532,543 -
						15,532,543
						$ 15,532,543
						$ 2,797,401 231,606
						$ 3,029,007
						$ 13,909,634 -
						13,909,634
						$ 13,909,634
						$ 2,059,459 279,147
						$ 2,338,606

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, 2020 and 2019 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.

164

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 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
		2020 $ 1,063,918 22,569,260 2,330,813 274,843 (3,977,415) 22,261,419 5,867,464 $ 28,128,883 $ 834,982 6,262,348 1,410,681 86,490 (3,067,754) 5,526,747 6,213,443 $ 11,740,190	2019 $ 917,695 20,873,191 2,623,567 291,373 (4,307,795) 20,398,031 5,039,041 $ 25,437,072 $ 688,616 6,399,468 1,614,286 105,984 (3,443,503) 5,364,851 5,286,761 $ 10,651,612

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
		2020 $ 2,551,127 12,045,049 617,812 $ 15,213,988	2019 $ 2,097,065 10,545,586 1,009,058 $ 13,651,709

4) Geographical information

The Group’s primary operating areas is Taiwan, Republic of China, America, and others.

165

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 For the Year Ended December 31 2020 2019 $ 5,719,342 $ 5,470,974 5,779,446 5,236,935 2,365,314 1,559,629 1,668,441 1,642,096 $ 15,532,543 $ 13,909,634	Non-current Assets	Non-current Assets

	December 31
2020 $ 5,719,342 5,779,446 2,365,314 1,668,441 $ 15,532,543	2020 $ 9,143,772 369,121 409,274 357,119 $ 10,279,286	2019 $ 7,784,729 373,369 419,378 371,426 $ 8,948,902

Note:Including all area amount of non-significant subsidiaries.

Non-current assets exclude non-current assets classified as financial instruments, investments accounted for using the equity method, 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, 2020.

166

CHROMA ATE INC. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Allowance Collateral Financing
Highest Actual Business Reasons for Aggregate
Financial Related Ending Interest Nature of for Limit for
No. Lender Borrower Balance for Borrowing Transaction Short-term Financing
Statement Account Party Balance Rate Financing Impairment Item Value Each
the Period Amount Amounts Financing Limit
Loss Borrower
0 The Corporation Chroma Systems Other receivables Y $ 110,689 $ 106,417 $ 106,417 3.25% a $ 368,570 - $ - - $ - $ 1,606,322 $ 3,212,645
Solutions, Inc. (Note 1)
Chroma Japan Corp. Other receivables Y 102,000 92,262 82,676 1.30% a 173,626 - - - - 1,606,322 3,212,645
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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: The amounts listed in the table were translated into the New Taiwan dollars at the exchange rate of US$1=NT$28.480 and JPY1 = NT$0.276 as of December 31, 2020.

Note 4: Financing provided:

a. For transactions.
b. For short-term financing.

167

CHROMA ATE INC. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

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Endorsee/Guarantee Ratio of
Limits on Endorsement
Maximum Accumulated Endorsement Endorsement
Endorsement Outstanding Aggregate /Guarantee
Amount Amount Endorsement /Guarantee /Guarantee
/Guarantee Endorsement Actual Endorsement Given on
Endorser/ Endorsed/ Endorsed/ /Guarantee Given by Given by
No. Given on /Guarantee Borrowing Guarantee Behalf of
Guarantor Name Relationship Guaranteed Guaranteed to Net Equity Parent on Subsidiaries
Behalf of at the End of Amount Limit Companies in
During the by Collateral in Latest Behalf of on Behalf of
Each Party the Period (Note 2) Mainland
Period Financial Subsidiaries Parent
(Note 1) China
Statements
0 The Corporation Chroma Japan Corp. Subsidiary $ 2,409,483 $ 55,200 $ 55,200 $ 27,600 $ - 0.34% $ 4,818,967 Y - -
Chroma ATE Europe Subsidiary 2,409,483 52,530 52,530 35,020 - 0.33% 4,818,967 Y - -
B.V.
Chroma ATE Inc. Subsidiary 2,409,483 142,400 142,400 142,400 - 0.89% 4,818,967 Y - -
Sajet System Technology Subsidiary 2,409,483 21,885 21,885 - - 0.14% 4,818,967 Y - Y
(Suzhou) Co., Ltd.
Chroma Electronics Subsidiary 2,409,483 43,770 43,770 1,542 - 0.27% 4,818,967 Y - Y
(Shanghai) Co., Ltd.
Chroma ATE (Suzhou) Subsidiary 2,409,483 87,540 87,540 26,773 - 0.54% 4,818,967 Y - Y
Co., Ltd.
----- End of picture text -----

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 within 15% of the net value of the Corporation and 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$28.480, JPY1=NT$0.276, RMB1=NT$4.377, EUR1=NT$35.020 as of December 31, 2020.

168

CHROMA ATE INC. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES) DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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December 31, 2020
Relationship with
Percentage
Holding Company Name Type and Name of Marketable Securities the Holding Financial Statement Account Shares/Units Carrying Note
of Fair Value
Company (Thousands) Amount
Ownership
The Corporation Fund
WI Harper INC Fund VII LP - Financial assets at fair value through profit or loss - non- - $ 4,646 - $ 4,646 -
current
Stocks
DynaColor, Inc. - Financial assets at fair value through other comprehensive 6,050 177,274 6.1 177,274 -
income - non-current
Chunghwa Telecom Co., Ltd. - 〃 412 44,950 - 44,950 -
China Communications Media Group Co., Ltd. - 〃 26 137 - 137 -
Tian Zheng International Precision Machinery Co., Ltd. - 〃 2,681 154,138 8.1 154,138 -
Twoway Catv Service Inc. - 〃 3,561 56,898 4.4 56,898 -
Taiwan Advanced Nanotech Inc. - 〃 2,430 236,765 11.5 236,765 -
WK Technology Fund IX Ltd. - 〃 4,614 65,657 4.6 65,657 -
WK Technology Fund IV Ltd. - 〃 806 4,064 1.9 4,064 -
WK Technology Fund VI Ltd. - 〃 723 2,500 1.4 2,500 -
TFBS Bioscience Inc. - 〃 3,280 58,975 14.7 58,975 -
Chroma New Material Corp. Fund
Mega Diamond Money Market Fund - Financial assets at fair value through profit or loss - current 15,821 200,138 - 200,138 -
Chroma Systems Solutions Inc. Fund
Franklin California Tax Free Income FD Inc. - 〃 165 36,888 - 36,888 -
Chroma Investment Co., Ltd. Fund
Hua Nan Kirin Money Market Fund - 〃 2,356 28,421 - 28,421 -
Stocks
Greatek Electronics Inc. - 〃 85 4,763 - 4,763 -
Hephas Energy Corporation - 〃 1,042 58,830 6.8 58,830 -
Chroma ATE Inc. The Corporation Financial assets at fair value through other comprehensive 1,806 303,337 0.4 303,337 -
income - non-current
Taiwan Advanced Nanotech Inc. - 〃 552 53,811 2.6 53,811 -
Cosmactive Broadband Networks Co., Ltd. - 〃 4 - 1.5 - -
Global Mixed-mode Technology Inc. - 〃 111 - 5.1 - -
Chen Hwa Technology Inc. Stocks
Hangzhou New Material Chroma Co., Ltd. - 〃 - 7,729 19.0 7,729 -
Adivic Technology Co. Fund
Cathay Taiwan Money Market Fund - Financial assets at fair value through profit or loss - current 2,601 32,601 - 32,601 -
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(Continued)

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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)

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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, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Beginning Balance Acquisition Disposal Ending Balance
Company Name Marketable Securities Type and Name of Financial Statement Account Counterparty Relationship Number of Shares Amount Number of Shares Amount Number of Shares Amount Carrying Amount Gain (Loss) on Number of Shares Amount
(Thousands) (Thousands) (Thousands) Disposal (Thousands)
The Corporation Fund
Taishin 1699 Money Financial assets at fair value through - - - $ - 22,023 $ 300,000 22,023 $ 300,072 $ 300,000 $ 72 - $ -
Market Fund profit or loss - current
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171

TABLE 5

CHROMA ATE INC. AND SUBSIDIARIES

DISPOSAL OF INDIVIDUAL REAL ESTATE AT PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original
Seller Property Event Date Acquisition Carrying Transaction Collection [Gain (Loss) ] Counterparty Relationship Purpose of Price Reference Other Terms
Amount Amount on Disposal Disposal
Date
The Corporation Land and buildings 2020.07.03 1999-2004 Note $ 308,000 Note Note Adlink Technology Association In order to Real estate appraisal Sell and leaseback
Inc. revitalize assets, reports of partial square feet of
increase working Cushman & factory in Hua Ya
capital and repay Wakefield and technology park for
debts. CCIS Real Estate the use of factory and
Joint Appraisers employees’
Firm and dormitory, and
promise to lease for 5
years.
----- End of picture text -----

Note: According to the regulation of contract, the corporation charge 10 percent deposit of transaction amount, carrying amount and gain (loss) on disposal will bargain after actual settlement, for further details please see Note 23

172

TABLE 6

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, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Notes/Accounts
Transaction Details Abnormal Transaction
Receivable (Payable)
Company Name Related Party Relationship Note
Purchase % to Payment Ending % to
Amount Payment Terms Unit Price
(Sale) Total Terms Balance Total
The Corporation Neworld Electronics Limited Subsidiary (Sale) $ (3,090,906) (34) Net 365 days after monthly closing - - $ 533.772 18 -
Neworld Electronics Limited The Corporation Parent company Purchase 3,090,906 100 Net 90 days after delivery - - (533,772) (100) -
The Corporation Chroma Electronics (Shanghai) Co., Ltd. Subsidiary (Sale) (219,019) (2) Net 365 days after monthly closing - - 23,657 1 -
Chroma Electronics (Shanghai) Co., Ltd. The Corporation Parent company Purchase 219,019 100 Net 120 days after delivery - - (23,657) (100) -
The Corporation Chroma Electronics (Shenzhen) Co., Ltd. Subsidiary (Sale) (428,412) (5) Net 365 days after monthly closing - - 139,548 5 -
Chroma Electronics (Shenzhen) Co., Ltd. The Corporation Parent company Purchase 428,412 100 Net 90 days after monthly closing - - (139,548) (100) -
The Corporation Chroma Japan Corp. Subsidiary (Sale) (173,626) (2) Net 365 days after monthly closing - - 208,148 7 -
Chroma Japan Corp. The Corporation Parent company Purchase 173,626 100 Net 90 days after delivery - - (208,148) (100) -
The Corporation Chroma ATE Inc. Subsidiary (Sale) (1,054,688) (11) Net 365 days after monthly closing - - 567,037 20 -
Chroma ATE Inc. The Corporation Parent company Purchase 1,054,688 100 Net 180 days after delivery - - (567,037) (100) -
The Corporation Chroma Systems Solutions, Inc. Subsidiary (Sale) (368,570) (4) Net 90 days after delivery - - 107,521 4 -
Chroma Systems Solutions, Inc. The Corporation Parent company Purchase 368,570 100 Net 90 days after delivery - - (107,521) (400) -
The Corporation Chroma ATE Europe B.V. Subsidiary (Sale) (283,440) (3) Net 365 days after monthly closing - - 107,056 4 -
Chroma ATE Europe B.V. The Corporation Parent company Purchase 283,440 100 Net 90 days after delivery - - (107,056) (100) -
The Corporation Quantel Private Ltd. Subsidiary (Sale) (252,143) (3) Net 90 days after delivery - - 53,468 2 -
Quantel Private Ltd. The Corporation Parent company Purchase 252,143 100 Net 90 days after delivery - - (53,468) (100) -
The Corporation Chroma ATE (Suzhou) Co., Ltd. Subsidiary (Sale) (269,740) (3) Net 365 days after monthly closing - - 169,768 6 -
Chroma ATE (Suzhou) Co., Ltd. The Corporation Parent company Purchase 269,740 100 Net 120 days after delivery - - (169,768) (100) -
(Continued)
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173

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Note: The actual credit period is longer than other customers, the recovery of receivables depends on the related parties’ financial position.

(Concluded)

174

TABLE 7

CHROMA ATE INC. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Overdue Amount
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance Impairment
Rate Amount Action Taken Subsequent
Loss
Period (Note)
The Corporation Neworld Electronics Limited Subsidiary Trade receivables $ 533,772 4.69 $ - - $ 226,150 $ -
Chroma ATE Inc. Subsidiary Trade receivables 567,037 2.18 - - 93,361 -
Chroma Systems Solutions, Inc. Subsidiary Trade receivables 107,521 2.40 - - 80,087 -
Chroma ATE Europe B.V. Subsidiary Trade receivables 107,056 1.94 - - 66,181 -
Chroma Japan Corp. Subsidiary Trade receivables 208,148 0.89 - - 9,786 -
Chroma Electronics (Shenzhen) Co, Subsidiary Trade receivables 139,548 3.54 - - 83,904 -
Ltd.
Chroma ATE (Suzhou) Co., Ltd. Subsidiary Trade receivables 169,768 2.51 - - 29,234 -
Chroma Systems Solutions, Inc. Subsidiary Other receivables - financing provided - - - 607 -
106,417
Neworld Electronics Limited Chroma Electronics (Shenzhen) Co, Subsidiary Trade receivables 145,796 - - - 145,796 -
Ltd.
Chroma ATE (Suzhou) Co., Ltd. Same parent Trade receivables 197,177 - - - 49,025 -
company
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Note: As of February 25, 2021.

