ESMT - Interim / Quarterly Report 2021

ELITE SEMICONDUCTOR MICROELECTRONICS TECHNOLOGY INC. AND SUBSIDIARIES Consolidated Financial Statements and Independent Auditors' Review Report June 30, 2021 and 2020 (Stock Code: 3006)

(English Translation of a Report Originally Issued in Chinese)

Company Address: No. 23, Industry E. Road IV, Hsinchu Science Park, Hsinchu 30077, Taiwan

Tel: +886-3-578-1970

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Financial Statements and Independent Auditors' Review Report for

June 30, 2021 and 2020

		Items	Page
I.	Cover		1
II.	Table of Contents		2
III.	Independent Auditors' Report		3 ~ 4
IV.	Consolidated Balance Sheets		5 ~ 6
V.	Consolidated Statements of Comprehensive Income		7
VI.	Consolidated Statements of Changes in Equity		8
VII.	Consolidated Statements of Cash Flows		9 ~ 10
VIII.	Notes to the Consolidated Financial Statements		11 ~ 59
	1.	History and Organization	11
	2.	The Date of Authorization for Issuance of the Consolidated Financial
		Statements and Procedures for Authorization	11
	3.	Application of New Standards, Amendments and Interpretations	11 ~ 12
	4.	Summary of Significant Accounting Policies	12 ~ 16
	5.	Critical Accounting Judgments, Estimates and Key Sources of
		Assumption Uncertainty	16
	6.	Details of Significant Accounts	16 ~ 43
	7.	Related-Party Transactions	43~44
	8.	Pledged Assets	44
	9.	Significant Contingent Liabilities and Unrecognized Contractual
		Commitments	44
	10.	Significant Disaster Losses	44
	11.	Significant Events after the End of the Balance Sheet Date	44
	12.	Others	44 ~ 57
	13.	Supplementary Disclosures	58
	14.	Operating Segment Information	58 ~ 59

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Report on Review of Interim Financial Information

(2021)Finance-Audit-Letter No.21001060 To the Board of Directors and Shareholders of Elite Semiconductor Microelectronics Technology Inc.

Introduction

We have reviewed the accompanying consolidated balance sheets of Elite Semiconductor Microelectronics Technology Inc. and its subsidiaries (the“ Group”) as at June 30, 2021 and 2020, and the related consolidated statements of comprehensive income for the three months and six months then ended, as well as the related consolidated statements of changes in equity and of cash flows for the six months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. 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 International Accounting Standard (IAS) No. 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission (FSC). Our responsibility is to express a conclusion on these interim financial statements based on our reviews and the review reports of other independent accountants.

Scope of Review

Except as explained in the Basis for Qualified Conclusion, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65, “Review of Financial Statements”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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Basis for Qualified Conclusion

As explained in Notes 4(3) and 6(6), the financial statements of certain insignificant consolidated subsidiaries and investments accounted for under the equity method were not reviewed by independent accountants. Those statements reflect total assets of NT$692,855 thousand and NT$723,816 thousand, constituting 4.3% and 6.0% of the consolidated total assets, and total liabilities of NT$90,027 thousand and NT$182,631 thousand, constituting 1.5% and 4.2% of the consolidated total liabilities as at June 30, 2021 and 2020, respectively, and total comprehensive income of NT$(39,127) thousand and NT$(24,772) thousand, constituting (3.1%) and (9.1%) of the consolidated total comprehensive income for the three months then ended, respectively, and NT$1,770 thousand and NT$(32,017) thousand, constituting 0.1% and (5.2%) of the consolidated total comprehensive income for the six months then ended, respectively.

Qualified Conclusion

Based on our reviews, except for the possible effects of the matter described in the Basis for Qualified Conclusion section of our report, nothing has come to our attention that causes us to believe that the accompanying interim financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at June 30, 2021 and 2020, and of its consolidated financial performance for the three-month and six-month periods then ended and its consolidated cash flows for the six-month periods then ended in accordance with the “Rules Governing the Preparation of Financial Reports by Securities Issuers” and IAS No. 34, “Interim Financial Reporting” as endorsed by the FSC.

Cheng, Ya-Huei Li, Tien-Yi

for and on behalf of PricewaterhouseCoopers, Taiwan July 30, 2021

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Balance Sheets June 30, 2021, December 31, 2020 and June 30, 2020

(The Balance Sheets as of June 30, 2021 and 2020 are unaudited)

Assets	Note	June 30, 2021 Amount % $ 6,674,997 42 349,087 2 55,720 - 43 - 2,298,262 14 14,965 - 5,058,712 32 118,740 1 1,022 - 14,571,548 91 47,282 - 39,389 - 1,088,214 7 79,798 1 17,216 - 90,712 1 3,339 - 58,122 - 1,424,072 9 $ 15,995,620 100	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 June 30, 2020 Amount % $ 2,442,265 20 254,050 2 82,964 1 69 - 1,360,617 11 83,178 1 6,650,496 55 87,255 1 4,779 - 10,965,673 91 69,748 1 31,546 - 677,746 6 76,938 1 18,186 - 125,747 1 3,616 - 35,307 - 1,038,834 9 $ 12,004,507 100
		Amount $ 6,674,997 349,087 55,720 43 2,298,262 14,965 5,058,712 118,740 1,022 14,571,548 47,282 39,389 1,088,214 79,798 17,216 90,712 3,339 58,122 1,424,072 $ 15,995,620		Amount $ 2,442,265 254,050 82,964 69 1,360,617 83,178 6,650,496 87,255 4,779 10,965,673 69,748 31,546 677,746 76,938 18,186 125,747 3,616 35,307 1,038,834 $ 12,004,507
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	6(1) 6(2) 6(4) 6(5) 8 6(3) 6(6) 6(7) 6(8) 6(9) 6(10) (11) 8

(Continue)

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Balance Sheets

June 30, 2021, December 31, 2020 and June 30, 2020

(The Balance Sheets as of June 30, 2021 and 2020 are unaudited)

Liabilities and equity	Note	June 30, 2021 Amount % $ 1,640,000 10 49,972 - 26,914 - 5,805 - 2,620,279 17 1,156,865 7 302,579 2 12,357 - 6,946 - 5,821,717 36 17,268 - 5,490 - 68,539 1 14,055 - 105,352 1 5,927,069 37 2,861,503 18 129,213 1 1,409,039 9 8,524 - 5,958,265 37 ( 12,018 ) - ( 145,649 ) ( 1) 10,208,877 64 ( 140,326 ) ( 1) 10,068,551 63 $ 15,995,620 100	Unit: NT$ thousand December 31, 2020 June 30, 2020 Amount % Amount % $ 1,340,000 10 $ 564,000 5 149,756 1 99,927 1 5,346 - 11,530 - 2,115 - 5,716 - 2,396,158 19 2,562,588 21 694,001 5 920,034 7 147,948 1 84,238 1 10,356 - 8,884 - 10,478 - 6,150 - 4,756,158 36 4,263,067 35 16,495 - 15,789 - 12,442 - 5,363 - 71,281 1 68,798 1 14,689 - 17,167 - 114,907 1 107,117 1 4,871,065 37 4,370,184 36 2,857,589 22 2,857,589 24 109,677 1 103,784 1 1,409,039 11 1,409,039 12 8,524 - 8,524 - 4,019,327 31 3,533,436 29 5,536 - 10,449 - ( 145,649) ( 1) ( 145,649) ( 1) 8,264,043 64 7,777,172 65 ( 134,760) ( 1) ( 142,849) ( 1) 8,129,283 63 7,634,323 64 $ 13,000,348 100 $ 12,004,507 100
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 36XX Non-controlling interest 3XXX Total equity Significant Events after the End of the Balance Sheet Date 3X2X Total liabilities and equity	6(12) 6(19) 6(13) 6(16) 6(17) 6(18) 6(16) 11

The accompanying notes are an integral part of these consolidated financial statements. Manager: Ming-Chien Chang Accounting Manager: Candy Chu

Chairman: Hsing-Hai Chen

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Comprehensive Income Six Months Ended June 30, 2021 and 2020

(Unaudited)

Unit: NT$ thousand (Except earnings per share)

