ITE - Annual Report 2021 | FinancialReports.eu

Stock No.: 3014

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2021Annual Report

Prepared by ITE Tech. Inc. Published on May 20, 2022 This annual report is available at https://mops.twse.com.tw

https://www.ite.com.tw

Spokesperson

Name: Lin, Hsiu-Che

Title: Project Director Tel No.: (02) 2912-6889 ext.2388 E-mail: [email protected]

Deputy Spokesperson

Name: Liu, Tsan-huang

Title: President of Business Unit Tel No.: (02) 2912-6889 ext.6071 E-mail: [email protected]

Address and telephone number of the company's headquarters, branch offices, and factories

Headquarters

Address: 3F, No. 13, Chuangsin 1st Rd., Hsinchu Science Park

Tel No.: (03) 579-8658

Hsinchu Chuangsin Office

Address: No. 9, Chuangsin 1st Rd., Hsinchu Science Park Tel No.: (03) 579-8658

Taipei Office

Address: 9F, No. 233-2, Baoqiao Rd., Xindian District, New Taipei City Tel No.: (02) 2912-6889

Stock Transfer Agent

Horizon Securities Co., Ltd.

Address: No. 236, Sec. 4, Xinyi Rd., Taipei City Tel No.: (02) 7719-8899 Website: https://honsec.com.tw

Names of the CPAs for the most recent year

Name of Office: Ernst & Young

Names of CPAs: Wan-Ju Chiu, Hsin-Min Hsu

Address: 9F, No. 333, Sec. 1, Keelung Rd., Taipei City Tel No.: (02) 2757-8888 Website: https://www.ey.com/en_tw

Overseas securities Dealers and methods to inquire about Overseas securities: Not applicable
Company Website: https://www.ite.com.tw

Contents

I. LETTER TO THE SHAREHOLDERS .............................................................................. 1 II. COMPANY PROFILE ....................................................................................................... 3 1. Date of Incorporation ..................................................................................................... 3 2. Milestones ...................................................................................................................... 3 III. CORPORATE GOVERNANCE REPORT .................................................................... 5 1. Organization ................................................................................................................... 5 2. Information on the Company's directors, supervisors, president, vice president, assistant presidents, and the heads of all the company's divisions and branch units ..... 7 3. Remuneration paid to general directors, independent directors, supervisors, president and vice presidents ....................................................................................................... 14 4. Implementation of Corporate Governance ................................................................... 20 5. Disclosure of the CPAs’ fee ......................................................................................... 46 6. Changes of CPA ........................................................................................................... 46 7. Where the company's chairman, president, or any manager in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm, the name and position of the person, and the period during which the position was held, shall be disclosed. ......................................................................................................... 46 8. In the most recent year to the date this report was printed, directors, supervisors, managerial officers and the shareholders holding more than 10% of the shares in the transfer of shares and pledge of shares under lien, and any change thereof. ............... 46 9. Information on shareholders among the top 10 by shareholding ratio who are related parties to one another or spouse, kindred within the 2nd degree of kinship ................ 48 10. Quantity of shareholdings of the same investee by the Company and Directors, Supervisors, Managerial Officers, and direct or indirect subsidiaries in proportion to the combined holdings of all, and combined to calculate the proportion of overall shareholding. ................................................................................................................ 48 IV. CAPITAL OVERVIEW .................................................................................................. 49 1. The Company's capital and shares ................................................................................. 49 2. Status of corporate bond ................................................................................................ 54 3. Status of preferred stocks ............................................................................................... 54 4. Status of overseas depository receipt ............................................................................. 54 5. Status of employee stock options ................................................................................... 54

Status of employee restricted share undertaking ........................................................... 54 7. Status of issuance of new shares due to merger and acquisition or acceptance of shares transferred by other companies .................................................................................... 54 8. Implementation status of the financing plan .................................................................. 54 V. OPERATION PROFILE .................................................................................................. 55 1. Business Contents .......................................................................................................... 55 2. Market, production and sales overview ......................................................................... 59 3. Information on employees as of the annual report printing date for the most recent 2 years…. ......................................................................................................................... 65 4. Information on environmental protection expenditures ................................................. 66 5. Labor-management relations ......................................................................................... 66 6. Information security management ................................................................................. 67 7. Important contract .......................................................................................................... 69 VI. FINANCIAL INFORMATION ...................................................................................... 70 1. Brief balance sheets and comprehensive income statements in the last five years ......... 70 2. Financial Analysis for the most recent five years ........................................................ 75 3. The Audit Committee’s review report .......................................................................... 78 4. Independent Auditors' Report and Consolidated Financial Statements ....................... 79 5. Independent Auditors' Report and Parent Company Only Financial Statements ....... 164 6. If the company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, the annual report shall explain how said difficulties will affect the company's financial situation. .................................................................................... 247 VII. REVIEW AND ANALYSIS OF FINANCIAL STATUS, FINANCIAL PERFORMANCE, AND RISKS ............................................................................... 248 1. Financial status ........................................................................................................... 248 2. Financial performance ................................................................................................ 249 3. Cash flow .................................................................................................................... 250 4. Impacts of major capital expenditures on finance and business in the most recent year…………………………………………………………………………………..250 5. The annual report shall describe the company's investment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving investment profitability, and investment plans for the coming year. ........ 250
Risk management analysis and assessment ................................................................ 251 7. Other important matters .............................................................................................. 253 VIII. SPECIAL DISCLOSURE .......................................................................................... 254 1. Information regarding the company’s affiliated companies ........................................ 254 2. Status of private placement of securities ..................................................................... 257 3. Acquisition or disposal of The Company’s shares by subsidiaries.............................. 257 4. Other necessary supplementary notes .......................................................................... 257 5. Event regulated in Article 36-3-2 of the Securities and Exchange Act that will materially effect shareholder’s equity or the share price ............................................ 257

I. Letter to the shareholders

Dear shareholders,

From the beginning of 2020, the COVID-19 pandemic overturned enterprises’ traditional business models, and countries around the world have accelerated digital transformation to cope with the COVID-19 crisis. ITE Tech’s PC-related products have benefited from this digital transformation trend and the performance has grown substantially. Many countries have implemented lockdown measures to block the pandemic’s spread. This has directly impacted the supply chain of the global ICT industry, resulting in a serious shortage of semiconductor components and a gradual rise in the price of chips. With this rapid increase in demand in the ICT industry, ITE’s revenue and profits for 2021 have also exceeded expectations.

I. Operating outcome in 2021
ITE Tech's 2021 operating performance
- A. Annual revenue was NT$7.184 billion, for an increase of 49.12% over the previous year.
- B. Annual net profit after tax was NT$1.805 billion, an increase of 93.04% over the previous year.
ITE Tech's 2021 revenue by major product line
- A. PC/NB product line: 2021 revenue increased by 47.28% compared with the previous year.
- B. High-speed interface IC product line: Products in this line include HDMI, DisplayPort, LVDS, MHL and other control chips. 2021 revenue increased by 43.23% over the previous year.
- C. HMI (Human-Machine Interface) ICs: 2021 revenue increased by 109.19% compared with the previous year.
- D. Other product lines have also grown, pushing up the Company's overall 2021 revenues.
II. Overview of Annual Business Plan for 2022
Product development policy
- A. PC/NB related ICs

Keep up with the evolution of mainstream CPU technology, and align with the demands of computer manufacturers to quickly provide products and technologies.

B. High-speed interface ICs

Develop technologies and products to satisfy the video streaming with the increasing data volume, and thus meet product specification for the new generation mobile devices and consumer electronics.

C. HMI ICs

In response to the gradual transformation to digital display controls in human-machine interfaces such as home appliances, video intercoms, and automotive and industrial

applications, ITE Tech will develop software and hardware bundled ICs to align with the development of HMI-related development systems.

Sales goals

Looking forward to 2022, market momentum will mainly be based on work and entertainment. The related industries such as the live streaming industry, e-Sports market, HPC, AI, 5G, and other industrial applications require PC and audio-visual products. ITE Tech is a supplier of chips for these purposes, and thus the market trend is relatively favorable. Therefore, the operating outlook remains optimistic. ITE Tech will seize this opportunity to enhance market share and maintain the goal of annual revenue growth.

III. The Company’s future development strategies
Continue to develop key technologies, strengthen technological deployment, and continue to develop new processes to reduce costs.
Actively explore innovative applications, and design customized, high-value, growthoriented new products.
Actively seek strategic customer cooperation, strengthen brand customer marketing, and strive for market initiative through pragmatic business models.
IV. The influenced of the external competitive environment, regulatory environment, and overall business environment

The industrial environment will encounter constant changes. Looking at the industrial trend for the next few years, ITE Tech's product layout is in line with trends. By virtue of the customer base we have built in the consumer electronics field, ITE Tech will definitely be able to maintain our market advantages. We are confident of overcoming the impacts and challenges brought about by the overall industrial environment.

Despite the changing global economic situation and fierce market competition, ITE Tech will implement countermeasures against market competition with a solid technical foundation. Together, all our employees will go forth to seize the opportunities each year brings, and overcome the challenges each year presents.

Chairman ： Hu, Chun-yang

II. Company Profile

1. Date of Incorporation

May 29, 1996

2. Milestones

March 1996 Hsinchu Science Park Bureau approved the investment application.
May 1996 The Company was established, with a paid-in capital of NT$80 million, and was located on the Keji 3rd Road in the Hsinchu Science Park.
November 1996 The cash capital increased by NT$120 million, and the paid-in capital after the capital increase was NT$200 million.
December 1997 The Company acquired an office building and moved to 3F, No. 13, Chuangsin 1st Road, Hsinchu Science Park.
December 1997

UMC acquired 99.9% shareholding in ITE. The board of directors elected Tsai, Ming-kai as the chairman.

April 1998 The capital increased by NT$465 million, and the paid-in capital after the capital increase was NT$665 million.
June 1998 The subsidiary - ITE USA (which ended its business at the end of 2007) was established. The board of directors elected Chen, Wen-hsi. as the chairman.
July 1999 Securities and Futures Institute authorized public offering.
August 1999 The stock dividends from retained earnings as well as employee bonuses were converted to a capital increase in the amount of NT$92 million, and the paidin capital was NT$757 million.
August 2000 The stock dividends from retained earnings as well as employee bonuses were converted to a capital increase in the amount of NT$176 million, and the paidin capital was NT$933 million.
August 2002 The stock dividends from retained earnings and capital surplus as well as employee bonuses were converted to a capital increase in the amount of NT$48 million, and the paid-in capital was NT$981 million.
October 2002 The Company was officially listed on the Taiwan Stock Exchange (stock no.: 3014) on October 29.
September 2003 The stock dividends from retained earnings and capital surplus as well as employee bonuses were converted to a capital increase in the amount of NT$109 million, and the paid-in capital was NT$1.09 billion.
March 2004 The board of directors elected Hu, Chun-yang as the chairman. August 2006 The shareholder services agent was changed from SinoPac Securities Co., Ltd to Horizon Securities Co., Ltd.
November 2007 The board of directors elected UMC as the chairman and UMC appointed Hung, Chia-tsung as its legal representative.
June 2008 The General Shareholders’ Meeting conducted a full re-election for 7 directors and 3 supervisors and the newly elected chairman was Hung, Chia-tsung.
September 2008 The stock dividends from retained earnings as well as employee bonuses were converted to a capital increase in the amount of NT$59 million, and the paid-
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in capital was NT$1.203 billion.
November 2008 The board of directors elected Chen, Chih-feng as the chairman. December 2008 The Company merged USBest, CAT, and SMedia through share swaps on December 31, 2008. After the merge, the paid in capital of NT$2.006 billion.
June 2011 The Company set up an Audit Committee to perform the duties on behalf of the supervisors. The board of directors elected Hu, Chun-yang as the chairman.
August 2011 The Board of Directors set up a Compensation and Remuneration Committee. December 2011 An impairment of NT$2.4685 Billion on goodwill was recognized as nonoperating losses and caused a deficit for the year 2011.
December 2011 Calculated along with the employee stock options exercised, the registered paid-in capital as of December 31, 2011 was NT$2.027 billion.
June 2012 The General Shareholders’ Meeting adopted a resolution to offset deficit , not to pay dividends and to issue employee restricted shares..
December 2012 Calculated along with the employee restricted shares, the registered paid-in capital as of the end of the year 2012 was NT$2.060 billion.
October 2013 The company decreased 25.08% of capital in cash and completed the replacement of share certificate. After the capital reduction, the paid-in capital was NT$1.538 billion.
December 2014 Calculated along with the employee restricted shares, the registered paid-in capital was NT$1.579 billion as of December 31, 2014.
February 2017 The Company acquired the office building located at 9F, No. 233-1 Baoqiao Road, Xindian District, New Taipei City.
December 2017 Calculated along with the employee restricted shares, the registered paid-in capital was NT$1.614 billion as of December 31, 2017.
March 2018 The Company acquired the office building located at 9F, No. 233-2 Baoqiao Road, Xindian District, New Taipei City.
December 2021 The registered paid-in capital was NT$1.611 billion as of the end of 2021.
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III. Corporate Governance Report

1. Organization

(1) Organizational Structure

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Shareholders' Meeting
Audit committee
(Note)
Board of Directors
Compensation and
Remuneration Committee Internal Auditor
Chairman
President's Office
BU I BU II BU III BU V Marketing & Sales BU
Operation
Support Finance Div. Design Engineering Quality Assurance Human Resource
Div. Div. Div. Div.
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Note: The Audit Committee replaces the supervisor in functions.

(2) Business of major departments

Division/Department	Businessincharge
President's Office	‧Comprehensively manages the implementation and coordination of the Company's overall business, sets operational goals, and directs and supervises subordinates’ handling of business. ‧Assists in supervising organizational operation, management review,legalaffairs, andimplementationof internalaudits.
Business Units	‧Responsible for researching, developing, and testing the Company's new products.
Marketing & Sales BU	‧Responsible for formulating business objectives, market planning, product planning, product sales, customerservices, etc.
Operation Support Division	‧Responsible for the Company's outsourcing product processing, production scheduling, goods shipment, material purchase requisition, materials management, warehousing, procurement, materials and equipment, etc.
Finance Division	‧Responsible for the Company's financial policy management, accounting operations, andhandling ofboard affairs.
Design Engineering Division	‧Responsible for introducing and planning the Company's design process. ‧Responsible for the Company's IC layout engineering, as well as software and hardware management. ‧Responsible for the Company's planning for office automation, development and management of application systems, as well as introduction of network information securitysystems.

Division/Department	Businessincharge
Quality Assurance Division	‧Responsible for promoting the Company's quality systems. ‧Responsible for the Company's product quality control. ‧Responsible for the Company's management of customer complaints.
Human Resource Division	‧Responsible for managing and planning the appointment and dismissal, recruitment, promotion, performance appraisal, attendance tracking, and training of the Company's personnel. ‧Responsible for office management, industrial safety, factory affairs,and other work.

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Information on the Company's directors, supervisors, president, vice president, assistant presidents, and the heads of all the company's divisions and branch units
(1) Related information on directors

A. Information on directors

April 23, 2022 Unit: share(s); %

Title	Nationality or place of registration	Name	Gender & Age	Date on which current position was assumed	Term of contract	Commence ment date of the first term	Shares held at the time of election	Shares held at the time of election	Number of shares currently held	Number of shares currently held	Number of shares currently held by their spouses, children of minor age	Number of shares currently held by their spouses, children of minor age	Shares held through nominees	Shares held through nominees	Principal work experience and academic qualifications	Position(s) held concurrently in the company and/or in any other company	Heads, directors or supervisors with a spouse or relatives within the second degree of kinship	Heads, directors or supervisors with a spouse or relatives within the second degree of kinship	Heads, directors or supervisors with a spouse or relatives within the second degree of kinship
							shares	%	shares	%	shares	%	shares	%			Title	Name	Relation
Chairman	R.O.C.	Hu, Chun-yang	Male (61~70)	June 15, 2020	3 years	June 15, 2000	1,985,361	1.23	1,985,361	1.23	--	--	--	--	Master of Electronics Engineering, National Chiao Tung University, Division Manager of Computer Products Division, UMC, President and Chairman of ITE Tech. Inc.	CTO of this Company Director of RDC Semiconductor Co., Ltd. Independent Director of U-MEDIA Communications Inc.	--	--	--
Director	R.O.C.	UMC	--	June 15, 2020	3 years	Dec. 18, 1997	13,959,978	8.66	13,959,978	8.66	--	--	--	--	--	--	--	--	--
Representative	R.O.C.	Chen, Yun-yu	Female (51~60)	June 15, 2020	3 years	June 13, 2008	37,949	0.02	37,949	0.02	--	--	--	--	MBA of Columbia Business School, USA	Assistant President of Finance Division of UMC, Supervisor of UMC Capital	--	--	--
Director	R.O.C.	Lin, Hung-yao	Male (61~70)	June 15, 2020	3 years	June 12, 2006	513,699	0.32	513,699	0.32	56	0	--	--	EMBA of National Chiao Tung University, President of SMedia Technology Corporation	President of this Company, Director of ITE Tech.(Shenzhen) Inc.	--	--	--
Director	R.O.C.	Liu, Liang-chun	Female (41~50)	June 15, 2020	3 years	June 15, 2011	386,455	0.24	386,455	0.24	26,913	0.02	--	--	Master, Institute of Management Science, National Chiao Tung University, Investment Manager of Pacific Venture Partner, Investment Manager of Hsu Pang Venture Investment Co., Ltd., Executive Vice President of ChingHungInvestment Co.,Ltd.	Chairperson of Chan Cheng Investment Co., Ltd., Independent Director of GeoVision Inc.	--	--	--
Independent Director	R.O.C.	Huang, Yi- tsung	Male (61~70)	June 15, 2020	3 years	June 14, 2017	--	--	--	--	--	--	--	--	Bachelor, Department of Accounting, Tamkang University, Domestic listing Department, TWSE, Vice President of Foxlink Image Technology Co., Ltd., Vice President of Power Quotient International Co.,Ltd.	Director of PixArt Imaging Inc. Independent Director of eCloudvalley Digital Technology Co., Ltd., Independent Director of Aethertek technology co., Ltd.	--	--	--
Independent Director	R.O.C.	Hsu, Shih-fang	Male (61~70)	June 15, 2020	3 years	June 14, 2017	--	--	--	--	--	--	--	--	Bachelor, Department of Electrical Engineering, National Cheng Kung University, President and Director of Atrie TechnologyInc.	Independent Director of U-MEDIA Communications Inc.	--	--	--
Independent Director	R.O.C.	Chen, Shou- shan	Male (51~60)	June 15, 2020	3 years	June 15, 2020	--	--	--	--	--	--	--	--	Master, Institute of Electronics Engineering, National Chiao TungUniversity	Director and Vice President of Weida Hi-Tech Co., Ltd.	--	--	--

Major Shareholders of Juristic Person Shareholders

Juristic Person Shareholder Major Shareholders of Juristic Person Shareholders Name JPMorgan Chase Bank, N.A. acting in its capacity as depositary and representative to the holders of ADRs (5.84%), Fubon Life Insurance Co, Ltd. (4.16%), Hsun Chieh Investment Co., Ltd. (3.55%), New Labor UMC Pension Fund (2.53%), Silicon Integrated Systems Corp. (2.30%), Yann Yuan Investment Co., Ltd. (1.62%), (Number of shares held on CTBC Bank Employee Stock Ownership Trust Account of UNITED MICROELECTRONICS CORP. April 10, 2021) (1.57%), Norges Bank-internal-NBIM PF EQ INTERNAL CFD(1.23%), Nan Shan Life Insurance Company, Ltd. (1.20%), JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds (1.06%)

The major shareholders of the major shareholders that are juridical persons

Name ofjuristic person	Majorshareholderofjuristic person
Fubon Life Insurance Company,Ltd.	Fubon Financial Holding Co., Ltd.(73.88%)
Hsun Chieh Investment Co., Ltd.	Shieh Yong Investment Co., Ltd. (63.48%), UMC(36.49%)
Silicon Integrated Systems Corp. (Number of shares held on Sep. 06, 2021)	UMC (19.01%), Hsun Chieh Investment Co., Ltd.(4.80%), Liu, Hsing-sen(1.38%), Vanguard Emerging Markets Stock Index Fund a series of Vanguard International Equity Index Funds (1.12%), JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds (0.96%), Credit Suisse International (0.90%), Chuang, Tsung-ming(0.46%), Chen, Wen-hsi(0.45%),Vanguard FTSE All-World ex-US Small-Cap Index Fund, a series of Vanguard International Equity Index Funds (0.35%), Vanguard Fiduciary Trust Company Institutional Total InternationalStock MarketIndex TrustII(0.35%)
Yann Yuan Investment Co., Ltd.	Hsi Pin Investment Co., Ltd.(29.45%), UMC (28.22%), Unimicron Technology Corp.(12.27%), King Yuan Electronics Co., Ltd.(15.34%), Coretronic Corporation (7.98%),Sigurd Microelectronics Corporation(4.29%), HsunChieh Investment Co.,Ltd.(2.45%)
Nan Shan Life Insurance Company,Ltd.	Jun Cheng Investment Holding Co., Ltd.(34%)

B. Disclosure of Professional Qualifications of Directors and Independence of Independent Directors

			April 23,2022
Conditions Name	Professional qualification and experience	Status of independence	Number of public companies where the person holds the title as independent director
Hu, Chun-yang	Principal academic qualification: Master of Electronics Engineering, National Chiao Tung University Principal work experience: Division Manager of Computer Products Division, UMC, President and Chairman of ITE Tech. Inc.	Not applicable	1
UMC, Representative: Chen,Yun-yu	Principal academic qualification :MBA of Columbia Business School, USA Principal work experience: Assistant President of Finance Division of UMC		0
Lin, Hung-yao	Principal academic qualification: EMBA of National Chiao Tung University Principal work experience: President of SMedia TechnologyCorporation		0
Liu, Liang-chun Chen, Shou-shan (Independent Director)	Principal academic qualification : Master, Institute of Management Science, National Chiao Tung University, Principal work experience: Investment Manager of Pacific Venture Partner, Investment Manager of Hsu Pang Venture Investment Co., Ltd., Executive Vice President of Ching Hung Investment Co., Ltd. Chairperson of Chan ChengInvestment Co.,Ltd.		1
Chen, Shou-shan (Independent Director)	Principal academic qualification: Master, Institute of Electronics Engineering, National Chiao Tung University Principal work experience: Vice President of Weida Hi-Tech Co., Ltd. Not aperson to whom anyconditions defined in Article 30 of the CompanyAct apply.	The independent directors of the Company are all in compliance with the provisions of article 3,paragraph 1, subparagraphs 1 to 8 of "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies". The independent directors did not provide business, legal, financial, accounting and other services to the Company	0
Hsu, Shih-fang (Independent Director)	Principal academic qualification: Bachelor, Department of Electrical Engineering, National Cheng Kung University Principal work experience: President and Director of Atrie Technology Inc. Not aperson to whom anyconditions defined in Article 30 of the CompanyAct apply.		1
Huang, Yi-tsung (Independent Director)	Principal academic qualification: Bachelor, Department of Accounting, Tamkang University Principal work experience: Domestic listing Department, TWSE, Vice President of Foxlink Image Technology Co., Ltd., Vice President of Power Quotient International Co., Ltd. Not aperson to whom anyconditions defined in Article 30 of the CompanyAct apply.		2

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C. Diversity information of directors

Diversity of the Board of Directors

In order to reinforce corporate governance and promote sound development of board composition and structure, the nomination of candidates for directors of the Company shall be adopted the candidate nomination system in accordance with the provisions of the Company's Articles of Incorporation. Each candidate’s professional background, gender, age, work experience, independence, and others are evaluated and considered. The nominated director should possess the capabilities such as Business judgment ability, Accounting and financial analysis ability, Management ability, Crisis handling ability, Industry knowledge, Global market perspectives, Leadership, and Decision-making ability.

For implementing the diversity of the board of directors, the company has, based on its operational patterns and developmental needs, formulated diversification management objective as follows: (1)Adequate and diverse professional knowledge and skills, (2)At least 3 seats of independent directors, (3)The independent directors shall not hold office for more than 3 terms, (4)At least two of the directors have financial, accounting or legal background, (5)The target ratio of female director is 25% or more.

The current Board of Directors of the Company consists of seven directors. The specific management objectives of the board diversity policy and their achievement status are as follows:

follows:
Diversitymanagement objectives	Achievement status
Adequate and diverse professional knowledge and skills	Done
Atleast 3 seats of independent directors	Done
The independent directors shall not hold office for more than 3 terms.	Done
At least two of the directors have financial, accounting or legal background	Done
The target ratio of female director is 25% or more	Done

The implementation status of the board diversity policy is as follows:

Core goals for diversification Name of director	Nationality	Gender	Employee	Age	Terms of contract	Operational management & business judgment	Accounting & Finance	Crisis Handling	Industry Knowledge	Global market perspective	Leadership
Hu,Chun-yang	R.O.C	Male	V	61-70	8	V		V	V	V	V
Representative of UMC: Chen,Yun-yu	R.O.C	Female		51-60	9	V	V	V	V	V	V
Lin,Hung-yao	R.O.C	Male	V	61-70	6	V		V	V	V	V
Liu,Liang-chun	R.O.C	Female		41-50	4	V		V	V	V	V
Hsu,Shih-fang	R.O.C	Male		61-70	2	V		V	V	V	V
Huang,Yi-tsung	R.O.C	Male		61-70	2	V	V	V	V	V	V
Chen,Shou-shan	R.O.C	Male		51-60	1	V		V	V	V	V

Independence of the Board of Directors

The Board of Directors of the Company consists of 7 directors, of which 3 are independent directors

As of 2021.12.31, in addition, all of independent directors comply with the regulations of the Securities and Futures Bureau and none of the circumstances prescribed in paragraph 3 and paragraph 4, Article 26-3 of the Securities Exchange Act exist among the directors and independent directors. The Board of Directors of the Company is independent (Please refer to page 9 of this Annual Report-Disclosure of information on professional

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qualifications of directors and independence of independent directors). The Experience(Education), Gender and Work Experience, please refer to page 7 of this Annual Report-Information of directors.

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(2) Information on the Company's president, vice president, assistant presidents, and the heads of all the company's divisions and branch units

April 23, 2022 Unit: share(s); %

Title	Nationality	Name	Gender	Date on which current position was assumed	Shares held	Shares held	Number of shares currently held by their spouses, children of minor age	Number of shares currently held by their spouses, children of minor age	Shares held through nominees	Shares held through nominees	Principal work experience and academic qualifications	Position(s) held concurrently in other company	Manager with a spouse or relatives within the second degree of kinship	Manager with a spouse or relatives within the second degree of kinship	Manager with a spouse or relatives within the second degree of kinship
					shares	%	shares	%	shares	%			Title	Name	Relation
President	R.O.C.	Lin, Hung-yao	Male	Jan. 1, 2007	513,699	0.32	56	0.00	--	--	EMBA of National Chiao Tung University President of SMedia Technology Corporation, Director of ITE Tech. Inc.	Director of ITE Tech.(Shenzhen) Inc.,	--	--	--
CTO	R.O.C.	Hu, Chun-yang	Male	Jan. 1, 2007	1,985,361	1.23	--	--	--	--	Master of Electronics Engineering, National Chiao Tung University, Division Manager of Computer Products Division, UMC, President and Chairman of ITE Tech. Inc.	Director of RDC Semiconductor Co., Ltd. Independent Director of U- MEDIA Communications Inc.	--	--	--
President of Business Unit	R.O.C.	Liu, Tsan-huang	Male	Dec. 31, 2008	152,178	0.09	382,000	0.24	--	--	Master, Business Management, Tatung Institute of Technology Vice President of ITE Tech. Inc.	None	--	--	--
President of Business Unit	R.O.C.	Tu, Chun-an	Male	Jan. 1, 2015	114,015	0.07	--	--	--	--	Master, Institute of Electronics Engineering, National Chiao Tung University, Vice President of ITE Tech. Inc.	None	--	--	--
President of Business Unit	R.O.C.	Huang, Chen-wang	Male	Jan. 1, 2015	790,829	0.49	--	--	--	--	Master, Institute of Electrical Engineering, National Cheng Kung University, Vice President of ITE Tech. Inc.	None	--	--	--
Senior Vice President of Business Unit	R.O.C.	Tung, Ming-hsien	Male	Jan. 1, 2015	85,679	0.05	57,024	0.04	--	--	Bachelor, Department of Electrical Engineering, Chung Yuan Christian University, Vice President of ITE Tech. Inc.	None	--	--	--
Vice President of Business Unit	R.O.C.	Hsiao, Chien-chung	Male	Dec. 31, 2008	153,081	0.10	174,542	0.11	--	--	Master, Institute of Communications Engineering, National Chiao Tung University, Vice President of SMedia Technology Corporation	None	--	--	--
Vice President of Business Unit	R.O.C.	Chang, Pei-yuan	Male	Jan. 1, 2015	89,803	0.06	--	--	--	--	Bachelor, Department of Electronic and Computer Engineering, National Taiwan Institute of Technology, Director, Marketing and Main Business Unit of ITE Tech. Inc.	None	--	--	--
Vice President of Business Unit	R.O.C.	Tsai, Chih-shun	Male	Jan. 1, 2011	219,076	0.14	--	--	--	--	Bachelor, Department of Electrical Engineering of National Central University, Director, Strategic Marketing Department, Third Business Unit of ITE Tech. Inc.	None	--	--	--
Vice President of Business Unit	R.O.C.	Lee, Yu-min	Male	Jan. 1, 2017	201,564	0.13	--	--	--	--	PhD, Institute of Electrical Engineering of Stanford University, USA Director, R&D Department, Second Business Unit of ITE Tech. Inc.	None	--	--	--
Project Vice President	R.O.C.	Huang, Shih-chung	Male	Apr. 1, 2012	541,473	0.34	22,767	0.01	--	--	Master of Electronics Engineering, National Chiao TungUniversity	None	--	--	--

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Title	Nationality	Name	Gender	Date on which current position was assumed	Shares held	Shares held	Number of shares currently held by their spouses, children of minor age	Number of shares currently held by their spouses, children of minor age	Shares held through nominees	Shares held through nominees	Principal work experience and academic qualifications	Position(s) held concurrently in other company	Manager with a spouse or relatives within the second degree of kinship	Manager with a spouse or relatives within the second degree of kinship	Manager with a spouse or relatives within the second degree of kinship
					shares	%	shares	%	shares	%			Title	Name	Relation
											Vice President of ITE Tech. Inc.
Project Vice President	R.O.C.	Kao, Shu-jen	Male	Jan. 1, 2014	122,536	0.08	10,256	0.01	--	--	Master, Institute of Electrical Engineering, National Tsing Hua University, Director, R&D 2ndDepartment, Fourth Business Unit of ITE Tech. Inc.	None	--	--	--
Operating Vice President	R.O.C.	Huang, Ching- hsien	Male	Jan. 1, 2010	321,692	0.20	--	--	--	--	Bachelor, Department Industrial Engineering, Chung Yuan Christian University, Director, Operation Management Department of ITE Tech. Inc.	None	--	--	--
Financial Director	R.O.C.	Hsu, Ya-shu	Female	Jan. 1, 1998	139,766	0.09	--	--	--	--	Master, West Texas A&M University, AuditingDivision of UMC	None	--	--	--

(3) Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto: No such condition.

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3. Remuneration paid to general directors, independent directors, supervisors, president and vice presidents

(1) Disclose aggregate remuneration information, with the name(s) indicated for each remuneration range

A. Remuneration to directors and independent directors

Unit: share(s); Unit: NT$1,000

Title	Name	Directors’ Remuneration	Directors’ Remuneration	Directors’ Remuneration	Directors’ Remuneration	Directors’ Remuneration	Directors’ Remuneration	Directors’ Remuneration	Directors’ Remuneration	The sum of A, B, C and D in proportion to net profit after tax(%)	The sum of A, B, C and D in proportion to net profit after tax(%)	Remuneration to the capacityas employees	Remuneration to the capacityas employees	Remuneration to the capacityas employees	Remuneration to the capacityas employees	Remuneration to the capacityas employees	Remuneration to the capacityas employees	Remuneration to the capacityas employees	Remuneration to the capacityas employees	The sum of A, B, C, D, E, F and G in proportion to net profit after tax (%)	The sum of A, B, C, D, E, F and G in proportion to net profit after tax (%)	Remuner- ation received from an invested company other than the company’s subsidiary or parent company
		Base Compensation(A)		Pension(B)		Directors’ Compensation (C) (note 3)		Business execution expenses (D)				Salaries, bonus and special disbursement(E)		Pension (F)		Employees’ Compensation (G) (note 2)
		The Company	Consolidated Entities	The Company	Consolidated Entities	The Company	Consolidated Entities	The Company	Consolidated Entities	The Company	Consolidated Entities	The Company	Consolidated Entities	The Company	Consolidated Entities	The Company		Consolidated Entities		The Company	Consolidated Entities
																Cash	Stock	Cash	Stock
Chairman	Hu,Chun-yang	--	--	--	--	2,301	2,301	30	30	0.13	0.13	17,468	17,468	--	--	6,400	--	6,400	--	1.58	1.58	--
Director	Lin,Hung-yao	--	--	--	--	2,301	2,301	30	30	0.13	0.13
Director	UMC(note 1)	--	--	--	--	2,301	2,301	30	30	0.13	0.13	--	--	--	--	--	--	--	--	0.13	0.13	--
	Legal representative: Chen,Yun-yu
Director	Liu,Liang-chun	--	--	--	--	2,301	2,301	30	30	0.13	0.13	--	--	--	--	--	--	--	--	0.13	0.13	--
Independent Director	Huang, Yi-tsung	420	420	--	--	2,301	2,301	80	80	0.16	0.16	--	--	--	--	--	--	--	--	0.16	0.16	--
Independent Director	Hsu, Shih-fang	420	420	--	--	2,301	2,301	80	80	0.16	0.16	--	--	--	--	--	--	--	--	0.16	0.16	--
Independent Director	Chen, Shou-shan	420	420	--	--	2,301	2,301	80	80	0.16	0.16	--	--	--	--	--	--	--	--	0.16	0.16	--
1. Specify the policy, system, standard and structure for remuneration of independent directors, and the relationship between the remuneration amount and their responsibilities, risks, and time commitments: In addition to monthly fixed remuneration for independent directors, the Company also appropriates funds for director remuneration based on the net profit before tax each month. 2. Remuneration received bythe Company’s directors for services rendered to all companies included in the financial statements(e.g.,as consultants to non-employees)in the lastyear: 0

Note 1: Ms. Chen, Yun-yu is the representative of the corporate director United Microelectronics Corporation; Ms. Chen attends the Board of Directors on its behalf. The business execution expenses are paid to the director personally, while the director remuneration is paid to the corporate director itself.

Note 3: The amount of directors’ remuneration approved by the Board of Directors and Compensation and Remuneration Committee on Feb. 24, 2022 was NT$16,108,000. The directors’ remuneration was disclosed in NT$1,000 amounts, and the next digit was rounded down unconditionally.

Note4: Disclosure of the total amounts of all types of remuneration paid by all companies (including the Company) to the Company’s directors according to consolidated reports.

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Classification of remuneration

Classification of remuneration
Classification of remuneration paid to directors	Name of Directors
	Sum of the 4 Remunerations(A+B+C+D)		Sum of the 7 Remunerations(A+B+C+D+E+F+G)
	The Company	Consolidated Entities	The Company	Consolidated Entities
Less than NT$1,000,000	--	--	--	--
NT$1,000,000(inclusive) - NT$2,000,000(exclusive)	--	--	--	--
NT$2,000,000(inclusive) - NT$3,500,000(exclusive)	Director: UMC (note), Hu, Chun-yang, Lin, Hung-yao, Liu, Liang-chun Independent Director: Hsu, Shih-fang, Huang, Yi-tsung Chen, Shou-shan	Director: UMC (note), Hu, Chun-yang, Lin, Hung-yao, Liu, Liang-chun Independent Director: Hsu, Shih-fang, Huang, Yi-tsung Chen, Shou-shan	Director: UMC (note), Liu, Liang-chun Independent Director: Hsu, Shih-fang, Huang, Yi-tsung Chen, Shou-shan	Director: UMC (note), Liu, Liang-chun Independent Director: Hsu, Shih-fang, Huang, Yi-tsung Chen, Shou-shan
NT$3,500,000 (inclusive) - NT$5,000,000(exclusive)	--	--	--	--
NT$5,000,000(inclusive) - NT$10,000,000(exclusive)	--	--	--	--
NT$10,000,000(inclusive) - NT$15,000,000(exclusive)	--	--	Director: Hu, Chun-yang, Lin,Hung-yao	Director: Hu, Chun-yang, Lin,Hung-yao
NT$15,000,000(inclusive) - NT$30,000,000(exclusive)	--	--	--	--
NT$30,000,000(inclusive) - NT$50,000,000(exclusive)	--	--	--	--
NT$50,000,000(inclusive) - NT$100,000,000(exclusive)	--	--	--	--
Over NT$100,000,000	--	--	--	--
Total	7	7	7	7persons

Note: Ms. Chen, Yun-yu is the representative of the corporate director United Microelectronics Corporation; Ms. Chen attends the Board of Directors on its behalf. The business execution expenses are paid to the representative personally, while the director remuneration is paid to the corporate director itself.

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B. Remuneration to President and Vice Presidents

Title	Name	Salaries (A) (note 1)	Salaries (A) (note 1)	Pension (B) (note 2)	Pension (B) (note 2)	Bonus and special disbursement (C) (note 3)	Bonus and special disbursement (C) (note 3)	Compensation to the employees (D) (note 4)	Compensation to the employees (D) (note 4)	Compensation to the employees (D) (note 4)	Compensation to the employees (D) (note 4)	The sum of A, B, C and D in ratio of total amount to net profit after tax(%) (note5)	The sum of A, B, C and D in ratio of total amount to net profit after tax(%) (note5)	Remuneration received from an invested company other than the company’s subsidiary or parent company
		The Company	Consolidated Entities	The Company	Consolidated Entities	The Company	Consolidated Entities	The Company		Consolidated Entities		The Company	Consolidated Entities
								Cash	Stock	Cash	Stock
President	Lin,Hung-yao	34,132	34,132	1,784	1,784	39,585	39,585	32,800	--	32,800	--	6.00	6.00	--
CTO	Hu,Chun-yang
President of Business Unit	Liu, Tsan-huang
President of Business Unit	Tu, Chun-an
President of Business Unit	Huang, Chen-wang
Senior Vice President of Business Unit	Tung, Ming-hsien
Vice President of Business Unit	Hsiao, Chien-chung
Vice President of Business Unit	Tsai, Chih-shun
Vice President of Business Unit	Chang, Pei-yuan
Vice President of Business Unit	Lee, Yu-min
Project Vice President	Huang,Shih-chung
Project Vice President	Wang, Chan-ting (Note 6)
Project Vice President	Kao,Shu-jen
Operating Vice President	Huang, Ching-hsien

Note 1: Including salaries, duty allowances, and severance pay. Note 2: Pensions funded according to applicable law.

