Hiwin Mikrosystem Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2025 and 2024 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2025 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we do not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

HIWIN MIKROSYSTEM CORPORATION

By:

Shou-Yeu Chuo
Chairperson

February 26, 2026

Deloitte.

勤業眾信

勤業眾信聯合會計師事務所

110421 台北市信義區松仁路100號20樓

Deloitte & Touche

20F, Taipei Nan Shan Plaza

No. 100, Songren Rd.,

Xinyi Dist., Taipei 110421, Taiwan

Tel: +886 (2) 2725-9988

Fax: +886 (2) 4051-6888

www.deloitte.com.tw

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders
Hiwin Mikrosystem Corporation

Opinion

We have audited the accompanying consolidated financial statements of Hiwin Mikrosystem Corporation (the “Corporation”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2025 and 2024, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2025. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2025 is described as follows:

Revenue Recognition

The Group’s sales mainly rely on distribution channels. Revenue from the sale of goods is recognized when the Group satisfies the performance obligations. There is a risk that revenue might be recognized even when specific conditions have not been satisfied. Because of the risk of misstatement and the materiality of sales revenue generated by distribution channels, we identified the recognition of sales revenue as a key audit matter. The accounting policy on sales revenue recognition is disclosed in Note 4 to the consolidated financial statements.

Our key audit procedures performed with respect to revenue recognition included the following:

We understood the internal controls, evaluated the design and implementation of key controls and tested the operating effectiveness of relevant controls over order acceptance and shipping procedures. We selected sample sales transactions from distribution channels and verified that order receipts and the timing of revenue recognition were in accordance with the terms of the transaction.
We validated the terms of transactions against sales contracts and orders from major distributors to ensure the consistency between the terms of transactions and the timing of revenue recognition. We tested the records of sales returns against source documents and checked whether there were any unusual items during the year and after the balance sheet date.

Other Matter

We have also audited the parent corporation only financial statements of Hiwin Mikrosystem Corporation as of and for the years ended December 31, 2025 and 2024 on which we have issued an unmodified opinion.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2025 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Ting-Chien Su and Hsiao-Fang Yen.

Deloitte & Touche
Taipei, Taiwan
Republic of China

February 26, 2026

Notice to Readers

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

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

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

ASSETS	December 31, 2025		December 31, 2024
	Amount	%	Amount	%
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)	$ 805,629	11	$ 682,014	10
Financial assets at amortized cost - current (Notes 4, 9 and 28)	322,515	5	279,691	4
Notes receivable, net (Notes 4, 10 and 20)	1,005	-	3,704	-
Trade receivables from unrelated parties, net (Notes 4, 10 and 20)	414,228	6	312,345	5
Trade receivables from related parties, net (Notes 4, 10, 20 and 27)	152,438	2	137,093	2
Other receivables (Notes 4 and 27)	21,792	-	11,283	-
Inventories (Notes 4 and 11)	1,030,611	15	878,070	13
Other current assets (Note 27)	70,375	1	62,780	1
Total current assets	2,818,593	40	2,366,980	35
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8)	28,359	-	48,093	1
Financial assets at amortized cost - non-current (Notes 4 and 9)	240,480	4	179,004	3
Property, plant and equipment (Notes 4, 13, 27 and 28)	3,704,947	53	3,812,431	58
Right-of-use assets (Notes 4 and 14)	34,619	1	39,827	1
Intangible assets (Notes 4 and 15)	20,273	-	19,258	-
Goodwill (Note 4)	49,218	1	49,218	1
Deferred tax assets (Notes 4 and 22)	93,609	1	87,371	1
Prepayments for machinery and equipment	19,218	-	19,377	-
Refundable deposits (Notes 4 and 27)	41	-	3,681	-
Total non-current assets	4,190,764	60	4,258,260	65
TOTAL	$ 7,009,357	100	$ 6,625,240	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term loans (Note 16)	$ 60,000	1	$ 80,000	1
Financial liabilities at fair value through profit or loss - current (Notes 4 and 7)	159	-	-	-
Contract liabilities (Notes 4 and 20)	30,240	-	35,500	1
Notes payable	2,934	-	1,489	-
Trade payables (Note 27)	508,856	7	346,365	5
Other payables (Notes 17 and 27)	569,850	8	532,306	8
Current tax liabilities (Notes 4 and 22)	35,041	1	3,948	-
Current portion of long-term loans (Notes 16 and 28)	116,468	2	127,907	2
Other current liabilities (Note 4)	19,313	-	18,417	-
Total current liabilities	1,342,861	19	1,145,932	17
NON-CURRENT LIABILITIES
Long-term loans (Notes 16 and 28)	1,115,504	16	1,226,454	19
Deferred tax liabilities (Notes 4 and 22)	99,821	2	82,469	1
Lease liabilities - non-current (Notes 4 and 14)	6,697	-	5,872	-
Net defined benefit liabilities - non-current (Notes 4 and 18)	5,362	-	7,909	-
Other non-current liabilities (Note 27)	3,257	-	2,919	-
Total non-current liabilities	1,230,641	18	1,325,623	20
Total liabilities	2,573,502	37	2,471,555	37
EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION
Ordinary shares	1,198,018	17	1,198,018	18
Capital surplus	1,578,181	22	1,578,181	24
Retained earnings
Legal capital reserve	163,536	2	157,359	2
Special capital reserve	-	-	3,834	-
Unappropriated earnings	1,118,450	16	901,905	14
Other equity	44,486	1	29,082	1
Total equity attributable to owners of the Corporation	4,102,671	58	3,868,379	59
NON-CONTROLLING INTERESTS	333,184	5	285,306	4
Total equity	4,435,855	63	4,153,685	63
TOTAL	$ 7,009,357	100	$ 6,625,240	100

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

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	2025		2024
	Amount	%	Amount	%
SALES (Notes 4, 20 and 27)	$ 2,714,367	100	$ 2,253,707	100
COST OF GOODS SOLD (Notes 11, 21 and 27)	1,723,413	63	1,554,283	69
GROSS PROFIT	990,954	37	699,424	31
OPERATING EXPENSES (Notes 21 and 27)
Selling and marketing expenses	139,922	5	133,472	6
General and administrative expenses	253,994	10	234,224	10
Research and development expenses	272,798	10	280,525	13
Total operating expenses	666,714	25	648,221	29
PROFIT FROM OPERATIONS	324,240	12	51,203	2
NON-OPERATING INCOME AND EXPENSES
Finance costs (Notes 4 and 21)	(15,403)	-	(15,983)	(1)
Interest income (Note 4)	27,153	1	29,920	2
Other income (Notes 21 and 27)	32,313	1	43,615	2
Other gains and losses (Notes 21 and 27)	(18,164)	(1)	(17,910)	(1)
Net foreign exchange gain (loss) (Notes 4 and 30)	(48,838)	(2)	23,843	1
Total non-operating income and expenses	(22,939)	(1)	63,485	3
PROFIT BEFORE INCOME TAX	301,301	11	114,688	5
INCOME TAX EXPENSE (Notes 4 and 22)	41,377	1	23,748	1
NET PROFIT FOR THE YEAR	259,924	10	90,940	4
OTHER COMPREHENSIVE INCOME (LOSS) (Note 4)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit plans (Note 18)	1,900	-	1,395	-
Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income (loss)	(19,734)	(1)	13,741	-
Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 22)	(380)	-	(279)	-
	(18,214)	(1)	14,857	-
				(Continued)

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	2025		2024
	Amount	%	Amount	%
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations, net of income tax	$ 64,420	3	$ 35,154	2
Other comprehensive income, net of income tax	46,206	2	50,011	2
TOTAL COMPREHENSIVE INCOME	$ 306,130	11	$ 140,951	6
NET PROFIT ATTRIBUTABLE TO:
Owners of the Corporation	$ 241,328	9	$ 60,652	3
Non-controlling interests	18,596	1	30,288	1
	$ 259,924	10	$ 90,940	4
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the Corporation	$ 258,252	9	$ 94,684	4
Non-controlling interests	47,878	2	46,267	2
	$ 306,130	11	$ 140,951	6
EARNINGS PER SHARE (Note 23)
Basic	$ 2.01		$ 0.51
Diluted	$ 2.01		$ 0.51

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

(Concluded)