Item	Notes	Three months ended June 30,2021 Amount % $ 6,175,127 100 ( 3,911,033) ( 63) 2,264,094 37 ( 115,130 ) ( 2) ( 139,367 ) ( 3) ( 385,602 ) ( 6) - - ( 640,099) ( 11) 1,623,995 26 7,335 - 5,768 - ( 134,061 ) ( 2) ( 4,927 ) - 2,996 - ( 122,889) ( 2) 1,501,106 24 ( 207,959) ( 3) $ 1,293,147 21 ($ 10,644) - ($ 10,644) - $ 1,282,503 21 $ 1,294,382 21 ($ 1,235) - $ 1,283,738 21 ($ 1,235) - $ 4.62 $ 4.61	Three months ended June 30,2020 Amount % $ 3,210,628 100 ( 2,504,355)( 78) 706,273 22 ( 63,042) ( 2) ( 79,435) ( 3) ( 228,070) ( 7) - - ( 370,547)( 12) 335,726 10 7,437 - 5,022 - ( 16,047) - ( 2,110) - 763 - ( 4,935) - 330,791 10 ( 51,133)( 2) $ 279,658 8 ($ 6,967) - ($ 6,967) - $ 272,691 8 $ 279,681 8 ($ 23) - $ 272,714 8 ($ 23) - $ 1.00 $ 1.00	Six months ended June 30,2021 Six months ended June 30,2020 Amount % Amount % $ 11,146,603 100 $ 6,874,358 100 ( 7,738,693)( 70)( 5,460,693) ( 79) 3,407,910 30 1,413,665 21 ( 200,818 ) ( 2) ( 126,421 ) ( 2) ( 233,974 ) ( 2) ( 157,843 ) ( 2) ( 721,787 ) ( 6) ( 456,156 ) ( 7) 5,713 - - - ( 1,150,866)( 10)( 740,420) ( 11) 2,257,044 20 673,245 10 13,148 - 18,585 - 12,000 - 7,580 - ( 46,088 ) - ( 9,903 ) - ( 9,765 ) - ( 4,207 ) - 5,506 - ( 1,664) - ( 25,199) - 10,391 - 2,231,845 20 683,636 10 ( 296,135)( 3)( 92,364) ( 1) $ 1,935,710 17 $ 591,272 9 ($ 17,554) - $ 18,973 - ($ 17,554) - $ 18,973 - $ 1,918,156 17 $ 610,245 9 $ 1,938,938 17 $ 591,347 9 ($ 3,228) - ($ 75) - $ 1,921,384 17 $ 610,320 9 ($ 3,228) - ($ 75) - $ 6.92 $ 2.11 $ 6.90 $ 2.10
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 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	6(19) 6(5) (24) (25) 6(24) (25) 12(2) 6(20) 6(21) 6(22) 6(23) 6(6) 6(26) 6(3) 6(27)
		$	$	$

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 Changes in Equity Six Months Ended June 30, 2021 and 2020

(Unaudited)

Unit: NT$ thousand

Notes			Equity attributable	Equity attributable	Equity attributable	to	owners of the parent	owners of the parent	owners of the parent			Non-controlling interest
	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	r	Unappropriated etained earnings
6(17) 6(17) (28) 6(17) 6(17) 6(17) 6(15)(16)(17) 6(17)	$ 2,857,589 - - - - - - - - - - $ 2,857,589 $ 2,857,589 - - - - - 3,914 - $ 2,861,503	$ 104,305 - - - - - - - 1,146 ( 1,749 ) 82 $ 103,784 $ 109,677 - - - 1,146 ( 311 ) 18,631 70 $ 129,213	$ 1,359,235 - - - 49,804 - - - - - - $ 1,409,039 $ 1,409,039 - - - - - - - $ 1,409,039		$ - - - - - - 8,524 - - - - $ 8,524 $ 8,524 - - - - - - - $ 8,524		$ 3,286,176 591,347 - 591,347 ( 49,804 ) ( 285,759 ) ( 8,524 ) - - - - $ 3,533,436 $ 4,019,327 1,938,938 - 1,938,938 - - - - $ 5,958,265		($ 8,524 ) - 18,973 18,973 - - - - - - - $ 10,449 $ 5,536 - ( 17,554 ) ( 17,554 ) - - - - ($ 12,018 )	($ 137,321 ) - - - - - - ( 8,328 ) - - - ($ 145,649 ) ($ 145,649 ) - - - - - - - ($ 145,649 )	$ 7,461,460 591,347 18,973 610,320 - ( 285,759 ) - ( 8,328 ) 1,146 ( 1,749 ) 82 $ 7,777,172 $ 8,264,043 1,938,938 ( 17,554 ) 1,921,384 1,146 ( 311 ) 22,545 70 $ 10,208,877	($ 120,681 ) ( 75 ) - ( 75 ) - - - ( 11,566 ) ( 10,396 ) ( 131 ) - ($ 142,849 ) ($ 134,760 ) ( 3,228 ) - ( 3,228 ) ( 7,233 ) 4,895 - - ($ 140,326 )	$ 7,340,779 591,272 18,973 610,245 - ( 285,759 ) - ( 19,894 ) ( 9,250 ) ( 1,880 ) 82 $ 7,634,323 $ 8,129,283 1,935,710 ( 17,554 ) 1,918,156 ( 6,087 ) 4,584 22,545 70 $ 10,068,551

Chairman: Hsing-Hai Chen

The accompanying notes are an integral part of these consolidated financial statements. Manager: Ming-Chien Chang

Accounting Manager: Candy Chu

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Cash Flows

Six Months Ended June 30, 2021 and 2020

(Unaudited)

Unit: NT$ thousand

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 gain
Net 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
Gains arising from lease modifications
Gains on disposals of property, plant and
equipment
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 (outflow) generated from
operations
Interest received
Interest paid
Income taxes paid
Net cash flows from operating activities

Notes
Six months ended
June 30,2021
Six months ended
June 30,2020
$ 2,231,845 $ 683,636
6(7)(8)(9)(24)
180,086
157,022
6(10)(24)
61,365
51,760
12(2)
(
5,713 )
-
6(2)(22)
(
56,099 ) (
2,582 )
6(23)
9,765
4,207
6(20)
(
13,148 ) (
18,585 )
6(6)
(
5,506 )
1,664
6(21)
(
737 )
-
6(22)
(
4 ) (
26 )
6(22)
(
10 )
-
72,486
1,126
(
43 ) (
35 )
(
658,812 ) (
103,030 )
256 (
649 )
80,598 (
4,017 )
910,618 (
1,677,944 )
(
87,054 ) (
59,811 )
4,175
2,087
224,121
3,735
3,690
336,679
21,568
7,571
537,395
157,960
(
3,956 )
69
(
336) (
1,174)
3,506,550 (
460,337 )
13,415
22,165
(
9,552 ) (
3,656 )
(
147,982) (
46,982)

3,362,431 (
488,810 )

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Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Cash Flows Six Months Ended June 30, 2021 and 2020

(Unaudited)

Unit: NT$ thousand

Cash flows from investing activities
Acquisition of financial assets at amortized
cost
Disposal of financial assets at amortized cost
Acquisition of property, plant and equipment
Proceeds from disposal of financial assets at
fair value through profit or loss
Acquisition of intangible assets
Decrease in guarantee deposit paid
Dividends received
Net cash flows from investing activities
Cash flows from financing activities
Increase in short-term borrowings
Employee exercised stock options
Increase (decrease) in short-term notes and
bills payable
Lease principal repayment
Decrease in guarantee deposit received
Subsidiaries paid cash dividends to non-
controlling interests
Expired cash dividends
Treasury share acquired
Acquisition of ownership interests from non-
controlling interests
Net cash flows from 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

Notes
Six months ended
June 30,2021
Six months ended
June 30,2020
( $ 61,024 ) ( $ 86,416 )

142,008
144,359
6(29)
(
537,812 ) (
142,471 )
10
-
6(10)
(
40,389 ) (
95,914 )
182
245
6(21)
737
-
(
496,288 ) (
180,197)
6(29)
300,000
290,000
22,545
-
6(29)
(
99,144 )
100,163
6(29)
(
6,149 ) (
4,952 )
6(29)
(
298 )
-
(
6,087 ) (
9,250 )
6(17)
70
82
- (
19,894 )
6(28)
- (
1,880)
210,937
354,269
3,077,080 (
314,738 )
6(1)
3,597,917
2,757,003
6(1)
$ 6,674,997 $ 2,442,265

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

Six Months Ended June 30, 2021 and 2020

(Unaudited)

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 Decembe r 5, 2005, and merged with Eon Silicon Solution Inc. on June 8, 2016, and the Company is the surviving company.

2. The Date of Authorization for Issuance of the Consolidated Financial Statements

and Procedures for Authorization

The consolidated financial statements were reported to the Board of Directors on July 30, 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 2021 are as follows:

Effective Date by International Accounting New Standards, Amendments and Interpretations Standards Board(“IASB”) Amendments to IFRS 4, “Extension of the temporary January 1, 2021 exemption from applying IFRS 9”

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, January 1, 2021 “Interest Rate Benchmark Reform— Phase 2”

Amendment to IFRS 16, “Covid-19-related rent concessions April 1, 2021(Note) beyond 30 June 2021”

Note ： Earlier application from January 1, 2021 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, Amendments and Interpretations	Effective Date by IASB
Amendments to IFRS 3, “Reference to the conceptual	January 1, 2022
framework”
Amendments to IAS 16, “Property, plant and equipment:	January 1, 2022
proceeds before intended use”
Amendments to IAS 37, “Onerous contracts— cost of fulfilling	January 1, 2022
a contract”
Annual improvements to IFRS Standards 2018–2020	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.

(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:

New Standards,AmendmentsandInterpretations	EffectiveDate byIASB
Amendments to IFRS 10 and IAS 28, “Sale or Contribution of	To be determined by
Assets between an Investor and its Associate or Joint Venture”	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	January 1, 2023
or Non-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 12, “Deferred tax related to assets and	January 1, 2023
liabilities arising from a single transaction”

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

4. Summary of Significant Accounting Policies

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2020, except for the compliance statement, basis of preparation, basis of consolidation and additional policies as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

A. These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IAS 34, “Interim Financial Reporting” as endorsed by the FSC.
B. These consolidated financial statements should be read along with the consolidated financial statements for the year ended December 31, 2020.