Note 3: Including various bonuses, incentives, travel expenses, special disbursements, allowances, and other remunerations. Note 4: Indicates the employee compensation for the year 2021 approved by the Company's Board of Directors and the Remuneration Committee on February 24, 2022. Note 5: The percentage was based on the 2021 parent company only net income after tax. Note 6: Wang, Chan-ting retired on December 31, 2021.

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Classification of remuneration

Classification of remuneration
Classification of remuneration paid to President and Vice Presidents	Name of Presidents	and VicePresidents
	The Company	Consolidated Entities
Less thanNT$1,000,000	--	--
NT$1,000,000(inclusive) - NT$2,000,000(exclusive)	--	--
NT$2,000,000(inclusive) - NT$3,500,000(exclusive)	Wang, Chan-ting (Note)	Wang, Chan-ting
NT$3,500,000(inclusive) - NT$5,000,000(exclusive)	Hsiao, Chien-chung, Lee, Yu-min, Kao, Shu-jen, Huang, Shih-chung,Tsai, Chih-shun	Hsiao, Chien-chung, Lee, Yu-min, Kao, Shu-jen, Huang, Shih-chung,Tsai, Chih-shun
NT$5,000,000(inclusive) - NT$10,000,000(exclusive)	Huang, Chen-wang, Tu, Chun-an, Tung, Ming-hsien, Chang,Pei-yuan,Huang, Ching-hsien	Huang, Chen-wang, Tu, Chun-an, Tung, Ming-hsien, Chang,Pei-yuan,Huang, Ching-hsien
NT$10,000,000(inclusive) - NT$15,000,000(exclusive)	Hu, Chun-yang, Lin, Hung-yao, Liu, Tsan-huang	Hu, Chun-yang, Lin, Hung-yao, Liu, Tsan-huang
NT$15,000,000(inclusive) - NT$30,000,000(exclusive)	--	--
NT$30,000,000(inclusive) - NT$50,000,000(exclusive)	--	--
NT$50,000,000(inclusive) - NT$100,000,000(exclusive)	--	--
OverNT$100,000,000	--	--
Total	14persons	14persons

Note: Wang, Chan-ting was retired on December 31, 2021.

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C. Names of managerial officers with employees’ compensation and the status of payment

Unit: NT$1,000

								Unit: NT$1,000
	Title	Name	Stock			Cash	Total	Proportion of total to net profit after tax(`％`)
			Number of shares	Market value	Amount	Amount
Managerial Officers	President	Lin, Hung-yao	--	--	--	32,800	32,800	1.81
	CTO	Hu, Chun-yang
	President of Business Unit	Liu, Tsan-huang
	President of Business Unit	Tu, Chun-an
	President of Business Unit	Huang, Chen-wang
	Senior Vice President of Business Unit	Tung, Ming-hsien
	Vice President of Business Unit	Lee, Yu-min
	Vice President of Business Unit	Hsiao, Chien-chung
	Vice President of Business Unit	Tsai, Chih-shun
	Vice President of Business Unit	Chang, Pei-yuan
	Project Vice President	Huang, Shih-chung
	Project Vice President	Kao, Shu-jen
	Operating Vice President	Huang, Ching-hsien
	Financial Director	Hsu,Ya-shu

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(2) Separate comparison and description of total remuneration, as a proportion of net profit after tax stated in the parent company only financial reports or individual financial reports, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, supervisors, presidents, and vice presidents, and analysis and description of remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance.
A. The analysis for proportion of net profit stated in the parent company only financial reports or individual financial reports, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, presidents, and vice presidents

nd vicepresidents
Year Item	2020		2021
	The Company	Consolidated Entities	The Company	Consolidated Entities
Net profit after tax for the parent company (Unit: NT$1,000)	935,498	935,498	1,805,886	1,805,886
Proportion of director remuneration (%)	3.54	3.54	2.30	2.30
Proportion of manager remuneration(%)	9.13	9.13	6.00	6.00

B. The policies, standards, and portfolios for payment of remuneration, procedures for determining remuneration, and correlations with business performance and risks
a. The remuneration for the Company's directors includes rewards, business execution expenses, director’s remuneration. Rewards and business execution expenses shall be paid based on the general levels. According to Article 26-1 of the Company’s Articles of Incorporation, if there is a profit during the year, the Company may appropriate no more than 1% thereof as director annual remuneration, which shall be submitted to Shareholders' Meeting for approval after being reviewed by Compensation Committee and approved by the Board. For directors concurrently serving as employees, the following (2) ~ (4) rules shall apply for the remuneration payment.
b. The appointment, dismissal and remuneration of the Company's president and vice presidents shall be handled in accordance with the Company's regulations. The remuneration standards are formulated by the Company's human resources unit based on the Company's HR performance appraisal regulations. Besides, the president’s or vice president’s individual performance and contribution to the Company's overall operations are also considered. Moreover, average levels applied in peer companies are also reviewed for the formulation of remuneration payment principles. The said standards/principles are implemented after being reviewed by Compensation Committee and approved by the Board of Directors.
c. The Company's remuneration policy is formulated based on the individual's capabilities, contribution to the Company and performance achievement, with a positive correlation with the Company's business performance. In addition, with proper control over future risks, the Company's remuneration policy is also well correlated with future risks. The overall compensation/remuneration portfolio primarily includes three parts: basic salary, bonus/employee compensation, benefits, etc. In regards to the remuneration payment standards, the basic salary is determined based on the Company's policy and the market competition status of the employee’s position; bonus and employee compensation are given on a basis connected with the employee's/department's goal achievement or the Company's business performance. Regarding benefits program design, the prerequisite is
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to fulfill regulatory requirements, and to meet employees' needs with measures that provide benefits for employees.

d. The remuneration for directors and managerial officers is determined based on their participation degree in the Company's operations and their personal contribution /performance. In addition, the directors' and managerial officers' goal achievement rate, profit ratio, operational effectiveness, contribution degree, etc. are comprehensively considered when calculating remuneration distribution proportion for fair compensation. The director and managerial officer remuneration system is always reviewed in a timely manner based on actual operating conditions and changes of relevant laws and regulations.

4. Implementation of Corporate Governance

(1) The state of operations of the Board of Directors

The Board called 6 meetings in 2021. The attendance of directors is specified as follows:

Title	Name	Actual number of attendance	Attend through proxy	Attendance rate (%)
Chairman	Hu, Chun-yang	6	0	100%
Director	Representative of
	UMC:	6	0	100%
	Chen,Yun-yu
Director	Lin,Hung-yao	6	0	100%
Director	Liu,Liang-chun	6	0	100%
Independent Director	Huang, Yi-tsung	6	0	100%
Independent Director	Hsu, Shih-fang	6	0	100%
Independent Director	Chen, Shou-shan	6	0	100%

Other mentionable items:

If any of the following is applied to the operation of the Board, specify the date and the session, the content of the motions, the opinions of all independent directors, and how the Company handled the opinions of the Independent Directors:
(1) Items listed in Article 14-3 of the Securities and Exchange Act: The Company has set up an Audit Committee; refer to the Audit Committee Operations.
(2) Except for the aforementioned matters, the resolutions reached by the Board of Directors with the objections or reservations of the independent directors documented or declared in writing: None
The avoidance of the conflict of interest by the Directors on related motions, specify the names of the Directors, the content of the motions, the principle of the avoidance of the conflict of interest, and the participation in casting the ballots:
(1) The Board of Directors held on November 9, 2021 discussed the matter of manager salary adjustment and bonuses. Chairman Hu, Chun-yang and director Lin, Hung-yao did not participate in the discussion and voting, due to their concurrently serving as the Company's appointed managers.
(2) The Board of Directors held on February 24, 2022 discussed the matter of employee compensation for managers. Chairman Hu, Chun-yang and director Lin, Hung-yao did not participate in the discussion and voting, due to their concurrently serving as the Company's appointed managers.
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TWSE/TPEx Listed Companies shall disclose the evaluation cycle and its period, evaluation scope, method, evaluation content of the board self (or peer) evaluation and other information, and fill in the implementation status of the board evaluation.

Evaluation Cycle	Evaluation Period	Evaluation Scope	Evaluation Method	Evaluation content
Annually	January 1, 2021 – December 31, 2021	Board of Directors and individual directors	Internal self- evaluation by the Board of Directors; self-evaluation by individual directors	Note 1 & Note 2

Note 1: Board of Directors performance evaluations: Including participation in the Company’s operations; improvement of the quality of board decisions, board composition, and structure; election and continuing education of directors; and internal controls.
Board members’ self-evaluations: Including alignment with the Company’s goals and missions; awareness of the duties of a director; participation in the Company’s operations; management of internal relationships and communications; directors’ professionalism and continuing education; and internal controls.
Note 2: The evaluation results of the board of directors and the self-assessment results of directors in 2021 are "excellent".
The objective for fortifying the function of the Board in the current period and the most recent period (e.g. the establishment of the Auditing Committee, and the upgrade of transparency in information) and the evaluation of the state of accomplishment:
The Company has established an Audit Committee as well as the Compensation and Remuneration Committee. For the operation of the Audit Committee as well as the Compensation and Remuneration Committee, please refer to the descriptions on pages 21 to 23 and 31 to 32.
The Company has formulated the Guidelines for Board Performance Evaluation, and conducts a self-evaluation of directors and evaluation of the Board of Directors on a regular basis every year. The Company's board performance evaluation shall be conducted by an external independent professional institution or a panel of external experts and scholars at least once every three years.
(2) The state of operations of Audit Committee:

The Company elected 3 independent directors at the General Shareholders’ Meeting held on June 15, 2020; these 3 independent directors comprise the Audit Committee that meets at least once a quarter. The main functions and powers of the Committee are as follows:

Formulate or revise the internal control system in accordance with the provisions in Article 14-1 of the Securities and Exchange Act.
Assess the effectiveness of the internal control system.
Formulate or revise the handling procedures for the acquisition or disposal of assets, engagement in derivative transactions, loaning of funds to others, provisions of endorsement or guarantee to others, and other significant financial or business actions in accordance with the provisions in Article 36-1 of the Securities and Exchange Act.
Matters involving the personal interest of directors.
Transactions on material assets or derivative commodities.
Material monetary loan, endorsement, or provision of guarantee.
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The offer, issuance or private placement of securities of equity nature.
The appointment, discharge or remuneration of certified public accountants.
The appointment and discharge of the head of finance, accounting, or internal audit.
The annual financial report signed or sealed by the Chairman, managers and the head of accounting.
Other matters stipulated by the competent authority as the functions and powers of this Committee.

The Auditing Committee convened for 5 times in 2021. The attendance is shown below:

Title	Title	Title	Name	Actual number of attendance	Actual number of attendance	Attend through proxy	Attend through proxy	Attendance rate	Attendance rate
Independent Director			Hsu, Shih-fang	5		0		100%
Independent Director			Huang, Yi-tsung	5		0		100%
Independent Director			Chen, Shou-shan	5		0		100%
Other matters to be recorded: 1.The content of the particulars inscribed in Article14-5 of the Securities and Exchange Act: Session of the Auditing Committee Proposal and Subsequent Handling Securities and Exchange Act Article 14-5 matters Resolutions not approved by the Audit Committee but approved by 2/3 of all directors The 4thBoard Meeting of the 4th Term February 19, 2021 1. The Company's 2020 parent company only financial statements and consolidated financial statements V 2. Internal control system statement from January 1, 2020 to December 31, 2020 V 3. The Issuance of Employee restricted shares V Audit Committee resolution: Approved (as proposed) by all Audit Committee members. The Board of Directors' handling of Audit Committee opinion: Approved (as proposed) by all directors. The 5thBoard Meeting of the 4th Term March 16, 2021 The investment in TGVest Asia Partners II (Taiwan), L.P. V Audit Committee resolution: Approved (as proposed) by all Audit Committee members The Board of Directors' handling of Audit Committee opinion: Approved (as proposed) by all directors. The 7thBoard Meeting of the 4th Term August 10, 2021 The Company's 2021Q2 consolidated financial statements V V Audit Committee resolution: Approved (as proposed) by all Audit Committee members The Board of Directors' handling of Audit Committee opinion: Approved (as proposed) by all directors. The 9thBoard Meeting of the 4th Term February 24, 2022 1. The Company's 2021 parent company only financial statements and consolidated financial statements V
	Session of the Auditing Committee	Proposal and Subsequent Handling			Securities and Exchange Act Article 14-5 matters		Resolutions not approved by the Audit Committee but approved by 2/3 of all directors
	The 4thBoard Meeting of the 4th Term February 19, 2021	1. The Company's 2020 parent company only financial statements and consolidated financial statements			V
		2. Internal control system statement from January 1, 2020 to December 31, 2020			V
		3. The Issuance of Employee restricted shares			V
		Audit Committee resolution: Approved (as proposed) by all Audit Committee members.
		The Board of Directors' handling of Audit Committee opinion: Approved (as proposed) by all directors.
	The 5thBoard Meeting of the 4th Term March 16, 2021	The investment in TGVest Asia Partners II (Taiwan), L.P.			V
		Audit Committee resolution: Approved (as proposed) by all Audit Committee members
		The Board of Directors' handling of Audit Committee opinion: Approved (as proposed) by all directors.
	The 7thBoard Meeting of the 4th Term August 10, 2021	The Company's 2021Q2 consolidated financial statements			V				V
		Audit Committee resolution: Approved (as proposed) by all Audit Committee members
		The Board of Directors' handling of Audit Committee opinion: Approved (as proposed) by all directors.
	The 9thBoard Meeting of the 4th Term February 24, 2022	1. The Company's 2021 parent company only financial statements and consolidated financial statements			V

22 -
Internal control system statement from January 1, 2021 to December 31, 2021
The appointment of certified public accountants Audit Committee resolution: Approved (as proposed) by all Audit Committee members. The Board of Directors' handling of Audit Committee opinion: Approved (as proposed) by all directors.

In addition to the aforementioned motions, other motions without approval by the Auditing Committee but passed by the Board with 2/3 of the Directors: None

The avoidance of the conflict of interest by the Independent Directors on related motions: There was no proposal involving interests of independent directors.
Communications between independent directors, the Company’s Chief Internal Auditor and CPAs:
(1) Communications between independent directors, the Company’s Internal Auditor and CPAs
1. Independent directors and internal auditor: The Company reports to independent directors on the results of audit execution at each Audit Committee meeting, and communicates directly with independent directors; after the internal audit department submits the monthly report, independent directors make a call or send an email for discussion if they have any questions.
2. Independent directors and certified public accountants: CPAs attend the board meeting at least once a year, and communicate and interact with independent directors on review of financial reports, review status, or issues related to finance, taxation or internal control. During the non-meeting period, discussions are conducted via phone or email.
(2) The major communication between independent directors and the internal auditor in 2021 is summarized as follows:

		Date	Mainpoints of communication
			1. Audit Business Execution Report for the fourth quarter of
		February 19, 2021	2020
			2. 2020 Statement of Internal Control
		May 11, 2021	Audit Business Execution Report for the first quarter of 2021
		August 10, 2021	Audit Business Execution Report for the secondquarter of 2021
		November 9, 2021	1. Audit Business Execution Report for the third quarter of 2021 2. Audit Plan of 2022
(3)	Summary of communication between independent directors and CPAs
	Excerpts from the main points of communication for the year 2021 are as follows:
		Date	Mainpoints of communication
			The content of the audit plan for the 2021 financial report primarily
			covers: the scope of audit in the group, significant risks, execution
		August 10, 2021	strategy for the internal control testing, opinions on the material
			qualitative aspects of the accounting practices, preliminary opinions
			on key audit matters, and estimated audit schedules.

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(3) The state of the company's implementation of corporate governance, any variance from the Corporate Governance Best practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance

Items for evaluation			Implementation Status	Any variance from the Corporate Governance Best practice Principles for TWSE/TPEx Listed Companies, and the reason for any suchvariance
	Yes	No	Summary
1. Has the Company established and disclosed its corporate governance practices based on the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies?	V		The Company has formulated the Corporate Governance Best Practice Principles and has disclosed the relevant content on the Company's website.	There were no material differences.
2. Equity structure and shareholders’ equity (1) Has the Company instituted an internal procedure for handling suggestions, questions, disputes of the shareholders and legal actions, and comply with the procedure properly?	V		The Company has a spokesperson and deputy spokesperson in place, and provides channels through which shareholders may put forward their suggestions, complaints, etc. to handle related matters.	There were no material differences.
(2) Has the Company kept track on the major shareholders roster of the Company and the parties controlling these shareholders?	V		The shareholder service agent and the Company's shareholder service personnel are responsible for such matters.	There were no material differences.
(3) Has the Company established and implemented the risk control mechanism and firewall between the corporate and the affiliates?	V		The powers and responsibilities of management between and among its affiliates are clearly divided, and mutual dealings or transactions are handled in accordance with laws and regulations.	There were no material differences.
(4) Has the company adopted internal rules prohibiting company insiders from trading securities using information not disclosed to themarket?	V		Such rules are stipulated in Article 13 of the Procedures For Ethical Management and Guidelines for Conduct formulated by the Company.	There were no material differences.
3. Composition and Responsibilities of the Board of Directors (1) Has the Board established a diversity policy, specific management goals for the composition of its members and implemented it accordingly?	V		Article 20 of the Company’s Best Practice Principles stipulates that the composition of the Board of Directors shall be diversified. The Company currently has 7 seats of directors, including 3 independent directors and 2 female directors. Each director possesses his/her own expertise in various fields, including accounting, finance, industry, marketing research and development, operations management, etc. (see the information about director core competencies on page 10 of this annual report), thus implementing the policy of diversification of directors. The formulation of the diversification policy onthe compositionoftheBoard of	There were no material differences.

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Items for evaluation	Implementation Status	Implementation Status	Implementation Status	Any variance from the Corporate Governance Best practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary Directors is disclosed on the Company's website.
(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?		V	In addition to the Remuneration Committee and the Audit Committee, the Company has not established any other functional committees.	Other functional committees are established as needed for future operations.
(3) Has the Company established a methodology for evaluating the performance of its Board of Directors, performed evaluations on an annual basis, submitted the results of the performance evaluation to the Board, and used such as a reference for individual director remuneration and renomination ?	V		The Company has formulated the Guidelines for evaluating the performance of Board of Directors and performed evaluations for the year 2021. The results of the board performance evaluation were reported to the Board of Directors on February 24, 2022.	There were no material differences.
(4) Has the Company evaluated the independence of the commissioned certified public accountants regularly?	V		The Company’s internal auditor department regularly evaluates the independence of the certified public accountants in terms of financial benefits; financing and guarantees; business relationships; family and personal relationships; employment relationships; gifts; gratuities and special offers; as well as rotation of duties and non-audit business of certified public accountants at the beginning of each year. This year, the audit results was submitted to the Audit Committee and the Board of Directors on February 24, 2022 for review and approval. Based on the evaluation of the Company’s internal audit, both the certified public accountants Wan-Ju Chiu and Hsin-Min Hsu of Ernst & Young Accounting Firm meet the Company's independence standards and are sufficient to serve as certified public accountants of the Company. The CPA independence declarations issued by the certified public accountants have also been obtained.	There were no material differences.
4. Does the TWSE/GTSM Listed Company have an appropriate and appropriate number of corporate governance personnel, and has the Company designated a Corporate Governance Senior Officer to deal withcorporate governancerelated	V		The Company’s Finance Department is in charge of corporate governance matters and responsible for corporate governance-related businesses, including providing information required by directors to execute business, assisting directorsin regulatory compliance,	There were no material differences.

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Items for evaluation	Implementation Status	Implementation Status	Implementation Status	Any variance from the Corporate Governance Best practice Principles for TWSE/TPEx Listed Companies, and the reason for any suchvariance
	Yes	No	Summary
affairs (including, but not limited to, providing directors and supervisors with information required for the execution of their duties; assisting directors and supervisors in complying with the laws and regulations; conducting board meeting and shareholders’ meeting related matters; handling company registration and amendments to registration and preparing the minutes for board meetings and shareholders’ meeting in accordance with the law, etc.)?			handling company registration and amendments to registration, and processing board meetings and shareholders’ meetings related matters in accordance with the law.
5. Has the Company established a communications channel and established a designated zone on its website for stakeholders (including, but not limited to, shareholders, employees, customers, and suppliers), and has the Company properly responded to all CSR issues such stakeholders are concerned with?	V		The Company respects the rights and interests of the stakeholders, identifies and understands the expectations and demands of the stakeholders, and responds appropriately to issues of their concerns. The relevant business personnel are responsible for communicating with the stakeholders. (1) Shareholders: Issues of concern: operations performance / environmental compliance / labor- employment relations 1. The General Shareholders’ Meetings is held in the first half of each year, and proposals are voted upon on a case-by- case basis. Shareholders may exercise their voting rights electronically. 2. Revenue for each month is announced in the following month, and the annual report of the Shareholders’ Meeting and related information is released every year as reference for shareholders. (2) Employees: Issues of concern: labor-employment relations/ occupational health and safety. Seminars are held on a quarterly basis, and an employee suggestion box is in place as well. (3) Suppliers: Issues of concern: operations performance / environmental regulatory compliance / labor-employment relations Meetings, mutual visits, and supplier evaluation are arranged as well to confirm that suppliers comply with	There were no material differences.

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Items for evaluation			Implementation Status	Any variance from the Corporate Governance Best practice Principles for TWSE/TPEx Listed Companies, and the reason for any suchvariance
	Yes	No	Summary
			national regulations and labor laws and regulations in terms of human rights. (4) Customers: Issues of concern: operations performance / anti-corruption / supplier environmental assessment Customer satisfaction surveys, visits, and customer interviews are arranged as well to obtain information on customer feedback.
6. Has the Company appointed a professional shareholder services agent to dealwithshareholderaffairs?	V		The shareholder services agent is the department of shareholder services agency of HorizonSecurities Co.,Ltd.	There were no material differences.
7. Disclosures (1) Has the Company established a website for the disclosure of Company’s financial and business, and corporate governance?	V		The Company's website https://www.ite.com.tw/zh-tw/investor	There were no material differences.
(2) Has the Company adopted other means of disclosures (e.g., the installation of a website in English language, appointment of designated persons for the collection and disclosure of information, the proper implementation of the spokesman system, and the minutes of the investor conference on record posted onthe website)?	V		The Company appoints a dedicated person to be responsible for the collection and disclosure of company information, implementation of the spokesperson system, placement of processes of institutional investor conferences on the Company’s website, etc.	There were no material differences.
(3) Does the Company announce and report the annual financial report within two months after the end of the fiscal year? Does the Company announce and report the first, second, and third quarter financial reports and the monthly operational status well in advance oftherequired deadlines?	V		The Company announces and files the annual financial report within two months after the end of the fiscal year, and The Company announces and files the first, second, and third quarter financial reports, as well as the monthly operational status, prior to the prescribed deadline.	There were no material differences.
8. Is there any other important information to facilitate a better understanding of the Company’s corporate governance practices (including, but not limited to, employee rights and interests, Care for employees, investor relations, supplier relations, stakeholder rights, status of directors’ and supervisors’ continuing education, implementation of risk managementpolicies and risk	V		Note.	There were no material differences.

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Items for evaluation	Implementation Status	Implementation Status	Implementation Status
	Yes	No	Summary
assessment criteria, implementation of customer related policies, and purchase of liability insurance for directors and supervisors by the Company)?
9. State of corrective action taken for responding to the results of the corporate governance assessment announced by Taiwan Stock Exchange Corporation in the Corporate Governance Center the most recent fiscal year, and the priority for improvement on issues pending further corrective action and related measures: The Company continues to make improvements based on the results of the corporate governance assessment for the most recent year, and strengthens detailed disclosure of relevant information on the Company's website as well as in the annual report. In the future, the official website will be optimized to disclose information related to corporategovernance items.

The Company continues to make improvements based on the results of the corporate governance assessment for the most recent year, and strengthens detailed disclosure of relevant information on the Company's website as well as in the annual report. In the future, the official website will be optimized to disclose information related to corporate governance items.

Note: Other important information that helps in understanding the operating status of corporate governance:
Employee rights and interests: The Company treats employees in good faith, and protects employee rights and interests in accordance with the Labor Standards Act.
Care for employees: The Company establishes a sound relationship of mutual trust and mutual dependence with employees through a welfare system and a good education and training system.
Investor relations: The Company's spokesperson is responsible for handling shareholder suggestions.
Supplier relationship: The Company pays attention to whether suppliers themselves comply with international environmental protection regulations as well as labor safety and health regulations, and is committed to the establishment of a green supply chain.
Stakeholder rights: The Company discloses stakeholders and issues of their concern on the special zone of its website so as to respond to such issues.
The status of continuing education for directors: All Company directors have professional backgrounds and complete continuing education courses in accordance with relevant laws and regulations.

gulations.
Title	Name	Date of Advanced study	Organized by	Course Name	Number of Hours
Chairman	Hu, Chun- yang	Mar. 11, 2021	Securities & Futures Institute	Foundry and advanced	3
				packaging technology
				and supply chain
				business opportunities
		May 13, 2021	Securities & Futures Institute	Block chain technology	3
				development and
				business
Director	Lin, Hung- yao	Mar. 11, 2021	Securities & Futures Institute	Foundry and advanced	3
				packaging technology
				and supply chain
				business opportunities
		May 17, 2021	Taiwan Corporate Governance Association	Corporate governance and securities regulations	3

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Title	Name	Date of Advanced study	Organized by	Course Name	Number of Hours
Representative of Juristic Person Director	Chen, Yun- yu	Jan. 05, 2021	Taiwan Business Council for Sustainable Development	Create a sustainable	3
				financial ecosystem


		Sep. 15, 2021	Digital Governance Association	Directors and	3
				Supervisors
				Responsibility and Risk
				Management Seminar
Director	Liu,Liang- chun	Sep. 01, 2021	Financial Supervisory Commission	The 13th Corporate	6
				Governance Forum

Independent Director	Chen, Shou-shan	Sep. 24, 2021	Accounting Research and Development Foundation	The role and operational	3
				practice of independent
				directors in corporate
				governance
		Oct. 15, 2021	Securities & Futures Institute	Early Warning and	3
				Type Analysis of
				Enterprise Financial
				Crisis
Independent Director	Hsu, Shih- fang	Apr. 15, 2021	Securities & Futures Institute	2021 economic outlook and industry trends	3
		Sep. 01, 2021	Financial Supervisory Commission	The 13th Taipei Corporate Governance Forum-Afternoon Session	3
Independent Director	Huang, Yi- tsung	Nov. 02, 2021	Taiwan Corporate Governance Association	Fraud in enterprise financial statement and case study	3
		Nov. 10, 2021	Taiwan Corporate Governance Association	Tax issues for Taiwanese businessmen under the impact of the global common reporting standard	3
		Nov. 10, 2021	Taiwan Corporate Governance Association	Tax issues for Enterprises and major shareholders	3
		Nov. 11, 2021	Securities & Futures Institute	The value of information security in the post- epidemic era and the Sino-US trade war	3
		Dec. 21, 2021	Taiwan Corporate Governance Association	Insider trading prevention and countermeasures	3
		Dec. 29, 2021	Securities & Futures Institute	Principles and Applications of Artificial Intelligence	3

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Implementation status of risk management policies and risk measurement standards: The Company has formulated and effectively implemented an internal control system so as to reduce various risks. Please refer to pages 253 to 254 of this annual report.
Implementation of customer related policies: Remain stable and good relationships with customers.
Status of liability insurance for directors: The Company reported to the Board of Directors on November 09, 2021 on renewal of the liability insurance for the directors., and filed such information on the Market Observation Post System in accordance with regulations.
(4) If the Company has established a Compensation and Remuneration Committee, its composition, responsibilities and operating status shall be disclosed:

The Company appointed 3 independent directors as members of the 4th Compensation and Remuneration Committee on June 23, 2020. The Committee meets at least twice a year and shall be responsible for:

Formulating and regularly reviewing performance evaluation of directors, Audit Committee members, and managers, as well as the policies, systems, standards and structures of compensation and remuneration.
Regularly evaluating and determining the compensation and remuneration of directors, Audit Committee members and managers.

				April 23,2022
Conditions Byidentity Name		Professional Qualification and Experience	Status of independence	Number of other public companies in which the individual is concurrently serving as Compensation and Remuneration Committee
Committee (Independent director)	Hsu, Shih-fang	Please refer to Disclosure of Professional, Qualifications of Directors and Independence of Independent Directors on page 9		1
Committee (Independent director)	Huang, Yi-tsung			2
Committee (Independent director)	Chen, Shou-shan			0

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B. Information on Operations of Compensation and Remuneration Committee
The Compensation and Remuneration Committee of the Company is consisted of 3 members.
Term of office of current committee members: June 23, 2020 to June 14, 2023, a total of 2 meetings were held in 2021. The attendance of committee member is as follows:

Title	Name	Actual number of attendance	Attendance rate (%)
Convener	Hsu, Shih- fang	2	100%
Committee	Huang, Yi- tsung	2	100%
Committee	Chen, Shou- shan	2	100%

Other mentionable items:

If the Board of Directors does not accept or amends the suggestions made by the Compensation Committee, the board meeting date, term/session, content of proposal(s), the board’s resolution result, and the Company's handling of Compensation Committee's opinions should be stated (for example, if the remuneration approved by the Board is better than that suggested by Compensation Committee, the difference and its reason(s) should be stated): None.
If any of the members has a dissenting or qualified opinion on Compensation Committee’s resolutions, and such opinion has been recorded or declared in writing, the Compensation Committee meeting date, term/session, content of proposal(s), opinions of all members, and the handling of the members' opinions should be stated: None.
Important resolution

Session of Compensation and Remuneration Committee	Proposal and Subsequent Handling	Resolution	Handling status to member's opinion by the Company
November 10, 2020 2ndsession of 4th term of the Board	The fixed salary adjustment rate for managers as well as the ratio of variable compensation paid to managers to that of the whole company for the year 2021.	Passed by all committees	Except for the chairman Hu, Chun-yang and the director Lin, Hung-yao who did not participate in the discussion and voting due to their concurrently serving as the Company's appointed managers, the remaining 5 directors approved the proposal.
February 19, 2021 3rdsession of 4th term of the Board	The amount of employee compensation paid to managers in 2021.	Passed by all committees	Except for chairman Hu, Chun-yang and director Lin, Hung-yao, who did not participate in the discussion and voting due to their concurrently

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Session of Compensation and Remuneration Committee	Proposal and Subsequent Handling	Resolution	Handling status to member's opinion by the Company
			serving as the Company's appointed managers, the remaining 5 directors approved the proposal.
November 9, 2021 4thsession of 4th term of the Board	The fixed salary adjustment rate for managers as well as the ratio of variable compensation paid to managers to that of the whole company for the year 2022.	Passed by all committees	Except for the chairman Hu, Chun-yang and the director Lin, Hung-yao who did not participate in the discussion and voting due to their concurrently serving as the Company's appointed managers, the remaining 5 directors approved the proposal.
February 24, 2022 5thsession of 4th term of the Board	1. The amount of employee compensation paid to managers in 2022. 2. Quota granted to managers when restricted shares are issued.	Passed by all committees	Except for the chairman Hu, Chun-yang and the director Lin, Hung-yao who did not participate in the discussion and voting due to their concurrently serving as the Company's appointed managers, the remaining 5 directors approved theproposal.

Where the Board may not take or revise the advice of the Compensation and Remuneration Committee, specify the date and the session of the Board, the content of the motion, the resolution of the Board, and the response to the opinions of the Company towards the advice of the Compensation and Remuneration Committee (if the resolution of the Board suggested better position of remuneration than the advice of the Compensation and Remuneration Committee, specify the reasons and the variations): None.
Where members of the Compensation and Remuneration Committee may have adverse opinions or qualified opinions in their resolutions on record or in written declaration, specify the date and session of the committee, the content of the motion, the opinions of all other members, and the responses to the adverse opinions: None.
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(5) The state of the company's performance of sustainable development, any variance from the Corporate Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance:

Items for evaluation			Implementation Status	Any variance from theCorporate Sustainable DevelopmentBest Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
1. Does the Company conduct sustainable development of the corporate governance issues related to the Company’s operations, and has the Company established risk management policies or strategies?	V		With the vision and mission of the Company's ESG policy, the CSR Committee was established in 2014 and renamed the "Sustainable Development Committee" in 2022, which is the highest level of sustainable development decision- making center within the company, chaired by the president, and promoted the responsibility for sustainable development by forming a committee of cross- departmental personnel, and regularly reports to the board of directors on the implementation goals and results every year. The results of the 2021 implementation and the 2022 work objectives were reported to the Board on 24 February 2022.	There were no material differences.
2. Has the Company established a designated (part-time) body for the advocacy of corporate social responsibility headed by a senior executive at the authorization of the Board, and report to the Board on the performance of corporate social responsibility?	V		The Company has clearly defined risk management policies and risk management specifications to conduct risk assessments on environmental, social and corporate governance issues related to the Company's operations.	There were no material differences.
3. Environmental Issues (1) Has the Company established an appropriate environmental management system in accordance with its industrial characteristics?	V		The Company takes pollution prevention and continuous improvement as its basic philosophy, and follows the following principles to carry out activities of the environmental management system: ‧Meet the requirements of environmental protection laws and regulations, and strive for the concept of pollution prevention ‧Comply with the environmental management system and	There were no material differences.

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Items for evaluation			Implementation Status	Any variance from theCorporate Sustainable DevelopmentBest Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
			continue to promote environmental improvement ‧Research and develop green products to reduce environmental and ecological impact ‧Promote environmental protection education and training, and appropriately carry out environmental management related activities. Please refer to the Company’s website at: https://www.ite.com.tw/zh- tw/csr/environmental
(2) Has the Company made effort to enhance the efficient use of all resources and used regenerated materials to mitigate the impact on the environment?	V		The company actively promotes various energy reduction measures to reduce the energy consumption of enterprises and products, so as to optimize the efficiency of energy use. Detailed information on energy reduction measures and results on the company's website https://www.ite.com.tw/zh- tw/csr/effectiveness	There were no material differences.
(3) Has the Company assessed the potential current and future risks and opportunities from climate change for the Company, and has the Company taken measures to address climate-related issues?	V		In response to future trends, the Company strives to research and develop energy-saving products so as to help customers reduce carbon emissions. In addition, in order to reduce operational risks caused by climate change, the clustering effect of the supply chain can reduce carbon emissions during the product delivery process and reduce the Company's operating costs.	There were no material differences.
(4) Has the Company compiled statistics on greenhouse gas emissions, water consumption, and total volume of waste materials for the past two years, and has the Company formulated policies for energy conservation and carbon reduction, greenhouse gas reduction, water use reduction, and other waste management?	V		The Company is committed to environmental protection and continues to promote environmental improvement. For more details on the policy and results relating to the energy plan for emission reduction, please refer to the Company’s website at: https://www.ite.com.tw/zh- tw/csr/effectiveness	There were no material differences.

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Items for evaluation			Implementation Status	Any variance from theCorporate Sustainable DevelopmentBest Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
4. Social issues (1) Has the Company established related management policy and procedure in accordance with applicable legal rules and international conventions on human rights?	V		The Company abides by labor laws and regulations, and respects internationally recognized principles of fundamental human rights for workers. The Work Rules and the Management Guidelines for employees are both formulated in accordance with the provisions of the Labor Standards Act and related laws and regulations. The rights and obligations of workers and management are in line with the provisions of worker related laws and regulations. The summary of the Company's human rights management policy and specific programs please refer to “Labor-management relations” of this annual report.	There were no material differences.
(2) Has the Company established and implemented reasonable employee benefit measures (including compensation, leave, and other benefits), and are operational performance and results appropriately reflected in employee compensation?	V		The Company provides a sound system of compensation and welfare, and upholds the concept of profit sharing, so as to attract, retain, cultivate, and motivate outstanding talents. For a more detailed introduction, please refer to the Company's official website at: https://www.ite.com.tw/zh- tw/careers/pay	There were no material differences.

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Items for evaluation			Implementation Status	Any variance from theCorporate Sustainable DevelopmentBest Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
(3) Has the Company provided a safe and health work environment for the employees, and provided education on labor safety and health regularly?	V		The Company is an IC design company without production lines. In order to ensure the safety and health of the working environment for employees, regular environmental monitoring (including lead work, CO2 concentration level, and illuminance level) is conducted, maintenance and testing of fire protection systems are performed, and public safety inspections of buildings are carried out; access control is available in all office areas, and colleagues must carry access control cards to scan for entry and exit; special applications are required for confidential and controlled areas, where entry can only be allowed after approval by the supervisor. Fire and disaster prevention drills are held every 6 months; new recruits are scheduled to attend occupational safety and health training courses; and employee health examinations are performed every year.	There were no material differences.
(4) Has the Company established the training program for the effective planning of career development for the employees?	V		The Company provides comprehensive education and training programs to assist employees in improving their work performance, enhancing professional capabilities and realizing their personal potential, thereby advancing a win-win strategy for corporate development and self-directed lifelong learning. The summary of the Company's training implementation and specific plans please refer to “Implementation status of advanced studies and training” of this annual report.	There were no material differences.

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Items for evaluation	Implementation Status	Implementation Status	Implementation Status	Any variance from theCorporate Sustainable DevelopmentBest Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
(5) Does the Company comply with laws, regulations, and international standards when managing customer health and safety, customer privacy, and marketing and labeling of products and services, etc. ? Has the Company established a policy and complaint procedure to protect consumer or client rights?	V		The products sold by the Company are component parts of consumer products; although no consumer rights and interests policy is formulated, the quality of the products is ensured through the control of the production process. With regard to the customer complaint channel, the Company regularly conducts customer satisfaction surveys to understand the products and services provided by the Company and to improve the quality of the Company's after-sales services. The Company is currently in compliance with relevant regulations and international standards in terms of marketing and labeling of the products and services.	There were no material differences.
(6) Has the Company established a supplier management policy that requires suppliers to comply with regulations on environmental protection, occupational safety and health, and labor rights issues? Has the Company established an implementation method for such?	V		The Company implements environmental protection policies, and requires that all raw material suppliers abide by environmental protection requirements under the contracts so as to jointly improve environmental protection. The Company regularly audits its suppliers. If any violation of environmental laws and regulations is found, the Company will issue a warning and demand improvement within a deadline. In case of severe violations, the Company will no longer cooperate with the supplier.	There were no material differences.
5. Does the Company refer to internationally standards/guidelines in the preparation of its reports, such as CSR reports, that disclose non-financial information? Has the Company obtained a third-party verification or assurance opiniononpreviously-disclosedreports?		V		To be prepared in response to the Company's business needs in the future.
6. If the Company has formulated its own CSR Best Practice Principles in accordance with the CSR Best- Practice Principles for TWSE/TPEx Listed Companies, specify the differences between its implementation and thePrinciplesformulated: No occurrence as such.