175

TABLE 8

CHROMA ATE INC. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Transaction Details Percentage to
Consolidated
Flow of
Total
No. Company Name Counterparty Transactions
Account Amount Transaction Terms Operating
(Note 1)
Revenues or
Total Assets
0 The Corporation Neworld Electronics Limited a Operating revenue $ 3,090,906 Note 2 20
Chroma ATE Inc. a Operating revenue 1,054,688 Note 2 7
Chroma Electronics (Shenzhen) Co, Ltd. a Operating revenue 428,412 Note 2 3
Chroma Systems Solutions, Inc. a Operating revenue 368,570 Note 2 2
Chroma ATE Europe B.V. a Operating revenue 283,440 Note 2 2
Chroma ATE (Suzhou) Co., Ltd. a Operating revenue 269,740 Note 2 2
Quantel Private Ltd. a Operating revenue 252,143 Note 2 2
Chroma Electronics (Shanghai) Co., Ltd. a Operating revenue 219,019 Note 2 1
Chroma Japan Corp. a Operating revenue 173,626 Note 2 1
Testar Electronics Co. a Operating revenue 44,747 Note 2 -
Chroma ATE Inc. a Purchase 55,960 Based on regular terms -
Adivic Technology Co. a Purchase 36,093 Based on regular terms -
Wei Kuang Automatic Equipment Co., Ltd. a Purchase 14,616 Based on regular terms -
Testar Electronics Co a Rent revenue 11,979 Based on regular terms -
Chroma Electronics (Shanghai) Co., Ltd. a Commissions expense 29,144 Based on regular terms -
Chroma ATE (Suzhou) Co., Ltd. a Commissions expense 10,141 Based on regular terms -
Chroma ATE Inc. a Trade receivables 567,037 Based on regular terms 2
Neworld Electronics Limited a Trade receivables 533,772 Based on regular terms 2
Chroma Japan Corp. a Trade receivables 208,148 Based on regular terms 1
Chroma ATE (Suzhou) Co., Ltd. a Trade receivables 169,768 Based on regular terms 1
Chroma Electronics (Shenzhen) Co., Ltd. a Trade receivables 139,548 Based on regular terms -
Chroma Systems Solutions, Inc. a Trade receivables 107,521 Based on regular terms -
Chroma ATE Europe B.V. a Trade receivables 107,056 Based on regular terms -
Quantel Private Ltd. a Trade receivables 53,468 Based on regular terms -
Chroma Electronics (Shanghai) Co., Ltd. a Trade receivables 23,657 Based on regular terms -
Testar Electronics Co. a Trade receivables 18,312 Note 3 -
Chroma Systems Solutions, Inc. a Other receivables - financing provided 106,417 Based on regular terms -
Chroma Japan Corp. a Other receivables - financing provided 82,676 Based on regular terms -
Testar Electronics Co. a Other receivables 13,679 Based on regular terms -
Wei Kuang Automatic Equipment Co., Ltd. a Dividends receivable 305,000 Based on regular terms 1
Wei Kuang Automatic Equipment Co., Ltd. a Trade payable 19,919 Based on regular terms -
1 Wei Kuang Automatic Equipment Co., Ltd. Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. b Operating revenue 105,362 Based on regular terms 1
Wei Kuang Automatic Equipment (Xiamen) Co., Ltd. b Trade receivables 11,979 Based on regular terms -
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(Continued)

176

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Transaction Details Percentage to
Consolidated
Flow of
Total
No. Company Name Counterparty Transactions
Account Amount Transaction Terms Operating
(Note 1)
Revenues or
Total Assets
2 Neworld Electronics Limited Chroma Electronics (Shenzhen) Co., Ltd. a Operating revenue $ 1,288,921 Based on regular terms 8
Chroma ATE (Suzhou) Co., Ltd. b Operating revenue 277,109 Based on regular terms 2
Chroma Electronics (Shanghai) Co., Ltd. a Operating revenue 47,148 Based on regular terms -
Chroma Electronics (Shenzhen) Co., Ltd. a Commissions expense 113,249 Based on regular terms 1
Chroma Electronics (Shanghai) Co., Ltd. a Commissions expense 46,935 Based on regular terms -
Chroma ATE (Suzhou) Co., Ltd. b Trade receivables 197,177 Based on regular terms 1
Chroma Electronics (Shenzhen) Co., Ltd. a Trade receivables 145,796 Based on regular terms 1
3 Chroma Electronics (Shenzhen) Co., Ltd. Chroma ATE (Suzhou) Co., Ltd. b Operating revenue 45,067 Based on regular terms -
Chroma Electronics (Shanghai) Co., Ltd. b Operating revenue 13,315 Based on regular terms -
Chroma ATE (Suzhou) Co., Ltd. b Purchase 13,922 Based on regular terms -
Chroma ATE (Suzhou) Co., Ltd. b Trade receivables 38,334 Based on regular terms -
Chroma ATE (Suzhou) Co., Ltd. b Trade receivables 10,788 Based on regular terms -
4 Wei Kuang Automatic Equipment (Xiamen) Co., Wei Kuang Automatic Equipment Co., Ltd. b Operating revenue 25,020 Based on regular terms -
Ltd.
Wei Kuang Automatic Equipment (Nanjing) Co., b Operating revenue 19,086 Based on regular terms -
Ltd.
Chroma ATE (Suzhou) Co., Ltd. b Operating revenue 13,750 Based on regular terms -
Wei Kuang Automatic Equipment (Nanjing) Co., b Trade receivables 13,216 Based on regular terms -
Ltd.
5 Chroma ATE Europe B.V. Chroma Germany GmbH a Operating revenue 117,892 Based on regular terms 1
Chroma Germany GmbH a Trade receivables 60,931 Based on regular terms -
Chroma Germany GmbH a Other receivables 32,407 Based on regular terms -
6 Quantel Private Ltd. Quantel Global Sdn Bhd. a Operating revenue 45,689 Based on regular terms -
Quantel Global Vietnam Co., Ltd. a Operating revenue 37,146 Based on regular terms -
Quantel Technologies India Private Ltd. a Operating expense 11,471 Based on regular terms -
Quantel Global Philippines Corporation a Operating expense 10,798 Based on regular terms -
Quantel Global Sdn Bhd. a Trade receivables 19,991 Based on regular terms -
----- End of picture text -----

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)

177

TABLE 9

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original Investment Amount Balance as of December 31, 2020 Net Income
Investment
Investor Investee Location Main Businesses and Products December 31, December 31, Shares Percentage of Carrying (Loss) of the Note
Gain (Loss)
2020 2019 (Thousands) Ownership Amount Investee
The Corporation Neworld Electronics Limited Hong Kong Sale and maintenance of electronic test instruments, etc. $ 271,873 $ 271,873 64,013 100.0 $ 1,464,458 $ 350,092 $ 350,097 Subsidiary
Chroma New Material Corporation Taoyuan, Taiwan Sale and processing of gold wire 480,715 480,715 25,000 100.0 428,239 20,156 20,155 Subsidiary
Wei Kuang Automatic Equipment Co., Ltd. Hsinchu, Taiwan Design, manufacturing, installment and testing of automated 533,000 533,000 10,000 100.0 270,267 (192,947) (193,097) Subsidiary
factory conveyor systems
Chroma ATE Inc. USA Sale and maintenance of electronic test instruments, etc. 29,895 29,895 1,000 100.0 128,653 73,309 73,370 Subsidiary
Chroma Systems Solutions, Inc. USA Sale and maintenance of electronic test instruments, etc. 29,628 29,628 120 25.0 (6,717) 122,884 30,720 Subsidiary
Chroma ATE Europe B.V. The Netherlands Sale and maintenance of electronic test instruments etc. 54,026 54,026 1 100.0 137,505 (5,322) (5,270) Subsidiary
Chroma Japan Corp. Japan Sale and maintenance of electronic test instruments, etc. 201,750 147,125 10 100.0 (125,940) (65,391) (64,967) Subsidiary
CHI Incorporation Ltd. British Virgin Islands Test of inductance, capacitance and resistance, and sale of parts 122,884 122,884 3,830 100.0 197,569 52,590 52,590 Subsidiary
Chen Hwa Technology Inc. British Virgin Islands Test of inductance, capacitance and resistance, and sale of parts 98,217 98,217 3,085 100.0 106,264 2,627 2,627 Subsidiary
San Eagle Development Corp. British Virgin Islands Investment 186,514 186,514 2,050 100.0 845,853 47,679 57,432 Subsidiary
Sensational Holding Ltd. British Virgin Islands Investment 38,301 38,301 1,200 100.0 50,764 208 208 Subsidiary
Deep Red Holding Co., Ltd. Mauritius Investment 12,217 12,217 215 100.0 142,022 28,387 28,387 Subsidiary
Testar Electronics Corporation Taoyuan, Taiwan Testing of LED products 247,096 247,096 20,160 67.2 34,528 33,215 22,306 Subsidiary
Adivic Technology Co. Taipei, Taiwan Sale and research of RF device 273,800 273,800 12,590 74.1 73,705 (20,121) (14,552) Subsidiary
Chroma Investment Co., Ltd. Taoyuan, Taiwan Investment 80,000 80,000 14,000 100.0 163,702 16,703 10,944 Subsidiary
Quantel Private Ltd. Singapore Sale and maintenance of test instruments, etc. 112,328 112,328 1,914 60.0 175,480 39,000 22,282 Subsidiary
EVT Technology Co., Ltd. Taoyuan, Taiwan Manufacturing of motorcycles and its parts 117,311 117,311 9,412 85.6 40,558 (11,005) (9,418) Subsidiary
Innovative Nanotech Incorporated Hsinchu, Taiwan Monitoring instruments of nanoparticles 142,140 142,140 14,214 71.1 152,441 49,039 34,853 Subsidiary
Touch Cloud Incorporation Taipei, Taiwan Development of cloud platform and Internet of Things systems 57,000 57,000 5,700 78.1 21,345 (16,932) (13,237) Subsidiary
Adlink Technology Inc. New Taipei, Taiwan Manufacturing, processing and retailing of software/hardware of 165,079 165,146 24,492 11.3 514,751 231,505 26,022 Associate
computers and peripherals
DynaScan Technology Corp. Taoyuan, Taiwan Research and manufacture of LED generators 238,746 238,746 9,841 27.3 141,439 84,664 23,112 Associate
Camtek Ltd. Israel Automatic optical inspection equipment 2,342,340 2,342,340 7,817 18.1 2,466,146 643,518 86,988 Associate
Chih Ho Shun Development Co., Ltd. Taoyuan, Taiwan Construction and development of residence, buildings and 17,500 17,500 1,750 35.0 16,891 (2,084) (730) Joint venture
specialized field; construction and investment of public works
Chroma ATE Inc. Chroma Systems Solutions, Inc. USA Sale and maintenance of electronic test instruments, etc. 64 64 240 50.0 216,644 122,884 NA Subsidiary
Chroma ATE Europe B.V. Chroma Germany GmbH Germany Sale and maintenance of electronic test instruments, etc. 1,073 1,073 30 100.0 154 (9,566) NA Subsidiary
San Eagle Development Corp. Wei Kuang Mech. Eng. Inc. Mauritius Investments 185,686 185,686 4,475 100.0 919,367 47,778 NA Subsidiary
Adivic Technology Co., Ltd. Adivic Holding Corporation Samoa Sale and research of RF device 42,245 42,245 1,000 100.0 9,297 (37) NA Subsidiary
Quantel Private Ltd. Quantel Technologies India Private Ltd. India Sale and maintenance of test instruments, etc. 3,056 3,056 65 100.0 4,813 1,824 NA Subsidiary
Quantel Global Vietnam Co., Ltd. Vietnam Sale and maintenance of test instruments, etc. 6,219 6,219 - 100.0 7,762 4,600 NA Subsidiary
Quantel Global Sdn. Bhd. Malaysia Sale and maintenance of test instruments, etc. 4,199 4,199 600 100.0 9,764 5,565 NA Subsidiary
Quantel Global Philippines Corporation Philippines Sale and maintenance of test instruments, etc. 610 610 99 100.0 4,480 (298) NA Subsidiary
EVT Technology Co., Ltd. Wei Da Electric Vehicle Co., Ltd. Pingtung, Taiwan Sale and lease of motorcycles - 3,750 - - - (53) NA Note 2
Chroma Investment Co., Ltd. Testar Electronics Corporation Taoyuan, Taiwan Testing of LED products 11,250 11,250 4,500 15.0 11,667 33,215 NA Subsidiary
----- End of picture text -----

Note 1: For amounts that were translated from foreign currencies, the amount of the original investment was translated into New Taiwan dollars at the historical exchange rate, while the amount of net income (loss) of the investee and investment gain (loss) were translated into New Taiwan dollars at the average exchange rate for the nine months ended December 31, 2020. Other amounts were translated into New Taiwan dollars at the spot exchange rate on December 31, 2020.