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(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 IFRS, IAS, IFRIC Interpretations and SIC Interpretations as endorsed by FSC (collectively referred herein as IFRSs), 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

The basis of preparation for the consolidated financial statements applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2020.

B. Subsidiaries included in the consolidated financial statements:

Name of Investor Name of Subsidiary Main Business Activities	Ownership (%) June 30, 2021 December 31, 2020 June 30, 2020 Note
Elite Semiconductor Microelectronics Technology Inc. Elite Semiconductor Memory Technology Inc. Research and development, production, sales and related consulting services of integrated circuit Elite Semiconductor Microelectronics Technology Inc. Charng Feng Investment Ltd. General investment Elite Semiconductor Microelectronics Technology Inc. Jie Yong Investment Ltd. General investment Elite Semiconductor Microelectronics Technology Inc. Elite Investment Services Ltd. General investment Elite Semiconductor Microelectronics Technology Inc. Elite Semiconductor (B.V.I.) Ltd. General investment Elite Semiconductor Microelectronics Technology Inc. Eon Silicon Solutions, Inc. USA Investigation and research of business situation and industrial technology	100 100 100 Note1 100 100 100 Note1 41.86 41.86 41.86 Note1 Note4 100 100 100 - - 100 Note3 Note5 100 100 100 Note1

Name of
Investor
Name of
Subsidiary
Main Business
Activities

Ownership (%)
June 30,
2021
December 31,
2020
June 30,
2020
Note

Elite
Semiconductor
Microelectronics
Technology Inc.
Elite Semiconductor
Memory Technology Inc.
Research and
development,
production, sales and
related consulting
services of integrated
circuit
Elite
Semiconductor
Microelectronics
Technology Inc.
Charng Feng
Investment Ltd.
General investment
Elite
Semiconductor
Microelectronics
Technology Inc.
Jie Yong Investment
Ltd.
General investment
Elite
Semiconductor
Microelectronics
Technology Inc.
Elite Investment
Services Ltd.
General investment
Elite
Semiconductor
Microelectronics
Technology Inc.
Elite Semiconductor
(B.V.I.) Ltd.
General investment
Elite
Semiconductor
Microelectronics
Technology Inc.
Eon Silicon Solutions,
Inc. USA
Investigation and
research of business
situation and industrial
technology

100
100
100
Note1
100
100
100
Note1
41.86
41.86
41.86
Note1
Note4
100
100
100
-
-
100
Note3
Note5
100
100
100
Note1

~13~

Name of Investor Name of Subsidiary Main Business Activities	Ownership (%) June 30, 2021 December 31, 2020 June 30, 2020 Note
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 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 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 Charng Feng Investment Ltd. Elite Semiconductor Memory 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 Charng Feng Investment Ltd. Elite Semiconductor Microelectronics (Shanghai) Technology Inc. Product design, wholesale and retail of electronic materials, information software services and international trade Charng Feng Investment Ltd. CHI Microelectronics Limited Trading Charng Feng Investment Ltd. HHHtech Co., Ltd. Information software services, product design, management consultant and international trade	100 100 100 Note1 98.01 98.01 97.69 Note1 100 100 100 Note1 100 100 100 Note1 100 100 100 Note1 100 100 - Note2 Note6 75 - - Note2 Note7

Name of
Investor
Name of
Subsidiary
Main Business
Activities

Ownership (%)
June 30,
2021
December 31,
2020
June 30,
2020
Note

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
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
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
Charng Feng
Investment Ltd.
Elite Semiconductor
Memory 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
Charng Feng
Investment Ltd.
Elite Semiconductor
Microelectronics
(Shanghai) Technology
Inc.
Product design,
wholesale and retail of
electronic materials,
information software
services and
international trade
Charng Feng
Investment Ltd.
CHI Microelectronics
Limited
Trading
Charng Feng
Investment Ltd.
HHHtech Co., Ltd.
Information software
services, product
design, management
consultant and
international trade

100
100
100
Note1

98.01
98.01
97.69
Note1

100
100
100
Note1

100
100
100
Note1
100
100
100
Note1
100
100
-
Note2
Note6
75
-
-
Note2
Note7

~14~

Note 1: As the subsidiaries do not meet the definition of significant subsidiaries, their financial statements as at June 30,2021 and 2020 were not reviewed by independent auditors.
Note 2: As the subsidiaries do not meet the definition of significant subsidiaries, their financial statements as at June 30,2021 were not reviewed by independent auditors.
Note 3: As the subsidiaries do not meet the definition of significant subsidiaries, their financial statements as at June 30,2020 were not reviewed by independent auditors.
Note 4: 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 5: Elite Semiconductor (B.V.I.) Ltd. obtained a liquidated cer tificate 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 6: 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.
Note 7: The Company obtained HHHtech Co., Ltd. share interest by 75% through it increased its capital by issuing new shares on March, 2021.Stockholders’ meeting of HHHtech Co., Ltd. approved to execute liquidation process on June 28, 2021.
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.

(4) Business combinations

A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportio nate share of the

~15~

entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.

B. The excess of the consideration transferred, the amount of any noncontrolling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date.
(5) Employee Benefits

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuat ion at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one -off events. And, the related information is disclosed accordingly.

(6) Income tax

The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

Critical Accounting Judgments, Estimates and Key Sources of Assumption Uncertainty

There was no significant change in the reporting period. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2020.

6. Details of Significant Accounts

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits		June 30, 2021 December 31, 2020		June 30, 2020 $ 157 559,279 1,882,829 $ 2,442,265
		$ 138 1,189,508 5,485,351 $ 6,674,997	$ 137 1,042,489 2,555,291 $ 3,597,917

A. The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probab ility 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.

~16~

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

Item	June 30, 2021 December 31, 2020	June 30, 2021 December 31, 2020	June 30, 2020 $ 576 148,013 23,263 74,102 31,226 14,341 291,521 ( 37,471) $ 254,050
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	$ 576 165,563 8,113 72,392 31,226 - 277,870 71,217 $ 349,087	$ 576 162,911 8,113 72,991 31,226 13,784 289,601 75,873 $ 365,474

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 Financial assets mandatorily measured at fair value through profit or loss Equity instruments Debt instruments Beneficiary certificates Total		Threemonths ended June 30, 2021 2020 ($ 18,119) $ 10,587 1,312 4,825 176 432 ($ 16,631) $ 15,844 Six months ended June 30, 2021 2020 $ 54,422 $ 3,270 2,047 ( 880) ( 370) 192 $ 56,099 $ 2,582
		2021

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).

~17~

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

Item	June 30, 2021 December 31, 2020	June 30, 2021 December 31, 2020	June 30, 2020
Non-current items: Equity instruments Unlisted stock Valuation adjustment	$ 59,300 ( 12,018) $ 47,282	$ 59,300 5,536 $ 64,836	$ 59,300 10,448
			$ 69,748

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 $47,282, $64,836 and $69,748 as at June 30, 2021, December 31, 2020, and June 30, 2020, respectively.

(4) Accounts receivable

2020, respectively. Accounts receivable
Accounts receivable - general customers Accounts receivable - related parties Less: Allowance for losses	June 30, 2021	December 31, 2020	June 30, 2020 $ 1,374,022 890 1,374,912 ( 14,295) $ 1,360,617
	$ 2,297,545 717 2,298,262 - $ 2,298,262	$ 1,638,733 973 1,639,706 ( 5,713) $ 1,633,993

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 181 days			June 30, 2021 December 31, 2020	June 30, 2021 December 31, 2020	June 30, 2020 $ 1,360,617 - - - 14,295 $ 1,374,912
			$ 2,295,814 2,448 - - - $ 2,298,262	$ 1,633,993 - - - 5,713 $ 1,639,706

The above aging analysis was based on past due date.

B. As at June 30, 2021, December 31, 2020 and June 30, 2020, 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 $2,298,262, $1,633,993 and $1,360,617.