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Items for evaluation	Implementation Status	Implementation Status	Implementation Status	Any variance from theCorporate Sustainable DevelopmentBest Practice Principles for TWSE/TPEx Listed Companies, and the reason for any suchvariance
	Yes	No	Summary
7. Other important information for understanding the Company’s ESG operations: Please refer to the company's official website for details: https://www.ite.com.tw/zh-tw/csr

(6) The state of the company’s performance in the area of ethical corporate management, any variance from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance:

Items for evaluation			Implementation Status	Any variance from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
1. Establishment of ethical corporate management policies and programs (1) Has the Company established an ethical corporate management policy that has been approved by the Board of Directors, and clearly stated the ethical corporate management policy and practices, as well as the commitment of the Board of Directors and the top management to actively implementing the management in the Articles of Incorporation and external documents?	V		The Company has established Operating Procedures and Code of Conduct for Ethical Corporate Management	There were no material differences.
(2) Has the Company established a mechanism to assess unethical conduct risks? Does that Company regularly analyze and evaluate the business activities within its scope of business that have a higher risk of unethical conduct? Has the Company accordingly formulated a planto prevent unethical	V		Such rules are stipulated in the Company’s Operating Procedures and Code of Conduct for Ethical Corporate Management. The Company’s management advocates from time to time at meetings and education and training sessions how to prevent unethical conduct, in the hope that all employees will abide by relevant laws and regulations and implement ethical corporate management.	There were no material differences.

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Items for evaluation			Implementation Status	Any variance from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
conduct, covering at a minimum the preventive measures for the acts mentioned in Article 7-2 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?
(3) Whether the Company has stipulated the operating procedures, conduct guidelines, disciplinary actions against violations as well as grievance system in the plan to prevent unethical conducts, implemented the execution thereof, and regularly reviewed and revised the aforementioned plan?	V		The Company’s Operating Procedures and Code of Conduct for Ethical Corporate Management stipulate that the Company’s colleagues shall not directly or indirectly provide, promise, request, or receive any improper benefits during the process of executing the business.	There were no material differences.
2. The Materialization of Ethical Management (1) Has the Company evaluated the record on ethical practices of its counterparties, and has specified the clause of business ethic in the agreements binding the Company and its counterparties?	V		When the Company evaluates its trading partners, it examines the following to understand their ethical corporate management conditions: 1. Their country, place of business operation, organization, and place of payment. 2. Whether an ethical corporate management policy is formulated. 3. Whether the place of business operation and business operations are at high risk of corruption. 4. Their state of business operations and goodwill. When the Company signs a contract with others (primarily procurement and quality contracts), it needs to fully understand the counterparty's ethical corporate management status, and incorporate ethical corporate management related matters in the contract: 1. Suppliers shall never request employees of the Company or their relatives or friends to offer any bribes and engage in any bribery or provide	There were no material differences.

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Items for evaluation			Implementation Status	Any variance from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
			other improper benefits, nor shall they directly or indirectly pursue private ends for employees of the Company or their relatives or friends. 2. The Company’s employees shall never request that suppliers offer or accept any bribes or other improper benefits, nor shall they directly or indirectly pursue private ends for themselves or their relatives or friends. Suppliers shall report to the relevant Company personnel immediately upon learning of such violation, and provide relevant evidence thereof.
(2) Has the Company established a dedicated unit under the Board of Directors to promote ethical corporate management, and to report to the Board of Directors on a regular basis (at least once a year) regarding ethical corporate management policies and plans, in order to prevent unethical conduct and to monitor their implementation?	V		The Company's human resources department is a dedicated unit, responsible for the revision and implementation of the Company's Operating Procedures and Code of Conduct for Ethical Corporate Management, and reports the implementation status to the Board of Directors every year. The implementation status for 2021 was reported to the Board of Directors on February 24, 2022.	There were no material differences.
(3) Has the Company mapped out the policy for the avoidance of the conflict of interest and has provided suitable channels for such purpose, and properly pursued the policy?	V		Such rules are stipulated in Article 10 of the Company’s Operating Procedures and Code of Conduct for Ethical Corporate Management.	There were no material differences.
(4) Has the Company established an effective accounting system and internal control system for the implementation of ethical corporate management? Has the internal auditing unit prepared an audit plan based on the assessment results for unethical conduct risks, and checked compliance withthe	V		The Company has established an effective accounting system and internal control system, and revised such systems in a timely manner according to regulatory changes and practical requirements; internal auditors conduct regular checks to ensure the effectiveness of system implementation and control as well as to achieve effective corporate governance and risk control.	There were no material differences.

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Items for evaluation	Implementation Status	Implementation Status	Implementation Status	Any variance from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such variance
	Yes	No	Summary
unethical conduct prevention plan accordingly, or appointed a CPA to conduct the audit?
(5) Has the Company organized internal and external training on ethical management?	V		The Company’s management advocates from time to time at meetings and education and training sessions on how to prevent unethical conduct, in the hope that all employees will abide by relevant laws and regulations, thus implementing ethical corporatemanagement.	There were no material differences.
3. The reporting system of the Company in action (1) Has the Company established a reporting and reward system and the channels for facilitating the report on unethical practices, and has appointed designated personnel to handle the subject of reporting?	V		Such rules are stipulated in Article 19 of the Company’s Operating Procedures and Code of Conduct for Ethical Corporate Management.	There were no material differences.
(2) Has the Company created a standard operating procedure (SOP) for the investigation of reported matters, follow-up measures to be taken after the completion of the investigation, and relevant confidentiality mechanisms?	V		Such rules are stipulated in Article 19 of the Company’s Operating Procedures and Code of Conduct for Ethical Corporate Management.	There were no material differences.
(3) Has the Company taken protection measures to protect the informant from improper treatment after reporting on unethical practices?	V		The Company is responsible for maintaining informant confidentiality and protecting them from being improperly treated as a result of reporting.	There were no material differences.
4. Enhancing Information Disclosure			The Company has formulated the Operating Procedures and Code of Conduct for Ethical Corporate Management. For more details, please	There were no material differences.
Has the Company disclosed the content of Ethical Corporate Management Best Practice Principles and the result at its	V

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Items for evaluation			Implementation Status
	Yes	No	Summary
official website and MOPS?			refer to the Company’s website. https://www.ite.com.tw/zh- tw/investor/regulation
5. If the Company has established performance of good-faith management best practice principles based on “Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the principles and their implementation: There were no material differences.
6. Other vital information that helps to understand the practice of ethical management of the Company (e.g., the review and amendment to the Ethical Corporate Management Best Practice Principles of the Company): None

(7) If the Company has formulated a code of corporate governance and related regulations, the inquiry method shall be disclosed:

The Company has formulated relevant rules. For more details, please refer to the Company’s website.

https://www.ite.com.tw/zh tw/investor/regulation
(8) Other important information to enhance the understanding of the Company’s corporate governance implementation: None
42 -
(9) Implementation Status of Internal Control System:
A. Internal Control System Statement

ITE Tech. Inc. Internal Control System Statement

Date: February 24, 2022

With regard to the 2021 internal control system, the Company declares the following based on the selfevaluation findings:

The Company is fully aware that establishing, implementing, and maintaining an internal control system are the responsibility of its Board of Directors and managerial officers. The Company has established such a system to provide reasonable assurance for attaining the aims of the effectiveness and efficiency of business operations (including profits, performance, safeguarding of asset security, etc.); reliability, timeliness, transparency of reporting; and compliance with the governing laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system provides assurance to the aforementioned aims only to a reasonable extent. Moreover, due to changes of environments and circumstances, the effectiveness of an internal control system may change accordingly. Nevertheless, the internal control system of the Company is equipped with a self-monitoring mechanism, and the Company takes corrective actions as soon as any fault is identified.
The Company determines the design and operating effectiveness of its internal control system in accordance with the determining factors provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the “Regulations”). The internal control system determining factors specified in the Regulations divide an internal control system into five elements based on its management: 1. Control Environment, 2. Risk Assessment, 3. Control Operations, 4. Information and Communications, and 5. Monitoring. Each element further contains several items. Refer to the Regulations for the aforementioned items.
The Company has adopted the aforementioned internal control system determining factors to examine the design and operating effectiveness of its internal control system.
Based on the findings of the evaluation mentioned in the preceding paragraph, the Company deems that the internal control system as of December 31, 2021 (including supervision and management of subsidiaries), which encompass internal controls for knowledge of the accomplishment degree of operating effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with the governing laws and regulations, are effectively designed and implemented, and reasonably assure accomplishment of the abovementioned aims.
This Statement constitutes the main content of the Company’s annual report and prospectus, and will be made public. Any wrongful act pertaining to falsification or concealment involving the above public declaration will be subjected to legal liabilities under Articles 20, 32, 171, and 174 of, and other regulations relating to, the Securities and Exchange Act.
This Statement was approved by the Board Meeting of the Company held on February 24, 2022, where none of the seven attending directors expressed dissenting opinions, and all consented to the content of this Statement.

ITE Tech. Inc.

Chairman: Hu, Chun-yang

President: Lin, Hung-yao

43 -
B. If a CPA is appointed to review the internal control system, the review report shall be disclosed: N/A
(10) If there has been any legal penalty against the Company or its internal personnel, or any disciplinary penalty by the Company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year preceding the annual report publication date, where the result of such penalty may have a material effect on shareholder equity or securities prices, the penalty, the main shortcomings, and conditions for improvement shall be disclosed in the annual report:

Year	Shortcomings	Suggested improvement	Improved results
2017	There were no material shortcomings.	None	None
2018	There were no material shortcomings.	None	None
2019	There were no material shortcomings.	None	None
2020	There were no material shortcomings.	None	None
2021	There were no material shortcomings.	None	None

(11) Major resolutions of the Shareholders’ Meeting and the Board in the most recent year to the date this report was printed:

date this	report wasprinted:
Name of meeting	Date	Important Resolutions
Shareholders’ Meeting	Aug. 10, 2021	1. Recognition of 2020 Business Report and Financial Statements. 2. Recognition of 2020 Earnings distribution (note) 3. Adopted the proposal to distribute cash dividends from capital surplus. 4. Approved the issuance of employee restricted shares 5. Lifted the non-compete restriction for directors of the Company.
Board of Directors	Feb. 19, 2021	1. The amount of director remuneration and employee compensation for the year 2020. 2. Recognition of 2020 Business Report and Financial Statements. 3. Recognition of 2020 Earnings distribution 4. The date and agenda of the 2021 General Shareholders’ Meeting. 5. Adopted the proposal to issue new employee restricted shares.
Board of Directors	Mar. 16, 2021	The investment in TGVest Asia Partners II(Taiwan), L.P.
Board of Directors	Jun. 17,2021	Change of the Shareholders’ Meeting date.
Board of Directors	Aug. 10, 2021	1. Recognition of 2021Q2 Financial Statements. 2. Engaged in cash dividend distribution operations, and proposed Sep 3, 2021 as the ex-dividend date.
Board of Directors	Nov. 9, 2021	2022 Audit plan.
Board of	February24,2022	1. The amount of director remuneration and employee

44 -

Directors		compensation for the year 2021. 2. Recognition of 2021 Business Report and Financial Statement. 3. Recognition of 2021 Earnings distribution. 4. The date and agenda of the 2022 General Shareholders’ Meeting. 5. Reappointed Ernst & Young Accounting Firm to provide attestation for the Company's 2022 financial statements.

The implementation status of important resolutions adopted at the 2021 General Shareholders’ Meeting:

Proposal for earnings distribution: At the board meeting held on Aug. 10, 2021, it was adopted that Sep. 03, 2021 was the ex-dividend date; the book entry for stock transfer was suspended from Aug. 30, 2021 to Sep. 03, 2021; and the cash dividends were distributed on Sep. 23, 2021.
The issuance of Restricted stock awards has been approved by Securities and Futures Bureau, FSC on Dec. 17, 2021.
(12) Adverse opinion from directors or supervisor over important resolution of the Board in the most recent year until the day the Annual Report was printed with records or written declaration, and the contents of such opinion:

The directors and independent directors of the Company held the same opinion on important resolutions passed by the Board of Directors.

(13) In the most recent year to the date this report was printed, the information on the resignation and discharge to Chairman, President, chief accountant, chief financial officer, chief internal auditor, corporate governance officer and R&D officer : No occurrence as such.
45 -

5. Disclosure of the CPAs’ fee

Disclosure of the CPA's Fee

Amount unit: NT$1,000

						Amou	nt unit:NT$1,000
Accounting Firm	Names of CPAs		Duration of Audit	Auditing fee	Non- Auditing fee	Total	Remark
Ernst & Young	Chiu, Wan- Ju	Hsu , Hsin- Min	2021/01/01	2021/12/31	2,633	572	3,205

(1) When non-auditing fee paid to the auditing CPA, the CPA’s firm, and its related business entity exceeds one fourth of the audit fee, the amount of auditing and non-auditing fees and the content of the non-audit service should be disclosed: Not applicable
(2) If there is a change in the accounting firm, and the auditing fees paid for the fiscal year in which the change took place are lower than those paid for the fiscal year immediately preceding the change, the amount and reason for the reduction in audit fees shall be disclosed: Not applicable
(3) When the audit fees paid for the current fiscal year are lower than those paid for the immediately preceding fiscal year by 10% or more, the amount and percentage of and reason for the reduction in audit fees shall be disclosed: Not applicable

6. Changes of CPA

(1) Information on replacement of certified public accountant: Not applicable
(2) Regarding the successor certified public accountant: Not applicable
Where the company's chairman, president, or any manager in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm, the name and position of the person, and the period during which the position was held, shall be disclosed.

None

In the most recent year to the date this report was printed, directors, supervisors, managerial officers and the shareholders holding more than 10% of the shares in the transfer of shares and pledge of shares under lien, and any change thereof.
46 -

(1) Changes in shareholdings of directors, supervisors, managerial officers and major shareholders

Unit: Share

				Unit: Share	Unit: Share
Title	Name	2021		As of April 23, 2022
		Increase (decrease) in No. of Shares	Increase (decrease) in No. of Pledged Shares	Increase (decrease) in No. of Shares	Increase (decrease) in No. of Pledged Shares
Chairman(CTO)	Hu, Chun- yang	--	--	--	--
Director	UMC	--	--	--	--
Director(President)	Lin, Hung- yao	--	--	--	--
Director	Liu, Liang- chun	--	--	--	--
Independent Director	Huang, Yi- tsung	--	--	--	--
Independent Director	Hsu, Shih- fang	--	--	--	--
Independent Director	Chen, Shou- shan	--	--	--	--
President of Business Unit	Liu, Tsan- huang	(18,000)	--	(240,000)	--
President of Business Unit	Tu, Chun-an	--	--	(40,000)	--
President of Business Unit	Huang, Chen-wang	--	--	--	--
Senior Vice President of Business Unit	Tung, Ming- hsien	--	--	--	--
Vice President of Business Unit	Hsiao, Chien-chung	--	--	--	--
Vice President of Business Unit	Tsai, Chih- shun	--	--	--	--
Vice President of Business Unit	Chang, Pei- yuan	(28,000)	--	--	--
Vice President of Business Unit	Lee, Yu-min	--	--	--	--
Project Vice President	Huang, Shih- chung	(30,000)	--	--	--
Project VicePresident	Kao, Shu-jen	--	--	--	--
Operating Vice President	Huang, Ching-hsien	(40,000)	--	(40,000)	--
Financial Director	Hsu,Ya-shu	--	--	--	--

(2) Information on transfer of equity interest: none
(3) Information on pledge of equity interest: none
47 -
Information on shareholders among the top 10 by shareholding ratio who are related parties to one another or spouse, kindred within the 2nd degree of kinship

kinship
Name	Own shareholdings		Shares Held by Spouse & minor children		Shares held through nominees		If there are related parties, spouses, kindred within the 2nd degree of kinship among the top 10 shareholders, give the names and affiliations of such shareholders		Remark
	shares	%	shares	%	shares	%	Title (Name)	Relation
UMC (Hong, Jia-cong)	13,959,978	8.66	--	--	--	--	Hsun Chieh Investment Co., Ltd	related parties	--
Hu, Chun-yang	1,985,361	1.23	--	--	--	--	--	--	--
BANK TAIWAN LIFE INSURANCE CO.,LTD. (Liu,Yu-zhi)	1,800,000	1.12	--	--	--	--	--	--	--
Vanguard Emerging Markets Stock Index Fund Account in custody of J.P. Morgan AssetManagement	1,727,000	1.07	--	--	--	--	--	--	--
Hsien-Jin Star Fund Series – Advanced International ETF Investment Account in custody of JP Morgan Chase Bank Taipei Branch	1,662,399	1.03	--	--	--	--	--	--	--
Taipei Fubon Commercial Bank Co., Ltd (Chen, Sheng-de)	1,440,000	0.89	--	--	--	--	--	--	--
Tong-An Investment Co., Ltd (Huang,Mao-xiong)	1,076,000	0.67	--	--	--	--	--	--	--
Rui Meng Financial Advisory Co., Ltd. (Chen,Ru-xiong)	1,062,283	0.66	--	--	--	--	--	--	--
JIA YUAN Investment Co., Ltd. (Shen,Xian-he)	1,000,000	0.62	--	--	--	--	--	--	--
Hsun Chieh Investment Co., Ltd (Guan,Jun)	999,728	0.62	--	--	--	--	UMC	related parties	--

Quantity of shareholdings of the same investee by the Company and Directors, Supervisors, Managerial Officers, and direct or indirect subsidiaries in proportion to the combined holdings of all, and combined to calculate the proportion of overall shareholding.

December 31, 2021 Unit: Share

Investee (Note)	Investment made by the Company	Investment made by the Company	Investment made by directors, supervisors, managerial officers and direct or indirect subsidiaries	Investment made by directors, supervisors, managerial officers and direct or indirect subsidiaries	Combined investment	Combined investment
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio
Emright TechnologyCo.,Ltd.	4,176,800	36.32%	--	--	4,176,800	36.32%

Note: The company adopts the equity method to recognize the investment profit and loss of the Investee.

48 -

IV. Capital Overview

1. The Company's capital and shares

(1) Sources of Capital Stock

A. Formation process of capital stock

Unit: Thousand share; NT$1,000 (Except for the price at issuance)

Period	Price at issuance (NT$)	Authorized capital stock	Authorized capital stock	Paid in capital	Paid in capital	Remark	Remark
		Number of shares	Amount	Number of shares	Amount	Sources of Capital Stock (Shares)	Property other than cash is paid by subscribers	Other
June 2017	10	250,000	2,500,000	161,374	1,613,743	Employee restricted shares cancellation: 35,000	None	June28, 2017- Letter No. Chu- shang-tzu-ti- 1060017299
March 2018	10	250,000	2,500,000	161,321	1,613,213	Employee restricted shares cancellation: 3,000	None	March 8, 2018- Letter No. Chu- shang-tzu-ti- 1070007213
May 2018	10	250,000	2,500,000	161,275	1,612,753	Employee restricted shares cancellation: 46,000	None	May 17, 2018- Letter No. Chu- shang-tzu-ti- 1070014422
August 2018	10	250,000	2,500,000	161,250	1,612,508	Employee restricted shares cancellation: 24,500	None	August 17, 2018- Letter No. Chu- shang-tzu-ti- 1070024113
November 2018	10	250,000	2,500,000	161,240	1,612,403	Employee restricted shares cancellation: 10,500	None	November 20, 2018- Letter No. Chu- shang-tzu-ti- 1070033261
March 2019	10	250,000	2,500,000	161,107	1,611,073	Employee restricted shares cancellation: 133,000	None	March 8, 2019- Letter No. Chu- shang-tzu-ti- 1080006252
May 2019	10	250,000	2,500,000	161,093	1,610,933	Employee restricted shares cancellation: 14,000	None	May 28, 2019- Letter No. Chu- shang-tzu-ti- 1080014642
November 2019	10	250,000	2,500,000	161,080	1,610,801	Employee restricted shares cancellation: 13,200	None	November 28, 2019- Letter No. Chu- shang-tzu-ti- 1080034324

49 -

B. Type of Stock

April 23, 2022

Unit: Share

Type of Stock	Authorized shares capital	Authorized shares capital		Remark
	Outstandingshares	Unissued shares	Total
Registered common shares	161,080,124	88,919,876	250,000,000	--

C. Information related to shelf registration: Not applicable

(2) Structure of Shareholders

April 23, 2022 Unit: Share

Structure of Shareholders Quantity	Government Agencies	Financial Institution	Other Juridical person	Individual	Foreign Institution and Foreigner	Total
Number of shareholders	1	14	210	47,941	141	48,307
Shares held	395,000	3,905,759	21,927,395	119,955,364	14,896,606	161,080,124
Shareholdingratio	0.25	2.42	13.61	74.47	9.25	100.00

(3) Equity Distribution

Common shares

April 23, 2022 Unit: Share

		April 23,2022	Unit: Share
Holding share classification	No. of Shareholders	Shares held	Shareholding ratio %
1 - 999	17,549	1,964,890	1.22
1,000-5,000	26,667	49,273,405	30.59
5,001 - 10,000	2,420	19,174,186	11.90
10,001 - 15,000	602	7,762,066	4.82
15,001 - 20,000	345	6,439,440	4.00
20,001 -30,000	279	7,061,662	4.38
30,001 - 40,000	131	4,769,367	2.96
40,001 -50,000	78	3,600,384	2.24
50,001 - 100,000	127	8,655,413	5.37
100,001 - 200,000	54	7,563,502	4.70
200,001 - 400,000	30	8,616,183	5.35
400,001 -600,000	7	3,685,727	2.29
600,001 -800,000	8	5,801,150	3.60
800,001 - 1,000,000	2	1,999,728	1.24
More than 1,000,001 shall be graded according to the actualsituation	8	24,713,021	15.34
Total	48,307	161,080,124	100.00

Note: The company has not issued preferred stocks.

50 -

(4) List of Major Shareholders

April 23, 2022 Unit: Share

		April 23,2022	Unit: Share
Name of major shareholder	Representative	Shares	Shareholding ratio (%)
UMC	Hong, Jia-cong	13,959,978	8.66
Hu, Chun-yang		1,985,361	1.23
BANK TAIWANLIFE INSURANCECO.,LTD.	Liu,Yu-zhi	1,800,000	1.12
Vanguard Emerging Markets Stock Index Fund Account in custody of J.P. Morgan Asset Management		1,727,000	1.07
Hsien-Jin Star Fund Series – Advanced International ETF Investment Account in custody ofJP MorganChaseBank Taipei Branch		1,662,399	1.03
Taipei FubonCommercial BankCo.,Ltd	Chen, Sheng-de	1,440,000	0.89
Tong-An Investment Co.,Ltd	Huang,Mao-xiong	1,076,000	0.67
Rui MengFinancial Advisory Co.,Ltd.	Chen,Ru-xiong	1,062,283	0.66
JIA YUANInvestment Co.,Ltd.	Shen,Xian-he	1,000,000	0.62
Hsun Chieh Investment Co.,Ltd	Guan,Jun	999,728	0.62

(5) Information on market price, net value, earnings and dividends per share in the most two

year

Unit: NT$

Item	Year	Year	2020 Distributed in 2021	2021 Distributed in 2022	As of Apr. 23, 2022
Market Price Per Share	TheHighest		79.60	143.5	120.5
	TheLowest		33.50	67.9	99.3
	Average		59.63	106.15	111.20
Net Value Per Share(Note 4)	Before distribution		29.86	38.87	(Note 5)
	After distribution		23.86	`＊`
Earnings per share	Weighted average shares		160,492,491	161,080,124
	Earnings pershare		5.83	11.21
Dividend Per Share	Cash dividends		6	`＊`
	Stock Dividends	Retained earnings	--	`＊`
		Capital Surplus	--	`＊`
	Accumulated Unpaid-for dividends			--
Return on Investment Analysis	Price-to-Earnings Ratio (Note1)		10.23	9.47
	Price-to-Dividend Ratio (Note2)		9.94	`＊`
	Cash Dividend Yield Rate(Note 3)		10.06	`＊`

＊ To be finalized upon the resolution of the general shareholders’ meeting of 2022.

Note 1: Price-to-Earnings Ratio = Average Share Price of the Year / Earnings per Share Note 2: Price-to-Dividend Ratio = Average Share Price of the Year / Cash Dividend per Share Note 3: Cash Dividend Yield Rate = Cash Dividend per Share / Average Share Price of the Year

Note 4: Net value per share = shareholder equity / (number of common shares + number of issued shares to be registered - number of treasury shares of the parent company held by the parent company and its subsidiaries)

Note 5: The current year has not ended; no relevant information is available.

51 -
(6) Dividend Policy and Implementation Status
Dividend Policy of the Company

The distribution of dividends to shareholders of the company can be paid in cash or shares. The policy of dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets. And the dividends in cash shouldn't less than 30% of the distributable, as well as the interest of the shareholders, share bonus equilibrium and long-term financial planning etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders’ meeting.

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

I. Income tax obligation;
II. Offsetting accumulated deficits, if any;
III. Legal reserve at 10% of net income after tax;
IV. Allocation or reverse of special reserves as required by law;
V. After deducting the respective amount specified from item I to IV, at least 80% of the remaining earnings will be distributed, together with the undistributed earnings at the beginning of the period, and the capital surplus. However, if the total distribution divided by all the issued shares is less than NTD 0.1 per share, all the remaining and surplus shall not be distributed.
Proposed dividend distribution at this General Shareholders’ Meeting

A cash dividend at NT$9 per share will be proposed at the Annual Shareholders’ Meeting. The cash dividend distributed from the earnings is NT$8, and the cash dividend distributed from the capital surplus is NT$1.

(7) Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders' meeting:

There is no stock dividend distribution proposed at this shareholders’ meeting.

(8) Employee, director and supervisor compensation
The percentage or scope of employee, director, and supervisor compensation in the Articles of Incorporation:

When the Company is operating profitably, the distribution of employee compensation and director remuneration shall be based on profitability. The so-called employee compensation shall not include routine/fixed salary, allowances, or bonuses. The so-called profitability shall refer to the benefits of the pre-tax benefits before the remuneration distribution is deducted. If the Company makes a profit in the current year, it shall appropriate 8% to 20% thereof for employee compensation; and then it may appropriate not more than 1% thereof for director remuneration. However, when the Company still has accumulated losses, it shall retain the amount required to make up for such losses and deduct such amount in advance before calculating such compensation and remuneration. In addition, the annual compensation and remuneration is a one-time distribution, which however may be paid in full at a single time or in installments.

Director remuneration is paid in cash, while employee compensation can be paid in cash or shares. “Employees” shall be defined as salaried employees who perform actual work,

52 -

as well as formal salaried employees of domestic and foreign affiliated companies of which the Company directly holds 49% or more of shares; and consultants appointed by the Company required for its normally organized work; and otherwise directors who perform daily business operations or serve in full-time technical positions. When employee compensation is distributed, the intended distributee shall remain as the employee, unless it is due to the Company's recent initiative to transfer, lay off, or retire the employee.

Basis for estimating the employee, director, and supervisor compensation amount, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy (if any) between the actual distributed amount and the estimated figure, for the current period:

The employee compensation recognized for the year 2021 was NT$392,322,179, and the director remuneration recognized was NT$16,108,012, which were estimated and recognized based on the percentage set in the Company's Articles of Incorporation (for the employee compensation, the percentage for such estimated recognition was 8%-20%; and for director remuneration, it was not more than 1%). If there is a difference between the actual distribution amount and the recognized amount, it shall be dealt with as a change in accounting estimates and recognized in the profit and loss for the year 2022.

Status of remuneration distribution approved by the Board of Directors:
(1) For the amounts of employee compensation and director and supervisor remuneration distributed in cash or by stocks, if they are different from the recognized amount, the difference in the number, reason and handling status shall be disclosed:

The Board of Directors resolved on February 24, 2022 to distribute employee compensation of NT$392,322,179 in cash, as well as director remuneration in the amount of NT$16,108,012; said amounts were identical with the ones recognized by the Company.

(2) The amount of employee compensation distributed by stocks, and the ratio of such amount to the total amount of the net profit after tax in the parent company-only financial report and total employee compensation for the current period: The Company does not distribute employee compensation via stock.
The actual distribution status of employee compensation as well as director and supervisor remuneration in the previous year (including the number of shares distributed, amount and price); where it was different from the employee compensation as well as director and supervisor remuneration recognized, the difference in the number, reason, and handling status shall be stated:

In 2021, the actual employee compensation distributed for the year 2020 was NT$200,552,369 and director remuneration was NT$13,370,152; said amounts were identical with the ones recognized by the Company.

(9) Repurchase of Company shares:
Completed execution: No occurrence as such for most recent year
Still under execution: none
53 -

2. Status of corporate bond

None

3. Status of preferred stocks

None

4. Status of overseas depository receipt

None

5. Status of employee stock options

None

6. Status of employee restricted share undertaking

(1) Status of new employee restricted share undertaking:

The Company adopted the resolution at the General Shareholders’ Meeting held on Aug10, 2021 to issue 3,000,000 new employee restricted shares, with such resolution taking effect on December 17, 2021 via filing with the Financial Supervisory Commission with case no. Chin-Kuan-Cheng-Fa-Tzu-100377439. The new employee restricted shares are not issued prior to the issuance of annual report.

(2) The managers as well as the names of the top ten employees granted with employee restricted shares: None
Status of issuance of new shares due to merger and acquisition or acceptance of shares transferred by other companies

None

8. Implementation status of the financing plan

None

54 -

V. Operation Profile

1. Business Contents

(1) Business Scope

A. Main business contents
(A).Electronics components manufacturing

Research, development, production, manufacturing, and sales of the following products:

a. Various types of computers and arithmetic logic unit chipsets.
b. Super/special-purpose input and output integrated circuits and modules.
c. Highly integrated ICs.
d. Integrated circuits and system products for reduced instruction set computers and arithmetic logic units.
e. Integrated circuits and system products for data communications.
f. Integrated circuits and system products for digital TVs.
g. Integrated circuits and module products controlled by flash memory.
h. Integrated circuits and system products for multimedia applications.
i. Integrated circuits and module products for analog circuit applications.
j. Systems, as well as software and hardware integration services, for the aforementioned related products.

(B) International trade

Import and export trading related to the above products.

(D) Product designing

B. Percentage of revenue from main products

	Unit: NT$1,000;%	Unit: NT$1,000;%
Year Product	2021
	SalesAmount	NetRevenue (%)
IC	7,181,129	99.95
Other	3,457	0.05

C. Current product (service) items

The Company's main products are Super I/O control (SIO) ICs for desktop computers, embedded control (EC) ICs for notebook computers, high-speed audio-video interface related ICs, system on a chip (SoC), and other customized application chips.

D. New products planned to be developed

(A) Desktop computer I/O controller ICs which support latest Intel chips’ modern standby functions, LED-lighting controller ICs which support DDR5 I3C interface, system security chips which have been certified by the CAVP (Cryptographic Algorithm Validation Program) of the NIST Computer Security Resource Center (CSRC), multifunctional chip which support CAN Bus and AIOT applications.
(B) The Company will continue to develop products including low-power keyboard
55 -

controller ICs, gaming notebook keyboard controller ICs, keyboard LED-lighting controller ICs, Chromebook keyboard controller ICs and USB Type C controller chips for applications such as notebook, tablet PC, deformable tablet, AIO, education and industrial computers. The products have fully supported the latest Intel/AMD/ARM chips. Furthermore, the Company will continue to develop high-efficiency and highly integrated RISC-V EC to meet customer needs, and has actively arranged new platforms for the notebook (NB) market.

(C) Converter ICs related to high-speed audio-video interfaces required for automotive equipment and consumer audio & video equipment.
(D) Enhanced system on a chip (SoC) with a high-performance graphics engine and a highspeed CPU.
(E) Automotive-grade SoCs.

(2) Industry overview

A. Outlook for the global IC design industry

From 2020 to 2021, the global economy has been affected dramatically by the COVID-19 pandemic and has gradually changed from physical transactions to online transactions and from in-person activities to contactless activities such as online shopping, online meetings, online education, etc., driving new ways of economic interaction.

The online economy has driven a surge in global demand for semiconductors, of which Taiwan’s companies have undertaken the majority of orders. Therefore, Taiwan’s semiconductor industry has been operating at full capacity during all of 2021, yet it still fell short to meet global demands. Consequentially, there is a serious shortage of semiconductor components throughout the global ICT industry. This has not only resulted in quarterly price hikes for semiconductor components, but also increased the risk of supply chain interruption, an unprecedented situation that has never happened before.

Taiwan is the main OEM provider of wafers, packaging, and testing for the global semiconductor industry. It also supplies various ICs to the world. It is evident that the Taiwan’s semiconductor industry plays a significant and influential role among the global ICT industry. Beginning in 2021, leading industrial nations of the world are becoming increasingly concerned of its dependence on Taiwan’s semiconductor companies, which has led them to actively plan and develop its domestic semiconductor sector in order to become less reliant and more self-sufficient. This is expected to heighten competition amid global semiconductor industries in the future.

Looking forward, the Covid-19 pandemic will slow down, which will eventually relieve the bottleneck of the semiconductor supply chain, recovering it to smooth and normal production. When this happens, the biggest growth momentum of the ICT industry will pivot to applications such as 5G, AI, IOT and automotive electronics, whereas the previous surge in demand for NB may cool down. However, due to the pandemic, online transactions and remote working (WFH) lifestyles have become the new norm, and therefore the market demand for PCs will continue to grow steadily. It is believed that Taiwan's semiconductor industry will continue to grow in the next few years, and the outlook is full of potential and optimistic.

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B. Relevance among upstream, midstream and downstream industries

==> picture [467 x 333] intentionally omitted <==

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

Taiwan Semiconductor Industry Structure Chart
Upstream Midstream Downstream
Computer Aided Design Tools
Equipment and Instruments
Materials
Wafers Lead Frames
Design Photomask Manufacturing Packaging
Chemicals Testing IC
----- End of picture text -----

C. Product development trend

In view of the development trend of ICT products, mobile products exhibited the most prosperous growth. The required specifications of mobile products cover low power consumption, low operating voltage, recharge ability and other functions with higher data processing capabilities, higher interface speed, larger memory, more complex algorithms, and more expansion interfaces.

D. Status of product competition

(1) PC-related industries

ITE ranks among the top in terms of technology and global market share in SIO and EC chips. Recently, with the widening of supported specifications, USB-C is also used in more and more PC products. ITE also launched a series of products that can support USB4/TBT4/QC4+/PPS/PD3.1 to provide customers with multi-functional needs. ITE adheres to the simultaneous launch of products that respond to the evolution of mainstream CPU technology, and provides timely and in-place technical services, which have been recognized by its customers and maintained its leading position in the market.

(2) Video Link IC

There are a wide range of audio-video products with many competitors in the video link market and its technique specifications continue to call for higher speed, higher display resolution, and better sound quality. ITE applies precise product strategies and market deployments to keep pace with the trend of product specification improvement and launch timely products that meet market demand. Therefore, ITE is highly recognized by the market.

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(3) SoC for Human Machine Interface (HMI)

The market for electronic devices with color screens is growing at a high rate. In addition to higher and higher functional requirements, the number of competitors entering this field has increased significantly. The challenges are getting tougher and tougher. ITE’s SoC has a high-performance graphic engine and a high-speed CPU to meet the market's demand for multicolor and high-resolution display control and deal with the challenges from market competitors.

(3) Technology and R&D Overview
A. Annual R&D expenses invested for the most recent years

			Unit: NT$1,000;%
Item	2020	2021	As of Mar. 31,2022
R&Dexpenses	755,123	946,059	231,023
Net operatingrevenue	4,817,829	7,184,586	1,610,799
Percentage of R&D expenses accounting for net operatingrevenue(%)	15.67	13.17	14.34

B. Technology or product accomplishments in the most recent years

Item	Results
System on a Chip (SoC)	SoCs that integrate high performance graphics engines with high-speed CPUs are widely used in smart building, home appliances, automotive smart display, sports equipment, and other fields.
USB 3.0 High Speed Image Bridge IC	USB 3.0 bridge ICs used together with high resolution video receiver ICs such as HDMI 2.0 for applications like video conference and game streaming.
VideoLinkController	Video/Audiointerface Controller, USB-C Converter IC.
Notebook EC	RISC-V, N8, 8051 EC.
Computer peripheral IC	USB-C PD ICs, PCIE Gen-4 MUX, eSPI to LPC bridge IC, ARGB lighting control IC, Security control IC with on-chip ROM as the root of trust which is certified by CAVP of CSRC at NIST, Multi-function chip supporting CAN Bus and AIOT application,Level shift IC

(4) Long-term and short-term business development plans
A. Short-term plan
- a. Maintain the market share of Super I/O and expand the market share of USB-C related products.
- b. Reach more Embedded Control IC customers and incorporate customized specifications so as to strengthen customer relationships.
- c. Continue to cultivate the ARM (Windows on ARM) and Chromebook markets, and deeply develop applications such as transformable tablets, tablet PCs, and industrial computers.
- d. Continue leveraging application processor system on a chip (SoC) to deepen the market for color display and control, such as video doorbells and home appliances, and increase the adoption rate in the virtual instruments for vehicles and athletic equipment markets.
- e. Continue to leverage SoC to deepen the market for color display and control, such as
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smart building and home appliances, and increase the adoption rate in the automotive smart display and sports equipment markets.

f. Continue to expand and improve the 4K USB3 bridge IC product line for the growing video capture box market for applications like video conferencing and game streaming.
B. Long-term plan
a. Participate in the formulation of product specifications by leading manufacturers in a variety of product markets; make pre-investments and seize opportunities for market growth.
b. Increase the level of product interoperability to meet customer one-stop shopping needs for the entire product line.

2. Market, production and sales overview

(1) Market analysis
A. Main product sales regions

production and sales overview t analysis in product sales regions	production and sales overview t analysis in product sales regions	production and sales overview t analysis in product sales regions	production and sales overview t analysis in product sales regions
Unit: NT$1,000
Year Sales area		2021
		Amount	%
Domestic sales		5,344,055	74.38
Export	Asia	1,831,076	25.49
	Europe	8,415	0.12
	America	1,040	0.01
	Oceania	0	0.00
Total		7,184,586	100.00

B. Market share of main products

According to forecasts made by market research agencies, the global output volume of desktop computers and notebook computers in 2021 were approximately 88 million units and 230 million units, respectively. The Company's global market share in 2021 is estimated to exceed the level of 40% in the preceding year.

C. Supply and demand status in the market and growth of major products in the future

a. Personal computer market

Due to the pandemic, PC demand has grown significantly in 2021 compared to the continuous decline in the total shipment in the past few years. In addition, brands have begun to pay attention to code and data protection mechanisms and must comply with NIST specifications for related chips. The degree of attention has also been greatly increased. For the growth of the computer market in the future, it has the momentum of continuous growth.

b. High-speed audio-video interface IC

USB-C connectors have become dominant in the market. Therefore, the demand for USB-C Video Converters for peripheral accessories is increasing. At present, the demand for the 2K audio-video market is still there, but the demand for new 4K or 8K and above is gradually increasing. Overall, the demand continues to change and grow.