Note 2: The Corporation’s subsidiary, Wei Da Electric Vehicle Co., Ltd., had completed its liquidation procedures on October 15, 2020.

178

CHROMA ATE INC. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

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Remittance of Funds Accumulated
Accumulated
Outward Accumulated
Outward Carrying
Remittance for Inward
Remittance for Net Income Percentage of Investment Amount as of
Paid-in Capital Method of Investment Investment from Remittance of
Investee Company Main Businesses and Products Investment from (Loss) of the Ownership in Gain (Loss) December 31,
(Note 2) (Note 1) Outward Inward Taiwan as of Earnings as of
Taiwan as of Investee Investment (Notes 4 and 5) 2020
December 31, December 31,
January 1, 2020 (Note 2)
2020 2020
(Note 3)
(Note 3)
Chroma Electronics (Shenzhen) Sale of computerized automatic test systems, $ 110,190 b. Subsidiary of $ 132,178 $ - $ - $ 132,178 $ 217,447 100 $ 217,447 $ 977,245 $ -
Co., Ltd. peripherals and electronic test instruments (HK$ 30,000) Neworld (HK$ 1,200 (HK$ 1,200
Electronics Limited US$ 3,853) US$ 3,853)
Chroma Electronics (Shanghai) Sale of computerized automatic test systems, 85,440 b. Subsidiary of 101,993 - - 101,993 59,900 100 59,900 225,501 -
Co., Ltd. peripherals and electronic test instruments (US$ 3,000) Neworld (US$ 3,000) (US$ 3,000)
Electronics Limited
Chroma (Shanghai) Trading Co., International and transit trading, commercial 76,896 b. Subsidiary of Chen 84,988 - - 84,988 (670) 100 (670) 80,826 -
Ltd. simple processing and commercial (US$ 2,700) Hwa Technology (US$ 2,700) (US$ 2,700)
consulting service and etc. Inc.
Hangzhou New Material Chroma Production and sale of semiconductor 42,720 b. Subsidiary of Chen 9,091 - - 9,091 45,424 19 - 7,729 12,065
Co., Ltd. connecting materials (US$ 1,500) Hwa Technology (US$ 285) (US$ 285) (US$ 368)
Inc.
Chroma ATE (Suzhou) Co., Ltd. Sale of computerized automatic test systems, 108,224 b. Subsidiary of CHI 121,115 - - 121,115 52,558 100 52,558 282,397 -
peripherals and electronic test instruments (US$ 3,800) Incorporation Ltd. (US$ 3,800) (US$ 3,800)
Wei Kuang Automatic Equipment Sale and maintenance of electronic equipment 51,959 b. Subsidiary of Wei 43,751 - - 43,751 2,951 100 2,951 210,560 -
(Nanjin) Co., Ltd. and factory conveyor systems (RMB 11,871) Kuang Mech. Eng. (US$ 1,338) (US$ 1,338)
Inc.
Wei Kuang Automatic Equipment Sale and maintenance of electronic equipment 49,972 b. Subsidiary of Wei 49,935 - - 49,935 31,729 100 31,729 508,942 -
(Xiamen) Co., Ltd. and factory conveyor systems (RMB 11,417) Kuang Mech. Eng. (US$ 1,500) (US$ 1,500)
Inc.
Mou Kuan Technologies (Nanjin) Assembly, sale and maintenance of factory 7,603 b. Subsidiary of Wei 92,000 - - 92,000 937 100 937 48,903 47,504
Co., Ltd. conveyors and related systems and renders (RMB 1,737) Kuang Mech. Eng. (US$ 2,836) (US$ 2,836) (US$ 1,552)
related after-sales services Inc.
Sajet System Technology Research, development and design of 36,653 b. Subsidiary of Deep (Note 9) - - (Note 9) 28,370 100 28,370 142,017 -
(Suzhou) Co., Ltd. computer network security systems and (RMB 8,374) Red Holding Co.,
information management Ltd.
Accumulated Outward Remittance for
Investment Amounts Authorized by the Upper Limit on the Amount of Investment
Investments in Mainland China as of
Investment Commission, MOEA Stipulated by Investment Commission, MOEA
December 31, 2020
$635,051 $725,060 $9,637,934
(HK$1,200, US$19,312) (HK$1,400, US$22,076) (Note 6) (Note 7)
----- End of picture text -----

(Continued)

179

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$3.673, US$1=NT$28.480, RMB1=NT$4.377 prevailing on December 31, 2020.

Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2020 and December 31, 2020 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$3.809, US$1=NT$29.549, RMB1=NT$4.282 for the year ended December 31, 2020.

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 Limited

Note 9: The investment in Sajet Technology Inc. (liquidated on September 15, 2008) was authorized by the Investment Commission in 2004.

(Concluded)

180

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, 2020 and 2019, 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, 2020 and 2019, 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, 2020. 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.

181

The key audit matters of the financial statements for the year ended December 31, 2020 are described as follows:

Impairment of Trade Receivables

As indicated in Notes 5 and 10, 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. We also obtained the calculation table, assessed the calculation method, and recalculated the amounts to draw a conclusion on lifetime ECL of trade receivables.

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.

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.

182

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 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.

183

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, 2020 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 25, 2021

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.

184

CHROMA ATE INC.

BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash (Note 6) Financial assets at amortized cost - current (Notes 9 and 30) Notes receivable (Note 10) Trade receivables (Notes 5 and 10) Trade receivables - related parties (Notes 10 and 29) Other receivables - related parties (Note 29) Inventories (Note 11) Prepayments Other current assets (Note 29) 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 12) Property, plant and equipment (Notes 13, 30 and 31) Right-of-use assets (Note 14) Investment properties (Notes 15 and 31) Goodwill (Note 16) Other intangible assets (Note 17) Deferred tax assets (Note 24) Prepayments for land and equipment (Note 31) Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 18) Contract liabilities - current (Notes 22 and 29) Trade payables Trade payables - related parties (Note 29) Other payables (Note 19) Current tax liabilities (Note 24) Lease liabilities - current (Note 14) Current portion of long-term borrowings (Note 18) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 18) Deferred tax liabilities (Note 24) Lease liabilities - non-current (Note 14) Net defined benefit liabilities (Note 20) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 21) 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		2020 Amount % $ 622,210 3 279,778 1 71,003 - 967,254 4 1,936,374 8 494,093 2 2,331,084 10 66,209 - 84,853 - 6,852,858 28 4,646 - 801,358 3 7,439,923 31 2,352,493 10 53,865 - 3,137,187 13 94,424 - 19,164 - 181,644 1 3,463,185 14 5,315 - 17,553,204 72 $ 24,406,062 100 $ 1,800,000 8 559,721 2 989,994 4 31,891 - 985,529 4 254,716 1 20,465 - 620,000 3 24,141 - 5,286,457 22 2,230,000 9 599,222 2 33,824 - 152,449 1 40,887 - 3,056,382 12 8,342,839 34 4,212,945 17 - - 4,036,875 17 2,592,487 10 176,128 1 5,160,575 21 7,929,190 32 (82,101) - (33,686) - 16,063,223 66 $ 24,406,062 100		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

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

185

CHROMA ATE INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 22 and 29) Sales Less: Sales returns Sales allowances Net operating revenue OPERATING COSTS (Notes 11, 23 and 29) GROSS PROFIT REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 23 and 29) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss (gain) Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Finance costs (Note 23) Share of profit of subsidiaries, associates and joint ventures, net (Note 12) Interest income (Note 29) Rental income (Note 29) Dividend income Other income (Note 29) (Loss) Gain on disposal of property, plant and equipment, net Gain on disposal of investment Net foreign exchange loss (Note 33) (Loss) Gain on financial assets at fair value through profit or loss, net Other expenses Total non-operating income and expenses		2020 Amount % $ 9,201,579 100 (19,513) - (1,826) - 9,180,240 100 4,355,315 47 4,824,925 53 42,023 - 4,866,948 53 845,805 9 537,646 6 1,216,060 14 7,000 - 2,606,511 29 2,260,437 24 (34,842) - 540,822 6 5,719 - 15,157 - 17,526 - 64,481 1 (995) - 480 - (68,727) (1) (44) - (5,034) - 534,543 6		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 (Continued)

186

CHROMA ATE INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 24) 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 (Note 20) Unrealized gain (loss) on investments in equity investments designated as at fair value through other comprehensive income Share of the other comprehensive income (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 income (loss) TOTAL COMPREHENSIVE INCOME EARNINGS PER SHARE (NT$; Note 25) Basic Diluted		2020 Amount % $ 2,794,980 30 471,204 5 2,323,776 25 (7,804) - 194,230 2 37,565 - 1,123 - (136,092) (1) 89,022 1 $ 2,412,798 26 $ 5.56 $ 5.51		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

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

(Concluded)

187

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CHROMA ATE INC.

Ordinary Share A Capital fo BALANCE AT JANUARY 1, 2019 $ 4,167,794 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 - 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 the Corporation's cash dividends received by subsidiaries - Changes in percentage of ownership interests in subsidiaries - Exercise of employee stock options 26,176 Share-based payment transaction - BALANCE AT JANUARY 1, 2020 4,192,961 Appropriation of the 2019 earnings Legal reserve - Special reserve - Cash dividends - NT$3.0 per share - Change in capital surplus from investments in subsidiaries, associates and joint ventures accounted for using the equity method - Net profit for the year ended December 31, 2020 - Other comprehensive income (loss) for the year ended December 31, 2020 - Total comprehensive income (loss) for the year ended December 31, 2020 - Buy-back of treasury shares - Cancelation of treasury shares (1,235 ) Stocks of the parent company disposed of by the subsidiary and recognized as treasury shares transaction - Adjustment of capital surplus for the Corproation's cash dividends received by subsidiaries - Disposal of investments accounted for using equity method - Exercise of employee stock options 21,219 Share-based payment transaction - BALANCE AT DECEMBER 31, 2020 $ 4,212,945	dvance Receipts r Share Capital Capital Surplus $ - $ 3,469,637 - - - - - 10,250 - - - - - - - - - - - 8,003 - - 13,724 119,085 - 22,496 13,724 3,629,471 - - - - - - - 273,530 - - - - - - - - - - - 16,629 - 5,760 - (22 ) (13,724 ) 105,068 - 6,439 $ - $ 4,036,875		Retained Earnings	Total $ 6,795,059 - (1,750,896 ) - 1,854,481 (14,132) 1,840,349 - - - (8,542 ) - - 6,875,970 - - (1,265,000 ) - 2,323,776 (5,556) 2,318,220 - - - - - - - $ 7,929,190	Other Equity	Total Treasury Shares $ 13,244 $ (35,714 ) - - - - - - - - (231,748) - (231,748) - - (1,009 ) - 1,009 - - - - - - 30,853 - (187,651 ) (35,714 ) - - - - - - - - - - 94,578 - 94,578 - - (1,235 ) - 1,235 - 2,028 - - - - - - 10,972 - $ (82,101 ) $ (33,686 )	Total Equity $ 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 - - (1,265,000 ) 273,530 2,323,776 89,022 2,412,798 (1,235 ) - 18,657 5,760 (22 ) 112,563 17,411 $ 16,063,223
					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 $ (104,872 ) $ 160,493 $ (42,377 ) - - - - - - - - - - - - (226,201) (5,547) - (226,201) (5,547) - - - - - - - - - - - - - - - - - - 30,853 (331,073 ) 154,946 (11,524 ) - - - - - - - - - - - - - - - (134,969) 229,547 - (134,969) 229,547 - - - - - - - - - - - - - - - - - - - - - 10,972 $ (466,042 ) $ 384,493 $ (552 )
			Unappropriated Legal Reserve Special Reserve Earnings $ 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 4,382,043 185,448 - (185,448 ) - 89,240 (89,240 ) - - (1,265,000 ) - - - - - 2,323,776 - - (5,556) - - 2,318,220 - - - - - - - - - - - - - - - - - - - - - $ 2,592,487 $ 176,128 $ 5,160,575