~18~

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	June 30, 2021 December 31, 2020		June 30, 2020
	$ 55,358 4,179 5,136 843,899 642,843 $ 1,551,415	$ 33,044 4,272 5,526 760,162 555,221 $ 1,358,225	$ 38,389 - 8,696 615,741 426,112
			$ 1,088,938

D. Information relating to credit risk is provided in Note 12(2).
E. As at June 30, 2021, December 31, 2020 and June 30, 2020, accounts receivable were all from contracts with customers. As at January 1, 2020, the balance of receivables from contracts with customers amounted to $1,256,938.
F. The Group has no accounts receivable pledged to others as collateral.
(5) Inventories

Raw materials Work in process Finished goods Inventory in transit Raw materials Work in process Finished goods Inventory in transit			June 30,2021	Bookvalue $ 121,639 3,729,650 1,192,434 14,989 $ 5,058,712 Bookvalue $ 127,378 4,704,290 1,131,122 6,540 $ 5,969,330
		Cost	Allowance for valuation loss
		$ 122,920 ($ 1,281) 3,756,067 ( 26,417) 1,229,663 ( 37,229) 14,989 - $ 5,123,639 ($ 64,927) December31,2020
		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)

~19~

Raw materials Work in process Finished goods Inventory in transit			June 30,2020	Bookvalue $ 189,475 4,747,769 1,663,847 49,405 $ 6,650,496
		Cost	Allowance for valuation loss
		$ 195,570 4,805,151 1,715,731 49,405 $ 6,765,857	($ 6,095) ( 57,382) ( 51,884) - ($ 115,361)

The Group recognized as expense or loss:

Cost of goods sold Reversal of allowance on market value decline and obsolete and slow- moving inventories Cost of goods sold Reversal of allowance on market value decline and obsolete and slow- moving inventories		Three months ended June 30, 2021 2020 $ 3,934,445 $ 2,516,784 ( 23,412) ( 12,429) $ 3,911,033 $ 2,504,355 Six months ended June 30, 2021 2020 $ 7,773,240 $ 5,514,528 ( 34,547) ( 53,835) $ 7,738,693 $ 5,460,693
		2021
		2021
		$ 7,773,240 ( 34,547) $ 7,738,693

The reversal of allowance on market value decline and obsolete and slow - moving inventories were recognized because sale of certain inventories which were previously provided with allowance for price decline fo r the three months and six months ended June 30, 2021 and 2020.

(6) Investments accounted for under the equity method

2021 At January 1 $ 33,883 $ Share of profit or loss of investments accounted for using equity method 5,506 ( At June 30 $ 39,389 $ June 30, 2021 December 31, 2020 Associates $ 39,389 $ 33,883	2021	2021
	$ 33,883 5,506 $ 39,389 December 31, 2020		$ (
			$

$ 39,389		$ 33,883

~20~

The above investments accounted for under the equity method is based on the company's evaluation of financial statements that have not been reviewed by individual auditors during the same period. The recognition of profit or loss of investments is as follows:

dividual auditors during the same vestments is as follows:	period. The recognition of profit or loss of	period. The recognition of profit or loss of
Investee Canyon Semiconductor Inc. Investee Canyon Semiconductor Inc.	Three months ended June 30, 2021 2020 $ 2,996 $ 763 Six months ended June 30, 2021 2020 $ 5,506 ($ 1,664)
		2020
		($ 1,664)

(7) Property, plant and equipment

Land	Buildings and structures	Machinery equipment	Testing equipment		Others
$ 9,023 -	$ 636,446 ( 398,943) $ 237,503 $ 237,503 66,287 - 5,355 ( 17,886) $ 291,259 $ 708,088 ( 416,829) $ 291,259	$ 518,018 ( 375,047)	$ 287,860 ( 168,256)	$ 1,481,488 ( 1,213,991) $ 267,497 $ 267,497 269,498 627 - ( 125,169)	$ 1,481,488 ( 1,213,991)
$ 9,023		$ 142,971	$ 119,604		$ 267,497
$9,023 - - - -		$ 142,971 94,146 - 9,894 ( 15,904)	$ 119,604 14,321 - 24,693 ( 14,246)
$ 9,023		$ 231,107	$ 144,372		$ 412,453
$ 9,023 -		$ 622,058 ( 390,951)	$ 326,874 ( 182,502)		$ 1,751,741 ( 1,339,288)
$ 9,023		$ 231,107	$ 144,372		$ 412,453

~21~

Land	Buildings and structures	Machinery equipment	Testing equipment	Others Total $ 1,231,048 $ 2,555,096 ( 994,858) ( 1,858,768) $ 236,190 $ 696,328 $ 236,190 $ 696,328 105,233 132,532 - 221 ( 113,649) ( 151,335) $ 227,774 $ 677,746 $ 1,336,281 $ 2,687,849 ( 1,108,507) ( 2,010,103) $ 227,774 $ 677,746	Others Total $ 1,231,048 $ 2,555,096 ( 994,858) ( 1,858,768) $ 236,190 $ 696,328 $ 236,190 $ 696,328 105,233 132,532 - 221 ( 113,649) ( 151,335) $ 227,774 $ 677,746 $ 1,336,281 $ 2,687,849 ( 1,108,507) ( 2,010,103) $ 227,774 $ 677,746
$ 9,023 - $ 9,023 $ 9,023 - - - $ 9,023 $ 9,023 - $ 9,023	$ 635,941 ( 364,888)	$ 429,782 ( 352,626)	$ 249,302 ( 146,396)
	$ 271,053	$ 77,156	$ 102,906	$ 236,190
	$ 271,053 - - ( 17,053)	$ 77,156 20,316 221 ( 9,590)	$ 102,906 6,983 - ( 11,043)	$ 236,190 105,233 - ( 113,649)
	$ 254,000	$ 88,103	$ 98,846		$ 227,774
	$ 635,941 ( 381,941)	$ 450,319 ( 362,216)	$ 256,285 ( 157,439)		$ 1,336,281 ( 1,108,507)
	$ 254,000	$ 88,103	$ 98,846

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

A. For the six months ended June 30, 2021 and 2020 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	June 30, 2021 December 31, 2020		June 30, 2020 $ 63,931 12,302 67 638 $ 76,938
		Book value
	$ 60,513 11,971 3,887 3,427 $ 79,798	$ 62,221 15,188 3,083 290 $ 80,782

~22~

Three months ended June 30,

	Threemonths ended June 30,	Threemonths ended June 30,
Land Buildings and structures Business vehicles Printers Land Buildings and structures Business vehicles Printers	2021 2020
	Depreciation charge
	$ 855 $ 855 1,692 1,537 661 202 155 174 $ 3,363 $ 2,768 Six months ended June 30,	$ 855 1,537 202 174
		$ 2,768
	2021 2020
	Depreciation charge
	$ 1,710 3,217 1,158 311 $ 6,396	$ 1,710 2,741 403 348
		$ 5,202

C. For the six months ended June 30, 2021 and 2020, the additions to right -ofuse assets were $5,702 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 Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts		Threemonths ended June 30, 2021 2020 $ 300 $ 301 $ 1,058 $ 2,775 Six months ended June 30, 2021 2020 $ 603 $ 612 $ 2,877 $ 4,325
		2021

		2021
		$ 603 $ 2,877

E. For six months ended June 30, 2021 and 2020, the Group’s total cash outflow for leases were $9,629 and $9,889, respectively.

~23~

(9) Investment property

At January 1, 2021 Cost Accumulated depreciation and impairment 2021 At January 1 Depreciation charge At June 30 At June 30, 2021 Cost Accumulated depreciation and impairment At January 1, 2020 Cost Accumulated depreciation and impairment 2020 At January 1 Depreciation charge At June 30 At June 30, 2020 Cost Accumulated depreciation and impairment	Buildingsand structures $ 20,369 ( 2,668) $ 17,701 $ 17,701 ( 485) $ 17,216 $ 20,369 ( 3,153) $ 17,216 Buildings and structures $ 20,369 ( 1,698) $ 18,671 $ 18,671 ( 485) $ 18,186 $ 20,369 ( 2,183) $ 18,186
	(

~24~

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

Three months ended June 30,

Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period		2021	2020
		$ 640 $ 628 $ 243 $ 243 Six months ended June 30,	$ 628
			$ 243
		2021	2020
		$ 1,281 $ 485	$ 1,280 $ 485

B. The fair value of the investment property held by the Group as at June 30, 2021, December 31, 2020 and June 30, 2020 was $9,001, $10,516 and $9,710, respectively, which was valued by income approach. Key assumptions are as follows:

follows:
Rate of net return on capital (Note)		June 30, 2021 December 31, 2020		June 30, 2020
		16.40%	13.29%	13.83%

Note: Calculated based on the weighted average capital cost of the issuer.
C. For the six months ended June 30, 2021 and 2020 no interest expense was capitalized on investment property in the Group.
D. The Group has no investment property pledged to others.

~25~

(10) Intangible assets

At January 1, 2021 Cost Accumulated depreciation and impairment 2021 At January 1 Additions Amortization charge At June 30 At June 30, 2021 Cost Accumulated depreciation and impairment At January 1, 2020 Cost Accumulated depreciation and impairment 2020 At January 1 Additions Amortization charge At June 30 At June 30, 2020 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 $ 497,091 ( 385,403) $ 111,688 $ 111,688 40,389 ( 61,365) $ 90,712 $ 537,480 ( 446,768) $ 90,712 Total $ 330,088 ( 248,495) $ 81,593 $ 81,593 95,914 ( 51,760) $ 125,747 $ 426,002 ( 300,255) $ 125,747
	$ 34,478 $ 11,000 ( 30,654) ( 11,000) $ 3,824 $- $ 3,824 $ - - - ( 2,549) - $ 1,275 $- $ 34,478 $ 11,000 ( 33,203) ( 11,000) $ 1,275 $ - Patents and Customer Technical skill Relationship			$ 80,758 ( 62,456) $ 18,302 $ 18,302 - - $ 18,302 $ 80,758 ( 62,456) $ 18,302 Goodwill	$ 370,855 ( 281,293) $ 89,562 $ 89,562 40,389 ( 58,816) $ 71,135 $ 411,244 ( 340,109) $ 71,135 Others
		$ 34,478 ( 25,556) $ 8,922 $ 8,922 - ( 2,549) $ 6,373 $ 34,478 ( 28,105) $ 6,373	$ 11,000 ( 11,000) $- $ - - - $- $ 11,000 ( 11,000) $-	$ 80,758 ( 37,104) $ 43,654 $ 43,654 - - $ 43,654 $ 80,758 ( 37,104) $ 43,654	$ 203,852 ( 174,835) $ 29,017 $ 29,017 95,914 ( 49,211) $ 75,720 $ 299,766 ( 224,046) $ 75,720