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D. Competitive niche

a. Long-term close cooperation with major manufacturers and key potential customers.
b. Well-qualified technical personnel in R&D.
c. Adoption of modular strategies to be able to flexibly adjust product design, which greatly shortens the product development cycle and creates competitive advantage.
d. A well-experienced marketing team that can work out a complete system, planning in a timely manner according to customer needs.
E. Advantages and disadvantages in development prospects, and countermeasures for such
a. Advantages
- i. PC chipsets are designed with external I/O chips, and the I/O market continues to exist.
- ii. The budding of e-sports PC and Megaverse applications will increase the demand for personal computers and meet the requirements for scene-based applications.
- iii. With the help of the evolution of Intel/AMD chip platforms, opportunities for peripheral IC products other than SIO increase.
- iv. EC with USB-C integrated can stimulate demand for mid- to high-end NB product designs.
- v. The market applications moving towards 4K / HDR or higher specifications are beneficial to the promotion of our HDMI 2.0 / DP1.4 and subsequent related products.

b. Disadvantages

i. If the 2022 pandemic slows down, it may affect PC shipment. In addition, the China's electricity curtailment policy will also have an impact on the overall PC industry.

Countermeasures:

(a) In addition to optimizing existing main Super I/O functions, we will continue to develop new functions for code and data protection, incorporate friendly end-user applications, and add more value to Super I/O products.
(b) Expand other components that can be supplied on the motherboard to make the Company become a Total Solution Provider for PC systems.
ii. Facing low-price competition from domestic competitors, we will continue to face pressure to reduce product prices.

Countermeasures:

(a) Actively interact closely with customers, increase cooperative relations, strengthen service quality, and improve customer satisfaction.
(b) Continue to carry out cost reduction and high-level IP integration so as to maintain market share.
iii. Large companies actively adopt merger and acquisition strategies to expand product integrity and competitiveness.

Countermeasures:

a. Continue to seek complementary companies for strategic cooperation.
b. Develop products for special niche markets suited to the Company's technologies,
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and avoid red ocean markets.

(2) Important purpose and manufacturing process of main products
A. Important purpose of main products

The Company's PC product families are primarily used for the control and management of PC peripheral equipment, and high-speed audio-video interface product families are primarily used for audio-video equipment that requires high-speed data transmission and displays. In addition, SoC products are leading the way in their target markets, such as home appliances, automotive smart display, smart building and sports equipment markets.

B. Manufacturing process

The Company is a professional IC design company. The entire production process is roughly divided into 4 parts:

(a) IC design process
(b) Wafer fabrication process
(c) Die packaging process
(d) Finished product testing process

The overall process is shown below. Within this, the wafer fabrication, die packaging, and finished product testing are outsourced to professional OEM factories; the Company is responsible for quality assurance and control.

Production Flow Chart

==> picture [381 x 371] intentionally omitted <==

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

Product
A
Proposal
Product Planning
Mask Manufacturing
Proposal
Wafer
Design
Fabrication
Simulation and
Review Chip Packaging
Fail Pass
Arrangement
Testing
Fail
DRC/L Pass
Scrapping
Fail Pass Finished Products
A
----- End of picture text -----

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i.IC design process

The logic and circuit design are conducted based on customer needs; the circuit is analyzed and simulated by utilizing CAD tools; and then it is made into a computer tape to be sent to the mask factory for mask manufacturing.

ii. Wafer fabrication process

The product tape design is sent to the professional fab for mask manufacturing and the fab process. With the use of each layer of the mask, the electrical characteristics are gradually fabricated on the wafer.

iii. Die packaging process

Wafers that have completed the wafer process are sent to the professional packaging factory; IC packaging is completed according to the pin number and packaging type required by the customer.

iv. Finished product testing process

Before finished products are shipped to customers, most importantly, they must pass final testing to confirm their electrical properties. Through the processes of die cutting, chip loading, wire bonding, sealing, stamping, slag removal, trimming, forming, electroplating, etc., the IC packaging is completed.

(3) Supply status of main raw materials

Supplystatus of main	raw materials
Main rawmaterials	Mainsupplier
Wafer	UMC,He Jian Technology(SuZhou) Co.Ltd
Packing	SPIL, ASE, Greatek, OSE, Cica-Huntek, Siliconware Technology (Suzhou)Limited
Testing	KYEC,YTEC,Greatek,Panther,Testar,OSE

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(4) The names of customers that have accounted for 10% or more of the total purchases (sales) in any of the most recent 2 years, their purchase (sale) amounts and percentages, and the reasons for their increases, decreases, or changes:
A. Information on major suppliers in the most recent 2 years

Unit: NT$1,000; %

		2020				2021			As of March31,2022	As of March31,2022	As of March31,2022
Item	Name	Amount	Percentage of annual net purchases (%)	Relationship with issuer	Name	Amount	Percentage of annual net purchases (%)	Relationship with the issuer	Name	Amount	Percentage of net purchases for Q1,2022 (%)	Relations hip with the issuer
1	UMC	726,647	60.98	Director	UMC	916,181	49.14	Director	UMC	259,184	58.42	Director
2	He Jian Technology (SuZhou) Co. Ltd	350,151	29.38	Other related party	He Jian Technology (SuZhou) Co. Ltd	549,238	29.46	Other related party	He Jian Technology (SuZhou) Co. Ltd	104,471	23.55	Other related party
3	Other	114,863	9.64	None	Other	398,915	21.40	None	Other	80,013	18.03	None
	Netpurchase	1,191,661	100.00		Netpurchase	1,864,334	100.00		Netpurchase	443,668	100.00

Note: The main raw material purchased by the Company is wafers.

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B. Information on major customers in the most recent 2 years

Unit: NT$1,000; %

		2020				2021				As of March 31,2022	As of March 31,2022
Item	Name	Amount	Percentage of annual net sales`〔`%`〕`	Relationship with the issuer	Name	Amount	Percentage of annual net sales `〔`%`〕`	Relationship with the issuer	Name	Amount	Percentage of net sales for Q1,2022 (%)	Relationship with the issuer
1	Customer A	1,707,579	35.44	None	Customer A	2,784,521	38.76	None	Customer A	608,759	37.79	None
2	Customer B	1,131,741	23.49	None	Customer B	1,703,600	23.71	None	Customer B	421,214	26.15	None
3	Other	1,978,509	41.07	None	Other	2,696,465	37.53	None	Other	580,826	36.06	None
	Net sales	4,817,829	100.00		Net sales	7,184,586	100.00		Net sales	1,610,799	100.00

Note: The Company's operating revenue primarily consists of desktop computer I/O control ICs, notebook computer peripheral control ICs, and highspeed audio-visual interface ICs. The Company's sales to customers accounting for 10% or more of net sales in 2021 and 2020 accounted for 62.47% and 58.93% of the net operating revenue for the given year, respectively, which indicates a slight increase.

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(5) Production volume table for the most recent 2 years

				Unit:	NT$1,000;	1,000 units
Year		2021			2020
Production volume / Mainproduct	Production capacity	Production output	Output value	Production capacity	Production output	Output value
IC	--	331,466	3,673,130	--	241,066	2,254,095
Others		-	-		1	62
Total		331,466	3,673,130		241,067	2,254,157

(6) Sales volume table for the most recent 2 years

Unit: NT$1,000; 1,000 units

					Unit: NT$1,000;1,000 units	Unit: NT$1,000;1,000 units	Unit: NT$1,000;1,000 units	Unit: NT$1,000;1,000 units
Year	2021				2020
Sales volume/ Mainproduct	Domestic sales		Export		Domestic sales		Export
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
IC	251,537	5,341,144	61,188	1,839,985	195,870	3,470,144	60,285	1,342,120
Other	1	2,911	1	546	1	4,943	1	622
Total	251,538	5,344,055	61,189	1,840,531	195,871	3,475,087	60,286	1,342,742

Note: Expressed in terms of net operating revenue of the consolidated financial data. Other product items include income from technical services, etc.

3. Information on employees as of the annual report printing date for the most recent 2 years

			Unit:person; year;%	Unit:person; year;%
Year Item		2020	2021	As of May 20, 2022
Number of employees	Direct employees	0	0	0
	Indirect employees	194	191	193
	R&D employees	233	231	236
	Total	427	422	429
Average age		42.69	43.69	43.05
Average service seniority		11.51	12.40	11.80
Level of education	Doctorate	1.41%	1.43%	1.40%
	Master’s	57.38%	57.05%	57.11%
	College and university	40.28%	40.57%	40.56%
	Senior high school	0.93%	0.95%	0.93%
	Below senior high school	--	--	--

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4. Information on environmental protection expenditures

(1) Describe the losses incurred by the Company due to environmental pollution as of the annual report printing date in the most recent year (including compensation and environmental protection audit results that find violations of environmental protection laws and regulations, in which case the date of disposition, the disposition case number, the violated articles of provisions, the violated content of provisions, and the content of the disposition shall be set forth), and disclose the estimated amount and corresponding measures that may occur at present and in the future: No occurrence of such.
(2) Future countermeasures and possible expenditures: The Company is a professional IC design company. Its business primarily focuses on IC R&D and design. The Company also entrusts integrated circuit manufacturers to fabricate wafers, and is not involved in pollution incidents that violate environmental protection regulations.

5. Labor-management relations

(1) Current important labor-management agreements and implementation status

The Company’s personnel management rules are all formulated based on the Labor Standards Act and other laws and regulations. They also take account of relevant practices in the industry to provide competitive salary, welfare measures, safe and healthy working environments, and other measures so as to safeguard employee rights and interests as well as to retain excellent talents.

A. Employee welfare measures

The Company provides welfare measures in accordance with the requirements set under the Labor Standards Act and other relevant regulations. It also provides diversified welfare measures for employee health and life-work balance. Examples include new year gift vouchers, birthday gift vouchers, childbirth cash gifts, wedding cash gifts, funeral condolence money, child education scholarships, club activities subsidies, tourism activities, new year company celebration activities, and other measures. There are facilities such as friendly sports and leisure areas, breastfeeding rooms, and staff restaurants in place as well. In addition to allowing employees and their family members to feel the Company’s care, we hope they can enjoy a balanced life between work and family.

B. Implementation status of advanced studies and training

In order to improve the quality of personnel, enhance their work skills, and strengthen overall competitiveness, ITE provides diversified learning resources to help employees further their professional capabilities and develop their potential.

a. Professional training: including professional courses, dedicated tutors for newcomers, OJT training, project training, etc.
b. Management training: including newcomer training, core competency training, supervisor training, etc.
c. Self-learning: including E-learning, lectures, club activities, etc.
C. Retirement system and implementation status

In order to take care of employee retirement and promote labor-management relations, the pension reserve has been set at 2% of total salaries since June 1996, deposited in a special account with Bank of Taiwan under the name of Labor Pension Reserve Supervisory Committee. The Labor Pension Act came into effect on July 1, 2005, which is a retirement system with a defined contribution plan. After the Act came into effect, employees may choose to apply the relevant pension regulations under the Labor Standards Act, or apply the

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pension system under the Act while retaining the seniority before applying to the Act. For employees who apply the new system, the Company will appropriate 6% of the employee's salary to the individual Bureau of Labor Insurance pension account in accordance with the law, and assist employees in processing voluntary contributions according to their wishes.

D. Labor-management agreement and various measures to safeguard rights and interests

The Company values employee opinions and has a suggestion box in place. The Company regularly holds labor-management meetings and employee seminars to maintain sound labormanagement relations, as well as to safeguard rights and interests; in addition, in order to create a safe working environment that is a win-win for both labor and management, measures are taken that include arranging annual employee health examinations, organizing regular labor safety seminars, and holding disaster prevention and fire drills every 6 months.

(2) Losses incurred due to labor disputes (including labor inspection results that find violations of the Labor Standards Act, in which case the date of disposition, the disposition case number, the violated article provisions, the violated provision content, and the content of the disposition shall be set forth) as of the annual report printing date for the most recent year, and disclosure of the estimated amount and corresponding measures that may occur at present and in the future. If such amount cannot be reasonably estimated, the fact thereof shall be stated.

The Company has a harmonious labor-management relationship, and it places relatively high emphasis on two-way communication with employees. There were no losses incurred due to labor disputes as of the annual report printing date for the most recent year.

6. Information security management

(1) Information Security Organization

The company has not established a dedicated information security organization, but according to the division of labor and its profession, the Information Technology Department is responsible for the formulation of information security policies.

(2) Information Security Policy
A. The company’s information security management regulations must comply with relevant regulations. Such as Intellectual Property Protection Law, Computer-Processed Personal Data Protection Law
B. The Information Engineering Department is responsible for the establishment and promotion of the information security system
C. Regularly publicize information security policies and related implementation regulations
D. Establish a management mechanism for information hardware facilities and software to coordinate the allocation and utilization of resources
E. The new information system should incorporate information security factors before establishment to prevent any information security issue.
F. Establish security protection measures for computer facilities, and regular maintenance
G. Clearly formulate the use rights of information systems and network services to prevent any unauthorized access.
H. Formulate an internal audit plan for information operation security, and regularly review the use of all personal computers.
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I. Formulate disaster recovery plan and practice it to ensure the continuous of the company’s business.
J. All personnel of the company are responsible for maintaining information security and should abide by relevant information security management regulations.
K. Regularly promote the concept of information security to colleagues through email or verbal means.
(3) Management plan and resources invested in the security management of information security

The Company has established the following network environment and related information protection systems to maintain the normal operation of the information system for corporate operations

A. Computer software and hardware asset management and audit: The Company has established a computer asset management system to regularly collect usage data on computer equipment, software, and hardware by personnel, to be reported to the central control database for follow-up audits and prevention of illegal software or hardware misuse.
B. Defense against network attack: The firewall and intrusion prevention system are built into the network gateway to defend against malicious network attacks.
C. Network access control: Network services (wired, wireless, VPN, and other connections) are established with strict identity verification mechanisms, and identity verification must be passed before network services can be used.
D. Anti-virus, anti-hacking, and anti-ransomware: Complete endpoint protection software is deployed on personnel computer equipment, and the computer virus and malware filtering mechanism is built into the mail gateway host.
E. Regular updating of security patch files for computer equipment: Security patch files are regularly delivered to computer equipment, to prevent security vulnerabilities.
F. Mail archive management: All company emails can be stored for a long period of time under the regulatory conditions, and they can also be quickly searched to find key emails when evidence needs is required.
G. Remote backup of information system data: Each plant’s information system data is regularly backed up to network storage devices. The backup software also synchronizes a copy of the stored data to the Microsoft cloud service storage space leased by the Company for storage as remote backup data.
H. Network backup: All important network nodes and backbones are equipped with backup mechanisms to avoid single points of failure causing connection interruptions. Disaster recovery drills are also conducted for network equipment every year, to ensure that recovery mechanisms are functioning normally.
I. OA system host virtualization: All important OA system hosts are virtualized and backed up regularly. If there is a host failure, it can be quickly transferred and restored.
J. Uninterruptible power system in the computer room: All equipment in the computer room is connected to the uninterruptible power system. The uninterruptible power system equipment is installed in a controlled independent computer room, and maintenance and care are conducted every quarter by suppliers.

The Company has not yet taken out information security insurance. In the future, it will evaluate the necessity of such insurance based on operational needs.

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(4) Describe the losses and possible impacts incurred by the Company due to major information security incident, and the corresponding measures as of the annual report printing date in the most recent year. If such amount cannot be reasonably estimated, the fact thereof shall be stated: No such condition.

7. Important contract

Nature of contract	Parties	Contract start and end dates	Main content	Restriction clause
Tech authorization	3Soft	1996- permanent	8042 8-bit microprocessor controller	None
Tech authorization	Flowring Technology	2001- permanent	Electronic sign-off system software	None
Wafer fabrication	UMC	2001- Termination	Foundry fabrication	None
Tech authorization	Information Technology Total Services Co., Ltd.	2010- permanent	Oracle enterprise operating system software	None
Tech authorization	Andes Technology	2011-2026	Authorized use of specific microprocessors	None
Tech authorization	Faraday Technology	2013-2023	Authorized use of USB PHY	None
Consultation	Dun&Bradstreet Int'l Ltd	2014- Termination	Multinational enterprise informationcertification	None
Tech authorization	Faraday Technology	2015-2025	Authorized use of 40nm circuit cell library	None
Consultation	Lloyd`s Register Quality Assurancelimited	2016- Termination	ISO9001: 2015 revision certification	None
Tech authorization	USB Implementers Forum	2018-2024	Authorized use of USB type C	None
Tech authorization	CAST, Inc.	2018- permanent	Authorized use of CAN Bus	None
Tech authorization	Faraday Technology	2018-2028	Authorized use of 90nm USB 3.0 &DDR	None
Tech authorization	IC-CRYSTAL	2019-2027	Authorized use of specific microprocessors	None
Tech authorization	Faraday Technology	2019-2029	Authorized use of 40nm circuit cell library	None
Tech authorization	Faraday Technology	2019-2029	Authorized use of SoC and USBOTG	None
Tech authorization	Hardent Corporation	2020- permanent	Authorized use of VESA Decoder	None
Tech Authorization	Veri Silicon	2021-2024	Authorized use of H.265 decoderandAINPU	None
Tech authorization	Faraday Technology	2021-2031	Authorized use of USB 3.0 Dual role controller`及`40LP DDR2/3 Combo PHY	None

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VI. Financial Information

Brief balance sheets and comprehensive income statements in the last five years
(1) Adoption of IFRS- Brief balance sheets and brief comprehensive income statements

Brief balance sheet –IFRS Accounting Standards (Consolidated financial information)

Unit: NT$1000

Year Item	Year Item	2017	2018	2019	2020	2021	Financial information as of March 31,2022
Current assets		3,619,600	3,410,730	3,614,625	4,340,082	5,711,586	5,962,331
Property, plant and equipment		443,783	652,407	630,884	617,454	636,065	638,882
Intangible assets		296,959	275,605	252,011	229,512	221,707	221,750
Otherassets		536,764	600,333	861,397	1,300,607	2,070,051	1,801,586
Total assets		4,897,106	4,939,075	5,358,917	6,487,655	8,639,409	8,624,549
Current liabilities	Before distribution	922,109	954,204	1,125,839	1,485,774	2,172,148	2,055,988
	After distribution	1,325,412	1,389,194	1,657,403	2,452,255	`＊`	--
Non-current liabilities		116,924	121,756	196,443	192,483	206,110	201,276
Total liabilities	Before distribution	1,039,033	1,075,960	1,322,282	1,678,257	2,378,258	2,257,264
	After distribution	1,442,336	1,510,950	1,853,846	2,644,738	`＊`	--
Equity attributable to owners of theparent		3,856,207	3,861,946	4,036,406	4,809,191	6,261,151	6,367,285
Capitalstock		1,613,743	1,612,403	1,610,801	1,610,801	1,610,801	1,610,801
Capital reserve		1,729,116	1,667,150	1,586,139	1,538,693	1,458,153	1,458,153
Retained earnings	Before distribution	569,095	864,150	1,056,578	1,534,546	2,380,884	2,785,438
	After distribution	165,792	429,160	525,014	568,065	`＊`	--
Other equity		(55,647)	(281,652)	(217,112)	125,151	811,313	512,893
Treasuryshares		(100)	(105)	0	--	--	--
Non-controllinginterest		1,866	1,169	229	207	--	--
~~T~~otal equity	Before distribution	3,858,073	3,863,115	4,036,635	4,809,398	6,261,151	6,367,285
	After distribution	3,454,770	3,428,125	3,505,071	3,842,917	`＊`	--

Note 1: The consolidated financial statements from 2017 to 2021 have all been audited and attested to by the CPAs.

Note 2: The consolidated financial statements for the first quarter of 2022 have been reviewed by the CPAs.

Note 3: ＊ To be resolved at the 2022 General Shareholders’ Meeting.

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Brief balance sheets -IFRS Accounting Standards (Parent company only financial information)

Unit: NT$1000

Year Item	Year Item	2017	2018	2019	2020	2021
Current assets		3,574,056	3,575,628	3,607,532	4,333,375	5,713,396
Property, plant and equipment		443,163	651,798	630,401	616,786	635,405
Intangible assets		294,667	273,880	250,627	228,362	220,823
Other assets		581,966	435,473	863,459	1,305,829	2,060,264
Total assets		4,893,852	4,936,779	5,352,019	6,484,352	8,629,888
~~C~~urrent liabilities	Before distribution	920,721	953,015	1,122,087	1,482,678	2,168,630
	After distribution	1,324,024	1,388,005	1,653,651	2,449,159	`＊`
Non-current liabilities		116,924	121,818	193,526	192,483	200,107
~~T~~otal liabilities	Before distribution	1,037,645	1,074,833	1,315,613	1,675,161	2,368,737
	After distribution	1,440,948	1,509,823	1,847,177	2,641,642	`＊`
Equity attributable to owners of the parent		3,856,207	3,861,946	4,036,406	4,809,191	6,261,151
Capital stock		1,613,743	1,612,403	1,610,801	1,610,801	1,610,801
Capital reserve		1,729,116	1,667,150	1,586,139	1,538,693	1,458,153
~~R~~etained earnings	Before distribution	569,095	864,150	1,056,578	1,534,546	2,380,884
	After distribution	165,792	429,160	525,014	568,065	`＊`
Other equity		(55,647)	(281,652)	(217,112)	125,151	811,313
Treasuryshares		(100)	(105)	--	--	--
Non-controllinginterest		--	--	--	--	--
~~T~~otal equity	Before distribution	3,856,207	3,861,946	4,036,406	4,809,191	6,261,151
	After distribution	3,452,904	3,426,956	3,504,842	3,842,710	`＊`

Note 1: The parent company only financial statements from 2017 to 2021 have all been audited and attested by the CPAs.

Note 2: * To be resolved at the 2022 General Shareholders’ Meeting.

71 -

Brief comprehensive income statement-IFRS Accounting Standards (Consolidated financial information)

Unit: NT$1000

information)					Unit:	NT$1000
Year Item	2017	2018	2019	2020	2021	2022Q1
Operatingrevenue	3,173,130	3,363,143	3,664,910	4,817,829	7,184,586	1,610,799
Operating grossprofit	1,611,761	1,772,668	1,925,892	2,458,267	3,783,169	852,296
Operating profit	491,747	551,326	665,794	1,113,703	2,096,399	458,243
Non-operatingrevenue and expense	(29,030)	32,344	13,807	9,531	110,704	16,817
Netprofit before tax	462,717	583,670	679,601	1,123,234	2,207,103	475,060
Profit or loss from continuing operations for the currentperiod	387,161	486,630	538,066	935,476	1,805,918	404,554
Loss from continuingoperations	--	--	--	--	--	--
Netprofit(loss)for the currentperiod	387,161	486,630	538,066	935,476	1,805,918	404,554
Other comprehensive income for the currentperiod(Net after tax)	92	(126,201)	54,209	362,761	612,555	(298,420)
Total comprehensive income for the currentperiod	387,253	360,429	592,275	1,298,237	2,418,473	106,134
Net profit attributable to owners of the parent	389,553	486,961	539,340	935,498	1,805,886	404,554
Net pofit attributable to non- controllinginterest	(2,392)	(331)	(1,274)	(22)	32	--
Comprehensive income attributable to owners of theparent	389,646	360,759	593,558	1,298,259	2,418,441	106,134
Comprehensive income attributable to non-controllinginterest	(2,393)	(330)	(1,283)	(22)	32	--
Earningsper share	2.47	3.08	3.38	5.83	11.21	2.51

Note 1: The consolidated financial statements from 2017 to 2021 have all been audited and attested by the CPAs.

Note 2: The consolidated financial statements for the first quarter of 2022 have been reviewed by the CPAs.

72 -

Brief comprehensive income statements -IFRS Accounting Standards (Parent company only financial information)

Unit: NT$1000

Year Item	2017	2018	2019	2020	2021
Operatingrevenue	3,167,765	3,361,078	3,660,152	4,816,964	7,185,089
Operating grossprofit	1,610,232	1,771,901	1,924,882	2,458,712	3,784,818
Operating profit or loss	522,374	559,381	692,043	1,113,464	2,096,551
Non-operating revenue and expense	(57,309)	24,437	(11,413)	9,629	110,500
Netprofit before tax	465,065	583,818	680,630	1,123,093	2,207,051
Profit or loss from continuing operations for the currentperiod	389,553	486,961	539,340	935,498	1,805,886
Loss from continuingoperations	--	--	--	--	--
Netprofit(loss)for currentperiod	389,553	486,961	539,340	935,498	1,805,886
Other comprehensive income for the currentperiod(Net after tax)	93	(126,202)	54,218	362,761	612,555
Total comprehensive income for the currentperiod	389,646	360,759	593,558	1,298,259	2,418,441
Earningsper share	2.47	3.08	3.38	5.83	11.21

Note 1: The parent company only financial statements from 2016 to 2020 have all been audited and attested by the CPAs.

73 -

(2) The names of CPA conducting financial audits in the most recent five years and their audit opinions

Year	Accountingfilm	Names ofCPAs	Audit opinions
2017	Ernst & Young	Wan-Ju Chiu, Tu, Chia-ling	Unqualified opinion
2018	Ernst & Young	Wan-Ju Chiu, Hsin-Min Hsu	Unqualified opinion
2019	Ernst & Young	Wan-Ju Chiu, Hsin-Min Hsu	Unqualified opinion
2020	Ernst & Young	Wan-Ju Chiu, Hsin-Min Hsu	Unqualified opinion
2021	Ernst & Young	Wan-Ju Chiu, Hsin-Min Hsu	Unqualified opinion

74 -

2. Financial Analysis for the most recent five years

IFRS-( Consolidated)Financial analysis

Year Items for Analysis	Year Items for Analysis	2017	2018	2019	2020	2021	Financial information as of March 31,2022
Financial structure (%)	Debt-asset ratio	21.22	21.78	24.67	25.86	27.53	26.17
	Ratio of long-term capital to property, plant and equipment	895.70	610.79	670.97	810.08	1,016.76	1,028.13
Solvency (%)	Current ratio	392.53	357.44	321.06	292.10	262.94	289.99
	Quick ratio	353.42	306.23	286.01	254.44	210.08	228.18
	Interest coverage ratio	35,594.61	291,836	335.61	635.95	1,291.70	1,031.49
Operating ability	Receivables turnover rate(times)	6.19	6.96	7.03	6.82	7.69	6.40
	Average collection days for receivables	58	52	52	54	47	57
	Inventoryturnover rate(times)	4.11	3.54	3.80	5.01	3.93	2.41
	Payables turnover rate(times)	4.42	4.25	4.63	4.67	4.41	3.70
	Average days for sale	89	103	96	73	93	151
	Property, plant and equipment turnover(times)	9.01	6.13	5.71	7.71	11.46	10.10
	Total asset turnover rate(times)	0.66	0.68	0.71	0.81	0.94	0.74
Profitability	Return on assets(%)	8.06	9.89	10.48	15.81	23.89	4.69
	Return on equity(%)	10.11	12.60	13.62	21.15	32.62	6.40
	Ratio of net profit before tax to paid-in capital(%)	28.67	36.19	42.19	69.73	137.01	29.49
	Netprofit ratio(%)	12.20	14.46	14.68	19.41	25.13	25.11
	Earningsper share(NT$)	2.47	3.08	3.38	5.83	11.21	2.51
Cash flows	Cash flow ratio(%)	75.07	58.83	86.12	11.61	47.26	7.00
	Cash flow adequacyratio(%)	127.24	105.28	116.36	97.28	80.57	150.75
	Cash flow reinvestment ratio(%)	5.86	4.19	13.49	(7.50)	0.96	2.25
Leveraging	Operatingleverage	1.09	1.09	1.12	1.06	1.03	1.02
	Financial leverage	1.00	1.00	1.00	1.00	1.00	1.00

Analysis and explanation for those with a change of 20% or more in the last two years are set out as follows: 1.The increase in the Ratio of long-term capital to property, plant and equipment was mainly due to the increase in total equity this year.

2.The increase in Interest coverage ratio was mainly due to the increase in net profit before tax this year.

The decrease in Inventory turnover rate was mainly due to the increase in the inventory this year.
4.The increase in property, plant and equipment turnover was mainly due to the increase in net sales this year.
5.The increase in return on assets, return on equity and net profit ratio was mainly due to the increase in net profit after taxes this year.
6.The increase in the net profit before tax to paid-in capital was mainly due to the increase in the net profit before tax this year.

7.The increase in earnings per share was mainly due to the increase in net profit this year.

8.The increase in cash flow ratio was mainly due to the increase in net profit this year.

9.The increase in cash reinvestment ratio was mainly due to the increase in net cash flow from operating activities this year.

Note 1: The consolidated financial statements from 2017 to 2021 have all been audited and attested by the CPAs.

Note 2: The consolidated financial statements for the first quarter of 2022 have been reviewed by the CPAs.

75 -

IFRS-(Parent company only)Financial analysis

Year Items for Analysis	Year Items for Analysis	2017	2018	2019	2020	2021
Financial structure (%)	Debt-asset ratio	21.21	21.77	24.58	25.83	27.45
	Ratio of long-term capital to property, plant and equipment	896.53	611.19	670.99	810.92	1,016.87
Solvency (%)	Current ratio	388.18	354.20	321.50	292.26	263.45
	Quick ratio	349.35	303.27	286.36	254.54	210.41
	Interest coverage ratio	35,775.23	194,607.00	444.69	751.22	1,519.96
Operating ability	Receivables turnover rate(times)	6.19	6.97	7.03	6.84	7.70
	Average collection days for receivables	58	52	52	53	47
	Inventoryturnover rate(times)	4.11	3.54	3.80	5.00	3.93
	Payables turnover rate(times)	4.42	4.24	4.62	4.67	4.41
	Average days for sale	88	103	96	73	92
	Property, plant and equipment turnover(times)	9.04	6.13	5.70	7.72	11.47
	Total asset turnover rate(times)	0.66	0.68	0.71	0.81	0.95
Profitability	Return on assets(%)	8.11	9.90	10.50	15.82	23.91
	Return on equity(%)	10.18	12.61	13.65	21.15	32.62
	Ratio of net profit before tax to paid-in capital (%)	28.81	36.20	42.25	69.72	137.01
	Netprofit ratio(%)	12.29	14.48	14.73	19.42	25.13
	Earningsper share(NT$)	2.47	3.08	3.38	5.83	11.21
Cash flow	Cash flow ratio(%)	78.60	59.58	86.92	11.41	46.97
	Cash flow adequacyratio(%)	131.45	108.75	119.48	99.32	81.39
	Cash flow reinvestment ratio(%)	6.71	4.37	13.63	(7.58)	0.83
Leveraging	Operatingleverage	1.08	1.09	1.09	1.06	1.02
	Financial leverage	1.00	1.00	1.00	1.00	1.00

1.The increase in the Ratio of long-term capital to property, plant and equipment was mainly due to the increase in total equity this year.

2.The increase in Interest coverage ratio was mainly due to the increase in net profit before tax this year.

The decrease in Inventory turnover rate was mainly due to the increase in the inventory this year.

4.The increase in property, plant and equipment turnover was mainly due to the increase in net sales this year.

5.The Increase in return on assets, return on equity and net profit ratio was mainly due to the increase in net profit after taxes this year.

6.The Increase in the net profit before tax to paid-in capital was mainly due to the increase in the net profit before tax this year.

7.The increase in earnings per share was mainly due to the increase in net profit this year.

8.The increase in cash flow ratio was mainly due to the increase in net profit this year.

9.The increase in cash reinvestment ratio was mainly due to the increase in net cash flow from operating activities this year.

Note: The parent company only financial statements from 2017 to 2021 have all been audited and attested by the CPAs.

76 -
Financial structure
A. Debt-asset ratio = total liabilities / total assets
B. Ratio of long-term capital to property, plant and equipment = (total equity + noncurrent liabilities) / net worth of property, plant and equipment
Solvency
A. Current ratio = current assets / current liabilities
＝
B. Quick ratio (current assets – inventory – prepaid expenses) / current liabilities
C. Interest coverage ratio = income before income tax and interest expenses / current interest expenses
Operating ability
A. Receivables (including accounts receivable and notes receivable arising from business operations) turnover rate = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period
B. Average collection days for receivables ＝ 365/Receivables turnover rate 。
C. Inventory turnover rate ＝ cost of sales / average inventory
D. Payables (including accounts payable and notes payable arising from business operations) turnover rate = cost of sale / average payables (including accounts payable and notes payable arising from business operations) for each period
E. Average days of sale =365/Inventory turnover rate
＝
F. Property, plant and equipment turnover net sales / average net of property, plant and equipment
G. Total asset turnover rate ＝ net sales / average total assets
Profitability
A. Return on assets= [profit or loss after tax+ interest expenses x (1- tax rate)] / average total assets
B. Return on equity = profit or loss after tax / average total equity
＝
C. Ratio of net profit before tax to paid-in capital Net profit before tax /paid-in capital
＝
D. Net profit ratio profit or loss after tax / net sales
E. Earnings per share ＝ (profit or loss attributable to owners of the parent － dividends on special shares)/ weighted average number of issued shares
Cash flow
A. Cash flow ratio = Net cash flow from operating activities / current liabilities
B. Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend)
C. Cash flow reinvestment ratio = (Net cash flow from operating activities – cash dividend)/( Gross property, plant and equipment value ＋ long-term investment ＋ other non-current assets ＋ working capital)
Leveraging
A. Operating leverage = (net operating revenue – variable operating costs and expenses) / Operating revenue
B. Financial leverage = Operating revenue / (Operating revenue - interest expenses)
77 -

3. The Audit Committee’s review report

Audit Committee’s Review Report

The Board of Directors has prepared and submitted the Company's 2021 business report, financial statements, and earnings distribution proposal. The financial statements have been completed with an audit by CPAs Wan-Ju Chiu and Hsin-Min Hsu of Ernst & Young Accounting Firm, and an audited report has been issued thereon. The aforementioned business report, financial statements, and earnings distribution proposal have been reviewed by this Committee and found to have no discrepancy. The above is hereby reported in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

To ITE Tech. Inc. 2022 Annual General Shareholders' Meeting.

