Macronix — Annual Report 2022

Jun 13, 2023

Stock Code: ２３３７

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Year 2022 Annual Report

Printed on March 5, 2023

This Annual Report is available at the following Websites: Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw

Corporate Website: http://www.macronix.com

------Disclaimer------

THIS IS A TRANSLATION OF YEAR 2022 ANNUAL REPORT OF MACRONIX INTERNATIONAL CO., LTD. THE TRANSLATION IS FOR REFERENCE ONLY. IF THERE IS ANY DISCREPANCY BETWEEN THE ENGLISH VERSION AND CHINESE VERSION, THE CHINESE VERSION SHALL PREVAIL.

I. Company Spokesperson and Deputy

Spokesperson: Miin Wu Tel: 03-5786688 Deputy Spokesperson: Paul Yeh Tel: 03-5786688

Title: Chairman and CEO E-mail: ir@mxic.com.tw Title: Vice President E-mail: ir@mxic.com.tw

II. Headquarters and Factories

Headquarters and FAB 2: No. 16, Li-Hsin Road, Science Park, Hsin-chu, Taiwan, R.O.C. Tel: 03-5786688

FAB 5: No. 19, Li-Hsin Road, Science Park, Hsin-chu, Taiwan, R.O.C. Tel: 03-6668999 Test Building: No. 8, Creation Road IV, Science Park, Hsin-chu, Taiwan, R.O.C. Tel: 03-5783333 Taipei Office: 19F, No. 4, Min-Chuan E. Road, Sec. 3, Taipei, Taiwan, R.O.C. Tel: 02-25093300

III. Stock Transfer Agency

Investor Relations Office Address: 2F, No. 162-1, Songjiang Road, Zhongshan Dist., Taipei, Taiwan, R.O.C. Website: http://www.macronix.com Tel: 02-25638128

IV. Auditors

Accounting Firm: Deloitte & Touche Accountant: Tung-Hui Yeh, Kuo-Tyan Hong Address: 6F, No. 2, Zhanye 1st Rd., Science Park, Hsin-chu, Taiwan, R.O.C. Website: http://www.deloitte.com.tw Tel: 03-5780899

V. Overseas Securities Exchanges : None

VI. Company Website : http://www.macronix.com

Macronix’s Philosophy

“Honesty”

Macronix’s Values

“Innovation, Quality, Efficiency, Service, Team Work”

Table of Contents

Chapter I. Letter to Shareholders .............................................................................................. 1	Chapter I. Letter to Shareholders .............................................................................................. 1
Chapter II. Company Overview ................................................................................................. 3
I.	Date of Establishment ............................................................................................................ 3
II.	Company History ................................................................................................................... 3
Chapter III. Corporate Governance Report ............................................................................. 8
I.	Organization ........................................................................................................................... 8
II.	Profile of Directors, Supervisors, the President, Vice Presidents, Assistant Managers,
	and Department Directors .................................................................................................. 10
III	Remuneration of Directors, Supervisors, President, and Vice Presidents in the Most
	Recent Fiscal Year ............................................................................................................. 29
IV.	Implementation of Corporate Governance .......................................................................... 35
V.	Information on the Professional Fees of the Attesting CPAs .............................................. 89
VI.	CPA Replacement Information ............................................................................................ 90
VII.	If Chairman, President, or Chief Financial Officer Holding Positions at the
	Independent Audit Firm or its Affiliated Company within the Most Recent Fiscal
	Year .................................................................................................................................... 90
VIII.	Equity Transfer and Pledge by Directors, Supervisors, Managers and/or Shareholders,
	Who Hold More Than 10% of the Outstanding Shares, in the Most Recent Fiscal
	Year and Up to the Printing Date of this Annual Report ................................................... 90
IX.	Relationship Among the Top Ten Shareholders .................................................................. 92
X.	The Total and Combined Shareholding in a Single Enterprise by the Company, its
	Directors, Supervisors, Managers, and the Directly or Indirectly Controlled Entities ...... 93
Chapter IV. Capital Overview .................................................................................................. 94
I.	Capital and Shares ............................................................................................................... 94
II.	Corporate Bonds ................................................................................................................ 102
III.	Preferred Shares ................................................................................................................. 102
IV.	Global Depository Receipts ............................................................................................... 102
V.	Employee Stock Options ................................................................................................... 102
VI.	New Shares of Employee Restricted Stock Awards .......................................................... 103
VII.	Mergers, Acquisitions or Issuance of New Shares for Acquisition of Shares of other
	Companies ........................................................................................................................ 106
VIII.	Financing Plans and Implementation ................................................................................. 106
Chapter V. Operation Summary ............................................................................................ 107
I.	Business Activities ............................................................................................................. 107
II.	Market and Sales Overview ............................................................................................... 111
III.	Employees Information ...................................................................................................... 115
IV.	Environmental Protection Expenditures ............................................................................ 116
V.	Labor Relations .................................................................................................................. 117
VI.	Information Security Management .................................................................................... 123
VII.	Important Contracts ........................................................................................................... 127
Chapter VI. Financial Summary ............................................................................................ 129
I.	Condensed Balance Sheet and Comprehensive Income Statement in the Last Five
	Fiscal Years ...................................................................................................................... 129
II.	Financial Analysis for the Last Five Fiscal Years ............................................................. 133
III.	Audit Committee’s Report for the Most Recent Fiscal Year............................................. 136

IV.	Financial Statements for the Most Recent Fiscal Year ...................................................... 137
V.	Stand-Alone Financial Statements for the Most Recent Fiscal Year Certified by the
	Accountant ....................................................................................................................... 137
VI.	Financial Difficulties Encountered by the Company and its Affiliated Companies in
	the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report ........... 137
Chapter VII. Review, Analysis, and Risks of Financial Position and Performance .......... 138
I.	Analysis of Financial Status .............................................................................................. 138
II.	Analysis of Financial Performance .................................................................................... 139
III.	Analysis of Cash Flow ....................................................................................................... 140
IV.	Major Capital Expenditures and Impact on Financial and Business in the Most Recent
	Fiscal Year........................................................................................................................ 140
V.	Reinvestment Policy for the Most Recent Fiscal Year, the Main Reasons for the
	Profits/Losses Generated Thereby, the Plan for Improving Reinvestment Profitability,
	and Investment Plans for the Coming Year ..................................................................... 141
VI.	Analysis of Risk Management in the Most Recent Fiscal Year and Up to the Printing
	Date of this Annual Report............................................................................................... 141
VII.	Other Significant Events .................................................................................................... 144
Chapter VIII. Special Disclosure ............................................................................................ 145
I.	Summary of Affiliated Companies .................................................................................... 145
II.	Private Placement Securities of the Most Recent Fiscal Year and Up to the Printing
	Date of this Annual Report............................................................................................... 148
III.	Subsidiaries’ Holding or Disposing the Company’s Sharesin the Most Recent Fiscal
	Year and Up to the Printing Date of this Annual Report ................................................. 149
IV.	Other Necessary Supplements ........................................................................................... 149
V.	The Events Resulting in Significant Impact to Shareholders’ Equity or Stock Prices
	Under Article 36(3)(ii) of Securities and Exchange Act in the Most Recent Fiscal
	Year and Up to the Printing Date of this Annual Report. ................................................ 149

Chapter I. Letter to Shareholders

The global economy was impacted by the pandemic, war, inflation, rising interest rates, and geopolitics in 2022, which suppressed market demand and resulted in excess inventory. Macronix has seen success in its long-term efforts in the high quality applications market, and has effectively mitigated the impact of fluctuations in the end demand and, despite the headwinds, maintained the relatively stable performance. This allowed Macronix’s revenue to remain at high levels, so as to maintain product prices based on premium services and high quality. Macronix’s annual gross margin increased 2.6% compared with the previous year (2021) and performing great. Facing an economic downturn as well as industrial and customers’ inventory adjustments, etc., Macronix has followed up by launching production reduction measures to control inventory levels, meanwhile, it transfers resources to accelerate technology development. This will allow us to get a head start in process technologies and further enhance our long-term competitiveness.

The operating performance of 2022 is as follows: annual consolidated net operating revenue was NT$43.487 billion, annual consolidated gross profit was NT$19.238 billion, the annual averaged gross margin increased to 44.2%, net profit after tax was NT$8.97 billion, and EPS was NT$4.85. Cash inflow from operating activities was NT$11.656 billion, cash outflow from investing activities was NT$10.339 billion, cash equivalents at the end of period was NT$19.764 billion, debt ratio was lowered to 37.3%, book value per share increased to NT$28.38, and return on equity was 18%.

Macronix has engaged in innovation and R&D for years, and its patents have strengthened its barrier against competitors. Taking patents as an example, Macronix has a total of 240 patents applications in various countries in 2022. As of the end of 2022, Macronix owned 8,894 patents worldwide. In addition to the number of patents ranking among the top in the semiconductor industry, it also has a large number of high quality key technologies and trade secrets worldwide, all of which are crucial in maintaining the Company's competitiveness in order to secure a leading position in the global non-volatile memory market. Last year (2022), Macronix was not only recognized with the Featured Vehicle Electronics Solutions Supplier in the 2022 EE Awards Asia, but also with the Best Memory Product of the Year for the second consecutive year. Furthermore, Macronix was also selected into the Top 100 Global Innovators of LexisNexis in 2023. All these recognitions show that Macronix bravely engages in innovation, persists in product improvement, and has the ability to create value-added applications for customers, which is why Macronix is able to stand out from its numerous competitors.

With regard to the development of processes and products, ROM accounted for 25% of annual revenue in 2022. NOR Flash accounted for 55% of annual revenue and is currently expanding to the high value-added market. For example, 256Mb and above high density products are accounting for an increasing percentage of NOR Flash revenue each year, and has reached 50% as of 2022. We are accelerating the development of the world's first ultra-high density 3D NOR Flash, which will help expand the high capacity NOR market. Moreover, our Flash products revenue from high quality applications, such as automotive, industry, healthcare, and aerospace, reached 41% and will become one of the greatest forces driving Macronix’s business growth. Revenue from automotive applications field significantly increased 43% compared with the previous year (2021). Bit shipments also reached a record high, and compound annual growth rate of bit shipments in the past five years reached 30%, with cumulative shipments surpassing 560 million. In terms of NAND Flash, the annual revenue accounted for 11%, and 96-layer 3D NAND Flash products began mass production at the end of last year (2022) and will gradually contribute to revenue. We expect to complete the development of 192layer 3D NAND Flash products by this year (2023), and will continue to develop higher layer stacking technologies to meet customers' demand for products with higher capacity.

Following the rapid development of data centers, artificial intelligence, automotive markets, and 5G, applications of memory chips have become even more extensive. Macronix upholds the spirit of R&D technologies, production capacity, strict quality control, and its commitments to provide customers with high performance and highly reliable memory solutions, and has obtained excellent certifications and recognition accordingly. For example, octaflash obtained the highest level ASIL D certification of ISO 26262 Automotive Electronics Functional Safety, and was accepted by major automotive chip manufacturers around the world.

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ArmorFlash[TM] products obtained certifications of numerous international safety standards, showing that the excellent quality of Macronix products already meets strict international standards, and thus has won the trust of high-end customers. Moreover, Macronix launched a new generation ultra-low voltage 1.2V SPI NOR Flash following the trend of low-carbon economy, which was recognized as the Best Memory Product of the Year in the 2022 EE Awards Asia. This is another excellent example representing Macronix as a leader of the technological innovation. Furthermore, the trend of artificial intelligence led to the development of memorycentric system architectures. The new FortiX[TM] series 3D NAND/NOR Flash Memory, released by Macronix, also provides an in-memory computing solution, which in the future will develop more towards memory AI systems in response to next generation high-performance memory becoming the mainstream in the field of AI.

Facing increasingly complex market environments and risks, corporate sustainability is confronted with more challenges. Macronix follows the UN Sustainable Development Goals (SDGs) and the Corporate Governance 3.0 – Sustainable Development Roadmap of the Financial Supervisory Comission, and has gradually established and implemented corporate governance and risk management mechanisms. The Board of Directors established the sustainable development policy and risk management policy in 2022. The policies serve as the highest guiding principles for the Company's sustainable development and risk management. The disclosure framework of the Task Force on Climate-Related Financial Disclosures (TCFD) and principles of Sustainability Accounting Standards Board (SASB) is incorporated in the Macronix’s Sustainability Report, and further increases the transparency of Macronix’s Environmental, Social, and Governance (ESG) information. Taking one step at a time, Macronix has become an excellent company ranked in the top 10% of electronics companies with a market cap of NT$10 billion and above in the Corporate Governance Evaluation, and was recognized for the excellence in workplace sustainability, health, and safety by the Occupational Safety and Health Administration, Ministry of Labor; excellence in water conservation by the Water Resources Agency, MOEA; excellence in waste reduction and circular economy by the Hsinchu Science Park Administration. These awards are recognitions of Macronix’s ESG and sustainable development performance.

Looking towards the future, the global economic environment is still highly uncertain and the memory industry is waiting to bounce back after bottoming out in the business cycle. Facing such harsh challenges in the overall environment, Macronix’s management team will continue uphold the business philosophy of “honesty”, size up the situation, and make flexible adjustments to production capacity and capital expenditures. Macronix will also facilitate employees’ teamwork accelerating R&D, to strengthen the Company's international competitiveness, and continue to expand to relatively stable high quality applications markets, and increase the revenue share of automotive products, in order to gain further leadership in the global automotive NOR Flash market.

We are extremely grateful for the support and trust of all shareholders, which has allowed us to pursue growth in stable operations, and seize opportunities in changing circumstances. Macronix will continue to enhance its competitive advantage in hopes of setting new milestones in the global memory market, and will continue to increase its company value to create even higher return on investment for shareholders!

Chairman: Miin Wu

President: C. Y. Lu

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Chapter II. Company Overview

I. Date of Establishment

Macronix International Co., Ltd. was founded on December 9, 1989.

II. Company History

• (I) Overview

• Macronix was founded in Hsinchu Science Park, Taiwan, in 1989, and was the first company to be listed as a Category C technology stock in Taiwan in 1995. Macronix is a leading integrated device manufacturer of non-volatile memory (NVM) in the global market that provides a full range of NOR flash, NAND flash, and ROM products.