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

188

CHROMA ATE INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Expected credit loss (gain) 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 (loss) on disposal of property, plant and equipment
Gain on disposal of investments accounted for using equity method
Write-downs of inventories
Unrealized (Realized) gain on transactions with subsidiaries and
associates
Net loss 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
Proceeds from disposal of financial assets at fair value through other
comprehensive income
Payments to acquire financial assets at amortized cost
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

2020
2019
$ 2,794,980
$ 2,150,375
217,918
214,414
5,033
-
7,000
(37,000)
44
(725)
34,842
35,680
(5,719)
(9,524)
(17,526)
(38,427)
16,948
53,004
(540,822)
(420,917)
995
(1,196)
(480)
-
42,000
35,076
(42,023)
48,359
22,713
71,524
(66,742)
5,546
386,680
(774,916)
(370,985)
(193,575)
73,237
(111,610)
26,691
(37,857)
(175,636)
396,343
-
(105)
(228,408)
270,824
139,896
174,281
5,561
2,619

(11,108)

(10,192)
2,315,089
1,822,001

(266,434)

(284,676)

2,048,655

1,537,325
(17,239)
-
17,946
-
(279,778)
-
(300,000)
(400,000)
300,072
1,354,226
(Continued)

189

CHROMA ATE INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Payments to acquire subsidiaries Proceeds from disposal of investment Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in advance receipts for real estate Increase in refundable deposits Increase in other receivables - related parties Payments for intangible 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 the principal portion of lease liabilities Dividends paid by cash Exercise of employee stock options Payments for buy-back of ordinary shares Acquisition of subsidiaries Interest paid Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	2020 $ (54,626) 688 (82,462) 20,935 308,000 (727) (329,716) (4,750) (1,451,858) 5,345 425,190 (1,442,980) 200,000 950,000 (400,000) 20,887 (22,493) (1,265,000) 112,563 (1,235) - (34,898) (440,176) (2,535) 162,964 459,246 $ 622,210	2019 $(2,342,340) - (72,011) 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 (16,861) (1,750,896) 158,985 (1,009) (80,000) (35,644) (236,117) (2,353) (456,653) 915,899 $ 459,246

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

(Concluded)

190

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (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 25, 2021.

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)

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Corporation’s accounting policies.

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

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Effective Date
New IFRSs Announced by IASB
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New IFRSs	Effective Date Announced by IASB
Amendments to IFRS 4 “Extension of the Temporary	Effective immediately upon
Exemption from Applying IFRS 9”	promulgation by the IASB
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16	January 1, 2021
“Interest Rate Benchmark Reform - Phase 2”
Amendment to IFRS 16 “Covid-19-Related Rent Concessions”	June 1, 2020

The above amendments of standards and interpretations did not have the material impact on the Corporation’s financial position, financial performance and accounting policies.

191

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

New IFRSs

Effective Date Announced by IASB (Note 1)

“Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of To be determined by IASB Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 4) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 5) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 6) before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 7) Contract”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 5: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 6: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 7: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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.

192

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.

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.

193

d. Foreign currencies

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

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 make timely adjustments to ensure that they approximate to weighted-average cost.

f. Investments accounted for using the equity method

Investments in subsidiaries, associates and joint ventures are accounted for by the equity method.

Under the equity method, investment in a subsidiary, associates and joint ventures 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 subsidiary, associates and joint ventures. The Corporation recognizes the changes in the Corporation’s share of equity of subsidiaries, associates attributable to the Corporation and equity of associates and joint ventures.

1) Investment in subsidiaries

A subsidiary is an entity that is controlled by 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.

194

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.

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.

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.

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.

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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.

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

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

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 are expected to benefit from the synergies of the combination.

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j. 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.

k. Financial instruments

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

For those financial assets which are measured at fair value, its fair value is determined in the manner described in Note 28.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. The Corporation derecognizes a financial asset only when the contractual rights to the cash flows from the asset expires or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

The Corporation’s financial assets are classified into the following categories:

a) Financial asset at FVTPL

The Corporation’s financial assets mandatorily classified as at FVTPL are investments in equity instruments which are not designated as at FVTOCI, it was measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income and interest income, respectively; any remeasurement gains or losses on such financial assets are recognized in other gains or losses.

b) Financial assets at amortized cost

If the financial assets, which are invested by the Corporation, are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and 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, are subsequently measured at amortized cost.

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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.

The Corporation’s financial assets at amortized cost include cash, pledge deposits, trade receivables at amortized cost and refundable deposits. 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.

c) 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 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.

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.

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.

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Equity instruments issued by the Corporation 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

Financial liabilities are measured at amortized cost using the effective interest method. On 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.

l. Assessment of asset impairment
1) Property, plant and equipment, right-of-use asset, investment properties and intangible assets

At the end of each reporting period, the Corporation reviews the carrying amounts of above assets, to determine whether there is any indication that those assets have suffered an 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 cash-generating unit to which the asset belongs.

2) Investments accounted for using the equity method

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. If the recoverable amount of the investment subsequently increases, the Corporation recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

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3) Goodwill

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently whenever 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. Any impairment loss recognized for goodwill is not reversed in subsequent periods.

4) Financial assets and contract assets

The Corporation assesses the impairment loss of financial assets at amortized cost (including trade receivables) and contract assets by lifetime expected credit losses on each balance sheet date.

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

For internal credit risk management purposes, the Corporation considers the following situations as indication that a financial asset is in default:

a) Internal or external information shows that the debtor is unlikely to pay its creditors.
b) Financial asset is more than 120 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.

m. Warranty provision

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.

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n. 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.

o. Leases

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. 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.

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. Right-of-use assets and lease liabilities are presented on a separate line in the 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 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.

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.

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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.

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 services.

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

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law in the ROC, an additional tax on unappropriated earnings is provided for 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.

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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.

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 10. Where the actual future cash flows are less than expected, a material impairment loss may arise.

b. Write-down of inventories

6. CASH

CASH
Cash on hand Demand deposits		December 31
		2020 $ 1,916 620,294 $ 622,210	2019 $ 2,232 457,014 $ 459,246

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets mandatorily at FVTPL-non-current Open-end beneficiary certificates		December	31
		2020 $ 4,646	2019 $ 4,762

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8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments-non-current Domestic listed ordinary shares and emerging market shares Domestic unlisted ordinary shares		December 31	December 31
		2020 $ 670,162 131,196 $ 801,358	2019 $ 452,982 154,853 $ 607,835

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. FINANCIAL ASSETS AT AMORTIZED COST - CURRENT

Pledged deposits (Note 30)		December 31	December 31
		2020 $ 279,778	2019 $ -

10. NOTES RECEIVABLE AND TRADE RECEIVABLES

Gross carrying amount at amortized cost - unrelated parties Less: Allowance for impairment loss Gross carrying amount at amortized cost - related parties		December 31	December 31
		2020 $ 1,086,626 (48,369) 1,038,257 1,936,374 $ 2,974,631	2019 $ 1,309,077 (41,369) 1,267,708 2,054,611 $ 3,322,319

The average credit period for sales of goods is 60 to 120 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 measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. 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.

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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.

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

Not past due Past due 1- 60 days Past due 61-180 days Past due 181-365 days Past due over 365 days		December 31	December 31
		2020 $ 831,676 72,699 45,151 41,049 96,051 $ 1,086,626	2019 $ 865,032 178,976 62,777 49,224 153,068 $ 1,309,077

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

Balance at January 1 Add: Impairment loss Less: Reversal of impairment loss 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
		2020 $ 41,369 7,000 - - $ 48,369	2019 $ 78,422 - (37,000) (53) $ 41,369

11. INVENTORIES

Finished goods Semi-finished products Work in process Raw materials		December 31	December 31
		2020 $ 277,297 443,435 654,770 955,582 $ 2,331,084	2019 $ 204,107 352,574 668,656 800,742 $ 2,026,079

The cost of goods sold for the years ended December 31, 2020 and 2019 included the inventory writedowns of $42,000 thousand and $35,076 thousand, respectively.

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12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates Investments in joint venture		December 31	December 31
		2020 $ 4,300,696 3,122,336 16,891 $ 7,439,923	2019 $ 3,798,573 2,893,609 17,621 $ 6,709,803

a. Investments in subsidiaries

Unlisted company Neworld Electronics Limited Chroma New Material Corp. Mas Automation Corp. Chroma ATE Inc. Chroma Systems Solutions, Inc. Chroma ATE Europe B.V. Chroma Japan Corp. CHI Incorporation Ltd. Chen Hwa Technology Inc. San Eagle Development Corp. Sensational Holding Ltd. Deep Red Holding Co., Ltd. Testar Electronics Corporation Adivic Technology Co., Ltd. Chroma Investment Co., Ltd. Quantel Private Ltd. EVT Technology Co., Ltd. Innovative Nanotech Incorporated Touchcloud		December 31	December 31	December 31
		2020 Amount Percentage of Equity Interest (%) $ 1,464,458 100.0 428,239 100.0 270,267 100.0 128,653 100.0 (6,717) 25.0 137,505 100.0 (125,940) 100.0 197,569 100.0 106,264 100.0 845,853 100.0 50,764 100.0 142,022 100.0 34,528 67.2 73,705 74.1 163,702 100.0 175,480 60.0 40,558 85.6 152,441 71.1 21,345 78.1 $ 4,300,696		2019
				Amount Percentage of Equity Interest (%) $ 1,090,020 100.0 431,515 100.0 478,363 100.0 69,756 100.0 (47,780) 25.0 105,878 100.0 (110,043) 100.0 171,580 100.0 97,192 100.0 782,959 100.0 53,227 100.0 113,189 100.0 11,596 67.2 88,636 74.1 101,449 100.0 158,915 60.0 49,951 85.6 117,588 71.1 34,582 78.1 $ 3,798,573

The Corporation and the Corporation’s subsidiary, Chroma USA, held 75% equity interest in Chroma Systems Solutions, Inc.

In May 2019, Adivic Technology Co., Ltd. (“Adivic”) decreased its capital by $150,000 thousand to make up for losses and increased its capital by $80,000 thousand subsequently. The Corporation’s board of directors resolved to participate in the capital injection. The Corporation’s equity interest in Adivic rose to 74.1% after the cash injection.

The Corporation and the Corporation’s subsidiary, Chroma Investment Co., Ltd. purchased 15% equity interest of Testar Electronics Corporation from WI Harper Fund VII LP in January 2019 to strengthen equity structure.

To improve financial structure and enrich working capital, the Corporation’s subsidiary, Chroma Japan Corp., increased its capital by $54,626 thousand in April 2020. The Corporation’s board of

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directors resolved to participate in the capital injection. After the cash injection, the Corporation’s equity remained the same.

Refer to Note 34 for the detail of the subsidiaries indirectly held by the Corporation.

Refer to Table 8 “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 years ended December 31, 2020 and 2019 were calculated based on the financial statements which have been audited.

b. Investments in associates

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 the Year Ended December 31
2020 $ 136,122 (136,596) $ (474)		2019 $ 97,235 (114,997) $ (17,762)

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
		2020 $ 1,552,809 $ 4,878,058	2019 $ 1,176,108 $ 2,538,193

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.

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

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.

c. Investments in joint ventures

Joint ventures that are not individually material Chih Ho Shun Development Co., Ltd.		December 31	December 31	December 31
		2020 Amount Percentage of Equity Interest (%) $ 16,891 35.0		2019
				Amount Percentage of Equity Interest (%) $ 17,621 35.0

Aggregate information of joint ventures that are not individually material:

The Corporation’s share of: Loss from continuing operations Other comprehensive income Total comprehensive loss for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (730) - $ (730)	2019 $ (43) - $ (43)

Refer to Table 8 “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, 2020 and 2019 were based on the joint ventures’ financial statements which have been audited.

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13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance, January 1, 2019 Additions Disposals Reclassification Balance, December 31, 2019 Accumulated depreciation Balance, January 1, 2019 Depreciation Disposals Reclassification Balance, December 31, 2019 Carrying amount at December 31, 2019 Cost Balance, January 1, 2020 Additions Disposals Reclassification Balance, December 31, 2020 Accumulated depreciation Balance, January 1, 2020 Depreciation Disposals Reclassification Balance, December 31, 2020 Carrying amount at December 31, 2020	Land $ 1,138,906 - - - $ 1,138,906 $ - - - - $ - $ 1,138,906 $ 1,138,906 - - - $ 1,138,906 $ - - - - $ - $ 1,138,906	Buildings $ 2,030,829 2,681 - - $ 2,033,510 $ 1,052,535 71,012 - - $ 1,123,547 $ 909,963 $ 2,033,510 7,309 - 3,195 $ 2,044,014 $ 1,123,547 68,836 - 2,512 $ 1,194,895 $ 849,119	Machinery Miscellaneous Equipment $ 166,207 $ 1,181,576 8,023 61,182 (1,639) (41,751) 6,687 45,984 $ 179,278 $ 1,246,991 $ 110,381 $ 860,982 23,145 103,168 (1,638) (27,445) 357 (357) $ 132,245 $ 936,348 $ 47,033 $ 310,643 $ 179,278 $ 1,246,991 14,739 65,651 (2,024) (175,987) (12,764) 84,658 $ 179,229 $ 1,221,313 $ 132,245 $ 936,348 23,951 102,442 (2,022) (147,195) (18,057) 8,362 $ 136,117 $ 899,957 $ 43,112 $ 321,356	Total $ 4,517,518 71,886 (43,390) 52,671 $ 4,598,685 $ 2,023,898 197,325 (29,083) - $ 2,192,140 $ 2,406,545 $ 4,598,685 87,699 (178,011) 75,089 $ 4,583,462 $ 2,192,140 195,229 (149,217) (7,183) $ 2,230,969 $ 2,352,493

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

Buildings

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 30 for property, plant and equipment have been pledged to secure borrowings of the Corporation.