~26~

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

Operating costs Selling expenses Administrative expenses Research and development expenses Operating costs Selling expenses Administrative expenses Research and development expenses		Threemonths ended June30, 2021 2020 $ 1,274 $ 1,274 88 18 416 171 28,928 25,338 $ 30,706 $ 26,801 Six months ended June 30, 2021 2020 $ 2,549 $ 2,549 164 110 832 341 57,820 48,760 $ 61,365 $ 51,760
		2021
		$ 1,274 88 416 28,928
		$ 30,706
		2021
		$ 2,549 164 832 57,820
		$ 61,365

B. For the six months ended June 30, 2021 and 2020 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 goodwill is tested annually for impairment. The recoverable amount has been determined based on value-in-use calculations. The assumptions of evaluation of impairment change immaterial as at June 30, 2021. The evaluation of goodwill impairment is provided in 6(11) in the consolidated financial statements for the year ended December 31, 2020.The goodwill is tested annually for impairment. The recoverable amount has been determined based on value-in-use calculations.

(12) Short -term borrowings

hort-term borrowings
Type of borrowings	June 30, 2021 Interest rate range Collateral $ 1,640,000 0.75%`～`0.94% None December31,2020Interest raterange Collateral $ 1,340,000 0.75%`～`1.05% None June 30, 2020 Interest rate range Collateral
Bank borrowings Credit loans Type ofborrowings
Bank borrowings Credit loans Type of borrowings
Bank borrowings Credit loans	$ 564,000 0.83%`～`1.76% None

~27~

Interest expense recognized in profit or loss amounted to $3,924, $1,304, $7,742 and $2,645 for the three months and six months ended June 30 ,2021 and 2020, respectively.

(13) Other payable

and 2020, respectively. ther payable
Salary and bonus payables Payable on employees and director remuneration Payable on equipment Cash dividend payable Others		June 30, 2021 December 31, 2020		June 30, 2020 $ 401,468 79,832 71,735 295,009 71,990 $ 920,034
		$ 783,133 223,304 72,209 6,087 72,132 $ 1,156,865	$ 381,089 80,658 146,904 - 85,350 $ 694,001

(14) Pensions

A.(a) The Company 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 ba sed 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 a 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) For the aforementioned pension plan, the Group recognized pension costs of $92, $134, $197 and $269 for the three months and six months ended June 30, 2021 and 2020, respectively.
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 monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual

~28~

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 Memory 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 three months and six months ended June 30, 2021 and 2020, were $9,046, $8,019, $17,801 and $15,921, respectively.

(15) Share- based payment
A. For the six months ended June 30, 2021 and 2020, the Group’s share-based payment arrangements were as follows:

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

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

~29~

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 exercised Options expired Options outstanding at June 30 Options exercisable at June 30		2021 2020 Weighted-average Weighted-average No. of options exercise price (in dollars) No. of options exercise price (in dollars) 518 $ 57.6~217.4 543 $ 59.2~303.4 - - ( 4) 223.30 ( 391) 57.6 - - ( 106) 217.4 - - 21 $ 57.6539 $ 59.2~303.4 21 539

		518 $ 57.6~217.4 - - ( 391) 57.6 ( 106) 217.4 21 $ 57.6 21

C. The weighted-average stock price of stock options at exercise dates for the six months ended June 30, 2021 was $83.68. No options exercised for the six months ended June 30, 2020.
D. As of June 30, 2021, December 31, 2020 and June 30, 2020, the range of exercise prices of stock options outstanding was $57.6, $57.6~$217.4 and $59.2~$303.4 (in dollars), respectively; the weighted-average remaining contractual period was 2.14 years, 2.64 years and 3.14 years, respectively.
E. Expenses incurred on share-based payment transactions for the three months and six months ended June 30, 2021 and 2020, were all $0.

(16) Share capital

A. As of June 30, 2021, 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 $2,861,503 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

Shares outstanding at January 1 Employee stock options exercised Acquisition of company's share by subsidiary recognized as treasury share Shares outstanding at June 30 Treasury shares at the end of the period Shares issued at June 30		2021	2020 272,320 - ( 715) 271,605 14,154 285,759
		271,605 391 - 271,996 14,154 286,150

~30~

B. Treasury shares

The Company's shares held by the Company's subsidiary, Jie Young Investment Ltd., as of June 30, 2021, December 31, 2020 and June 30, 2020 due to the parent company's business strategy, were 14,154 thousand shares, with carrying amounts of $347,942; the average book value per share were $24.58, and the fair value per share were $163.00, $64.70 and $38.65.

(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.

2021

	2021	2021	2021	2021
At January 1 Recognition of effects from change in ownership interests in subsidiaries - cash dividends distribution from subsidiaries Expired cash dividends transferred to capital surplus Issue new shares due to employee stock options exercised Difference between consideration and carrying amount of subsidiaries acquired or disposed At June 30	Changes in Share Treasury share ownership interests in Employee stock premium transactions subsidiaries options				Others	Total $109,677 1,146 70 18,631 ( 311) $129,213
	$ - - - 19,827 - $19,827	$ 1,661 - - - - $ 1,661	$ 100,239 1,146 - - ( 311) $ 101,074	$ 3,913 - - ( 1,196) -	$3,864 - 70 - -
				$ 2,717	$3,934

~31~

	2020	2020	2020
Share premium	Changes in Treasury share ownership interests in Employee stock transactions subsidiaries options			Others
$ 1,661 - - - $ 1,661	$ 94,949 1,146 ( 1,749) - $ 94,346	$ 3,913 - - - $ 3,913	$ 3,782 - - 82 $ 3,864	$104,305 1,146 ( 1,749) 82
				$103,784

(18) Retained earnings
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.

~32~

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 equity 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 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.
F. 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 appropriations had been approved by stockholders’ meeting on July 12, 2021.

(19) Operating revenue

Three months ended June 30,

		Threemonths e
Revenue from contracts with customers Revenue from contracts with customers		2021
		$ 6,175,127
		2021
		$ 11,146,603

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:

Three months ended June 30, 2021 Integrated circuits Three months ended June 30, 2020 Integrated circuits	Three months ended June 30, 2021 Integrated circuits Three months ended June 30, 2020 Integrated circuits	Domestic	Asia	Others	Total $ 6,175,127 Total $ 3,210,628
		$ 2,961,073 Domestic	$ 3,191,757 Asia	$ 22,297 Others
		$ 1,302,840	$ 1,874,460	$ 33,328

~33~

Six months ended June 30, 2021 Domestic Asia Others Total Integrated circuits $ 5,128,733 $ 5,973,342 $ 44,528 $11,146,603

Six months ended June 30, 2020 Integrated circuits		Domestic	Asia	Others	Total
		$ 2,981,568	$ 3,819,213	$ 73,577	$ 6,874,358

B. Contract liabilities

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

liabilities:
Contract liabilities- advance sales receipts		June 30, 2021	December 31, 2020	June 30, 2020	January 1, 2020
		$ 26,914	$ 5,346	$ 11,530	$ 3,959

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 Contract liabilities- advance sales receipts		Threemonths ended June 30, 2021 2020 $ 14 $ 65 Six months ended June 30, 2021 2020 $ 5,255 $ 3,874
		2021
		$ 14

		2021
		$ 5,255

~34~

(20) Interest revenue

Three months ended June 30,

Interest income from bank deposits Interest income from financial assets at amortized cost Other interest income		2021	2020 $ 7,102 140 195 $ 7,437
		$ 7,219 52 64 $ 7,335

Six months ended June 30,

Interest income from bank deposits Interest income from financial assets at amortized cost Other interest income		2021	2020 $ 17,305 838 442 $ 18,585
		$ 12,903 113 132 $ 13,148

(21) Other income

Three months ended June 30,

Rent income Dividend income Other income, others		2021	2020 $ 1,377 - 3,645 $ 5,022
		$ 1,357 737 3,674 $ 5,768

Six months ended June 30,

Rent income Dividend income Other income, others		2021	2020 $ 2,766 - 4,814 $ 7,580
		$ 2,735 737 8,528 $ 12,000

~35~

(22) Other gains and losses

Three months ended June 30,

Gains on disposals of property, plant and equipment Foreign exchange losses Gains (Losses) on financial assets at fair value through profit or loss Miscellaneous disbursements		2021	2020 $ - ( 31,648) 15,844 ( 243) ($ 16,047)
		$ 10 ( 117,197) ( 16,631) ( 243) ($ 134,061)

Six months ended June 30,

Gains on disposals of property, plant and equipment Gains arising from lease modifications Foreign exchange losses Gains (Losses) on financial assets at fair value through profit or loss Miscellaneous disbursements		2021	2020 $ - $ 26 ( 12,026) 2,582 ( 485) ($ 9,903)
		$ 10 4 ( 101,716) 56,099 ( 485) ($ 46,088)

