ESMT — Annual Report 2020

Nov 12, 2020

ELITE SEMICONDUCTOR MICROELECTRONICS TECHNOLOGY INC. AND SUBSIDIARIES Consolidated Financial Statements and

Independent Auditors’ Report December 31, 2020 and 2019 (Stock Code: 3006)

(English Translation of a Report Originally Issued in Chinese)

Company Address: No.23, Industry E Rd. IV Science-Based Industrial Park, Hsinchu 300, Taiwan, R.O.C. Tel: +886-3-578-1970

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Financial Statements and Independent Auditors’ Report for December 31, 2020 and 2019

Table of Contents

		Items	Page
I.	Cover		1
II.	Table of Contents		2
III.	Representation Letter		3
IV.	Independent Auditors’ Report		4 ~ 8
V.	Consolidated Balance Sheets		9 ~ 10
VI.	Consolidated Statements of Comprehensive Income		11
VII.	Consolidated Statements of Changes in Equity		12
VIII.	Consolidated Statements of Cash Flows		13 ~ 14
IX.	Notes to the Consolidated Financial Statements		15 ~ 72
	1.	History and Organization	15
	2.	The Date of Authorization for Issuance of the Consolidated Financial
		Statements and Procedures for Authorization	15
	3.	Application of New Standards, Amendments and Interpretations	15 ~ 16
	4.	Summary of Significant Accounting Policies	17 ~ 30
	5.	Critical Accounting Judgments, Estimates and Key Sources of
		Assumption Uncertainty	30
	6.	Details of Significant Accounts	31 ~ 58
	7.	Related-Party Transactions	59
	8.	Pledged Assets	59
	9.	Significant Contingent Liabilities and Unrecognized Contractual
		Commitments	59
	10.	Significant Disaster Losses	59
	11.	Significant Events after the End of the Balance Sheet Date	59
	12.	Others	59 ~ 70
	13.	Supplementary Disclosures	71
	14.	Operating Segment Information	72

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Elite Semiconductor Microelectronics Technology Inc.

Representation Letter of Consolidated Financial Statements of Affiliated Enterprises

The entities that are required to be included in the combined financial statements of Elite Semiconductor Microelectronics Technology Inc.as of and for the year ended December 31, 2020, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries do not prepare a separate set of combined financial statements.

Hereby declare

Elite Semiconductor Microelectronics Technology Inc.

By

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Hsing-Hai Chen

Chairman

February 26, 2021

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Independent Auditors’ Report (2021) Finance-Audit-Letter No.20003747

To the Board of Directors and Shareholders of Elite Semiconductor Microelectronics Technology Inc.

Opinion

We have audited the accompanying consolidated balance sheets of Elite Semiconductor Microelectronics Technology Inc. and its subsidiaries (the“ Group”) as at December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and 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 at 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and Generally Accepted Auditing Standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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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 of the current period. 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.

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Evaluation of inventories

Description

Refer to Note 4 (13) for the accounting policies on the evaluation of inventories, Note 5 (2) for the uncertainty of accounting estimations and assumptions for evaluation of inventories, Note 6 (5) for the Details of inventory. As at December 31,2020, the inventory and allowance for inventory valuation loss amounted to NT$6,068,804 thousand and NT$99,474 thousand.

The Group is primarily engaged in research, development, production, manufacture, and sales of integrated circuit. The Group evaluates inventories stated at lower of cost and net realizable value. Since the evaluation of net realizable value of the inventories exceed specific period and obsolete inventories is subject to management’s judgment and uncertainty of estimations. Consequently, we consider the evaluation of inventories as a key audit matter.

How our audit addressed the matter

We have performed primary audit procedures for the above key audit matter included assessed the rationality of policy and procedure on allowance for inventory valuation loss based on our understanding of the Group’s operations and industry, the historical data of product marginalization in the market and judged the rationality of obsolete inventories. We inspected the appropriateness of inventory aging report to confirm the consistency of report and policy, selected samples to compare the historical data of product marginalization in the market which determine the net realizable value of the obsolete inventories and net realizable value of the obsolete inventories to assessed the rationality of the allowance for inventory valuation loss.

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Other matter–Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Elite Semiconductor Microelectronics Technology Inc. as at and for the years ended December 31, 2020 and 2019.

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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, 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 audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditor’s 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 auditor’s 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 ROC GAAS 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.

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As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• A. 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;

• B. 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;

• C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

• D. 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern;

• E. 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; and

• F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

We also provide those charged with governance with a statement 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 of the current year and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Cheng, Ya-Huei

Li, Tien-Yi

for and on behalf of PricewaterhouseCoopers, Taiwan

February 26, 2021

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2020 and 2019

Assets	Notes 6(1) 6(2) 6(4) 6(5) 8 6(3) 6(6) 6(7) 6(8) 6(9) 6(10)(11) 6(26) 8	December 31,2020 Amount % $ 3,597,917 28 365,474 3 136,704 1 - - 1,633,993 12 95,830 1 5,969,330 46 27,602 - 5,197 - 11,832,047 91 64,836 - 33,883 - 776,598 6 80,782 1 17,701 - 111,688 1 3,813 - 79,000 1 1,168,301 9 $ 13,000,348 100	Unit: NT$ thousand December 31,2019 Amount % $ 2,757,003 26 252,593 3 140,906 1 34 - 1,256,938 12 82,741 1 4,972,552 48 27,444 - 6,866 - 9,497,077 91 50,776 - 33,210 - 696,328 7 86,367 1 18,671 - 81,593 1 4,174 - 12,124 - 983,243 9 $ 10,480,320 100
		Amount $ 3,597,917 365,474 136,704 - 1,633,993 95,830 5,969,330 27,602 5,197 11,832,047 64,836 33,883 776,598 80,782 17,701 111,688 3,813 79,000 1,168,301 $ 13,000,348	Amount $ 2,757,003 252,593 140,906 34 1,256,938 82,741 4,972,552 27,444 6,866 9,497,077 50,776 33,210 696,328 86,367 18,671 81,593 4,174 12,124 983,243 $ 10,480,320
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - current 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 130X Inventories 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1517 Financial assets at fair value through other comprehensive income - non-current 1550 Investment accounted for under the equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets

(Continued)

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2020 and 2019

Liabilitiesand equity	Notes 6(12) 6(19) 6(13) 6(26) 6(14) 6(16) 6(17) 6(18) 6(16) 11	Unit: NT$ thousand December 31,2020 December 31,2019 Amount % Amount % $ 1,340,000 10 $ 274,000 3 149,756 1 - - 5,346 - 3,959 - 2,115 - 1,981 - 2,396,158 19 2,225,909 21 694,001 5 462,523 5 147,948 1 40,046 - 10,356 - 11,447 - 10,478 - 6,080 - 4,756,158 36 3,025,945 29 16,495 - 15,083 - 12,442 - 4,731 - 71,281 1 75,440 1 14,689 - 18,342 - 114,907 1 113,596 1 4,871,065 37 3,139,541 30 2,857,589 22 2,857,589 27 109,677 1 104,305 1 1,409,039 11 1,359,235 13 8,524 - - - 4,019,327 31 3,286,176 31 5,536 - ( 8,524) - ( 145,649) ( 1)( 137,321) ( 1) 8,264,043 64 7,461,460 71 ( 134,760) ( 1)( 120,681) ( 1) 8,129,283 63 7,340,779 70 $ 13,000,348 100 $ 10,480,320 100
		Amount $ 1,340,000 149,756 5,346 2,115 2,396,158 694,001 147,948 10,356 10,478 4,756,158 16,495 12,442 71,281 14,689 114,907 4,871,065 2,857,589 109,677 1,409,039 8,524 4,019,327 5,536 ( 145,649) 8,264,043 ( 134,760) 8,129,283 $ 13,000,348
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2130 Contract liabilities - current 2150 Notes payable 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2280 Lease liabilities - current 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2550 Provisions - non-current 2570 Deferred income tax liabilities 2580 Lease liabilities – non-current 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of the parent Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury shares 31XX Total equity attributable to owners of the parent 36XXNon-controlling interest 3XXX Total equity Significant Events after the End of the Balance Sheet Date 3X2X Total liabilities and equity

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

Chairman: Hsing-Hai Chen

Manager: Ming-Chien Chang

Accounting Manager: Candy Chu

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Comprehensive Income Years ended December 31, 2020 and 2019

Items

Unit: NT$ thousand (Except earnings per share) 2020 2019 Notes Amount % Amount % 6(19) $ 15,267,139 100 $ 11,983,479 100 6(5) (24) (25) ( 12,618,097 )( 83) ( 10,181,271)( 85 ) 2,649,042 17 1,802,208 15 6(24) (25) ( 271,045 ) ( 2) ( 234,342) ( 2 ) ( 290,943 ) ( 2) ( 243,035) ( 2 ) ( 940,851 ) ( 6) ( 739,881) ( 6 ) 12(2) 8,582 - ( 10,007) - ( 1,494,257 )( 10) ( 1,227,265)( 10 ) 1,154,785 7 574,943 5 6(20) 27,412 - 49,666 - 6(21) 26,505 - 40,500 - 6(22) 55,852 1 ( 66,895) - 6(23) ( 11,527 ) - ( 8,840) - 6(6) 673 - ( 13,194) - 98,915 1 1,237 - 1,253,700 8 576,180 5 6(26) ( 169,259 )( 1) ( 70,569)( 1 ) $ 1,084,441 7 $ 505,611 4 6(14) $ 812 - $ 636 - 6(3) 14,060 - ( 8,524) - $ 14,872 - ( $ 7,888) - $ 1,099,313 7 $ 497,723 4 $ 1,076,426 7 $ 497,405 4 $ 8,015 - $ 8,206 - $ 1,091,298 7 $ 489,517 4 $ 8,015 - $ 8,206 - 6(27) $ 3.85 $ 1.78 $ 3.83 $ 1.77

4000 Operating revenue 5000 Operating costs 5950 Gross profit Operating expenses 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit impairment gain (loss) 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains or losses 7050 Financial costs 7060 Share of profit (loss) of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expenses 8200 Profit for the period Other comprehensive income (loss) - net Items not reclassified to profit or loss 8311 Gain on remeasurements of defined benefit plans 8316 Unrealized gain (loss) on valuation of equity instruments at fair value through other comprehensive income 8300 Other comprehensive income (loss) - net 8500 Total comprehensive income for the period Profit (loss) attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive income (loss) attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings per share 9750 Basic earnings per share 9850 Diluted earnings per share

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

Chairman: Hsing-Hai Chen

Accounting Manager: Candy Chu

Manager: Ming-Chien Chang

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Changes in Equity Years ended December 31, 2020 and 2019