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	Equity Attributable to Owners of the Corporation (Note 19)
	Ordinary Shares	Capital Surplus	Retained Earnings			Other Equity		Total	Non-controlling Interests	Total Equity
			Legal Capital Reserve	Special Capital Reserve	Unappropriated Earnings	Exchange Differences on Translating the Financial Statements of Foreign Operations	Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Comprehensive Income (Loss)
BALANCE, JANUARY 1, 2024	$ 1,198,018	$ 1,578,181	$ 156,748	$ 3,867	$ 852,695	$ (4,211)	$ 377	$ 3,785,675	$ 239,039	$ 4,024,714
Appropriation of 2023 earnings
Legal capital reserve	-	-	611	-	(611)	-	-	-	-	-
Special capital reserve	-	-	-	(33)	33	-	-	-	-	-
Cash dividends	-	-	-	-	(11,980)	-	-	(11,980)	-	(11,980)
Net profit for the year ended December 31, 2024	-	-	-	-	60,652	-	-	60,652	30,288	90,940
Other comprehensive income (loss) for the year ended December 31, 2024, net of income tax	-	-	-	-	1,116	19,175	13,741	34,032	15,979	50,011
Total comprehensive income (loss) for the year ended December 31, 2024	-	-	-	-	61,768	19,175	13,741	94,684	46,267	140,951
BALANCE, DECEMBER 31, 2024	1,198,018	1,578,181	157,359	3,834	901,905	14,964	14,118	3,868,379	285,306	4,153,685
Appropriation of 2024 earnings
Legal capital reserve	-	-	6,177	-	(6,177)	-	-	-	-	-
Special capital reserve	-	-	-	(3,834)	3,834	-	-	-	-	-
Cash dividends	-	-	-	-	(23,960)	-	-	(23,960)	-	(23,960)
Net profit for the year ended December 31, 2025	-	-	-	-	241,328	-	-	241,328	18,596	259,924
Other comprehensive income (loss) for the year ended December 31, 2025, net of income tax	-	-	-	-	1,520	35,138	(19,734)	16,924	29,282	46,206
Total comprehensive income (loss) for the year ended December 31, 2025	-	-	-	-	242,848	35,138	(19,734)	258,252	47,878	306,130
BALANCE, DECEMBER 31, 2025	$ 1,198,018	$ 1,578,181	$ 163,536	$ -	$ 1,118,450	$ 50,102	$ (5,616)	$ 4,102,671	$ 333,184	$ 4,435,855

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

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	2025	2024
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$ 301,301	$ 114,688
Adjustments for:
Depreciation expenses	164,091	167,067
Amortization expenses	6,397	8,304
Net loss on fair value changes of financial assets and liabilities at fair value through profit or loss	159	-
Finance costs	15,403	15,983
Interest income	(27,153)	(29,920)
Dividend income	(351)	(365)
Gain on disposal of property, plant and equipment	(393)	(322)
Write-down of inventories	25,255	38,765
Unrealized foreign currency exchange loss (gain), net	34,156	(8,454)
Others	(587)	(771)
Changes in operating assets and liabilities
Notes receivable	2,699	(554)
Trade receivables	(104,038)	(5,226)
Other receivables	(3,514)	31,925
Inventories	(166,413)	141,006
Other current assets	(7,070)	(12,404)
Contract liabilities	(5,260)	11,587
Notes payable	1,322	352
Trade payables	158,856	48,819
Other payables	48,297	2,103
Other current liabilities	896	145
Net defined benefit liabilities	(647)	(582)
Cash generated from operations	443,406	522,146
Interest received	26,139	29,920
Dividends received	351	365
Interest paid	(14,764)	(14,873)
Income taxes paid	(12,541)	(24,987)
Net cash generated from operating activities	442,591	512,571
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at amortized cost	(103,061)	(31,164)
Payments for property, plant and equipment	(70,108)	(549,829)
Proceeds from disposal of property, plant and equipment	393	3,233
Decrease in refundable deposits	3,640	-
Payments for intangible assets	(7,412)	(8,663)
Increase in prepayments for machinery and equipment	(12,160)	(615)
Net cash used in investing activities	(188,708)	(587,038)

(Continued)

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars)

	2025	2024
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of short-term loans	$ (20,000)	$ (20,000)
Proceeds from long-term loans	5,000	1,320,000
Repayments of long-term loans	(127,923)	(928,184)
Proceeds from guarantee deposits received	1,009	-
Repayment of the principal portion of lease liabilities	-	(24,305)
Dividends paid	(23,960)	(11,980)
Net cash generated from (used in) financing activities	(165,874)	335,531
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES	35,606	15,477
NET INCREASE IN CASH AND CASH EQUIVALENTS	123,615	276,541
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR	682,014	405,473
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	$ 805,629	$ 682,014

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

11 -

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Hiwin Mikrosystem Corporation (the "Corporation") was incorporated on April 1, 1997. It manufactures, repairs and sells a variety of motors, drives and automation systems.

The Corporation's shares have been listed on the Taiwan Stock Exchange (TWSE) since September 4, 2019.

The consolidated financial statements are presented in the Corporation's functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Corporation's board of directors on February 26, 2026.

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

a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the "IFRS Accounting Standards") endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Amendments to IAS 21 "Lack of Exchangeability"

The initial application of the Amendments to IAS 21 "Lack of Exchangeability" did not have a material impact on the accounting policies of the Corporation and its subsidiaries (collectively referred to as the "Group").

b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2026

New, Amended and Revised Standards and Interpretations	Effective Date Announced by IASB
Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments”	January 1, 2026
Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity”	January 1, 2026
Annual Improvements to IFRS Accounting Standards - Volume 11	January 1, 2026
IFRS 17 “Insurance Contracts” (including the 2020 and 2021 amendments to IFRS 17)	January 1, 2023

12 -

Amendments to IFRS 9 and IFRS 7 “Amendments to the Classification and Measurement of Financial Instruments”

1) The amendments to the application guidance of classification of financial assets

The amendments mainly amend the requirements for the classification of financial assets, including:

a) If a financial asset contains a contingent feature that could change the timing or amount of contractual cash flows and the contingent event itself does not relate directly to changes in basic lending risks and costs (e.g., whether the debtor achieves a contractually specified reduction in carbon emissions), the financial asset has contractual cash flows that are solely payments of principal and interest on the principal amount outstanding if, and only if,

In all possible scenarios (before and after the occurrence of a contingent event), the contractual cash flows are solely payments of principal and interest on the principal amount outstanding; and
In all possible scenarios, the contractual cash flows would not be significantly different from the contractual cash flows on a financial instrument with identical contractual terms, but without such a contingent feature.

b) To clarify that a financial asset has non-recourse features if an entity’s ultimate right to receive cash flows is contractually limited to the cash flows generated by specified assets.

c) To clarify that the characteristics of contractually linked instruments include a prioritization of payments to the holders of financial assets using multiple contractually linked instruments (tranches) established through a waterfall payment structure, resulting in concentrations of credit risk and a disproportionate allocation of cash shortfalls from the underlying pool between the tranches.

2) The amendments to the application guidance of derecognition of financial liabilities

The amendments mainly stipulate that a financial liability is derecognized on the settlement date. However, when settling a financial liability in cash using an electronic payment system, the Group can choose to derecognize the financial liability before the settlement date if, and only if, the Group has initiated a payment instruction that resulted in:

The Group having no practical ability to withdraw, stop or cancel the payment instruction;
The Group having no practical ability to access the cash to be used for settlement as a result of the payment instruction; and
The settlement risk associated with the electronic payment system being insignificant.

An entity shall apply the amendments retrospectively but is not required to restate prior periods. The effect of initially applying the amendments shall be recognized as an adjustment to the opening balance at the date of initial application. An entity may restate prior periods if, and only if, it is possible to do so without the use of hindsight.

As of the date the consolidated financial statements were authorized for issue, the Group has assessed that the application of above standards and interpretations will not have a material impact on the Group’s financial position and financial performance.

13 -

c. The IFRS Accounting Standards in issue but not yet endorsed and issued into effect by the FSC

New, Amended and Revised Standards and Interpretations	Effective Date Announced by IASB (Note 1)
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”	To be determined by IASB
IFRS 18 “Presentation and Disclosure in Financial Statements”	January 1, 2027 (Note 2)
IFRS 19 “Subsidiaries without Public Accountability: Disclosures” (including the 2025 amendments to IFRS 19)	January 1, 2027
Amendments to IAS 21 “Translation to a Hyperinflationary Presentation Currency”	January 1, 2027

Note 1: Unless stated otherwise, the above IFRS Accounting Standards are effective for annual reporting periods beginning on or after their respective effective dates.

Note 2: On September 25, 2025, the FSC announced that IFRS 18 will take effect starting from January 1, 2028. Domestic entities could elect to apply IFRS 18 for an earlier period after the endorsement of IFRS 18 by the FSC.

IFRS 18 “Presentation and Disclosure in Financial Statements” and consequential amendments

IFRS 18 will supersede IAS 1 “Presentation of Financial Statements”. The main changes comprise:

To classify items of income and expenses presented in the statement of profit or loss into the operating, investing, financing, income taxes and discontinued operations categories, the Group shall assess whether it has specified main business activities of investing in particular types of assets and providing financing to customers.
The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or loss before financing and income taxes and profit or loss.
Provides guidance to enhance the requirements of aggregation and disaggregation: The Group shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from individual transactions or other events and shall classify and aggregate them into groups based on shared characteristics, so as to result in the presentation in the primary financial statements of line items that have at least one similar characteristic. The Group shall disaggregate items with dissimilar characteristics in the primary financial statements and in the notes. The Group labels items as "other" only if it cannot find a more informative label.
Disclosures on Management-defined Performance Measures (MPMs): When in public communications outside financial statements and communicating to users of financial statements management's view of an aspect of the financial performance of the Group as a whole, the Group shall disclose related information about its MPMs in a single note to the financial statements, including the description of such measures, calculations, reconciliations to the subtotal or total specified by IFRS Accounting Standards and the income tax and non-controlling interests effects of related reconciliation items.