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14. LEASE ARRANGEMENTS

The Corporation’s important lease projects include lease land from other companies and government department for the use of the plants, warehouses and parking spaces, as well as leases of information systems cloud services, etc. The lease terms is 2 to 10 years. The Corporation does not have bargain purchase options to acquire lease items at the end of lease terms.

The right-of-use assets increases $31,159 thousand and $24,427 thousand, the depreciation was $22,689 thousand and $17,089 thousand, and the total cash out flow in lease was $25,953 thousand and $24,049 thousand for the years ended December 31, 2020 and 2019, respectively. Please refer to balance sheet for the balance of right-of-assets and lease liabilities of lease arrangement as of balance date.

15. INVESTMENT PROPERTIES

INVESTMENT PROPERTIES
Land		December 31
		2020 $ 3,137,187	2019 $ 3,137,187

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, part of the land was co-constructed with Fu Yu Construction to build a joint building project, and part of it has not yet been decided, both of the above land were classified as investment properties, refer to Note 31.

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.

as appraised.
Fair value		December 31
		2020 $ 11,754,551	2019 $ 13,727,067

In the third quarter of 2019, the Corporation entered into a joint building contract with Fu Yu Construction Co., Ltd. (Fu Yu Construction) to jointly build a building located at Project No 61-0 and Project No 61-1 projects, 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 two guaranted notes with a denomination of $120,000 thousand 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. The joint building project started in the fourth quarter of 2020, based on the agreement, the Corporation received $20,000 thousand guarantee deposit within five business days after the approval of underground bottom plate inspection.

16. GOODWILL

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 from the premium acquisition. There was no change for the years end December 31, 2020 and 2019.

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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, 2020 and 2019.

17. OTHER INTANGIBLE ASSETS

The balance of other intangible assets stands for softwares as of December 31, 2020 and 2019. Amortization expense is base on a straight-line basis over 5-6 years.

18. BORROWINGS

a. Short-term borrowings

Unsecured bank loans Interest rate (%)		December 31
	2020 2019 $ 1,800,000 $ 1,600,000 0.52%-071% 0.72%-0.87%

b. Long-term borrowings

Secured bank loans (1) (Note 30) Unsecured bank loans (2) Less: Current portions		December 31	December 31
		2020 $ 300,000 2,550,000 2,850,000 620,000 $ 2,230,000	2019 $ 300,000 2,000,000 2,300,000 15,000 $ 2,285,000

1) The Corporation applied to Mega International Commercial Bank for a credit line of $600,000 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 0.85% and 1.16% per annum on a floating basis respectively. The bank loan will be due in March 2023, and was secured by the Corporation’s land and buildings. Please refer to Note 30.
2) The Corporation applied for bank loan for repaying syndicated bank loans and increasing operating budget. As of December 31, 2020 and 2019, the interest rate was 0.69%-0.89% and 1.00%-1.07% per annum on a floating basis. The bank loan will be due in June 2026.

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19. OTHER PAYABLES

Salaries and bonus Employee’s compensation Remuneration of directors Others		December 31	December 31
		2020 $ 343,916 408,769 9,600 223,244 $ 985,529	2019 $ 329,314 328,842 9,600 173,159 $ 840,915

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation adopted a pension plan under the Labor Pension Act (the “LPA”), which is a statemanaged 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 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		December 31	December 31
		2020 $ 486,736 (334,287) $ 152,449	2019 $ 475,089 (319,336) $ 155,753

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Movements in net defined benefit liability were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liabilities
Balance at January 1, 2019	$ 460,083	$ (307,690)	$ 152,393
Current service cost	3,672	-	3,672
Net interest expense (income)	5,751	(3,943)	1,808
Recognized in profit or loss	9,423	(3,943)	5,480
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(9,841)	(9,841)
Actuarial (gain) loss
Changes in demographic assumptions	10	-	10
Changes in financial assumptions	26,986	-	26,986
Experience adjustments	(3,603)	-	(3,603)
Recognized in other comprehensive income	23,393	(9,841)	13,552
Contributions from employer	-	(15,672)	(15,672)
Benefits paid	(17,810)	17,810	-
Balance at December 31, 2019	475,089	(319,336)	155,753
Current service cost	3,576	-	3,576
Net interest expense (income)	3,563	(2,453)	1,110
Recognized in profit or loss	7,139	(2,453)	4,686
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(10,445)	(10,445)
Actuarial (gain) loss
Changes in demographic assumptions	118	-	118
Changes in financial assumptions	13,617	-	13,617
Experience adjustments	4,514	-	4,514
Recognized in other comprehensive income	18,249	(10,445)	7,804
Contributions from employer	-	(15,794)	(15,794)
Benefits paid	(13,741)	13,741	-
Balance at December 31, 2020	$ 486,736	$ (334,287)	$ 152,449

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.

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Discount rate(s) Expected rate(s) of salary increase	December 31
	2020 2019 0.38%-0.50% 0.63%-0.75% 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
		2020 $(13,617) $ 14,172 $ 13,667 $(13,206)	2019 $(13,873) $ 14,459 $ 13,978 $(13,486)

Expected contributions to the plan for the next year Average duration of the defined benefit obligation		December	31
	2020 2019 $ 15,713 $ 15,477 11.6 years 12.2 years

21. 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
		2020 500,000 $ 5,000,000 421,295 $ 4,212,945	2019 500,000 $ 5,000,000 419,296 $ 4,192,961

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, and the cancellation of employee restricted shares.

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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 exercised Employee restricted shares vested 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
		2020 $ 2,919,560 210,193 146,976 200,452 197,133 13,859 327,868 16,060 4,774 $ 4,036,875	2019 $ 2,814,492 187,804 146,976 167,723 116,588 13,564 54,360 46,438 81,526 $ 3,629,471

c. Retained earnings and dividends policy

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.

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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 2019 and 2018 have been approved in the annual shareholders’ meeting on June 10, 2020 and June 18, 2019, respectively, were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For Fiscal Year 2019 For Fiscal Year 2018 $ 185,448 $ 254,628 89,240 - 1,265,000 1,750,896	Dividends Per Share (NT$)
		For Fiscal Year 2019 For Fiscal Year 2018 $ 3.0 $ 4.2

The appropriations of earnings for 2020 had been proposed by the Corporation’s board of directors on February 25, 2021, were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	231,823
Special reserve		(89,240)
Cash dividends		1,897,175	$4.5

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’ meeting to be held on June 10, 2021.

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, 2020
Balance at January 1, 2020
$ (331,073)
$ 154,946

Exchange differences on translating foreign
operations
1,123
-
Unrealized gain arising from equity
investments
-
194,230
Share of other comprehensive gain (loss) of
associates and join ventures accounted
for using the equity method
(136,092)
35,317
Share-based payment transaction

-

-

Balance at December 31, 2020
$ (466,042)
$ 384,493

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

Unearned
Employee
Benefit
$ (11,524)
-
-
-
10,972
$ (552)
$ (42,377)
-
-
$ -
30,853
$ (11,524)

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
		2020 1,806 $ 33,686 $ 303,337	2019 1,916 $ 35,714 $ 277,759

The Corporation’s subsidiary, Chroma Investment Co., Ltd. disposed 110 thousand shares of the Corporation for the ended of December 31, 2020.

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22. REVENUE

Contract revenue of the Corporation comes from sale of goods.

a. Contract balances

Contract liabilities from sale of goods (1) Construction contract revenue (2)		December 31	December 31
		2020 $ 251,721 308,000 $ 559,721	2019 $ 427,357 - $ 427,357

1) The changes in the balance of contract liabilities primarily result from the timing difference between the Corporation’s performance and respective customer’s payment.
2) In order to revitalize assets, increase working capital and repay debts, the Corporation’s board of directors resolved to sell the plant and land in Hwa Ya Technology Park to its related party, Adlink Technology, on July 3, 2020.The transaction price, which amounted to $3.08 billion, was determined with reference to the appraisal results of independent real estate appraisers. The transaction is expected to be settled before March 31, 2021. In addition, the Corporation will lease back part of the building as plant and employee’s dormitories with a lease term of at least 5 years. The Corporation, according the contract, had received 10% of the contract price and 20% document payment as deposit in July 2020 and January 2021, respectively.
b. Disaggregation of revenue

Automatic test systems Precision electronic test instruments Others		December 31	December 31
		2020 $ 4,976,066 3,352,078 852,096 $ 9,180,240	2019 $ 4,297,926 3,248,907 564,200 $ 8,111,033

23. ADDITIONAL INFORMATION ON EXPENSES

a. Finance costs

Interest on borrowings Interest on lease liabilities	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 34,097 745 $ 34,842	2019 $ 35,089 591 $ 35,680

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b. Depreciation and amortization

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		December 31
		2020 $ 43,477 174,441 $ 217,918 $ 5,033	2019 $ 44,018 170,396 $ 214,414 $ -

An analysis of amortization by function Operating expenses

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	For the Year Ended December 31
			2020	Total $ 1,825,626 138,053 10,320 1,973,999 16,948 67,178 4,686 71,864 40,053 $ 2,102,864 $			2019
		Operating Costs $ 300,078 31,134 - 331,212 - 9,705 737 10,442 16.185 $ 357,839	Operating Expenses $ 1,525,548 106,919 10,320 1,642,787 16,948 57,473 3,949 61,422 23,868 $ 1,745,025 $			Operating Costs $ 276,808 28,345 - 305,153 - 8,928 840 9,768 15,738 $ 330,659	Operating Expenses $ 1,376,017 102,309 10,410 1,488,736 53,004 54,128 4,640 58,768 22,462 $ 1,622,970 $	Total $ 1,652,825 130,654 10,410 1,793,889 53,004 63,056 5,480 68,536 38,200 $ 1,953,629

1) As of December 31, 2020 and 2019, the Corporation’s average number of employees was 1,754 and 1,708 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.
2) As of December 31, 2020 and 2019, the average employee benefit expenses were $1,196 thousand and $1,141 thousand, respectively; average salary expenses were $1,044 thousand and $971 thousand, respectively. The change in average salary expense was 7.5%.
3) The Corporation set up an audit committee in accordance with Article 14-4 of Securities and Exchange Act and did not set up supervisory duties.
4) The Corporation’s compensation policy is determined by considering the operating performance and future development of the current year and the remuneration of directors and managers and employees are as follows:

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Directors

The remuneration paid by the Corporation is comprises bonus for directors. When the board of directors is held, the Corporation will also pay the directors’ attendance.

According to Article 34 of the Corporation’s Articles of Incorporation, bonus distributed to directors shall not be greater than 1.5% of the Corporation's net income before taxes.

The fixed amount of directors’ remuneration for 2020 and 2019 was 9,600 thousand which accounts for 0.30% and 0.39% of the net profit before tax for each year, respectively. The director attendance expenses for 2020 and 2019 720 thousand and 810 thousand, respectively.

Managers

The Corporation has established the “Regulations Governing Compensation for Senior Executives”, which stipulates that when a manager 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 Corporation'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

Staff

The Corporation’s remuneration policy takes into account the salary levels of benchmark companies in the market, and provide differentiated and competitive salaries for employees based on the achievement of performance indicators to reflect the ability of employees and to measure salary and bonus levels. The salary composition includes salaries, bonuses and employee remuneration, benefits, etc.; benefits are superior to the legal provisions as prerequisites are designed to improve talent attraction, motivation, and retention effects.

d. Employees’ compensation and remuneration of directors

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2020 Amount Rate (%) $ 383,845 12.04 9,600 0.30	2019
		Amount Rate (%) $ 290,000 11.84 9,600 0.39

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, 2020 and 2019.