Unit: NT$ thousand

2019 Balance at January 1, 2019 Profit for the period Other comprehensive income for the period Comprehensive income for the period Distribution of 2018 earnings Legal reserve appropriated Cash dividends of ordinary share Reversal of special reserve Recognition of effects from change in ownership interests in subsidiaries - cash dividends distribution from subsidiaries Disposal of subsidiaries Adjustment of capital reserve due to cash dividends that subsidiaries received from parent Change in associates and joint ventures accounted for under equity method Expired cash dividends transferred to capital surplus Adjustment of payments of expired cash dividends Balance at December 31, 2019 2020 Balance at January 1, 2020 Profit for the period Other comprehensive income for the period Comprehensive income for the period Distribution of 2019 earnings Legal reserve appropriated Cash dividends of ordinary share Special reserve appropriated Acquisition of company's share by subsidiary recognized as treasury share Recognition of effects from change in ownership interests in subsidiaries - cash dividends distribution from subsidiaries Adjustment of capital reserve due to cash dividends that subsidiaries received from parent Recognition of effects from change in ownership interests in subsidiaries - subsidiary acquired non-controlling interest Expired cash dividends transferred to capital surplus Balance at December 31, 2020	Note						Equityattributable	Equityattributable	Equityattributable	to owners of theparent	to owners of theparent	to owners of theparent	to owners of theparent					Non-controlling interest	Non-controlling interest		Total equity
			Common stock		Capital surplus			R	etained earnings			Unrealized gain (loss) on financial assets measured at fair value through other comprehensive income			Treasury share		Total
							Legal reserve		Special reserve	Unappropriated retained earnings
	6(18) 6(17) 6(17) (28) 6(17) (28) 6(17) 6(17) 6(17) 6(18) 6(17) 6(17) 6(17) (28) 6(17)		$ 2,857,589 - - - - - - - - - - - - $ 2,857,589 $ 2,857,589 - - - - - - - - - - - $ 2,857,589		$ 59,072 - - - - - - 1,146 35,475 8,438 180 39 ( 45 ) $ 104,305 $ 104,305 - - - - - - - 1,146 5,925 ( 1,781 ) 82 $ 109,677		$ 1,288,584 - - - 70,651 - - - - - - - - $ 1,359,235 $ 1,359,235 - - - 49,804 - - - - - - - $ 1,409,039		$ 194,377 - - - - - ( 194,377 ) - - - - - - $ - $ - - - - - - 8,524 - - - - - $ 8,524		$ 3,093,047 497,405 636 498,041 ( 70,651 ) ( 428,638 ) 194,377 - - - - - - $ 3,286,176 $ 3,286,176 1,076,426 812 1,077,238 ( 49,804 ) ( 285,759 ) ( 8,524 ) - - - - - $ 4,019,327		$ - - ( 8,524 ) ( 8,524 ) - - - - - - - - - ($ 8,524 ) ($ 8,524 ) - 14,060 14,060 - - - - - - - - $ 5,536		($ 137,321 ) - - - - - - - - - - - - ($ 137,321 ) ($ 137,321 ) - - - - - - ( 8,328 ) - - - - ($ 145,649 )		$ 7,355,348 497,405 ( 7,888 ) 489,517 - ( 428,638 ) - 1,146 35,475 8,438 180 39 ( 45 ) $ 7,461,460 $ 7,461,460 1,076,426 14,872 1,091,298 - ( 285,759 ) - ( 8,328 ) 1,146 5,925 ( 1,781 ) 82 $ 8,264,043		($ 110,910 ) 8,206 - 8,206 - - - ( 15,444 ) ( 2,533 ) - - - - ($ 120,681 ) ($ 120,681 ) 8,015 - 8,015 - - - ( 11,566 ) ( 10,396 ) - ( 132 ) - ($ 134,760 )		$ 7,244,438 505,611 ( 7,888 ) 497,723 - ( 428,638 ) - ( 14,298 ) 32,942 8,438 180 39 ( 45 ) $ 7,340,779 $ 7,340,779 1,084,441 14,872 1,099,313 - ( 285,759 ) - ( 19,894 ) ( 9,250 ) 5,925 ( 1,913 ) 82 $ 8,129,283

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

Chairman: Hsing-Hai Chen

Manager: Ming-Chien Chang

Accounting Manager: Candy Chu

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Cash Flows Years ended December 31, 2020 and 2019

Cash flows from operating activities Profit before income tax for the period Adjustments Income and expenses having no effect on cash flows Depreciation Amortization Expected credit impairment loss (gain) Net loss (gain) on financial assets at fair value through profit or loss Interest expenses Interest income Share of (loss) profit of associates and joint ventures accounted for under equity method Dividend income Impairment loss Gains arising from lease modifications Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets at fair value through profit and loss Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Prepayments Other current assets Net changes in liabilities relating to operating activities Notes payable Accounts payable Contract liabilities Other payables Other current liabilities Other non-current liabilities Cash inflow generated from operations Interest received Interest paid Income taxes paid Net cash flows from operating activities

Unit: NT$ thousand Notes 2020 2019 $ 1,253,700 $ 576,180 6(7)(8)(9)(24) 312,334 398,674 6(10)(24) 111,556 85,108 12(2) ( 8,582 ) 10,006 6(2)(22) ( 132,628 ) 8,727 6(23) 11,527 8,840 6(20) ( 27,412 ) ( 49,666 ) 6(6) ( 673 ) 13,194 6(21) ( 13,053 ) ( 26,570 ) 6(10)(11)(22) 25,352 12,057 6(22) ( 211 ) - 19,747 ( 18,850 ) 34 ( 34 ) ( 367,741 ) ( 161,164 ) ( 732 ) - ( 16,458 ) ( 15,256 ) ( 996,778 ) 795,104 ( 158 ) 52,384 ( 2,300 ) ( 3,946 ) 134 ( 764 ) 170,249 331,538 1,387 388 142,077 ( 54,781 ) 4,398 1,742 395 384 486,164 1,963,295 30,782 50,064 ( 10,313 ) ( 7,837 ) ( 53,285) ( 156,102) 453,348 1,849,420 (Continued)

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Cash Flows Years ended December 31, 2020 and 2019

Cash flows from investing activities Acquisition of financial assets at amortized cost Disposal of financial assets at amortized cost Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for under the equity method Acquisition of property, plant and equipment (Increase) decrease in prepayments for equipment Acquisition of intangible assets Cash outflows from disposal of subsidiaries (Increase) Decrease in guarantee deposit paid Dividends received Net cash flows from investing activities Cash flows from financing activities Increase (decrease) in short-term borrowings Increase (decrease) in short-term notes and bills payable Lease principal repayment (Decrease) Increase in guarantee deposit received Cash dividends paid Subsidiaries paid cash dividends to minority share interests Subsidiaries received cash dividends from parent Expired cash dividends Payments of expired cash dividends Treasury share acquired Acquisition of ownership interests in subsidiaries Net cash flows from (used in) financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

Unit: NT$ thousand Notes 2020 2019 ( $ 140,157 ) ( $ 140,906 ) 144,359 - - 63,905 - ( 2,387 ) 6(29) ( 291,635 ) ( 268,041 ) ( 62,673 ) 52,996 6(10) ( 167,003 ) ( 44,783 ) - ( 11,607 ) ( 234 ) 185 6(21) 13,053 26,570 ( 504,290 ) ( 324,068 ) 6(29) 1,066,000 ( 96,000 ) 6(29) 150,476 ( 99,417 ) 6(29) ( 10,575 ) ( 12,525 ) 6(29) ( 3,236 ) 269 6(18) ( 285,759 ) ( 428,638 ) ( 9,250 ) ( 14,298 ) 6(17) 5,925 8,438 6(17) 82 39 6(17) - ( 45 ) ( 19,894 ) - 6(28) ( 1,913) - 891,856( 642,177) 840,914 883,175 6(1) 2,757,003 1,873,828 6(1) $ 3,597,917 $ 2,757,003

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

Chairman: Hsing-Hai Chen

Manager: Ming-Chien Chang

Accounting Manager: Candy Chu

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Notes to the Consolidated Financial Statements Years Ended December 31, 2020 and 2019

Unit: NT$ thousand (Unless otherwise indicated)

1. History and Organization

Elite Semiconductor Microelectronics Technology Inc. (the Company) was founded in May 1998 and started operation in December of the same year. The core business of the Company and its subsidiaries (collectively referred herein as “the Group”) include research, development, production, manufacture, and sales of dynamic and static random access memory, flash memory, analog integrated circuit, analog and digital mixed integrated circuit. The Group also provides technical services related to product design and R&D.

The Company merged with Ji Xin Technology Co., Ltd. On December 5, 2005, and merged with Eon Silicon Solution Inc. on June 8, 2016, and the Company is the surviving company.

1. The Date of Authorization for Issuance of the Consolidated Financial Statemen ts

and Procedures for Authorization

The consolidated financial statements were reported to the Board of Directors on February 26, 2021.

3. Application of New Standards, Amendments and Interpretations

• (1) Effect of the adoption of new issuance of or amendments to International Financial Reporting Standards ( “IFRS”) as endorsed by the Financial Supervisory Commission ( “FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

	Effective Date by
	International Accounting
New Standards,AmendmentsandInterpretations	StandardsBoard
Amendments to IAS 1 and IAS 8, “Disclosure Initiative - Definition of Material”	January 1, 2020
Amendments to IFRS 3, “Definition of a Business”	January 1, 2020
Amendments to IFSR 9, IAS 39, and IFRS 7, “Interest rate benchmark reform”	January 1, 2020
Amendments to IFRS 16, “Covid-19-Related Rent Concessions”	June 1, 2020 (Note)
Note: Earlier application from January 1, 2020 is allowed by	FSC.

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

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(2) Effect of New Issuances of or Amendments to IFRSs as Endorsed by the FSC but not yet Adopted by the Company

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

from 2021 are as follows:
	Effective Date by
	International
	Accounting Standards
New Standards, Amendments and Interpretations	Board
Amendments to IFRS 4, “Extension of the Temporary Exemption from Applying IFRS 9”	January 1, 2021
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16,
“Interest Rate Benchmark Reform— Phase 2”	January 1, 2021

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

(3) Effects of IFRSs Issued by IASB but not yet Endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

	Effective Date by
	International
	Accounting
New Standards,AmendmentsandInterpretations	StandardsBoard
Amendments to IFRS 3, “Reference to the Conceptual Framework”	January 1, 2022
Amendments to IFRS 10 and IAS 28, “Sale or Contribution of Assets	To be determined
between an Investor and its Associate or Joint Venture”	by IASB
IFRS 17, “Insurance Contracts”	January 1, 2023
Amendments to IFRS 17, “Insurance Contracts”	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
Amendments to IAS 8, “Definition of accounting estimates”	January 1, 2023
Amendments to IAS 16, “Property, Plant and Equipment -Proceeds	January 1, 2022
before Intended Use”
Amendments to IAS 37, “Onerous Contracts - Cost of Fulfilling a	January 1, 2022
Contract”
Annual Improvements to IFRSs 2018-2020 Cycle	January 1, 2022

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

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4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

• (1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

• (2) Basis of preparation

• A. Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:

  • (a) Financial assets (including derivatives instruments) at fair value through profit or loss.

  • (b) Financial assets at fair value through other comprehensive income.

  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.

• B. The preparation of financial statements in conformity with IF RSs, requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are estimates are significant to the consolidated financial statements are disclosed in Note 5.

• (3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements

  • (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

  • (b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency wit h the policies adopted by the Group.

  • (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

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• (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with noncontrolling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. 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.

• B. Subsidiaries included in the consolidated financial statements:

directly in equity. . Subsidiaries included in the consolidated	financial statements:
Name of Investor Name of Subsidiary Main Business Activities	Ownership(%) December 31,2020 December 31,2019 Note
Elite Semiconductor Microelectronics Technology Inc. Elite Semiconductor Memory Technology Inc. Research and development, production, sales and related consulting services of integrated circuit 100 100 Elite Semiconductor Microelectronics Technology Inc. Charng Feng Investment Ltd. General investment 100 100 Elite Semiconductor Microelectronics Technology Inc. Jie Yong Investment Ltd. General investment 41.86 41.86 Note 1 Elite Semiconductor Microelectronics Technology Inc. Elite Investment Services Ltd. General investment 100 100 Elite Semiconductor Microelectronics Technology Inc. Elite Semiconductor (B.V.I.) Ltd. General investment - 100 Note 2 Elite Semiconductor Microelectronics Technology Inc. Eon Silicon Solutions, Inc. USA Investigation and research of business situation and industrial technology 100 100 Charng Feng Investment Ltd. 3R Semiconductor Technology Inc. Product design, wholesale and retail of electronic materials, manufacturing of electronic components, information software services and international trade 100 100 Charng Feng Investment Ltd. Elite Silicon Technology Inc. Product design, wholesale and retail of electronic materials, manufacturing of electronic components, information software services and international trade 98.01 79.37 Charng Feng Investment Ltd. Elite Innovation Japan Ltd. Product design, wholesale and retail of electronic materials, manufacturing of electronic components, information software services and international trade 100 100

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Name of Investor Name of Subsidiary Main Business Activities

Ownership(%) December 31,2020 December 31,2019 Note

Charng Feng Investment Ltd. Elite Semiconductor Microelectronics Technology (Shenzhen) Inc. Trading of goods or technical services, develop and sale products of networking system, storage, and peripherals, technical consulting and services of integrated circuit, and after - sales service 100 100 Charng Feng Investment Ltd. Elite Semiconductor Microelectronics (Shanghai) Technology Inc. Product design, wholesale and retail of electronic materials, information software services and international trade 100 - Note 3 Charng Feng Investment Ltd. CHI Microelectronics Limited Trading 100 - Note 4

• Note 1: Elite Semiconductor Microelectronics Technology Inc. accounts for the majority of voting rights of Jie Yong Investment Ltd. and have same management. It is evaluated to have substantial control, so it was included in the consolidated financial statements.