In addition, the following consequential amendments have been made to IAS 7 “Statement of Cash Flows”:

The Group shall use operating profit or loss as the starting point when presenting cash flows from operating activities under the indirect method.
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Interest and dividends received by the Group shall be classified as investing activities, while interest and dividends paid shall be classified as financing activities. However, if, after assessment, the Group has a specific main operating activity, it shall determine how to classify dividends received, interest received and interest paid in the statement of cash flows by referring to how it classifies dividend income, interest income and interest expense in the statement of profit or loss. The total of each of these cash flows shall be classified in a single category in the statement of cash flows.

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

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

a. Statement of compliance

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

b. Basis of preparation

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

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

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

c. Classification of current and non-current assets and liabilities

Current assets include:

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

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; and

3) Liabilities for which the Group does not have the substantial right at the end of the reporting period to defer settlement for at least 12 months after the reporting period.

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

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Corporation and the entities controlled by the Corporation (i.e., its subsidiaries).

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Corporation and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

See Note 12 and Table 3 for detailed information on subsidiaries (including percentages of ownership and main businesses).

e. Foreign currencies

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

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

Non-monetary item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

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

f. Inventories

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

g. Property, plant, and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation.

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Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Samples produced when testing whether an item of property, plant and equipment is functioning properly before that asset reaches its intended use are measured at the lower of cost or net realizable value, and any proceeds from selling those samples and the cost of those samples are recognized in profit or loss. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

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

h. Goodwill

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

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

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

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

i. Intangible assets

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

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

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j. Impairment of property, plant and equipment, right-of-use assets and intangible assets other than goodwill

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

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

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

k. Financial instruments

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

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

1) Financial assets

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

a) Measurement categories

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

i. Financial assets at FVTPL

A financial asset is classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in other gains or losses. Fair value is determined in the manner described in Note 26.

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ii. Financial assets at amortized cost

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

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

i) Purchased or originated credit-impaired financial asset, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial asset; and

ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

i) Significant financial difficulty of the issuer or the borrower;

ii) Breach of contract, such as a default;

iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

iv) The disappearance of an active market for that financial asset because of financial difficulties.

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

iii. Investments in equity instruments at FVTOCI

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

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified

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to profit or loss on disposal of the equity investments, instead, it will be transferred to retained earnings.

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

b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

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

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

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

i. Internal or external information shows that the debtor is unlikely to pay its creditors.

ii. When a financial asset is more than 90 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

c) Derecognition of financial assets

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

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

2) Equity instruments

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

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

The repurchase of the Corporation’s own equity instruments is recognized in and deducted directly from equity, and its carrying amounts are calculated based on weighted average by share types. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Corporation’s own equity instruments.

3) Financial liabilities

a) Subsequent measurement

Except financial liabilities which are stated at fair value and any gains or losses on such financial liabilities are recognized in other gains or losses, all the financial liabilities are measured at amortized cost using the effective interest method:

Fair value is determined in the manner described in Note 26.

b) Derecognition of financial liabilities

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

4) Derivative financial instruments

The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risks.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Provision

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Provisions for the expected cost of warranty obligations with sale contracts are recognized on the date of sale of the relevant products at the best estimate by the management of the Corporation of the expenditures required to settle the Group’s obligation.

m. Revenue recognition

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

For contracts where the period between the date on which the Group transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Group does not adjust the promised amount of consideration for the effects of a significant financing component.

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Sales of goods are recognized as revenue when the goods are delivered to the customer’s specific location/the goods are shipped/the goods are picked up because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. The transaction price received is recognized as a contract liability until the goods have been delivered to the customer.

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

n. Leases

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

1) The Group as lessor

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

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

2) The Group as lessee

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

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

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

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

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

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o. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

p. Government grants

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

Government grants related to income are recognized in subsidy revenue on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.

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

The benefit of a government loan received at a below-market rate of interest is treated as a government grant, measured as the difference between the proceeds received and the fair value of the loan based on prevailing market interest rates.

q. Employee benefits

1) Short-term employee benefits

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

2) Retirement benefits

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

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

Net defined benefit liabilities represent the actual deficit in the Group's defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

r. Share-based payment arrangements

The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Corporation's best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. The expense is recognized in full at the grant date if the grants are vested immediately. The grant date of issued ordinary shares for cash which are reserved for employees is the date on which the board of directors approves the transaction.

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

s. Taxation

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

1) Current tax

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

According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

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

2) Deferred tax

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

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

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

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

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

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3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity respectively.

MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

When the Group develops material accounting estimates, the Group considers the possible impact of US reciprocal tariffs. The estimates and underlying assumptions are reviewed on an ongoing basis.

Based on the assessment of the Group’s management, the accounting policies, estimates, and assumptions adopted by the Group have not been subject to material accounting judgements, estimates and assumptions uncertainty.

CASH AND CASH EQUIVALENTS

	December 31
	2025	2024
Cash on hand	$ 1,443	$ 1,151
Checking accounts and demand deposits	654,633	680,863
Cash equivalents
Time deposits with original maturities of 3 months or less	149,553	-
	$ 805,629	$ 682,014
Rate of interest per annum (%)
Cash in bank	0.03-0.60	0.002-0.90
Time deposits with original maturities of 3 months or less	1.00-4.03	-

FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting are as follows:

	Currency	Maturity Date	Notional Amount (In Thousands)
December 31, 2025
Sell	USD/NTD	2025.12.16-2026.02.26	USD400/NTD12,446
Sell	EUR/NTD	2025.12.22-2026.02.02	EUR100/NTD3,609

The Corporation entered into foreign exchange forward contracts to manage exposure to exchange rate fluctuations of foreign currency-denominated assets and liabilities.

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8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

	December 31
	2025	2024
Name of Investee Company
Domestic listed ordinary shares
Hiwin Technologies Corporation (Hiwin Technologies)	$ 28,359	$ 48,093

The investment in equity instrument is held for medium to long-term strategic purposes. Accordingly, the management elected to designate the investment in equity instrument as at FVTOCI as they believe that recognizing short-term fluctuations in the investment's fair value in profit or loss would not be consistent with the Group's strategy of holding the investment for long-term purposes.

9. FINANCIAL ASSETS AT AMORTIZED COST

	December 31
	2025	2024
Current
Time deposits with original maturities of 3 months or less (a)	$ 31,430	$ -
Time deposits with original maturities of more than 3 months (b)	291,085	279,691
	$ 322,515	$ 279,691
Non-current
Time deposits with original maturities of more than 3 months (b)	$ 179,652	$ 178,062
Corporate bonds (c)	59,892	-
Government bonds (d)	936	942
	$ 240,480	$ 179,004

a. The interest rate for time deposits with original maturities of 3 months or less was 4.40% per annum as of December 31, 2025. Information relating to assets pledged as security, please refer to Note 28.

b. The interest rates for time deposits with original maturities of more than 3 months were 4.80%-5.32% and 4.60%-5.84% per annum as of December 31, 2025 and 2024, respectively.

c. For the year ended December 31, 2025, the Corporation bought corporate bonds with a total face value of US$1,900 thousand with coupon rates of 4.812%-7.018%, effective interest rates of 4.677%-6.176% and maturity in February 2030 to February 2045.

d. On March 13, 2019, the Corporation bought government bonds at face value of $900 thousand with a coupon rate of 1.625%, an effective interest rate of 0.95% and maturity in March 2032.

NOTES RECEIVABLE AND TRADE RECEIVABLES

	December 31
	2025	2024
Notes receivable
At amortized cost
Gross carrying amount	$ 1,005	$ 3,704
Less: Allowance for impairment loss	-	-
	$ 1,005	$ 3,704
Trade receivables
At amortized cost
Gross carrying amount	$ 566,666	$ 449,438
Less: Allowance for impairment loss	-	-
	$ 566,666	$ 449,438

a. Notes receivable

The Group's aging of notes receivable is as follows:

	December 31
	2025	2024
Not past due	$ 1,005	$ 3,704
Past due	-	-
	$ 1,005	$ 3,704

The above aging schedule was based on the past due days.

b. Trade receivables

The Group determines the credit terms of sales based on the counterparty's credit rating, region and transaction terms.

In order to minimize credit risk, the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group's credit risk was significantly reduced.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECL. The expected credit losses on trade receivables are estimated by reference to the past default records of the customer, the customer's current financial position, economic condition of the industry in which the customer operates, as well as industry outlooks. As the Group's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group's different customer base.