• With its world-class R&D and manufacturing capabilities, Macronix continues to provide customers with the highest-quality, innovative, and high-performance products for fields of consumption, communication, computing, automotive electronics, networking, and so on. Also, Macronix provides high-end application clients with superior -quality products. Macronix currently owns one 12-inch wafer fab (FAB 5) and one 8-inch wafer fab (FAB 2). FAB 5 and FAB 2 are for Macronix’s own-brand non-volatile memory products. Macronix will carry on developing more technologies and accelerating the implementation of the competitive advantage of its own-brand products, moreover, it will continue to develop new products and strengthen its technologies, quality and service; Macronix strives for its sustainable management and the global competitiveness of Taiwan. Please refer to Milestone of Macronix website (URL: http://www.macronix.com).

• (II) Mergers and Acquisitions, Reinvestment in Affiliated Companies, and Reorganization of the Company

• Implementation of Major Mergers and Acquisitions: None.

• Reinvestment in Affiliated Companies: Please refer to page 145 to 149 of this annual report for “Summary of Affiliated Companies”.

• Reorganization: None.

• (III) Mass Transfer of Equity Which Made or Changed by Directors, Supervisors, or Major Shareholders Who are Holding More than 10% of Outstanding Shares: None.

• (IV) Major Changes of Ownership, Business Management or Operation: None.

• (V) Other Major Matters Could Affect Shareholders’ Equity and its Impact on the Company: None.

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(VI) Milestones

Month/Year	Milestones
Dec. 1989	‧Establishment of Macronix International Co.,Ltd.
Dec. 1990	‧Joint development of Mask ROM with NKK Corporation,Japan
Jan. Dec. 1991	‧Successfully developed the 256Kb and 512Kb EPROM ‧Revenue exceeded NT$100 million for the first time
May. Jun. Oct. 1992	‧Macronix’s Flat Cell patent was granted by USPTO ‧Successful mass production of FAB 1: monthly production exceeded 5,000 wafers ‧Launched the first 4Mb Flash Memoryin the world
Jun. Oct. 1993	‧Process technology migrated to 0.6um ‧Signed manufacturingcooperation agreement with TSMC
Jan. Feb. 1994	‧Announced the new product of R3000 RISC CPU ‧Grand openingof the Creation Building
Mar. Dec. 1995	‧First listed High-Tech company under Category C in Taiwan Stock Exchange (“TSE) ‧Grand openingof the TestingPlant and Recreation Hall
Mar. May. Dec. 1996	‧Completion of the world first 10/100M bps Ethernet and high-speed Ethernet BRIDGE CONTROLLER development ‧First Taiwanese company listed in Nasdaq, USA ‧Yearlyrevenue exceeded NT$10 billion
Feb. Mar. May. Sep. Oct. 1997	‧Issued the first ECB for approximately US$210 million ‧Mass production of FAB 2 ‧Company shares listed at TSE changed from Category C to Category A ‧Establishment of Investor Relations Office ‧Signed cooperation memorandum with Matsushita Electric Co.,Ltd.,Japan
Aug. Dec. 1998	‧Signed joint development agreement of 16Mb XA microcontroller with Philips Semiconductors ‧Completion of new organization structure for Y2000 challenges
Mar. 1999	‧Grand openingof the new Headquarters Building
Feb. Aug. Dec. 2000	‧Jointly developing the world's first single chip solution for 32Mbyte Mask ROM with Infineon ‧Cooperated with Mitsubishi in mobile memory IC manufacturing ‧Strategic alliance with Tower Semiconductor Ltd.,Israel
Aug. Dec. 2001	‧Establishment of Macronix Education Foundation ‧NT$300 million donation to National Tsing Hua University for its construction of "LearningResource Center Building"
Jul. Oct. 2002	‧Grand opening of FAB 3. ‧Grand openingof Employee Dormitorywith Recreation Facilities
May 2003	‧Rulingin favor of Macronix against Atmel’s US 4419747patent
Apr. Jul. 2004	‧US$170 million GDR offering listed at Luxembourg ‧Joint development of the Phase Change MemoryTechnologywith IBM
Mar. Jun. Nov. 2005	‧Mr. Miin Wu was elected as the Chairman of Macronix ‧Mass production of 150nm 3V Serial Flash products ‧Capital reduction resolved bytheprovisional shareholders meeting
Jan. May. Dec. 2006	‧FAB 3 Disposal documents signed ‧New shares listed at TSE after capital reduction ‧Five technical papers selected by 2006 International Electron Devices Meeting (IEDM), among which the paper with IBM and Qimonda AG regarding Phase Change Memory was highlighted by IEDM and ISSCC ‧Massproduction of 100nm XtraROM®

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Month/Year	Milestones
Jan. Jul. Aug. Oct. 2007	‧Spun off four subsidiaries ‧Dr. C. Y. Lu was appointed as the President of Macronix ‧Mass production of 75nm XtraROM® ‧Mass production of 130nm 3V Serial Flash products ‧Macronix’s ADR delisted from Nasdaq ‧Frost & Sullivan awarded Macronix with its 2007 Excellence in Research of the Year Award in the Asia Pacific Phase Change MemoryTechnologies Market
Oct. 2008	‧Foundation-Laying Ceremony of Macronix’s affiliated company in SuZhou Industrial Park, China was held ‧Massproduction of 65nm XtraROM®
May. Dec. 2009	‧Mass production of 110nm 3V Serial Flash products ‧Macronix was awarded of National Industrial Safety& Health Awards
Apr. Jun. Nov. Dec. 2010	‧Acquisition of FAB 5 ‧Two technical papers were selected by the Symposium on VLSI Technology, and among those the paper regarding 3D VG NAND Flash was selected as one of the 8 highlighted papers ‧Mass production of 75nm 3V Parallel Flash products ‧The unveilingceremonyof FAB 5
Feb. Mar. July. Sep. Nov. Dec. 2011	‧Mass production of 110nm 1.8V Parallel Flash products ‧Mr. Miin Wu, Chairman & CEO of Macronix, was awarded with Honorary Doctorate by National Tsing Hua University ‧Mr. C. Y. Lu, President of Macronix, was awarded with the 2012 IEEE Frederik Philips Award ‧Macronix honored with the 2011 National Invention and Creation Award ‧Macronix was 1st in the ranking of patent strength in Taiwan’s semiconductor industry and 18th in the world ‧Mass production of 75nm 1.8V Serial Flash products ‧Massproduction of 75nm 3V NAND Flashproducts
Jan. Feb. Sep. Oct. 2012	‧Mr. C. Y. Lu, President of Macronix was awarded with Special Distinguished Award of Physical Society of Republic of China ‧Mass production of 45 nm XtraROM® ‧Mass production of 75 nm 1.8V Parallel Flash products ‧Mass production of 75 nm 3V Serial Flash products ‧Macronix Received the 13th National Standardization Forward-looking Contribution Award
Apr. Jul. Dec. 2013	‧Opening ceremony of the Macronix Building at National Tsing Hua University ‧Mr. C. Y. Lu, President of Macronix was awarded with Honorary Doctorate by National Chiao Tung University ‧Mr. C. Y. Lu, President of Macronix was awarded with ITRI Laureate ‧Mr. C. Y. Lu, President of Macronix was awarded with Presidential Science Prize ‧Macronix Education Foundation was awarded by the Ministry of Education with OutstandingEducational Foundation Award
Feb. May. Jun. 2014	‧Mass production of 55 nm 3V Parallel Flash products ‧Mass production of 55 nm 3V Serial Flash products ‧Mass production of 36 nm 1.8V/3V NAND Flash products ‧Mass production of 32 nm XtraROM®products

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Month/Year	Milestones
Jun. Sep. Nov. 2015	‧Macronix ranked among the top 5% excellent companies in the first corporate governance evaluation of Listed Companies ‧Samples delivery of 55 nm 1.8V Serial Flash products ‧Mr. C. Y. Lu, President of Macronix was awarded with The World Academy of Sciences (TWAS)Prize in EngineeringSciences
Feb. Dec. 2016	‧Mass production of 55 nm 1.8V Serial Flash products ‧Mr. Miin Wu, Chairman & CEO of Macronix was awarded with Honorary Doctorate by National ChengKungUniversity
May. Dec. 2017	‧Capital reduction plan resolved by the annual shareholders meeting ‧Mr. C. Y. Lu, President of Macronix, was awarded with the 19th "Outstanding Performance Award in the Field of Management of Technology" of Chinese Society for Management of Technology ‧Mr. Miin Wu, Chairman & CEO of Macronix, was awarded of Social Education Contribution Awards of the Ministryof Education
Apr. Jul. Nov. 2018	‧Mr. C. Y. Lu, President of Macronix was elected as Fellow of the US National Academy of Inventors ‧Mr. C. Y. Lu, President of Macronix was elected as Academician of Academia Sinica ‧Mr. C. Y. Lu, President of Macronix was awarded with Materials Technology Contribution Award of Materials Research Society Taiwan ‧Mr. Miin Wu, Chairman & CEO of Macronix was awarded with "Country Winner" and "Business Paradigm Entrepreneur" of EY Entrepreneur Of The Year
Feb. Mar. Dec. 2019	‧Mass production of 19 nm 3V NAND Flash products ‧Donation of NT$420 million to National Cheng Kung University for its construction of "Cheng Kung Innovation Center-MACRONIX Hall" ‧Mr. C. Y. Lu, President of Macronix was elected as Fellow of The World Academy of Sciences(TWAS)of 2020
May. Jun. Aug. Nov. 2020	‧Mr. Miin Wu, Chairman & CEO of Macronix was awarded with Honorary Doctorate by National Chiao Tung University ‧Donation of NT$100 million to National Cheng Kung University per year for the next ten years to establish the "School of Computing" ‧Sample delivery of 75 nm 1.2V Serial Flash products ‧Sample deliveryof 19 nm 1.8V NAND Flashproducts
May. June. Aug. Sep. Nov. 2021	‧Mass production of 75nm 1.2V Serial Flash products ‧Mass production of 19nm 1.8V NAND Flash products ‧FAB 1 Asset Transaction Agreement signed ‧Mass production of 48-Layer 3D NAND Flash products ‧Mr. Miin Wu, Chairman & CEO of Macronix, was awarded of the 10th Industrial Technology Research Institute (ITRI) Laureate ‧Macronix was awarded of 2021 National Occupational Safety and Health Enterprise Benchmarking Award from the Occupational Safety and Health Administration of the Ministryof Labor
April. Dec. 2022	‧Mr. Miin Wu, Chairman & CEO of Macronix was awarded of 5th "Presidential Innovation Award". ‧Macronix Ultra-Low-Power 1.2V Serial NOR Flash Memory was awarded of the "Best Memory of the Year" of 2022 EE Awards Asia. ‧Macronix was awarded of "Featured Vehicle Electronics Solution Supplier" of 2022 EE Awards Asia. ‧Mr. Miin Wu, Chairman & CEO of Macronix was awarded of "Executive of the Year" of 2022 EE Awards Asia. ‧Samples deliveryof 68 nm 1.2V Serial Flashproducts.

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Month/Year	Milestones
	‧Mass production of 96-Layer 3D NAND Flash products.
Jan. 2023	‧Mass production of 45nm 3V Serial Flash products.

(VII) CSR Milestones and Other Awards: Please refer to page 71 of this annual report.

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Chapter III. Corporate Governance Report

I. Organization

• (I) Organizational Structure

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(II) Responsibilities and Functions of Major Departments

(II) Responsibilities	and Functions of Major Departments
Unit	Functions
Internal Auditing	Audit in accordance with the annual audit plan and responsible for integrating internal control assessments and recommendations.
Conglomerate Marketing Center	Responsible for developing and planning marketing strategies for Macronix and its affiliated companies.
Microelectronics and Memory Solution Group (MMSG)	Responsible for the market analysis and planning for memory and microelectronics in line with the Macronix’s development strategy, as well as the planning and leading related products’ operation. It’s also responsible for developing and/or control critical advanced technologies for the manufacture of high-quality products to be provided to Macronix’s customers.
Foundry Business Group (FBG)	A business unit with marketing, manufacturing, and sales capacity to provide professional wafer foundry services to Macronix or third party.
Professional Service Units	Responsible for finance, legal, administration, environmental safety & health, human resource, quality engineering and/or procurement as well as related services.