• Note 2: Elite Semiconductor (B.V.I.) Ltd. obtained a liquidated certificate from local regulatory authority on February 9, 2021, and obtained a liquidated letter from Investment Commission of Ministry of Economic Affairs (MOEA) on February 20, 2021.

• Note 3: Elite Semiconductor Microelectronics (Shanghai) Technology Inc. was established on November 27, 2019. The Company's subsidiary, Charng Feng Investment Ltd., obtained the investment amount of USD 200,000 approved by the Investment Commission of MOEA on May 20, 2020.

• Note 4: CHI Microelectronics Limited. was established on August 31, 2020. The Company's subsidiary, Charng Feng Investment Ltd., obtained the investment amount of HKD 100,000 approved by the Investment Commission of MOEA on December 11, 2020. It has not yet operated as of December 31, 2020.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: Not applicable.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

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(4) Foreign currency translation

Items included in the financial statements of each of the Group ’s entities are measured using the currency of the primary economic environment in w hich the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional and the Group’s presentation currency.

Foreign currency transactions and balances

• A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transact ions are recognized in profit or loss in the period in which they arise.

• B. Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

• C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

• D. All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’

• (5) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a)Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

  • (b)Assets held mainly for trading purposes;

  • (c)Assets that are expected to be realized within twelve months from the balance sheet date;

  • (d)Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

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• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

  • (a)Liabilities that are expected to be settled within the normal operating cycle;

  • (b)Liabilities arising mainly from trading activities;

  • (c)Liabilities that are to be settled within twelve months from the balance sheet date;

  • (d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect it s classification.

• (6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definit ion above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

• (7) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial ass ets that are not measured at amortized cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.

• D. The Group recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(8) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

• (a)The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

• (b) The assets’ contractual cash flows represent solely payments of principal and interest.

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• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(9) Financial assets at amortized cost

• A. Financial assets at amortized cost are those that meet all of the following criteria:

  • (a)The objective of the Group’s business model is achieved by collecting contractual cash flows.

  • (b)The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortized cost

  • are recognized and derecognized using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.

• D. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amou nt as the effect of discounting is immaterial.

• (10) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(11) Impairment of financial assets

For financial assets at amortized cost, at each reporting date, the Group recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant financing component, the Group recognizes the impairment provision for lifetime ECLs.

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(12) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

(13) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads. It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(14) Investments accounted for using equity method / associates

• A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.

• B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post -acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

• D. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit

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or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.

• G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• (15) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

• B. Subsequent costs are included in the asset ’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight -line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets ’ future economic benefits embodied in the assets have changed significantly, an y change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

  • Buildings and structures 3~20 years Machinery and equipment 3~8 years Testing equipment 3~8 years Other 3~10 years

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(16) Leasing arrangements (lessee) － right -of-use assets/ lease liabilities

• A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low value assets, lease payments are recognized as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of Fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term.

• Starting from the lease date, the Group assesses whether it can reasonably determine its option to extend the lease or purchase the underlying asset, or not to terminate the lease. The Group considers all relevant facts and circumstances that will generate economic incentives to exercise or not exercise the options. Such circumstances include all expected changes in facts and situations from the start of the lease to the day when the option is exercised. Main factors to consider include contractual terms and conditions within the period of options and the importance of the underlying asset to the lessee’s operations, etc. The lease term will be reassessed if a significant change or a major change in circumstances occurs within the Company's control range.

The lease liability is remeasured and the amount of remeasurement is recognized as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost. The cost is the amount of the initial measurement of lease liability. The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset ’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognized as an adjustment to the right -of-use asset.

• (17) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Investment property is depreciated on a straight -line basis over its estimated useful life of 20 years.

(18) Intangible assets

• A. Patent and technical skill, customer relationship

Separately acquired patent is stated at historical cost. Patent and technical skill, customer relationship acquired in a business combination are recognized at fair value at the acquisition date and amortized on a straightline basis over their estimated useful lives of 3 years.

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B. Goodwill

  - Goodwill arises in a business combination accounted for by applying the acquisition method.

• C. Other intangible assets, mainly computer software, are stated at cost and amortized on a straight-line basis over their estimated useful lives of 1 ~ 3 years.

• (19) Impairment of non- financial assets

• A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset ’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

• B. The recoverable amount of goodwill is evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.

• C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

(20) Borrowings

Borrowings are short-term bank borrowings. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

(21) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. However, for short -term accounts payable without bearing interest, as the effect of discounting is insignificant, they are measured subsequently at original invoice amount.

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(22) Derecognition of financial liabilities

A financial liability is derecognized when the obligation specified in the contract is either discharged or cancelled or expires.

(23) Provisions

Provisions of decommissioning are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre - tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the oblig ation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(24) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expense in that period when the employees render service.

• B. Pensions

• (a)Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expense when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

• (b)Defined benefit plans

• I. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds at the balance sheet date of a currency and term consistent with the currency and term of the employment benefit obligations.

• II. Remeasurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as other equity.

• III. Past service costs are recognized immediately in profit or loss.

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• C. Employees’ compensation and directors’ and supervisors’ remuneration

• Employees’ compensation and directors’ and supervisors’ remuneration are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

- (25) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

(26) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affect s neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable

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future. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

• D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.

• E. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

• F. If a change in tax rate is enacted, the Group recognizes the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognized outside profit or loss is recognized in other comprehensive income or equity while the effect of the change on items recognized in profit or loss is recognized in profit or loss.

(27) Share capital

• A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(28) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

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(29) Revenue recognition

• A. The Group manufactures and sells integrated circuit. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

• B. The Group accepts sales orders from customers. Sales revenue is recognized according to the contract price, and the Group transfers the promised goods or services to customers. Since the customer's payment period does not exceed one year, the Group has not adjusted the monetary time value of the transaction price.

• C. A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

(30) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Group ’s chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments.

5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Critical judgements in applying the Group ’s accounting policies

None.

(2) Critical accounting estimates and assumptions

Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is

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principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation. As of December 31, 2020, the carrying amount of inventories was $5,969,330.

6. Details of Significant Accounts

• (1) Cash and cash equivalents

Cash on hand and revolving funds Checking accounts and demand deposits Time deposits		December 31, 2020	December 31, 2019 $ 171 394,658 2,362,174
		$ 137 1,042,489 2,555,291 $ 3,597,917
			$ 2,757,003

• A. The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. Details of the Group's cash and cash equivalents pledged to others as collateral are provided in Note 8.

• (2) Financial assets at fair value through profit or loss

Item	December31,2020	December31,2019 $ 1,567 148,013 23,263 74,442 31,226 14,510 293,021 ( 40,428) $ 252,593
Current items: Financial assets mandatorily measured at fair value through profit or loss Listed stock Emerging stocks Unlisted stock Beneficiary certificates Bonds Preference share Subtotal Valuation adjustment Total	$ 576 162,911 8,113 72,991 31,226 13,784 289,601 75,873 $ 365,474

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• A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

Financial assets mandatorily measured at fair value through profit or loss Equity instruments Debt instruments Beneficiary certificates Total		Year ended December 31, 2020 2019 $ 123,592 ($ 14,498) 2,465 3,115 6,571 2,656 $ 132,628 ($ 8,727)
		2020
		$ 123,592 2,465 6,571 $ 132,628

• B. The Group has no financial assets at fair value through profit or loss pledged to others.

• C. Information relating to credit risk is provided in Note 12(2)C(b).

• (3) Financial assets at fair value through other comprehensive income

Item	December 31, 2020	December 31, 2019
Non-current items: Equity instruments Unlisted stock Valuation adjustment	$ 59,300 5,536 $ 64,836	$ 59,300 ( 8,524)
		$ 50,776

The Group has elected to classify equity investments that are considered to strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $64,836 and $50,776 as at December 31, 2020 and 2019, respectively.

(4) Accounts receivable

Accounts receivable - general customers Accounts receivable - related parties Less: Allowance for losses		December31,2020	December31,2019 $ 1,270,992 241 1,271,233 ( 14,295) $ 1,256,938
		$ 1,638,733 973 1,639,706 ( 5,713) $ 1,633,993

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• A. The ageing analysis of accounts receivable is as follows:

Not past due Past due-within 30 days Past due-31-90 days Past due-91-180 days Past due-over 180 days		December 31, 2020	December 31, 2019 $ 1,256,700 238 - - 14,295 $ 1,271,233
		$ 1,633,993 - - - 5,713 $ 1,639,706

The above aging analysis was based on past due date.

• B. As at December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum hedge to credit risk in respect of the amount that best represents the Group ’s accounts receivable were $1,633,993 and $1,256,938, respectively.

• C. The collaterals and fair value held by the Group as guarantee for accounts receivable are as follows:

receivable are as follows:
Bank guarantee Pledged certificate of deposit Guarantee deposits received (shown as “other non-current liabilities”) Letters of credit Company promissory note/check		December 31, 2020	December 31, 2019 $ 43,494 7,500 8,794 546,672 366,621 $ 973,081
		$ 33,044 4,272 5,526 760,162 555,221 $ 1,358,225

• D. Information relating to credit risk is provided in Note 12(2).

• E. As at December 31, 2020 and 2019, accounts receivable were all from contracts with customers. As at January 1, 2019, the balance of receivables from contracts with customers amounted to $1,105,913.

• F. The Group has no accounts receivable pledged to others as collateral.

~33~

(5) Inventories

Raw materials Work in progress Finished goods Inventory in transit Raw materials Work in progress Finished goods Inventory in transit			December31,2020	December31,2020	December31,2020	Bookvalue $ 127,378 4,704,290 1,131,122 6,540 $ 5,969,330 Book value $ 148,876 3,942,623 876,660 4,393 $ 4,972,552
			Cost	Allowance for valuation loss
			$ 138,104 4,724,556 1,199,604 6,540 $ 6,068,804	($ 10,726) ( 20,266) ( 68,482) - ($ 99,474) December 31, 2019
			Cost		Allowance for valuation loss
			$ 158,670 4,013,286 965,399 4,393 $ 5,141,748		($ 9,794) ( 70,663) ( 88,739) - ($ 169,196)

The Group recognized as expense or loss:

Cost of goods sold Reversal of allowance on market value decline and obsolete and slow-moving inventories	YearendedDecember31,	YearendedDecember31,	YearendedDecember31,
	2020	2019
	$ 12,687,819 ( 69,722) $ 12,618,097	$ 10,266,729 ( 85,458) $ 10,181,271
			$ 10,181,271

The reversal of allowance were recognized due to sale of certain inventories which were previously provided with allowance for price decline.