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

The following table details the loss allowance of trade receivables:

	Not Past Due	1 to 120 Days	121 to 360 Days	Over 360 Days	Total
December 31, 2025
Gross carrying amount	$ 566,666	$ -	$ -	$ -	$ 566,666
Loss allowance (Lifetime ECL)	-	-	-	-	-
Amortized cost	$ 566,666	$ -	$ -	$ -	$ 566,666
December 31, 2024
Gross carrying amount	$ 446,715	$ 2,723	$ -	$ -	$ 449,438
Loss allowance (Lifetime ECL)	-	-	-	-	-
Amortized cost	$ 446,715	$ 2,723	$ -	$ -	$ 449,438

11. INVENTORIES

	December 31
	2025	2024
Merchandise	$ 198	$ 290
Finished goods	109,964	121,744
Work in progress	279,934	215,246
Raw materials and supplies	640,515	540,790
	$ 1,030,611	$ 878,070

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2025 and 2024 were $1,723,413 thousand and $1,554,283 thousand, respectively.

The cost of inventories recognized as cost of goods sold included inventory write-downs of $25,255 thousand and $38,765 thousand, respectively.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

Investee	Main Business	% of Ownership
		December 31
		2025	2024
Mega-Fabs Motion Systems Ltd. ("Mega-Fabs")	Research, development, manufacture and sale of drives and controllers	60	60

13. PROPERTY, PLANT AND EQUIPMENT

	December 31
	2025	2024
Assets used by the Group	$ 3,295,544	$ 3,451,505
Assets leased under operating leases	409,403	360,926
	$ 3,704,947	$ 3,812,431

a. Assets used by the Group

	For the Year Ended December 31, 2025
	Beginning Balance	Additions	Disposals	Reclassified Amount	Transfers from Assets Leased under Operating Leases	Transfers to Assets Leased under Operating Leases	Translation Adjustments	Ending Balance
Cost
Land	$ 1,598,673	$ -	$ -	$ -	$ -	$ -	$ -	$ 1,598,673
Buildings and improvements	1,477,450	1,414	(6,130)	874,766	99,785	(146,360)	-	2,300,925
Machinery and equipment	663,323	803	(3,150)	9,968	-	-	-	670,944
Transportation equipment	29,624	2,083	(143)	-	-	-	-	31,564
Molding equipment	102,914	2,577	(276)	1,492	-	-	-	106,707
Leasehold improvements	37,292	94	-	-	-	-	3,589	40,975
Miscellaneous equipment	179,416	8,168	(2,081)	3,612	-	-	1,705	190,820
Construction in progress	859,896	16,594	-	(876,490)	-	-	-	-
	4,948,588	$ 31,733	$ (11,780)	$ 13,348	$ 99,785	$ (146,360)	$ 5,294	4,940,608
Accumulated depreciation
Buildings and improvements	695,836	$ 61,589	$ (6,130)	$ -	$ 15,464	$ (449)	$ -	766,310
Machinery and equipment	522,901	52,951	(3,150)	-	-	-	-	572,702
Transportation equipment	25,612	1,552	(143)	-	-	-	-	27,021
Molding equipment	93,078	6,594	(276)	-	-	-	-	99,396
Leasehold improvements	22,789	3,757	-	-	-	-	2,524	29,070
Miscellaneous equipment	136,867	14,511	(2,081)	-	-	-	1,268	150,565
	1,497,083	$ 140,954	$ (11,780)	$ -	$ 15,464	$ (449)	$ 3,792	1,645,064
	$ 3,451,505							$ 3,295,544
	For the Year Ended December 31, 2024
---	---	---	---	---	---	---	---	---
	Beginning Balance	Additions	Disposals	Reclassified Amount	Transfers from Assets Leased under Operating Leases	Transfers to Assets Leased under Operating Leases	Translation Adjustments	Ending Balance
Cost
Land	$ 1,598,673	$ -	$ -	$ -	$ -	$ -	$ -	$ 1,598,673
Buildings and improvements	1,473,457	3,993	-	-	-	-	-	1,477,450
Machinery and equipment	644,229	25,788	(8,678)	1,984	-	-	-	663,323
Transportation equipment	29,602	22	-	-	-	-	-	29,624
Molding equipment	98,206	4,376	(103)	435	-	-	-	102,914
Leasehold improvements	34,976	147	-	-	-	-	2,169	37,292
Miscellaneous equipment	160,205	19,674	(4,121)	2,763	-	-	895	179,416
Construction in progress	456,820	403,076	-	-	-	-	-	859,896
	4,496,168	$ 457,076	$ (12,902)	$ 5,182	$ -	$ -	$ 3,064	4,948,588
Accumulated depreciation
Buildings and improvements	635,052	$ 60,784	$ -	$ -	$ -	$ -	$ -	695,836
Machinery and equipment	472,287	56,387	(5,773)	-	-	-	-	522,901
Transportation equipment	23,500	2,112	-	-	-	-	-	25,612
Molding equipment	86,073	7,108	(103)	-	-	-	-	93,078
Leasehold improvements	17,953	3,597	-	-	-	-	1,239	22,789
Miscellaneous equipment	126,462	13,838	(4,115)	-	-	-	682	136,867
	1,361,327	$ 143,826	$ (9,991)	$ -	$ -	$ -	$ 1,921	1,497,083
	$ 3,134,841							$ 3,451,505

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings and improvements
Main buildings	50 years
Electrical power equipment	10-20 years
Other	7-20 years
Machinery and equipment	3-11 years
Transportation equipment	6 years
Molding equipment	3-10 years
Leasehold improvements	7-14 years
Miscellaneous equipment	3-17 years

Property, plant and equipment pledged as collateral for bank loans are set out in Note 28.

b. Assets subject to operating leases

	For the Year Ended December 31, 2025
	Beginning Balance	Additions	Disposals	Reclassified Amount	Transfers to Assets used by the Group	Transfers from Assets used by the Group	Ending Balance
Cost
Buildings and improvements	$ 422,204	$ 1,636	$ (88)	$ 100	(99,785)	$ 146,360	$ 470,427
Accumulated depreciation
Buildings and improvements	61,278	$ 14,849	$ (88)	$ -	$ (15,464)	$ 449	61,024
	$ 360,926						$ 409,403
	For the Year Ended December 31, 2024
	Beginning Balance	Additions	Disposals	Reclassified Amount	Transfers to Assets used by the Group	Transfers from Assets used by the Group	Ending Balance
Cost
Buildings and improvements	$ 422,151	$ 53	$ -	$ -	$ -	$ -	$ 422,204
Accumulated depreciation
Buildings and improvements	46,085	$ 15,193	$ -	$ -	$ -	$ -	61,278
	$ 376,066						$ 360,926

Operating leases relate to leases of buildings with lease terms ranging from 2 to 3 years. The lessees do not have purchase options to acquire the assets at the expiration of the lease periods.

The maturity analysis of lease payments receivable under operating lease payments was as follows:

	December 31
	2025	2024
Year 1	$ 19,599	$ 9,106
Year 2	6,052	5,023
Year 3	5,044	-
	$ 30,695	$ 14,129

Property, plant and equipment leased under operating leases are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings and improvements
- Main buildings: 50 years
- Electrical power equipment: 10-20 years
- Other: 10-20 years

Lease commitments with lease terms commencing after the balance sheet date are as follows:

	December 31
	2025	2024
Lease commitments of property, plant and equipment	$ 5,229	$ 13,094

14. LEASE ARRANGEMENTS

a. Right-of-use assets

	December 31
	2025	2024
Carrying amounts
Buildings	$ 34,619	$ 39,827
	For the Year Ended December 31
	2025	2024
Depreciation charge for right-of-use assets
Buildings	$ 8,288	$ 8,048

Except for the aforementioned additions and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the years ended December 31, 2025 and 2024.

b. Lease liabilities

	December 31
	2025	2024
Carrying amounts
Non-current	$ 6,697	$ 5,872

Range of discount rate for lease liabilities (%) was as follows:

	December 31
	2025	2024
Buildings	4.00	4.00

c. Material lease-in activities and terms

The Group leases an office space for office and warehouse with lease term of 5 years. The Group has priority right to renew the lease for 6 years but does not have bargain purchase options to acquire the leasehold buildings at the end of the lease terms.

