INX — Investor Presentation 2021

Sep 3, 2021

==> picture [173 x 93] intentionally omitted <==

2021 Second Half Institutional Investor Conference

August 6, 2021

Disclaimer

Innolux Corporation’s statements of its current expectations and estimates are forward-looking statements subject to significant known and unknown risks and uncertainties and actual results may differ materially from those contained or implied in the forward-looking statements. These forward-looking statements are not guarantees of future performance and therefore one should not place undue reliance on them. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

1

Agenda

1. Market Overview

==> picture [74 x 67] intentionally omitted <==

1. Dual-Transformation: Digital Decision Making

2. Business Strategies and Goals

3. Financial Results

4. Summary / Q & A

2

Cautiously optimistic: Demands in the 2021 Second Half

• Structural change undergoing in the industry continues and INX maintains cautiously optimistic about the peak season 2H2021.

• The upstream components are still short and the lead time for material preparation is still long, thus restriction on panel output.

• Although the quotation price for some small-sized TV panels have been adjusted, the demand for large-sized TV panel and IT products is still strong. The domino effect will not take place.

Supply / Demand forecast is still healthy

Driver IC remains in shortage

==> picture [336 x 219] intentionally omitted <==

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

(Glut ratio)
12%
11% Glut ratio by
market forecast
10%
9%
8%
7% Glut ratio by
Innolux forecast
6%
5%
2018 2019 2020 2021E 2022E
Sources: Omdia, Innolux
----- End of picture text -----

==> picture [336 x 216] intentionally omitted <==

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

(Glut ratio)
10%
5%
0%
-5%
-10%
-15%
-20%
1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21E 4Q21E
Sources: Omdia 3
----- End of picture text -----

Transformation – Smart Manufacturing and Operation

• [Internally] digital transformation: Implementing high-quality standards in product development; providing competitive products to improve customer satisfaction.

• [Externally] product structure adjustment: Switching production capacity of old-generation factories to high value-added products; exploring application markets and growing new ventures.

Dual-Transformation - minimize the cyclical impact and achieve steady profit growth

Digital Transformation - Smart Manufacturing & Smart Operation

==> picture [33 x 172] intentionally omitted <==

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

M
A
R
K
E
T
----- End of picture text -----

==> picture [379 x 195] intentionally omitted <==

==> picture [84 x 84] intentionally omitted <==

==> picture [84 x 84] intentionally omitted <==

==> picture [256 x 37] intentionally omitted <==

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

Smart Smart
Manufacturing Operation
----- End of picture text -----

• Profitability Analysis

• Precise Design

• Optimal Allocation System

• SmartManufacturing

• Smart Dispatch

• Smart Inspection

4

Module Factories Lights-Out Rate Achieved 71%

• With the advantages of the automatic design, INX builds smart manufacturing automatic production lines and delivers niche products.

• By 2Q21, the lights-out production line rate has increased to 71%, which has made INX ranked as Top 2 supplier to 76% of the major customers.

==> picture [712 x 243] intentionally omitted <==

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

Smart Manufacturing - Ranked as Top 2 supplier
smart assembly, smart production to 76% of the major customers
80% 76%
71%
Lights-out Rate
Manual Assembly Smart Production 70%
63%
Line Line Customer Satisfaction
60%
52%
50%
DFA 40%
Low Quality High Quality 40%
Self- Smart
Low-Skill-Intensive Development Assembly Line High-Skill-Intensive 30%
20%
HighManpower Low Manpower
10%
High Cost Low Cost
0%
0%
2015Y 2018Y 2021Y
----- End of picture text -----

Note: DFA = Design For Automation

Note: Customer Satisfaction refers to the ranking of Innolux to its major customers

5

Responding to Challenges Through Flexible Smart Operation

• A comprehensive smart industrial ecosystem: Be responsive to market challenges through profitability analysis, optimal allocati on and smart dispatch system.

• Smart Operation yields great results. Indicators for operational effectiveness and product manufacturing both have shown substantial growth.