(6) Investments accounted for under the equity method

At January 1 Addition of investments accounted for using equity method(Note) Share of profit or loss of investments accounted for using equity method At December 31	2020	2019 $ - 46,404 ( 13,194) $ 33,210
	$ 33,210 - 673 $ 33,883

~34~

Associates	December31,2020	December31,2019
	$ 33,883	$ 33,210

• Note: The Group held 7,795 thousand shares or NT$77,950 in its subsidiary, Canyon Semiconductor Inc. (collectively referred herein as “Canyon Semiconductor”).As the Group did not participate in Canyon Semiconductor Inc.’s capital increase by the issuance of shares for cash on March 4, 2019, the shareholding ratio of the Group decreased from 77.95% to 38.21%. In addition, Charng Feng Investment Ltd. purchased shares of Canyon Semiconductor Inc. in December 2019, increasing its percentage of shareholding from 38.21% to 40.93%. Though the Group no longer controls Canyon Semiconductor, it has still significant influences on the subsidiary.

• A. Associates

• (a) The basic information of the associates that are material to the Group is as follows:

on the subsidiary. sociates The basic information as follows:	of the associates that are material to the Group is
Company name Principal place of business	Shareholding ratio Nature of relationship Method of measurement
Canyon Semiconductor Inc. Taiwan	December 31, 2020 December 31, 2019 40.93% 40.93% Holding over 20% of voting rights Equity method

• (b) The summarized financial information of the associates that are material to the Group is as follows:

• Balance sheet

Balance sheet
Current assets Non-current assets Current liabilities Total net assets Share in associate's net assets Carrying amount of the associate		CanyonSemiconductor Inc. December31,2020 December31,2019 $ 109,740 $ 91,092 1,299 1,596 ( 28,258) ( 11,549) $ 82,781 $ 81,139 $ 33,883 $ 33,210 $ 82,781 $ 81,139
		December31,2020
		$ 109,740 1,299 ( 28,258) $ 82,781 $ 33,883 $ 82,781

~35~

Revenue Profit (loss) for the period from continuing operations Total comprehensive income (loss)		CanyonSemiconductor Inc.	CanyonSemiconductor Inc.
		YearendedDecember31,
		2020	2019
		$ 149,872 $ 1,642 $ 1,642	$ 21,440
			($ 33,589)
			($ 33,589)

(7) Property, plant and equipment

At January 1, 2020 Cost Accumulated depreciation and impairment 2020 At January 1 Additions Transfer (Note) Depreciation charge At December 31 At December 31, 2020 Cost Accumulated depreciation and impairment		Land Buildings and structures Machinery equipment Testing equipment	Land Buildings and structures Machinery equipment Testing equipment	Land Buildings and structures Machinery equipment Testing equipment	Land Buildings and structures Machinery equipment Testing equipment	Others
		$9,023 - $9,023 $9,023 - - - $9,023 $9,023 - $9,023	$635,941 ( 364,888) $271,053 $271,053 505 - ( 34,055) $237,503 $636,446 ( 398,943) $237,503	$429,782 ( 352,626) $ 77,156 $ 77,156 85,605 2,719 ( 22,509) $142,971 $518,018 ( 375,047) $142,971	$249,302 ( 146,396) $102,906 $102,906 38,058 1,455 ( 22,815) $119,604 $287,860 ( 168,256) $119,604	$1,231,048 ( 994,858) $ 236,190 $ 236,190 252,171 - ( 220,864) $ 267,497 $1,481,488 (1,213,991) $ 267,497

~36~

At January 1, 2019 Cost Accumulated depreciation and impairment 2019 At January 1 Additions Transfer (Note) Effects due to changes in consolidated entities Depreciation charge At December 31 At December 31, 2019 Cost Accumulated depreciation and impairment		Land Buildings and structures Machinery equipment Testing equipment	Land Buildings and structures Machinery equipment Testing equipment	Land Buildings and structures Machinery equipment Testing equipment	Land Buildings and structures Machinery equipment Testing equipment	Others
		$9,023 - $9,023 $9,023 - - - - $9,023 $9,023 - $9,023	$615,250 ( 332,185) $283,065 $283,065 5,496 15,195 - ( 32,703) $271,053 $635,941 ( 364,888) $271,053	$393,874 ( 313,959) $ 79,915 $ 79,915 35,908 - - ( ( 38,667) $ 77,156 $429,782 ( 352,626) $ 77,156	$188,647 ( 134,215) $ 54,432 $ 54,432 10,070 59,205 336) ( 20,465) $102,906 $249,302 ( 146,396) $102,906	$1,081,083 ( 708,456) $ 372,627 $ 372,627 159,093 - ( 2,843) ( 292,687) $ 236,190 $1,231,048 ( 994,858) $ 236,190

• Note: Transferred from prepayments for equipment (shown as “other noncurrent assets”).

• A. For the years ended December 31, 2020 and 2019 no interest expense was capitalized on property, plant and equipment in the Group.

• B. The Group has no property, plant and equipment pledged to others.

• (8) Leasing arrangements- lessee

• A. The Group leases various assets including land, buildings and structures, business vehicles, printers. Rental contracts are typically made for periods of 2 to 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Short-term leases with a lease term of 12 months or less comprise business vehicles and staff dormitory.

• B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

as follows:
Land Buildings and structures Business vehicles Printers		December31,2020 December31,2019 Bookvalue $ 62,221 $ 65,641 15,188 19,270 3,083 470 290 986 $ 80,782 $ 86,367
		$ 62,221 15,188 3,083 290 $ 80,782

~37~

Land Buildings and structures Business vehicles Printers		YearendedDecember31, 2020 2019 Depreciationcharge $ 3,420 $ 3,420 6,294 7,334 711 1,732 696 696 $ 11,121 $ 13,182
		2020
		Depreciation
		$ 3,420 6,294 711 696 $ 11,121

• C. For the years ended December 31, 2020 and 2019, the additions to right -ofuse assets were $10,410 and $0, respectively.

• D. The information on profit and loss accounts relating to lease contracts is as follows:

follows:
Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts		YearendedDecember31, 2020 2019 $ 1,203 $ 1,191 $ 7,855 $ 9,052
		2020
		$ 1,203 $ 7,855

• E. For years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $19,633 and $22,909, respectively.

• (9) Investment property

At January 1, 2020 Cost Accumulated depreciation and impairment 2020 At January 1 Depreciation charge At December 31 At December 31, 2020 Cost Accumulated depreciation and impairment	Buildings and structures $ 20,369 ( 1,698) $ 18,671 $ 18,671 ( 970) $ 17,701 $ 20,369 ( 2,668) $ 17,701

~38~

Buildings and structures

At January 1, 2019 Cost Accumulated depreciation and impairment 2019 At January 1 Depreciation charge At December 31 At December 31, 2019 Cost Accumulated depreciation and impairment	$ 20,369 ( 728)
	$ 19,641 $ 19,641 ( 970)
	$ 18,671 $ 20,369 ( 1,698)
	$ 18,671

• A. Rental income from investment property and direct operating expenses arising from investment property are shown below:

Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period		Year ended December 31, 2020 2019 $ 2,470 $ 2,436 $ 970 $ 970
		2020
		$ 2,470 $ 970

• B. The fair value of the investment property held by the Group as at December 31, 2020 and 2019 was $10,516 and $10,538, respectively, which was valued by income approach. Key assumptions are as follows:

Rate of net return on capital (Note) Note: Calculated based on the	December 31, 2020

• C. For the years ended December 31, 2020 and 2019 no interest expense was capitalized on investment property in the Group.

• D. The Group has no investment property pledged to others.

~39~

(10) Intangible assets

At January 1, 2020 Cost Accumulated depreciation and impairment 2020 At January 1 Additions Amortization charge Impairment loss At December 31 At December 31, 2020 Cost Accumulated depreciation and impairment At January 1, 2019 Cost Accumulated depreciation and impairment 2019 At January 1 Additions Amortization charge Impairment loss At December 31 At December 31, 2019 Cost Accumulated depreciation and impairment	Patents and Customer Technical skill Relationship	Patents and Customer Technical skill Relationship	Patents and Customer Technical skill Relationship	Goodwill	Others	Total $ 330,088 ( 248,495) $ 81,593 $ 81,593 167,003 ( 111,556) ( 25,352) $ 111,688 $ 497,091 ( 385,403) $ 111,688 Total $ 285,305 ( 151,330) $ 133,975 $ 133,975 44,783 ( 85,108) ( 12,057) $ 81,593 $ 330,088 ( 248,495) $ 81,593
	$ 34,478 $ 11,000 ( 25,556) ( 11,000) $ 8,922 $- $ 8,922 $ - - - ( 5,098) - - - $ 3,824 $- $ 34,478 $ 11,000 ( 30,654) ( 11,000) $ 3,824 $- Patents and Customer Technical skill Relationship			$ 80,758 ( 37,104) $ 43,654 $ 43,654 - - ( 25,352) $ 18,302 $ 80,758 ( 62,456) $ 18,302 Goodwill	$ 203,852 ( 174,835) $ 29,017 $ 29,017 167,003 ( 106,458) - $ 89,562 $ 370,855 ( 281,293) $ 89,562 Others
		$ 34,478 ( 16,596) $ 17,882 $ 17,882 - ( 8,960) - $ 8,922 $ 34,478 ( 25,556) $ 8,922	$ 11,000 ( 9,473) $ 1,527 $ 1,527 - ( 1,527) - $- $ 11,000 ( 11,000) $-	$ 80,758 ( 25,047) $ 55,711 $ 55,711 - - ( 12,057) $ 43,654 $ 80,758 ( 37,104) $ 43,654	$ 159,069 ( 100,214) $ 58,855 $ 58,855 44,783 ( 74,621) - $ 29,017 $ 203,852 ( 174,835) $ 29,017

~40~

A. Details of amortization on intangible assets are as follows:

Operating costs Selling expenses Administrative expenses Research and development expenses		Year ended December 31, 2020 2019 $ 5,098 $ 8,405 176 1,864 909 711 105,373 74,128 $ 111,556 $ 85,108
		2020
		$ 5,098 176 909 105,373 $ 111,556

• B. For the years ended December 31, 2020 and 2019 no interest expense was capitalized on intangible assets in the Group.

• C. Impairment information about the intangible assets is provided in 6(11).

• D. The Group has no intangible assets pledged to others.

(11) Impairment of non- financial assets

The Group performs impairment tests on the recoverable amount of goodwill on the balance sheet date. The recoverable amount of cash-generating units has been determined based on value-in-use calculations. These calculations use cash flow projections approved by the management covering a five -year period as the basis for estimation. The relevant discount rates for 2020 and 2019 were 13.29% and 13.86%, respectively. The value-in-use used by the Group to calculate cash-generating units is derived from historical information on estimated future revenue growth rates, gross profit margins, and operating expense ratios, with reference to future industrial economic trends. The recoverable amount calculated based on the above key assumptions is lower than the book value of goodwill. Thus, the Group recognized impairment losses of $25,352 and $12,057 in 2020 and 2019, respectively.

(12) Short -term borrowings

respectively. hort-term borrowings
Type of borrowings Bank borrowings Credit loans Type of borrowings Bank borrowings Credit loans	December 31, 2020 Interest raterange Collateral
	$ 1,340,000 0.75%～1.05% None December 31, 2019 Interest raterange Collateral
	$ 274,000 0.98%～1.90% None

Interest expense recognized in profit or loss amounted to $8,184 and $5,340 for the years ended December 31,2020 and 2019, respectively.

~41~

(13) Other payables

Salary and bonus payables Payable on employees and director remuneration Payable on equipment Others	December31,2020	December31,2019
	$ 381,089 80,658 146,904 85,350 $ 694,001	$ 295,252 36,191 58,026 73,054 $ 462,523

(14) Pensions

• A.(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions for the deficit by next March.