Information on the employees’ compensation and remuneration of directors resolved by the Corporation’s board of directors in 2021 and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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24. 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 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
		2020 $ 365,461 14,990 (36,631) 343,820 127,384 $ 471,204	2019 $ 274,702 33,740 (61,334) 247,108 48,786 $ 295,894

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

b.	Profit before tax Income tax expense calculated at the statutory rate Nondeductible expenses in determining taxable income Tax-exempt income other Unrecognized investment credits Income tax on unappropriated earnings Adjustments for prior years’ tax Income tax expense recognized in profit or loss Deferred tax assets and liabilities For the year ended December 31, 2020 Opening Balance Deferred tax assets Temporary differences Unrealized intercompany gain $ 120,426 Inventory reserve 47,658 Unrealized exchange loss 8,952 Net defined benefit liability 5,983 Allowance for impaired receivables 1,546 Provisions 873 $ 185,438	For the Year Ended December 31
		2020 2019 $ 2,794,980 $ 2,150,375 $ 558,996 $ 430,075 (3,405) (20,086) 18,808 (13,599) (81,554) (72,902) 14,990 33,740 (36,631) (61,334) $ 471,204 $ 295,894 Recognized in Profit or Loss Closing Balance $ (8,404) $ 112,022 8,400 56,058 (3,651) 5,301 (2,221) 3,762 2,082 3,628 - 873 $ (3,794) $ 181,644 (Continued)

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Deferred tax liabilities Temporary differences Unappropriated earnings of subsidiaries Goodwill 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	Opening Balance Recognized in Profit or Loss Closing Balance $ 445,017 $ 120,985 $ 566,002 30,615 2,605 33,220 $ 475,632 $ 123,590 $ 599,222 (Concluded) 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	Closing Balance $ 566,002 33,220
		$ 599,222
		$ 185,438
		$ 445,017 30,615 -
		$ 475,632

c. Income tax assessments

As of December 31, 2020, the Corporation’s tax returns through 2018 had been assessed by the tax authorities.

25. 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

Net Profit for the Year
Earnings used in the computation of basic and diluted earnings per share	For the Year Ended December 31
		2020 $ 2,323,776	2019 $ 1,854,481

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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: Employees’ compensation Employee share options 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
		2020 417,761 2,575 1,248 46 421,630	2019 414,078 2,242 2,424 1,120 419,864

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.

26. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee share option plan

The Corporation didn’t granted employee stock options in March 2020 and 2019 thousand. The information on granted employee share options was as follow:

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
	2020 Number of Options (In Thousands) Weighted- average Exercise Price (NT$) 3,136 $ 59.8 (1,892) 59.5 (6) - 1,238 58.7 1,238	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

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Information on outstanding options is as follows:

December 31

2020 Range of Exercise Price (NT$) Weighted-average Remaining Contractual Life (Years) $ 58.7 $ 1.24	2019
	Range of Exercise Price (NT$) Weighted-average Remaining Contractual Life (Years) $ 59.8 $ 2.24

Compensation costs recognized were $2,646 thousand and $22,860 thousand for the years ended December 31, 2020 and 2019, 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.
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.

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Information relating to outstanding employee restricted shares is 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
		2020 1,285 (1,110) (123) 52	2019 2,273 (887) (101) 1,285

Compensation costs of share-based payment arising from the RSU Plan were $14,302 thousand and $30,144 thousand for the years ended December 31, 2020 and 2019, respectively

27. 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.

28. 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.

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

December 31, 2020 Financial assets at FVTPL Open-end beneficiary certificates Financial assets at FVTOCI Domestic listed ordinary shares and emerging markets shares Foreign unlisted equity securities	Level 1 $ - $ 376,499 - $ 376,499	Level 2 $ - $ - - $ -	Level 3 Total $ 4,646 $ 4,646 $ 293,663 $ 670,162 131,196 131,196 $ 424,859 $ 801,358 (Continued)

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Level 1

Level 2

Level 3

Total

December 31, 2019 Financial assets at FVTPL Open-end beneficiary certificates Financial assets at FVTOCI Domestic listed ordinary shares and emerging markets shares Foreign unlisted equity securities	$ - $ 407,798 - $ 407,798	$ - $ - - $ -	$ 4,762 $ 4,762 $ 45,184 $ 452,982 154,853 154,853 $ 200,037 $ 607,835 (Concluded)

There were no transfers between Levels 1 and 2 for the years ended December 31, 2020 and 2019.

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

For the year ended December 31, 2020

Financial Assets Balance at January 1, 2020 Purchases Disposal Unrealized gains and losses from sales to subsidiaries 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, 2020	Financial Assets at FVTPL Open-end beneficiary certificates $ 4,762 - - - (116) - $ 4,646	Financial Assets at FVTOCI Equity Instruments $ 200,037 17,239 (9,000) (8,946) - 225,529 $ 424,859	Total $ 204,799 17,239 (9,000) (8,946) (116) 225,529 $ 429,505

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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 Open-end beneficiary certificates $ 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

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

The fair values of domestic unlisted and emerging market 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
	2020 2019 $ 4,646 $ 4,762 4,405,723 4,358,538 801,358 607,835 6,698,301 6,014,104

1) The balances include financial assets at amortized cost, which comprise cash, 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.

228

d. Financial risk management objectives and policies

The Corporation’s major financial instruments consist of equity investments, cash, receivables, longterm 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 33.

Sensitivity analysis

The Corporation was mainly exposed to USD and RMB.

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. Had the NTD strengthened/weakened by 5% against the relevant currency, the pre-tax profit would have decreased/increased by $101,208 thousand and $110,674 thousand for the years ended December 31, 2020 and 2019, respectively.

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.

229

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
	2020 2019 $ 279,778 $ - 1,054,289 545,623 620,294 457,014 3,650,000 3,400,000

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, 2020 and 2019 would have decreased/increased by $15,149 thousand and $14,715 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, 2020 and 2019 would have increased/decreased by $232 thousand and $238 thousand, respectively, as a result of the changes in fair values of financial assets at FVTPL, and the pretax other comprehensive income for the years ended December 31, 2020 and 2019 would have increased/decreased by $40,068 thousand and $30,392 thousand, respectively, as a result of the changes in fair values of financial assets at FVTOCI.

230

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
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, 2020 and 2019, the Corporation’s available unutilized bank loan facilities were $2,850,000 thousand and $2,661,200 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.

231

Non-interest bearing Fixed interest rate instruments Floating interest rate instruments Lease liabilities Non-interest bearing Fixed interest rate instruments Floating interest rate instruments Lease liabilities	December 31, 2020	December 31, 2020
	Within 1 Year 1-5 Years $ 2,007,414 $ - 1,000,185 - 1,445,424 2,136,262 20,998 28,220 $ 4,474,021 $ 2,164,482 December 31, 2019		More Than 5 Years $ - - 120,417 6,530 $ 126,947
	Within 1 Year $ 2,094,104 420,786 1,221,520 15,264 $ 3,751,674	1-5 Years $ - 86,089 1,891,140 23,679 $ 2,000,908	More Than 5 Years $ - - 363,441 8,271 $ 371,712

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.

29. TRANSACTIONS WITH RELATED PARTIES

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

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Relationship with the
Related Party Corporation
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Related Party	Relationship with the Corporation
Chroma ATE Inc. (“Chroma USA”)	Subsidiary
Neworld Electronics Limited (“Neworld”)	Subsidiary
Chroma ATE Europe B.V. (“Chroma Europe”)	Subsidiary
Chroma Investment Co., Ltd. (“Chroma Investment”)	Subsidiary
Chroma New Material Corp. (“Chroma New Material”)	Subsidiary
Chroma Japan Corp. (“Chroma Japan”)	Subsidiary
Chroma Systems Solutions, Inc. (“CSS”)	Subsidiary
Quantel Private Ltd. (“Quantel”)	Subsidiary
Mas Automation Corp. (“Taiwan Wei Kuang”)	Subsidiary
Testar Electronics Corp. (“Testar Electronics”)	Subsidiary
Adivic Technology Co., Ltd. (“Adivic Tech.”)	Subsidiary
Sajet System Technology (Suzhou) Co., Ltd. (“Sajet	Subsidiary
Suzhou”)

(Continued)

232

Relationship with the Corporation

Related Party

Chroma Electronics (Shenzhen) Co., Ltd. (“Chroma	Subsidiary
Shenzhen”)
Chroma Electronics (Shanghai) Co., Ltd. (“Chroma	Subsidiary
Shanghai”)
Chroma ATE (Suzhou) Co., Ltd. (“Chroma Suzhou”)	Subsidiary
EVT Technology Co., Ltd. (“EVT”)	Subsidiary
Innovative Nanotech Incorporated (“Innovative”)	Subsidiary
Quantel Technologies India Private Ltd. (“Quantel	Subsidiary
Technologies India”)
Chroma Germany GmbH (“Chroma Germany”)	Subsidiary
Adlink Technology Inc. (“Adlink”)	Associate
DynaScan Technology Corp. (“DynaScan Technology”)	Associate
Camtek Ltd.	Associate
		(Concluded)

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

The related-party transactions were as follows:

b. Sales

Related Party Categories Subsidiaries Neworld 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
		2020 $ 3,090,906 1,054,688 2,042,821 18,003 - $ 6,206,418	2019 $ 2,628,273 336,352 2,112,912 13,958 850 $ 5,092,345

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 Limited The selling prices for Chroma USA, CSS, Chroma Europe, Neworld, 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 Other related parties	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 116,053 21,686 9 $ 137,748	2019 $ 332,098 7,624 - $ 339,722

233

d.Contract liabilities

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020 2019 $ 308,000 $ - December 31
	2020 2019 $ 567,037 $ 402,745 533,772 783,034 830,524 865,853 5,041 2,979 $ 1,936,374 $ 2,054,611 $ 305,000 $ 300,000 - 11,992 $ 305,000 $ 311,992 December 31
2020 2019 $ 19,919 $ 184,795 5,631 8,583 6,341 2,685 $ 31,891 $ 196,063 For the Year Ended December 31
	2020 $ 1,121 740 $ 1,861	2019 $ 2,730 3,198 $ 5,928

234

h. Loans to related parties

1) Loans and interest receivables

Line Item Related Party Categories Other receivable-related party Subsidiaries CSS Chroma Japan Other current asset Subsidiaries		December 31	December 31
		2020 $ 106,417 82,676 $ 189,093 $ 731	2019 $ 116,519 38,185 $ 154,704 $ 357

2) Interest revenue

Related Party Categories Subsidiaries CSS Chroma Japan	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,664 938 $ 4,602	2019 $ 3,899 - $ 3,899

Note: Refer to Table 1 (attached) for other information related to financing provided.

i. Endorsement guarantees provided

Note:Refer to Table 2 (attached) for other information related to endorsement guarantees provided.

j. Others

1) Commission expense

Related Party Categories Subsidiaries Chroma Shanghai Chroma Suzhou Quantel Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 29,144 10,141 5,523 4,691 $ 49,499	2019 $ 11,453 17,989 13,756 2,763 $ 45,961

Commission expense refers to the disbursements made for business introduction activities.

235

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
		2020 $ 11,979 1,284 1,260 $ 14,523	2019 $ 13,231 1,284 1,260 $ 15,775

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
		2020 $ 6,000 600 $ 6,600	2019 $ 6,000 600 $ 6,600

Management service income was from the Corporation’s provision of administrative services.

Other income is income from repairs and maintenance.

4) Other current assets - other receivables

Related Party Categories Subsidiaries Testar Electronics Neworld Others Associates		December 31	December 31
		2020 $ 13,679 4,817 1,520 523 $ 20,539	2019 $ 27,922 5,381 1,291 531 $ 35,125

Receivables were recognized from managerial services and building rentals.

k. 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
		2020 $ 144,666 2,435 $ 147,101	2019 $ 123,220 2,431 $ 125,651

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30. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The assets pledged as collaterals for bank loans were as follows:

Land and buildings, net Pledge deposits (classified as financial assets measured at amortized cost)		December 31	December 31
		2020 $ 597,432 279,778 $ 877,210	2019 $ 692,486 - $ 692,486

31. 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 $353,040 thousand and 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 $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 $536,729 thousand and the remaining part of the third installment $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.

237

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 $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. Please refer to Notes 13 and 15.

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, 2020, the unrecognized commitments amounted to $358,464 thousand.
c. The global economic and financial development are facing significant uncertainty due to the outbreak of COVID-19 pandemic. As of the date the consolidated financial statements were authorized for issue, the Corporation assessed that the pandemic did not have material impact on its ability to continue as a going concern, impairment of assets and risks arising from financing activities. The Corporation continuously observes and assesses the impact of the pandemic on the aforementioned aspects.

32. SIGNIFICANT EVENTS

The Corporation considers the future strategy of the product and the improvement of product competitiveness, and the Corporation’s board of directors resolved to invest US$1.5 million and owned 100% equity in Environmental Stress Systems, Inc in 2021. Upon completion of investment procedures, the Corporation will increase its capital by US$500,000 dollars.