Independent director: Huang, Yi-tsung Independent director: Hsu, Shih-fang Independent director: Chen, Shou-shan

February 24, 2022

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4. Independent Auditors' Report and Consolidated Financial Statements

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83 -

English Translation of Consolidated Financial Statements Originally Issued in Chinese ITE TECH. INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

As of December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

ASSETS	Notes		As of Dec	ember 31,		LIABILITIES AND EQUITY	Notes		As of Dec	ember 31,
		2021		2020				2021		2020
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss-current Notes receivables, net Trade receivables, net Trade receivables from related parties, net Other receivables Inventories, net Prepayments Other current assets Total current assets Non-current assets Financial assets at fair value through profit or loss-noncurrent Financial assets at fair value through other comprehensive income-noncurrent Financial assets measured at amortized cost-noncurrent Investments accounted for using the equity method Property, plant and equipment Right-of-use assets Intangible assets Deferred tax assets Other noncurrent assets-others Total non-current assets Total assets	4,6(1) 4,6(2),6(20) 4,6(5),6(17) 4,6(6),6(17) 4,6(6),6(17),7 4,6(7) 4,6(2),6(20) 4,6(3) 4,6(4),8 4,6(8) 4,6(9) 4,6(18) 4,6(10),6(11) 4,6(22)	$1,975,925 1,533,832 9,248 1,034,939 3,011 6,117 1,076,888 71,506 120	22.87 17.75 0.11 11.98 0.04 0.07 12.46 0.83 -	$2,027,313 932,895 4,071 813,939 - 841 495,831 65,101 91	31.25 14.38 0.06 12.55 - 0.01 7.64 1.01 -	Current liabilities Contract liabilities-current Trade payables Trade payables to related parties Other payables Other payables to related parties Current tax liabilities Lease liabilities-current Other current liabilities Total current liabilities Non-current liabilities Deferred tax liabilities Lease liabilities-noncurrent Net defined benefit liabilities-noncurrent Deposits received Total non-current liabilities Total liabilities Equity attributable to owners of the parent Share capital Common stock Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Other equity Equity attributable to owners of the parent Non-controlling interests Total equity Total liabilities and equity	4,6(16) 7 7 4,6(22) 4,6(18) 4,6(12) 4,6(22) 4,6(18) 4,6(13) 6(14) 6(14) 6(14) 6(14)	$4,996 620,558 298,187 699,135 3,105 356,677 7,046 182,444	0.06 7.18 3.45 8.09 0.04 4.13 0.08 2.11	$7,012 418,755 203,733 449,813 6,193 196,728 6,228 197,312	0.11 6.45 3.14 6.93 0.10 3.03 0.10 3.04
								2,172,148	25.14	1,485,774	22.90
		5,711,586	66.11	4,340,082	66.90			3,043 86,726 87,858 28,483	0.04 1.00 1.02 0.33	102 83,811 84,279 24,291	- 1.29 1.30 0.38
		31,397 1,838,958 4,230 13,294 636,065 91,439 221,707 72,676 18,057	0.36 21.29 0.05 0.15 7.36 1.06 2.57 0.84 0.21	27,404 1,105,254 4,230 8,488 617,454 88,425 229,512 62,508 4,298	0.42 17.04 0.06 0.13 9.52 1.36 3.54 0.96 0.07
								206,110	2.39	192,483	2.97
								2,378,258	27.53	1,678,257	25.87
								1,610,801 1,458,153 414,947 - 1,965,937 811,313	18.64 16.88 4.80 - 22.76 9.39	1,610,801 1,538,693 297,664 211,900 1,024,982 125,151	24.83 23.72 4.59 3.26 15.80 1.93
								6,261,151	72.47	4,809,191	74.13
		2,927,823	33.89	2,147,573	33.10			-	-	207	-
		$8,639,409	100.00	$6,487,655	100.00			6,261,151	72.47	4,809,398	74.13
								$8,639,409	100.00	$6,487,655	100.00

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

84 -

English Translation of Consolidated Financial Statements Originally Issued in Chinese

ITE TECH. INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Description	Notes	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2021		2020
		Amount	%	Amount	%
Operating revenues Operating costs Gross profit Operating expenses Selling expenses Administrative expenses	4,6(16),7 6(7),6(18),6(19),7 6(18),6(19),7	$7,184,586 (3,401,417)	100.00 (47.34)	$4,817,829 (2,359,562)	100.00 (48.98) 51.02 (6.85) (5.38)
		3,783,169	52.66	2,458,267
		(421,918) (320,393)	(5.87) (4.46)	(330,121) (259,320)
Research and development expenses Expected credit gains Total operating expenses Operating income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of profit of associates and joint ventures accounted for using the equity method Total non-operating income and expenses Net income before income tax Income tax expense Net income Other comprehensive income (loss) Items that may not be reclassified subsequently to profit or loss		(946,059)	(13.17)	(755,123)	(15.67)
	6(17)	1,600	0.02	-	-
		(1,686,770)	(23.48)	(1,344,564)	(27.90)
		2,096,399	29.18	1,113,703	23.12

		5,124	0.07	10,261	0.21
	6(20),7	97,339	1.35	8,215	0.17
	6(20)	5,145	0.07	(8,380)	(0.17)
	6(20)	(1,710)	(0.02)	(1,769)	(0.03)
	6(8)	4,806	0.07	1,204	0.02
		110,704	1.54	9,531	0.20
		2,207,103	30.72	1,123,234	23.32
	4,6(22)	(401,185)	(5.58)	(187,758)	(3.90)
		1,805,918	25.14	935,476	19.42
	6(21)

Remeasurements of defined benefit plans	6(13)	(4,999)	(0.07)	2,366	0.05
Unrealized gains (losses) from equity instrument investments measured at fair value through other comprehensive income Income tax relating to those items not to be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss Exchange differences resulting from translating the financial statements of foreign operations Other comprehensive income, net of tax Total comprehensive income		619,358	8.62	363,785	7.55
		(1,812)	(0.03)	(3,418)	(0.07)

		8	-	28	-
		612,555	8.52	362,761	7.53
		$2,418,473	33.66	$1,298,237	26.95

Net income (loss) for the periods attributable to : Owners of the parent Non-controlling interests
		$1,805,886		$935,498
		32		(22)
		$1,805,918		$935,476
Total comprehensive income for the periods attributable to : Owners of the parent Non-controlling interests
		$2,418,441		$1,298,259
		32		(22)
Earning per share(in New Taiwan Dollars)	6(23)	$2,418,473		$1,298,237

Basic earnings per share (in New Taiwan Dollars) Diluted earnings per share (in New Taiwan Dollars)		$11.21		$5.83
		$10.94		$5.71

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

85 -

English Translation of Consolidated Financial Statements Originally Issued in Chinese ITE TECH. INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Description			Equityattributable to	Equityattributable to	Equityattributable to	owners of theparent				Non-controlling interests	Total equity
	Common stock	Capital surplus	Retained Earnings				Other equity		Equity attributable to owners of the parent
			Legal reserve	Special reserve	Undistributed earnings	Exchange differences resulting from translating the financial statements of foreign operations	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Others
Balance as of January 1, 2020 Appropriation and distribution of 2019 earnings: Legal reserve Cash dividends Reversal of special reserve	$1,610,801 - - - - - - - - - $1,610,801 $1,610,801 - - - -	$1,586,139 - - - (48,324) - -	$238,288 59,376 - - - - -	$258,594 - - (46,694) - - -	$559,696 (59,376) (483,240) 46,694 - 935,498 1,892	$(281) - - - - - 28	$(211,619) - - - - - 360,841	$(5,212) - - - - - -	$4,036,406 - (483,240) - (48,324) 935,498 362,761	$229 - - - - (22) -	$4,036,635 - (483,240) - (48,324) 935,476 362,761
Changes in other capital surplus
Cash dividends distributed from capital surplus Profit (loss) for the year ended December 31, 2020 Other comprehensive income for the year ended December 31, 2020 Total comprehensive income for the year ended December 31, 2020 Share-based payment transactions Proceeds from disposal of equity instruments measured at fair value through other comprehensive income Balance as of December 31, 2020 Balance as of January 1, 2021 Appropriation and distribution of 2020 earnings: Legal reserve Cash dividends Reversal of special reserve
		- 878 -	- - -	- - -	937,390 - 23,818	28 - -	360,841 - (23,818)	- 5,212 -	1,298,259 6,090 -	(22) - -	1,298,237 6,090 -
		$1,538,693	$297,664	$211,900	$1,024,982	$(253)	$125,404	$-	$4,809,191	$207	$4,809,398
		$1,538,693 - - - (80,540)	$297,664 117,283 - - -	$211,900 - - (211,900) -	$1,024,982 (117,283) (885,941) 211,900 -	$(253) - - - -	$125,404 - - - -	$- - - - -	$4,809,191 - (885,941) - (80,540)	$207 - - - -	$4,809,398 - (885,941) - (80,540)
Changes in other capital surplus
Cash dividends distributed from capital surplus
Profit for the year ended December 31, 2021 Other comprehensive income for the year ended December 31, 2021 Total comprehensive income for the year ended December 31, 2021 Disposal of subsidiaries Proceeds from disposal of equity instruments measured at fair value through other comprehensive income Balance as of December 31, 2021	- - - - - $1,610,801	- -	- -	- -	1,805,886 (3,999)	- 8	- 616,546	- -	1,805,886 612,555	32 -	1,805,918 612,555
		- - -	- - -	- - -	1,801,887 - (69,608)	8 - -	616,546 - 69,608	- - -	2,418,441 - -	32 (239) -	2,418,473 (239) -
		$1,458,153	$414,947	$-	$1,965,937	$(245)	$811,558	$-	$6,261,151	$-	$6,261,151

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

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English Translation of Consolidated Financial Statements Originally Issued in Chinese

ITE TECH. INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2021 and 2020

(Expressed in thousands of New Taiwan Dollars)

Description	For the years ended December 31,	For the years ended December 31,	Description	For the years ended December 31,	For the years ended December 31,
	2021	2020		2021	2020

Cash flows from operating activities :			Cash flows from investing activities :
Profit before tax from continuing operations	$2,207,103	$1,123,234	Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from capital return of financial assets at fair value through other comprehensive income Acquisition of financial assets measured at amortized cost Acquisition of financial assets at fair value through profit or loss 處Disposal of subsidiary 取Acquisition of property, plant and equipment 取Acquisition of intangible assets Increase in other non-current assets-others 預Increase in prepayments for equipment Dividends received Net cash used in investing activities	(114,354)	(100,000)
Adjustments for: The profit or loss items which did not affect cash flows: Depreciation Amortization Expected credit gains Gains on financial assets and liabilities at fair value through profit or loss	50,660 14,183 (1,600) (4,201)	41,127 29,949 - (8,288)		8 - - (649) (5,617) (60,445)	48,056 10,600 (3) (22,522) - (20,424)
Interest expenses Interest income Dividend income Share-based payment expenses Share of profit of associates and joint ventures accounted for using the equity method Losses on disposal of property, plant and equipment Gains on disposal of investments	1,710 (5,124) (93,472) - (4,806) 29 (1,996)	1,769 (10,261) (5,026) 5,854 (1,204) - -		(6,375) (2,463) (11,296) 93,472	(7,445) (21) (3,075) 5,026
				(107,719)	(89,808)

Changes in operating assets and liabilities:
Financial assets mandatorily measured at fair value through profit or loss	(598,084)	(780,000)
Notes receivables Trade receivables	(5,177) (219,400)	2,432 (230,550)
Trade receivables from related parties	(3,011)	-	Cash flows from financing activities :
Inventories	(581,057)	(150,587)	存Increase in deposits received	4,192	8,603
Prepayments	(6,405)	(14,698)	Cash payment for the principal portion of the lease liabilities 發Cash dividends Net cash used in financing activities	(8,145)	(6,675)
Other current assets Contract liabilities	(29) (2,016)	(1) (9,542)		(966,481)	(531,564)
				(970,434)	(529,636)
Trade payables	201,803	153,224
Trade payables to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liabilities Cash generated from operating activities: Interest received Interest paid Income tax paid Net cash provided by operating activities	94,454 249,322 (3,088) (14,868) (1,420)	81,912 122,504 (12,158) 70,623 (5,064)
	1,273,510	405,249
	5,226 (1,710) (250,275)	12,594 (1,769) (243,501)	Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	14	34
				(51,388) 2,027,313	(446,837) 2,474,150
	1,026,751	172,573		$1,975,925	$2,027,313

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

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English Translation of Financial Statements Originally Issued in Chinese ITE TECH. INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For The Years Ended December 31, 2021 and 2020

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

1. Organization and Operation

ITE Tech. Inc. (“the Company”) was incorporated in Hsinchu Science Park on May 29, 1996. The Company's main products are Super I/O control (SIO) ICs for desktop computers, embedded control (EC) ICs for notebook computers, high-speed audio-video interface related ICs, system on a chip (SoC), and other customized application chips. The Company’s shares are traded in Taiwan Stock Exchange. The Company’s registered office and the main business location is at 3F, No.13, Innovation Road I, Hsinchu Science Park, Hsinchu City.

2. Date and Procedures of Authorization of Financial Statements for Issue

The consolidated financial statements of the Company and its subsidiaries (the “Group”) were authorized for issue by the Board of Directors on February 24, 2022.

3. Newly Issued or Revised Standards and Interpretations

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after January 1, 2021. The application of these new standards and amendments had no material effect on the Group.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) and endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Dates
a	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	January 1, 2022

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(a) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential “day 2” gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.

B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss.

C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

D. Annual Improvements to IFRS Standards 2018 - 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in

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IAS 41 with those in other IFRS Standards.

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after January 1, 2022. The standards and interpretations have no material impact on the Group.

(3) Standards or interpretations issued, revised, or amended, by IASB which are not endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New,Revised or Amended Standards and Interpretations	Effective Date issued
a	IFRS 10 “Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” – Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	January1, 2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	January 1, 2023
d	Disclosure Initiative- Accounting Policies – Amendments to IAS 1	January 1, 2023
e	Definition of Accounting Estimates – Amendments to IAS 8	January1, 2023
f	Deferred Tax related to Assets and Liabilities arising from a single transaction-Amendment to IAS 12	January 1, 2023

(a) IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

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(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in June 2020. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after January 1, 2023 (from the original effective date of January 1, 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after January 1, 2023.

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Disclosure Initiative – Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

(e) Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and included other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

(f) Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
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The amendments narrow the scope of the recognition exemption in paragraphs 15 and 24 of IAS 12 so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The Group assesses that there will be no significant impact on the Group’s financial statements.

4. Summary of Significant Accounting Policies

(1) Statement of compliance

The consolidated financial statements of the Group for the years ended December 31, 2021 and 2020 have been prepared in accordance with Regulations Governing the Preparation of Financial Report by Securities Issuers (the “Regulations”) and International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretation Committee or the former Standing Interpretations Committee as endorsed by the FSC.

(2) Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

(3) Basis of consolidation

Preparation principle of consolidated financial statements

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

(a) power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
(b) exposure, or rights, to variable returns from its involvement with the investee, and
(c) the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

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(a) the contractual arrangement with the other vote holders of the investee
(b) rights arising from other contractual arrangements
(c) the Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If the Group loses control of a subsidiary, it:

(a) derecognizes the assets (including goodwill) and liabilities of the subsidiary;
(b) derecognizes the carrying amount of any non-controlling interest;
(c) recognizes the fair value of the consideration received;
(d) recognizes the fair value of any investment retained;
(e) recognizes any surplus or deficit in profit or loss; and
(f) reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss.

The consolidated entities are listed as follows:

Investor	Subsidiaries	Main businesses	Percentage of ownership	Percentage of ownership
			As of December 31,
			2021	2020
ITE Tech. Inc. ITE Tech. Inc.	ITE Tech. (Shenzhen) Inc. Ubiquity Smart Technology Inc.	Technological consultation services for ICs products Wholesale of electronic materials	100.00% -%	100.00% 95.74%

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Ubiquity Smart Technology Inc. was resolved for dissolution and liquidation by the provisional meeting of shareholders on September 30, 2021.

(4) Foreign currency transactions

The Group’s consolidated financial statements are presented in NT$, which is also the parent

company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transaction.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(5) Translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are

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recognized in other comprehensive income. On the disposal of the foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposals:

(a) when the partial disposal involves the loss of control of a subsidiary that includes a foreign operation; and
(b) when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(6) Current and non-current distinction

An asset is classified as current when:

(a) the Group expects to realize the asset or intends to sell or consume it, in its normal operating cycle
(b) the Group holds the asset primarily for the purpose of trading
(c) the Group expects to realize the asset within twelve months after the reporting period
(d) the asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

(a) the Group expects to settle the liability in its normal operating cycle
(b) the Group holds the liability primarily for the purpose of trading
(c) the liability is due to be settled within twelve months after the reporting period
(d) the Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the
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option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

(7) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including times deposits with contract periods within six months).

(8) Financial instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

(a) Financial instruments: Recognition and Measurement

The Group accounts for regular way purchase or sales of financial assets on the trade date.

The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

I. the Group’s business model for managing the financial assets and
II. the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables, financial assets measured at amortized cost, other receivables and other non-current assets etc., on balance sheet as at the reporting date:

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
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outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

I. purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
II. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial assets measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

I. the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets 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.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

I. a gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
II. when the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment
III. interest revenue is calculated by using the effective interest method. This is
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calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

i. purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
ii. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.

Financial assets measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

(b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on debt instrument investments measured at financial asset measured at amortized cost.

The Group measures expected credit losses of a financial instrument in a way that reflects:

I. an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
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II. the time value of money; and
III. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measured as follows:

I. at an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
II. at an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
III. for trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

A financial asset is derecognized when:

I. the rights to receive cash flows from the asset have expired.
II. the Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
III. the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

(d) Financial liabilities and equity

Financial liabilities

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Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(e) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(9) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability.
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The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials – Actual purchase cost measured using weighted-average method.

Finished goods and work in progress – Cost of direct materials and manufacturing overheads.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(11) Investments accounted for using the equity method

The Group’s investment in its associate is accounted for using the equity method. An associate is an entity over which the Group has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or an investment in a joint venture

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is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the Group’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Group’s percentage of ownership interests in the associate or joint venture, the Group recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro rata basis.

When the associate or joint venture issues new stock, and the Group’s interest in an associate or a joint venture is reduced or increased as the Group fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in capital surplus and investments accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Group disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures . If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Group estimates:

(a) its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the
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associate and the proceeds on the ultimate disposal of the investment; or

(b) the present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing of goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate or joint venture, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(12) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, Plant and Equipment . When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings	3`～`41 years
Machinery and equipment	6 years
Research and development equipment	4 years
Office equipment	3`～`5 years
Other equipment	4 years

An item of property, plant and equipment and any significant part initially recognized is

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derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(13) Lease

The Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether the contract, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and
(b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate standalone price of the non-lease components. The relative stand-alone price of lease and nonlease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximizing the use of observable information.

Group as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts.

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the

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following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Group measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Group measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a) the amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Group measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-ofuse asset or the end of the lease term.

The Group applies IAS 36 Impairment of Assets to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Group accounted for as short-term leases or leases of low-

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value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements of comprehensive income.

For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Group as a lessor

At inception of a contract, the Group classifies its lease not transfer substantially all the risks and rewards incidental to ownership of an underlying asset as an operating lease.

The Group recognizes lease payments from operating leases as rental income on straightline basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(14) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

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Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Group can demonstrate:

(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale
(b) its intention to complete and its ability to use or sell the asset
(c) how the asset will generate future economic benefits
(d) the availability of resources to complete the asset
(e) the ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit.

A summary of the policies applied to the Group’s intangible assets is as follows:

Useful lives Amortization method used Internally generated or acquired	Patents Finite(10 years) Amortized on a straight-line basis over the period of the patent Acquired externally	Computer software Finite(3~10 years) Amortized on a straight-line basis over the estimated useful life Acquired externally	Other intangible assets
			Finite(3~15 years) Amortized on a straight-line basis over the estimated useful life Acquired externally

(15) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(16) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Sales returns and allowances

Sales returns and allowances are accounted in accordance with IFRS 15.

(17) Treasury shares

Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. Any difference between the carrying amount and the consideration is recognized in equity.

(18) Revenue recognition

The Group’s revenue arising from contracts with customers are primarily related to sale of goods. The accounting policy is explained as follows:

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Sale of goods

The Group manufactures and sells goods. Sales are recognized when control of the goods is transferred to the customers and the goods are delivered to the customers. The main products of the Group are manufacturing and marketing of integrated circuit design products and revenue is recognized based on the consideration stated in the contract, net of the estimated discounts. The Group estimates the discounts using the expected value method based on historical experiences. Revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected discounts (recognized as other current liabilities).

The credit period of the Group’s sale of goods is from 30 to 90 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Group usually collects the payments shortly after transfer of goods to customers; therefore there is no significant financing component to the contract. For some of the contracts, part of the consideration was received from customers upon signing the contract, then the Group has the obligation to provide the goods subsequently; these contracts should be presented as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component is arisen.

(19) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company. Therefore, fund assets are not included in the Company’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees’ subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries make contribution to the plan based on the requirements of local regulations.

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asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and
(b) the date that the Group recognizes restructuring or termination costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(20) Share-based payment transactions

The cost of equity-settled transactions between the Group and its employees is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the

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computation of diluted earnings per share.

The cost of restricted stocks issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Group recognized unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(21) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

(a) where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
(b) in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

(a) where the deferred tax asset relating to the deductible temporary difference arises from
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the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

(b) in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities 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. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(22) Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any noncontrolling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

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Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

5. Significant accounting judgements, estimates and assumptions

The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(1) Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as

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the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash generating units, including a sensitivity analysis, are further explained in Note 6(11).

(2) Revenue recognition – sales returns and allowance

The Group estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, revenue is recognized to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6(12) and 6(16) for more details.

6. Contents of significant accounts

(1) Cash and cash equivalents

Cash on hand Checking and saving accounts Time deposits Total	As of December 31,	As of December 31,
	2021	2020
	$255 1,035,670 940,000	$249 216,314 1,810,750
	$1,975,925	$2,027,313

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

Mandatorily measured at fair value through profit or loss: Funds Current Non-current Total	As of December 31,	As of December 31,
	2021	2020
	$1,565,229	$960,299
	$1,533,832 31,397	$932,895 27,404
	$1,565,229	$960,299

Financial assets at fair value through profit or loss were not pledged.

The Group converted Embestor Technology Inc.’s preferred stock to common stock in July 2020 upon maturity of the preferred stock, and the Group reclassified this investment from mandatorily measured at fair value through profit or loss to financial assets at fair value through other comprehensive income based on the fair value of

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NT$10,796 thousand.

(3) Financial assets at fair value through other comprehensive income, non-current

Equity instrument investments measured at fair value through other comprehensive income-Non-current: Listed company stocks Unlisted company stocks Total	As of December 31,	As of December 31,
	2021	2020
	$43,351 1,795,607	$13,740 1,091,514
	$1,838,958	$1,105,254

Financial assets at fair value through other comprehensive income were not pledged.

The Group received NT$7,200 thousand and NT$3,400 thousand in 2020 for the return of capital from Darjun Venture Corporation and TriKnight Capital Corporation, respectively, which were reported under equity instrument investments measured at fair value through other comprehensive income.

The Group’s dividend income related to equity instrument investments measured at fair value through other comprehensive income for the years ended December 31, 2021 and 2020 are as follow:

Related to investments held at the end of the reporting period Related to investments derecognized during the period Dividends recognized during the period	Years Ended	December 31,
	2021	2020
	$91,789 -	$3,562 -
	$91,789	$3,562

In consideration of the Group’s investment strategy, the Group disposed and derecognized partial equity instrument investments measured at fair value through other comprehensive income. Details on derecognition of such investments for the years ended December 31, 2021 and 2020 are as follow:

The fair value of the investments at the date of derecognition The cumulative gain or (loss) on disposal reclassified from other equity to retained earnings	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$8 $(69,608)	$48,056 $23,818

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(4) Financial assets measured at amortized cost, non-current

Time deposits	As of December 31,	As of December 31,
	2021	2020
	$4,230	$4,230

The Group classified certain financial assets as financial assets measured at amortized cost. Since credit risk is low, expected credit losses during the duration are not significant. Please refer to Note 8 for more details on financial assets measured at amortized cost under pledge, and refer to Note 12 for more details on credit risk.

(5) Notes receivables

Notes receivables arising from operating activities Less: loss allowance Total	As of December 31,	As of December 31,
	2021	2020
	$9,248 -	$4,071 -
	$9,248	$4,071

Notes receivables were not pledged.

The Group follows the requirement of IFRS 9 to assess the impairment. Please refer to Note 6 (17) for more details on loss allowance and Note 12 for details on credit risk.

(6) Trade receivables and trade receivables from related parties

Trade receivables Less: loss allowance Subtotal Trade receivables from related parties Less: loss allowance Subtotal Total	As of December 31,	As of December 31,
	2021	2020
	$1,034,939 -	$815,539 (1,600)
	1,034,939	813,939
	3,011 -	- -
	3,011	-
	$1,037,950	$813,939

Trade receivables and trade receivables from related parties were not pledged.

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Trade receivables are generally on 30-90 day terms. The total carrying amounts were NT$1,037,950 thousand and NT$815,539 thousand as of December 31, 2021 and 2020, respectively. Please refer to Note 6(17) for more details on impairment of trade receivables, and Note 12 for more details on credit risk.

(7) Inventories

Raw materials Work in progress Finished goods Total	As of December 31,	As of December 31,
	2021	2020
	$13,410 569,511 493,967	$20,803 376,249 98,779
	$1,076,888	$495,831

The cost of inventories recognized in expenses amounted to NT$3,401,417 thousand and NT$2,359,562 thousand for the years ended December 31, 2021 and 2020, respectively, including the inventory valuation loss of NT$85,499 thousand and NT$4,253 thousand for the years ended December 31, 2021 and 2020, respectively.

The reversals of allowance for inventory valuation and obsolescence loss resulting from inventories scrapped amounted to NT$22,458 thousand and NT$13,706 thousand for the years ended December 31, 2021 and 2020, respectively.

Inventories were not pledged.

(8) Investments accounted for using equity method

The detail of investments accounted for under the equity method is as follows:

As of December 31,	As of December 31,	As of December 31,
2021 Carrying amount Percentage of ownership $13,294 36.32%	2020
Carrying amount	Carrying amount	Percentage of ownership
$13,294	$8,488	36.32%

Although the Group is the largest shareholder of some associates; after comprehensive assessment, the Group does not own the major voting rights as the remaining voting rights holders are able to align and prevent the Group from ruling the relevant operation. Therefore, the Group does not control but owns significant influence over the aforementioned associate.

117 -

The aggregate amount of the Group’s share of all its individually immaterial associate that is accounted for using the equity method is as follows:

Income from continuing operations Other comprehensive income (net of tax) Total comprehensive income	Years Ended	December 31,
	2021	2020
	$4,806 -	$1,204 -
	$4,806	$1,204

The Group did not have contingent liabilities or capital commitments to the aforementioned associate and the investment was not pledged as of December 31, 2021 and 2020.

118 -

(9) Property, plant and equipment

Land	Buildings	Machinery and equipment	Research and development equipment	Office equipment	Other equipment	Total
$311,450 - - -	$398,842 201 (1,074) -	$902 28,682 - -	$35,872 26,052 (3,086) -	$6,961 311 (664) 18	$22,766 5,199 (3,735) -	$776,793 60,445 (8,559) 18
$311,450	$397,969	$29,584	$58,838	$6,626	$24,230	$828,697
$311,450 - - -	$396,526 2,316 - -	$546 902 (546) -	$29,552 9,595 (3,275) -	$6,723 441 (238) 35	$18,170 7,170 (2,574) -	$762,967 20,424 (6,633) 35
$311,450	$398,842	$902	$35,872	$6,961	$22,766	$776,793
	$123,240 19,242 (1,074) -	$53 3,736 - -	$18,862 12,389 (3,086) -	$5,842 585 (635) 17	$11,342 5,854 (3,735) -	$159,339 41,806 (8,530) 17
$-	$141,408	$3,789	$28,165	$5,809	$13,461	$192,632
$- - - -	$103,609 19,631 - -	$508 91 (546) -	$14,081 8,056 (3,275) -	$5,419 625 (238) 36	$8,466 5,450 (2,574) -	$132,083 33,853 (6,633) 36
$-	$123,240	$53	$18,862	$5,842	$11,342	$159,339
$311,450	$256,561	$25,795	$30,673	$817	$10,769	$636,065
$311,450	$275,602	$849	$17,010	$1,119	$11,424	$617,454

(a) Components of buildings with different useful lives are main building structure and air conditioning units, which are depreciated over 41 years and 3 years, respectively.

(b) Property, plant and equipment were not pledged.

119 -

(10) Intangible assets

Patents	Software	Goodwill	Others	Total
$201,740 - (201,740) -	$18,618 1,365 (5,512) 11	$2,674,827 - - -	$11,902 5,010 (4,801) -	$2,907,087 6,375 (212,053) 11
$-	$14,482	$2,674,827	$12,111	$2,701,420
$201,740 - - -	$14,074 5,269 (744) 19	$2,674,827 - - -	$25,934 2,176 (16,208) -	$2,916,575 7,445 (16,952) 19
$201,740	$18,618	$2,674,827	$11,902	$2,907,087
$193,334 8,406 (201,740) -	$9,901 4,897 (5,512) 8	$2,468,504 - - -	$5,836 880 (4,801) -	$2,677,575 14,183 (212,053) 8
$-	$9,294	$2,468,504	$1,915	$2,479,713
$173,160 20,174 - -	$5,744 4,887 (744) 14	$2,468,504 - - -	$17,156 4,888 (16,208) -	$2,664,564 29,949 (16,952) 14
$193,334	$9,901	$2,468,504	$5,836	$2,677,575
$-	$5,188	$206,323	$10,196	$221,707
$8,406	$8,717	$206,323	$6,066	$229,512

Amortization expense of intangible assets under the statement of comprehensive income:

Operating expenses Research and development expenses	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$9,159	$20,950
	$5,024	$8,999

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(11) Impairment testing of goodwill

The Group has two cash-generating units but the goodwill arising from the business combination belongs to the second cash-generating unit, based on which, the Group assesses whether the goodwill is impaired annually. The assessments are as follows:

The recoverable amounts of the second cash-generating unit have been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five-year period. The projected cash flows have been updated to reflect the change in demand for products and services. The pre-tax discount rates applied to cash flow projections are both 16.05% in 2021 and 2020. Cash flows beyond the five-year period are extrapolated using the growth rate of 2.62% in 2021 and 0.06% in 2020. As of December 31, 2021 and 2020, the Group did not identify any impairment for goodwill of NT$206,323 thousand.

The calculation of value-in-use for cash-generating units is most sensitive to the following assumptions:

(a) Gross margin
(b) Discount rates
(c) Growth rates of sales

Gross margins – gross margins are based on average values achieved in the three years preceding the start of the budget period.

Discount rates – the discount rates reflect the current market assessment of the risks specific to cash generating unit (including the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted). The discount rate was estimated based on the weighted average cost of capital (WACC) for the Group, taking into account the particular situations of the Group and its operating segments. The WACC includes both the cost of liabilities and cost of equities. The cost of equities is derived from the expected returns of the Group’s investors on capital, where the cost of liabilities is measured by the interest bearing loans that the Group has obligation to settle.

Growth rates estimates — the growth rates are based on historical experiences. For the reasons explained above, the long-term average growth rate used to extrapolate the budget has been adjusted base on the speed of product innovation and the overall economic environment.

Sensitivity to changes in assumptions

121 -

With regard to the assessment of value-in-use of the second cash-generating unit, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.

(12) Other current liabilities

Refund liabilities Others Total	As of December 31,	As of December 31,
	2021	2020
	$173,450 8,994	$190,198 7,114
	$182,444	$197,312

(13) Post-employment benefits plans

Defined contribution plan

The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company and its domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Subsidiaries located in the People’s Republic of China will contribute social welfare benefits based on a certain percentage of employees’ salaries or wages to the employees’ individual pension accounts.

For the years ended December 31, 2021 and 2020, the pension expenses recognized under the defined contribution plan are NT$29,459 thousand and NT$28,705 thousand, respectively.

Defined benefit plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contributes an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assesses the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March

122 -

in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandating, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$2,135 thousand to its defined benefit plan during the 12 months beginning after December 31, 2021.

The average duration of the defined benefit plan obligation as of December 31, 2021 and 2020 are 2.5 years and 2.6 years, respectively.

Pension costs recognized in profit or loss for the years ended December 31, 2021 and 2020:

Current period service costs Interest income or expense Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,616 422	$1,609 505
	$2,038	$2,114

Changes in the defined benefit obligation and fair value of plan assets are as follows:

	As of
December 31, 2021	December 31, 2020	January 1, 2020
$187,675 (99,817)	$178,974 (94,695)	$175,856 (84,147)
$87,858	$84,279	$91,709

Reconciliation of liabilities (assets) under the defined benefit plan is as follows:

123 -

Defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (assets)
$175,856 1,609 967	$(84,147) - (462)	$91,709 1,609 505
178,432	(84,609)	93,823
400 142 -	- - (2,908)	400 142 (2,908)
542	(2,908)	(2,366)
- -	- (7,178)	- (7,178)
178,974	(94,695)	84,279
1,616 895	- (473)	1,616 422
181,485	(95,168)	86,317
34 6,156 -	- - (1,191)	34 6,156 (1,191)
6,190	(1,191)	4,999
- -	- (3,458)	- (3,458)
$187,675	$(99,817)	$87,858

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of December 31,	As of December 31,
	2021	2020
	0.50% 2.5%	0.50% 2.5%

The sensitivity analyses for significant assumption are shown as below:

124 -

Years Ended December 31,	Years Ended December 31,	Years Ended December 31,	Years Ended December 31,
2021		2020
Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
$- 3,988 3,404 -	$3,821 - - 3,297	$- 4,096 3,519 -	$3,915 - - 3,400

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the prior period.

(14) Equity

(a) Common stock

The Company’s authorized capital as of December 31, 2021 and 2020 was NT$2,500,000 thousand divided into 250,000,000 shares (including 30,000,000 shares reserved for exercise of employee stock options at each period), each at a par value of NT$10. The Company’s issued capital was NT$1,610,801 thousand divided into 161,080,124 shares as of December 31, 2021 and 2020. Each share has one voting right and a right to receive dividends.

(b) Capital surplus

Premium from merger Restricted stocks for employees Employee stock option Treasury share transactions Premium from issuance of common stock Change in subsidiaries’ ownership Share of changes in net assets of associates and joint ventures accounted for using equity method Others Total	As of December 31,	As of December 31,
	2021	2020
	$979,037 191,764 112,008 19,238 16,424 1,977 1,008 136,697	$1,059,577 191,764 112,008 19,238 16,424 1,977 1,008 136,697
	$1,458,153	$1,538,693

125 -

According to the Company Act, the capital surplus shall not be used except for offset a deficit of the company. When a company incurs no loss, it may distribute the capital surplus derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

I. Income tax obligation;
II. Offsetting accumulated deficits, if any;
III. Legal reserve at 10% of net income after tax;
IV. Allocation or reverse of special reserves as required by law;
V. After deducting the respective amount specified from item I to IV, at least 80% of the remaining earnings will be distributed, together with the undistributed earnings at the beginning of the period, and the capital surplus. However, if the total distribution divided by all the issued shares is less than NTD 0.1 per share, all the remaining and surplus shall not be distributed.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paid-in capital. The legal reserve can be used to offset the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve, which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

126 -

net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed from the special reserve.

On March 31, 2021, the FSC issued Order No. Financial-Supervisory-SecuritiesCorporate-1090150022, which sets out the following provisions for compliance: On a public company's first-time adoption of the IFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside special reserve. For any subsequent use, disposal or reclassification of related assets, the Company can reverse the special reserve by the proportion of the special reserve first appropriated and distribute it.

The amount of special reserve provided by the Company for the first time in adopting IFRS is NT$0.

The appropriation of earnings for 2020 was approved by the shareholders’ meeting held on August 10, 2021, while the appropriation of earnings for 2021 was proposed by the Board of Directors’ meeting on February 24, 2022. The details of distribution are as follows:

Appropriation of earnings Dividendper Years Ended December 31,	Appropriation of earnings Dividendper Years Ended December 31,	Dividendper	share(NT$)

2021	2020 $117,283 (211,900) 885,941	2021	2020
$173,228 - 1,288,641		$8.0	$5.5

In addition, the Board of Directors’ meeting on February 24, 2022 and the shareholders’ meeting on August 10, 2021 proposed and resolved to distribute the capital surplus by cash in the amount of NT$161,080 thousand and NT$80,540 thousand, or NT$1 per share and NT$0.5 per share, respectively.

Please refer to Note 6(19) for more details on employees’ compensations and the remunerations to directors.

(d) Non-controlling interests

Beginning balance Income (Loss) attributable to non-controlling interests Disposal of subsidiaries Ending balance	Years Ended December 31,	Years Ended December 31,
	2021 $207 32 (239) $-	2020
		$229 (22) -
		$207

127 -

(15) Share-based payment plans

Certain employees of the Group are entitled to share-based payment as part of their remunerations; services are provided by the employees in return for the equity instruments granted. These plans are accounted for as equity-settled share-based payment transactions.

(a) Restricted stocks plans for employees

On June 20, 2016, the shareholders’ meeting approved a compensation plan to issue 5,000,000 restricted stocks to qualified employees of the Company. The regulator approved for the Company to issue restricted stocks in installments. There were 3,500,000 shares issued, and the remaining 1,500,000 shares were not issued and expired.

The fair value of the restricted stocks issued was NT$27.15 per share. The estimated compensation expenses amounted to NT$87,037 thousand and will be recognized during the vesting period based on the vesting conditions. The Company had recognized NT$0 and NT$5,854 thousand as compensation expense for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, the Company had recognized NT$0 as unearned employee compensation.

Restrictions on the rights and vesting conditions of restricted stocks for employees are as follows:

The restricted stocks are common shares; however, certain rights of the shareholders of these shares are restricted in accordance with the securities issuance regulations and this plan. During the unvested period, these shareholders can receive various dividend distributions without restrictions. However, any right to dispose of these shares are restricted, including but not limited to sale and transfer, pledge, mortgage, gift, etc.

Those employees who remained employed by the Company during the vesting period, maintained the performance conditions at “Good” or above and complied with the confidentiality requirements of the service code are gradually eligible to the vested restricted stocks at certain percentage and time frame, the certain percentage are as follow:

One year since the date of grant:30% Two years since the date of grant:30% Three years since the date of grant:40%

128 -

For those employees who fail to fulfill the vesting conditions, the Company can reacquire their stocks at par. Non-employment includes, but is not limited to, resignation, severance, dismissal, self-appointed early retirement, and stay without pay.

There are 1,020,300 shares, 942,300 shares and 1,243,200 shares vested on June 21, 2018 for first year, 2019 for the second year and 2020 for the third year, respectively.

In addition, on August 10, 2021, the stockholders approved a compensation plan in their meeting to issue 3,000,000 restricted stocks to qualified employees. The Company is authorized to issue restricted stocks in installments. There were no shares issued as of December 31, 2021.

(b) Modification or cancellation of the share-based payment plan for employees

No modification or cancellation of share-based payment plan has occurred in the years ended December 31, 2021 and 2020.

The expense recognized for employee services received for the years ended December 31, 2021 and 2020 are shown in the following table:

(16)	Restricted stocks for employees Operating revenues	Years Ended December 31,	Years Ended December 31,
		2021	2020 $5,854
		$-

Revenue from contracts with customers Sale of goods Other operating revenues Total	Years Ended December 31,	Years Ended December 31,
	2021 $7,181,129 3,457 $7,184,586	2020
		$4,812,264 5,565
		$4,817,829

Analysis of revenue from contracts with customers for the years ended December 31, 2021 and 2020 is as follows:

(a) Contract balances
129 -

Contract liabilities – current

Contract liabilities – current
Sale of goods		As of
	December 31, 2021	December 31, 2020 $7,012	January 1, 2020 $16,554
	$4,996

The significant changes in the Group’s balances of contract liabilities for the years ended December 31, 2021 and 2020 are as follows:

The opening balance transferred to revenue Increase in receipts in advance during the period (deducting the amount incurred and transferred to revenue during the period) Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$(7,012) 4,996	$(16,552) 7,010
	$(2,016)	$(9,542)

(b) Assets recognized from costs to fulfil a contract

None.

(17) Expected credit gains

Operating expenses — Expected credit gains Trade receivables	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,600	$-

Please refer to Note 12 for more details on credit risk.

The Group measures the loss allowance of its trade receivables (including note receivables, trade receivables and trade receivables from related parties) at an amount equal to lifetime expected credit losses. The assessments of the Group’s loss allowance as of December 31, 2021 and 2020 are as follows:

The trade receivables loss allowance is measured by using a provision matrix, details are as follows:

130 -

2021.12.31

Not past due (Note)			Past due			Total
	Within 30 days	31-120 days	121-150 days	151-180 days	After 181 days
$1,031,332 -	$15,105 -	$761 -	$- 1%-20%	$- 20%-30%	$- 30%-100%	$1,047,198 -
-	-	-	-	-	-
$1,031,332	$15,105	$761	$-	$-	$-	$1,047,198
Not past due (Note)			Past due			Total
	Within 30 days	31-120 days	121-150 days	151-180 days	After 181 days
$809,903 -	$7,139 -	$968 -	$- 1%-20%	$- 20%-30%	$1,600 30%-100%	$819,610 (1,600)
-	-	-	-	-	(1,600)

Note: All of the Group’s note receivables are not yet due.

The movements in the provision for impairment of note receivables and trade receivables (including related parties) during the years ended December 31, 2021 and 2020 are as follows:

follows:
As of January 1, 2021 Reversal for the current period As of December 31, 2021 As of January 1, 2020 Increase for the current period As of December 31, 2020	Note receivables	Trade receivables (includingrelatedparties)
	$- -	$1,600 (1,600)
	$-	$-
	$- -	$1,600 -
	$-	$1,600

(18) Leases

Group as a lessee

The Group leases various properties, including real estate such as land and buildings, and furniture and fixtures. The lease terms range from 3 to 33 years.

131 -

The Group’s leases effect on the financial position, financial performance and cash flows are as follow:

(a) Amounts recognized in the balance sheet
I. Right-of-use assets

The carrying amount of right-of-use assets

Land Buildings Furniture and fixtures Total	As of December 31,	As of December 31,
	2021 $81,109 9,686 644 $91,439	2020
		$84,443 3,597 385
		$88,425

During the years ended December 31, 2021 and 2020, the additions to right-of-use assets of the Group amounted to NT$11,878 thousand and NT$1,226 thousand, respectively.

II. Lease liabilities

Current Non-current Total	As of December 31,	As of December 31,
	2021 $7,046 86,726 $93,772	2020
		$6,228 83,811
		$90,039

Please refer to Note 6(20) for the interest on lease liabilities recognized during the years ended December 31, 2021 and 2020, and refer to Note 12(5) Liquidity Risk Management for the maturity analysis for lease liabilities.

(b) Amounts recognized in the statement of comprehensive income

Depreciation charge for right-of-use assets

Land Buildings Furniture and fixtures Total	Years Ended December 31,	Years Ended December 31,
	2021 $3,334 5,402 118 $8,854	2020
		$3,334 3,874 66
		$7,274

132 -

Years Ended December 31, 2021 2020 The expenses relating to short-term leases $1,492 $1,427 The expenses relating to leases of low-value assets (Not including the short-term leases) 88 86 The expenses relating to variable lease payments not included in the measurement of lease liabilities 1,251 1,171 Total $2,831 $2,684 Income from subleasing right-of-use assets $631 $374	Years Ended December 31,	Years Ended December 31,
	2021	2020
		$1,427 86 1,171
	$2,831	$2,684
	$631	$374

(d) Cash outflow relating to leasing activities

During the years ended December 31, 2021 and 2020, the Group’s total cash outflows for leases amounted to NT$12,631 thousand and NT$10,992 thousand, respectively.