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II. Profile of Directors, Supervisors, the President, Vice Presidents, Assistant Managers, and Department Directors

(I) Directors and Supervisors

1. Profile of Directors and Supervisors

1.	Profile of Directors and Supervisors	Profile of Directors and Supervisors	Profile of Directors and Supervisors	Profile of Directors and Supervisors	Profile of Directors and Supervisors	Profile of Directors and Supervisors
							February28,2023
Title	Nationality or Place of registration	Name	Gender/Age	Date Elected	Term (yrs)	Date First Elected	Shareholding When Elected		Shares currently held		Shares held by spouse and underage children		Education/ work experience	Other positions at the Company or elsewhere
							Shares	%	Shares	%	Shares	%
Chairman	R.O.C	Miin Wu (Note 1)	Male / 74	2022.05.27	3	1989.11.25	13,200,809	0.71%	13,440,809	0.72%	None	None	M.S. degree in Material Science and Engineering from Stanford University	Chairman & CEO of Macronix International Co., Ltd. Director of Macronix America, Inc. Director of Macronix (BVI) Co., Ltd. Representative (Director) of Hui Ying Investment Ltd. Representative (Director) of Run Hong Investment Ltd. Chairman of Mxtran Inc. Director of Phoenix 3 Venture Capital Co., Ltd. Director of Phoenix 4 Venture Capital Co., Ltd. Director of Macronix Europe N.V. Director of Macronix (Hong Kong) Co., Ltd. Executive Director of Macronix Microelectronics (Suzhou) Co., Ltd. Director of Macronix (Asia) Limited ManagingDirectorof Eastern Electronics Co.,Ltd.
Director	R.O.C	Shun Yin Investment Ltd.	-	2022.05.27	3	2004.06.18	22,587,265	1.22%	22,587,265	1.22%	None	None	None	None
	Japan	Representative: Ikuo Yamaguchi	Male / 55	2022.05.27	3	2021.06.30	None	None	None	None	None	None	BS in electronics engineering from Kogakuin University	Director of MegaChips Corporation and Head of the 1st Business Division of ASIC
Director	R.O.C	C. Y. Lu	Male / 72	2022.05.27	3	2003.04.18	2,815,766	0.15%	2,941,766	0.16%	None	None	Ph.D. degree in Physics from Columbia University	President of Macronix International Co., Ltd. Chairman of Macronix America, Inc. Director of Macronix Europe N.V. Director of Macronix (Hong Kong) Co., Ltd. Chairman & CEO of Ardentec Corporation Director of Ardentec Korea Co., Ltd. Director of Ardentec Singapore Pte. Ltd. Representative (Chairman) of Sheng Tang Investment Co., Ltd. Representative (Chairman) of Ardentec Semiconductor Co. Ltd. Representative (Chairman) of Giga Solution Tech. Co., Ltd. Independent Director of Hong Tai Electric Industrial Co. Ltd. Director of ValuTest Incorporated Director of Valucom Investment Inc. Directorof Feng Chia University
Director	R.O.C	Achi Capital Limited (Note2)	-	2022.05.27	3	2010.06.09	902,456	0.05%	902,456	0.05%	None	None	None	Director of Mxtran Inc.
	R.O.C	Representative: Stacey Lee	Female / 63	Omitted	Omitted	2007.06.29	Omitted	Omitted	19,446	0.00%	None	None	Ph.D. degree in Law, University of the Pacific	Representative (Director) of Mxtran Inc. Adjunct Professor of National Chiao Tung University Adjunct Associate Professor of Soochow University
Director	R.O.C	Chien Hsu Investment Corporation (Note3)	-	2022.05.27	3	2016.06.16	811,421	0.04%	811,421	0.04%	None	None	None	Director of ZOWIE Technology Corporation Director / supervisor of Homey Consulting Corp.
	R.O.C	Representative: Ching-Yun Li	Female / 80	Omitted	Omitted	2019.07.26	Omitted	Omitted	1,441,799	0.08%	None	None	Public relations from Shih Hsin School of Journalism	Chairman of Chien Hsu Investment Corporation Representative (Chairman) of Homey Consulting Corp.

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Title	Nationality or Place of registration	Name	Gender/Age	Date Elected	Term (yrs)	Date First Elected	Shareholding When Elected	Shareholding When Elected	Shares currently held	Shares currently held	Shares held by spouse and underage children	Shares held by spouse and underage children	Education/ work experience	Other positions at the Company or elsewhere
							Shares	%	Shares	%	Shares	%
Director	R.O.C	Che-Ho Wei	Male / 76	2022.05.27	3	2016.06.16	None	None	None	None	None	None	Ph. D. degree in electronic engineering from the University of Washington, Seattle, USA.	Director of Taipei Medical University Director of Arcadyan Technology Corporation Director of Unizyx Holding Corporation Independent Director of Sunplus Technology Co., Ltd. Independent Director of Genesis Photonics Inc.
Director	R.O.C	Yan-Kuin Su (Note4)	Male / 74	2022.05.27	3	2007.06.29	None	None	None	None	None	None	Ph.D. degree in electrical engineering from National Cheng Kung University	Independent Director of Himax Technologies, Inc Independent Director of Epileds Technologies.Inc Independent Director of Universal Cement Corporation Honorary Professor of National Cheng Kung University Professor of Kun Shan University Chief Director of Kun Shan University Green Energy Technology Research Center Dean of Academy of Innovative Semiconductor and Sustainable Manufacturing of National Cheng Kung University
Director	R.O.C	Sung-Jen Fang (Note5)	Male / 55	2022.05.27	3	2022.05.27	370,159	0.02%	375,159	0.02%	60,000	0.00%	Ph.D. degree in Material Science and Engineering from Stanford University	Director of GTM Holdings Corporation Director of TECO Image Systems Co., Ltd. Director of TECO Electric & Machinery Co., Ltd. Independent Director of Scientech Corporation
Director	R.O.C	Tom Yiu	Male / 70	2022.05.27	3	1995.06.05	6,657,322	0.36%	6,681,322	0.36%	1,272,084	0.07%	M.S. degree in Electronic Engineering from University of California, Berkeley	Senior V.P. & Chief Marketing Officer of Macronix International Co., Ltd. Director of Macronix America, Inc. Representative (Director) of Mxtran Inc. Director of SiTime Corporation Independent Director of Chipbond Technology Corporation
Director	R.O.C	F. L. Ni	Male / 64	2022.05.27	3	2007.06.29	1,983,933	0.11%	2,067,933	0.11%	340,333	0.02%	M.S. degree in Electronic Engineering from University of Michigan	Vice President of Macronix International Co., Ltd. Chairman of Macronix Europe N.V. Director of Macronix Pte Ltd. Director of Macronix (Hong Kong) Co., Ltd. DirectorofWolleyInc.
Director	R.O.C	Hui Ying Investment Ltd. (Note6)	-	2022.05.27	3	2001.04.19	1,956,619	0.11%	1,956,619	0.11%	None	None	None	None
	R.O.C	Representative: Paul Yeh	Male / 66	Omitted	Omitted	2007.07.18	Omitted	Omitted	2,730,174	0.15%	4,985	0.00%	MBA, degree in Business Administration of National Chengchi University	Vice President of Macronix International Co., Ltd. Director of New Trend Technology Inc. Director of Macronix Europe N.V. Director of Macronix (Hong Kong) Co., Ltd. Representative (supervisor) of Mxtran Inc.
Independent Director	R.O.C	Tyzz-Jiun Duh	Male / 63	2022.05.27	3	2019.06.18	None	None	None	No/ne	None	None	Ph.D., Institute of Forestry, National Taiwan University	Independent Director of USI Corporation Independent Director of CHINA DEVELOPMENT FINANCIAL HOLDING CORP. Independent Director of CDIB Capital Group Director of Shinfox EnergyCo.,Ltd.
Independent Director	R.O.C	Chiang Kao	Male / 70	2022.05.27	3	2007.06.29	None	None	None	None	None	None	Ph.D. degree in Forest Management from Oregon State University	Honorary Professor of Department of Industrial and Information Management of National Cheng Kung University

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Title	Nationality or Place of registration	Name	Gender/Age	Date Elected	Term (yrs)	Date First Elected	Shareholding When Elected	Shareholding When Elected	Shares currently held	Shares currently held	Shares held by spouse and underage children	Shares held by spouse and underage children	Education/ work experience	Other positions at the Company or elsewhere
							Shares	%	Shares	%	Shares	%
Independent Director	R.O.C	Cheng-Wen Wu (Note7)	Male / 64	2022.05.27	3	2022.05.27	None	None	None	None	4,000	0.00%	Ph.D. degree in Electrical and Computer Engineering from University of California, Santa Barbara	President of Southern Taiwan University of Science and Technology Chair Professor of Academy of Innovative Semiconductor and Sustainable Manufacturing of National Cheng Kung University
Independent Director	R.O.C	Chien-Kuo Yang (Note7)	Male / 64	2022.05.27	3	2022.05.27	None	None	None	None	None	None	B.S. degree in International Trade from Tamkang University	CPA of Diwan & Company Accounting Firm. Chairman of Diwan International Management Consulting Inc. Independent Director of Leadtrend Technology Corporation Independent Director of Andes Technology Corporation Chairman of Tien Da Investment Co.,Ltd.

Note 1: Where the chairman and president or equivalent position (the highest-level of the managerial officer) is the same person, the reasonableness, necessity, and response measures must be disclosed:

Mr. Miin Wu founded Macronix in 1989 and served as its President, who has been elected as the Chairman since 2005 and successfully had Macronix become the global leader in non-volatile memory (NVM) with his breadth of vision and innovative business strategy. In 2022, he was elected as the chairman and CEO of the 12th term of the Board of Directors. Considering that Macronix has four independent directors, and more than half of its directors are non-employees nor managers of Macronix, the independence of the Board of Directors can be ensured. Also, to continue the forward-looking and innovative business philosophy, and to maintain Macronix’s worldwide reputation, image, and competitiveness, it is reasonable and necessary to have Chairman Miin Wu continue to serve concurrently as Macronix’s highest level manager (CEO) to improve the operational efficiency and decision-making, and further enhance its value. Note 2: Ms. Stacey Lee was appointed to attend the 12th Term of the Board of Directors and represent the company exercising any and all Director’s rights thereof.

Note 3: Ms. Ching-Yun Li was appointed to attend the 12th Term of the Board of Directors and represent the company exercising any and all Director’s rights thereof.

Note 4: Mr. Yan-Kuin Su was relieved of the position as the Company's independent director on May 27, 2022, and was appointed as a director.

Note 5: Mr. Sung-Jen Fang was appointed as the Company's new director on May 27, 2022.

Note 6: Mr. Paul Yeh was appointed to attend the 12th Term of the Board of Directors and represent the company exercising any and all Director’s rights thereof. Note 7: Mr. Cheng-Wen Wu and Chien-Kuo Yang were appointed as the Company's new independent directors on May 27, 2022.

Note 8: Mr. Cheng-Yi Fang was relieved of the position as the Company's director on May 27, 2022.

Note 9: Mr. John C. F. Chen was relieved of the position as the Company's independent director on May 27, 2022.

Note 10: Directors held shares by nominee arrangement: Mr. Sung-Jen Fang in the name of other persons held a total of 60,000 of the Company’s shares, constituting 0.00% of shareholding; other directors: none. Note 11: Managers or Directors who are spouses or within second-degree relative of consanguinity to the directors: None.

• 12 -

Major Shareholders of Institutional Shareholders

Name of institutional shareholder	Major shareholders of institutional shareholders
Shun Yin Investment Ltd.	MegaChips Corporation (Japan) (100%)
Achi Capital Limited	Top Harvest Investment Ltd. (Samoa) (100%)
Chien Hsu Investment Corporation	Ching-Yun Li (47.75%) Pao-Yueh Chang (16.00%) Jui-Wen Hu (13.34%) Ting-Chen Hu (13.34%) Chih-To Lee (4.04%) Chih-Te Yeh (1.83%) Guang-Hui Chu (1.75%) Mei-Chih Chen (1.36%) Hsiu-Chu Lin(0.59%)
Hui Ying Investment Ltd.	Macronix International Co., Ltd. (100%)

• 13 -

Major Shareholders Who are Institutional Investors and Their Major Shareholders

Name of institutional shareholder	Major shareholders of institutional shareholders
MegaChips Corporation (Japan)	The Master Trust Bank of Japan, Ltd. (Trust Account) (13.00%) Shindo Co., Ltd. (6.46%) Shindo and Associates (6.46%) Custody Bank of Japan, Ltd. (Trust Account) (3.49%) Masahiro Shindo (2.86%) The Bank of New York 133652 (Standing proxy Mizuho Bank, Ltd. Settlement Sales Department) (2.84%) Ritsuko Shindo (2.80%) Noriko Matsui (2.64%) Mika Aoki (2.58%) MUFG Bank,Ltd.(2.54%)
Top Harvest Investment Ltd. (Samoa)	Hannah Chen (100%)
Macronix International Co., Ltd.	Syue-Rong Shen (3.01%) Cathay Life Insurance (1.65%) The New Labor Pension Fund (1.49%) Robeco Capital Growth Funds (1.42%) Vanguard Emerging Markets Stock Index Fund A Series of Vanguard International Equity Index Funds (1.38%) Mercuries Life Insurance (1.29%) JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard Total International Stock Index Fund A Series of Vanguard Star Funds (1.27%) Shun Yin Investment Ltd. (1.22%) Goldman Sachs International (0.94%) J.P. Morgan Securities Plc (0.77%)

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2. Disclosure of the Professional Qualifications of Directors and Supervisors and the Independence of Independent Directors

Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Miin Wu	Chairman Miin Wu is the founder of Macronix, Before that, Mr. Wu served in several semiconductor companies, such as VLSI Technology Inc., Intel Corp., Rockwell International, and Siliconix Inc. He is currently the chairman and CEO of Macronix and the chairman of Mxtran Inc., a subsidiary of Macronix. He possesses over 30-year experience in the field of semiconductors and backgrounds in industry technology and marketing. Mr. Miin Wu graduated with an MS in Material Science and Engineering from Stanford University, and has earned many recognitions such as "Premier Award on Contemporary Business Leader"(Taiwan Business Weekly), "Top Executive"(Electronic Business Asia), "The 25 Industry executives who made a difference" (Electronic Buyers' News), Cover People of Forbes, "Outstanding Contribution Award" (The Electronics Devices and Materials Association), "The Stars of Asia" (Business Week). He was also awarded of "Honorary Doctorate" by National Chiao Tung University, National Cheng Kung University, and National Tsing Hua University, "Outstanding Achievement Award" by National Cheng Kung University and "Outstanding Alumni Award" by National Taichung First Senior High School, “Outstanding Entrepreneur” by The General Chamber of Commerce of the R.O.C., a Fellow and "Outstanding Performance Award in the Field of Management of Technology" of Chinese Society for Management of Technology, "Professor Shen Wenzen Memorial Award" for his outstanding contribution of the integrated circuits and system design fields, Social Education Contribution Awards of Ministry of Education, "Country Winner" and "Business Paradigm Entrepreneur" of EY Entrepreneur Of The Year, "Digital Transforming Leader Award" of Harvard Business Review, Industrial Technology Research Institute (ITRI) Laureate, "Lifetime Achievement Award" of Global Views Leaders Forum, "Presidential Innovation Award" and "Executive of the Year"of EE Awards Asia.	1. Concurrently serves as the CEO of Macronix and a director with managerial status. 2. Concurrently serves as directors of the subsidiaries of Macronix. 3. Serves as directors of companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraphs 5 and 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 4. Except for 1, 2, and 3, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.”	0

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Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Shun Yin Investment Ltd. (Note 2) Representative: Ikuo Yamaguchi	Director Ikuo Yamaguchi graduated with a BS in Electronics Engineering from Kogakuin University and has a background in industry technology. Mr. Yamaguchi is currently the appointed representative of Shun Yin Investment Ltd., the elected director of Macronix and invested by MegaChips Corporation. He is also a director of MegaChips Corporation and the head of the 1st Business Division of ASIC.	1. A corporate shareholder who holds more than 1% of Macronix’s outstanding shares, and is one of the top ten major shareholders. 2. Serves as the representative appointed by the corporate director of Macronix. 3. Serves as directors of companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraph 5 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 4. Except for 1, 2, and 3, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	0