Smart Operationintelligently respond to various challenges

Smart Operation Results - Automation; Digitalization; Intelligence

==> picture [378 x 199] intentionally omitted <==

6

Complete the Layout of Each Generation Line

• Specifications for TV are developing towards large-size and high resolution. The shipments of 65’and 75’ TV will each grow at a CAGR of 18% and 24%, respectively, by the end of 2024.

• INX will become the most valuable panel supplier with the most comprehensive layout of generation lines once the agreement between INX and SDP Global (China) Co., Ltd. becomes effective.

Large-sized TV panel shipments 2020 - 24E CAGR

Cost Comparison

==> picture [695 x 216] intentionally omitted <==

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

Unit: 1,000s
Builda Long-term Supply
50,000 Gen 10.5 Agreement
 65” 2020-24E CAGR: 18%
45,000
 75” 2020-24E CAGR: 24%
40,000 Factory Cost Applicable N/A
35,000
30,000
Amortized Cost Applicable N/A
25,000
20,000 Applicable
Capital Cost Applicable
15,000 (Note)
10,000
5,000 OperatingCost Applicable N/A
0
2020 2021E 2022E 2023E 2024E
65" LCD TV 75" LCD TV
Sources: Omdia Note: Opportunity cost from the prepaid part of the purchase price 7
----- End of picture text -----

2Q2021 Financial Results

• Consistently optimizing product structure and increasing the proportion of high-value-added products. Although the 2Q21 avg. panel area price QoQ % growth had decelerated, the gross profit QoQ % growth has yet accelerated thanks to better product mix.

• In the peak of cyclical period in 2017, the total revenue contribution of TV/IT/Mobile&CPwas 51%/27%/22%, respectively, whereas

• 38%/38%/24% in 2Q21, representing a more comprehensive and balanced product mix that contributes to stable profitability.

(NT$ million)	2Q 2021	1Q 2021	QoQ %	YoY % 66,883 100.0% 39.4% 65,027 97.2% -4.1% 2Q 2020	2021Q2 2021Q1
Cost of Goods Sold Net Sales	93,236 100.0% 62,372 66.9%	83,839 100.0% 62,212 74.2%	11.2% 0.3%
					Gross Profit NT$m 30,864 21,627
Gross Profit	30,864 33.1%	21,627 25.8%	42.7%	1,856 2.8% 1562.9%
Operating Expenses Basic EPS(NT$)(1)(2) Profit (Loss) before Tax Net Profit (Loss) Operating Profit (Loss) Net Non-operating Income (Exp.) Net Profit (Loss) Attributable to Owners of Company	7,087 7.6% 23,777 25.5% -451 -0.5% 23,326 25.0% 21,419 23.0% 21,419 23.0% 2.05	6,746 8.0% 14,881 17.7% -2,283 -2.7% 12,598 15.0% 11,567 13.8% 11,571 13.8% 1.15	5.1% 59.8% -80.3% 85.2% 85.2% 85.1%	5,217 7.8% 35.8% -3,361 -5.0% - -910 -1.4% -50.5% -4,271 -6.4% - -4,777 -7.1% - -4,781 -7.1% - -0.49 5,491 8.2% 499.0% 8,852 4,500
					Blended ASP (m2) % QoQ 12% 14%
					Gross Profit % QoQ 43% 36%
EBITDA(3)	32,892 35.3%	23,950 28.6%	37.3%
Depreciation & Amortization Capital Expenditure	9,115 7,219	9,069 3,470

Notes:

1. Basic EPS = Net Income-Parent / Weighted Average of Outstanding Common Shares

2. Capital Stock (common, including Certificates of Bond-to-Stock Conversion): NT$99.4 billion as of December 31, 2020

3. EBITDA = Operating Income + Depreciation & Amortization

4. All figures are prepared by Innolux Corporation in accordance with the International Financial Reporting Standards as endorsed in TIFRS.

8