(e) Extension and termination options

Some of the Group’s property rental agreements contain extension option. In determining the lease terms, the non-cancellable period for which the Group has the right to use an underlying asset, together with both periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option. The option is used to maximize operational flexibility in terms of managing contracts. The majority of extension option held is exercisable only by the Group. After the commencement date, the Group reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Group is reasonably certain to exercise an option not previously included in its determination of the lease term.

(19) Summary statement of employee benefits, depreciation and amortization expenses by function:

	Years Ended	Years Ended	December 31,	December 31,
	2021			2020
Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
$54,342 3,368 1,833 699	$1,246,929 50,939 29,664 9,552	$1,301,271 54,307 31,497 10,251	$41,014 2,827 1,731 674	$950,620 43,561 29,088 9,556	$991,634 46,388 30,819 10,230
$60,242	$1,337,084	$1,397,326	$46,246	$1,032,825	$1,079,071
$5,026	$45,634	$50,660	$1,431	$39,696	$41,127
$-	$14,183	$14,183	$-	$29,949	$29,949

133 -

According to the Articles of Incorporation, between 8% to 20% of profit of the current year is distributable as employees’ compensation and no higher than 1% of profit of the current year is distributable as remuneration to directors. However, the Company's accumulated losses shall have been covered (if any). The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors can be obtained from the “Market Observation Post System” on the website of the TWSE.

Based on profit of current year, the Company estimated the amounts of the employees’ compensation and remuneration to directors for the year ended December 31, 2021 and December 31, 2020 to be NT$392,322 thousand, NT$16,108 thousand, NT$200,552 thousand and NT$13,370 thousand, respectively. The employees’ compensation and remuneration to directors recognized as salary expense. If the estimated amounts differ from the actual distribution resolved by the board of directors, the Company will recognize the change as an adjustment to income of next year. If the board of directors resolved to distribute employees’ compensation in the form of stocks, then the number of stocks distributed as employees’ compensation was calculated based on the closing price one day earlier than the date of resolution.

The distributions of employees and directors’ compensation for 2021 and 2020 were approved through the Board of Directors’ meeting on February 24, 2022 and February 19, 2021, respectively. There is no differences between the estimated amount and the actual distribution for the aforementioned employees and directors’ compensation.

(20) Non-operating income and expenses

(a) Other income

Rental income Dividend income Others Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$3,086 93,472 781	$2,830 5,026 359
	$97,339	$8,215

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(b) Other gains and losses

Losses on disposal of property, plant and equipment Gains on disposal of investments Foreign exchange losses Gains on financial assets at fair value through profit or loss (Note) Others Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$(29) 1,996 (1,000) 4,201 (23)	$- - (16,668) 8,288 -
	$5,145	$(8,380)

Note: Balances were arising from financial assets mandatorily measured at fair value through profit or loss, including valuation adjustment and exchange difference, etc.

(c) Finance costs

Interest expenses on lease liabilities Interest expenses on guarantee deposits Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,708 2	$1,767 2
	$1,710	$1,769

(21) Components of other comprehensive income

For the year ended December 31, 2021

Items that may not be reclassified subsequently to profit or loss Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences resulting from translating the financial statements of foreign operations Total	Arising during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
	$(4,999) 619,358 8	$(4,999) 619,358 8	$1,000 (2,812) -	$(3,999) 616,546 8
	$614,367	$614,367	$(1,812)	$612,555

135 -

For the year ended December 31, 2020

Arising during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
$2,366 363,785 28	$2,366 363,785 28	$(474) (2,944) -	$1,892 360,841 28
$366,179	$366,179	$(3,418)	$362,761

Current income tax expense (income): Current income tax charge Adjustments in respect of current income tax of prior periods Deferred tax expense (income): Deferred tax income relating to origination and reversal of temporary differences Others Total income tax expense	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$440,245 (30,044) (9,039) 23	$234,184 (36,912) (9,565) 51
	$401,185	$187,758

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Income tax relating to components of other comprehensive income

Deferred tax expense (income): Unrealized gains (losses) from equity instrument investments measured at fair value through other comprehensive income Remeasurements of defined benefit plans Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$2,812 (1,000)	$2,944 474
	$1,812	$3,418

A reconciliation of tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:

Accounting profit before tax from continuing operations Tax at the Company’s domestic rate Tax effect of revenues exempt from taxation Tax effect of expenses not deductible for tax purposes Surtax on undistributed retained earnings Adjustments in respect of current income tax of prior periods Others Total income tax expense recognized in profit or loss	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$2,207,103	$1,123,234
	$441,421 (17,927) (371) 8,494 (30,044) (388)	$224,647 (862) (1,475) 2,547 (36,912) (187)
	$401,185	$187,758

Deferred tax assets (liabilities) relate to the following:

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For the year ended December 31, 2021

For the year ended December 31, 2021	1, 2021
Beginning balance as of January1,2021 Temporary differences Difference between the investment cost and the fair value measured at fair value through other comprehensive gains and losses $(28) Unrealized foreign exchange losses (gains) (74) Unrealized inventory valuation loss reversal 7,594 Refund liabilities 38,040 Net defined benefit liabilities 16,856 Others 18 Deferred tax income (expense) Net deferred tax assets/(liabilities) $62,406 Reflected in balance sheet as follows: Deferred tax assets $62,508 Deferred tax liabilities $(102) For the year ended December 31, 2020 Beginning balance as of January1,2020 Temporary differences Difference between the investment cost and the fair value measured at fair value through other comprehensive gains and losses $2,916 Unrealized foreign exchange losses (gains) 1,221 Unrealized inventory valuation loss reversal 9,485 Refund liabilities 24,271 Net defined benefit liabilities 18,342 Others 24 Deferred tax income (expense) Net deferred tax assets/(liabilities) $56,259 Reflected in balance sheet as follows: Deferred tax assets $56,259 Deferred tax liabilities $-	Beginning balance as of January1,2021	Recognized in profit or loss	Recognized in other comprehensive income	Ending balance as of December 31,2021
	$(28) (74) 7,594 38,040 16,856 18	$- (129) 12,608 (3,350) (284) 194	$(2,812) - - - 1,000 -	$(2,840) (203) 20,202 34,690 17,572 212
	$62,406	$9,039	$(1,812)	$69,633
		Recognized in profit or loss	Recognized in other comprehensive income
	$62,508			$72,676
	$(102)			$(3,043)
				Ending balance as of December 31,2020
	$2,916 1,221 9,485 24,271 18,342 24	$- (1,295) (1,891) 13,769 (1,012) (6)	$(2,944) - - - (474) -	$(28) (74) 7,594 38,040 16,856 18
	$56,259	$9,565	$(3,418)	$62,406

	$56,259			$62,508
	$-			$(102)

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(b) The following table contains information of the unused tax losses of the Group:

Unutilized accumulated loss as of

Year	Accumulated loss(Note)	December 31, 2021	December 31, 2020	Expiration Year
2014 2015 2016 2017 2018 2019 2020	$4,214 12,922 12,537 14,155 9,105 14,913 515	$- - - - - - -	$4,214 12,922 12,537 14,155 9,105 14,913 515	2024 2025 2026 2027 2028 2029 2030
	$68,361	$-	$68,361

Note: Ubiquity Smart Technology Inc. was resolved for dissolution and liquidation by the provisional meeting of shareholders on September 30, 2021.

As of December 31, 2021 and 2020, deferred tax assets that were not recognized amounted to NT$0 and NT$13,672 thousand, respectively.

(d) The assessment of income tax returns

As of December 31, 2021, the assessment of the income tax returns of the Company and its subsidiaries is as follows:

ITE Tech. Inc. Subsidiary - ITE Tech. (ShenZhen) Inc.	The assessment of income tax returns
	Assessed and approved up to 2019 Assessed to 2020

(23) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

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(a) Basic earnings per share Profit attributable to ordinary equity holders of the parent company (in thousand NT$) Weighted average number of ordinary shares outstanding for basic earnings per share (share) Basic earnings per share (NT$) (b) Diluted earnings per share Profit attributable to ordinary equity holders of the parent company after dilution (in thousand NT$) Weighted average number of ordinary shares outstanding for basic earnings per share (share) Effect of dilution: Employees’ compensation-stock (share) Weighted average number of ordinary shares outstanding after dilution (share) Diluted earnings per share (NT$)	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,805,886	$935,498
	161,080,124	160,492,491
	$11.21	$5.83
	2021	2020
	$1,805,886	$935,498
	161,080,124 3,954,533	160,492,491 3,345,822
	165,034,657	163,838,313
	$10.94	$5.71

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the issuance date of the financial statements.

(24) Deconsolidation of Subsidiaries

Ubiquity Smart Technology Inc. (Ubiquity)

Ubiquity, a subsidiary of ITE, was resolved for dissolution and liquidation by the provisional shareholders’ meeting on September 30, 2021 and the liquidator took control on the same day. According to IFRS 10 and related questions and answers issued, the Company has lost control over Ubiquity and therefore derecognized its relevant assets and liabilities at the date when the control was lost.

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(a) Derecognized assets and liabilities mainly consisted of:

Assets Cash and cash equivalents Liabilities Other payables Net assets of deconsolidation	$5,620
	(3)
	$5,617

(b) Consideration received and gain recognized from the deconsolidation:

Receivable from liquidation consideration (Note) Less: Net assets of the deconsolidation Add: Non-controlling interests Gain on deconsolidation	$5,378 (5,617) 239
	$-

Note: Ubiquity was deconsolidated when the control was lost. The company recorded as other receivables.

Cash received Net cash of subsidiary derecognized Net cash outflow from deconsolidation	$- (5,617)
	$(5,617)

7. Related Party Transactions

Information of the related parties that had transactions with the Group during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Names of relatedparties	Nature of relationshipof the relatedparties
United Microelectronics Corp. HeJian Technology (Suzhou) Co., Ltd. Wavetek Microelectronics Corporation United DS Semiconductor (Shandong) Co., Ltd. Fortune Venture Capital Corp. United Semiconductor (Xiamen) Co., Ltd. Emright Technology Co., Ltd.	Director of the Group Other related party Other related party Other related party Other related party Other related party Associates

141 -

Significant transactions with the related parties

(1) Sales

Sales
Associates	Years Ended December 31,
	2021	2020
	$21,119	$6,609

The sales prices to the above related parties were determined through mutual agreement in reference to market conditions. The payment term for the related parties was 30 days after month-end.

(2) Purchases

Purchases
United Microelectronics Corp. HeJian Technology (Suzhou) Co., Ltd. Others Total	Years Ended December 31,
	2021	2020
	$916,181 549,238 1,596	$726,647 350,151 889
	$1,467,015	$1,077,687

The purchase price to the above related party is not comparable to the market due to differentiation of manufacturing process and product specification. Payment terms to related parties were 45 days after month-end.

(3) Trade receivables from related parties

Associates	As of December 31,	As of December 31,
	2021	2020
	$3,011	$-

(4) Trade payables to related parties

Trade payables to related parties
United Microelectronics Corp. HeJian Technology (Suzhou) Co., Ltd. Others Total	As of December 31,
	2021	2020
	$193,646 104,002 539	$134,257 69,306 170
	$298,187	$203,733

(5) Other payables to related parties

Other payables to related parties
Director of the Group	As of December 31,
	2021	2020 $5,504
	$2,828

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Others Total	277	689 $6,193
	$3,105

(6) The Group disposed the stock of M3 Technology Inc. to other related parties for NT$38,688 thousand during the year ended December 31, 2020, which were reported under equity instrument investments measured at fair value through other comprehensive income. The accumulated unrealized valuation gain of NT$26,241 thousand were reclassified from other components of equity to retained earnings.
(7) The Group purchased masks and other from the director of the Group and recognized NT$31,759 thousand and NT$29,946 thousand as manufacturing expenses and operating expenses for the years ended December 31, 2021 and 2020, respectively. Payment terms for related parties were 45 days after month-end.
(8) The Group had transactions with other related parties and recognized NT$6,740 thousand and NT$2,173 thousand of manufacturing expenses and operating expenses for the years ended December 31, 2021 and 2020, respectively. Payment terms for related parties were 45 days after month-end and on demand.
(9) The Group recognized NT$19 thousand of non-operating income in the year of 2021 for its transactions with associates. The payment term for associates was 30 days after month-end.
(10) Key management personnel compensation

) Key management personnel compensation
Short-term employee benefits Post-employment benefits Share-based payment Total	Years Ended December 31,
	2021	2020
	$113,778 1,867 -	$89,026 1,836 1,060
	$115,645	$91,922

8. Assets Pledged As Security

The following table lists assets of the Group pledged as security:

Assetspledged for security	As of December 31,	As of December 31,	Secured liabilities
	2021	2020
Financial assets measured at amortized cost – non current	$4,230	$4,230	Guarantee for land

9. Significant Contingencies And Unrecognized Contractual Commitments

The Group uses patents of other companies for certain products, and has paid royalty fees based on sales amounts or quantities of these products in accordance with the agreements.

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10.Losses Due To Major Disasters

None.

11.Significant Subsequent Events

None.

12.Others

(1) Categories of financial instruments

Financial assets

Financial assets
Financial assets at fair value through profit or loss: Mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost (Note) Total Financial liabilities Financial liabilities at amortized cost: Trade and other payables (including related parties) Lease liabilities Deposits received Total	As of December 31,
	2021	2020
	$1,565,229 1,838,958 3,034,173	$960,299 1,105,254 2,850,928
	$6,438,360	$4,916,481
	2021	2020
	$1,620,985 93,772 28,483	$1,078,494 90,039 24,291
	$1,743,240	$1,192,824

Note: Including cash and cash equivalents (excluding cash on hand), financial assets measured at amortized cost, notes receivables, trade receivables (including related parties), other receivables and other non-current assets (refundable deposits).

(2) Financial risk management objectives

The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Group identifies, measures and manages the aforementioned risks based on the Group’s policy and risk appetite.

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The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity instruments).

In practice, it is rarely the case that a single risk variable will change independently from other risk variables, there is usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD. The information of the sensitivity analysis is as follows:

When NTD strengthens/weakens against USD by 5%, the profit for the year ended December 31, 2021 increase/decrease by NT$6,936 thousand, and the profit for the year ended December 31, 2020 would decrease/increase by NT$10,160 thousand.

145 -

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group doesn’t have any liabilities risk of changes in market interest rates. Therefore, the Group expects no fair value and cash flow risks due to significant interest rate fluctuations.

All of the Group’s financial assets and financial liabilities that are exposed to cash flow risk due to fluctuating interest rate are under short term contracts, thus the cash flow risk of fluctuate interest is considerably low.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as of the end of the reporting period, including investments with variable interest rate. At the reporting date, an increase/decrease of 10 basis points (0.1%) of interest rate in a reporting period could cause the profit for the years ended December 31, 2021 and 2020 to increase/decrease both by NT$2 thousand.

Equity price risk

The Group’s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment objectives. The Group’s listed equity securities are classified under financial assets measured at fair value through other comprehensive income. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Board of Directors reviews and approves certain equity investments according to level of authority.

For the years ended December 31, 2021 and 2020, a change of 10% in the price of the equity instrument investments could increase/decrease by NT$4,335 thousand and NT$1,374 thousand, respectively.

Please refer to Note 12(8) for sensitivity analysis information of other equity instruments that are linked to such equity instruments whose fair value measurement is categorized under Level 3 of the fair value hierarchy.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for trade receivables and note receivables) and from its financing activities, including bank deposits and other financial instruments.

146 -

Credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Group’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of December 31, 2021 and 2020, trade receivables from top ten customers represented 94.08% and 96.02% of the total trade receivables of the Group, respectively. The credit concentration risk of other trade receivables is insignificant.

Credit risk from balances with bank and other financial instruments is managed by the Group’s treasury in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions and companies with good credit rating. Consequently, there is no significant credit risk for these counter parties.

The Group adopted IFRS 9 to assess the expected credit losses. Except for trade receivables, for debt instrument investments which are not measured at fair value through profit or loss and are at low credit risk upon acquisition, an assessment is made at each reporting date as to whether the credit risk has substantially increased in order to determine the method of measuring the loss allowance and the loss ratio. The measurement indicators of the Group are described as follows:

Level of credit risk	Indicator	Measurement method for expected credit losses	Total carrying amount as of December 31,	Total carrying amount as of December 31,
			2021
				2020
Credit-impaired	(a) The counterparty has experienced financial difficulties (b) Others	Lifetime expected credit losses	$-	$15,000
Simplified approach(Note)	(Note)	Lifetime expected credit losses	$1,047,198	$819,610

Note: By using simplified approach (loss allowance is measured at lifetime expected credit losses), including note receivables, trade receivables and trade receivables from related parties.

Financial assets are written off when there is no realistic prospect of future recovery.

(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents and financial assets and liabilities

147 -

at fair value through profit or loss. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest.

Non-derivative financial liabilities

December 31, 2021 Payables (including related parties) Lease liabilities Deposits received December 31, 2020 Payables (including related parties) Lease liabilities Deposits received	Less than 1year	2 to 3years	4 to 5years	5 to 15years	15 to 20years	> 20years	Total
	$1,620,985 $8,795 $- $1,078,494 $7,734 $-	$- $14,916 $28,483 $- $8,998 $24,291	$- $8,445 $- $- $8,442 $-	$- $41,672 $- $- $41,671 $-	$- $17,666 $- $- $19,668 $-	$- $22,371 $- $- $24,536 $-	$1,620,985 $113,865 $28,483 $1,078,494 $111,049 $24,291

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended December 31, 2021 and 2020:

As of January 1, 2020 Cash flows Non-cash changes As of December 31, 2020 Cash flows Non-cash changes As of December 31, 2021	Deposits received $15,688 8,603 - 24,291 4,192 - $28,483	Lease liabilities $95,488 (6,675) 1,226 90,039 (8,145) 11,878 $93,772	Total liabilities from financing activities
			$111,176 1,928 1,226
			114,330 (3,953) 11,878
			$122,255

(7) Fair values of financial instruments
(a) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Group to measure or disclose the fair values of financial assets and financial liabilities:

148 -
I. The carrying amount of cash and cash equivalents, trade receivables (including related parties), other receivables, other non-current assets, payables (including related parties) and deposits received approximate their fair value due to their short maturities.
II. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities) at the reporting date.
III. Fair value of equity instruments without market quotations (including private company equity securities) are estimated using the market approach valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).
(b) Fair value of financial instruments measured at amortized cost

The carrying amounts of the Group’s financial assets and liabilities measured at amortized cost approximate their fair value.

Please refer to Note 12(8) for fair value measurement hierarchy for financial instruments of the Group.

(8) Fair values measurement hierarchy
(a) Fair value measurement hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 — Unobservable inputs for the assets or liabilities.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(b) Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group’s assets and liabilities measured at fair

149 -

value on a recurring basis is as follows:

As of December 31, 2021:

Level 1	Level 2	Level 3	Total
$1,565,229 43,351	$- -	$- 1,795,607	$1,565,229 1,838,958
$1,608,580	$-	$1,795,607	$3,404,187
Level 1	Level 2	Level 3	Total
$960,299 13,740	$- -	$- 1,091,514	$960,299 1,105,254
$974,039	$-	$1,091,514	$2,065,553

Transfers between Level l and Level 2 during the period

During the years ended December 31, 2021 and 2020, there were no transfers between Level 1 and Level 2 fair value measurements.

Movements of fair value measurement in level 3 on recurring basis

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

150 -

	Assets
At fair value through profit or loss Stocks $- - - - $-	At fair value through other comprehensive income	Total
	Stocks
	$1,091,514 604,101 100,000 (8)	$1,091,514 604,101 100,000 (8)
	$1,795,607	$1,795,607

	Assets
At fair value through profit or loss	At fair value through other comprehensive income Stocks $680,689 - 355,309 100,000 (44,680) (10,600) 10,796 $1,091,514	Total
Stocks
$10,140 656 - - - - (10,796)		$690,829 656 355,309 100,000 (44,680) (10,600) -
$-		$1,091,514

151 -

Recognized as profit (loss) above, the gain from financial assets still held by the Group as of December 31, 2021 and 2020 was NT$604,450 thousand and NT$321,217 thousand, respectively.

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of December 31, 2021:

Financial assets: Financial assets measured at fair value through other comprehensive income Stocks Stocks	Valuation technique	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity analysis of the input to fair value
	Market approach Asset approach	Discount for lack of marketability Discount for lack of marketability	30% 10%	The higher the discount for lack of marketability, the lower the fair value estimated The higher the discount for lack of marketability, the lower the fair value estimated	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s equity by NT$55,594 thousand 10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s equity by NT$123,967 thousand

152 -

As of December 31, 2020:

Financial assets: Financial assets measured at fair value through other comprehensive income Stocks Stocks	Valuation technique	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity analysis of the input to fair value
	Market approach Asset approach	Discount for lack of marketability Discount for lack of marketability	30% 0%~10%	The higher the discount for lack of marketability, the lower the fair value estimated The higher the discount for lack of marketability, the lower the fair value estimated	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s equity by NT$21,984 thousand 10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Group’s equity by NT$87,167 thousand

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Group validates the fair value measurements and ensure that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The Group also analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed based on the Group’s accounting policies at each reporting date.

(9) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

153 -

As of December 31,

Financial assets		2021		2020
	Foreign currencies (In thousands)	Foreign exchange rate NTD (In thousands)	Foreign currencies (In thousands)	Foreign exchange rate	NTD (In thousands)
	$11,439 $16,455	27.655 $316,348 27.655 $455,070	$15,940 $8,709	28.10 28.10	$447,916 $244,724
Monetary items: USD Financial liabilities
Monetary items: USD

The Group does not disclose all of information regarding the assets and liabilities denominated in foreign currencies due to the varieties of foreign currency transactions. During the years ended December 31, 2021 and 2020, the foreign exchange losses were NT$1,000 thousand and NT$16,668 thousand, respectively.

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

(10) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

154 -

13.Additional Disclosure

(1) Information at significant transactions

Additional disclosures for information of the Company for the year ended December 31, 2021:

(a) Financing provided to others for the year ended December 31, 2021: None.
(b) Endorsement/Guarantee provided to others for the year ended December 31, 2021: None.
(c) Marketable securities held as of December 31, 2021 (excluding subsidiaries, associates and joint ventures):

Held Company Name	Marketable Securities Type and Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31,2021	December 31,2021		Note
					Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value (dollar)/ Shares/Units
ITE Tech. Inc.	Common Stock	Unitech Capital, Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	2,000,000	83,800	4.00%	41.90
	Common Stock	Shieh Yong Investment Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income,non-current	24,368,086	333,843	1.52%	13.70
	Common Stock	Darjun Venture Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	9,280,000	84,541	19.61%	9.11
	Common Stock	TriKnight Capital Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	29,285,000	463,582	5.00%	15.83
	Common Stock	Darhe II Venture Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	10,000,000	94,300	14.29%	9.43
	Common Stock	Darchan Venture Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	20,000,000	179,600	18.18%	8.98
	Common Stock	Generiton Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income,non-current	508,047	24,584	12.70%	48.39
	Common Stock	Embestor Technology Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	4,400,000	49,236	16.92%	11.19
	Common Stock	M3 Technology Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	2,003,000	461,371	5.45%	230.34

Held Company Name	Marketable Securities Type and Name		Relationship with the Company	Financial Statement Account		December	31,2021		Note
					Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value (dollar)/ Shares/Units

155 -

Common Stock	Isentek Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	1,000,000	20,750	4.04%	20.75
Common Stock	A-Tec Subsystem Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	500,000	-	12.50%	-
Common Stock	Gigastone Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	1,734,841	21,356	3.42%	12.31
Common Stock	Orient Semiconductor Electronics Limited	-	Financial assets measured at fair value through other comprehensive income,non-current	830,000	21,995	0.10%	26.50
Fund	Taishin 1699 Money Market Fund	-	Financial assets at fair value through profit or loss,current	49,087,372.63	671,447	-	13.68
Fund	Taishin Ta Chong Money Market Fund	-	Financial assets at fair value through profit or loss,current	17,440,929.40	250,284	-	14.35
Fund	Jih Sun Money Market Fund	-	Financial assets at fair value through profit or loss,current	30,115,964.21	451,351	-	14.99
Fund	Nomura Taiwan Money Market Fund	-	Financial assets at fair value through profit or loss,current	9,756,813.62	160,750	-	16.48
Fund	Yuanta/P-shares Taiwan Dividend Plus ETF	-	Financial assets at fair value through profit or loss,non-current	935,000	31,397	-	33.58

156 -
(d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2021:

Amount: Thousands of NTD

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party	Nature of Relationship	Beginning	balance	Acquisition	Acquisition		Disposal	Disposal		Endingbalance	Endingbalance
					Units	Amount	Units	Amount	Units	Amount	Carrying Value	Gains (Losses) on Disposal	Units	Amount
ITE Tech. Inc.	Taishin 1699 Money Market Fund	Financial assets at fair value through profit or loss, current	-	-	45,567,847.86	$621,814	32,921,265.23	$450,000	29,401,740.46	$401,916	$399,920	$1,996	49,087,372.63	$671,447
	Jih Sun Money Market Fund	Financial assets at fair value through profit or loss, current	-	-	10,076,285.64	$150,641	20,039,678.57	$300,000	-	$-	$-	$-	30,115,964.21	$451,351

(e) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2021: None.
(f) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2021: None.
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(g) Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended December 31, 2021:

Amount: Thousands of NTD

									Amount: Thousands	Amount: Thousands	of N
Company Name	Related Party	Nature of Relationship		Transaction Details			Abnormal Transaction		Notes/Trade Payable or Receivable		Note
			Purchase/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
ITE Tech. Inc.	United Microelectronics Corp.	Directors of the Company	Purchase	$916,181	49.14%	45 days after month-end	Not comparable to the market due to differentiation of manufacturing process and product specification.	Same as general trading conditions	$(193,646)	(21.08)%
	HeJian Technology (Suzhou) Co., Ltd.	Other related party	Purchase	$549,238	29.46%	45 days after month-end	Not comparable to the market due to differentiation of manufacturing process and product specification.	Same as general trading conditions	$(104,002)	(11.32)%

(h) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of December 31, 2021: None.
(i) Financial instruments and derivative transactions: None.
158 -
(j) Intercompany relationship and significant intercompany transactions for the year ended December 31, 2021:

No. (Note 1)	Company Name	Counter Party	Nature of Relationship (Note 2)		IntercompanyTransactions	IntercompanyTransactions	IntercompanyTransactions
				Financial Statement Item	Amount	Term	Percentage of Consolidated Net Revenue or Total Assets(Note 3)
0	ITE Tech. Inc.	ITE Tech. (Shenzhen) Inc.	1	Administrative expenses	$38,336	On demand	0.53%

Note 1: Number should be input in the remark column for intercompany transactions. Here illustrate how to assign numbers to transactions. 1. 0 for parent company.
Subsidiaries are given a number in sequence starting with No. 1.
Note 2: There are three types of transactions. Please remark the type of transaction by giving a number to it.
Parent to Subsidiary.
Subsidiary to Parent.
Subsidiaries to Subsidiaries.
Note 3: Asset/liability items are calculated by using the ending balances of the item divided by ending balance of total consolidated assets; Profit/loss items are calculated by using the amount of the transaction divided by total consolidated revenue.
159 -

(2) Information on investees

(a) Names, locations and related information of investees as of December 31, 2021 (excluding investment in Mainland China):

Amount: Thousands of NTD

									Amount:	Thousands	of NT
Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		Balances	as of December 31,2021		Net Income (losses) of the Investee	Profits/losses of Investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of Ownership	Carrying Value
ITE Tech. Inc.	Ubiquity Smart TechnologyInc.	Taiwan	Wholesale of electronic materials	$-	$87,000	-	-	$-	$753	$725	Note
	Emright Technology Co., Ltd.	Taiwan	Communication machinery equipment, electronic components manufacturing	$41,768	$41,768	4,176,800	36.32%	$13,294	$13,232	$4,806

Note: Ubiquity Smart Technology Inc. was dissolved and liquidated on September 30, 2021.

(b) The Company has control over the investee company, supplementary disclosure of relevant information about the investee company: None.
160 -

(3) Investment in China

(a) Investment situation:

Amount: US Dollars/Thousands of NTD

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital (Note 4)	Method of Investment	Accumulated outflow of Investment from Taiwan as of January 1, 2021 (Note 4)	Investment Flows	Investment Flows	Accumulated outflow of Investment from Taiwan as of December 31, 2021(Note 4)	Percentage of Ownership	Net Income (Losses) of the Investee Company	Share of Profits /Losses (Note 3)	Carrying Amount as of December 31, 2021 (Note 3)	Accumulated Inward Remittance of Earnings as of December 31, 2021
					Outflow	Inflow
ITE Tech. (Shenzhen) Inc.	Technological consultation services for ICsproducts	$16,593 USD 600,000	Direct investment in Mainland China (Note 1)	$16,593 USD 600,000	$-	$-	$16,593 USD 600,000	100%	$(1,526)	$(1,526)	$2,419	$-

Accumulated Investment in Mainland China as of December 31, 2021	Investment Amounts Authorized by Investment Commission,MOEA	Upper Limit on Investment
$16,593 (Note 4) (USD600,000)	$16,593 (Note 4) (USD600,000)	$3,756,690 (Note 2)

Note 1: The Company has been approved the investment which that changed the investment structure and directly invested in ITE Tech. (Shenzhen) Inc. by the Investment Commission, MOEA.

Note 2: lBased on Regulations Governing the Approval of Investment or Technical Cooperation in the Mainland China promulgated by Investment Commission, MOEA.

Note 3: According to regulations, it may be evaluated based on the financial statements of the investee company audited by the accountant during the same period.

Note 4: Converted to NTD at the exchange rate on the financial reporting date (1 USD=27.655 NTD).

161 -
(b) Significant direct or indirect transactions with the investees in Mainland China:
- I. The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None.
- II. The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None.
- III.The amount of property transactions and the amount of the resultant gains or losses: None.
- IV.The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: None.
- V. The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None.
- VI.Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: Please refer to Note 13(1) (j).
(4) Information of major shareholders

Name of major shareholders	Number of shares held (shares)	Percentage of ownership
United Microelectronics Corp.	13,959,978	8.66%

162 -

14.Segment information

(1) General Information

The products of the Group are all related to integrated circuit design products and the chief operating decision maker reviews the Group’s operating results as a whole to make decisions about resources to be allocated and assess its performance; therefore, the Group is considered a single segment. The preparation basis of the segment is the same with the preparation of this financial statements, and the policies are the same with those mentioned in Note 4, Summary of Significant Accounting Policies.

(2) Geographical information

Revenues from external customers:

Taiwan Asia Others Total	Years Ended December 31,	Years Ended December 31,
	2021 $5,344,055 1,831,076 9,455 $7,184,586	2020
		$3,475,087 1,337,117 5,625
		$4,817,829

The revenue information above is based on the location of the customers. Non-current assets

Taiwan Others Total	As of December 31,	As of December 31,
	2021	2020
	$2,914,073 13,750	$2,142,384 5,189
	$2,927,823	$2,147,573

Major customers’ information

Individual customers accounting for at least 10% of net sales for the years ended December 31, 2021 and 2020 were as follows:

Customer A Customer B	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$2,784,521 1,703,600	$1,707,579 1,131,741

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5. Independent Auditors' Report and Parent Company Only Financial Statements

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English Translation of Financial Statements Originally Issued in Chinese

ITE TECH. INC. PARENT COMPANY ONLY BALANCE SHEETS As of December 31, 2021 and 2020 (Expressed in Thousands of New Taiwan Dollars)

ASSETS	Notes		As of Dec	ember 31,		LIABILITIES AND EQUITY	Notes		As of D	ecember 31,
		2021		2020				2021		2020
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss-current Notes receivables, net Trade receivables, net Trade receivables from related parties, net Other receivables Inventories, net Prepayments Other current assets Total current assets Non-current assets Financial assets at fair value through profit or loss-noncurrent Financial assets measured at amortized cost-noncurrent Investments accounted for using the equity method Property, plant and equipment Right-of-use assets Intangible assets Deferred tax assets Other noncurrent assets-others Total non-current assets Total assets Financial assets measured at fair value through other comprehensive income, noncurrent	4, 6(1) 4, 6(2), 6(20) 4, 6(5), 6(17) 4, 6(6), 6(17) 4,6(6),6(17),7 4, 6(7) 4, 6(2), 6(20) 4, 6(3) 4, 6(4), 8 4, 6(8) 4, 6(9) 4, 6(18) 4, 6(10), 6(11) 4, 6(22)	$1,975,759 1,533,832 9,248 1,034,939 3,011 6,117 1,076,888 73,482 120	22.89 17.77 0.11 11.99 0.04 0.07 12.48 0.85 -	$2,022,230 932,895 4,071 813,939 - 841 495,831 63,477 91	31.19 14.39 0.06 12.55 - 0.01 7.65 0.98 -	Current liabilities Contract liabilities-current Trade payables Trade payables to related parties Other payables Other payables to related parties Current tax liabilities Lease liabilities- current Other current liabilities Total current liabilities Non-current liabilities Deferred tax liabilities Lease liabilities- noncurrent Net defined benefit liabilities- noncurrent Deposits received Total non-current liabilities Total liabilities Equity Share capital Common stock Capital surplus Retained earnings Legal reserve Special reserve Undistributed earnings Other equity Total equity Total liabilities and equity	4, 6(16) 7 7 4, 6(22) 4, 6(18) 4, 6(12) 4, 6(22) 4, 6(18) 4, 6(13) 6(14) 6(14) 6(14)	$4,996 620,558 298,187 699,135 3,105 356,677 3,592 182,380	0.06 7.19 3.46 8.10 0.04 4.13 0.04 2.11	$7,012 418,696 203,733 449,765 6,193 196,728 3,290 197,261	0.11 6.46 3.14 6.94 0.10 3.03 0.05 3.04
								2,168,630	25.13	1,482,678	22.87
		5,713,396	66.20	4,333,375	66.83			3,043 80,723 87,858 28,483	0.03 0.94 1.02 0.33	102 83,811 84,279 24,291	- 1.29 1.30 0.37
		31,397 1,838,958 4,230 15,713 635,405 82,370 220,823 72,676 14,920	0.37 21.31 0.05 0.18 7.36 0.96 2.56 0.84 0.17	27,404 1,105,254 4,230 17,078 616,786 85,755 228,362 62,508 3,600	0.42 17.05 0.07 0.26 9.51 1.32 3.52 0.96 0.06
								200,107	2.32	192,483	2.96
								2,368,737	27.45	1,675,161	25.83
								1,610,801 1,458,153 414,947 - 1,965,937 811,313	18.66 16.90 4.81 - 22.78 9.40	1,610,801 1,538,693 297,664 211,900 1,024,982 125,151	24.84 23.73 4.59 3.27 15.81 1.93
								6,261,151	72.55	4,809,191	74.17
		2,916,492	33.80	2,150,977	33.17			$8,629,888	100.00	$6,484,352	100.00
		$8,629,888	100.00	$6,484,352	100.00

(The accompanying notes are an integral part of the parent company only financial statements.)

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English Translation of Financial Statements Originally Issued in Chinese

ITE TECH. INC.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For The Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Description	Notes	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2021		2020
		Amount	%	Amount	%
Operating revenues Operating costs Gross profit Operating expenses Selling expenses Administrative expenses Research and development expenses Total operating expenses Operating income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of profit of subsidiaries, associates, and joint ventures accounted for using the equity method Total non-operating income and expenses Net income before income tax Income tax expense Net income Other comprehensive income (loss) Items that may not be reclassified subsequently to profit or loss Remeasurements of defined benefit plans Unrealized gains (losses) from equity instrument investments measured at fair value through other comprehensive income Income tax relating to those items not to be reclassified to profit or loss Items that may be reclassified subsequently to profit or loss Exchange differences resulting from translating the financial statements of foreign operations Other comprehensive income, net of tax Total comprehensive income Earnings per share (in New Taiwan Dollars) Basic earnings per share (in New Taiwan Dollars) Diluted earnings per share (in New Taiwan Dollars)	4, 6(16), 7 6(7), 6(18), 6(19), 7 6(18), 6(19), 7 6(20),7 6(20) 6(20) 6(8) 4, 6(22) 6(21) 6(13) 6(23)	$7,185,089 (3,400,271)	100.00 (47.32)	$4,816,964 (2,358,252)	100.00 (48.96)
		3,784,818	52.68	2,458,712	51.04
		(421,918) (320,290) (946,059)	(5.87) (4.46) (13.17)	(330,117) (260,008) (755,123)	(6.85) (5.40) (15.68)
		(1,688,267)	(23.50)	(1,345,248)	(27.93)
		2,096,551	29.18	1,113,464	23.11
		5,110 97,322 5,516 (1,453) 4,005	0.07 1.35 0.08 (0.02) 0.06	10,245 7,974 (7,884) (1,497) 791	0.21 0.17 (0.16) (0.03) 0.01
		110,500	1.54	9,629	0.20
		2,207,051 (401,165)	30.72 (5.58)	1,123,093 (187,595)	23.31 (3.89)
		1,805,886	25.14	935,498	19.42
		(4,999) 619,358 (1,812) 8	(0.07) 8.62 (0.03) -	2,366 363,785 (3,418) 28	0.05 7.55 (0.07) -
		612,555	8.52	362,761	7.53
		$2,418,441	33.66	$1,298,259	26.95
		$11.21		$5.83
		$10.94		$5.71

(The accompanying notes are an integral part of the parent company only financial statements.)

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English Translation of Financial Statements Originally Issued in Chinese

ITE TECH. INC.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

For The Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Description	Common stock	Capital surplus	Retained earnings	Retained earnings	Retained earnings	Other equity	Other equity		庫藏股票 Total equity
			Legal reserve	Special reserve	Undistributed earnings	Exchange differences resulting from translating the financial statements of foreign operations	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Others
Balance as of January 1, 2020 Appropriation and distribution of 2019 earnings: Legal reserve Cash dividends Reversal of special reserve Changes in other capital surplus Cash dividends distributed from capital surplus Profit for the year ended December 31, 2020 Other comprehensive income for the year ended December 31, 2020 Total comprehensive income for the year ended December 31, 2020 Share-based payment transactions Proceeds from disposal of equity instruments measured at fair value through other comprehensive income Balance as of December 31, 2020 Balance as of January 1, 2021 Appropriation and distribution of 2020 earnings: Legal reserve Cash dividends Reversal of special reserve Changes in other capital surplus Cash dividends distributed from capital surplus Profit for the year ended December 31, 2021 Other comprehensive income for the year ended December 31, 2021 Total comprehensive income for the year ended December 31, 2021 Proceeds from disposal of equity instruments measured at fair value through other comprehensive income Balance as of December 31, 2021	$1,610,801 - - - - - -	$1,586,139 - - - (48,324) - -	$238,288 59,376 - - - - -	$258,594 - - (46,694) - - -	$559,696 (59,376) (483,240) 46,694 - 935,498 1,892	$(281) - - - - - 28	$(211,619) - - - - - 360,841	$(5,212) - - - - - -	$4,036,406 - (483,240) - (48,324) 935,498 362,761
	- - -	- 878 -	- - -	- - -	937,390 - 23,818	28 - -	360,841 - (23,818)	- 5,212 -	1,298,259 6,090 -
	$1,610,801	$1,538,693	$297,664	$211,900	$1,024,982	$(253)	$125,404	$-	$4,809,191
	$1,610,801 - - - - - -	$1,538,693 - - - (80,540) - -	$297,664 117,283 - - - - -	$211,900 - - (211,900) - - -	$1,024,982 (117,283) (885,941) 211,900 - 1,805,886 (3,999)	$(253) - - - - - 8	$125,404 - - - - - 616,546	$- - - - - - -	$4,809,191 - (885,941) - (80,540) 1,805,886 612,555
	- -	- -	- -	- -	1,801,887 (69,608)	8 -	616,546 69,608	- -	2,418,441 -
	$1,610,801	$1,458,153	$414,947	$-	$1,965,937	$(245)	$811,558	$-	$6,261,151

(The accompanying notes are an integral part of the parent company only financial statements.)