31 -

15. INTANGIBLE ASSETS

	For the Year Ended December 31, 2025
	Beginning Balance	Additions	Disposals	Ending Balance
Cost
Trademarks	$ 31,035	$ 276	$ -	$ 31,311
Patents	31,962	2,133	-	34,095
Computer Software	83,061	5,003	(41)	88,023
	146,058	$ 7,412	$ (41)	153,429
Accumulated amortization
Trademarks	29,732	$ 374	$ -	30,106
Patents	19,715	1,698	-	21,413
Computer Software	77,353	4,325	(41)	81,637
	126,800	$ 6,397	$ (41)	133,156
	$ 19,258			$ 20,273
	For the Year Ended December 31, 2024
	Beginning Balance	Additions	Disposals	Ending Balance
Cost
Trademarks	$ 31,035	$ -	$ -	$ 31,035
Patents	28,575	3,387	-	31,962
Computer Software	77,878	5,276	(93)	83,061
	137,488	$ 8,663	$ (93)	146,058
Accumulated amortization
Trademarks	29,363	$ 369	$ -	29,732
Patents	18,186	1,529	-	19,715
Computer Software	71,040	6,406	(93)	77,353
	118,589	$ 8,304	$ (93)	126,800
	$ 18,899			$ 19,258

Intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Trademarks 3-29 years

Patents 8-26 years

Computer Software 1-8 years

16. BANK LOANS

a. Short-term bank loans

	December 31
	2025	2024
Unsecured bank loans
Credit bank loans	$ 60,000	$ 80,000
Rate of interest per annum (%)
Credit bank loans	1.80	1.95

b. Long-term bank loans

	December 31
	2025	2024
Secured bank loans (Note 28)
Secured loans - maturity dates range from December, 2027 to December, 2042	$ 1,143,000	$ 1,210,833
Unsecured bank loans
Unsecured loans - maturity dates range from August, 2027 to February, 2028	88,972	143,528
	1,231,972	1,354,361
Less: Current portion	(116,468)	(127,907)
Long-term bank loans	$ 1,115,504	$ 1,226,454
Rate of interest per annum (%)
Secured loans	1.88-2.12	1.88-2.12
Unsecured loans	1.35-1.88	1.28-1.45

In October 2019, the Corporation received the Ministry of Economic Affairs' approval for the qualification of 'Domestic Corporations' in Taiwan, and received subsidy for the processing fees of long-term bank loans drawn down for the purchase of machinery and equipment and for the operating capital. The Corporation recognized a government grant for the difference between the value of the loan obtained at a lower-than-market interest rate and its fair value, which was accounted for as deferred revenue and would be subsequently recognized in profit or loss over the useful life of the related asset.

34 -

17. OTHER PAYABLES

	December 31
	2025	2024
Payables for salaries and bonuses	$ 415,335	$ 356,842
Others	154,515	175,464
	$ 569,850	$ 532,306

18. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Corporation makes monthly contributions to employees' individual pension accounts at 6% of monthly salaries and wages.

Mega-Fabs has a defined contribution pension plan and is independently administered.

b. Defined benefit plans

The defined benefit plan adopted by the Corporation in accordance with the Labor Standards Act is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Corporation contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee's name. Before the end of each year, the Corporation assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Corporation is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the "Bureau"); the Corporation has no right to influence the investment policy and strategy.

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

	December 31
	2025	2024
Present value of defined benefit obligation	$ 30,688	$ 30,028
Fair value of plan assets	(25,326)	(22,119)
Net defined benefit liabilities	$ 5,362	$ 7,909

Movements in net defined benefit liabilities were as follows:

	Present Value of the Defined Benefit Obligation	Fair Value of the Plan Assets	Net Defined Benefit Liabilities
Balance, January 1, 2025	$ 30,028	$ (22,119)	$ 7,909
Service cost
Current service cost	476	-	476
Net interest expense (income)	413	(313)	100
Recognized in profit or loss	889	(313)	576
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(1,671)	(1,671)
Actuarial loss - changes in financial assumptions	170	-	170
Actuarial gain - experience adjustments	(399)	-	(399)
Recognized in other comprehensive income	(229)	(1,671)	(1,900)
Contributions from the employer	-	(1,223)	(1,223)
Balance, December 31, 2025	$ 30,688	$ (25,326)	$ 5,362
Balance, January 1, 2024	$ 30,715	$ (20,829)	$ 9,886
Service cost
Current service cost	470	-	470
Net interest expense (income)	384	(267)	117
Recognized in profit or loss	854	(267)	587
Remeasurement
Return on plan assets (excluding amounts included in net interest)	-	(1,801)	(1,801)
Actuarial gain - changes in financial assumptions	(223)	-	(223)
Actuarial loss - experience adjustments	629	-	629
Recognized in other comprehensive income	406	(1,801)	(1,395)
Contributions from the employer	-	(1,169)	(1,169)
Benefits paid	(1,947)	1,947	-
Balance, December 31, 2024	$ 30,028	$ (22,119)	$ 7,909

Through the defined benefit plans under the Labor Standards Act, the Corporation is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans' debt investments.

3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

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

	December 31
	2025	2024
Discount rates (%)	1.25	1.38
Expected rates of salary increase (%)	3.50	3.50

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

	December 31
	2025	2024
Discount rate
0.25% increase	$ (337)	$ (437)
0.25% decrease	$ 347	$ 449
Expected rate of salary increase/decrease
0.25% increase	$ 334	$ 434
0.25% decrease	$ (326)	$ (424)

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

	December 31
	2025	2024
Expected contributions to the plan for the next year	$ 1,278	$ 1,246
Average duration of the defined benefit obligation	4.4 years	5.8 years

19. EQUITY

a. Ordinary shares

	December 31
	2025	2024
Number of shares authorized (in thousands)	300,000	300,000
Shares authorized	$ 3,000,000	$ 3,000,000
Number of shares issued and fully paid (in thousands)	119,802	119,802
Shares issued	$ 1,198,018	$ 1,198,018

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

b. Capital surplus

	December 31
	2025	2024
Issuance of ordinary shares	$ 1,576,813	$ 1,576,813
Employee share options	1,368	1,368
	$ 1,578,181	$ 1,578,181

Capital surplus that arises from shares issued in excess of par value may be used to offset a deficit; in addition, when the Corporation has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Corporation's capital surplus and to once a year).

Capital surplus that arises from employee share options may not be used for any purpose.

c. Retained earnings and dividends policy

Under the dividends policy as set forth in the Corporation's Articles, where the Corporation made a profit in a fiscal year, the profit shall be first utilized for offsetting losses of previous years, setting aside as legal capital reserve at 10% of the remaining profit, until the accumulated legal capital reserve equals the Corporation's paid-in capital, then setting aside or reversing a special capital reserve in accordance with the laws and regulations, and then reserves equal or less than 6% of the remaining profit as cash dividend out of the remaining balance. Dividends can be distributed in the form of cash or share dividends, provided that the value of share dividends does not exceed two-thirds of the Corporation's dividends for the year. A distribution plan is proposed by the board of directors and approved by the shareholders in shareholders' meeting. Dividends distributed in whole or in part by cash can be approved by a board meeting that is attended by at least two-thirds of the board and approved by over one-half of the directors present, submitted to the shareholders' meeting. Approval by the shareholders is not necessary.

The legal capital reserve may be used to offset the Corporation's losses. If the Corporation is not operating at a loss and the legal capital reserve has exceeded 25% of the Corporation's paid-in capital, the excess may be transferred to capital or be distributed in the form of cash.

The appropriations of earnings for 2024 and 2023 were as follows:

	Appropriation of Earnings		Dividends Per Share (NT$)
	For the Year Ended December 31		For the Year Ended December 31
	2024	2023	2024	2023
Legal capital reserve	$ 6,177	$ 611
Reversal of special capital reserve	(3,834)	(33)
Cash dividends	23,960	11,980	$ 0.2	$ 0.1

The above 2024 and 2023 appropriations for cash dividends have been approved by the Corporation's board of directors on February 26, 2025 and February 27, 2024 respectively; the other proposed appropriations for 2024 and 2023 were also approved by the shareholders in the shareholders' meetings on May 27, 2025 and May 30, 2024, respectively.

The appropriations of earnings for 2025 proposed by the Corporation's board of directors on February 26, 2026 per share were as follows:

	Appropriation of Earnings	Dividends Per Share (NT$)
Legal capital reserve	$ 24,285
Cash dividends	95,841	$ 0.8

The appropriation of earnings for 2025 is subject to the resolution by the shareholders in their meeting to be held on May 26, 2026.