33. 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, 2020

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	63,736	28.480 (USD:NTD)	$ 1,815,201
RMB		96,728	4.377 (RMB:NTD)	423,378
				$ 2,238,579
				(Continued)

238

		Foreign		Carrying	Carrying
	Currencies		Exchange Rate		Amount
Non-monetary items
Investments accounted for using the
equity method
USD	$	149,393	28.480 (USD:NTD)	$	3,930,554
HKD		450,598	3.673 (HKD:NTD)		1,464,458
				$	5,395,012
Financial liabilities
Monetary items
USD		7,529	28.480 (USD:NTD)	$	214,426
				(Concluded)
December 31, 2019
		Foreign		Carrying
	Currencies		Exchange Rate		Amount
Financial assets
Monetary items
USD	$	73,599	29.980 (USD:NTD)	$	2,206,504
RMB		81,511	4.305 (RMB:NTD)		350,907
				$	2,557,411
Non-monetary items
Investments accounted for using the
equity method
USD		126,764	29.980 (USD:NTD)	$	3,722,070
HKD		338,746	3.849 (HKD:NTD)		1,303,828
				$	5,025,898
Financial liabilities
Monetary items
USD		11,472	29.980 (USD:NTD)	$	343,932

For the years ended December 31, 2020 and 2019, (realized and unrealized) net foreign exchange losses were $68,727 thousand and $46,438 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.

34. 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)

239

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: Table 5 (attached)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6 (attached)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 7 (attached)
9) Trading in derivative instruments: None.
10) 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 6 (attached)
b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 6 (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.

c. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder: None.

240

TABLE 1

CHROMA ATE INC.

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Allowance Collateral Financing
Highest Actual Business Reasons for Aggregate
Financial Related Ending Interest Nature of for Limit for
No. Lender Borrower Balance for Borrowing Transaction Short-term Financing
Statement Account Parties Balance Rate Financing Impairment Item Value Each
the Period Amount Amounts Financing Limit
Loss Borrower
0 The Corporation Chroma Systems Other receivables Y $ 110,689 $ 106,417 $ 106,417 3.25% 1 $ 368,570 - $ - - $ - $ 1,606,322 $ 3,212,645
Solutions, Inc. (Note 1) (Note 2)
Chroma Japan Corp. Other receivables Y 102,000 92,262 82,676 1.30% 1 173,626 - - - - 1,606,322 3,212,645
(Note 1) (Note 2)
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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: The amounts listed in the table were translated into the New Taiwan dollars at the exchange rate of US$1=NT$28.480 and JPY1 = NT$0.276 as of December 31, 2020.

Note 4: 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, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 3: The amounts listed in columns were translated into the New Taiwan dollars at the exchange rate of US$1=NT$28.480, JPY1=NT$0.276, RMB1=NT$4.377, EUR1=NT$35.020, as of December 31, 2020.

242

TABLE 3

CHROMA ATE INC.

MARKETABLE SECURITIES HELD (EXCLUDING INVESTMENT IN SUBSIDIARIES, ASSOCIATES AND JOINT CONTROLLED ENTITIES) DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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December 31, 2020
Relationship
Percentag
with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Shares/Units Carrying e of Note
Holding Fair Value
(Thousands) Amount Ownershi
Company
p
The Corporation Fund
WI Harper INC Fund VII LP - Financial assets at fair value through profit or loss - - $ 4,646 - $ 4,646 -
non-current
Stocks
DynaColor, Inc. - Financial assets at fair value through other 6,050 177,274 6.1 177,274 -
comprehensive income - non-current
Chunghwa Telecom Co., Ltd. - 〃 412 44,950 - 44,950 -
China Communications Media Group Co., Ltd. - 〃 26 137 - 137 -
Tian Zheng International Precision Machinery Co., - 〃 2,681 154,138 8.1 154,138 -
Ltd.
Twoway Catv Service Inc. - 〃 3,561 56,898 4.4 56,898 -
Taiwan Advanced Nanotech Inc. - 〃 2,430 236,765 11.5 236,765 -
WK Technology Fund IX Ltd. - 〃 4,614 65,657 4.6 65,657 -
WK Technology Fund IV Ltd. - 〃 806 4,064 1.9 4,064 -
WK Technology Fund VI Ltd. - 〃 723 2,500 1.4 2,500 -
TFBS Bioscience Inc. - 〃 3,280 58,975 14.7 58,975 -
Chroma New Material Corp. Fund
Mega Diamond Money Market Fund - Financial assets at fair value through profit or loss - 15,821 200,138 - 200,138 -
current
Chroma Systems Solutions Inc. Fund
Franklin California Tax Free Income FD Inc. - Financial assets at fair value through profit or loss - 165 36,888 - 36,888 -
current
Chroma Investment Co., Ltd. Fund
Hua Nan Kirin Money Market Fund - 〃 2,356 28,421 - 28,421 -
Stocks
Greatek Electronics Inc. - 85 4,763 - 4,763 -
Hephas Energy Corporation 1,042 58,830 6.8 58,830 -
Chroma ATE Inc. The Corporation Financial assets at fair value through other 1,806 303,337 0.4 303,337 -
comprehensive income - non-current
Taiwan Advanced Nanotech Inc. - 〃 552 53,811 2.6 53,811 -
Cosmactive Broadband Networks Co., Ltd. - 〃 4 - 1.5 - -
Global Mixed-mode Technology Inc. - 〃 111 - 5.1 - -
(Continued)
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243

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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)

244

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, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Beginning Balance Acquisition Disposal Ending Balance
Company Name Marketable Securities Type and Name of Financial Statement Account Counterparty Relationship 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
Taishin 1699 Money Financial assets at fair value - - - $ - 22,023 $ 300,000 22,023 $ 300,072 $ 300,000 $ 72 - $ -
Market Fund through profit or loss - current
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245

TABLE 5

CHROMA ATE INC. AND SUBSIDIARIES

DISPOSAL OF INDIVIDUAL REAL ESTATE AT PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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246

TABLE 6

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, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Notes/Accounts
Transaction Details Abnormal Transaction
Receivable (Payable)
Company Name Related Party Relationship Note
Purchase % to Payment Ending % to
Amount Payment Terms Unit Price
(Sale) Total Terms Balance Total
The Corporation Neworld Electronics Limited Subsidiary (Sale) $ (3,090,906) (34) Net 365 days after monthly - - $ 533,772 18 -
closing
Neworld Electronics Limited The Corporation Parent company Purchase 3,090,906 100 Net 90 days after delivery - - (533,772) (100) -
The Corporation Chroma Electronics (Shanghai) Co., Subsidiary (Sale) (219,019) (2) Net 365 days after monthly - - 23,657 1 -
Ltd. closing
Chroma Electronics (Shanghai) Co., The Corporation Parent company Purchase 219,019 100 Net 120 days after delivery - - (23,657) (100) -
Ltd.
The Corporation Chroma Electronics (Shenzhen) Co., Subsidiary (Sale) (428,412) (5) Net 365 days after monthly - - 139,548 5 -
Ltd. closing
Chroma Electronics (Shenzhen) Co., The Corporation Parent company Purchase 428,412 100 Net 90 days after monthly - - (139.548) (100) -
Ltd. closing
The Corporation Chroma Japan Corp. Subsidiary (Sale) (173,626) (2) Net 365 days after monthly - - 208,148 7 -
closing
Chroma Japan Corp. The Corporation Parent company Purchase 173,626 100 Net 90 days after delivery - - (208,148) (100) -
The Corporation Chroma ATE Inc. Subsidiary (Sale) (1,054,688) (11) Net 365 days after monthly - - 567,037 20 -
closing
Chroma ATE Inc. The Corporation Parent company Purchase 1,054,688 100 Net 180 days after delivery - - (567,037) (100) -
The Corporation Chroma Systems Solutions, Inc. Subsidiary (Sale) (368,570) (4) Net 90 days after delivery - - 107,521 4 -
Chroma Systems Solutions, Inc. The Corporation Parent company Purchase 368,570 100 Net 90 days after delivery - - (107,521) (100) -
The Corporation Chroma ATE Europe B.V. Subsidiary (Sale) (283,440) (3) Net 365 days after monthly - - 107,056 4 -
closing
Chroma ATE Europe B.V. The Corporation Parent company Purchase 283,440 100 Net 90 days after delivery - - (107,056) (100) -
The Corporation Quantel Private Ltd. Subsidiary (Sale) (252,143) (3) Net 90 days after delivery - - 53,468 2 -
(Continued)
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Notes/Accounts
Transaction Details Abnormal Transaction
Receivable (Payable)
Company Name Related Party Relationship Note
Purchase % to Payment Ending % to
Amount Payment Terms Unit Price
(Sale) Total Terms Balance Total
Quantel Private Ltd. The Corporation Parent Purchase $ 252,143 100 Net 90 days after delivery - - $ (53,468) (100) -
company
The Corporation Chroma ATE (Suzhou) Co., Ltd. Subsidiary (Sale) (269,740) (3) Net 365 days after monthly - - 169,768 6 -
closing
Chroma ATE (Suzhou) Co., Ltd. The Corporation Parent Purchase 269,740 100 Net 120 days after delivery - - (169,768) (100) -
company
Neworld Electronics Limited Chroma Electronics (Shenzhen) Co., Subsidiary (Sale) (1,288,921) (37) Net 90 days after declaration - - 145,796 21 -
Ltd
Chroma Electronics (Shenzhen) Co., Neworld Electronics Limited Parent Purchase 1,288,921 69 Net 90 days after declaration - - (145,796) (50) -
Ltd company
Neworld Electronics Limited Chroma ATE (Suzhou) Co., Ltd. Same parent (Sale) (277,109) (8) Net 90 days after declaration - - 197,177 28 -
company
Chroma ATE (Suzhou) Co., Ltd. Neworld Electronics Limited Same parent Purchase 277,109 34 Net 90 days after declaration - - (197,177) (49) -
company
Chroma ATE Europe B.V. Chroma Germany Subsidiary (Sale) (117,892) (25) Net 90 days after declaration - - 60,931 43 -
Chroma Germany Chroma ATE Europe B.V. Parent Purchase 117,892 82 Net 90 days after declaration - - (60,931) (99) -
company
Mas Automation Corp. Wei Kuang Automatic Equipment Same parent (Sale) (105,362) (34) Net 90 days after declaration - - 11,979 4 -
(Xiamen) Co., Ltd. company
Wei Kuang Automatic Equipment Mas Automation Corp. Same parent Purchase 105,362 37 Net 90 days after declaration - - (11,979) (10) -
(Xiamen) Co., Ltd. company
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Note: The actual credit period is longer than other customers, the recovery of receivables depends on the related parties’ financial position.

(Concluded)

248

TABLE 7

CHROMA ATE INC.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Overdue Amount
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance Impairment
Rate Amount Action Taken Subsequent
Loss
Period (Note)
The Corporation Neworld Electronics Limited Subsidiary Trade receivables $ 533,772 4.69 $ - - $ 226,150 $ -
Chroma ATE Inc. Subsidiary Trade receivables 567,037 2.18 - - 93,361 -
Chroma Systems Solutions, Inc. Subsidiary Trade receivables 107,521 2.40 - - 80,087 -
Chroma ATE Europe B.V. Subsidiary Trade receivables 107,056 1.94 - - 66,181 -
Chroma Japan Corp. Subsidiary Trade receivables 208,148 0.89 - - 9,786 -
Chroma Electronics (Shenzhen) Co, Ltd. Subsidiary Trade receivables 139,548 3.54 - - 83,904 -
Chroma ATE (Suzhou) Co., Ltd. Subsidiary Trade receivables 169,768 2.51 - - 29,234 -
Chroma Systems Solutions, Inc. Subsidiary Other receivables - financing provided - - - 607 -
106,417
Neworld Electronics Limited Chroma Electronics (Shenzhen) Co, Ltd. Subsidiary Trade receivables 145,796 - - - 145,796 -
Chroma ATE (Suzhou) Co., Ltd. Same parent Trade receivables 197,177 - - - 49,025 -
company
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Note: As of February 25, 2021.