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English Translation of Financial Statements Originally Issued in Chinese

ITE TECH. INC.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For The Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Description	For theyears end	ed December 31,	Description	For theyears end	ed December 31,
	2021	2020		2021	2020
Cash flows from operating activities: Profit before tax from continuing operations Adjustments for: The profit or loss items which did not affect cash flows: Depreciation Amortization Gains on financial assets and liabilities at fair value through profit or loss Interest expenses Interest income Dividend income Share-based payment expenses Share of profit of subsidiaries, associates, and joint ventures accounted for using the equity method Gains on disposal of investments Changes in operating assets and liabilities: Financial assets mandatorily measured at fair value through profit or loss Notes receivables Trade receivables Trade receivables from related parties Inventories Prepayments Other current assets Contract liabilities Trade payables Trade payables to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liabilities Cash generated from operating activities: Interest received Interest paid Income tax paid Net cash provided by operating activities	2,207,051 $ 45,583 13,914 (4,201) 1,453 (5,110) (93,472) - (4,005) (1,996) (598,084) (5,177) (221,000) (3,011) (581,057) (10,005) (29) (2,016) 201,862 94,454 249,370 (3,088) (14,881) (1,420)	1,123,093 $ 37,367 29,658 (8,288) 1,497 (10,245) (5,026) 5,854 (791) - (780,000) 2,432 (230,625) - (150,587) (14,401) (1) (9,542) 153,224 81,912 122,521 (12,158) 70,620 (5,064)	Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from capital return of financial assets at fair value through other comprehensive income Acquisition of financial assets measured at amortized cost Acquisition of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Acquisition of intangible assets Increase in other non-current assets-others Increase in prepayment for equipment Dividends received Net cash used in investing activities Cash flows from financing activities: Increase in deposits received Cash payment for the principal portion of the lease liabilities Cash dividends Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	(114,354) 8 - - (649) (60,134) (6,375) (24) (11,296) 93,472	(100,000) 48,056 10,600 (3) (22,522) (19,983) (7,393) (51) (3,075) 5,026
				(99,352)	(89,345)
				4,192 (3,469) (966,481)	8,603 (3,116) (531,564)
				(965,758)	(526,077)
				(46,471) 2,022,230	(446,229) 2,468,459
	1,265,135	401,450
	5,212 (1,453) (250,255)	12,578 (1,497) (243,338)
	1,018,639	169,193		1,975,759 $	2,022,230 $

(The accompanying notes are an integral part of the parent company only financial statements.)

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English Translation of Financial Statements and Footnotes Originally Issued in Chinese ITE TECH. INC.

Notes to Parent Company Only Financial Statements For The Years Ended December 31, 2021 and 2020

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

1. Organization and Operation

ITE Tech. Inc. (“the Company”) was incorporated in Hsinchu Science Park on May 29, 1996. The Company’s main products are Super I/O control (SIO) ICs for desktop computers, embedded control (EC) ICs for notebook computers, high-speed audio-video interface related ICs, system on a chip (SoC), and other customized application chips. The Company’s shares are traded in Taiwan Stock Exchange. The Company’s registered office and the main business location is at 3F, No.13, Innovation Road I, Hsinchu Science Park, Hsinchu City.

2. Date and Procedures of Authorization of Financial Statements for Issue

The parent company only financial statements of the Company were authorized for issue by the Board of Directors on February 24, 2022.

3. Newly Issued or Revised Standards and Interpretations

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after January 1, 2021. The application of these new standards and amendments had no material effect on the Company.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) and endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Dates
a	Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements	January 1, 2022

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(a) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3)

B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)

The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

D. Annual Improvements to IFRS Standards 2018 – 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

Amendment to Illustrative Examples Accompanying IFRS 16 Leases The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee’s leasehold improvements.

174 -

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

(3) Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	January 1, 2023
c	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	January 1, 2023
d	Disclosure Initiative - Accounting Policies –Amendments to IAS 1	January 1, 2023
e	Definition of Accounting Estimates – Amendments to IAS 8	January 1, 2023
f	Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12	January 1, 2023

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

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(b) IFRS 17 “Insurance Contracts”

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(d) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

(e) Definition of Accounting Estimates – Amendments to IAS 8 The amendments introduce the definition of accounting estimates and included other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.
(f) Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

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The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The Company assesses that there will be no significant impact on the Company’s financial statements.

4. Summary of Significant Accounting Policies

(1) Statement of compliance

The parent company only financial statements for the years ended December 31, 2021 and 2020 have been prepared in accordance with the Regulations Governing the Preparation of Financial Report by Securities Issuers (the “Regulations”).

(2) Basis of preparation

According to Article 21 of the Regulations, the profit or loss and other comprehensive income presented in parent company only financial statements will be the same as the allocations of profit or loss and of other comprehensive income attributable to owners of the parent presented in the financial statements prepared on a consolidated basis, and the owners’ equity presented in the parent company only financial statements will be the same as the equity attributable to owners of the parent presented in the financial statements prepared on a consolidated basis. Therefore, the investments in subsidiaries will be disclosed under “Investments accounted for using the equity method” in the parent company only financial statements and change in value will be adjusted.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

(3) Foreign currency transactions

The Company’s parent company only financial statements are presented in its functional currency, New Taiwan Dollars (NTD).

Transactions in foreign currencies are initially recorded by the Company’s functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transaction.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

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(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

(4) Translation of financial statements in foreign currency

Each foreign entity of the Company determines its function currency upon its primary economic environment and items included in the financial statements of each entity are measured using that functional currency. The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of the foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposals:

(a) when the partial disposal involves the loss of control of a subsidiary that includes a foreign operation; and
(b) when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the noncontrolling interests in that foreign operation. In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and

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liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(5) Current and non-current distinction

An asset is classified as current when:

(a) the Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle.
(b) the Company holds the asset primarily for the purpose of trading.
(c) the Company expects to realize the asset within twelve months after the reporting period.
(d) the asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

(a) the Company expects to settle the liability in its normal operating cycle.
(b) the Company holds the liability primarily for the purpose of trading.
(c) the liability is due to be settled within twelve months after the reporting period.
(d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

(6) Cash and cash equivalents

(7) Financial instruments

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

(a) Financial instruments: Recognition and Measurement
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The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

I. the Company’s business model for managing the financial assets and
II. the contractual cash flow characteristics of the financial asset.

Financial assets 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.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

I. purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
II. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial assets measured at fair value through other comprehensive income

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A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

I. the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets 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.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

I. a gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
II. when the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
III. interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
i. purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
ii. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.

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Financial assets measured at fair value through profit or loss

(b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at financial asset measured at amortized cost. The Company measures expected credit losses of a financial instrument in a way that reflects:

I. an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
II. the time value of money; and
III. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measures as follow:

I. at an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
II. at an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
III. for trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at

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initial recognition. Please refer to Note 12 for further details on credit risk.

A financial asset is derecognized when:

I. the rights to receive cash flows from the asset have expired.
II. the Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
III. the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

(d) Financial liabilities and equity

Financial liabilities

Financial liabilities at amortized cost

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

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the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(e) Offsetting of financial instruments

(8) Fair value measurement

(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(9) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials – Actual purchase cost measured using weighted-average method

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Finished goods and work in progress – Cost of direct materials and manufacturing overheads.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(10) Investments accounted for using the equity method

According to article 21 of the Regulations, the investments in subsidiaries will be disclosed under “Investments accounted for using the equity method” and change in value will be adjusted to comply. The profit or loss and other comprehensive income presented in parent company only financial reports will be the same as the allocations of profit or loss and other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports will be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis. The difference of the accounting treatment between the parent company only basis and the consolidated basis are adjusted under “investments accounted for using the equity method,” “share of profit of subsidiaries and associates accounted for using the equity method” and “share of other comprehensive income of subsidiaries and associates accounted for using the equity method.”

The Company’s investment in its associates is accounted for using the equity method. An associate is an entity over which the Company has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the postacquisition change in the Company’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Company’s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership

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interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro rata basis.

When the associate or joint venture issues new stock, and the Company’s interest in an associate or a joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in capital surplus and investments accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures . If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Company estimates:

(a) its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(b) the present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment

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in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(11) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, Plant and Equipment . When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings	3`～`41 years
Machinery and equipment	6 years
Research and development equipment	4 years
Office equipment	4 years
Other equipment	4 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

(12) Lease

The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses

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whether the contract, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and
(b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximizing the use of observable information.

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

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At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a) the amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures the rightof-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 Impairment of Assets to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements of comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Company as a lessor

At inception of a contract, the Company classifies its lease not transfer substantially all the risks and rewards incidental to ownership of an underlying asset as an operating lease.

The Company recognizes lease payments from operating leases as rental income on straight-line basis. Variable lease payments for operating leases that do not depend on an

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index or a rate are recognized as rental income when incurred.

(13) Intangible assets

The useful lives of intangible assets are assessed as either finite or indefinite.

Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Company can demonstrate:

(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale
(b) its intention to complete and its ability to use or sell the asset
(c) how the asset will generate future economic benefits
(d) the availability of resources to complete the asset
(e) the ability to measure reliably the expenditure during development
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A summary of the policies applied to the Company’s intangible assets is as follows:

Useful lives Amortization method used Internally generated or acquired	Patents	Computer software	Other intangible assets
	Finite(10 years) Amortized on a straight-line basis over the period of the patent Acquired externally	Finite(3 years) Amortized on a straight-line basis over the estimated useful life Acquired externally	Finite(3~15 years) Amortized on a straight-line basis over the estimated useful life Acquired externally

(14) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there

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is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Sales returns and allowances

Sales returns and allowances are accounted in accordance with IFRS 15.

(16) Treasury shares

(17) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale of goods. The accounting policy is explained as follows:

Sale of goods

The Company manufactures and sells goods. Sales are recognized when control of the goods is transferred to the customers and the goods are delivered to the customers. The main products of the Company are manufacturing and marketing of integrated circuit design products and revenue is recognized based on the consideration stated in the contract, net of the estimated discounts. The Company estimates the discounts using the expected value method based on historical experiences. Revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative

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revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected discounts (recognized as other current liabilities).

The credit period of the Company’s sale of goods is from 30 to 90 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly after transfer of goods to customers; therefore there is no significant financing component to the contract. For some of the contracts, part of the consideration was received from customers upon signing the contract, then the Company has the obligation to provide the goods subsequently; these contracts should be presented as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component is arisen.

(18) Post-employment benefits

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and
(b) the date that the Company recognizes restructuring or termination costs

(19) Share-based payment transactions
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The cost of equity-settled transactions between the Company and its employees is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equitysettled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

The cost of restricted stocks issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Company recognized unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(20) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of

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profit or loss for the period in respect of current tax and deferred tax.

Current income tax

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

(a) where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
(b) in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

(a) where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
(b) in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply

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in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

(21) Business combinations and goodwill

When the Company acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

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losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or Company of units to which the goodwill is so allocated represents the lowest level within the Company at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

5. Significant accounting judgements, estimates and assumptions

The preparation of the Company’s parent company only financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

(1) Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for the different cash generating units, including a sensitivity analysis, are further explained in Note 6(11).

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(2) Revenue recognition – sales returns and allowance

The Company estimates sales returns and allowance based on historical experience and other known factors at the time of sale, which reduces the operating revenue. In assessing the aforementioned sales returns and allowance, revenue is recognized to the extent it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Please refer to Note 6(12) and 6(16) for more details.

6. Contents of significant accounts

(1) Cash and cash equivalents

Cash on hand Checking and saving accounts Time deposits Total	As of December 31,	As of December 31,
	2021	2020
	$242 1,035,517 940,000	$226 211,254 1,810,750
	$1,975,759	$2,022,230

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

Mandatorily measured at fair value through profit or loss: Funds Current Non-current Total	As of December 31,	As of December 31,
	2021	2020
	$1,565,229	$960,299
	$1,533,832 31,397	$932,895 27,404
	$1,565,229	$960,299

Financial assets at fair value through profit or loss were not pledged.

The Company converted Embestor Technology Inc.’s preferred stock to common stock in July 2020 upon maturity of the preferred stock, and the Company reclassified this investment from mandatorily measured at fair value through profit or loss to financial assets at fair value through other comprehensive income based on the fair value of NT$10,796 thousand.

(3) Financial assets at fair value through other comprehensive income, non-current

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Equity instrument investments measured at fair value through other comprehensive income-Non- current: Listed company stocks Unlisted company stocks Total	As of December 31,	As of December 31,
	2021	2020
	$43,351 1,795,607	$13,740 1,091,514
	$1,838,958	$1,105,254

Financial assets at fair value through other comprehensive income were not pledged.

The Company received NT$7,200 thousand and NT$3,400 thousand in 2020 for the return of capital from Darjun Venture Corporation and TriKnight Capital Corporation, respectively, which were reported under equity instrument investments measured at fair value through other comprehensive income.

The Company’s dividend income related to equity instrument investments measured at fair value through other comprehensive income for the years ended December 31, 2021 and 2020 are as follow:

Related to investments held at the end of the reporting period Related to investments derecognized during the period Dividends recognized during the period	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$91,789 -	$3,562 -
	$91,789	$3,562

In consideration of the Company’s investment strategy, the Company disposed and derecognized partial equity instrument investments measured at fair value through other comprehensive income. Details on derecognition of such investments for the years ended December 31, 2021 and 2020 are as follow:

Years Ended December 31,

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The fair value of the investments at the date of derecognition The cumulative gain or (loss) on disposal reclassified from other equity to retained earnings	2021	2020
	$8 $(69,608)	$48,056 $23,818

(4) Financial assets measured at amortized cost, non-current

Time deposits	As of December 31,	As of December 31,
	2021	2020
	$4,230	$4,230

The Company classified certain financial assets as financial assets measured at amortized cost. Since credit risk is low, expected credit losses during the duration are not significant. Please refer to Note 8 for more details on financial assets measured at amortized cost under pledge, and refer to Note 12 for more details on credit risk.

(5) Notes receivables

Notes receivables arising from operating activities Less: loss allowance Total	As of December 31,	As of December 31,
	2021	2020
	$9,248 -	$4,071 -
	$9,248	$4,071

Notes receivables were not pledged.

The Company follows the requirement of IFRS 9 to assess the impairment. Please refer to Note 6(17) for more details on loss allowance and Note 12 for details on credit risk.

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(6) Trade receivables and trade receivables from related parties

Trade receivables Less: loss allowance Subtotal Trade receivables from related parties Less: loss allowance Subtotal Total	As of December 31,	As of December 31,
	2021	2020
	$1,034,939 -	$813,939 -
	1,034,939	813,939
	3,011 -	- -
	3,011	-
	$1,037,950	$813,939

Trade receivables and trade receivables from related parties were not pledged.

Trade receivables are generally on 30-90 day terms. The total carrying amounts were NT$1,037,950 thousand and NT$813,939 thousand as of December 31, 2021 and 2020, respectively. Please refer to Note 6(17) for more details on impairment of trade receivables, and Note 12 for more details on credit risk.

(7) Inventories

Raw materials Work in progress Finished goods Total	As of December 31,	As of December 31,
	2021	2020
	$13,410 569,511 493,967	$20,803 376,249 98,779
	$1,076,888	$495,831

The cost of inventories recognized in expenses amounted to NT$ 3,400,271 thousand and NT$ 2,358,252 thousand for the years ended December 31, 2021 and 2020, respectively, including the inventory valuation loss of NT$85,499 thousand and NT$4,253 thousand for the years ended December 31, 2021 and 2020, respectively.

Inventories were not pledged.

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(8) Investments accounted for using equity method

Details of investments accounted for under the equity method are as follows:

Investees	As of December 31,	As of December 31,	As of December 31,	As of December 31,
	2021		2020
	Carrying amount	Percentage of ownership	Carrying amount	Percentage of ownership
Investments in subsidiaries ITE Tech. (Shenzhen) Inc. Ubiquity Smart Technology Inc. (Note) Subtotal Investments in associates: Emright Technology Co., Ltd. Total	$2,419 -	100% - 36.32%	$3,937 4,653	100% 95.74% 36.32%
	2,419		8,590
	13,294		8,488
	$15,713		$17,078

Note: Ubiquity Smart Technology Inc. was resolved for dissolution and liquidation by the provisional meeting of shareholders on September 30, 2021.

(a) Investments in subsidiaries

Investments in subsidiaries are expressed in the parent company only financial statements as "Investments accounted for using equity method" and necessary valuation adjustments are made.

(b) Investment in an associate

Although the Company is the largest shareholder of an associate; after comprehensive assessment, the Company does not own the major voting rights as the remaining voting rights holders are able to align and prevent the Company from ruling the relevant operation. Therefore, the Company does not control but owns significant influence over the aforementioned associate.

The aggregate amount of the Company’s share of all its individually immaterial associate that is accounted for using the equity method is as follows:

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Income from continuing operations Other comprehensive income (net of tax) Total comprehensive income	Years Ended December 31,	Years Ended December 31,
	2021 $4,806 - $4,806	2020
		$1,204 -
		$1,204

The Company did not have contingent liabilities or capital commitments to the aforementioned associate and the investment was not pledged as of December 31, 2021 and 2020.

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(9) Property, plant and equipment

Land	Buildings	Machinery and equipment	Research and development equipment	Office equipment	Other equipment	Total
$311,450 - -	$398,842 201 (1,074)	$902 28,682 -	$35,872 26,052 (3,086)	$1,481 - (331)	$22,766 5,199 (3,735)	$771,313 60,134 (8,226)
$311,450	$397,969	$29,584	$58,838	$1,150	$24,230	$823,221
$311,450 - -	$396,526 2,316 -	$546 902 (546)	$29,552 9,595 (3,275)	$1,650 - (169)	$18,170 7,170 (2,574)	$757,894 19,983 (6,564)
$311,450	$398,842	$902	$35,872	$1,481	$22,766	$771,313
	$123,240 19,242 (1,074)	$53 3,736 -	$18,862 12,389 (3,086)	$1,030 294 (331)	$11,342 5,854 (3,735)	$154,527 41,515 (8,226)
$-	$141,408	$3,789	$28,165	$993	$13,461	$187,816
$- - -	$103,609 19,631 -	$508 91 (546)	$14,081 8,056 (3,275)	$829 370 (169)	$8,466 5,450 (2,574)	$127,493 33,598 (6,564)
$-	$123,240	$53	$18,862	$1,030	$11,342	$154,527
$311,450	$256,561	$25,795	$30,673	$157	$10,769	$635,405

(a) Components of buildings with different useful lives are main building structure and air conditioning units, which are depreciated over 41 years and 3 years, respectively.

(b) Property, plant and equipment were not pledged.

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(10) Intangible assets

Patents	Software	Goodwill	Others	Total
$201,740 - (201,740)	$15,695 1,365 (5,512)	$2,674,827 - -	$11,902 5,010 (4,801)	$2,904,164 6,375 (212,053)
$-	$11,548	$2,674,827	$12,111	$2,698,486
$201,740 - -	$11,222 5,217 (744)	$2,674,827 - -	$25,934 2,176 (16,208)	$2,913,723 7,393 (16,952)
$201,740	$15,695	$2,674,827	$11,902	$2,904,164
$193,334 8,406 (201,740)	$8,128 4,628 (5,512)	$2,468,504 - -	$5,836 880 (4,801)	$2,675,802 13,914 (212,053)
$-	$7,244	$2,468,504	$1,915	$2,477,663
$173,160 20,174 -	$4,276 4,596 (744)	$2,468,504 - -	$17,156 4,888 (16,208)	$2,663,096 29,658 (16,952)
$193,334	$8,128	$2,468,504	$5,836	$2,675,802
$-	$4,304	$206,323	$10,196	$220,823
$8,406	$7,567	$206,323	$6,066	$228,362

Amortization expense of intangible assets under the statement of comprehensive income:

Operating expenses Research and development expenses	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$8,890	$20,659
	$5,024	$8,999

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(11) Impairment testing of goodwill

The Company has two cash-generating units but the goodwill arising from the business combination belongs to the second cash-generating unit, based on which, the Company assesses whether the goodwill is impaired annually. The assessments are as follows:

The recoverable amounts of the second cash-generating unit have been determined based on a value in use calculation using cash flow projections from financial budgets approved by management covering a five-year period. The projected cash flows have been updated to reflect the change in demand for products and services. The pre-tax discount rates applied to cash flow projections are both 16.05% in 2021 and 2020. Cash flows beyond the five-year period are extrapolated using the growth rate of 2.62% in 2021 and 0.06% in 2020. As of December 31, 2021 and 2020, the Company did not identify any impairment for goodwill of NT$206,323 thousand.

The calculation of value-in-use for cash-generating units is most sensitive to the following assumptions:

(a) Gross margin
(b) Discount rates
(c) Growth rates of sales

Gross margins – gross margins are based on average values achieved in the three years preceding the start of the budget period.

Discount rates — the discount rates reflect the current market assessment of the risks specific to cash generating unit (including the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted). The discount rate was estimated based on the weighted average cost of capital (WACC) for the Company, taking into account the particular situations of the Company and its operating segments. The WACC includes both the cost of liabilities and cost of equities. The cost of equities is derived from the expected returns of the Company’s investors on capital, where the cost of liabilities is measured by the interest bearing loans that the Company has obligation to settle.

Sensitivity to changes in assumptions

With regard to the assessment of value-in-use of the second cash-generating unit, management believes that no reasonably possible change in any of the above key

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assumptions would cause the carrying value of the unit to materially exceed its recoverable amount.

(12) Other current liabilities

Refund liabilities Others Total	As of December 31,	As of December 31,
	2021 $173,450 8,930 $182,380	2020
		$190,198 7,063
		$197,261

(13) Post-employment benefits plans

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

For the years ended December 31, 2021 and 2020, the pension expenses recognized under the defined contribution plan are NT$29,459 thousand and NT$28,705 thousand, respectively.

Defined benefit plan

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mandating, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$2,135 thousand to its defined benefit plan during the 12 months beginning after December 31, 2021.

The average duration of the defined benefit plan obligation as of December 31, 2021 and 2020 are 2.5 years and 2.6 years, respectively.

Pension costs recognized in profit or loss for the years ended December 31, 2021 and 2020:

Current period service costs Interest income or expense Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,616 422	$1,609 505
	$2,038	$2,114

Changes in the defined benefit obligation and fair value of plan assets are as follows:

	As of
December 31, 2021	December 31, 2020	January 1, 2020
$187,675 (99,817)	$178,974 (94,695)	$175,856 (84,147)
$87,858	$84,279	$91,709

Reconciliation of liabilities (assets) under the defined benefit plan is as follows:

As of January 1, 2020 Current period service costs	Defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (assets) $91,709 1,609
	$175,856 1,609	$(84,147) -

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Defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (assets)
967	(462)	505
178,432	(84,609)	93,823
400 142 -	- - (2,908)	400 142 (2,908)
542	(2,908)	(2,366)
- -	- (7,178)	- (7,178)
178,974	(94,695)	84,279
1,616 895	- (473)	1,616 422
181,485	(95,168)	86,317
34 6,156 -	- - (1,191)	34 6,156 (1,191)
6,190	(1,191)	4,999
- -	- (3,458)	- (3,458)
$187,675	$(99,817)	$87,858

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate Expected rate of salary increases	As of December 31,	As of December 31,
	2021 0.50% 2.5%	2020
		0.50% 2.5%

The sensitivity analyses for significant assumption are shown as below:

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Years Ended	Years Ended	December 31,	December 31,
2021		2020
Increase defined benefit obligation	Decrease defined benefit obligation	Increase defined benefit obligation	Decrease defined benefit obligation
$- 3,988 3,404 -	$3,821 - - 3,297	$- 4,096 3,519 -	$3,915 - - 3,400

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the prior period.

(14) Equity

(a) Common stock

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(b) Capital surplus

Premium from merger Restricted stocks for employees Employee stock option Treasury share transactions Premium from issuance of common stock Change in subsidiaries’ ownership Share of changes in net assets of associates and joint ventures accounted for using equity method Others Total	As of December 31,	As of December 31,
	2021	2020
	$979,037 191,764 112,008 19,238 16,424 1,977 1,008 136,697	$1,059,577 191,764 112,008 19,238 16,424 1,977 1,008 136,697
	$1,458,153	$1,538,693

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

I. Income tax obligation;
II. Offsetting accumulated deficits, if any;
III. Legal reserve at 10% of net income after tax;
IV. Allocation or reverse of special reserves as required by law;
V. After deducting the respective amount specified from item I to IV, at least 80% of the remaining earnings will be distributed, together with the undistributed earnings at the beginning of the period, and the capital surplus. However, if the total distribution divided by all the issued shares is less than NTD 0.1 per share, all the remaining and surplus shall not be distributed.

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competition and capital budgets. And the dividends in cash shouldn't less than 30% of the distributable, as well as the interest of the shareholders, share bonus equilibrium and long-term financial planning etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders’ meeting.

When the Company distributing distributable earnings, it shall set aside to special reserve, an amount equal to “other net deductions from shareholders” equity for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements for the adoption of IFRS, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed from the special reserve.

The amount of special reserve provided by the Company for the first time in adopting IFRS is NT$0.

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Appropriation of earnings Dividend per share (NT$)	Appropriation of earnings Dividend per share (NT$)	Appropriation of earnings Dividend per share (NT$)	Appropriation of earnings Dividend per share (NT$)
Years Ended December 31,
2021	2020	2021	2020
$173,228 - 1,288,641	$117,283 (211,900) 885,941	$8.0	$5.5

Please refer to Note 6(19) for more details on employees’ compensations and the remunerations to directors.

(15) Share-based payment plans

Certain employees of the Company are entitled to share-based payment as part of their remunerations; services are provided by the employees in return for the equity instruments granted. These plans are accounted for as equity-settled share-based payment transactions.

(a) Restricted stocks plans for employees

Restrictions on the rights and vesting conditions of restricted stocks for employees are as follows:

The restricted stocks are common shares; however, certain rights of the shareholders

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of these shares are restricted in accordance with the securities issuance regulations and this plan. During the unvested period, these shareholders can receive various dividend distributions without restrictions. However, any right to dispose of these shares are restricted, including but not limited to sale and transfer, pledge, mortgage, gift, etc.

One year since the date of grant:30%

Two years since the date of grant:30%

Three years since the date of grant:40%

There are 1,020,300 shares, 942,300 shares and 1,243,200 shares vested on June 21, 2018 for first year, 2019 for the second year and 2020 for the third year, respectively.

(b) Modification or cancellation of the share-based payment plan for employees

No modification or cancellation of share-based payment plan has occurred in the years ended December 31, 2021 and 2020.

The expense recognized for employee services received for the years ended December 31, 2021 and 2020 are shown in the following table:

Restricted stocks for employees	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$-	$5,854

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(16) Operating revenues

Revenue from contracts with customers Sale of goods Other operating revenues Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$7,181,632 3,457	$4,812,264 4,700
	$7,185,089	$4,816,964

Analysis of revenue from contracts with customers for the years ended December 31, 2021 and 2020 is as follows:

(a) Contract balances

Contract liabilities – current

Contract liabilities – current
Sale of goods		As of
	December 31, 2021	December 31, 2020	January 1, 2020
	$4,996	$7,012	$16,554

The significant changes in the Company’s balances of contract liabilities for the years ended December 31, 2021 and 2020 are as follows:

The opening balance transferred to revenue Increase in receipts in advance during the period (deducting the amount incurred and transferred to revenue during the period) Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$(7,012) 4,996	$(16,552) 7,010
	$(2,016)	$(9,542)

(b) Assets recognized from costs to fulfil a contract

None.

(17) Expected credit gains

The Company measures the loss allowance of its trade receivables (including note receivables, trade receivables and trade receivables from related parties) at an amount equal to lifetime expected credit losses. The assessments of the Company’s loss allowance as of December 31, 2021 and 2020 are as follows:

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The trade receivables loss allowance is measured by using a provision matrix, details are as follows:

2021.12.31

2021.12.31
Gross carrying amount Loss ratio Lifetime expected credit losses Carrying amount of trade receivables 2020.12.31 Gross carrying amount Loss ratio Lifetime expected credit losses Carrying amount of trade receivables	Not past due(Note)			Past due			Total
		Within 30 days	31-120 days	121-150 days	151-180 days	After 181 days
	$1,031,332 -	$15,105 -	$761 -	$- 1%-20%	$- 20%-30%	$- 30%-100%	$1,047,198 -
	-	-	-	-	-	-
	$1,031,332	$15,105	$761	$-	$-	$-	$1,047,198
	Not past due(Note)			Past due			Total
		Within 30 days	31-120 days	121-150 days	151-180 days	After 181 days
	$809,903 -	$7,139 -	$968 -	$- 1%-20%	$- 20%-30%	$- 30%-100%	$818,010 -
	-	-	-	-	-	-
	$809,903	$7,139	$968	$-	$-	$-	$818,010

Note: All of the Company’s note receivables are not yet due.

(18) Leases

Company as a lessee

The Company leases various properties, including real estate such as land and buildings, and furniture and fixtures. The lease terms range from 3 to 33 years.

The Company’s leases effect on the financial position, financial performance and cash flows are as follow:

(a) Amounts recognized in the balance sheet

I. Right-of-use assets
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The carrying amount of right-of-use assets

Land Buildings Furniture and fixtures Total	As of December 31,	As of December 31,
	2021 $81,109 617 644 $82,370	2020
		$84,443 927 385
		$85,755

During the years ended December 31, 2021 and 2020, the additions to right-of-use assets of the Company amounted to NT$683 thousand and NT$1,226 thousand, respectively.

II. Lease liabilities

Current Non-current Total	As of December 31,	As of December 31,
	2021	2020 $3,290 83,811 $87,101
	$3,592 80,723
	$84,315

(b) Amounts recognized in the statement of comprehensive income

Depreciation charge for right-of-use assets

Land Buildings Furniture and fixtures Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$3,334 616 118	$3,334 369 66
	$4,068	$3,769

The expenses relating to short-term leases The expenses relating to leases of low-value assets (Not including the short-term leases) The expenses relating to variable lease payments not	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$450 88 1,251	$376 86 1,171

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included in the measurement of lease liabilities Total Income from subleasing right-of-use assets
	$1,789	$1,633
	$631	$374

(d) Cash outflow relating to leasing activities

During the years ended December 31, 2021 and 2020, the Company’s total cash outflows for leases amounted to NT$6,593 thousand and NT$6,111 thousand, respectively.

(e) Extension and termination options

Some of the Company’s property rental agreements contain extension option. In determining the lease terms, the non-cancellable period for which the Company has the right to use an underlying asset, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option. The option is used to maximize operational flexibility in terms of managing contracts. The majority of extension option held is exercisable only by the Company. After the commencement date, the Company reassesses the lease term upon the occurrence of a significant event or a significant change in circumstances that is within the control of the lessee and affects whether the Company is reasonably certain to exercise an option not previously included in its determination of the lease term.

(19) Summary statement of employee benefits, depreciation and amortization expenses by function:

		Years Ended December 31,	Years Ended December 31,
	2021			2020
Operating costs	Operating expenses	Total	Operating costs	Operating expenses
$54,342 3,368 1,833 - 699	$1,205,361 50,928 29,664 17,728 9,552	$1,259,703 54,296 31,497 17,728 10,251	$41,014 2,827 1,731 - 674	$914,222 43,547 29,088 14,955 9,556
$60,242	$1,313,233	$1,373,475	$46,246	$1,011,368
$5,026	$40,557	$45,583	$1,431	$35,936
$-	$13,914	$13,914	$-	$29,658

The average number of employees of the Company was 431 and 430 for the years ended

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December 31, 2021 and 2020, respectively, including both 5 non-employee directors for years ended December 31, 2021 and 2020, respectively. The average employee benefits expense for the current year was NT$3,183 thousand, and the average employee benefits expense for the previous year was NT$2,453 thousand. The average employee salaries for the current year was NT$2,957 thousand, and the average employee salaries for the previous year was NT$2,248 thousand. The Company’s average salary expense adjustment increased by 31.56%.

The Company's salary and remuneration policy is as follows:

(a) The Company’s employee salary includes fixed monthly salary, festival bonus, performance reward, employee benefits and share-based payment plans. The employee compensation policy is based on the salary market, the Company’s operating performance and organizational structure. According to the flexible adjustment of employee performance and market salary. In addition, uphold the spirit of profit sharing, pay performance reward based on the Company’s operating performance, departmental performance and individual performance of employees, and recognize employee compensation in accordance with the Company’s Articles of Incorporation. In order to retain outstanding talents, the Company will implement employees in a timely reward. There is a complete employee welfare system to achieve the goal of employee work-life balance and create the Company's sustainable development momentum.
(b) The Company’s remuneration of the directors includes remuneration, business execution costs and directors’ remuneration which is determined by the remuneration committee and the Board of Directors in consideration of the Company’s operating results and reference to its contribution to the Company’s performance. Directors’ remuneration recognize in accordance with Article 26-1 of the Company’s Articles of Incorporation. The procedures for determining remuneration are based on the Company’s "Director Performance Evaluation Method". In addition to referring to the Company’s overall operating performance, future business risks and development trends of the industry, it also refers to the individual director’s performance achievement rate and the Company’s performance.
(c) The Company’s manager remuneration includes salary, employee remuneration and share-based compensation. The remuneration policy for managers is based on the Company’s "Salary Management Measures" and the salary level of the position in the industry market, the scope of authority and contribution to the Company’s operating goals.

According to the Articles of Incorporation, between 8% to 20% of profit of the current year is distributable as employees’ compensation and no higher than 1% of profit of the current year is distributable as remuneration to directors. However, the Company’s accumulated losses shall have been covered (if any). The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution

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regarding the employees’ compensation and remuneration to directors can be obtained from the “Market Observation Post System” on the website of the TWSE.

(20) Non-operating income and expenses

(a) Other income

Rental income Dividend income Others Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$3,086 93,472 764	$2,830 5,026 118
	$97,322	$7,974

(b) Other gains and losses

Gains on disposal of investments Foreign exchange losses Gains on financial assets at fair value through profit or loss (Note) Others Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,996 (658) 4,201 (23)	$- (16,172) 8,288 -
	$5,516	$(7,884)

Note: Balances were arising from financial assets mandatorily measured at fair value through profit or loss, including valuation adjustment and exchange difference, etc.

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(c) Finance costs

Interest expenses on lease liabilities Interest expenses on guarantee deposits Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,451 2	$1,495 2
	$1,453	$1,497

(21) Components of other comprehensive income

For the year ended December 31, 2021

Items that may not be reclassified subsequently to profit or loss Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences resulting from translating the financial statements of foreign operations Total	Arising during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
	$(4,999) 619,358 8	$(4,999) 619,358 8	$1,000 (2,812) -	$(3,999) 616,546 8
	$614,367	$614,367	$(1,812)	$612,555

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For the year ended December 31, 2020

Arising during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
$2,366 363,785 28	$2,366 363,785 28	$(474) (2,944) -	$1,892 360,841 28
$366,179	$366,179	$(3,418)	$362,761

(a) The major components of income tax expense are as follows:

Income tax expense (income) recognized in profit or loss

Current income tax expense (income): Current income tax charge Adjustments in respect of current income tax of prior periods Deferred tax expense (income): Deferred tax income relating to origination and reversal of temporary differences Total income tax expense	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$440,245 (30,041) (9,039)	$234,184 (37,024) (9,565)
	$401,165	$187,595

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Income tax relating to components of other comprehensive income

Deferred tax expense (income): Unrealized gains (losses) from equity instrument investments measured at fair value through other comprehensive income Remeasurements of defined benefit plans Total A reconciliation of tax expense and the product	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$2,812 (1,000)	$2,944 474
	$1,812	$3,418
applicable tax rates is as follows:

Accounting profit before tax from continuing operations Tax at the Company’s domestic rate Tax effect of revenues exempt from taxation Tax effect of expenses not deductible for tax purposes Surtax on undistributed retained earnings Adjustments in respect of current income tax of prior periods Others Total income tax expense recognized in profit or loss	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$2,207,051	$1,123,093
	$441,410 (17,927) (371) 8,494 (30,041) (400)	$224,619 (862) (1,475) 2,547 (37,024) (210)
	$401,165	$187,595

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Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2021

Beginning balance as of January1,2021	Recognized in profit or loss	Recognized in other comprehensive income	Ending balance as of December 31,2021
$(28) (74) 7,594 38,040 16,856 18	$- (129) 12,608 (3,350) (284) 194	$(2,812) - - - 1,000 -	$(2,840) (203) 20,202 34,690 17,572 212
$62,406	$9,039	$(1,812)	$69,633

$62,508			$72,676
$(102)			$(3,043)

For the year ended December 31, 2020

Beginning balance as of January1,2020	Recognized in profit or loss	Recognized in other comprehensive income	Ending balance as of December 31,2020
$2,916 1,221 9,485 24,271 18,342 24	$- (1,295) (1,891) 13,769 (1,012) (6)	$(2,944) - - - (474) -	$(28) (74) 7,594 38,040 16,856 18
$56,259	$9,565	$(3,418)	$62,406

$56,259			$62,508
$-			$(102)

(b) Unrecognized deferred tax assets

As of December 31, 2021 and 2020, deferred tax assets that have not been recognized both amount to NT$0.

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(c) The assessment of income tax returns

As of December 31, 2021, the assessment and approval of the income tax returns of the Company is up to 2019.

(23) Earnings per share

(a) Basic earnings per share Profit attributable to ordinary equity holders of the parent company (in thousand NT$) Weighted average number of ordinary shares outstanding for basic earnings per share (share) Basic earnings per share (NT$) (b) Diluted earnings per share Profit attributable to ordinary equity holders of the parent company after dilution (in thousand NT$) Weighted average number of ordinary shares outstanding for basic earnings per share (share) Effect of dilution: Employees’ compensation-stock (share) Weighted average number of ordinary shares outstanding after dilution (share) Diluted earnings per share (NT$)	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$1,805,886	$935,498
	161,080,124	160,492,491
	$11.21	$5.83
	2021	2020
	$1,805,886	$935,498
	161,080,124 3,954,533	160,492,491 3,345,822
	165,034,657	163,838,313
	$10.94	$5.71

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There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the issuance date of the financial statements.