20. REVENUE

	For the Year Ended December 31
	2025	2024
Revenue from contracts with customers
Revenue from the sale of goods	$ 2,714,367	$ 2,253,707
a. Contract balances
	December 31, 2025	December 31, 2024
Notes receivable and trade receivables	$ 567,671	$ 453,142
Contract liabilities - current
Sale of goods	$ 30,240	$ 35,500

b. Disaggregation of revenue

	For the Year Ended December 31
	2025	2024
Precision motion and control parts	$ 1,263,937	$ 1,226,039
Micro and nano-positioning systems	1,427,102	1,004,843
Others	23,328	22,825
	$ 2,714,367	$ 2,253,707

21. NET PROFIT FROM CONTINUING OPERATIONS

a. Other income

	For the Year Ended December 31
	2025	2024
Rental income	$ 21,207	$ 21,281
Others	11,106	22,334
	$ 32,313	$ 43,615

b. Other gains and losses

	For the Year Ended December 31
	2025	2024
Depreciation of leased assets	$ (14,849)	$ (15,193)
Valuation gain (loss) on financial assets (liabilities) at fair value through profit or loss	(3,113)	268
Others	(202)	(2,985)
	$ (18,164)	$ (17,910)

c. Finance costs

	For the Year Ended December 31
	2025	2024
Interest on bank loans	$ 15,162	$ 15,665
Interest on lease liabilities	241	318
	$ 15,403	$ 15,983

Information about capitalized interest is as follows:

	For the Year Ended December 31
	2025	2024
Capitalized interest amount	$ 11,402	$ 8,866
Capitalization rates (%)	1.77-2.64	1.70-2.88

d. Employee benefits expense, depreciation and amortization

	Operating Costs	Operating Expenses	Other Operating Income and Expenses	Total
For the Year Ended December 31, 2025
Short-term employee benefits	$ 264,736	$ 435,859	$ -	$ 700,595
Post-employment benefits
Defined contribution plans	11,130	18,184	-	29,314
Defined benefit plans (Note 18)	383	193	-	576
Other employee benefits	11,659	12,511	-	24,170
Depreciation expenses	96,957	52,285	14,849	164,091
Amortization expenses	23	6,374	-	6,397
For the Year Ended December 31, 2024
Short-term employee benefits	264,638	428,352	-	692,990
Post-employment benefits
Defined contribution plans	10,704	18,467	-	29,171
Defined benefit plans (Note 18)	357	230	-	587
Other employee benefits	9,592	11,820	-	21,412
Depreciation expenses	107,176	44,698	15,193	167,067
Amortization expenses	229	8,075	-	8,304

e. Compensation of employees and remuneration of directors

According to the Articles of Incorporation of the Corporation, the Corporation accrues compensation of employees and remuneration of directors at rates of no less than 1% and no higher than 4% of net profit before income tax, for compensation of employees, and the remuneration of directors respectively. In accordance with the amendments to the Securities and Exchange Act in August 2024, the shareholders of the Corporation resolved the amendments to the Corporation’s Articles at their 2025 regular meeting. The amendments explicitly stipulate the allocation of no less than 1% of net profit before income tax, compensation of employees and remuneration of directors as compensation distributions, of which no less than 0.3% shall be distributed to non-executive employees. The compensation of employees and remuneration of directors for the years ended December 31, 2025 and 2024, approved by the Corporation’s board of directors on February 26, 2026 and February 26, 2025, respectively, were as follows:

Cash	For the Year Ended December 31
	2025		2024
	Accrual rate	Amount	Accrual rate	Amount
Compensation of employees	4.74%	$ 14,000	5.06%	$ 3,833
Remuneration of directors	2.37%	7,000	2.53%	1,917

Shall there be any change in the amounts after the annual consolidated financial statements authorized for issue, the differences are to be recorded as an adjustment to the accounting estimate of the next year.

There was no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2024 and 2023.

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

22. INCOME TAXES

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

	For the Year Ended December 31
	2025	2024
Current tax
In respect of the current year	$ 42,586	$ 16,997
Income tax of unappropriated earnings	1,049	-
Adjustments for prior years	(5,981)	1,440
	37,654	18,437
Deferred tax
In respect of the current year	3,723	5,311
Income tax expense recognized in profit or loss	$ 41,377	$ 23,748

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

	For the Year Ended December 31
	2025	2024
Income tax expense calculated at the statutory rate	$ 63,083	$ 25,088
Non-deductible expenses in determining taxable income	103	133
Tax-exempt income	(70)	(73)
Income tax on unappropriated earnings	1,773	-
Investment tax credits used	(17,531)	(2,840)
Adjustments for prior years’ tax	(5,981)	1,440
Income tax expense recognized in profit or loss	$ 41,377	$ 23,748

The tax rate applicable to the Group under the Income Tax Act in ROC is 20%; the tax rates applicable to Mega-Fabs for the years ended December 31, 2025 and 2024 are both 7.5%.

b. Income tax expense recognized in other comprehensive income

	For the Year Ended December 31
	2025	2024
Deferred tax
In respect of the current year:
Translation of foreign operations	$ (8,784)	$ (4,794)
Remeasurement of defined benefit plans	(380)	(279)
	$ (9,164)	$ (5,073)

c. Deferred tax assets and liabilities

	For the Year Ended December 31, 2025
	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
Deferred tax assets
Temporary differences
Allowance for inventory devaluation	$ 64,124	$ 4,523	$ -	$ 68,647
Payables for employees’ bonuses	17,771	1,927	-	19,698
Others	5,476	168	(380)	5,264
	$ 87,371	$ 6,618	$ (380)	$ 93,609
Deferred tax liabilities
Temporary differences
Unappropriated earnings of subsidiaries	$ 78,329	$ 5,579	$ -	$ 83,908
Others	4,140	2,989	8,784	15,913
	$ 82,469	$ 8,568	$ 8,784	$ 99,821

42 -

	For the Year Ended December 31, 2024
	Opening Balance	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Closing Balance
Deferred tax assets
Temporary differences
Allowance for inventory devaluation	$ 57,026	$ 7,098	$ -	$ 64,124
Payables for employees’ bonuses	14,998	2,773	-	17,771
Others	11,485	(4,678)	(1,331)	5,476
	$ 83,509	$ 5,193	$ (1,331)	$ 87,371
Deferred tax liabilities
Temporary differences
Unappropriated earnings of subsidiaries	$ 69,244	$ 9,085	$ -	$ 78,329
Others	-	398	3,742	4,140
	$ 69,244	$ 9,483	$ 3,742	$ 82,469

d. Unused investment credits for which no deferred tax assets have been recognized in the consolidated balance sheets

	December 31
	2025	2024
Investment credits
Research and development	$ 79,851	$ 127,544

e. Income tax assessments

The tax returns of the Corporation through 2023 have been assessed by the tax authorities.

23. EARNINGS PER SHARE

	Net Profit Attributable to Owners of the Corporation	Number of Shares (In Thousands)	Earnings Per Share (NT$)
For the Year Ended December 31, 2025
Basic earnings per share
Profit for the year attributable to owners of the Corporation	$ 241,328	119,802	$ 2.01
Effect of potentially dilutive ordinary shares
Compensation of employees	-	140
Diluted earnings per share
Profit for the year attributable to owners of the Corporation plus effect of potentially dilutive ordinary shares	$ 241,328	119,942	$ 2.01

43 -

	Net Profit Attributable to Owners of the Corporation	Number of Shares (In Thousands)	Earnings Per Share (NT$)
For the Year Ended December 31, 2024
Basic earnings per share
Profit for the year attributable to owners of the Corporation	$ 60,652	119,802	$ 0.51
Effect of potentially dilutive ordinary shares
Compensation of employees	-	27
Diluted earnings per share
Profit for the year attributable to owners of the Corporation plus effect of potentially dilutive ordinary shares	$ 60,652	119,829	$ 0.51

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

24. CASH FLOW INFORMATION

a. Non-cash transactions

In addition to those disclosed in other notes, the Group entered into the following non-cash investing and financing activities which were not reflected in the consolidated statements of cash flows for the years ended December 31, 2025 and 2024.

Cash paid for acquisition of property, plant and equipment for the year ended December 31, 2025 and 2024 were as follows:

	For the Year Ended December 31
	2025	2024
Increase in property, plant and equipment	$ 31,744	$ 457,129
Net decrease in payables for purchases of building and equipment	38,364	92,700
	$ 70,108	$ 549,829

b. Changes in liabilities arising from financing activities

	Short-term Bank loans	Long-term Bank loans	Lease Liabilities
For the year ended December 31, 2025
Balance, January 1, 2025	$ 80,000	$ 1,354,361	$ 5,872
Net financing cash flows	(20,000)	(122,923)	-
Interest under operating activities	-	-	241
Non-cash changes	-	534	584
Balance, December 31, 2025	$ 60,000	$ 1,231,972	$ 6,697
For the year ended December 31, 2024
Balance, January 1, 2024	$ 100,000	$ 961,645	$ 30,932
Net financing cash flows	(20,000)	391,816	(24,305)
Interest under operating activities	-	-	318
Non-cash changes	-	900	(1,073)
Balance, December 31, 2024	$ 80,000	$ 1,354,361	$ 5,872

25. CAPITAL MANAGEMENT

To support the needs for expansion and upgrade of its plant and equipment, the Group has to maintain an appropriate amount of capital. Therefore, the Group manages its capital to ensure it has the necessary financial resources and operating plan to support the required operating funds, capital expenditures, research and development expenses, debt repayment and dividend payments in the next 12 months to achieve an overall balanced capital structure.

Management of the Group reviews the capital structure of the Group periodically, considering the cost of capital and the risks associated with each class of capital. Based on recommendations of the management, the overall capital structure is balanced by, adjusting the amount of dividends paid to shareholders, the number of new shares issued, and the amount of new debt issued or existing debt redeemed.