• (b) The amounts recognized in the balance sheet are as follows:

Present value of defined benefit obligations Fair value of plan assets Unadjusted amount for the period Net liability recognized in the balance sheet		December 31, 2020	December 31, 2019 $ 12,739 ( 2,409) 10,330 ( 21) $ 10,309
		$ 14,033 ( 2,663) 11,370 ( 850) $ 10,520

~42~

(c) Movements in net defined benefit liabilities are as follows:

2020 At January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Unadjusted amount for the period At December 31 2019 At January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Unadjusted amount for the period At December 31		Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability	Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability	Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability
		($ 12,739) $ 2,409 ($ 10,330) ( 314) - ( 314) ( 88) 18 ( 70) ( 13,141) 2,427 ( 10,714) - 80 80 ( 524) - ( 524) ( 368) - ( 368) ( 892) 80 ( 812) - 156 156 - - 850 ($ 14,033) $ 2,663 ($ 10,520) Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability		($ 10,330) ( 314) ( 70)
				( 10,714) 80 ( 524) ( 368)
				( 812)
				156 850
		($ 11,614) ( 299) ( 116) ( 12,029) - ( 385) ( 325) ( 710) - - ($ 12,739)	$ 2,164 - 21 2,185 74 - - 74 150 - $ 2,409	($ 9,450) ( 299) ( 95)
				( 9,844)
				74 ( 385) ( 325)
				( 636)
				150 21
				($ 10,309)

~43~

• (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over - the-counter, or private placement equity securit ies, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

(e)The principal actuarial assumptions used were as follows:

Discount rate Future salary increases		Year ended December 31,	Year ended December 31,
		2020	2019
		0.30% 3.00%	0.70%
			3.00%

Assumptions regarding future mortality experience are set based on the fifth life experience table in Taiwan for the years ended 2020 and 2019. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

December 31, 2020 Effect on present value of defined benefit obligation December 31, 2019 Effect on present value of defined benefit obligation	Discount rate Future salary increases	Discount rate Future salary increases	Discount rate Future salary increases	Discount rate Future salary increases	Discount rate Future salary increases
	Increase 0.25% Decrease 0.25% Increase 0.25%Decrease 0.25%
		($ 330) ($ 322)	$ 341 $ 332	$ 296 $ 292	($ 289) ($ 285)

~44~

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

• (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $158.

in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period. (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $158.	in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period. (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $158.
(g) As of December 31, 2020, the weighted average duration of the
retirement plan is 10 years. The analysis of timing of the fut ure pension
payment was as follows:
Within 1 year	$ 147
1-2 years	145
2-5 years	3,201
Over 5 years	6,458
	$ 9,951

• B.(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute mo nthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The Company’s subsidiaries, Eon Silicon Solutions, Inc. USA established a 401(K) plan based on the US Government ’s National Tax Regulation 401(K), and local employees can allocate a certain amount of salary to the pension account each month within the upper limit; the Company may cooperate with the allocation according to its policy of rewarding or comforting employees.

• (c) The Company’s mainland China subsidiaries, Elite Semiconductor Microelectronics Technology (Shenzhen) Inc. and Elite Semiconductor Microelectronics (Shanghai) Technology Inc., have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

• (d) The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2020 and 2019, were $31,867 and $31,323, respectively.

~45~

(15) Share- based payment

• A. For the years ended December 31, 2020 and 2019, the Group’s share-based payment arrangements were as follows:

			Contract	Vesting
Type of arrangement	Grant date	Quantity granted	period	condition
Succeed to 2010 Eon	August 10, 2010,	4,000 thousand shares	10 years	Note 1
Silicon Solution Inc.’s	October 15, 2010 and	(Note 2)
employee stock options	January 13, 2011
Succeed to 2013 Eon	August 19, 2013	7,500 thousand shares	10 years	Note 1
Silicon Solution Inc.’s		(Note 2)
employee stock options

Note 1: The accumulative proportion of the new shares that can be obtained after the two-year, three-year and four-year service expirations are 50%, 75% and 100%, respectively.

Note 2: The number of grants given by the Company to the Eon Silicon Solution Inc. employee stock option plan is the amount given on the original plan grant date. After the merger, Eon Silicon Solution Inc.'s 2010 and 2013 employee stock option plans have 219 thousand shares and 688 thousand shares in circulation.

Among the share-based payment arrangements above are settled by equity.

• B. Details of the share-based payment arrangements are as follows:

Succeed to Eon Silicon Solution Inc. ’s employee stock options:

Options outstanding at January 1 Options forfeited Options expired Options outstanding at December 31 Options exercisable at December 31	2020 2019	2020 2019	2020 2019
	Weighted-average Weighted-average No. of options exercise price (indollars) No. of options exercise price (indollars)
		543 $ 59.2~303.4 ( 4) 217.4 ( 21) 241.2~295.4 518 $ 57.6~217.4 518	621 $ 62.3~319.0 ( 78) 59.2~303.4 - - 543 $ 59.2~303.4 543

• C. No options exercised for the years ended December 31, 2020 and 2019, respectively.

• D. As of December 31, 2020 and 2019, the range of exercise prices of stock options outstanding was $57.6~$217.4 and $59.2~$303.4 (in dollars), respectively; the weighted-average remaining contractual period was 2.64 years and 3.64 years, respectively.

• E. Expenses incurred on share-based payment transactions for the years ended December 31, 2020 and 2019, were all $0.

~46~

(16) Share capital

• A. As of December 31, 2020, the Company’s authorized capital was $3,500,000, consisting of 350,000 thousand shares of ordinary stock (including 20,000 thousand shares reserved for employee stock options), and the paid-in capital was $2,857,589 with a par value of $10 (in dollars) per share.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

Shares: thousand shares

are as follows:		Shares:	thousand shares
Shares outstanding at January 1 Subsidiary acquired parent company's shares is regarded as treasury shares transaction Shares outstanding at December 31 Treasury shares at the end of the period Shares issued at December 31		2020	2019 272,320 - 272,320 13,439 285,759
		272,320 ( 715) 271,605 14,154 285,759

B. Treasury shares

The Company's shares held by the Company's subsidiary, Jie Young Investment Ltd., as of December 31, 2020 and 2019 due to the parent company's business strategy, were 14,154 thousand shares and 13,439 thousand shares, with carrying amounts of $347,942 and $328,048, respectively; the average book value per share were $24.58 and $24.41, and the fair value per share were $64.70 and $38.90.

(17) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

~47~

2020 Changes in Treasury share ownership interests in Employee stock transactions subsidiaries options At January 1 $ 1,661 $ 94,949 $ 3,913 Recognition of effects from change in ownership interests in subsidiaries - cash dividends distribution from subsidiaries - 1,146 - Adjustment of capital reserve due to cash dividends that subsidiaries received from parent - 5,925 - Recognition of effects from change in ownership interests in subsidiaries - subsidiary acquired non- controlling interest - ( 1,781) - Expired cash dividends transferred to capital surplus - - - At December 31 $ 1,661 $ 100,239 $ 3,913 2019 Changes in Treasury share ownership interests in Employee stock transactions subsidiaries options At January 1 $ 1,661 $ 49,710 $ 3,913 Recognition of effects from change in ownership interests in subsidiaries - cash dividends distribution from subsidiaries - 1,146 - Disposal of subsidiaries - 35,475 - Adjustment of capital reserve due to cash dividends that subsidiaries received from parent - 8,438 - Change in associates and joint ventures accounted for under equity method - 180 - Expired cash dividends transferred to capital surplus - - - Adjustment of payments of expired cash dividends - - - At December 31 $ 1,661 $ 94,949 $ 3,913	2020	2020	2020	2020		Total $104,305 1,146 5,925 ( 1,781) 82 $109,677 Total $ 59,072 1,146 35,475 8,438 180 39 ( 45) $104,305
	Changes in Treasury share ownership interests in Employee stock transactions subsidiaries options				Others
		$ 1,661 - - - - $ 1,661	$ 94,949 1,146 5,925 ( 1,781) - $ 100,239 2019	$ 3,913 - - - - $ 3,913	$ 3,782 - - - 82 $ 3,864
	Changes in Treasury share ownership interests in Employee stock transactions subsidiaries options				Others
		$ 1,661 - - - - - - $ 1,661	$ 49,710 1,146 35,475 8,438 180 - - $ 94,949	$ 3,913 - - - - - - $ 3,913	$ 3,788 - - - - 39 ( 45)
					$ 3,782

~48~

(18) Retained earning

• A. Under the Company’s Articles of Incorporation, the current year ’s earnings, if any, shall be appropriated in the following order:

• (a) Payment of all taxes and dues.

• (b) Offset against prior years’ operating losses, if any.

• (c) Set aside 10% of remaining amount as legal reserve.

• (d) Setting aside a special reserve when necessary.

• (e) The remainder shall be stockholders’ bonus, which will be appropriated in proportion or be retained shall be resolved by the stockholders at the stockholders’ meeting.

• B. Dividend policy

The Company is still in the growth stage, the appropriation of stockholders ’ bonus will be appropriated as cash, the remainder will be appropriated as shares when over 5%.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• D.(a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equit y items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. FinancialSupervisory-Securities-Corporate1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

• E. As approved by Board of Directors on March 18, 2019, the appropriations of 2018 earnings would be legal reserve $70,651 and cash dividend $428,638, constituting $1.5(in dollars) per share. Aforementioned appropriations had been approved by stockholders’ meeting on June 13, 2019.

• F. As approved by Board of Directors on March 20, 2020, the appropriations of 2019 earnings would be legal reserve $49,804 and cash dividend $285,759, constituting $1(in dollars) per share. Aforementioned appropriations had been approved by stockholders’ meeting on June 15, 2020.

• G. As approved by Board of Directors on February 26, 2021, the appropriations of 2020 earnings would be legal reserve $107,724 and cash dividend $2(in dollars) per share. Aforementioned appropriatio ns had not yet been approved by stockholders’ meeting.

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(19) Operating revenue

perating revenue
Revenue from contracts with customers	Years ended December 31,
	2020	2019
	$ 15,267,139	$ 11,983,479

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods at a point in time in the following geographical regions:

Years ended December 31,2020 Integrated circuits Years ended December 31,2019 Integrated circuits		Domestic	Asia	Others	Total
		$ 6,138,237 Domestic	$ 9,069,729 Asia	$ 59,173 Others	$15,267,139
					Total
		$ 5,153,908	$ 6,643,377	$ 186,194	$11,983,479

• B. Contract liabilities

The Group has recognised the following revenue-related contract liabilities:

liabilities:
Contract liabilities-advance sales receipts	December 31, 2020	December 31, 2019	January 1, 2019
	$ 5,346	$ 3,959	$ 3,710

Revenue recognised that was included in the contract liability balance at the beginning of the period:

the beginning of the period:
Contract liabilities-advance sales receipts	Years ended December 31,
	2020	2019
	$ 3,888	$ 3,536

(20) Interest revenue

Years ended December 31,

Interest income from bank deposits Interest income from financial assets at amortized cost Other interest income		2020	2019
		$ 25,594 1,207 611	$ 45,955 2,420 1,291
		$ 27,412	$ 49,666

~50~

(21) Other income

Rent income Dividend income Other income, others		Years endedDecember31, 2020 2019 $ 5,460 $ 5,427 13,053 26,570 7,992 8,503 $ 26,505 $ 40,500	Years endedDecember31, 2020 2019 $ 5,460 $ 5,427 13,053 26,570 7,992 8,503 $ 26,505 $ 40,500
		2020
		$ 5,460 13,053 7,992 $ 26,505
			$ 40,500

(22) Other gains and losses

Gains arising from lease modifications Foreign exchange losses Gains (Losses) on financial assets at fair value through profit or loss Impairment loss Miscellaneous disbursements		Years ended December 31, 2020 2019 $ 211 $ - (,50,665) ( 45,141) 132,628 ( 8,727) (,25,352) ( 12,057) ( 970) ( 970) $ 55,852 ($ 66,895)	Years ended December 31, 2020 2019 $ 211 $ - (,50,665) ( 45,141) 132,628 ( 8,727) (,25,352) ( 12,057) ( 970) ( 970) $ 55,852 ($ 66,895)
		2020
		$ 211 (,50,665) 132,628 (,25,352) ( 970) $ 55,852
			($ 66,895)

(23) Financial costs

ncial costs
Interest expense: Bank borrowings Provisions for liabilities - unwinding of discount Lease liability Total of interest expense Others		Years endedDecember31, 2020 2019 $ 8,184 $ 5,340 1,412 1,291 1,203 1,191 10,799 7,822 728 1,018 $ 11,527 $ 8,840
		2020
		$ 8,184 1,412 1,203 10,799 728 $ 11,527
			7,822
			1,018
			$ 8,840

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(24) Expenses by nature

Employee benefit expense Depreciation charges on property, plant and equipment Depreciation charges on right-of- use assets Depreciation charges on investment property Amortization charges on intangible assets		Years ended December 31,	Years ended December 31,
		2020	2019
		$ 1,183,477 $ 300,243 $ 11,121 $ 970 $ 111,556	$ 943,207
			$ 384,522
			$ 13,182
			$ 970 $ 85,108

(25) Employee benefit expense

loyee benefit expense
Wages and salaries Labor and health insurance fees Pension costs Director remuneration Other personnel expenses		Years endedDecember31,
		2020	2019
		$ 1,061,353 49,276 32,408 17,232 23,208 $ 1,183,477	$ 839,534 48,285 31,872 7,549 15,967
			$ 943,207

• A. In accordance with the Articles of Incorporation of the Company, the profit before income tax of the current year, before covering employees’ compensation and directors’ remuneration, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be lower than 5% for employees’ compensation and 1% for directors’ remuneration.