(23) Financial costs

Interest expense: Bank borrowings Provisions for liabilities - unwinding of discount Lease liability Total of interest expense Others		Threemonths ended June 30, 2021 2020 $ 3,924 $ 1,304 386 353 300 301 4,610 1,958 317 152 $ 4,927 $ 2,110
		2021
		$ 3,924 386 300 4,610 317 $ 4,927

~36~

Six months ended June 30,

Interest expense: Bank borrowings Provisions for liabilities - unwinding of discount Lease liability Total of interest expense Others		2021	2020 $ 2,645 706 612 3,963 244 $ 4,207
		$ 7,742 772 603 9,117 648 $ 9,765

(24) Expenses by nature

Three months ended June 30,

	Threemonths e
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 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	2021
	2021
	$ 1,040,650 $ 173,205 $ 6,396 $ 485 $ 61,365

~37~

(25) Employee benefit expense

Wages and salaries Labor and health insurance fees Pension costs Director remuneration Other personnel expenses Wages and salaries Labor and health insurance fees Pension costs Director remuneration Other personnel expenses		Threemonths ended June 30, 2021 2020 $ 575,073 $ 273,957 12,638 10,987 9,138 8,153 17,804 4,155 5,610 7,321 $ 620,263 $ 304,573 Six months ended June 30, 2021 2020 $ 952,820 $ 542,433 27,809 24,400 17,998 16,190 27,436 8,545 14,587 13,025 $ 1,040,650 $ 604,593
		2021

		2021
		$ 952,820 27,809 17,998 27,436 14,587 $ 1,040,650

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 three months and six months ended June 30, 2021 and 2020, employees’ compensation was accrued at $79,901, $17,597, $118,871 and $36,367, respectively; while directors’ remuneration was accrued at $15,980, $3,519, $23,774 and $7,273, 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 six months ended June 30, 2021.

C. The employees’ compensation and directors’ remuneration of 2020 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2020 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.

~38~

(26) Income tax

A. Income tax expense

(a) Components of income tax expense:

Current tax: Current tax on profits for the period Prior year income tax overestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense Current tax: Current tax on profits for the period Prior year income tax overestimation Total current tax Deferred tax: Origination and reversal of temporary differences Income tax expense	Three months ended June 30, 2021 2020 $ 217,723 $ 52,562 ( 3,250) ( 4,596) 214,473 47,966 ( 6,514) 3,167 $ 207,959 $ 51,133 Six months ended June 30, 2021 2020 $ 305,863 $ 95,770 ( 3,250) ( 4,596) 302,613 91,174 ( 6,478) 1,190 $ 296,135 $ 92,364
	2021
	$ 305,863 ( 3,250) 302,613 ( 6,478) $ 296,135

(b) The income tax charge relating to components of other comprehensive income: None.
(c) The income tax charged to equity during the period: None.
B. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

~39~

(27) Earnings per share

Basic earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employee stock options Employees’ compensation Diluted earnings per share Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 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		Three months ended June 30, 2021 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 1,294,382 280,195 $ 4.62 12 729 $ 1,294,382 280,936 $ 4.61 Threemonths ended June 30,2020 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (sharein thousands) share (indollars) $ 279,681 279,984 $ 1.00 941 $ 279,681 280,925 $ 1.00	Three months ended June 30, 2021 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 1,294,382 280,195 $ 4.62 12 729 $ 1,294,382 280,936 $ 4.61 Threemonths ended June 30,2020 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (sharein thousands) share (indollars) $ 279,681 279,984 $ 1.00 941 $ 279,681 280,925 $ 1.00



		$ 279,681 $ 279,681	279,984 941 280,925

~40~

Six months ended June 30, 2021 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 1,938,938 280,046 $ 6.92 9 959 $ 1,938,938 281,014 $ 6.90 Six months ended June 30,2020 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 591,347 279,984 $ 2.11 1,492 $ 591,347 281,476 $ 2.10	Six months ended June 30, 2021 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 1,938,938 280,046 $ 6.92 9 959 $ 1,938,938 281,014 $ 6.90 Six months ended June 30,2020 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 591,347 279,984 $ 2.11 1,492 $ 591,347 281,476 $ 2.10	Six months ended June 30, 2021 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 1,938,938 280,046 $ 6.92 9 959 $ 1,938,938 281,014 $ 6.90 Six months ended June 30,2020 Weighted average number of ordinary Earnings per Amount after tax shares outstanding (share in thousands) share (in dollars) $ 591,347 279,984 $ 2.11 1,492 $ 591,347 281,476 $ 2.10

$ 1,938,938 $ 1,938,938 Six months		280,046 9 959 281,014 ended June 30,2020

$ 591,347 $ 591,347	279,984 1,492 281,476

Note: The employee stock options not calculate for thr ee months and six months ended June 30, 2020 due to the effect of anti-dilution.

~41~

(28) Transactions with non-controlling interest

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

The effect of changes in interests in Elite Silicon Technology Inc. on the equity attributable to owners of the parent for the six months ended June 30, 2020 is shown below:

30, 2020 is shown below:
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		2020 $ 131 ( 1,880) ($ 1,749)

(29) Supplemental cash flow information

A. Investing activities with partial cash payments:

Purchase of property, plant and equipment (including amount of transfer) Add: Ending balance of prepayments for equipment Less: Opening balance of prepayments for equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid during the period		Six months ended June 30, 2021 2020 $ 484,194 $ 132,753 47,458 29,290 ( 68,535) ( 5,863) 146,904 58,026 ( 72,209) ( 71,735) $ 537,812 $ 142,471
		2021
		$ 484,194 47,458 ( 68,535) 146,904 ( 72,209) $ 537,812

B. Financing activities with no cash flow effects

Cash dividend to shareholders Less: Ending balance of dividend payable		Six months ended June 30, 2021 2020 $ 6,087 $ 295,009 ( 6,087) ( 295,009) $- $-
		2021
		$ 6,087 ( 6,087)
		$-

~42~

C. Changes in liabilities from financing activities:

At January 1, 2021 Changes in cash flow from financing activities Interest paid Interest expense Changes in other non- cash items Changes from lease modifications Dividend declared At June 30, 2021	Short-term borrowings	Short-term notes and bills payable	Lease liabilities Guarantee deposits received	Lease liabilities Guarantee deposits received	Dividend payable	Liabilities from financing activities-gross
	$ 1,340,000 300,000 - - - - -	$ 149,756 ( 99,144) - - ( 640) - -	$ 81,637 ( 6,149) ( 603) 603 5,702 ( 294) -	$ 6,635 ( 298) - - - - - $ 6,337	$ - - - - - - 6,087 $ 6,087	$ 1,578,028 194,409 ( 603) 603 5,062 ( 294) 6,087
	$ 1,640,000	$ 49,972	$ 80,896			$ 1,783,292

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 Dividend declared At June 30, 2020	Short-term borrowings	Short-term notes and bills payable	Lease liabilities Guarantee deposits received	Lease liabilities Guarantee deposits received	Dividend payable	Liabilities from financing activities-gross
	$ 274,000 290,000 - - - - -	$ - 100,163 - - ( 236) - -	$ 86,887 ( 4,952) ( 612) 612 - ( 4,253) -	$ 9,871 - - - - - -	$ - - - - - - 295,009	$ 370,758 385,211 ( 612) 612 ( 236) ( 4,253) 295,009 $ 1,046,489
	$ 564,000	$ 99,927	$ 77,682	$ 9,871	$ 295,009

7. Related Party Transactions

(1) Names of related parties and relationship

Names of related parties	Relationship with the Company
Arima Lasers Corporation	The Company’s subsidiary is this company’s director
Canyon Semiconductor Inc.	Investee indirectly accounted for under equity method

(2) Key management compensation

Salaries and other short-term employee benefits Post-employment benefits Total		Threemonths ended June 30, 2021 2020 $ 48,342 $ 14,227 108 108 $ 48,450 $ 14,335
		2021
		$ 48,342 108
		$ 48,450

~43~

Salaries and other short-term employee benefits Post-employment benefits Total		Six months ended June 30, 2021 2020 $ 75,496 $ 29,104 216 216 $ 75,712 $ 29,320
		2021
		$ 75,496 216
		$ 75,712

8. Pledged Assets

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

Assetsitem		Bookvalue	Bookvalue	June 30, 2020 Purpose
		June 30, 2021 December 31, 2020
Time deposits (shown as “other current assets and other non-current assets ”)		$ 3,969	$ 3,969	$ 3,969 Guarantee deposits for lease of land

Significant Contingent Liabilities and Unrecognized Contract Commitments

None.

10. Significant Disaster Loss

None.

11. Significant Events after the Balance Sheet Date

Appropriations had been approved by stockholders’ meeting on July 12, 2021. Information about the appropriations is provided in 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.

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.