26. FINANCIAL INSTRUMENTS

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

1) Short-term financial instruments' estimated fair value is based on the book value on the balance sheet. These financial instruments are very close to the expiration date; therefore, the book value is a reasonable basis for the estimation of fair value. This method is applicable to cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term bank loans, notes payable, trade payables and other payable.

2) Long-term bank loans' estimated fair value is based on the anticipated cash flow discounted at the long-term interest rate that is available to the Group under similar conditions. The Group's long-term bank loans rate is floating and the book value is equal to its fair value.

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

1) Fair value hierarchy

The Group’s financial assets and financial liabilities at FVTPL are measured at fair value using Level 2 inputs, and the financial assets at FVTOCI are measured at fair value using Level 1 inputs.

2) Valuation techniques and inputs applied for the purpose of Level 2 fair value measurement

Financial Instruments	Valuation Techniques and Inputs
Derivatives - foreign currency forward contracts	Discounted cash flow.
	Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

c. Categories of financial instruments

	December 31
	2025	2024
Financial assets
Financial assets at amortized cost (1)	$ 1,958,128	$ 1,608,815
Financial assets at FVTOCI
Equity instruments	28,359	48,093
Financial liabilities
Financial liabilities at FVTPL
Mandatorily classified as at FVTPL	159	-
Financial liabilities at amortized cost (2)	2,373,612	2,314,521

1) The balances included cash and cash equivalents, notes receivable, trade receivables (including from related parties), financial assets at amortized cost, other receivables and refundable deposits.

2) The balances included short-term bank loans, notes payable, trade payables, other payables and long-term bank loans (including current portion).

d. Financial risk management objectives and policies

The Group’s major financial instruments include equity and debt investments, trade receivables, trade payables, bank loans and lease liabilities. The Group’s corporate treasury function manages the financial risks relating to the operations of the Group. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

Material treasury activities are reviewed by the audit committee and the board of directors in accordance with relevant regulations and internal control policies.

1) Market risk

The financial risks that the Group’s operating activities are exposed to are primarily the risks of changes in foreign currency exchange rates and changes in interest rates.

45 -

46 -

a) Foreign currency risk

The Group conducts foreign currency denominated sales and purchases, which creates exposure to foreign currency risk. Exchange rate risk exposures are managed by utilizing foreign exchange forward contracts, the anticipated cash flow of accounts receivable and trade payables offsets, or adjustment of foreign deposits, within approved policy parameters.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period are set out in Note 30.

Sensitivity analysis

The Group was mainly exposed to the USD, EUR, JPY and RMB.

The sensitivity analysis used when reporting foreign currency risk internally to the executives mainly focuses on foreign currency denominated monetary items at the end of the reporting period. When the NTD had appreciated by 1% against the relevant foreign currencies, the post-tax profit for the years ended December 31, 2025 and 2024 would have decreased by $8,975 thousand and by $6,477 thousand respectively.

b) Interest rate risk

The Group is exposed to interest rate risk because the Group borrowed funds with interests at both fixed and floating rates. The Group partially offsets the risk by keeping cash and cash equivalents at floating rate and partially by comparing interest rates from different financial institutions and selecting the best one to manage the interest rate risk.

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

	December 31
	2025	2024
Fair value interest rate risk
Deposits in bank	$ 180,983	$ -
Lease liabilities	6,697	5,872
Long-term bank loans	88,972	143,528
Cash flow interest rate risk
Deposits in bank	1,115,259	1,120,160
Short-term bank loans	60,000	80,000
Long-term bank loans	1,143,000	1,210,833

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to interest rates for non-derivative instruments at the end of the year. For floating rate assets and liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the year remained outstanding. A 1% increase or decrease is used when reporting interest rate risk internally to the executives and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% higher with all other variables held constant, the Group’s post-tax profit for the years ended December 31, 2025 and 2024 would have decreased by $702 thousand and $1,365 thousand, respectively.

47 -

2) Credit risk

Credit risk refers to the risk that a counterparty defaults on its contractual obligations, resulting in a financial loss to the Group. As of the end of the reporting period, the counterparties of the Group are all creditworthy, no significant credit risk is expected.

The counterparties of the Group’s trade receivables cover a large number of customers across diverse industries and hence the credit risk is not as highly concentrated.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a sufficient level of cash and cash equivalents adequate to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank loans and ensures compliance with loan covenants.

The Group relies on bank loans as a significant source of liquidity. As of December 31, 2025 and 2024, the Group’s available unutilized bank loan facilities were $2,092,860 thousand and $2,165,570 thousand, respectively.

The following table details the Group’s remaining contractual obligations for its financial liabilities with agreed repayment periods. The tables below had been drawn up based on the undiscounted contractual maturities of the financial liabilities.

	Less Than 1 Year	1-5 Years	More Than 5 Years
December 31, 2025
Non-derivative financial liabilities
Non-interest bearing	$ 609,581	$ -	$ -
Lease liabilities	-	7,663	-
Fixed interest rate liabilities	48,635	40,337	-
Floating interest rate liabilities	127,833	443,917	631,250
	$ 786,049	$ 491,917	$ 631,250
December 31, 2024
Non-derivative financial liabilities
Non-interest bearing	$ 483,200	$ -	$ -
Lease liabilities	-	6,992	-
Fixed interest rate liabilities	60,074	83,454	-
Floating interest rate liabilities	147,833	337,612	805,388
	$ 691,107	$ 428,058	$ 805,388

Further information on the maturity analysis of the above financial liabilities was as follows:

	Less than 1 Year	1-5 Years	5-10 Years	10-15 Years	15-20 Years
December 31, 2025
Lease liabilities	$ -	$ 7,663	$ -	$ -	$ -
Fixed interest rate liabilities	48,635	40,337	-	-	-
Floating interest rate liabilities	127,833	443,917	317,250	261,667	52,333
	$ 176,468	$ 491,917	$ 317,250	$ 261,667	$ 52,333
December 31, 2024
Lease liabilities	$ -	$ 6,992	$ -	$ -	$ -
Fixed interest rate liabilities	60,074	83,454	-	-	-
Floating interest rate liabilities	147,833	337,612	355,743	272,008	177,637
	$ 207,907	$ 428,058	$ 355,743	$ 272,008	$ 177,637

27. TRANSACTIONS WITH RELATED PARTIES

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

a. Related party name and category

Related Party	Relationship with the Group
Hiwin Technologies Corporation (Hiwin Technologies)	Other related party
Hiwin Corporation, U.S.A. (Hiwin USA)	Other related party
Hiwin Corporation, Japan (Hiwin Japan)	Other related party
Hiwin GmbH (Hiwin Germany)	Other related party
Hiwin Singapore Pte. Ltd. (Hiwin Singapore)	Other related party
Hiwin Technologies (China) Corporation (Hiwin China)	Other related party
Matrix Precision Co., Ltd. (Matrix Precision)	Other related party
Hiwin S.R.L. (Hiwin Italy)	Other related party
Hiwin Corporation (Hiwin Korea)	Other related party
Hiwin (Schweiz) GmbH (Hiwin Schweiz)	Other related party
Suzhou Matrix Precision Machinery Co., Ltd. (Suzhou Matrix)	Other related party
Hiwin S.R.O. (Hiwin Czech)	Other related party

b. Operating transactions

For the Year Ended December 31
	2025	2024
1) Sales of goods
Other related parties	$ 554,055	$ 584,473

Due to the differences in product specifications, the selling prices of goods sold to related parties and those sold to third parties are not comparable, price and terms were determined in accordance with mutual agreements. The selling price is quoted at cost plus a reasonable margin based on the market and competitor pricing. Credit terms of the related parties are O/A 90 to 150 days and 90 days after the end of the month.

For the Year Ended December 31

2025 2024

2) Purchases of goods

Other related parties

$ 105,473 $ 60,274

The products purchased from related parties and those from third parties are not the same; therefore, their prices are not comparable. Payment terms are O/A 90 to 120 days and 60 to 150 days after the end of the month.

3) Other operating transactions

	For the Year Ended December 31
	2025	2024
Manufacturing and operating expenses
Other related parties	$ 2,339	$ 3,996
Non-operating income - rental income (classified as other income)
Other related parties
Hiwin Technologies	$ 18,905	$ 19,973
Others	1,009	-
	$ 19,914	$ 19,973

Rental income represented the lease rates of the Group's factory in accordance with the lease agreements and were based on rents of similar factories in the vicinity. The rents were paid monthly.