• B. For the years ended December 31, 2020 and 2019, employees’ compensation was accrued at $66,124 and $29,970, respectively; while directors’ remuneration was accrued at $13,225 and $5,994, respectively. The aforementioned amounts were recognized in salary expenses.

The employees’ compensation and directors’ remuneration were estimated and accrued based on 5% and 1% of distributable profit for the years ended December 31, 2020.

For the years ended December 31, 2020 and 2019, employees’ compensation of subsidiaries was accrued at $14 and $4, respectively; while directors’ remuneration of subsidiaries was accrued at $1,294 and $223, respectively. The aforementioned amounts were recognized in salary expenses.

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• C. The employees’ compensation and directors’ remuneration of 2019 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2019 financial statements.

• D. Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

• (26) Income tax

• A. Income tax expense

  • (a) Components of income tax expense:

wan Stock Exchange. ome tax expense Components of income	e	tax expense:
Current tax: Current tax on profits for the period Tax on undistributed earnings Prior year income tax underestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense		Years ended December 31, 2020 2019 $ 154,162 $ 55,223 - 10,378 7,025 316 161,187 65,917 8,072 4,652 $ 169,259 $ 70,569
		2020
		$ 154,162 - 7,025 161,187 8,072 $ 169,259

• (b) The income tax charge relating to components of other comprehensive income: None.

• (c) The income tax charged to equity during the period: None.

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B. Reconciliation between income tax expense and accounting profit:

Reconciliation between income tax expense and accounting profit:	ncome tax expense and accounting profit:	ncome tax expense and accounting profit:
Years ended December 31, 2020 2019 Tax calculated based on profit before tax and statutory tax rate (note) $ 276,096 $ 108,571 Tax exempt income by tax regulation (,23,866) ( 1,276) Prior year income tax underestimation 7,025 316 Temporary differences not recognized as deferred tax assets (,25,963) ( 14,855) Taxable loss not recognized as deferred tax assets 1,058 - Effect from investment tax credits (,65,059) - Change in assessment of realization of deferred tax assets ( 23) - Not exceed the starting point of income tax ( 9) - Effect from tax exempt income - ( 36,435) Effect from Alternative Minimum Tax - 3,870 Tax on undistributed earnings - 10,378 Income tax expense $ 169,259 $ 70,569	Years ended December 31,
	2020	2019
		$ 108,571 ( 1,276) 316 ( 14,855) - - - - ( 36,435) 3,870 10,378
		$ 70,569

Note: The basis for computing the applicable tax rate are the rates applicable in the respective countries where the Group entities operate.

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• C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

Deferred tax assets: - Temporary differences: Bad debt expense Unrealized exchange loss Loss on market value decline and obsolete and slow-moving inventories Pension liability Others Subtotal -Deferred tax liabilities: Unrealized exchange gain Others Subtotal Total		2020	2020	2020	2020
		Recognized in Recognized in other January 1 profit or loss comprehensive income December 31
		$ 48 153 1,688 61 2,224 4,174 ( 4,731) - ( 4,731) ($ 557)	$ - 195 ( 700) 20 124 ( 361) ( 3,202) ( 4,509) ( 7,711) ($ 8,072)	$ - - - - - - - - - $-	$ 48 348 988 81 2,348 3,813 ( 7,933) ( 4,509)
					( 12,442)
					($ 8,629)

Deferred tax assets: - Temporary differences: Bad debt expense Unrealized exchange loss Loss on market value decline and obsolete and slow-moving inventories Pension liability Others Subtotal -Deferred tax liabilities: Unrealized exchange gain Subtotal Total		2019	2019	2019	2019
		Recognized in Recognized in other January 1 profit or loss comprehensive income December 31
		$ 48 60 2,545 ( 57 2,464 ( 5,174 ( 1,078) ( 1,078) $ 4,096	$ - 93 857) 4 240) ( 1,000) ( 3,653) ( 3,653) ($ 4,653)	$ - - - - - - - - $-	$ 48 153 1,688 61 2,224
					4,174
					( 4,731)
					( 4,731)
					($ 557)

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• D. The amounts of deductible temporary difference that are not recognized as deferred tax assets are as follows:

Deductible temporary differences	December 31, 2020 $ 362,221	December 31,2019
		$ 381,968

• E. The Company has not recognized taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2020 and 2019, the amounts of temporary difference unrecognized as deferred tax liabilities were $0.

• F. The Company’s products qualify for “Regulations for Encouraging Manufacturing Enterprises and Technical Service Enterprises in the Newly Emerging, Important and Strategic Industries” and the Company is entitled to the income tax exemption for 5 consecutive years (ends on December, 2019).

• G. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

• (27) Earnings per share

Basic earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares (Note) Employees’ compensation Diluted earnings per share Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Year ended December 31, 2020	Year ended December 31, 2020	Year ended December 31, 2020
	Amount after tax	Weighted average number of ordinary Earnings per shares outstanding (share in thousands) share (in dollars)
	$ 1,076,426	279,909 1,295 281,204	$ 3.85 $ 3.83
	$ 1,076,426

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YearendedDecember31,2019 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (sharein thousands) share (indollars) Basic earnings per share Profit attributable to ordinary shareholders of the parent $ 497,405 280,133 $ 1.78 Assumed conversion of all dilutive potential ordinary shares (Note) Employees’ compensation 1,057 Diluted earnings per share Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares $ 497,405 281,190 $ 1.77	YearendedDecember31,2019	YearendedDecember31,2019	YearendedDecember31,2019
	Amount after tax	Weighted average number of ordinary Earnings per shares outstanding (sharein thousands) share (indollars)
	$ 497,405	280,133 1,057 281,190	$ 1.78 $ 1.77

Note: The employee stock options not calculate for years ended December 31, 2020 and 2019 due to the effect of anti-dilution.

• (28) Transactions with non-controlling interest

• A. On March 30, 2020, April 28, 2020 and November 13,2020 the Group acquired an additional shares of its subsidiary-Elite Silicon Technology Inc. for a total cash consideration of $1,752, $128 and $33. The carrying amount of non-controlling interest in Elite Silicon Technology Inc. was $119, $12 and $1 at the acquisition date. This transaction resulted in a decrease in the equity attributable to owners of the parent by $1,633 , $116 and $32.

The effect of changes in interests in Elite Silicon Technology Inc. on the equity attributable to owners of the parent for the years ended December 31, 2020 and 2019 is shown below:

the equity attributable to owners of the parent December 31, 2020 and 2019 is shown below:	for the years ended
Carrying amount of non-controlling interest acquired Consideration paid to non-controlling interest Capital surplus - difference between proceeds on actual acquisition of or disposal of equity interest in a subsidiary and its carrying amount	Year ended December 31,2020 $ 132 ( 1,913) ($ 1,781)

• B. The Group’s subsidiary, Canyon Semiconductor Inc., increased its capital by issuing new shares on March 4, 2019. The Group did not acquire shares proportionally to its interest. As a result, the Group decreased its share interest by 39.74%. And the Group acquired an

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additional shares of its subsidiary - Canyon Semiconductor Inc. on December 6,2019. The transactions above decreased non-controlling interest by $2,533 and increased the equity attributable to owners of parent by $35,475.

(29) Supplemental cash flow information

A. Investing activities with partial cash payments:

Purchase of property, plant and equipment (including amount of transfer) Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid during the period	YearendedDecember31,	YearendedDecember31,
	2020	2019
	$ 380,513 58,026 ( 146,904) $ 291,635	$ 284,967 41,100 ( 58,026) $ 268,041

B. Changes in liabilities from financing activities:

At January 1, 2020 Changes in cash flow from financing activities Interest paid Interest expense Changes in other non- cash items Changes from lease modifications At December 31,2020	Short-term borrowings Short-term notes and bills payable	Lease liabilities	Guarantee deposits received Liabilities from financing activities-gross $ 9,871 $ 370,758 ( 3,236) 1,202,665 - ( 1,203) - 1,203 - 9,690 - ( 5,085) $ 6,635 $ 1,578,028
	$ 274,000 $ - 1,066,000 150,476 - - - - - ( 720) - - $ 1,340,000 $ 149,756	$ 86,887 ( 10,575) ( 1,203) 1,203 10,410 ( 5,085)
		$ 81,637

At January 1, 2019 Changes in cash flow from financing activities Interest paid Interest expense Changes in other non- cash items Changes from lease modifications At December 31,2019	Short-term borrowings	Short-term notes and bills payable	Short-term notes and bills payable	Lease liabilities	Guarantee deposits received	Liabilities from financing activities-gross $ 584,623 ( 208,187) ( 1,332) 1,191 229 ( 5,766) $ 370,758
	$ 370,000 ( 96,000) - - - - $ 274,000	$ 99,932 ( 99,932) - - - -		$ 105,090 ( 12,525) ( 1,332) 1,191 229 ( 5,766)	$ 9,601 270 - - - -
		$-		$ 86,887	$ 9,871

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7. Related Party Transactions

(1) Names of related parties and relationship

Names of related parties Relationship with the Company Arima Lasers Corporation Canyon Semiconductor Inc.

The Company’s subsidiary is this company’s director Investee indirectly accounted for under equity method

(2) Key management compensation

Salaries and other short-term employee benefits Post-employment benefits Total	YearendedDecember31,	YearendedDecember31,
	2020	2019
	$ 54,409 432 $ 54,841	$ 36,572 432
		$ 37,004

8. Pledged Assets

The Group’s assets pledged as collateral are as follows:

Assets item	Book value December 31, 2020 December 31, 2019 Purpose	Book value December 31, 2020 December 31, 2019 Purpose
	December 31, 2020
Time deposits (shown as “other current assets and other non-current assets ”)	$ 3,969	$ 3,969 Guarantee deposits for lease of land

1. Significant Contingent Liabilities and Unrecognized Contract Commitments

None.

10. Significant Disaster Loss

None.

11. Significant Events after the Balance Sheet Date

Information about the appropriations of earnings of the Company which had been approved by Board of Directors on February 26, 2021 is provided in Note 6(18).

12. Others

(1) Capital management

Considering the industrial characteristics, future development, and changes in the environment, the Group plans the demand of working capital, research and development expenses and dividends to safeguard the Group ’s ability to continue as a going concern, to provide returns for shareholders, to take care of the benefit of other related parties, and to maintain an optimal capital structure, so as to promote shareholder value in the long-term.

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To maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new shares or pay cash to shareholders, or repurchase shares.