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Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
C. Y. Lu	Director C. Y. Lu has a Ph.D. degree in Physics from Columbia University, and was previously the president of Vanguard International Semiconductor Corporation; who has backgrounds in industry technology, education, and marketing. Mr. Lu has worked as a professor at National Chiao Tung University and participating in research of the Bell Labs. He has also served as the deputy director of the Electronics Research & Service Organization (ERSO), Industrial Technology Research Institute (ITRI) and was responsible for the Submicron Project of the Ministry of Economic Affairs, in which successfully developed the first 8-inch high density DRAM/SRAM manufacturing technology in Taiwan. He is currently the president of Macronix and the chairman and CEO of Ardentec Technology Inc. Mr. Lu has been fellows of the Institute of Electrical and Electronics Engineers (IEEE), the American Physical Society (APS), and the Chinese Society for Management of Technology. Mr. Lu has received many honors, such as the 2012 IEEE Frederik Philips Award, the IEEE Millennium Medal, the National Science and Technology Medal from the Executive Yuan, the Outstanding Research Award from Pan Wen Yuan Foundation, the Special Contribution Award from the Physical Society of Taiwan, the Golden Merchants Award from the General Chamber of Commerce of R.O.C., the Outstanding Alumni Award from National Taiwan University, an honorary Doctorate from National Chiao Tung University, the ITRI Laureate, the Presidential Science Prize from the Ministry of Science and Technology, and the Engineering Sciences Award from the World Academy of Sciences (TWAS), the Technology Management Award from the Chinese Society for Management of Technology, a fellow of the National Academy of Inventors, an academician of Academia Sinica, the Materials Technology Contribution Award from the Materials Research Society- Taiwan (MRS-T), and a Fellow of the World Academy of Sciences (TWAS).	1.Serves as the president of Macronix and a director with the status of a managerial officer. 2.Concurrently serves as directors of the subsidiaries of Macronix. 3.Serves as directors of companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraph 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 5. Except for 1, 2, and 3, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	1

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Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Achi Capital Limited (Note 2) Representative: Stacey Lee	Director Stacey Lee graduated with a JD from University of the Pacific and has received attorney licenses by passing Bar Examinations in Taiwan and California respectively; she possesses over 40-year experience in the practice of law and qualifications of a patent attorney and an arbitrator. Mrs. Lee also serve as the consultant of Straits Exchange Foundation, a commissioner of the Trade Commission of the Chinese National Federation of Industries, a consultant to the Domain Name Review Committee of the Institute for Information Industry, Lecturer of the Judicial Officer Training Workshop, legal consultant to the Institute for Information Industry, and consultant to many institutions, including the Taiwan Invention Association, the he VDU Office of the Ministry of Economic Affairs. She also served as the chairlady of the North Area Fellowship and the director of the Council for Industrial and Commercial Development, the chairlady of the Cross-Strait Affair Committee and a committed member of the Board of Council of the Taiwan Patent Attorneys Association. Furthermore, Mrs. Lee served as an associate professor at Tamkang University and Central Police University, and was an international senior partner of Baker McKenzie. Mrs. Lee has almost 30-year teaching experience as a professor or adjunct professor at National Chiao Tung University and an adjunct professor at Soochow University, and specialized in cross border transactions, intellectual property, venture capital, incorporation, corporate financing, securities, mergers and acquisitions, licensing and negotiation, international dispute, as well as financing. Mrs. Lee has been a commentor to TV shows, and has solid backgrounds in industry technology, law, education, and public relations.	1. Serves as appointed representatives of the entity directors of Macronix. 2. Serves as a representative of the companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraph 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 4.Except for 1 and 2, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	0

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Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Chien Hsu Investment Corporation (Note 3) Representative: Ching-Yun Li	Director Ching-Yun Li graduated from the Department of Public Relations, Shih Hsin University. She is currently the chairman and the appointed representative of Chien Hsu Investment Corporation. She also serves as the appointed representative of Homey Consulting Corp., who specializes in public relations.	1. Serves as appointed representative of the legal entity elected as the juridical persons that are director of Macronix. 2. Serves as director of companies that have a specific relationship with Macronix, according to Article 3, Paragraph 1, Subparagraph 5 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 3. Except for 1 and 2, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.”	0
Che-Ho Wei	Director Che-Ho Wei graduated with a PhD in electronic engineering from the University of Washington and possesses backgrounds in industry technology and education. He has been the vice president of National Chiao Tung University and is currently the director of Arcadyan Technology Corporation.	1. Serves as directors of a companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraph 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 2. Except for 1, the rest all meet the independence requirements set in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	1

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Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Yan-Kuin Su (Note 4)	Director Yan-Kuin Su graduated with a PhD in electrical engineering from National Cheng Kung University, and has passed the Civil Service Senior Examination of the Electric Power Section of the Electrical Engineering Division of the Construction Personnel; Mr. Su has backgrounds in industry technology and education. He has been a professor of the Department of Electrical Engineering at National Cheng Kung University and the president of Kun Shan University, also, he has been an academician of the IEEE. Mr. Su is currently an dean of Academy of Innovative Semiconductor and Sustainable Manufacturing at National Cheng Kung University, emeritus chair professor at National Cheng Kung University and a chair professor at Kun Shan University.	1. Serves as directors of companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraph 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 3. Except for 1, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	1
Sung-Jen Fang (Note5)	Director Fang Song-Jen has a Ph.D. in Material Science from Stanford University, and formerly worked in the R&D department of Texas Instruments. He formerly held the position of vice president at United Microelectronics Corporation and adjunct assistant professor at Yuan Ze University. He is currently the chairman of Darwin Venture Management, and has a background in industrial technology, financial accounting, education, and marketing.	1. A relative within the second degree of kinship was a director of the Company within the two years before the appointment. 2. The rest all complies with the independence requirements set out in the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies."	1

• 20 -

Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Tom Yiu	Director Tom Yiu graduated with an MS in Electrical Engineering from the University of California, Berkeley, and was previously the Company’s COO. He is currently the Company's senior vice president and chief marketing officer, and is the representative of the Company's legal entity director and subsidiary Mxtran Inc. Before joining Macronix, Mr. Yiu has worked in many IC design companies in the United States, such as VLSI Technology Inc, and founded Dynasty Technology Inc. As a result, he has acquired vast experience in memory R&D, and design, and marketing, with nearly 100 patents in the United States, Europe, Japan, and Taiwan, etc., and possesses a background in industrial technology and marketing.	1. Serves as the senior vice president and the chief marketing officer of Macronix and a director with the status of a managerial officer. 2. Concurrently serves as directors of the subsidiaries of Macronix. 3. Serves as a director of a company that has a specific relationship with Macronix, according to Article 3, Paragraph 1, Subparagraph 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 4. Except for 1, 2, and 3, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	1
F. L. Ni	Director F. L. Ni graduated with an MS in Electrical Engineering from the University of Michigan and has a background in industry technology. Mr. Ni is currently the vice president of the Microelectronics and Memory Solution Group of Macronix and the director of Macronix (Hong Kong) Co., Ltd., a subsidiary of Macronix.	1. Serves as the vice president of Macronix and a director with the status of a managerial officer. 2. Concurrently serves as directors of the subsidiaries of Macronix. 3. Serves as directors of companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraph 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 4. Except for 1, 2, and 3, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	0

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Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Hui Ying Investment Ltd. (Note 6) Representative: Paul Yeh	Director Paul Yeh graduated with an MBA from National Chengchi University and has backgrounds in industry technology and financial accounting. Mr. Yeh is the vice president of the Financial Center of Macronix and the appointed representative of Hui Ying Investment Ltd., a juridical person that is a director of Macronix. He has over 30-year vast experience in financial management. He was awarded the 13th edition of the Outstanding Financial Manager from the Chinese Professional Management Association in 1995.	1. Serves as the appointed representative director of Macronix. 2. Serves as the vice president of Macronix and a director with the status of a managerial officer. 3. Concurrently serves as directors of the subsidiaries of Macronix. 4. Serves as supervisors of companies that have specific relationships with Macronix, according to Article 3, Paragraph 1, Subparagraph 7 of “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. 5. Except for 1, 2, 3, and 4, the rest all meet the independence requirements in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.	0
Tyzz-Jiun Duh	Independent Director Tyzz-Jiun Duh graduated with a PhD in forestry from National Taiwan University and has backgrounds industry technology and education. He has been the Vice Premier of R.O.C., the Minister of the National Development Council, and an adjunct professor at Soochow University. He is currently a consultant of the Taiwan Electrical and Electronic Manufacturers’ Association, and possesses a background in industrial technology and education.	Independent directors have signed the independent director statement (during their service term) for the Company, and were verified to be in compliance with the independence requirements set out in the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, which was reported to the board of directors in 2023 Q1.	3

• 22 -

Criteria Name	Professional Qualifications and Work Experiences (Note 1)	Independence Criteria	Number of Other Public Companies in which Serves Concurrently as an Independent Directors
Chiang Kao	Independent Director Chiang Kao graduated with a PhD in forest management from Oregon State University and has backgrounds in industry technology, financial accounting, and education. He has been the president of National Cheng Kung University and a professor at the Department of Computer Science of Texas State University and is currently a chair professor of the Department of Industrial and Information Management at National Cheng Kung University, and possesses a background in industrial technology, financial accounting, and education.	Independent directors have signed the independent director statement (during their service term) for the Company, and were verified to be in compliance with the independence requirements set out in the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, which was reported to the board of directors in 2023 Q1.	0
Cheng-Wen Wu (Note 7)	Independent Director Wu Cheng-Wen has a Ph.D. in Electrical Engineering and Computer Engineering from the University of California, Santa Barbara. He was formerly the dean of the College of Electrical Engineering and Computer Science and vice president of National Tsing Hua University, and vice president of National Cheng Kung University. He is currently the president of Southern Taiwan University of Science and Technology, and has a background in industrial technology and education.	Independent directors have signed the independent director statement (during their service term) for the Company, and were verified to be in compliance with the independence requirements set out in the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, which was reported to the board of directors in 2023 Q1.	0
Chien-Kuo Yang (Note 7)	Independent Director Yang Chien-Kuo has a bachelor degree in international trade from Tamkang University, has passed the national entrance examination for accountants, was previously an accountant at Ernst & Young, Taiwan, and is currently an accountant at Diwan & Company, the chairperson of Diwan International Management Consulting Inc., and the chairperson of Tien Da Investment Co., Ltd. He has a background in industrial technology and financial accounting.	Independent directors have signed the independent director statement (during their service term) for the Company, and were verified to be in compliance with the independence requirements set out in the "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, which was reported to the board of directors in 2023 Q1.	2

Note 1: None of the directors and the appointed representatives appoint by the directors of the legal person has been in or is under any circumstances stated in Article 30 of the Company Act.

Note2: Mrs. Stacey Lee was appointed to attend the 12th term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof. Note 3: Mrs. Ching-Yun Li was appointed to attend the 12th term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof. Note 4: Mr. Yan-Kuin Su was relieved of the position as the Company's independent director on May 27, 2022, and was appointed as a director. Note 5: Mr. Fang Song-Jen was appointed as the Company's new director on May 27, 2022.

Note 6: Mr. Paul Yeh was appointed to attend the 12th-term Board of Directors, and represent the company exercising any and all director's rights thereof. Note 7: Mr. Wu Wen-Cheng and Yang Chien-Kuo were appointed as the Company's new independent directors on May 27, 2022. Note 8: Mr. Cheng-Yi Fang was relieved of the position as the Company's director on May 27, 2022. Note 9: Mr. John C. F. Chen was relieved of the position as the Company's independent director on May 27, 2022.

• 23 -

• Diversity and Independence of the Board of Directors

• (1) Diversity of the Board of Directors:

• Board diversity goals and implementation are as follows:

  • ‧The Board of Directors is required to have members with professional knowledge, technology, or experience in, at a minimum, industrial technology, law, and accounting, in which more than half of all directors must have a background or experience in industrial technology, at least 1 director must be a legal expert, and at least 1 director must be an accounting expert.

  • ‧The Board of Directors is required to have members of different gender.

The abilities possessed by the Board of Directors as a whole meets the Company’s needs for future development and comply with the Board diversity policy. Implementation of the Board diversity policy in 2022 is as follows:

‧Over 90% of directors have a background or experience in industrial technology, in addition to that, 1 has a background in law, 4 have a background in accounting, 8 have a background in education, 4 have a background in marketing, and 2 has a background in public relations.

‧2 of the 15 directors are female.

Name	Gender	Professional Background	Professional Background	Professional Background	Professional Background	Professional Background	Professional Background
		Industrial Technology	Law	Financial Accounting	Education	Marketing	Public Relations
Miin Wu	Male					
Shun Yin Investment Ltd. Representative: Ikuo Yamaguchi	Male	
C. Y. Lu	Male					
Achi Capital Limited Representative: StaceyLee	Female						
Chien Hsu Investment Corporation Representative: Ching-Yun Li	Female						
Che-Ho Wei	Male				
Yan-Kuin Su	Male				
Sung-Jen Fang	Male					
Tom Yiu	Male					
F. L. Ni	Male	
Hui Ying Investment Ltd. Representative: Paul Yeh	Male			
Tyzz-Jiun Duh	Male				
Chiang Kao	Male				
Cheng-Wen Wu	Male				
Chien-Kuo Yang	Male			

• 24 -

(2) Independence of the Board of Directors

There are 4 independent directors among all the 15 directors, which is 26.67% of the Board of Directors. None of the directors (including independent directors) is spouse or relative within two generations of other directors. Please refer to page 15 of this annual report for the independence of the Board of Directors.