249

TABLE 8

CHROMA ATE INC.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Investment Amount Balance as of December 31, 2020 Net Income
Investment
Investor Investee Location Main Businesses and Products December 31, December 31, Shares Percentage of Carrying (Loss) of the Note
Gain (Loss)
2020 2019 (Thousands) Ownership Amount Investee
The Corporation Neworld Electronics Limited Hong Kong Sale and maintenance of electronic test instruments, etc. $ 271,873 $ 271,873 64,013 100.0 $ 1,464,458 $ 350,092 $ 350,097 Subsidiary
Chroma New Material Corporation Taoyuan, Taiwan Sale and processing of gold wire 480,715 480,715 25,000 100.0 428,239 20,156 20,155 Subsidiary
Mas Automation Corp. Hsinchu, Taiwan Design, manufacturing, installment and testing of automated 533,000 533,000 10,000 100.0 270,267 (192,947) (193,097) Subsidiary
factory conveyor systems
Chroma ATE Inc. USA Sale and maintenance of electronic test instruments, etc. 29,895 29,895 1,000 100.0 128,653 73,309 73,370 Subsidiary
Chroma Systems Solutions, Inc. USA Sale and maintenance of electronic test instruments, etc. 29,628 29,628 120 25.0 (6,717) 122,884 30,720 Subsidiary
Chroma ATE Europe B.V. The Netherlands Sale and maintenance of electronic test instruments etc. 54,026 54,026 1 100.0 137,505 (5,322) (5,270) Subsidiary
Chroma Japan Corp. Japan Sale and maintenance of electronic test instruments, etc. 201,750 147,125 10 100.0 (125,940) (65,391) (64,967) Subsidiary
CHI Incorporation Ltd. British Virgin Islands Test of inductance, capacitance and resistance, and sale of parts 122,884 122,884 3,830 100.0 197,569 52,590 52,590 Subsidiary
Chen Hwa Technology Inc. British Virgin Islands Test of inductance, capacitance and resistance, and sale of parts 98,217 98,217 3,085 100.0 106,264 2,627 2,627 Subsidiary
San Eagle Development Corp. British Virgin Islands Investment 186,514 186,514 2,050 100.0 845,853 47,679 57,432 Subsidiary
Sensational Holding Ltd. British Virgin Islands Investment 38,301 38,301 1,200 100.0 50,764 208 208 Subsidiary
Deep Red Holding Co., Ltd. Mauritius Investment 12,217 12,217 215 100.0 142,022 28,387 28,387 Subsidiary
Testar Electronics Corporation Taoyuan, Taiwan Testing of LED products 247,096 247,096 20,160 67.2 34,528 33,215 22,306 Subsidiary
Adivic Technology Co., Ltd. Taipei, Taiwan Sale and research of RF device 273,800 273,800 12,590 74.1 73,705 (20,121) (14,552) Subsidiary
Chroma Investment Co., Ltd. Taoyuan, Taiwan Investment 80,000 80,000 14,000 100.0 163,702 16,703 10,944 Subsidiary
Quantel Private Ltd. Singapore Sale and maintenance of test instruments, etc. 112,328 112,328 1,914 60.0 175,480 39,000 22,282 Subsidiary
EVT Technology Co., Ltd. Taoyuan, Taiwan Manufacturing of motorcycles and its parts 117,311 117,311 9,412 85.6 40,558 (11,005) (9,418) Subsidiary
Innovative Nanotech Incorporated Hsinchu, Taiwan Monitoring instruments of nanoparticles 142,140 142,140 14,214 71.1 152,441 49,039 34,853 Subsidiary
Touchcloud Taipei, Taiwan Development of cloud platform and Internet of Things systems 57,000 57,000 5,700 78.1 21,345 (16,932) (13,237) Subsidiary
Adlink Technology Inc. New Taipei, Taiwan Manufacturing, processing and retailing of software/hardware of 165,079 165,146 24,492 11.3 514,751 231,505 26,022 Associate
computers and peripherals
DynaScan Technology Corp. Taoyuan, Taiwan Research and manufacture of LED generators 238,746 238,746 9,841 27.3 141,439 84,664 23,112 Associate
Camtek Ltd. Israel Automatic optical inspection equipment 2,342,340 2,342,340 7,817 18.1 2,466,146 643,518 86,988 Associate
Chih Ho Shun Development Co., Ltd. Taoyuan, Taiwan Construction and development of residence, buildings and 17,500 17,500 1,750 35.0 16,891 (2,084) (730) Joint venture
specialized field; construction and investment of public works
Chroma ATE Inc. Chroma Systems Solutions, Inc. USA Sale and maintenance of electronic test instruments, etc. 64 64 240 50.0 216,644 122,884 NA Subsidiary
Chroma ATE Europe B.V. Chroma Germany GmbH Germany Sale and maintenance of electronic test instruments, etc. 1,073 1,073 30 100.0 154 (9,566) NA Subsidiary
San Eagle Development Corp. Wei Kuang Mech. Eng. Inc. Mauritius Investments 185,686 185,686 4,475 100.0 919,367 47,778 NA Subsidiary
Adivic Technology Co., Ltd. Adivic Holding Corporation Samoa Sale and research of RF device 42,245 42,245 1,000 100.0 9,297 (37) NA Subsidiary
Quantel Private Ltd. Quantel Technologies India Private Ltd. India Sale and maintenance of test instruments, etc. 3,056 3,056 65 100.0 4,813 1,824 NA Subsidiary
Quantel Global Vietnam Co., Ltd. Vietnam Sale and maintenance of test instruments, etc. 6,219 6,219 - 100.0 7,762 4,600 NA Subsidiary
Quantel Global Sdn. Bhd. Malaysia Sale and maintenance of test instruments, etc. 4,199 4,199 600 100.0 9,764 5,565 NA Subsidiary
Quantel Global Philippines Corporation Philippines Sale and maintenance of test instruments, etc. 610 610 99 100.0 4,480 (298) NA Subsidiary
EVT Technology Co., Ltd. Wei Da Electric Vehicle Co., Ltd. Pingtung, Taiwan Sale and lease of motorcycles - 3,750 - - - (53) NA Note 2
Chroma Investment Co., Ltd. Testar Electronics Corporation Taoyuan, Taiwan Testing of LED products 11,250 11,250 4,500 15.0 11,667 33,215 NA Subsidiary
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Note 2: The Corporation’s subsidiary, Wei Da Electric Vehicle Co., Ltd., had completed its liquidation procedures on October 15, 2020.

250

TABLE 9

CHROMA ATE INC.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars or Foreign Currency, Unless Stated Otherwise)

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Remittance of Funds Accumulated
Accumulated
Outward Accumulated
Outward Carrying
Remittance for Inward
Remittance for Net Income Percentage of Investment Amount as of
Paid-in Capital Method of Investment Investment from Remittance of
Investee Company Main Businesses and Products Investment from (Loss) of the Ownership in Gain (Loss) December 31,
(Note 2) (Note 1) Outward Inward Taiwan as of Earnings as of
Taiwan as of Investee Investment (Notes 4 and 5) 2020
December 31, December 31,
January 1, 2020 (Note 2)
2020 2020
(Note 3)
(Note 3)
Chroma Electronics (Shenzhen) Co., Ltd. Sale of computerized automatic test systems, $ 110,190 b. Subsidiary of $ 132,178 $ - $ - $ 132,178 $ 217,447 100 $ 217,447 $ 977,245 $ -
peripherals and electronic test instruments (HK$ 30,000) Neworld Electronics (HK$ 1,200 (HK$ 1,200
Limited US$ 3,853) US$ 3,853)
Chroma Electronics (Shanghai) Co., Ltd. Sale of computerized automatic test systems, 85,440 b. Subsidiary of 101,993 - - 101,993 59,900 100 59,900 225,501 -
peripherals and electronic test instruments (US$ 3,000) Neworld Electronics (US$ 3,000) (US$ 3,000)
Limited
Chroma (Shanghai) Trading Co., Ltd. International and transit trading, commercial 76,896 b. Subsidiary of Chen 84,988 - - 84,988 (670) 100 (670) 80,826 -
simple processing and commercial (US$ 2,700) Hwa Technology Inc. (US$ 2,700) (US$ 2,700)
consulting service and etc.
Hangzhou New Material Chroma Co., Ltd. Production and sale of semiconductor 42,720 b. Subsidiary of Chen 9,091 - - 9,091 45,424 19 - 7,729 12,605
connecting materials (US$ 1,500) Hwa Technology Inc. (US$ 285) (US$ 285) (US$ 368)
Chroma ATE (Suzhou) Co., Ltd. Sale of computerized automatic test systems, 108,224 b. Subsidiary of CHI 121,115 - - 121,115 52,558 100 52,558 282,397 -
peripherals and electronic test instruments (US$ 3,800) Incorporation Ltd. (US$ 3,800) (US$ 3,800)
Wei Kuang Automatic Equipment (Nanjin) Sale and maintenance of electronic 51,959 b. Subsidiary of Wei 43,751 - - 43,751 2,951 100 2,951 210,560 -
Co., Ltd. equipment and factory conveyor systems (RMB 11,871) Kuang Mech. Eng. (US$ 1,338) (US$ 1,338)
Inc.
Wei Kuang Automatic Equipment (Xiamen) Sale and maintenance of electronic 49,972 b. Subsidiary of Wei 49,935 - - 49,935 31,729 100 31,729 508,942 -
Co., Ltd. equipment and factory conveyor systems (RMB 11,417) Kuang Mech. Eng. (US$ 1,500) (US$ 1,500)
Inc.
Mou Kuan Technologies (Nanjin) Co., Ltd. Assembly, sale and maintenance of factory 7,603 b. Subsidiary of Wei 92,000 - - 92,000 937 100 937 48,903 47,504
conveyors and related systems and renders (RMB 1,737) Kuang Mech. Eng. (US$ 2,836) (US$ 2,836) (US$ 1,552)
related after-sales services Inc.
Sajet System Technology (Suzhou) Co., Ltd. Research, development and design of 36,653 b. Subsidiary of Deep (Note 9) - - (Note 9) 28,370 100 28,370 142,017 -
computer network security systems and (RMB 8,374) Red Holding Co.,
information management Ltd.
Accumulated Outward Remittance for
Investment Amounts Authorized by the Upper Limit on the Amount of Investment
Investment in Mainland China as of
Investment Commission, MOEA Stipulated by Investment Commission, MOEA
December 31, 2020
$635,051 $725,060 $9,637,934
(HK$1,200, US$19,312) (HK$1,400, US$22,076) (Note 6) (Note 7)
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(Continued)

251

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$3,673, US$1=NT$28.480, RMB1=NT$4.377 prevailing on December 31, 2020.

Note 3: The amounts of accumulated outflow of investment from Taiwan as of January 1, 2019 and December 31, 2020 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$3,809, US$1=NT$29.549, RMB1=NT$4.282 for the year ended December 31, 2020.

Note 6:

Approval Letter 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 Limited

Note 9: The investment in Sajet Technology Inc. (liquidated on September 15, 2008) was authorized by the Investment Commission in 2004.

(Concluded)

252

Chroma ATE Inc.

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Chairman Leo Huang

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253

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254

AI assistant

CHROMA — Annual Report 2020

52029_rns_2021-08-24_3557de9f-c83a-4c13-9ada-934539293b91.pdf

Critical financial indicators (integrated)

Table of Contents

Chapter 6. Financial summary

Chapter 8 Special Notes

Chapter 1 Reports to Shareholders

Business results

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

Chairman & CEO Leo Huang

Chapter 2 Corporation Introduction

Chapter 3 Corporate Governance Report

I. Organization

(II) Responsibilities and functions of main departments

Director Information

(II) CEO, general managers, vice presidents, assistant managers, and supervisors at various departments and branches

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

1. Remuneration for the director (including independent directors)

2. Remuneration for CEO, general managers and vice presidents

III. Operation of corporate governance

(I) Operation of Board of Directors

(III) Operation Overview of the Audit Committee:

(V) Composition, duties, and operation of the compensation Committee

1. Information on the members of the Salary and Remuneration Committee

2. Operations of the Salary and Remuneration Committee

( VII) Compliance with ethical corporate management and measures implemented

(XI) Implementation of internal control system

1. The Statement on Internal Control System

IV. CPA fees

Table on the range of professional charge of the CPA

Relationship information between the 10 largest shareholders

Consolidated shareholding percentage

Chapter4 Financing

I. Capital and shares

(II) Shareholder structure

(III) Distribution of equity ownership

1. Common shares

(IV) List of major shareholders

(VI) Dividend policy of the Corporation and its implementation

1. Dividend policy stipulated within the articles of association

VI. New restricted employee shares

Chapter 5 Operation summary

I. Business content

(I) Scope of business

B. Special materials

1. Short-term development plans

2. Production process

(III) Supply of primary raw materials

(V) Production volume in the two most recent years

(VI) Sales volume in the two most recent years

IV. Environmental protection expenditure

V. Labor relations

2020 training topics:

VI. Important contracts

Chapter 6 Financial summary

2. Individual balance sheet and comprehensive income or loss sheet - International Financial Reporting Standards

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

II. Financial analysis in the five most recent years

2. Parent company-only financial analysis

Chroma ATE Inc.

Audit Committee’s Audit Report

Chapter 7 Review, analysis, and risks of financial position and performance

I. Financial condition

II. Financial performance

Financial performance analysis

III. Cash flow

(II) Analysis of cash liquidity for the following year

Chapter 8 Special Notes

1. Diagram of related corporation

2. Basic information of various related corporation

6. Business operating conditions of Chroma ATE Inc. and its related corporation

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Impairment of Trade Receivables

Other Matter

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

CHROMA Annual Report 2020