~44~

The gearing ratios at June 30, 2021, December 31, 2020 and June 30, 2020 were as follows:

were as follows:
Total assets Total liabilities Total equity Equity to asset ratio	June 30, 2021 December 31, 2020		June 30, 2020 $ 12,004,507 ( 4,370,184) $ 7,634,323 64%
	$ 15,995,620 ( 5,927,069) $ 10,068,551 63%	$ 13,000,348 ( 4,871,065) $ 8,129,283 63%

(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”)	June 30, 2021	December 31, 2020	June 30, 2020 $ 254,050 $ 69,748 $ 2,442,265 82,964 69 1,360,617 83,178 3,969 6,016 $ 3,979,078
	$ 349,087	$ 365,474
	$ 47,282	$ 64,836
	$ 6,674,997 55,720 43 2,298,262 14,965 3,969 6,693	$ 3,597,917 136,704 - 1,633,993 95,830 3,969 6,495
	$ 9,054,649	$ 5,474,908

~45~

Financial liabilities Financial liabilities at amortized cost Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other accounts payable Guarantee deposits received (shown as “other non-current liabilities”) Lease liability	June 30, 2021	December 31, 2020	June 30, 2020 $ 564,000 99,927 5,716 2,562,588 920,034 9,871 $ 4,162,136 $ 77,682
	$ 1,640,000 49,972 5,805 2,620,279 1,156,865 6,337	$ 1,340,000 149,756 2,115 2,396,158 694,001 6,635
	$ 5,479,258	$ 4,588,665
	$ 80,896	$ 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, credit 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 appropriat e 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 and liabilities use the currency different from the functional currency of the companies.

~46~

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:

	June 30,2021	June 30,2021
	Foreign currency		Book value
(Foreign currency: functional	amount	Exchange		(NTD in
currency)	(In thousands)	rate		thousands)
Financial assets
Monetary items
USD:NTD	$ 284,648	27.860	$	7,930,293
RMB:NTD	200,796	4.309		865,230
Financial liabilities
Monetary items
USD:NTD	$ 53,929	27.860	$	1,502,462
	December 31, 2020
	Foreign currency		Book value
(Foreign currency: functional	amount	Exchange		(NTD in
currency)	(In thousands)	rate		thousands)
Financial assets
Monetary items
USD:NTD	$ 154,117	28.480	$	4,389,252
RMB:NTD	181,116	4.377		792,745
Financial liabilities
Monetary items
USD:NTD	$ 50,522	28.480	$	1,438,867
JPY:NTD	67,255	0.276		18,562

~47~

	June 30,2020	June 30,2020
	Foreign currency		Book value
(Foreign currency: functional	amount	Exchange	(NTD in
currency)	(In thousands)	rate	thousands)
Financial assets
Monetary items
USD:NTD	$ 97,566	29.630	$ 2,890,881
RMB:NTD	211,088	4.191	884,670
Financial liabilities
Monetary items
USD:NTD	$ 56,088	29.630	$ 1,661,887

V. The total exchange losses, including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the three months and six months ended June 30, 2021 and 2020, amounted to $117,197, $31,648, $101,716 and $12,026, respectively.
VI. Analysis of foreign currency market risk arising from significant foreign exchange variation:

.Analysis of foreign curren foreign exchange variation:	cy market risk arising from significan
(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD	Six months ended June 30,2021 Sensitivityanalysis Degree of variation Effect on profit or loss Effect on other comprehensive income 1% $ 79,303 $ - 1% 8,652 - 1% ($ 15,025) $ -

~48~

Six months ended June 30, 2020

	Six months ended June 30, 2020
(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD	Sensitivityanalysis
	Degree of variation Effect on profit or loss Effect on other comprehensive income
	1% $ 28,909 $ - 1% 8,847 - 1% ($ 16,619) $ -

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 cha nge 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 Three months ended June 30, 2021 and 2020 would have increased/decreased by $34,909 and $25,405, 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 $4,728 and $6,975, respectively, as a result of other co mprehensive 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.

~49~

(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 t he 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 regular ly monitored.
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 financial 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 includ ing time deposits 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.

~50~

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 June 30, 2021, December 31, 2020 and June 30, 2020.
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 Reversal of impairment At June 30	2021 2020
	Accounts receivable
	$ 5,713 ( 5,713) $-	$ 14,295 -
		$ 14,295

(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.

~51~

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 disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

Non-derivative financial liabilities:
June 30, 2021 Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Lease liability Guarantee deposits received Derivative financial liabilities:None.	Less than 1 year Between 1 and 5 years Over 5 years
	$ 1,640,000 $ - $ - 49,972 - - 5,805 - - 2,620,279 - - 1,156,865 - - 13,453 25,775 50,971 - - 6,337

Non-derivative financial liabilities:

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

Non-derivative financial liabilities:

Non-derivative financial liabilities:
June 30, 2020 Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable Other payables Lease liability Guarantee deposits received Derivative financial liabilities:None.	Less than 1 year Between 1 and 5 years Over 5 years
	$ 564,000 $ - $ - 100,000 - - 5,716 - - 2,562,588 - - 920,034 - - 10,000 23,222 54,620 - - 9,871

~52~

(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, 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:
June 30, 2021
Level 1
Level 2
Level 3
Total
Assets
Recurring fair value measurements
Financial assets at fair value through profit or
loss
Equity securities
$213,378 $ 2,476 $ 2,516 $218,370
Beneficiary certificates
91,366 - - 91,366
Debt securities
39,351 - - 39,351
Financial assets at fair value through other
comprehensive income
Equity securities
-
-
47,282
47,282
$344,095
$ 2,476
$ 49,798
$396,369
Financial liabilities: None.

~53~

Level 1 Level 2	Level 1 Level 2	Level 1 Level 2
$214,924 $ 2,506 91,737 - 51,390 - - -
$358,051	$ 2,506	$ 69,753
Level 1	Level 2	Level 3
$216,094	$ 2,112	$105,592

(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-end fund
	Closing price Net asset value

~54~

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.
E. For the six months ended June 30, 2021 and 2020, there was no transfer between Level 1 and Level 2.
F. The following chart is the movement of Level 3 for the six months ended June 30, 2021 and 2020:

une 30, 2021 and 2020:
At January 1 Valuation adjustment At June 30	Equity securities
	2021	2020
	$ 69,753 (19,955) $ 49,798	$ 85,953 19,639 $ 105,592

G. 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.

~55~

H. 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		Significant
	June 30,	Valuation	unobservable	Range	Relationship of
	2021	technique	input	(weighted average) inputs to fair value
Non-derivative	equity instrument:
Unlisted shares	$ 2,516	Market -	Discount for	30%	the higher the
		comparable	lack of		discount for lack of
		companies	marketability		marketability, the
					lower the fair value
Unlisted shares	47,282	Market -	Discount for	45%	the higher the
		comparable	lack of		discount for lack of
		companies	marketability		marketability, the
					lower the fair value
	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
	Fair value at		Significant
	June 30,	Valuation	unobservable	Range	Relationship of inputs
	2020	technique	input	(weighted average) to fair value
Non-derivative	equity instrument:
Unlisted shares	$ 20,694	Market -	Discount for	30%	the higher the discount
		comparable	lack of		for lack of
		companies	marketability		marketability, the
					lower the fair value
Unlisted shares	69,748	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	Not applicable	Not applicable
		deal price	applicable

~56~

I. 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:

Input Change	June 30, 2021	June 30, 2021	June 30, 2021	June 30, 2021	June 30, 2021
	Recognized in profit or loss Recognized in other comprehensive income
	Favorable change Unfavorable change Favorable change Unfavorable change
Discount for lack of marketability ±10% Input Change		$ 108	($ 108) $ 3,869 December 31, 2020		($ 3,869)

		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)

Input Change	June 30,2020	June 30,2020	June 30,2020	June 30,2020	June 30,2020
	Recognized in profit or loss Recognized in other comprehensive income
	Favorable change Unfavorable change Favorable change Unfavorable change
Discount for lack of marketability ±10%		$ 887	($ 887)	$ 4,650	($ 4,650)

(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 for the six months ended June 30, 2021. However, the Company will continue to pay attention to the development of the COVID -19 and its impact on the overall economic environment.

~57~

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: None.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 2.

(3) Information on investments in Mainland China

Basic information: Please refer to table 3.
Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(4) Major shareholders information

As of June 30, 2021, the Company did not have any shareholders with a shareholding ratio more than 5%.

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.