1. Succession Plan for Board Members and Management

2. (1) Succession Plan for Board Members

The Company's Articles of Incorporation clearly state that the candidate nomination system is used for direction election. Board composition is planned in accordance with the Corporate Governance Principles, Regulations for Director/Supervisor Election, and Nomination Committee Charter, and professionals in industrial technology, law, and accounting are recruited in coordination with the Company's development blueprint and Board diversity policy. Besides irregularly providing directors with continuing education information, the Company regularly schedules directors to take continuing education courses; options include corporate governance, internal control system, and financial reporting responsibility courses. Completion of such courses will continue to improve directors' professional knowledge and skills, and director succession planning and candidates are arranged on this basis.

• (2) Succession Plan for Management

Courses for supervisors are offered every year to train managers at all levels and cultivate sufficient managerial talent. Senior executives periodically participate in important cross-departmental business meetings and strategy planning meetings with the president. Discussions during the meetings serve as the basis for establishing the succession team. We also established a talent pool system to examine high-potential talent at any time, and accurately select a succession team.

• 25 -

(II) President, Vice Presidents, Assistant Managers, and Department Directors

													February28,2023	February28,2023	February28,2023
Title	Nationality	Name	Gender	Date appointed	Shares currently held		Shares held by spouse and underage children		Shares held in the name of others		Education/work experience	Other positions at the Company or elsewhere	Other officer, director or supervisor who is the spouse or a relative within second degree
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
CEO	R.O.C	Miin Wu (Note 1)	Male	2007.07.30	13,440,809	0.72%	None	None	None	None	M.S. degree in Material Science and Engineering from Stanford University	Director of Macronix America, Inc. Director of Macronix (BVI) Co., Ltd. Representative (Director) of Hui Ying Investment Ltd. Representative (Director) of Run Hong Investment Ltd. Director of Phoenix 3 Venture Capital Co., Ltd. Director of Phoenix 4 Venture Capital Co., Ltd. Chairman of Mxtran Inc. Director of Macronix Europe N.V. Director of Macronix (Hong Kong) Co., Ltd. Executive Director of Macronix Microelectronics (Suzhou) Co., Ltd. Director of Macronix (Asia) Limited ManagingDirector of Eastern Electronics Co.,Ltd.	None	None	None
President	R.O.C	C. Y. Lu	Male	2007.07.30	2,941,766	0.16%	None	None	None	None	Ph.D. degree in Physics from Columbia University	Chairman of Macronix America, Inc. Director of Macronix Europe N.V. Director of Macronix (Hong Kong) Co., Ltd. Chairman & CEO of Ardentec Corporation Director of Ardentec Korea Co., Ltd. Director of Ardentec Singapore Pte. Ltd. Representative (Chairman) of Sheng Tang Investment Co., Ltd. Representative (Chairman) of Ardentec Semiconductor Co. Ltd. Representative (Chairman) of Giga Solution Tech. Co., Ltd. Independent Director of Hong Tai Electric Industrial Co., Ltd. Director of ValuTest Incorporated Director of Valucom Investment Inc. Director of FengChia University	None	None	None
Senior Vice President & Chief Marketing Officer	R.O.C	Tom Yiu	Male	2007.01.01	6,681,322	0.36%	1,272,084	0.07%	None	None	M.S. degree in Electronic Engineering from University of California,Berkeley	Director of Macronix America, Inc. Representative (Director) of Mxtran Inc. Director of SiTime Corporation Independent Director of Chipbond Technology Corporation	None	None	None
Vice President	R.O.C	F. L. Ni	Male	2006.06.27	2,067,933	0.11%	340,333	0.02%	None	None	M.S. degree in Electronic Engineering from University of Michigan	Chairman of Macronix Europe N.V. Director of Macronix Pte Ltd. Director of Macronix (Hong Kong) Co., Ltd. Director ofWolley Inc.	None	None	None
Vice President	R.O.C	Paul Yeh	Male	2007.10.30	2,730,174	0.15%	4,985	0.00%	None	None	MBA degree in Business Administration, of National Chengchi University	Director of New Trend Technology Inc. Director of Macronix Europe N.V. Director of Macronix (Hong Kong) Co., Ltd. Representative (supervisor) of Mxtran Inc.	None	None	None

• 26 -

Title	Nationality	Name	Gender	Date appointed	Shares currently held	Shares currently held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shares held in the name of others	Shares held in the name of others	Education/work experience	Other positions at the Company or elsewhere	Other officer, director or supervisor who is the spouse or a relative within second degree	Other officer, director or supervisor who is the spouse or a relative within second degree	Other officer, director or supervisor who is the spouse or a relative within second degree
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Vice President	R.O.C	Yen-Hie Chao	Male	2013.05.02	1,616,541	0.09%	35,108	0.00%	None	None	B.S. degree in Materials Science and Engineering of National Tsing Hua University	Representative (Director) of Ardentec Corporation	None	None	None
Vice President	R.O.C	Chun-Hsiung Hung	Male	2015.10.28	598,593	0.03%	2,833	0.00%	None	None	M.S. degree in Electronics Engineering of National Chiao Tung University	None	None	None	None
Vice President	R.O.C	Jui-Kun Chen	Male	2016.12.20	548,040	0.03%	None	None	None	None	M.S. degree in Accounting of National Taiwan University	None	None	None	None
Vice President	R.O.C	Jon-Ten Chung	Male	2018.02.01	751,774	0.04%	158,059	0.01%	None	None	M.S. degree in Economics of University of Arizona	Director of Macronix Pte Ltd. Director of Macronix Europe N.V. Director of Macronix (Hong Kong) Co., Ltd.	None	None	None
Vice President	R.O.C	Kuang-Chao Chen	Male	2022.02.25	921,448	0.05%	1,511	0.00%	None	None	M.S. degree in Chemistry of National Sun Yat-sen University	None	None	None	None
Senior Associate V.P.	R.O.C	Wen-Pin Lu	Male	2022.02.25	440,037	0.02%	None	None	None	None	M.S. degree in Electronic Engineering of National Taiwan University	None	None	None	None
Head of Emerging R&D	R.O.C	Ke-Zhong Wang	Male	2022.02.25	155,534	0.01%	None	None	None	None	PhD in Physics of California Institute of Technology	None	None	None	None
Executive Director	R.O.C	Hsin-Cheng Liu	Male	2020.04.28	76,442	0.00%	None	None	None	None	M.S. degree in Chemical Engineering of National Tsing Hua University	None	None	None	None
Executive Director	R.O.C	Kai-Wen Tu	Male	2020.04.28	92,577	0.00%	None	None	None	None	Ph.D. degree in statistics of National Chiao Tung University	None	None	None	None
Executive Director	R.O.C	Ting-Chang Lin	Male	2020.04.28	109,378	0.01%	None	None	None	None	M.S. degree in Astronomy of National Central University	None	None	None	None

• 27 -

Title	Nationality	Name	Gender	Date appointed	Shares currently held	Shares currently held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shares held in the name of others	Shares held in the name of others	Education/work experience	Other positions at the Company or elsewhere	Other officer, director or supervisor who is the spouse or a relative within second degree	Other officer, director or supervisor who is the spouse or a relative within second degree	Other officer, director or supervisor who is the spouse or a relative within second degree
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
Executive Director	R.O.C	Kun-Lung Chang	Male	2020.04.28	102,253	0.00%	None	None	None	None	M.S. degree in Electronics Engineering of National Chiao Tung University	None	None	None	None
Executive Director	R.O.C	Ta-Hone Yang (Note 2)	Male	2022.07.26	253,312	0.01%	None	None	None	None	M.S. degree in Chemistry of National Tsing Hua University	None	None	None	None
Project Executive Director	R.O.C	Hui-Chi Li	Male	2017.10.11	326,182	0.02%	3,066	0.00%	None	None	M.S. degree in Ceramic Engineering of Alfred University	None	None	None	None
Note 1: Where the chairman and president or equivalent position (the highest level manager) is the same person, the reasonableness, necessity, and response measures must be disclosed: Mr. Miin Wu founded Macronix in 1989 and served as its President, who has been elected as the Chairman since 2005 and successfully had Macronix become the global leader in non-volatile memory (NVM) with his breadth of vision and innovative business strategy. In 2022, he was elected as the chairman and CEO of the 12th term of the Board of Directors. Considering that Macronix has four independent directors, and more than half of its directors are non-employees nor managers of Macronix, the independence of the Board of Directors can be ensured. Also, to continue the forward-looking and innovative business philosophy, and Macronix’s international reputation, image, and competitiveness, it is reasonable and necessary to have Chairman Miin Wu concurrently serve as Macronix’s highest level manager (CEO) to improve the operational efficiency and decision-making and further enhance its value for Macronix. Note 2: Mr. Ta-Hone Yang was promoted to Executive Director on July 26, 2022

• 28 -

III Remuneration of Directors, Supervisors, President, and Vice Presidents in the Most Recent Fiscal Year

(I) Remuneration of Directors and Independent Directors

December 31, 2022 Unit: NT$ thousands

Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	The Total of Remuneration (A+B+C+D) and the Ratio Between it and Net Income(%)	The Total of Remuneration (A+B+C+D) and the Ratio Between it and Net Income(%)	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	Relevant Remuneration Received byDirectors Who are Also Employees	The Total of Compensation (A+B+C+D+E+F+G) and the Ratio Between it and Net Income(%)	The Total of Compensation (A+B+C+D+E+F+G) and the Ratio Between it and Net Income(%)	Remuneration received from invested companies other than subsidiaries or the parent company
		Base Compensation (A)		Severance Pay (B) (Note 1)		Directors Compensation(C) (Note 2)		Allowances (D)				Salary, Bonuses, and Allowances (E)		Severance Pay (F) (Note 1)		Employee Compensation (G) (Note 2)
		The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company		Companies in the consolidated financial statements		The Company	Companies in the consolidated financial statements
																Cash	Stock	Cash	Stock
Chairman	Miin Wu	0	0	0	0	64,221	64,221	120	120	64,341 0.72%	64,341 0.72%	28,051	28,051	567	567	80,000	0	80,000	0	172,959 1.93%	172,959 1.93%	0
Director	Shun Yin Investment Ltd. Representative: Ikuo Yamaguchi	0	0	0	0	30,735	30,735	120	120	30,855 0.34%	30,855 0.34%	0	0	0	0	0	0	0	0	30,855 0.34%	30,855 0.34%	0
Director	C. Y. Lu	0	0	0	0	33,485	33,485	120	120	33,605 0.37%	33,605 0.37%	20,633	20,633	567	567	55,000	0	55,000	0	109,805 1.22%	109,805 1.22%	95,004
Director	Achi Capital Limited	0	0	0	0	30,735	30,735	120	120	30,855 0.34%	30,855 0.34%	0	0	0	0	0	0	0	0	30,855 0.34%	30,855 0.34%	0
Director	Chien Hsu Investment Corporation	0	0	0	0	30,735	30,735	120	120	30,855 0.34%	30,855 0.34%	0	0	0	0	0	0	0	0	30,855 0.34%	30,855 0.34%	0
Director	Che-Ho Wei	0	0	0	0	10,245	10,245	120	120	10,365 0.12%	10,365 0.12%	0	0	0	0	0	0	0	0	10,365 0.12%	10,365 0.12%	0
Director	Yan-Kuin Su (Note2)	1,461	1,461	0	0	6,147	6,147	120	120	7,728 0.09%	7,728 0.09%	0	0	0	0	0	0	0	0	7,728 0.09%	7,728 0.09%	0
Director	Sung-Jen Fang (Note3)	0	0	0	0	6,147	6,147	72	72	6,219 0.07%	6,219 0.07%	0	0	0	0	0	0	0	0	6,219 0.07%	6,219 0.07%	0
Director	Tom Yiu	0	0	0	0	10,245	10,245	120	120	10,365 0.12%	10,365 0.12%	10,865	10,865	567	567	15,000	0	15,000	0	36,797 0.41%	36,797 0.41%	0
Director	F. L. Ni	0	0	0	0	10,245	10,245	120	120	10,365 0.12%	10,365 0.12%	14,523	14,523	567	567	33,000	0	33,000	0	58,455 0.65%	58,455 0.65%	0
Director	Hui Ying Investment Ltd.	0	0	0	0	10,245	10,245	120	120	10,365 0.12%	10,365 0.12%	0	0	0	0	0	0	0	0	10,365 0.12%	10,365 0.12%	0
Director	Cheng-Yi Fang (Note4)	0	0	0	0	4,126	4,126	48	48	4,174 0.05%	4,174 0.05%	0	0	0	0	0	0	0	0	4,174 0.05%	4,174 0.05%	0
Independent Director	Tyzz-Jiun Duh	3,600	3,600	0	0	0	0	120	120	3,720 0.04%	3,720 0.04%	0	0	0	0	0	0	0	0	3,720 0.04%	3,720 0.04%	0
Independent Director	Chiang Kao	3,600	3,600	0	0	0	0	120	120	3,720 0.04%	3,720 0.04%	0	0	0	0	0	0	0	0	3,720 0.04%	3,720 0.04%	0
Independent Director	Cheng-Wen Wu (Note5)	2,148	2,148	0	0	0	0	72	72	2,220 0.02%	2,220 0.02%	0	0	0	0	0	0	0	0	2,220 0.02%	2,220 0.02%	0
Independent Director	Chien-Kuo Yang (Note5)	2,148	2,148	0	0	0	0	72	72	2,220 0.02%	2,220 0.02%	0	0	0	0	0	0	0	0	2,220 0.02%	2,220 0.02%	0
Independent Director	John C.F. Chen (Note6)	1,461	1,461	0	0	0	0	48	48	1,509 0.02%	1,509 0.02%	0	0	0	0	0	0	0	0	1,509 0.02%	1,509 0.02%	0
1. Please describe the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration: The Board of Directors is authorized to determine the remuneration of independent directors based on participation in the Company's operations, value of contributions, and domestic and overseas industry standards in accordance with the Articles of Incorporation. The independent director’s remuneration is a fixed monthly remuneration and does not participate in the Company’s earnings distribution 2. Other than as disclosed in the above table,the remuneration earned byDirectorsprovidingservices to the Companyand all consolidated entities in the latest fiscalyear: None.