	For the Year Ended December 31
	2025	2024
Non-operating income - dividend income (classified as other income)
Hiwin Technologies	$ 351	$ 365
Non-operating income - other income (classified as other income)
Other related parties
Hiwin Technologies	$ 8,325	$ 12,004
Matrix Precision	-	4,756
Others	-	1,194
	$ 8,325	$ 17,954
Non-operating income - other expenses (classified as other gains and losses)
Matrix Precision	$ -	$ 2,801

	December 31
	2025	2024
4) Trade receivables
Other related parties
Hiwin USA	$35,899	$8,131
Hiwin Germany	25,785	37,000
Hiwin Japan	23,556	26,357
Hiwin Italy	19,173	15,647
Hiwin Technologies	3,587	22,915
Others	44,438	27,043
	$152,438	$137,093
5) Other receivables
Other related parties
Hiwin Technologies	$1,282	$3,085
Others	356	361
	$1,638	$3,446
6) Prepayments for purchases of goods (classified as other current assets)
Other related parties	$-	$504
7) Refundable deposits
Other related parties	$37	$-
8) Trade payables
Other related parties	$7	$-
9) Other payables
Other related parties	$77	$-
10) Guarantee deposits received (classified as other non-current liabilities)
Hiwin Technologies	$1,616	$1,616
Matrix Precision	1,009	-
	$2,625	$1,616

c. Transaction of property, plant and equipment

1) Acquisition of property, plant and equipment

	Purchase Price
	For the Year Ended December 31
	2025	2024
Other related parties	$ -	$ 13,815

2) Disposal of property, plant and equipment

	Proceeds		Gain on Disposal
	For the Year Ended December 31		For the Year Ended December 31
	2025	2024	2025	2024
Other related parties	$ -	$ 3,233	$ -	$ 328

d. Remuneration of key management personnel

	For the Year Ended December 31
	2025	2024
Short-term employee benefits	$ 57,996	$ 43,897
Post-employment benefits	642	642
	$ 58,638	$ 44,539

The remuneration of directors and key executives was determined in accordance with the performance of individuals and market trends.

28. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets had been provided as collateral for bank loans:

	December 31
	2025	2024
Property, plant and equipment	$ 3,542,655	$ 2,741,162
Pledged deposits (classified as financial assets at amortized cost - current)	31,430	-
	$ 3,574,085	$ 2,741,162

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

As of December 31, 2025 and 2024, commitment for the acquisition of property, plant and equipment amounted to $54,937 thousand and $60,680 thousand, respectively.

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than the functional currencies of the entities in the Group and the related exchange rates between the foreign currencies and the respective functional currencies were as follows:

	December 31, 2025			December 31, 2024
	Foreign Currency	Exchange Rate	Carrying Amount	Foreign Currency	Exchange Rate	Carrying Amount
Financial assets
Monetary items
USD	$ 31,967	31.43	$ 1,004,734	$ 19,950	32.79	$ 654,071
RMB	36,563	4.50	164,386	23,718	4.48	106,209
EUR	2,087	36.90	77,024	2,383	34.14	81,372
JPY	139,378	0.20	27,987	171,082	0.21	35,910
Financial liabilities
Monetary items
USD	523	31.43	16,426	430	32.79	14,102
RMB	22,939	4.50	103,135	10,102	4.48	45,237
EUR	49	36.90	1,811	81	34.14	2,760
JPY	153,810	0.20	30,885	27,953	0.21	5,867

The Group is mainly exposed to the USD, RMB, EUR and JPY. The following information was aggregated by the functional currencies of the entities in the Group, and the exchange rates between the respective functional currencies and the presentation currency were disclosed. The significant (realized and unrealized) foreign exchange gains (losses) are as follows:

	For the Year Ended December 31
	2025		2024
Foreign Currency	Exchange Rate	Net Foreign Exchange Gain (Loss)	Exchange Rate	Net Foreign Exchange Gain
NTD	1 (NTD:NTD)	$ 21,932	1 (NTD:NTD)	$ 17,433
ILS	9.04 (ILS:NTD)	(70,770)	8.68 (ILS:NTD)	6,410
		$ (48,838)		$ 23,843

31. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:

1) Financing provided to others. (None)
2) Endorsements/guarantees provided. (None)
3) Significant marketable securities held (excluding investments in subsidiaries, associates and jointly controlled entities). (Notes 8 and 9)
4) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 1)
5) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (None)

6) Other: intercompany relationships and significant intercompany transactions. (Table 2)
7) Information on investees. (Table 3)

b. Information on investments in mainland China. (None)

32. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. The Group's reportable segments are precision motion and control parts, micro and nano-positioning systems and others.

a. Segment revenue and results

The following was an analysis of the Group's revenue and results from continuing operations by reportable segment:

	For the Year Ended December 31
	Segment Revenue		Segment Profit
	2025	2024	2025	2024
Precision motion and control parts	$ 1,263,937	$ 1,226,039	$ 114,669	$ 20,478
Micro and nano-positioning systems	1,427,102	1,004,843	205,872	29,880
Others	23,328	22,825	3,699	845
Total from continuing operations	$ 2,714,367	$ 2,253,707	324,240	51,203
Finance costs			(15,403)	(15,983)
Interest income			27,153	29,920
Other income			32,313	43,615
Other gains and losses			(18,164)	(17,910)
Net foreign exchange gain (loss)			(48,838)	23,843
Profit before income tax			$ 301,301	$ 114,688

Segment revenue reported above represents revenue generated from sales made to external customers.

Segment profit represented the profit before tax earned by each segment without finance costs, interest income, other income, other gains and losses, net foreign exchange gain (loss) and income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Segment total assets and liabilities

The Group had not reported segment assets and liabilities information to the chief operating decision maker. Thus, no disclosure is made.

c. Geographical information

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location of assets are detailed below:

	Revenue from External Customers		Non-current Assets
	Year Ended December 31		December 31
	2025	2024	2025	2024
Taiwan	$ 2,390,636	$ 1,992,753	$ 3,727,569	$ 3,835,659
Israel	323,731	260,954	51,529	58,915
	$ 2,714,367	$ 2,253,707	$ 3,779,098	$ 3,894,574

Non-current assets exclude financial instruments, goodwill and deferred tax assets.

d. Information about major customers

	For the Year Ended December 31
	2025		2024
	Amount	%	Amount	%
Customer A	$ 947,712	35	$ 656,546	29
Customer B	554,055	20	584,473	26

54 -

TABLE 1

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Transaction Details				Abnormal Transaction		Notes/Accounts Receivable (Payable)		Note
			Purchase/Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Corporation	Hiwin Germany	Other related party	Sale	$ 128,690	5%	O/A 90 days	$ -	-	$ 25,785	5%	-

TABLE 2

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

No.	Investee Company	Counterparty	Relationship (Note 1)	Transaction Details
				Financial Statement Account	Amount (Note 2)	Payment Terms	% to Total Sales or Assets
0	The Corporation	Mega-Fabs	1	Sales	$ 203	O/A 30 days	-
			1	Cost of goods sold	32,463	O/A 30 days	1
			1	Manufacturing and operating expenses	4,979	-	-
			1	Other receivables	453	-	-
			1	Other payables	1,191	-	-

Note 1: Relationship of investee company to counterparty: (1) parent company to subsidiary; (2) subsidiary to parent company; (3) Subsidiary to subsidiary.
Note 2: Significant intercompany accounts and transactions have been eliminated.

TABLE 3

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES

FOR THE YEAR ENDED DECEMBER 31, 2025

(In Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		As of December 31, 2025			Net Income of the Investee	Share of Profit	Note
				December 31, 2025	December 31, 2024	Number of Shares	%	Carrying Amount
The Corporation	Mega-Fabs	Israel	Research, manufacture and sale of drives and controllers	$ 63,650	$ 63,650	360,000	60	$ 548,994	$ 50,737	$ 27,895	Subsidiary

Note: Significant intercompany accounts and transactions have been eliminated.

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HMC — Audit Report / Information 2025

52414_rns_2026-04-23_5e034214-26e6-4752-af41-e04f76d30cef.pdf

Hiwin Mikrosystem Corporation and Subsidiaries

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Revenue Recognition

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

a. Statement of compliance

b. Basis of preparation

c. Classification of current and non-current assets and liabilities

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

9. FINANCIAL ASSETS AT AMORTIZED COST

11. INVENTORIES

12. SUBSIDIARIES

13. PROPERTY, PLANT AND EQUIPMENT

14. LEASE ARRANGEMENTS

15. INTANGIBLE ASSETS

16. BANK LOANS

17. OTHER PAYABLES

18. RETIREMENT BENEFIT PLANS

19. EQUITY

20. REVENUE

21. NET PROFIT FROM CONTINUING OPERATIONS

22. INCOME TAXES

23. EARNINGS PER SHARE

24. CASH FLOW INFORMATION

25. CAPITAL MANAGEMENT

26. FINANCIAL INSTRUMENTS

27. TRANSACTIONS WITH RELATED PARTIES

28. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

31. SEPARATELY DISCLOSED ITEMS

32. SEGMENT INFORMATION

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

HIWIN MIKROSYSTEM CORPORATION AND SUBSIDIARIES

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HMC Audit Report / Information 2025