The gearing ratios at December 31, 2020 and 2019 were as follows:

Total assets Total liabilities Total equity Gearing ratio		December 31, 2020	December 31, 2019 $ 10,480,320 3,139,541) $ 7,340,779 43%
		$ 13,000,348 ( 4,871,065) ( $ 8,129,283 60%

(2) Financial instruments

A. Financial instruments by category

0 Financial assets Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortized cost Cash and cash equivalents Financial assets at amortized cost - current Notes receivable Accounts receivable Other receivables Time deposits (shown as “other current assets and other non-current assets”) Guarantee deposits paid (shown as “other non-current assets”)		December 31, 2020	December 31, 2019 $ 252,593 $ 50,776 $ 2,757,003 140,906 34 1,256,938 82,741 3,969 6,261 $ 4,247,852
		$ 365,474
		$ 64,836
		$ 3,597,917 136,704 - 1,633,993 95,830 3,969 6,495
		$ 5,474,908

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Financial liabilities Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Guarantee deposits received (shown as “other non-current liabilities”) Lease liability		December 31, 2020	December 31, 2019 $ 274,000 - 1,981 2,225,909 462,523 9,871 $ 2,974,284 $ 86,887
		$ 1,340,000 149,756 2,115 2,396,158 694,001 6,635
		$ 4,588,665 $ 81,637

• B. Financial risk management policies

• (a) The Group adopt comprehensive system of risk management and control to identify, measure and control all categories of risk, including market risk, credit risk, liquidity risk, and risk of cash flow, to make sure management is able to control and measure market risk, cred it risk, liquidity risk, and risk of cash flow effectively.

• (b) In order to control all management objectives of market risk effectively, achieve optimal level of risk, maintain appropriate level of liquidity and collectively manage all market risks, the Group will take factors such as consideration for the overall economic environment, status of competition and market value risks.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• I. The Group operates internationally and is exposed to foreign exchange risk arising from the various currency, primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities.

• II. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. The companies adopt forward foreign exchange contracts through the Group treasury to manage the foreign exchange risk from future commercial transactions and recognized assets and liabilities. The foreign exchange risk will exist when future commercial transactions and recognized assets an d liabilities use the currency different from the functional currency of the companies.

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• III. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through deposits denominated in the relevant foreign currencies (see Note 6(1)).

• IV. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD JPY:NTD (Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD	December31,2020 Foreign currency amount (In thousands) Exchange rate Book value (NTD in thousands) $ 154,117 28.480 $ 4,389,252 181,116 4.377 792,745 $ 50,522 28.480 $ 1,438,867 67,255 0.276 18,583 December 31, 2019 Foreign currency amount (In thousands) Exchange rate Book value (NTD in thousands) $ 120,486 29.980 $ 3,612,170 56,049 4.305 241,291 $ 47,708 29.980 $ 1,430,286

• V. The total exchange loss, including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31 ,2020 and 2019, amounted to $50,665 and $45,141, respectively.

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• VI. Analysis of foreign currency market risk arising from significant foreign exchange variation:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD JPY:NTD (Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD	Year ended December 31, 2020
	Sensitivityanalysis
	Degree of variation Effect on profit or loss Effect on other comprehensive income
	1% $,,43,893 $ - 1% 7,927 - 1% ($ 14,389) $ - 1% (,186) - YearendedDecember31,2019
	Sensitivityanalysis
	Degree of variation Effect on profit or loss Effect on other comprehensive income
	1% $ 36,127$ - 1% 2,413- 1% ($,14,303) $ -

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Price risk

• I. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

• II. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic and foreign companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 10% with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $36,547 and $25,259, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $6,484 and $5,078, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value Interest rate risk

The Group’s main interest rate risk arises from short-term borrowings and short-term notes and bills payable. Borrowings with floating rates expose the Group to cash flow interest rate risk, but the majority of risk offset by cash and cash equivalents with floating rates. Borrowings with fixed rates expose the Group to fair value interest rate risk. The Group doesn’t have significant risk of change of interest rate due to borrowings with floating rates are all shorter than one year.

• (b) Credit risk

• I. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of financial instruments stated at amortized cost and debt instruments at fair value through profit or loss.

• II. The Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions, only these with high rating are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, considering their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored.

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• III. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 90 days.

• IV. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

• If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• V. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

• (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

• (ii) The disappearance of an active market for that fina ncial asset because of financial difficulties;

• (iii) Default or delinquency in interest or principal repayments;

• (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

• VI. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

• VII. The financial assets at amortized cost including time deposits, repurchase bonds and restricted time deposits. The banks are with high rating and don’t past due before. In addition to the above, the whole economic environment doesn’t change significant, so the risk of credit risk is low and the effect to financial statement is insignificant.

• VIII. The information about ageing analysis and collaterals of accounts receivable is provide in Note6(4). The Group request significant clients provide collaterals and other right of guarantee, therefore, the Group classifies customer’s accounts receivable in accordance with the nature of collaterals. The applies the simplified approach using loss rate methodology to estimate expected credit loss. In summary, the allowance for losses which the Group should recognize is minor at December 31, 2020 and 2019.

• IX. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable is as follows:

follows:
At January 1 Provision for impairment Reversal of impairment At December 31	2020	2019
	$ 14,295 - ( 8,582) $ 5,713	$ 4,289 10,006 - $ 14,295

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• (c) Liquidity risk

• I. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.

• II. Surplus cash held by the operating entities over and above balance required for working capital management should invest surplus cash in interest bearing current accounts, time deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

• III. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disc losed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
	Less than Between 1
December 31, 2020	1 year and 5 years Over 5 years
Short-term borrowings	$ 1,340,000 $ - $ -
Short-term notes and bills payable	149,756 - -
Notes payable	2,115 - -
Accounts payable	2,396,158 - -
Other payables	694,001 - -
Lease liability	12,224 26,569 52,635
Guarantee deposits received	- - 6,635
Derivative financial liabilities:None.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
	Less than Between 1
December 31, 2019	1 year and 5 years Over 5 years
Short-term borrowings	$ 274,000 $ - $ -
Notes payable	1,981 - -
Accounts payable	2,225,909 - -
Other payables	462,523 - -
Lease liability	12,685 28,440 56,605
Guarantee deposits received	- - 9,871
Derivative financial liabilities:None.

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(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, beneficiary certificates and debt securities is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.

• B. Fair value information of investment property at cost is provided in Note 6(9).

• C. Financial instruments not measured at fair value of the Group including cash and cash equivalents, time deposit (over 3 months), notes receivable, accounts receivable, other receivables, guarantee deposits paid, short -term borrowings, short-term notes and bills payable, notes payable, accounts payable and other payables, lease liabilities (current and non-current) and guarantee deposits received are approximate to their fair values.

• D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

• (a) The related information of natures of the assets and liabilities is as follows:

follows:
December 31, 2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Beneficiary certificates Debt securities Financial assets at fair value through other comprehensive income Equity securities Financial liabilities: None.		Level 1 Level 2 Level 3			Total
		$214,924 91,737 51,390 - $358,051	$ 2,506 - - - $ 2,506	$ 4,917 - - 64,836 $ 69,753	$222,347 91,737 51,390 64,836
					$430,310

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December 31, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities Beneficiary certificates Debt securities Financial assets at fair value through other comprehensive income Equity securities Financial liabilities: None.		Level 1 Level 2 Level 3	Level 1 Level 2 Level 3	Level 1 Level 2 Level 3	Total
		$ 81,109 84,404 49,686 - $215,199	$ 2,217 - - - $ 2,217	$ 35,177 - - 50,776 $ 85,953	$118,503 84,404 49,686 50,776
					$303,369

• (b) The methods and assumptions the Group used to measure fair value are as follows:

• I. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Market quoted price	Listed shares Open-endfund
	Closing price Net asset value

• II. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

• III. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

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• E. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

• F. The following chart is the movement of Level 3 for the years ended December 31, 2020 and 2019:

December 31, 2020 and 2019:
At January 1 Acquired in the period Transfers out from level 3 Valuation adjustment At December 31		Equity securities 2020 2019 $ 85,953 $ 66,115 - 18,850 ( 26,157) - 9,957 988 $ 69,753 $ 85,953
		2020
		$ 85,953 - ( 26,157) 9,957 $ 69,753

• G. Because M3 Technology Inc. and Powerchip Semiconductor Manufacturing Corporation started their transaction in Emerging Stock Market from November,2020 and December,2020, and there is sufficient observable market information available, the Group has transferred the fair value from Level 3 into Level 1 at the end of the month when the event occurred.

• H. Accounting segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

• I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

	Fair value at	Fair value at		Significant
	December 31,		Valuation	unobservable	Range	Relationship of
		2020	technique	input	(weighted average) inputs to fair value
Non-derivative	equity instrument:
Unlisted shares	$ 4,917		Market -	Discount for	30%	the higher the
			comparable	lack of		discount for lack of
			companies	marketability		marketability, the
						lower the fair value
Unlisted shares		64,836	Market -	Discount for	40%	the higher the
			comparable	lack of		discount for lack of
			companies	marketability		marketability, the
						lower the fair value

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	Fair value at		Significant
	December 31,	Valuation	unobservable	Range	Relationship of inputs
	2019	technique	input	(weighted average) to fair value
Non-derivative	equity instrument:
Unlisted shares	$ 20,027	Market -	Discount for	30%	the higher the discount
		comparable	lack of		for lack of
		companies	marketability		marketability, the
					lower the fair value
Unlisted shares	50,776	Market -	Discount for	40%	the higher the discount
		comparable	lack of		for lack of
		companies	marketability		marketability, the
					lower the fair value
Unlisted shares	15,150	Most recent	Not applicable	Not applicable	Not applicable
		deal price

• J. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

Financial assets Equity instrument	Input Change	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020	December 31, 2020
		Recognized in profit or loss Recognized in other comprehensive income
		Favorable change Unfavorable change Favorable change Unfavorable change
	Discount for lack of marketability ±10%		$ 211	($ 211)	$ 4,322	($ 4,322)

Financial assets Equity instrument	Input Change	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019
		Recognized in profit or loss Recognized in other comprehensive income
		Favorable change Unfavorable change Favorable change Unfavorable change
	Discount for lack of marketability ±10%		$ 858	($ 858)	$ 3,384	($ 3,384)

(4) Others

As of the reported date, the Company has assessed that COVID-19 has no adverse impact on the Company’s overall operating activities and financial statements. However, the Company will continue to pay attention to the development of the COVID-19 and its impact on the overall economic environment.

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13. Supplementary Disclosures

(1) Significant transactions information

• A. Loans to others: None.

• B. Provision of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 1.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital

• or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid -in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: None.

• H. Receivables from related parties reaching $100 million or 20% of paid -in

• capital or more: None.

• I. Trading in derivative instruments undertaken during the reporting periods: None.

• J. Significant inter-company transactions during the reporting periods: Please refer to table 2.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 3.

(3) Information on investments in Mainland China

• A. Investee accounted for under the equity method of the Company, Elite Semiconductor (B.V.I.) Limited, which has been approved to establish Shanghai offices in Mainland China by Investment Commission of MOEA on June 18, 2009. The Shanghai office indirectly established by the Company was approved for cancellation by the Investment Commission of MOEA on November 17, 2020.

• B. Basic information: Please refer to table 4.

• C. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(4) Major shareholders information

As of December 31, 2020, the Company did not have any shareholders with a shareholding ratio more than 5%.

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14. Operating Segment Information

(1) General information

The Group operates business only in a single industry. The chief operating decision-maker who allocates resources and assesses performance of the Group as a whole, has identified that the Group has only one reportable operating segment.

(2) Segment information

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

Revenue from external customers Segment income before income tax Segment assets Segment liabilities		Years ended December 31, 2020 2019 $ 15,267,139 $ 11,983,479 $ 1,253,700 $ 576,180 December31,2020 December31,2019 $ 13,000,348 $ 10,480,320 $ 4,871,065 $ 3,139,541
		2020
		$ 15,267,139 $ 1,253,700 December31,2020
		$ 13,000,348 $ 4,871,065

• (3) Reconciliation for segment income (loss): None.