Note 1: Estimated amount

• 29 -

Note 2: Mr. Yan-Kuin Su was relieved of the position as the Company's independent director on May 27, 2022, and was appointed as a director. Note 3: Mr. Sung-Jen Fang was appointed as the Company's new director on May 27, 2022. Note 4: Mr. Cheng-Yi Fang was relieved of the position as the Company's director on May 27, 2022. Note 5: Mr. Cheng-Wen Wu and Chien-Kuo Yang were appointed as the Company's new independent directors on May 27, 2022. Note 6: Mr. John C. F. Chen was relieved of the position as the Company's independent director on May 27, 2022.

• Note 7: Explanation of the correlation and rationality of after-tax changes in the profit and remuneration.

• (1)The Company’s 2021 net profit after tax was NT$11,962,952,000. The net profit for 2022 was NT$8,969,775,000. According to the Articles of Incorporation, bonuses are distributed to Directors and employees as incentive. The Company’s net profit after tax for 2021 decrease from 2020, which was in line with the decrease in the “Remuneration of Directors” and “Relevant Remuneration Received by Directors Who are Also Employees.”

(2)The Company’s shares distribution is calculated while taking the industry standard, employment duration of directors (and representatives), and actual participation and contributions into consideration. The remuneration is reasonable.

• 30 -

December 31, 2022 Unit: NT$ thousands

(II) Remuneration of the President and Vice Presidents

Title	Name (Note 1)	Salary (A)	Salary (A)	Severance Pay (B) (Note 2)	Severance Pay (B) (Note 2)	Bonuses and Allowances (C)	Bonuses and Allowances (C)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	Employee Compensation (D)	The Total of Remuneration (A+B+C+D) and the Ratio Between it and Net Income(%)	The Total of Remuneration (A+B+C+D) and the Ratio Between it and Net Income(%)	Remuneration received from invested companies other than subsidiaries or the parent company
		The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements	The Company		Companies in the consolidated financial statements		The Company	Companies in the consolidated financial statements
								Cash	Stock	Cash	Stock
CEO	Miin Wu	78,964	78,964	5,670	5,670	57,137	57,137	336,500	0	336,500	0	478,271 5.33%	478,271 5.33%	95,004
President	C. Y. Lu
Senior Vice President & Chief Marketing Officer	Tom Yiu
Vice President	F. L. Ni
Vice President	Paul Yeh
Vice President	Yen-Hie Chao
Vice President	Chun-HsiungHung
Vice President	Jui-Kun Chen
Vice President	Jon-Ten Chung
Vice President	Kuang-Chao Chen (Note1)

Note 1: Mr. Kuang-Chao Chen promoted to Vice President on February 25, 2022. Note 2: Estimated amount

• 31 -

Range of Remuneration for Presidents and Vice Presidents

Range of Remuneration Paid to Each President and Vice President	Name of President and Vice Presidents	Name of President and Vice Presidents
	The Company	Companies in the consolidated financial statements(Note)
Under NT$1,000,000
NT$1,000,000 (inclusive) – NT$2,000,000(exclusive)
NT$2,000,000 (inclusive) – NT$3,500,000(exclusive)
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)
NT$15,000,000 (inclusive) – NT$30,000,000(exclusive)	Tom Yiu / Paul Yeh / Kuang-Chao Chen	Tom Yiu / Paul Yeh / Kuang-Chao Chen
NT$30,000,000 (inclusive) – NT$50,000,000 (exclusive)	F. L. Ni / Chun-Hsiung Hung / Jui-Kun Chen / Yen-Hie Chao / Jon-Ten Chung	F. L. Ni / Chun-Hsiung Hung / Jui-Kun Chen / Yen-Hie Chao / Jon-Ten Chung
NT$50,000,000 (inclusive) – NT$100,000,000(exclusive)	C. Y. Lu
Over NT$100,000,000	Miin Wu	Miin Wu / C. Y. Lu
Total	10	10

Note: The total amount of A+B+C+D and remuneration received from subsidiaries or the parent company other than invested companies.

• 32 -

(III). Employees Compensation Distributed to Management Team

December 31, 2022 Unit: NT$ thousands

	Title	Name	Stock (Fair Market Value)	Cash	Total	Ratio of Total Amount to Net Income (%)
Managers	CEO	Miin Wu	0	413,500	413,500	4.61%
	President	C. Y. Lu
	Senior Vice President & Chief Marketing Officer	Tom Yiu
	Vice President	F. L. Ni
	Vice President	Paul Yeh
	Vice President	Yen-Hie Chao
	Vice President	Chun-HsiungHung
	Vice President	Jui-Kun Chen
	Vice President	Jon-TenChung
	Vice President	Guang-Chao Chen
	Head of Emerging R&D	Ke-Zhong Wang(Note 1)
	Senior Associate V.P.	Wen-Bin Lu
	Executive Director	Hsin-ChengLiu
	Executive Director	Kai-Wen Tu
	Executive Director	Ting-ChangLin
	Executive Director	Kun-LungChang
	Executive Director	Ta-Hone Yang (Note 2)
	Project Executive Director	Hui-Ji Li

Note 1: Mr. Ke-Zhong Wang was promoted to Head of Emerging R&D on February 25, 2022. Note 2: Mr. Ta-Hone Yang was promoted to Executive Director on July 26, 2022.

• 33 -

• (IV) The Ratio of Total Remuneration Paid by the Company and by All Companies Included in the Consolidated Financial Statements for the Two Most Recent Fiscal Years to Directors, Supervisors, President and Vice Presidents of the Company, to the Net Income as Well as the Policies, Standards, and Portfolios for the Payment of Remuneration, the Procedures for Determining Remuneration, and the Correlation with Risks and Business Performance

• The ratio of the total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, president and vice presidents of the Company, to the net income.

	2021	2021		2022
	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements
Directors	2.80%	2.80%	2.94%	2.94%
Presidents and Vice Presidents	4.59%	4.59%	5.33%	5.33%

1. The policy, standards and packages of remunerations, the procedures for such decisions and relation to business performance and future risks.

2. (1) Remuneration to the Company's directors and managers are distributed in accordance with the Articles of Incorporation and the law, after referring to industry standards in Taiwan and overseas, the length of the tenure of related members, actual participation, and contributions. Remunerations are summarized below:

   • ‧ Independent Director: Receives NT$300,000 and travel allowance on a monthly basis regardless of the Company's profit or loss, but does not participate in earning distribution.

   • ‧ Non-Independent Director: Calculated and distributed based on the director's (including representatives) performance evaluation items (e.g. attendance in Board meetings and shareholders’ meetings and continuing education), length of tenure, actual participation, and contributions in accordance with the Company's Articles of Incorporation and the law, after referring to industry standards in Taiwan and overseas, provided that it does not exceed 2% of profits after deducting accumulated losses.

3. (2) Transportation allowance for directors: NT$10,000 per month.

4. (3) Compensation for managers: Reviewed and approved by the Compensation Committee after referencing manager performance evaluation items, which include financial indicators (e.g., revenue and EPS) and non-financial indicators (e.g., decision-making ability and performance improvement), and submitted to the Board of Directors for resolution.

5. (4) Others: With consideration to future changes in the economic environment, remuneration paid to our management team will be carefully established in accordance with the law, based on business performance and future risks, as well as industry standards in Taiwan and overseas.

6. 34 -

IV. Implementation of Corporate Governance

(I) Board of Directors

A total of 7 (A) meetings of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%)(B/A) (Note1 )	Remarks
Chairman	Miin Wu	7	0	100%	Re-elected
Director	Shun Yin Investment Ltd. Representative: Ikuo Yamaguchi	7	0	100%	Re-elected
Director	C. Y. Lu	6	1	86%	Re-elected
Director	Achi Capital Limited Representative: Stacey Lee	7	0	100%	(1) Re-elected (2)Ms. Stacey Lee was appointed to attend the 12th Term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof.
Director	Chien Hsu Investment Corporation Representative: Ching-Yun Li	7	0	100%	(1) Re-elected (2)Ms. Ching-Yun Li was appointed to attend the 12th Term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof.
Director	Che-Ho Wei	7	0	100%	Re-elected
Director	Yan-Kuin Su (Note 2)	7	0	100%	Re-elected
Director	Sung-Jen Fang (Note 3)	4	0	100%	Newly elected
Director	Tom Yiu	7	0	100%	Re-elected
Director	F. L. Ni	7	0	100%	Re-elected
Director	Hui Ying Investment Ltd. Representative: Paul Yeh	7	0	100%	(1) Re-elected (2)Mr. Paul Yeh was the appointed representative to attend the 12th Term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof.
Director	Cheng-Yi Fang (Note 4)	2	1	67%	Former
Independe nt Director	Tyzz-Jiun Duh	7	0	100%	Re-elected
Independe nt Director	Chiang Kao	7	0	100%	Re-elected
Independe nt Director	Cheng-Wen Wu (Note 5)	4	0	100%	Newly elected
Independe nt Director	Chien-Kuo Yang (Note 6)	4	0	100%	Newly elected
Independe ntDirector	John C.F. Chen (Note 7)	1	2	33%	Former

• 35 -

Other items that shall be recorded:

• I. If any of the following circumstances occur to the operation of the Board of Directors, the date of the meeting, session, content of the motion, all independent directors’ opinions, and the Company’s response to independent directors' opinions should be specified:

(I) Matters referred to in Article 14-3 of the Securities and Exchange Act.

Board of Directors Date/ Term	Motion	Independent Directors’ Opinions	The Company’s Response to Independent Directors’Opinions
2022.01.25 The 17th meeting of the 11th Term of the Board of Directors	Submitted for approval of the 2022 salary adjustment of the Company Managers	Approved	Not applicable
2022.02.25 The 18th meeting of the 11th Term of the Board of Directors	Pursuant to the applicable amended regulations, it is proposed to amend the Company’s “Procedure Rules for Acquisition or Disposal of Assets.”	Approved	Not applicable
	Submitted for approval of fund raising by issuance of new shares, overseas depositary receipts through cash capital increase, and/or the private placement of common shares and/or domestic or overseas convertible bonds.	Approved	Not applicable
2022.04.26 The 19th meeting of the 11th Term of the Board of Directors	To enhance corporate governance, it is hereby proposed to amend the “Procedures for Preventing Insider Trading” under the Company’s Internal Control System.	Approved	Not applicable
	Submitted for approval of the 2021 employee bonus to be distributed to the managers(“Company Managers”).	Approved	Not applicable
2022.07.26 The 1st meeting of the 12th Term of the Board of Directors	Pursuant to the applicable amended regulations, it is hereby proposed to amend the Company’s Internal Control System for Shareholders Services Process.	Approved	Not applicable
2022.10.25 The 2nd meeting of the 12th Term of the Board of Directors	Pursuant to the applicable amended regulations, it is hereby proposed to amend the Company’s Internal Control System for Information OperationCycle.	Approved	Not applicable

• 36 -

Board of Directors Date/ Term	Motion	Independent Directors’ Opinions	The Company’s Response to Independent Directors’ Opinions
2022.12.20 The 3rd meeting of the 12th Term of the Board of Directors	Submitted for approval of the Company's financial and tax accountants for Year 2023 (“Year 2023 CPAs”) resolved by the AuditCommittee.	Approved	Not applicable
	Submitted for approval of the fees and expenses of CPAs in 2023 (“Compensations”) resolved by the Audit Committee.	Approved	Not applicable
	Submitted for approval of 2023 annual incentive bonus of the CompanyManagers.	Approved	Not applicable

• (II) In addition to the aforementioned matters, other motions resolved by the Board of Directors that are objected to by Independent Directors or expressed reservations and recorded or declared in writing: None.

• II. If there is Directors’ avoidance of motions in conflicts of interest, the Directors’ names, content of the motion, causes of avoiding conflicts of interest, and the voting participation should be specified:

Name of Directors who avoid conflict of interest	Motion	Causes of Avoiding Conflicts of Interest	Voting Participation
Miin Wu, C. Y. Lu, Tom Yiu, F. L. Ni, the representative of Hui Ying Investment, Ltd.: Paul Yeh	Submitted for approval of the 2022 salary adjustment of the Company Managers (“Adjustments”).	Related persons	Recusal and no participation in the resolution by proxy
Tom Yiu, F. L. Ni, the representative of Hui Ying Investment, Ltd.: Paul Yeh	Submitted for approval of the compensation package of new V.P., K.C. Chen, new Associate V.P., W.P. Lu, and new Head of Emerging R&D (equivalent Associate V.P.), K.C. Wang.	Related persons	Recusal and no participation in the resolution by proxy
Miin Wu, C. Y. Lu, Tom Yiu, F. L. Ni, the representative of Hui Ying Investment, Ltd.: Paul Yeh	Submitted for approval of the 2021 employee bonus to be distributed to the managers (“Company Managers”).	Related persons	Recusal and no participation in the resolution by proxy

• 37 -

Name of Directors who avoid conflict of interest	Motion	Causes of Avoiding Conflicts of Interest	Voting Participation
Tom Yiu, F. L. Ni, the representative of Hui Ying Investment, Ltd.: Paul Yeh	Submitted for approval of the compensation package of the new Executive Director, Ta- hone Yang.	Related persons	Recusal and no participation in the resolution by proxy
Miin Wu, C. Y. Lu, Tom Yiu, F. L. Ni, the representative of Hui Ying Investment, Ltd., Paul Yeh	The 2022 Performance Assessments Report of the Company Managers	Related persons	Recusal and no participation in the resolution by proxy
Miin Wu, C. Y. Lu, Tom Yiu, F. L. Ni, the representative of Hui Ying Investment, Ltd., Paul Yeh	Submitted for approval of 2023 annual incentive bonus of the Company Managers.	Related persons	Recusal and no participation in the resolution by proxy

III. Evaluation of the board of directors:

Internal performance evaluations have been conducted for the overall board of directors, individual board members, and functional committees (including the Audit Committee, Remuneration Committee, and Nomination Committee) in 2022. Evaluation results are shown in the table below and were reported to the Nomination Committee and Board of Directors meeting on March 3, 2023.