~58~

(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 Revenue from external customers Segment income before income tax Segment assets Segment liabilities	Three months ended June 30, 2021 2020 $ 6,175,127 $ 3,210,628 $ 1,501,106 $ 330,791 Six months ended June 30, 2021 2020 $ 11,146,603 $ 6,874,358 $ 2,231,845 $ 683,636 June 30, 2021 June 30, 2020 $ 15,995,620 $ 12,004,507 $ 5,927,069 $ 4,370,184
	2021
	$ 11,146,603 $ 2,231,845 June 30, 2021
	$ 15,995,620 $ 5,927,069

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

~59~

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries

Holding of marketable securities at the end of the period

June 30, 2021

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 June 30, 2021	As of June 30, 2021	As of June 30, 2021	As of June 30, 2021
				Number of shares	Book value (Note)	Ownership (%)	Fair value (Note)
Elite Semiconductor Microelectronics Technology Inc.	Arima Lasers Corporation stock	Note 1	Financial assets at fair value through profit or loss	3,391,000	79,010	12.04	79,010
Elite Semiconductor Microelectronics Technology Inc.	King Yuan Electronics Corporation stock	None	Financial assets at fair value through profit or loss	10,000	449	0.00	449
Elite Semiconductor Microelectronics TechnologyInc.	HSBC FRN PERPETUAL bond	None	Financial assets at fair value through profit or loss	1,000,000	26,184	Not applicable	26,184
Elite Semiconductor Microelectronics Technology Inc.	ANZ FRN PERPETUAL bond	None	Financial assets at fair value through profit or loss	500,000	13,167	Not applicable	13,167
Elite Semiconductor Microelectronics Technology Inc.	BGF RENMINBI BOND FUND	None	Financial assets at fair value through profit or loss	127,986	58,477	Not applicable	58,477
Elite Semiconductor Microelectronics Technology Inc.	Turning Point Lasers Ltd. preferred stock	None	Financial assets at fair value through other comprehensive income	1,000,000	23,641	8.06	23,641
Elite Investment Services Ltd.	HSBC ALL CHINA BOND FUND - AC (2802)	None	Financial assets at fair value through profit or loss	600,000	32,889	Not applicable	32,889
Charng Feng Investment Ltd.	King Yuan Electronics Corporation stock	None	Financial assets at fair value through profit or loss	10,000	449	0.00	449
Charng Feng Investment Ltd.	Arima Lasers Corporation stock	Note 2	Financial assets at fair value through profit or loss	907,000	21,133	3.22	21,133
Charng Feng Investment Ltd.	Ushine Photonics Corporation stock	None	Financial assets at fair value through profit or loss	72,227	1,033	0.39	1,033
Charng Feng Investment Ltd.	Brightek Optoelectronic Corporation Ltd. stock	None	Financial assets at fair value through profit or loss	30,601	1,443	0.05	1,443
Charng Feng Investment Ltd.	M2 Communication Inc. stock	None	Financial assets at fair value through profit or loss	400,000	2,516	4.46	2,516
Charng Feng Investment Ltd.	Powerchip Semiconductor Manufacturing Corporation	None	Financial assets at fair value through profit or loss	1,630,426	112,337	0.05	112,337
Charng Feng Investment Ltd.	Turning Point Lasers Ltd. preferred stock	None	Financial assets at fair value through other comprehensive income	1,000,000	23,641	8.06	23,641
Jie Yong Investment Ltd.	Elite Semiconductor Microelectronics Technology Inc. stock	Parent company	Financial assets at fair value through other comprehensive income	14,154,000	2,307,102	4.95	2,307,102

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

Note 1: The Company’s subsidiary is this company’s director

Note 2: Charng Feng Investment Ltd. is this company’s director

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries

Information on investees (exclude investee in Mainland China)

Six months ended June 30, 2021

Table 2

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 June 30, 2021	Shares held as at June 30, 2021	Shares held as at June 30, 2021	Net income (loss) of the investee for the three months ended June 30, 2021	Investment income (loss) recognized by the Company for the three months ended June 30, 2021
				Balance as at June 30, 2021	Balance as at December 31, 2020	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	$ 19,137	$ 3,642	$ 3,642
Elite Semiconductor Microelectronics Technology Inc.	Charng Feng Investment Ltd.	Taiwan	General investment	500,000	500,000	50,000,000	100	544,223	41,181	42,282
Elite Semiconductor Microelectronics Technology Inc.	Elite Investment Services Ltd.	British Virgin Islands	General investment	417,900	417,900	15	100	611,309	( 9,190)	( 9,190)
Elite Semiconductor Microelectronics Technology Inc.	Jie Yong Investment Ltd.	Taiwan	General investment	270,000	270,000	3,600,000	41.86	131,769	( 15)	( 6)
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	1,351	2,762	2,762
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	21,772	( 180)	( 180)
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	61,201	7,448,960	98.01	524	( 4)	( 4)

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries

Information on investees (exclude investee in Mainland China)

Six months ended June 30, 2021

Table 2 Expressed in thousands of New Taiwan dollars, except as otherwise indicated

				Initial investment amount	Initial investment amount	Shares held as at June 30, 2021	Shares held as at June 30, 2021	Shares held as at June 30, 2021	Net income (loss) of the investee for the three months ended June 30, 2021	Investment income (loss) recognized by the Company for the three months ended June 30, 2021	Footnote
Investor	Investee	Location	Main business activities	Balance as at June 30, 2021	Balance as at December 31, 2020	Number of shares	Ownership (%)	Book value
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	39,389	13,453	5,506
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	2,065	2,065	200	100	2,149	( 47)	( 47)
Charng Feng Investment Ltd.	CHI Microelectronics Limited	Hong Kong	Trading	359	359	10,000	100	359	( 9)	( 9)
Charng Feng Investment Ltd.	HHHtech Co., Ltd.	Taiwan	Information software services, product design, management consultant and international trade	15,000	-	1,500,000	75	4,964	( 12,966)	( 9,725)	Note 2

Note 1: The foreign investment amount translated at the exchange rate as of June 30, 2021.

Note 2: The Company obtained HHHtech Co., Ltd. share interest by 75% through it increased its capital by issuing new shares on March, 2021. Stockholders’ meeting of HHHtech Co., Ltd. approved to execute liquidation process on June 28, 2021.

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Information on investments in Mainland China

Six months ended June 30, 2021

Table 3

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, 2021	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six months ended June 30, 2021	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the six months ended June 30, 2021	Accumulated amount of remittance from Taiwan to Mainland China as at June 30, 2021	Net income (loss) of the investee for the six months ended June 30, 2021	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the six months ended June 30, 2021 (Note 2)	Book value of investments in Mainland China as at June 30, 2021	Accumulated amount of investment income remittance back to Taiwan as at June 30, 2021	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Elite Semiconductor Memory 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	$ 70,750	(1)	$ 2,493	$ 68,257	$ -	$ 70,750	($ 3,783)	100	($ 3,783)	$ 73,259	$ -	Note 5
Elite Semiconductor Microelectronics (Shanghai) Technology Inc.	Product design, wholesale and retail of electronic materials, information software services and international trade	5,572	(1)	5,572	-	-	5,572	417	100	417	7,050	-	Note 6
Company name Accumulated amount of remittance from Taiwan to Mainland China as at June 30, 2021 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. $ 76,322 $ 76,322 $ 300,000
Company name	Accumulated amount of remittance from Taiwan to Mainland China as at June 30, 2021	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.	$ 76,322	$ 76,322	$ 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 unreviewed 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 June 30, 2021.

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

AI assistant

ESMT — Interim / Quarterly Report 2021

52243_rns_2021-11-30_94a84506-c43c-4a39-aef9-d9b5ec91f703.pdf

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Financial Statements and Independent Auditors' Review Report for

June 30, 2021 and 2020

Table of Contents

Report on Review of Interim Financial Information

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Balance Sheets June 30, 2021, December 31, 2020 and June 30, 2020

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Balance Sheets

June 30, 2021, December 31, 2020 and June 30, 2020

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Comprehensive Income Six Months Ended June 30, 2021 and 2020

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Changes in Equity Six Months Ended June 30, 2021 and 2020

Chairman: Hsing-Hai Chen

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Cash Flows

Six Months Ended June 30, 2021 and 2020

Elite Semiconductor Microelectronics Technology Inc. and Subsidiaries Consolidated Statements of Cash Flows Six Months Ended June 30, 2021 and 2020

1. History and Organization

2. The Date of Authorization for Issuance of the Consolidated Financial Statements

3. Application of New Standards, Amendments and Interpretations

4. Summary of Significant Accounting Policies

(1) Compliance statement

(4) Business combinations

6. Details of Significant Accounts

(1) Cash and cash equivalents

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

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

(4) Accounts receivable

(6) Investments accounted for under the equity method

(7) Property, plant and equipment

(8) Leasing arrangements- lessee

(9) Investment property

Three months ended June 30,

(10) Intangible assets

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

(11) Impairment of non- financial assets

(12) Short -term borrowings

(13) Other payable

(14) Pensions

(16) Share capital

B. Treasury shares

(17) Capital surplus

(19) Operating revenue

B. Contract liabilities

(20) Interest revenue

(21) Other income

Three months ended June 30,

(22) Other gains and losses

(23) Financial costs

(24) Expenses by nature

(25) Employee benefit expense

(26) Income tax

A. Income tax expense

(a) Components of income tax expense:

(27) Earnings per share

(28) Transactions with non-controlling interest

(29) Supplemental cash flow information

A. Investing activities with partial cash payments:

C. Changes in liabilities from financing activities:

7. Related Party Transactions

(1) Names of related parties and relationship

(2) Key management compensation

8. Pledged Assets

10. Significant Disaster Loss

11. Significant Events after the Balance Sheet Date

12. Others

(1) Capital management

(2) Financial instruments

A. Financial instruments by category

Foreign exchange risk

Six months ended June 30, 2020

Price risk

Cash flow and fair value Interest rate risk

(3) Fair value information

(4) Others

13. Supplementary Disclosures

(1) Significant transactions information

ESMT Interim / Quarterly Report 2021