• (4) Information on products and services

As of December 31, 2020 and 2019 the net operating revenue of integrated circuit and electronic materials is $15,267,139 and $11,983,479.

(5) Geographical information

Geographical information for the years ended December 31, 2020 and 2019 is as follows:

Years ended December 31,

Domestic Asia Others Total			2020	2020	2020	2019 Revenue Non-current assets $ 5,153,908 $ 874,235 6,643,377 - 186,194 14,587 $ 11,983,479 $ 888,822
			Revenue	Non-current assets		Revenue
			$ 6,138,237 9,069,729 59,173 $ 15,267,139		$ 1,046,111 - 9,194 $ 1,055,305	$ 5,153,908 6,643,377 186,194 $ 11,983,479

• (6) Major customer information

Years ended December 31,

	Years ended December 31,
A Company	2020 2019
	Revenue Segment Revenue Segment
	$ 3,430,386 The Group $ 2,724,676 The Group

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries

Holding of marketable securities at the end of the period

December 31, 2020

Table 1

Expressed in thousands of New Taiwan dollars, except as otherwise indicated

Securities held by	Name and category of marketable securities	Relationship with the securities issuer	General ledger account	As of December 31, 2020	As of December 31, 2020	As of December 31, 2020	As of December 31, 2020	Footnote
				Number of shares	Book value (Note)	Ownership(%)	Fair value (Note)
Elite Semiconductor Microelectronics Technology Inc.	Arima Lasers Corporation stock	The Company’s subsidiary is this company’s director	Financial assets at fair value through profit or loss	3,455,000	$ 72,209	12.26	$ 72,209
Elite Semiconductor Microelectronics Technology Inc.	King Yuan Electronics Corporation stock	None	Financial assets at fair value through profit or loss	10,000	348	0.00	348
Elite Semiconductor Microelectronics TechnologyInc.	HSBC FRN PERPETUAL bond	None	Financial assets at fair value through profit or loss	1,000,000	25,192	Not applicable	25,192
Elite Semiconductor Microelectronics Technology Inc.	ANZ FRN PERPETUAL bond	None	Financial assets at fair value through profit or loss	500,000	11,895	Not applicable	11,895
Elite Semiconductor Microelectronics Technology Inc.	BGF RENMINBI BOND FUND	None	Financial assets at fair value through profit or loss	127,986	58,904	Not applicable	58,904
Elite Semiconductor Microelectronics Technology Inc.	Turning Point Lasers Ltd. preferred stock	None	Financial assets at fair value through other comprehensive income	1,000,000	32,418	8.06	32,418
Elite Investment Services Ltd.	HSBC HLDGS PLC 6.20 PCT PREF SHARE SERIES A	None	Financial assets at fair value through profit or loss	20,000	14,303	Not applicable	14,303
Elite Investment Services Ltd.	HSBC ALL CHINA BOND FUND - AC(2802)	None	Financial assets at fair value through profit or loss	600,000	32,833	Not applicable	32,833
Charng Feng Investment Ltd.	King Yuan Electronics Corporation stock	None	Financial assets at fair value through profit or loss	10,000	348	0.00	348
Charng Feng Investment Ltd.	Arima Lasers Corporation stock	None	Financial assets at fair value through profit or loss	907,000	18,956	3.22	18,956
Charng Feng Investment Ltd.	Ushine Photonics Corporation stock	None	Financial assets at fair value through profit or loss	115,519	797	0.41	797
Charng Feng Investment Ltd.	Brightek Optoelectronic Corporation Ltd. stock	None	Financial assets at fair value through profit or loss	65,601	1,709	0.15	1,709
Charng Feng Investment Ltd.	M3 Technology Inc. stock	None	Financial assets at fair value through profit or loss	433,000	48,063	1.18	48,063
Charng Feng Investment Ltd.	M2 Communication Inc. stock	None	Financial assets at fair value through profit or loss	2,000,000	4,917	7.89	4,917
Charng Feng Investment Ltd.	Powerchip Semiconductor Manufacturing Corporation	None	Financial assets at fair value through profit or loss	1,500,000	75,000	0.05	75,000
Charng Feng Investment Ltd.	Turning Point Lasers Ltd. preferred stock	None	Financial assets at fair value through other comprehensive income	1,000,000	32,418	8.06	32,418
Jie Yong Investment Ltd.	Elite Semiconductor Microelectronics Technology Inc. stock	Parent company	Financial assets at fair value through other comprehensive income	14,154,000	915,764	4.95	915,764

Note: Valuation adjustment of financial assets and cumulative translation differences are included.

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries

Significant inter-company transactions during the reporting periods

Year ended December 31, 2020

Table 2

Expressed in thousands of New Taiwan dollars, except as otherwise indicated

Number (Note 1)	Company name	Counterparty	Relationship (Note 2)	Transaction	Transaction	Transaction	Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note 3)
0	Elite Semiconductor Microelectronics Technology Inc.	Eon Silicon Solutions,Inc.USA	(1)	Research and development expenses	$ 76,375	Note 4	0.50%
0	Elite Semiconductor Microelectronics Technology Inc.	Elite Semiconductor Memory Technology Inc.	(1)	Other revenue	48,000	Note 4	0.31%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

• (1) Parent company is “0”.

• (2) The subsidiaries are numbered in order starting from “1”.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

• (1) Parent company to subsidiary.

• (2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The transaction terms are decided by the two parties through negotiation.

Note 5: Only transactions with related parties of NT$25 million or more are disclosed, and transactions with related parties will not be disclosed separately.

Note 6: The transaction between parent company to subsidiary and subsidiaries were elminated when preparing consolidated financial statements.

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries

Information on investees (exclude investee in Mainland China)

Year ended December 31, 2020

Table 3

Expressed in thousands of New Taiwan dollars, except as otherwise indicated

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Net income (loss) of the investee for the year ended December 31, 2020	Investment income (loss) recognized by the Company for the year ended December 31, 2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
Elite Semiconductor Microelectronics Technology Inc.	Elite Semiconductor Memory Technology Inc.	Taiwan	Research and development, production, sales and related consulting services of integrated circuit	$ 272	$ 272	100,000	100	$ 24,236	$ 9,712	$ 9,712
Elite Semiconductor Microelectronics Technology Inc.	Charng Feng Investment Ltd.	Taiwan	General investment	500,000	500,000	50,000,000	100	511,029	112,211	111,110	Note 2
Elite Semiconductor Microelectronics Technology Inc.	Elite Investment Services Ltd.	British Virgin Islands	General investment	427,200	427,200	15	100	620,500	( 7,222)	( 7,222)
Elite Semiconductor Microelectronics Technology Inc.	Elite Semiconductor (B.V.I.) Ltd.	British Virgin Islands	General investment	-	142,400	-	-	-	( 7,220)	( 7,220)	Note 3
Elite Semiconductor Microelectronics Technology Inc.	Jie Yong Investment Ltd.	Taiwan	General investment	270,000	270,000	3,600,000	41.86	136,983	13,823	( 138)
Elite Semiconductor Microelectronics Technology Inc.	Eon Silicon Solutions, Inc.USA	U.S.A.	Investigation and research of business situation and industrial technology	13,304	13,304	200,000	100	( 1,411)	( 240)	( 240)
Charng Feng Investment Ltd.	3R Semiconductor Technology Inc.	Taiwan	Product design, wholesale and retail of electronic materials, manufacturing of electronic components, information software services and international trade	69,407	69,407	10,000,000	100	21,953	( 567)	( 567)
Charng Feng Investment Ltd.	Elite Silicon Technology Inc.	Taiwan	Product design, wholesale and retail of electronic materials, manufacturing of electronic components, information software services and international trade	61,201	59,288	7,448,960	98.01	528	( 154)	( 154)
Charng Feng Investment Ltd.	Canyon Semiconductor Inc.	Taiwan	International trade, manufacturing of electronic components, product design and information software services	80,337	80,337	8,350,000	40.93	33,883	1,642	673

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Net income (loss) of the investee for the year ended December 31, 2020	Investment income (loss) recognized by the Company for the year ended December 31, 2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
Charng Feng Investment Ltd.	Elite Innovation Japan Ltd.	Japan	Product design, wholesale and retail of electronic materials, manufacturing of electronic components, information software services and international trade	$ 2,111	$ 2,111	$ 200	100	2,195	$ 116	$ 116
Charng Feng Investment Ltd.	CHI Microelectronics Limited	Hong Kong	Trading	367	-	10,000	100	367	( 4)	( 4)	Note 4

Note 1: The foreign investment amount translated at the exchange rate as of December 31, 2020.

Note 2: The investment income/loss has been adjusted the unrealized gain/loss of upstream transactions. Note 3: Elite Semiconductor (B.V.I.) Ltd. obtained a liquidated certificate from local regulatory authority on February 9, 2021, and obtained a liquidated letter from Investment Commission of MOEA on February 20, 2021. Note 4: CHI Microelectronics Limited. was established on August 31, 2020. The Company's subsidiary, Charng Feng Investment Ltd., obtained the investment amount of HKD 100,000 approved by the Investment Commission of MOEA on December 11, 2020.

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries

Information on investments in Mainland China

Year ended December 31, 2020

Table 4

Expressed in thousands of New Taiwan dollars, except as otherwise indicated

Investee in Mainland China	Main business activities	Paid-in capital (Note 4)	Investment method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as at January 1, 2020	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2020	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2020	Accumulated amount of remittance from Taiwan to Mainland China as at December 31, 2020	Net income (loss) of the investee for the year ended December 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2020 (Note 2)	Book value of investments in Mainland China as at December 31, 2020	Accumulated amount of investment income remittance back to Taiwan as at December 31, 2020	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Elite Semiconductor Microelectronics Technology (Shenzhen) Inc.	Trading of goods or technical services, develop and sale products of networking system, storage, and peripherals, technical consulting and services of integrated circuit, and after - sales service	$ 2,549	(1)	$ -	$1,424	$ -	$ 1,424	$ 1,224	100	$ 1,224	$ 4,619	$ -
Elite Semiconductor Microelectronics (Shanghai) Technology Inc.	Product design, wholesale and retail of electronic materials, information software services and international trade	5,696	(1)	-	5,696	-	5,696	581	100	581	6,633	-	Note 6
Company name Accumulated amount of remittance from Taiwan to Mainland China as at December 31, 2020 Investment amount approved by the Investment Commission of MOEA (Note 5) Ceiling of investments in Mainland China imposed by the Investment Commission of MOEA Charng Feng Investment Ltd. $ 7,120 $ 78,021 $ 300,000
Company name	Accumulated amount of remittance from Taiwan to Mainland China as at December 31, 2020	Investment amount approved by the Investment Commission of MOEA (Note 5)	Ceiling of investments in Mainland China imposed by the Investment Commission of MOEA
Charng Feng Investment Ltd.	$ 7,120	$ 78,021	$ 300,000

Note 1: The methods for engaging in investment in Mainland China include the following:

• (1) Direct investment in Mainland China.

• (2) Indirect investment in Mainland China through companies registered in a third region.

• (3) Other methods.

Note 2: Investment income (loss) was recognized based on financial statement prepared by each company which were audited by independent auditors.

Note 3: The amount of the statement should show as New Taiwan Dollars.

Note 4: Paid-in capital translated at the exchange rate as of December 31, 2020.

Note 5: The Company's subsidiary, Charng Feng Investment Ltd., obtained the revised investment amount of USD 39,485.42 and USD 2,500,000 approved by the Investment Commission, MOEA on February 6, 2020 and July 10, 2020.

Note 6: Elite Semiconductor Microelectronics (Shanghai) Technology Inc. was established on November 27, 2019. The Company's subsidiary, Charng Feng Investment Ltd., obtained the investment amount of USD 200,000 approved by the Investment Commission of MOEA on May 20, 2020.