Assessment cycle	Assessment period	Assessment scope	Assessment method	Assessment content	Evaluation result
Performed once per year	January 1, 2022 to December 31, 2022	Entire Board of Directors	Self- assessment of the board of directors	1. Participation in the Company's Operations 2. Raising the Quality of the Board of Directors' Decisions 3. Composition and Structure of the Board of Directors 4. Election and Continuing Education of Directors 5. Internal controls	Overall average 4.96 (out of 5)
Performed once per year	January 1, 2022 to December 31, 2022	each member of the board of directors	Self- assessment of each member of the board of directors	1. Understanding of the Company's Objectives and Tasks 2. Directors’ Responsibilities 3. Participation in the Company's Operations 4. Management and Communication of Internal Relations 5. Directors' Expertise and Continuing Education 6. Internalcontrols	Overall average 4.94 (out of 5)
Performed once per year	January 1, 2022 to December 31, 2022	the Audit Committee	Self- assessment of the Audit Committee	1. Participation in the Company's Operations 2. Audit Committee’s Responsibilities 3. Raising the Quality of the Audit Committee’s Decisions 4. Composition and Membership of the Audit Committee 5. Internal controls	Overall average 4.99 (out of 5)

• 38 -

Assessment cycle	Assessment period	Assessment scope	Assessment method	Assessment content	Evaluation result
Performed once per year	January 1, 2022 to December 31, 2022	the Compensation Committee	Self- assessment of the Compensation Committee	1. Participation in the Company's Operations 2. Compensation Committee’s Responsibilities 3. Raising the Quality of the Compensation Committee’s Decisions 4. Composition and Membership of the Compensation Committee	Overall average 5.00 (out of 5)
Performed once per year	January 1, 2022 to December 31, 2022	the Nomination Committee	Self- assessment of the Nomination Committee	1. Participation in the Company's Operations 2. Nomination Committee’s Responsibilities 3. Raising the Quality of the Nomination Committee’s Decisions 4. Composition and Membership of the Nomination Committee	Overall average 4.97 (out of 5)

• IV. Measures taken to strengthen the functions of the Board (for example, establishing an Audit Committee and enhancing information transparency) for the current year and the most recent year and the implementation:

The Company has functional committees, including the Audit Committees, Compensation Committees and Nomination Committees, to review and resolve proposals within its authority and to submit to the Board of Directors for decision to enhance supervision and strengthen management. Board members continue to participate in continuing education to enhance their professional knowledge as well as communication to improve the Board's performance. In order to encourage the Directors to continue studies, the Company regularly arranges corporate governance courses and provides course information from external institutions for the Directors' reference. Please refer to page 81 of this annual report for the Company's Director training in the most recent year.

• Note1: The Company fully re-elected the directors at the Shareholders’ meeting on May 27, 2022. A total of 7 meetings were convened by the Board of Directors in the most recent year. The 11th- term convened 3 meetings and the 12th-term convened 4 meetings. Attendance rate (%) is calculated based on the number of meetings convened by the Board of Directors and the actual attendance during the service term.

• Note 2: Mr. Yan-Kuin Su was relieved of the position as the Company's independent director on May 27, 2022, and was appointed as a director.

• Note 3: Mr. Sung-Jen Fang was appointed as the Company's new director on May 27, 2022.

Note 4: Mr. Cheng-Yi Fang was relieved of the position as the Company's director on May 27, 2022.

• Note 5: Mr. Cheng-Wen Wu and Chien-Kuo Yang were appointed as the Company's new independent directors on May 27, 2022.

• Note 6: Mr. John C. F. Chen was relieved of the position as the Company's independent director on May 27, 2022.

• 39 -

• (II) Audit Committee

• The Company’s Audit Committee is comprised of four independent directors to carry out supervision under applicable laws and regulations, including ensuring proper statements of the Company's financial reports, engaging or dismissal of auditing CPAs and their independence as well as performance, effective implementation of internal audit, compliance of applicable laws and regulations, and control of the Company’s existing and potential risks. In the most recent year, the following have been duly reviewed and resolved by the Audit Committee:

• Assessment of the internal control system and efficiency.

• The offering, issuance, or private placement of equity securities.

• Engaging and/or dismissal of auditing CPA and the compensation.

• Annual and first quarter to third quarter financial reports.

• Business report and earnings distribution

• The amendment of the Procedure Rules for Acquisition or Disposal of Assets

A total of 7 (A) Audit Committee meetings were held in the most recent year. The attendance of the independent directors was as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%)(B/A) (Note1)	Remarks
Convener	Tyzz-Jiun Duh	7	0	100%	Re-elected
Member	Chiang Kao	7	0	100%	Re-elected
Member	Cheng-Wen Wu (Note2)	4	0	100%	Newly elected
Member	Chien-Kuo Yang (Note2)	4	0	100%	Newly elected
Convener	Yan-Kuin Su (Note3)	3	0	100%	Former
Member	John C.F. Chen (Note4)	1	2	33%	Former

• 40 -

Other items that shall be recorded:

• I. When one of the following situations has occurred to the operations of the Audit Committee, the convening date, term, and agenda of the Audit Committee, the objections, reservations, and major comments of independent directors, resolution of the Audit Committee, and the Company's response to the comments of the Audit Committee shall be stated:

• (I) Items specified in Article 14-5 of the Securities and Exchange Act

Audit Committee Date / Term	Motion	The objections, reservations, and major comments of independent directors	Resolution of the Audit Committee	The Company’s response to the comments of the Audit Committee
2022.02.25 The 17th meeting of the 11th Term of the Audit Committee	Year 2021 Financial Statements	None	Unanimously approved by all the members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
	Pursuant to the applicable amended regulations, it is proposed to amend the Company’s “Procedure Rules for Acquisition or Disposal of Assets.”	None	Unanimously approved by all the members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
	Submitted for approval of fund raising by issuance of new shares, overseas depositary receipts through cash capital increase, and/or the private placement of common shares and/or domestic or overseas convertible bonds.	None	Unanimously approved by all the members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
2022.04.26 The 18th meeting of the 11th Term of the Audit Committee	To enhance corporate governance, it is hereby proposed to amend the “Procedures for Preventing Insider Trading” under the Company’s Internal Control System.	None	Unanimously approved by all the members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
2022.07.26 The 1st meeting of the 12th Term of the Audit Committee	Pursuant to the applicable amended regulations, it is hereby proposed to amend the Company’s Internal Control System for Shareholders Services Process.	None	Unanimously approved by all the members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable

• 41 -

Audit Committee Date / Term	Motion	The objections, reservations, and major comments of independent directors	Resolution of the Audit Committee	The Company’s response to the comments of the Audit Committee
2022.10.25 The 2nd meeting of the 12th Term of the Board of Directors	Pursuant to the applicable amended regulations, it is hereby proposed to amend the Company’s Internal Control System for Information Operation Cycle..	None	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
2022.12.20 The 3rd meeting of the 12th Term of the Audit Committee	Submitted for approval of the Company's financial and tax accountants for the year 2023 (“Year 2023 CPAs”) resolved by the Audit Committee.	None	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
	Submitted for approval of the fees and expenses of CPAs in 2023 (“Compensations”) resolved by the Audit Committee.	None	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable

• (II) Except the items in the preceding issues, other resolutions approved by two-thirds of all Directors but yet to be approved by the Audit Committee: None.

• II. Names, content of the motion, cause of the conflict of interest, and participation in the voting of Independent Directors who have abstained from voting for proposals that are considered to present conflicts of interest: None.

• III. Communication between Directors and the head of internal audit and CPAs (including important issues, audit methods, and results related to the Company's finance and business):

  1. The Company's head of internal audit, in addition to regularly sending various audit reports to independent directors, also attends and reports to the Audit Committee quarterly. The head of internal audit also responds at all times to any questions that the independent directors may have, and the interactions between them were good.

  2. CPAs appointed by the Company attended the Audit Committee quarterly, where they explained financial/accounting matters to the independent directors, and the interactions between them were good.

  3. The head internal audit and CPAs shall contact the independent directors alone at least once per year as well as directly contact independent directors at any times and according to need, and the communication channel between them is unimpeded.

• 42 -

• Summary of communications between independent directors, internal audit supervisors and accountants in the most recent fiscal year are as follows:

		Key points of	Results of
Date/Meeting	Attendees
		communication	communication
2022.01.25 Audit Committee	Independent Director: Yan-Kuin Su, Tyzz-Jiun Duh, Chiang Kao, John C.F. Chen Head of internal audit: Hong-Chi Wang CPAs: Tung Hui Yeh, Kuo Tyan Hong	．Audit report for Q4 2021 ．2021 Statement on Internal Control	Full attendance No objections from Independent Directors
2022.02.25 Audit Committee	Independent Director: Yan-Kuin Su, Tyzz-Jiun Duh Chiang Kao Head of internal audit: Hong-Chi Wang CPAs: Tung Hui Yeh, Kuo Tyan Hong	．Review results and key review items for the 2021 stand- alone and consolidated financial statements
2022.04.26 Audit Committee	Independent Director: Yan-Kuin Su, Tyzz-Jiun Duh, Chiang Kao Head of internal audit: Hong-Chi Wang CPAs: Tung Hui Yeh, Kuo Tyan Hong	．Results of review of the consolidated financial statements for Q1 2022
2022.07.26 Audit Committee	Independent Director: Tyzz-Jiun Duh, Chiang Kao Cheng-Wen Wu, Chien-Kuo Yang Head of internal audit: Hong-Chi Wang CPAs: Tung Hui Yeh, Kuo Tyan Hong	．Results of review of the consolidated financial statements for Q2 2022
2022.10.25 Audit Committee	Independent Director: Tyzz-Jiun Duh, Chiang Kao, Cheng-Wen Wu, Chien-Kuo Yang Head of internal audit: Hong-Chi Wang CPAs: Tung Hui Yeh, Kuo Tyan Hong	．Audit report for Q3 2022 ．Results of review of the consolidated financial statements for Q3 2022 ．AQI introduction
2022.12.20 Audit Committee	Independent Director: Tyzz-Jiun Duh, Chiang Kao, Cheng-Wen Wu, Chien-Kuo Yang Head of internal audit: Hong-Chi Wang CPAs: Tung Hui Yeh, Kuo Tyan Hong	The 2023 Audit Plan

Note1: The Company fully re-elected the directors at the Shareholders’ meeting on May 27, 2022. A total of 7 meetings were convened by the Audit Committee in the most recent year. The 11th- term convened 3 meetings and the 12thterm convened 4 meetings. Attendance rate (%) is calculated based on the number of meetings convened by the Audit Committee and the actual attendance during the service term.

• Note 2: Mr. Cheng-Wen Wu and Chien-Kuo Yang were appointed as the Company's new independent directors on May 27, 2022.

• Note 3: Mr. Yan-Kuin Su was relieved of the position as the Company's independent director on May 27, 2022, and was appointed as a director.

• Note 4: Mr. John C. F. Chen was relieved of the position as the Company's independent director on May 27, 2022.

• 43 -

(III)Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

The Company attaches great importance to corporate governance. Not only has it introduced the corporate governance systems in advance by taking overseas norms into consideration, but has also adopted the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” as its guideline. In 2003, the Company added two independent directors to the Board of Directors in accordance with the US Securities Laws and Regulations. The following year, three Independent Directors were elected. The Company also established an Audit Committee, which was later renamed the Auditing Committee. The Compensation Committee was set up in 2005, with internal auditing being directly subordinate to the Board.

In 2007, the Company adopted the candidate nomination system for the first time for the election of the Board and Supervisors (including three Independent Directors). In June 2009, the Company set up the Audit Committee to replace Supervisors in accordance with Article 14-4 of the Securities and Exchange Act. In January 2019, the "Compensation Committee" was set up in accordance with Article 14-6 of the Securities and Exchange Act. In January 2019, the Company voluntarily set up the "Nomination Committee" to assist the operation of Board.

In 2007 and 2011, the company passed the Taiwan Corporate Governance Association CG6002 and CG6006 evaluations in the corporate governance system respectively and was ranked in the top 5% of the listed companies in the first corporate governance evaluation in 2014. The Company was ranked in the top 10% of electronics companies with a market cap of NT$10 billion and above in the 8th (2021) evaluation, reaffirms Macronix’s implementation and active promotion of corporate governance.

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
I. Does the company establish and disclose the Corporate Governance Best-Practice Principles" based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?			The Company has established the "Corporate Governance Principles" based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and disclosed them on the companywebsite.	None
II. Shareholding structure & shareholders’ rights (I) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes, and litigations, and implement based on the procedure?			(I) The Company has established an Investor Relations Office and a legal center. Dedicated personnel are assigned to address issues such as shareholder suggestions, inquiries, and disputes. The legal actions taken by the shareholders are also properly addressed through internal operating procedures,and records are kept for future reference.	None

• 44 -

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(II) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (III) Does the company establish and execute the risk management and firewall system within its conglomerate structure? (IV) Does the company establish internal rules against insiders trading with undisclosed information?	  		(II) The Company possesses the list of its directors, managers, and shareholders with more than 10% of the shares as well as their major shareholders. Relevant information is routinely disclosed. (III) The Company has established the "Relevant Financial and Business Operations Rules between Relation Parties" and "Regulations of the Supervision and Management of Subsidiaries" to clearly distinguish the assets, finance, and operations between the Company and its affiliated companies, as well as execute the risk management and firewall system. (IV) The Company has established the "Code of Business Conduct and Ethics" and "Preventing Insider Trading" to clearly regulate matters regarding the staff purchasing the Company's securities.	None None None
III. Composition and Responsibilities of the Board of Directors (I) Does the board of directors formulate and implement the diversity policies and the specific administration objectives?			(I) The Company's corporate governance principles stipulate that the composition of the Board of directors shall take diversity into consideration. The authorized Nomination Committee shall also formulate criteria regarding the diversity and independence of the directors' professional knowledge, expertise, experience, and gender. These criteria will be adopted in the search, review, and nomination of director candidates. Please refer to page 24 of this Annual Report for Board diversity policy, objectives and the implementation status.	None