7. Related Party Transactions

Information of the related parties that had transactions with the Company during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Names of relatedparties	Nature of relationshipof the relatedparties
United Microelectronics Corp. HeJian Technology (Suzhou) Co., Ltd. Wavetek Microelectronics Corporation United DS Semiconductor (Shandong) Co., Ltd. Fortune Venture Capital Corp. United Semiconductor (Xiamen) Co., Ltd. Emright Technology Co., Ltd.	Director of the Company Other related party Other related party Other related party Other related party Other related party Associates

Significant transactions with the related parties

(1) Sales

Associates	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$21,119	$6,609

The sales prices to the above related parties were determined through mutual agreement in reference to market conditions. The payment term for the related parties was 30 days after month-end.

(2) Purchases

United Microelectronics Corp. HeJian Technology (Suzhou) Co., Ltd. Others Total	Years Ended December 31,	Years Ended December 31,
	2021	2020
	$916,181 549,238 1,596	$726,647 350,151 889
	$1,467,015	$1,077,687

The purchase price to the above related party is not comparable to the market due to differentiation of manufacturing process and product specification. Payment terms to

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related parties were 45 days after month-end.

(3) Trade receivables from related parties

Associates	As of December 31,	As of December 31,
	2021	2020
	$3,011	$-

(4) Trade payables to related parties

United Microelectronics Corp. HeJian Technology (Suzhou) Co., Ltd. Others Total (5) Other payables to related parties		As of December 31,	As of December 31,
		2021	2020
		$193,646 104,002 539	$134,257 69,306 170
		$298,187	$203,733

Director of the Company Others Total	As of December 31,	As of December 31,
	2021	2020
	$2,828 277	$5,504 689
	$3,105	$6,193

(6) The Company disposed the stock of M3 Technology Inc. to other related parties for NT$38,688 thousand during the year ended December 31, 2020, which were reported under equity instrument investments measured at fair value through other comprehensive income. The accumulated unrealized valuation gain of NT$26,241 thousand were reclassified from other components of equity to retained earnings.
(7) The consultant service transaction NT$38,336 thousand and NT$33,507 thousand to subsidiary were recorded as operating expenses in the year 2021 and 2020. Payment terms for subsidiary was on demand.
(8) The Company purchased masks and other from the director of the Company and recognized NT$31,759 thousand and NT$29,946 thousand as manufacturing expenses and operating expenses for the years ended December 31, 2021 and 2020, respectively. Payment terms for related parties were 45 days after month-end.
(9) The Company had transactions with other related parties and recognized NT$6,740 thousand and NT$2,173 thousand of manufacturing expenses and operating expenses for the years ended December 31, 2021 and 2020, respectively. Payment terms for related parties were 45 days after month-end and on demand.
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(10) The Company recognized NT$19 thousand of non-operating income in the year of 2021 for its transactions with associates. The payment term for associates was 30 days after month-end.
(11) Key management personnel compensation

Short-term employee benefits Post-employment benefits Share-based payment Total	Years Ended	December 31,
	2021	2020
	$111,179 1,784 -	$86,479 1,752 1,032
	$112,963	$89,263

8. Assets Pledged As Security

The following table lists assets of the Company pledged as security:

Assetspledged for security	As of December 31,	As of December 31,	Secured liabilities
	2021	2020
Financial assets measured at amortized cost – non current	$4,230	$4,230	Guarantee for land

9. Significant Contingencies And Unrecognized Contractual Commitments

The Company uses patents of other companies for certain products, and has paid royalty fees based on sales amounts or quantities of these products in accordance with the agreements.

10. Losses Due To Major Disasters

None.

11. Significant Subsequent Events

None.

12. Others

(1) Categories of financial instruments
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Financial assets

Financial assets
Financial assets at fair value through profit or loss: Mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost (Note) Total	As of December 31,
	2021	2020
	$1,565,229 1,838,958 3,033,171	$960,299 1,105,254 2,845,170
	$6,437,358	$4,910,723

Financial liabilities

Financial liabilities
Financial liabilities at amortized cost: Trade and other payables (including related parties) Lease liabilities Deposits received Total	As of December 31,
	2021	2020
	$1,620,985 84,315 28,483	$1,078,387 87,101 24,291
	$1,733,783	$1,189,779

(2) Financial risk management objectives

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Company identifies, measures and manages the aforementioned risks based on the Company’s policy and risk appetite.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk
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Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as of the end of the reporting period. The Company’s foreign currency risk is mainly related to the volatility in the exchange rates for USD. The information of the sensitivity analysis is as follows:

When NTD strengthens/weakens against USD by 5%, the profit for the year ended December 31, 2021 increase/decrease by NT$6,937 thousand, and the profit for the year ended December 31, 2020 would decrease/increase by NT$10,156 thousand.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company doesn’t have any liabilities risk of changes in market interest rates. Therefore, the Company expects no fair value and cash flow risks due to significant interest rate fluctuations.

All of the Company’s financial assets and financial liabilities that are exposed to cash flow risk due to fluctuating interest rate are under short term contracts, thus the cash flow risk of fluctuate interest is considerably low.

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Equity price risk

The Company’s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment objectives. The Company’s listed equity securities are classified under financial assets measured at fair value through other comprehensive income. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves certain equity investments according to level of authority.

For the years ended December 31, 2021 and 2020, a change of 10% in the price of the equity instrument investments could increase/decrease by NT$4,335 thousand and NT$1,374 thousand, respectively.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for trade receivables and note receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of December 31, 2021 and 2020, trade receivables from top ten customers represented 94.08% and 96.02% of the total trade receivables of the Company, respectively. The credit concentration risk of other trade receivables is insignificant.

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Credit risk from balances with bank and other financial instruments is managed by the Company’s treasury in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions and companies with good credit rating. Consequently, there is no significant credit risk for these counter parties.

The Company adopted IFRS 9 to assess the expected credit losses. Except for trade receivables, for debt instrument investments which are not measured at fair value through profit or loss and are at low credit risk upon acquisition, an assessment is made at each reporting date as to whether the credit risk has substantially increased in order to determine the method of measuring the loss allowance and the loss ratio. The measurement indicators of the Company are described as follows:

Level of credit risk	Indicator	Measurement method for expected credit losses	Total carrying amount as of December 31,	Total carrying amount as of December 31,
			2021
				2020
Simplified approach(Note)	(Note)	Lifetime expected credit losses	$1,047,198	$818,010

Note: By using simplified approach (loss allowance is measured at lifetime expected credit losses), including note receivables, trade receivables and trade receivables from related parties.

Financial assets are written off when there is no realistic prospect of future recovery.

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents and financial assets and liabilities at fair value through profit or loss. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest.

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Non-derivative financial liabilities

December 31, 2021 Payables (including related parties) Lease liabilities Deposits received December 31, 2020 Payables (including related parties) Lease liabilities Deposits received	Less than 1year	2 to 3years	4 to 5years	5 to 15years	15 to 20years	> 20years	Total
	$1,620,985 $4,989 $- $1,078,387 $4,737 $-	$- $8,699 $28,483 $- $8,998 $24,291	$- $8,445 $- $- $8,442 $-	$- $41,672 $- $- $41,671 $-	$- $17,666 $- $- $19,668 $-	$- $22,371 $- $- $24,536 $-	$1,620,985 $103,842 $28,483 $1,078,387 $108,052 $24,291

(6) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended December 31, 2021 and 2020:

As of January 1, 2020 Cash flows Non-cash changes As of December 31, 2020 Cash flows Non-cash changes As of December 31, 2021	Deposits received $15,688 8,603 - 24,291 4,192 - $28,483	Lease liabilities $88,991 (3,116) 1,226 87,101 (3,469) 683 $84,315	Total liabilities from financing activities
			$104,679 5,487 1,226
			111,392 723 683
			$112,798

(7) Fair values of financial instruments
(a) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

I. The carrying amount of cash and cash equivalents, trade receivables (including related parties), other receivables, other non-current assets, payables (including related parties) and deposits received approximate their fair value due to their short maturities.
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II. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities) at the reporting date.
III. Fair value of equity instruments without market quotations (including private company equity securities) are estimated using the market approach valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).
(b) Fair value of financial instruments measured at amortized cost

The carrying amounts of the Company’s financial assets and liabilities measured at amortized cost approximate their fair value.

Please refer to Note 12(8) for fair value measurement hierarchy for financial instruments of the Company.

(8) Fair values measurement hierarchy
(a) Fair value measurement hierarchy

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 — Unobservable inputs for the assets or liabilities.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(b) Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

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Level 1	Level 2	Level 3	Total
$1,565,229 43,351	$- -	$- 1,795,607	$1,565,229 1,838,958
$1,608,580	$-	$1,795,607	$3,404,187
Level 1	Level 2	Level 3	Total
$960,299 13,740	$- -	$- 1,091,514	$960,299 1,105,254
$974,039	$-	$1,091,514	$2,065,553

Transfers between Level l and Level 2 during the period

During the years ended December 31, 2021 and 2020, there were no transfers between Level 1 and Level 2 fair value measurements.

Movements of fair value measurement in level 3 on recurring basis

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

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As of January 1, 2021 Total gains and losses recognized: Amount recognized in other comprehensive income (“Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income”) Additions Disposal As of December 31, 2021		Assets	Total $1,091,514 604,101 100,000 (8) $1,795,607
	At fair value through profit or loss	At fair value through other comprehensive income
	Stocks	Stocks
	$- - - -	$1,091,514 604,101 100,000 (8) $1,795,607
	$-

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	Assets
At fair value through profit or loss	At fair value through other comprehensive income	Total
Stocks	Stocks
$10,140 656 - - - - (10,796)	$680,689 - 355,309 100,000 (44,680) (10,600) 10,796	$690,829 656 355,309 100,000 (44,680) (10,600) -
$-	$1,091,514	$1,091,514

Recognized as profit (loss) above, the gain from financial assets still held by the Company as of December 31, 2021 and 2020 was NT$604,450 thousand and NT$321,217 thousand, respectively.

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

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As of December 31, 2021:

Financial assets: Financial assets measured at fair value through other comprehensive income Stocks Stocks	Valuation technique	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity analysis of the input to fair value
	Market approach Asset approach	Discount for lack of marketability Discount for lack of marketability	30% 10%	The higher the discount for lack of marketability, the lower the fair value estimated The higher the discount for lack of marketability, the lower the fair value estimated	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s equity by NT$55,594 thousand 10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s equity by NT$123,967 thousand

As of December 31, 2020:

Financial assets: Financial assets measured at fair value through other comprehensive income Stocks Stocks	Valuation technique	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity analysis of the input to fair value
	Market approach Asset approach	Discount for lack of marketability Discount for lack of marketability	30% 0%~10%	The higher the discount for lack of marketability, the lower the fair value estimated The higher the discount for lack of marketability, the lower the fair value estimated	10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s equity by NT$21,984 thousand 10% increase (decrease) in the discount for lack of marketability would result in (decrease) increase in the Company’s equity by NT$87,167 thousand

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Company validates the fair value measurements and ensure that the results of the

238 -

valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The Company also analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed based on the Company’s accounting policies at each reporting date.

(9) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Financial assets		As of December 31,	As of December 31,
		2021		2020
	Foreign currencies (In thousands)	Foreign exchange rate NTD (In thousands)	Foreign currencies (In thousands)	Foreign exchange rate	NTD (In thousands)
	$11,438 $16,455	27.655 $316,325 27.655 $455,070	$15,937 $8,709	28.10 28.10	$447,843 $244,724
Monetary items: USD Financial liabilities
Monetary items: USD

The Company does not disclose all of information regarding the assets and liabilities denominated in foreign currencies due to the varieties of foreign currency transactions. During the years ended December 31, 2021 and 2020, the foreign exchange losses were NT$658 thousand and NT$16,172 thousand, respectively.

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

(10) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

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13. Additional Disclosure

(1) Information at significant transactions

Additional disclosures for information of the Company for the year ended December 31, 2021:

(a) Financing provided to others for the year ended December 31, 2021: None.
(b) Endorsement/Guarantee provided to others for the year ended December 31, 2021: None.
(c) Marketable securities held as of December 31, 2021 (excluding subsidiaries, associates and joint ventures):

Held Company Name	Marketable Securities Type and Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31,2021	December 31,2021
					Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value (dollar)/ Shares/Units
ITE Tech. Inc.	Common Stock	Unitech Capital, Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	2,000,000	83,800	4.00%	41.90
	Common Stock	Shieh Yong Investment Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income,non-current	24,368,086	333,843	1.52%	13.70
	Common Stock	Darjun Venture Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	9,280,000	84,541	19.61%	9.11
	Common Stock	TriKnight Capital Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	29,285,000	463,582	5.00%	15.83
	Common Stock	Darhe II Venture Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	10,000,000	94,300	14.29%	9.43
	Common Stock	Darchan Venture Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	20,000,000	179,600	18.18%	8.98
	Common Stock	Generiton Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income,non-current	508,047	24,584	12.70%	48.39
	Common Stock	Embestor Technology Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	4,400,000	49,236	16.92%	11.19
	Common Stock	M3 Technology Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	2,003,000	461,371	5.45%	230.34
	Common Stock	Isentek Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	1,000,000	20,750	4.04%	20.75

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Held Company Name	Marketable Securities Type and Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December	31,2021
					Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value (dollar)/ Shares/Units
ITE Tech. Inc.	Common Stock	A-Tec Subsystem Inc.	-	Financial assets measured at fair value through other comprehensive income,non-current	500,000	-	12.50%	-
	Common Stock	Gigastone Corporation	-	Financial assets measured at fair value through other comprehensive income,non-current	1,734,841	21,356	3.42%	12.31
	Common Stock	Orient Semiconductor Electronics Limited	-	Financial assets measured at fair value through other comprehensive income,non-current	830,000	21,995	0.10%	26.50
	Fund	Taishin 1699 Money Market Fund	-	Financial assets at fair value through profit or loss,current	49,087,372.63	671,447	-	13.68
	Fund	Taishin Ta Chong Money Market Fund	-	Financial assets at fair value through profit or loss,current	17,440,929.40	250,284	-	14.35
	Fund	Jih Sun Money Market Fund	-	Financial assets at fair value through profit or loss,current	30,115,964.21	451,351	-	14.99
	Fund	Nomura Taiwan Money Market Fund	-	Financial assets at fair value through profit or loss,current	9,756,813.62	160,750	-	16.48
	Fund	Yuanta/P-shares Taiwan Dividend Plus ETF	-	Financial assets at fair value through profit or loss,non-current	935,000	31,397	-	33.58

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(d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2021:

										Amount:Thousands ofNTD	Amount:Thousands ofNTD	Amount:Thousands ofNTD	Amount:Thousands ofNTD	Amount:Thousands ofNTD
Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter- party	Nature of Relationship	Beginning	balance	Acquisition			Disposal			Endingbalance
					Units	Amount	Units	Amount	Units	Amount	Carrying Value	Gains (Losses) on Disposal	Units	Amount
ITE Tech. Inc.	Taishin 1699 Money Market Fund	Financial assets at fair value through profit or loss, current	-	-	45,567,847.86	$621,814	32,921,265.23	$450,000	29,401,740.46	$401,916	$399,920	$1,996	49,087,372.63	$671,447
	Jih Sun Money Market Fund	Financial assets at fair value through profit or loss, current	-	-	10,076,285.64	$150,641	20,039,678.57	$300,000	-	$-	$-	$-	30,115,964.21	$451,351

(e) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2021: None.
(f) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2021: None.
242 -

(g) Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended December 31, 2021:

									Amount:Thousands of	Amount:Thousands of	NTD
Company Name	Related Party	Nature of Relationship		Transaction Details			Abnormal Transaction		Notes/Trade Payable or Receivable		Note
			Purchase/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
ITE Tech. Inc.	United Microelectronics Corp.	Directors of the Company	Purchase	$916,181	49.14%	45 days after month-end	Not comparable to the market due to differentiation of manufacturing process and product specification.	Same as general trading conditions	$(193,646)	(21.08)%
	HeJian Technology (Suzhou) Co., Ltd.	Other related party	Purchase	$549,238	29.46%	45 days after month-end	Not comparable to the market due to differentiation of manufacturing process and product specification.	Same as general trading conditions	$(104,002)	(11.32)%

(h) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of December 31, 2021: None.

(i) Financial instruments and derivative transactions: None.

243 -
(j) Intercompany relationship and significant intercompany transactions for the year ended December 31, 2021:

No. (Note 1)	Company Name	Counter Party	Nature of Relationship (Note 2)		IntercompanyTransactions	IntercompanyTransactions	IntercompanyTransactions
				Financial Statement Item	Amount	Term	Percentage of Consolidated Net Revenue or Total Assets(Note 3)
0	ITE Tech. Inc.	ITE Tech. (Shenzhen) Inc.	1	Administrative expenses	$38,336	On demand	0.53%

Note 1: Number should be input in the remark column for intercompany transactions. Here illustrate how to assign numbers to transactions. 1. 0 for parent company.
Subsidiaries are given a number in sequence starting with No. 1.
Note 2: There are three types of transactions. Please remark the type of transaction by giving a number to it.
Parent to Subsidiary.
Subsidiary to Parent.
Subsidiaries to Subsidiaries.
Note 3: Asset/liability items are calculated by using the ending balances of the item divided by ending balance of total consolidated assets; Profit/loss items are calculated by using the amount of the transaction divided by total consolidated revenue.
244 -

(2) Information on investees

(a) Names, locations and related information of investees as of December 31, 2021 (excluding investment in Mainland China):

Amount: Thousands of NTD

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balances	as of December 31,2021	as of December 31,2021	Net Income (losses) of the Investee	Profits/losses of Investee	Note
				December 31, 2021	December 31, 2020	Shares	Percentage of Ownership	Carrying Value
ITE Tech. Inc.	Ubiquity Smart TechnologyInc.	Taiwan	Wholesale of electronic materials	$-	$87,000	-	-	$-	$753	$725	Note
	Emright Technology Co., Ltd.	Taiwan	Communication machinery equipment, electronic components manufacturing	$41,768	$41,768	4,176,800	36.32%	$13,294	$13,232	$4,806

Note: Ubiquity Smart Technology Inc. was dissolved and liquidated on September 30, 2021.

(b) The Company has control over the investee company, supplementary disclosure of relevant information about the investee company: None.

245 -

(3) Investment in China

(a) Investment situation:

Amount: US Dollars/Thousands of NTD

Investee Company	Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital (Note 4)	Method of Investment	Accumulated outflow of Investment from Taiwan as of January 1, 2021 (Note 4)	Investment Flows	Investment Flows	Accumulated outflow of Investment from Taiwan as of December 31, 2021(Note 4)	Percentage of Ownership	Net Income (Losses) of the Investee Company	Share of Profits /Losses (Note 3)	Carrying Amount as of December 31, 2021 (Note 3)	Accumulated Inward Remittance of Earnings as of December 31, 2021
						Outflow	Inflow
ITE Tech. (Shenzhen) Inc.		Technological consultation services for ICsproducts	$16,593 USD 600,000	Direct investment in Mainland China (Note 1)	$16,593 USD 600,000	$-	$-	$16,593 USD 600,000	100%	$(1,526)	$(1,526)	$2,419	$-
									Upper Limit on Investment $3,756,690 (Note 2)
	Accumulated Investment in Mainland China as of December 31, 2021				Investment Amounts Authorized by Investment Commission,MOEA				Upper Limit on Investment
	$16,593 (Note 4) (USD600,000)				$16,593 (Note 4) (USD600,000)				$3,756,690 (Note 2)

Note 1: The Company has been approved the investment which that changed the investment structure and directly invested in ITE Tech. (Shenzhen) Inc. by the Investment Commission, MOEA.

Note 2: lBased on Regulations Governing the Approval of Investment or Technical Cooperation in the Mainland China promulgated by Investment Commission, MOEA.

Note 3: According to regulations, it may be evaluated based on the financial statements of the investee company audited by the accountant during the same period.

Note 4: Converted to NTD at the exchange rate on the financial reporting date (1 USD=27.655NTD).

246 -
(b) Significant direct or indirect transactions with the investees in Mainland China:
I. The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: None.
II. The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None. III.The amount of property transactions and the amount of the resultant gains or losses: None.
IV.The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: None.
V. The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None.
VI.Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: Please refer to Note 13(1) (j).

(4) Information of major shareholders

Name of major shareholders	Number of shares held (shares)	Percentage of ownership
United Microelectronics Corp.	13,959,978	8.66%

If the company or its affiliates have experienced financial difficulties in the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, the annual report shall explain how said difficulties will affect the company's financial situation.

None

247 -

VII. Review and analysis of financial status, financial performance,

and risks

1. Financial status

Unit: NT$1000

Financial status			Unit: NT$1000	Unit: NT$1000
Year Item	2021	2020	Variation
			Amount	%
Current assets	$5,711,586	$4,340,082	1,371,504	31.60
Property, plant and equipment	636,065	617,454	18,611	3.01
Intangible assets	221,707	229,512	(7,805)	(3.40)
Other assets	2,070,051	1,300,607	769,444	59.16
Total assets	8,639,409	6,487,655	2,151,754	33.17
Current liabilities	2,172,148	1,485,774	686,374	46.20
Non-current liabilities	206,110	192,483	13,627	7.08
Total liabilities	2,378,258	1,678,257	700,001	41.71
Equity attributable to owners of the parent	6,261,151	4,809,191	1,451,960	30.19
Capital stock	1,610,801	1,610,801	0	0.00
Capital reserve	1,458,153	1,538,693	(80,540)	(5.23)
Retained earnings	2,380,884	1,534,546	846,338	55.15
Other equity	811,313	125,151	686,162	548.27
Treasury shares	0	0	0	--
Non-controlling interest	0	207	(207)	(100.00)
Total equity	6,261,151	4,809,398	1,451,753	30.19
Analysis regarding changes of 20% or more from one period to the next where the amount of change was NT$10 million or more is given as follows: (1) The increase in current assets was primarily due to the increase in current financial assets measured at fair value through profit and loss this year. (2) The increase in other assets was primarily due to the increase in non-current financial assets measured at fair value through other comprehensive income this year. (3) The increase in total assets was primarily due to the increase in current assets and other assets this year. (4) The increase in current liabilities and total liabilities was primarily due to the increase in accounts payable this year. (5) The increase in retained earnings was primarily due to the increase in net profit this year. (6) The increase in other equity was primarily due to the increase in unrealized benefits of financial assets measured at fair value through other comprehensive income this year. (7) The increase in total equity was primarily due to the increase in undistributed earnings thisyear.

(1) The increase in current assets was primarily due to the increase in current financial assets measured at fair value through profit and loss this year.
(2) The increase in other assets was primarily due to the increase in non-current financial assets measured at fair value through other comprehensive income this year.
(4) The increase in current liabilities and total liabilities was primarily due to the increase in accounts payable this year.
(5) The increase in retained earnings was primarily due to the increase in net profit this year. (6) The increase in other equity was primarily due to the increase in unrealized benefits of financial assets measured at fair value through other comprehensive income this year.
(7) The increase in total equity was primarily due to the increase in undistributed earnings this year.
248 -

2. Financial performance

Unit: NT$1000

			Unit: NT$1000	Unit: NT$1000
Year Item	2021	2020	Variation
			Amount	%
Operating revenue	$7,184,586	$4,817,829	2,366,757	49.12
Operating gross profit	3,783,169	2,458,267	1,324,902	53.90
Operating profit	2,096,399	1,113,703	982,696	88.24
Non-operating revenue and expense	110,704	9,531	101,173	1,061.52
Net profit before tax	2,207,103	1,123,234	1,083,869	96.50
Net profit from continuing operations for the current period	1,805,918	935,476	870,442	93.05
Loss from continuing operations	--	--	--	--
Net profit (loss) for the current period	1,805,918	935,476	870,442	93.05
Other comprehensive income for the current period (Net after tax)	612,555	362,761	249,794	68.86
Total comprehensive income for the current period	2,418,473	1,298,237	1,120,236	86.29
Net profit attributable to owners of the parent	1,805,886	935,498	870,388	93.04
Net profit attributable to non- controlling interest	32	(22)	54	(245.45)
Comprehensive income attributable to owners of the parent	2,418,441	1,298,259	1,120,182	86.28
Comprehensive income attributable to non-controlling interest	32	(22)	54	(245.45)
Analysis regarding changes of 20% or more from one period to the next where the amount of change was NT$10 million or more is given as follows: (1) The increase in operating revenue, operating gross profit and operating profit was primarily due to the increase in the operating revenue this year. (2) The increase in non-operating revenue and expense was primarily due to the increase in dividend income this year. (3) The increase in net profit before tax, net profit from continuing operations, and net profit for the current period was primarily due to the increase in operating revenue this year. (4) The increase in other comprehensive income for the current period (net after tax) and total comprehensive income for the current period was primarily due to the increase in unrealized gains on valuation of financial assets measured at fair value through other comprehensive income this year. (5) The increase in net profit attributable to owners of the parent company was primarily due to the increase in the operating revenue this year. (6) The increase in comprehensive income attributable to owners of the parent was primarily due to the increase in operatingrevenue thisyear.

249 -

3. Cash flow

(1) Explanation for analysis of cash flow changes in the recent most year:

Unit: NT$1000

				Unit: NT$1000	Unit: NT$1000
Beginning of year cash balance (1)	Annual net cash inflow from operating activities (2)	Annual net cash outflow from investment and financing activities (3)	Cash surplus (deficit) (1)+(2)- (3)	Remediation measures against expected cash flow deficit
				Investment plans	Wealth management
2,027,313	1,026,751	(1,078,139)	1,975,925	-	-
Analysis of changes in 2021 cash flow: 1. The net cash inflow from operating activities was primarily due to the operating profit this year. 2. The net cash outflow from investment and financing activities was primarily due to the acquisition of financial assets measured at fair value through other comprehensive income this year as well as thepayment of cash dividends.

(2) Improvement plan for liquidity deficiencies: none
(3) Analysis of cash flow analysis for the next year

Unit: NT$1000

				Unit: NT$1000	Unit: NT$1000
Beginning of year cash balance (1)	Expected annual net cash inflow from operating activities (2)	Expected annual net cash outflow from investment and financing activities(3)	Cash surplus (deficit) (1)+(2)-(3)	Remediation measures against expected cash flow deficit
				Investment plans	Wealth management
1,975,925	1,016,768	(1,449,748)	1,542,945	-	-
1. Analysis of changes in 2022 cash flow: (1) The net cash inflow from operating activities was mainly due to the expected operating profit. (2) The net cash outflow from investment and financing activities was mainly due to capital expenditures and expected distribution of cash dividends. 2. Remediation measures against expected cash flow deficit: Not applicable.

Impacts of major capital expenditures on finance and business in the most recent year

None

The annual report shall describe the company's investment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving investment profitability, and investment plans for the coming year.
(1) Investment policy, primary reason(s) for profit or loss in the most recent year, and improvement plan: None.
(2) Investment plan for the coming year: None.
250 -

6. Risk management analysis and assessment

(1) Impact of interest rates, fluctuations in exchange rates, and inflation in the most recent year on the Company’s profit and loss, as well as future countermeasures:
A. Explain the impact of the foreign exchange gains and losses as well as interest income and expenses for the most recent 2 years on the Company's profit and loss
- a. The Company's foreign exchange gains and losses as well as interest income and expense for the most recent 2 years

Unit: NT$1000

		Unit: NT$1000
Item	2021	2020
Foreignexchange gains or(losses) (A)	(1,000)	(16,668)
Financial assets measured at amortized cost- Interestincome orexpense(B)	3,414	8,492
Operatingrevenue (C)	7,184,586	4,817,829
Operating profit(D)	2,096,399	1,113,703
A/C	-0.01%	-0.35%
A/D	-0.05%	-1.50%
B/C	0.05%	0.18%
B/D	0.16%	0.76%

Source: 2020 and 2021 consolidated financial report audited and attested by the CPAs.

b. Impact of inflation in the most recent year on the Company's profit and loss:

No significant impact.

B. The Company's specific measures in response to fluctuations in foreign exchange rates, interest rates and inflation
- a. As a portion of product sales are in U.S. dollars, in order to reduce the impact of fluctuations in foreign exchange rates on profits, an agreement had been reached with major purchasers to pay for purchases in U.S. dollars starting from September 1999.
- b. The Handling Procedures for Engaging in Derivatives Transactions are formulated as the basis for engaging in foreign currency exchange rate hedging instruments, so as to reduce the impact of fluctuations in foreign exchange rates on profits.
- c. Information is collected on fluctuations in foreign exchange rates and interest rates on a daily basis, to allow taking appropriate response measures in a timely manner.
(2) Policies for engaging in high-risk, high-leverage investments, loans to others, endorsements, and derivative transactions, the main reason for profit or loss, and future countermeasures:

The Company does not engage in high-risk and high-leverage investments, nor does it loan funds to others, nor provide endorsements and guarantees. The Company has formulated the Operating Procedures for Loaning Funds to Others, and the Operational Guidelines for Providing Endorsement and Guarantee, for compliance. The amount of the pre-sold foreign exchange forward contract is based on the Company's monthly fund requirements and positions for each currency; the risk of each transaction shall be, in principle, no more than US$100,000 at any time based on the profit and loss assessment, which is also used as the stop loss target. The total amount of contracts for which the Company may engage in derivative transactions is limited to no more than 30% of the paid-in capital, and contract

251 -

losses as a whole are limited to no more than 3% of the paid-in capital.

(3) Future R&D plans and estimated investment in R&D expenses:
Future R&D plan: For detailed information, please refer to 5. Operation Overview - new products planned to be developed.
Estimated investment in R&D expenses: There shall be no need for the Company, except for major changes in technology, to further invest a large amount of funds in research and development. The estimated investment in research and development expenses this year is NT$1,085,027,000.
(4) Impact of important domestic and foreign policies and legal changes on the Company's finances and business, as well as countermeasures:

All businesses of the Company are handled in accordance with the laws and regulations of the competent authority. As of the printing date of the annual report, the Company’s finances and business have not been affected by major domestic or foreign policies or legal changes.

(5) Impact of technological changes and industrial changes on the Company’s finances and business as well as countermeasures:

The company pays attention to changes in technology and industry at any time, evaluates its possible impact, and then proposes corresponding response strategies. And also strengthen the protection capabilities of various information security to ensure the continuous of the company’s business.

(6) Impact of changes in the corporate image on corporate crisis management, as well as countermeasures:

Integrity is the first priority of the corporate image, and there shall be no pursuit of unlawful private interests. The Company takes such value as the Company’s most important principle, which is manifested in its culture as well as in its Articles of Incorporation. Therefore, ethical corporate management has become the essence of the Company.

(7) Expected benefits, possible risks, and corresponding measures for engaging in mergers and acquisitions: There are currently no mergers or acquisitions in process, and therefore this does not apply.
(8) Expected benefits, possible risks and corresponding measures for plant expansion: None
(9) Risks faced due to purchases or sales concentration, as well as countermeasures:
A. The Company’s main raw material is wafers. Since major domestic wafer foundries are run by TSMC and UMC, most domestic IC design companies generally have their purchases concentrated in a specific wafer foundry. In consideration of fabrication process technology, quality yield rate, coordinated scheduling of delivery, and other factors, the Company has for the time being established long-term and stable strategic partnerships with UMC and He Jian Technology (Suzhou) Co., Ltd, which can appropriately diversify risks, meet market demand during peak seasons, and allow company growth in the future.
B. The Company’s operating revenue is primarily from computer peripheral control ICs and high-speed audio-visual interface related ICs. The transaction counterparts are primarily well-known domestic and foreign manufacturers. The risk of sales concentration is not high. In the future, the Company will continue to expand into new markets and develop new customers, so as to reduce the ratio of shipments to a single customer.
252 -
(10) Directors, supervisors, or major shareholders holding 10% or more of the shares; the impact, risks and countermeasures of the Company's massive transfer or replacement of shares: None
(11) Impact, risks and countermeasures for changes in management rights on the Company: None
(12) For litigation or non-litigation matters, the names of the Company, its directors, supervisors, president, substantive responsible person, major shareholders holding more than 10% of the shares, and affiliated companies that have been rendered a final and binding judgement or that involve in a pending major litigation, non-litigation or administrative litigation case shall be set out; where the results thereof may have a significant effect on shareholder equity or securities prices, such facts at issue, the amount of the subject matter, the start date of the litigation, the main parties involved, and the handling status as of the annual report printing date shall be disclosed: None.
(13) Other important risks and countermeasures: None.
Other important matters

None

253 -

VIII. Special Disclosure

1. Information regarding the company’s affiliated companies

(1) Affiliated companies' consolidated business report
A. Organizational chart of the company's affiliated companies

==> picture [377 x 149] intentionally omitted <==

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

ITE Tech. Inc.
ITE Tech.(Shenzhen) Ubiquity Smart
Inc. Technology Inc.
100.00% 95.74%(Note)
----- End of picture text -----

Note ： Ubiquity Smart Technology Inc. was dissolved and liquidated on Sep. 30, 2021.

B. The name, date of establishment, address, paid-in capital and main business items of each affiliate

Profiles of the Company's affiliated companies

Unit: NT$1000

				Unit: NT$1000
Name of enterprise	Date of establishment	Address	Paid-in Capital	Main business or production items
Ubiquity Smart TechnologyInc.	July 8, 2014	Note 1	90,870	Wholesale of electronic materials
ITE Tech.(Shenzhen) Inc.	August 30, 2006	Note 2	16,593 (US$600,000)	Technical consultation and services for integrated circuit electronicproducts

Note 1: 9F, No. 233-1, Baoqiao Rd., Xindian District, New Taipei City. Ubiquity Smart Technology Inc. was dissolved and liquidated on Sep. 30, 2021.

Note 2: Rm816, Vanke Fuchun Dongfang Building ,NO.7006,Shennan Avenue, Futian District, Shenzhen

C. Where it is presumed to have a controlling and subordinate relationship, matters in accordance with Article 369-3 of the Company Act shall be disclosed: None
D. Business services provided by all affiliates: Please refer to the aforementioned “the name, date of establishment, address, paid-in capital and main business items of each affiliated company” for details.
254 -

F. Profiles of Directors, Supervisors and Presidents of the Company's affiliates

Unit: US$1,000; share;%

			Unit: US$1,000;share;%	Unit: US$1,000;share;%
Name of enterprise	Title	Name or Representative	Sharesheld
			Number of shares	Shareholding ratio (%)
ITE Tech.(Shenzhen) Inc.	Director	Lin, Hung-yao (Representative of ITE Tech. Inc.)	(Note)	(Note)

Note: The shareholding is not applicable for foreign-invested enterprises.

G. Operation overview of the Company's affiliates

Operation overview of the Company's affiliates (As of December 31, 2021)

						Unit: NT$1,000,except EPS Operating profit Net profit aftertax Earnings Per Share (1,067) (1,526)(Note)	Unit: NT$1,000,except EPS Operating profit Net profit aftertax Earnings Per Share (1,067) (1,526)(Note)	Unit: NT$1,000,except EPS Operating profit Net profit aftertax Earnings Per Share (1,067) (1,526)(Note)
Name of enterprise	Capital	Total assets	Total liabilities	Net Worth	Operating revenue	Operating profit	Net profit aftertax	Earnings Per Share
ITE Tech. (Shenzhen)Inc.	16,860 (US$600,000)	14,430	12,011	2,419	38,241	(1,067)	(1,526)	(Note)

Note: The shareholding is not applicable for foreign-invested enterprises.

H. Major changes in business methods or business content: None

255 -

REPRESENTATION LETTER

The entities included in the consolidated financial statements as of December 31, 2021 and for the year then ended prepared under the International Financial Reporting Standards 10 Consolidated Financial Statements (referred to as “Consolidated Financial Statements”) are the same as the entities to be included in the combined financial statements of the Company, pursuant to the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises (referred to as “Combined Financial Statements”). Also, the footnotes disclosed in the Consolidated Financial Statements have fully covered the required information in such Combined Financial Statements. Accordingly, the Company did not prepare any other set of Combined Financial Statements than the Consolidated Financial Statements.

Very truly yours,

ITE Tech. Inc.

Chairman: Vincent Hu

February 24, 2022

256 -
(2) Consolidated Financial Statements with Affiliates: Refer to page 79-163.

2. Status of private placement of securities

None.

Acquisition or disposal of The Company’s shares by subsidiaries

None.

Other necessary supplementary notes

None.

Event regulated in Article 36-3-2 of the Securities and Exchange Act that will materially affect shareholder’s equity or the share price

None.

257 -

ITE Tech. Inc.

Person in Charge: Hu, Chun-yang

258 -

AI assistant

ITE — Annual Report 2021

52248_rns_2022-06-23_80be7e6f-1022-4b0e-a2c5-05ba48cdf006.pdf

2021Annual Report

I. Letter to the shareholders

Dear shareholders,

II. Company Profile

1. Date of Incorporation

2. Milestones

III. Corporate Governance Report

1. Organization

A. Information on directors

3. Remuneration paid to general directors, independent directors, supervisors, president and vice presidents

B. Remuneration to President and Vice Presidents

Classification of remuneration

C. Names of managerial officers with employees’ compensation and the status of payment

4. Implementation of Corporate Governance

ITE Tech. Inc. Internal Control System Statement

5. Disclosure of the CPAs’ fee

6. Changes of CPA

(1) Changes in shareholdings of directors, supervisors, managerial officers and major shareholders

IV. Capital Overview

1. The Company's capital and shares

(1) Sources of Capital Stock

A. Formation process of capital stock

B. Type of Stock

C. Information related to shelf registration: Not applicable

(2) Structure of Shareholders

(3) Equity Distribution

Common shares

(4) List of Major Shareholders

2. Status of corporate bond

3. Status of preferred stocks

4. Status of overseas depository receipt

5. Status of employee stock options

6. Status of employee restricted share undertaking

8. Implementation status of the financing plan

V. Operation Profile

1. Business Contents

(1) Business Scope

(B) International trade

(D) Product designing

C. Current product (service) items

D. New products planned to be developed

(2) Industry overview

B. Relevance among upstream, midstream and downstream industries

C. Product development trend

D. Status of product competition

(1) PC-related industries

(2) Video Link IC

(3) SoC for Human Machine Interface (HMI)

2. Market, production and sales overview

a. Personal computer market

D. Competitive niche

b. Disadvantages

Countermeasures:

Countermeasures:

Countermeasures:

Production Flow Chart

(3) Supply status of main raw materials

B. Information on major customers in the most recent 2 years

3. Information on employees as of the annual report printing date for the most recent 2 years

4. Information on environmental protection expenditures

5. Labor-management relations

6. Information security management

7. Important contract

VI. Financial Information

2. Financial Analysis for the most recent five years

3. The Audit Committee’s review report

Audit Committee’s Review Report

4. Independent Auditors' Report and Consolidated Financial Statements

English Translation of Consolidated Financial Statements Originally Issued in Chinese ITE TECH. INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

As of December 31, 2021 and 2020

English Translation of Consolidated Financial Statements Originally Issued in Chinese

ITE TECH. INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2021 and 2020

English Translation of Consolidated Financial Statements Originally Issued in Chinese ITE TECH. INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the years ended December 31, 2021 and 2020

ITE Annual Report 2021