• 45 -

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(II) Does the company voluntarily establish other functional committees in addition to the Compensation Committee and the Audit Committee? (III) Does the Company establish standards and methods for evaluating board performance, conduct annual performance evaluations, submit performance evaluation results to the Board, and use the results as a basis for determining the remuneration and nomination renewal of individual directors? (IV) Does the company regularly evaluate the independence of CPAs?	  		(II) The Company voluntarily set up the Nomination Committee on January 22, 2019, please refer to page 54 of this Annual Report for the members and operations. (III) The Company has established the “Rules for Board of Directors Performance Assessments” to clearly regulate the evaluation cycle, period, scope, execution unit, and procedures. The results were submitted to the Company's Nomination Committee and Board of Directors. Please refer to page 38 of this Annual Report for implementation status in 2022. (IV) The Company evaluates the independence and competence of the accountants based on the following matters each year. The review is carried out by the Audit Committee, which submits evaluation results and appointment (extension) of the accountants to the Board of Directors for discussion and approval: 1. Not appointing the same accountant to perform audits for more than seven consecutive years, 2. Obtaining a statement of independence, including but not limited to whether the accountant , audit team, or family members have direct or indirect significant financial interests in the Company; whether there is kinship or business relations that might have an impact on the independence with the Company's directors, supervisors and managers; whether they concurrently serve as the Company's directors and supervisors during the audit period or hold positions that have direct and significant influence on the audit. 3.Information on the accountingfirm's AQI: AQI	None None None

• 46 -

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			information consists of 13 items in five aspects. The Company verified that the accountants' audit experience and the accounting firm's quality support ability and training hours were higher than the industry average. Audit innovation tools were adopted, and data analysis was utilized along with Robotic Process Automation (“RBA”) for audit work to focus on specific risks and the verification of abnormalities.
IV. Does the TWSE listed company have a suitable number of competent corporate governance personnel, and has it appointed a corporate governance supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their duties, assisting directors and supervisors with regulatory compliance, handling matters related to Board meetings and shareholders' meetings, and preparing proceedings for Board meetings and shareholders' meetings)?			The Board of Directors has designated the Board Secretariat Department to handle administrative matters for the Board. On March 12th, 2019, the Corporate Governance Officer was also set up to handle corporate governance Officer as per the requests of the directors. The terms of reference are set out below: (1) Responsibilities: 1.Matters related to the meetings of the Board of Directors and shareholders' meetings in accordance with the law; 2.Prepare the minutes of the Board and Shareholders' Meeting; 3.Assist the directors and supervisors in continuous education; 4.Provide information necessary for the Directors and Supervisors; 5.Assist Directors and Supervisors to comply with the laws and regulations; 6.Report to the Board of Directors results of whether independent directors had the qualifications required by law during their nomination, election, and term. 7. Handle matters related to the change of directors. 8. Other matters stipulated in the Articles of Incorporation or the contract.	None

• 47 -

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			(2) Please refer to page 81 of this annual report for education of corporategovernance supervisor in 2022.
V. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?			The Company understands and responds to the stakeholders’ reasonable expectations for the Company, needs, and topics of concern through a number of communication channels, and such communications with stakeholders are reported to the Board of Directors every year. All types of stakeholders can access the Company's contact information and communication channels through the “Contact Us” on the company website, and ask questions or express opinions. Please refer to the Company's ESG Report for the identification method and identity of stakeholders, topics of concern, and response method.	None
VI. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?			The Company has set up an Investor Relations office since 1997 dedicated to handling matters related to the Company's shareholders. All shareholders' equity operations are carried out in accordance with the “Standards for the Internal Control System of the Stock Department", and the same applies to shareholders' meetings.	Please refer to Implementation Status
VII. Information Disclosure (I) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (II) Does the company have other information disclosure channels (e.g., building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?	 		(I) The Company has established a corporate website to disclose information on financial operations and corporate governance. (II) The Company has established an English website to disclose relevant information and set up dedicated departments for collecting and disclosing company information. Furthermore, to implement the spokesperson system, the Company has designated a spokesperson and a deputyspokesperson to disclose material inside	None None

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Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(III)Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?			information on behalf of the Company, unless otherwise stipulated by the law or regulations. The briefing and procedures of investor conferences are available in the “Investor Relations/Financial Information/Quarterly Results” section of the company website. (III)The Company announces and reports quarterly financial statements and monthly operation results within the prescribed time limit, and Year 2022 financial statements were announced and reported within two months after the end of the fiscal year.	None
VIII. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?			1. Status of employee rights and employee wellness: Please refer to the Company's ESG Report. 2. Status of risk management policies and risk evaluation: Please refer to (IX) on Page 81 of this annual report for important information that can enhance the 3. Directors’ training: The Company arranges training courses for directors annually. Each director also participates in relevant courses organized by external institutions when necessary. All newly elected directors received 12 hours of training in 2022, and all reelected directors also received 6 hours of training. Please refer to page 81 of this annual report for Directors’ training records. 4. Directors’ Liability Insurance: The Company has taken out liability insurance for Directors and Supervisors since October 15th, 1999. For the status of maintaining the insurance and submission to the Board of Directors, please refer to the Market Observation Post System(MOPS).	None

• 49 -

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
IX. Please describe the improvements your company has made based on the corporate governance evaluation results released by the Corporate Governance Center of Taiwan Stock Exchange in the most recent year, and list priorities and measures for matters that still require improvement. The Corporate Governance Center announced results of the 2021 (8th) Corporate Governance Evaluation in April 2022. Macronix ranked in the top 6-20% of public companies and top 10% of electronics companies with a market cap of NT$10 billion or above. Key improvements to corporate governance in 2022 are as follows: (1) The risk management policy was passed by the board of directors and the Risk Management Committee was established. (2) Interim financial reports are all approved by the Audit Committee and passed by the board of directors. (3) Disclose related information in the Sustainability Report according to the TCFD (Task Force on Climate-related Financial Disclosures) framework. We will continue to improve our corporategovernance accordingto "Corporate Governance 3.0–Sustainable Development Blueprint."

• 50 -

• (IV) Composition, Functional Authority, and Operations of the Compensation Committee 1. Information on Committee Members

1. Information on Committee Members	1. Information on Committee Members	1. Information on Committee Members	1. Information on Committee Members
				December 31,2022
Title	Criteria Name	Professional Qualifications and Experience	Independence	Number of Other Public Companies In Which The Member Concurrently As A Member of Their Compensation Committee
Independent Director / Convener	Chiang Kao	(Note)	(Note)	0
Independent Director	Tyzz-Jiun Duh			3
Independent Director	Cheng-Wen Wu			0

Note: Please refer to page 15 of this annual report for information on directors and supervisors.

2. Responsibilities

• (1) Establishes and periodically reviews the performance evaluation and policies, system, standards, and structure of the compensations for Directors, supervisors, and managers.

• (2) Periodically evaluates and establishes compensations and benefits for Directors, supervisors, and managers.

3. Implementation Status

• (1) The Company fully re-elected the directors at the Shareholders’ meeting on May 27, 2022, and the Board of Directors appointed members of the Compensation Committee on the same day.

• (2) This term’s Compensation Committee is composed of 3 members, and the service term of the current members is from May 27, 2022 to May 26, 2025.

• (3) The Compensation Committee convened 6 times (A) in the last fiscal year. The qualifications of the members and attendance are as follows:

Title	Name	Attendance in Person (B)	By Proxy	Attendance Rate (%)(B/A) (Note1)	Remarks
Convener	Chiang Kao	6	0	100%	Re-elected
Committee Member	Tyzz-Jiun Duh (Note2)	3	0	100%	Newly elected
Committee Member	Cheng-Wen Wu (Note3)	3	0	100%	Newly elected
Committee Member	Yan-Kuin Su (Note4)	3	0	100%	Former
Committee Member	John C. F. Chen (Note4)	1	2	33%	Former

• 51 -

Other items that shall be recorded:

I. The main items that discussed in the meetings of the Compensation Committee in the most recent year are as follows

Compensation Committee Date/ Term	Motion	Resolution results of the Compensation Committee	The Company's response to the comments of the Compensation Committee
2022.01.25 The 11th meeting of the 11th Term of the Compensation Committee	Submitted for approval of the patents award to C.H. Hung, K.C. Chen, W.P. Lu and K.L. Chang(“Managers’).	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
	Submitted for approval of the R&D incentive bonus to C.H. Hung, K.C. Chen, W.P. Lu and K.L. Chang(“Managers’).
	Submitted for approval of the 2022 salary adjustment of the Company Managers (“Adjustments”).
2022.02.25 The 12th meeting of the 11th Term of the Compensation Committee	Submitted for approval of 2021 compensation for employees and directors.	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
	Submitted for approval of the compensation package of new V.P., K.C. Chen, new Associate V.P., W.P. Lu, and new Head of Emerging R&D (equivalent Associate V.P.), K.C. Wang.
2022.04.26 The 13th meeting of the 11th Term of the Compensation Committee	Submitted for approval of the directors’ compensation in 2021.	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
	Submitted for approval of the 2021 employee bonus to be distributed to the managers (“Company Managers”).
2022.05.27 The 1st provisional meeting of the 12th Term of the Compensation Committee	Submitted for election of the convener of the 12th Term of the Compensation Committee.	Mr. Chiang Kao is unanimously elected by all attendant members as the Convener of the Compensation Committee.	Not applicable
2022.07.26 The 1st meeting of the 12th Term of the Compensation Committee	Submitted for approval of the compensation package of the new Executive Director, Tahone Yang.	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
2022.12.20 The 2nd meeting of the 12th Term of the Compensation Committee	Submitted for approval of the salary adjustment of employees in 2023.	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable

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• II. If the Board of Directors chooses not to adopt or revise recommendations proposed by the Compensation Committee, the date of the meeting, term, agenda, resolution results, and the Company’s response to the comments provided by the Salary and Compensation Committee shall be described (if the compensation passed by the Board of Directors is higher that recommended by the Compensation Committee, the difference and reason shall be described): None.

• III. For the decisions made by the Compensation Committee, if there are documented records of members who veto or withhold from expressing their opinions, the date, term, agenda, all members’ comments, and the measures for handling these comments shall be elaborated: None.

• Note 1: The Company fully re-elected the directors at the Shareholders’ meeting on May 27, 2022. A total of 6 meetings were convened by the Compensation Committee in the most recent year. The 11th-term convened 3 meetings and the 12th-term convened 3 meetings. Attendance rate (%) is calculated based on the number of meetings convened by the Compensation Committee and the actual attendance during the service term.

• Note 2: Mr. Tyzz-Jiun Duh was reelected as the Company's independent director on May 27, 2022 and was appointed as a member of the Compensation Committee on May 27, 2022.

• Note 3: Mr. Cheng-Wen Wu was appointed as the Company's new independent director and Compensation Committee member on May 27, 2022.

• Note 4: Mr. Yan-Kuin Su and John C. F. Chen was step down as the Company's independent director and member of the Compensation Committee on May 27, 2022.

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(V) Information on the Members and the Operation of the Nomination Committee

1. Qualifications and Duties

The Nomination Committee is comprised of 3 to 5 directors, in which more than half shall be the independent directors. With authorization from the board of directors, the Nomination Committee will faithfully perform the following duties with a duty of care and then submit them to the Board of Directors for discussions:

• (1) Formulate the standards for directors and senior executives, such as specialized knowledge, skills, experience, and gender. As well as searching, reviewing, and nominating directors and senior executive candidates.

• (2) Establish and develop organizational structure of the Board of Directors and various committees. Evaluate the performance of the Board of Directors, various committees, directors, senior executives, and the independence of independent directors.

• (3) Establish and periodically review the continuing education plan of directors and succession plan of directors and senior executives.

• (4) Other matters entrusted to the committee by resolution of the Board of Directors.

2. Professional Qualifications, Experience and the Operation

• (1) The Company fully re-elected the directors at the Shareholders’ meeting on May 27, 2022, and the Board of Directors appointed members of the Nomination Committee on the same day.

• (2) This term’s Nomination Committee is comprised of 3 members, including the chairman: Miin Wu and two independent directors: Chiang Kao and Cheng-Wen Wu. An independent director is a chair in meetings of the Nomination Committee, and the term of the incumbent member is from May 27, 2022 to May 26, 2025.

• (3) The Nomination Committee convened 5 meetings (A) in the most recent year. The professional qualifications and experience of the members, and the attendances and motions that discussed in the meetings are as follows:

Title	Name	Professional Qualifications and Experience	Attendance in Person(B)	By Proxy	Attendance Rate (%) (B/A) (Note1)	Remarks
Convener	Miin Wu	Note	5	0	100%	Re-elected
Committee Member	Chiang Kao		5	0	100%	Re-elected
Committee Member	Cheng-Wen Wu (Note2)		4	0	100%	Newly elected
Committee Member	Yan-Kuin Su (Note3)		0	1	0%	Former
Other items that shall be recorded: The main items that discussed in the meetings of Compensation Committee in the most recent year are as follows

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				Nomination Committee Date/ Term Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
Nomination Committee Date/ Term	Motion	Nomination Committee’s Opinions or Objections	Resolution results of the Nomination Committee	Nomination Committee Date/ Term
2022.02.25 The 11th meeting of the 11th Term of the Nomination Committee	Propose for the number of candidates of the 12th term of the Board of Director.	None	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
	Propose to nominate the candidates of the 12th term of the Board of Directors.
	Submitted for the approval of 2021 Performance Assessments Report of the Board of Directors.
	Submitted for approval of promoting K.C. Chen, the Associate V.P. of Technology Development Center, as Vice President (“Promotion’) of the Company since February 25,2022.
2022.05.27 The 1st provisional meeting of the 12th Term of the Nomination Committee	Submitted for the approval of appointing the members of the Nomination Committee of the 12th Term of the Board of Directors.	None	Mr. Miin Wu is unanimously elected by all attending members as the Convener of the Nomination Committee.	Not applicable
2022.07.26 The 1st meeting of the 12th Term of the Nomination Committee	It is hereby proposed to determine the assessed units and assessment method of the Company’s 2022 “Board of Directors Performance Assessments”.	None	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable
2022.10.25 The 2nd meeting of the 12th Term of the Nomination Committee	2022 "Board of Directors Performance Evaluation" self- evaluation questionnaire.	None	Unanimously approved by all members attending the meeting.	Not applicable
2022.12.20 The 3rd meeting of the 12th Term of the Nomination Committee	Submitted for the approval of 2022 Performance Assessments Report of the Managers.	None	All attending members are in agreement and no other comments.	Not applicable
	Propose the 2023 advanced study plan of the directors.	None	Unanimously approved by all members attending the meeting and will be submitted to the Board of Directors meeting for approval.	Not applicable

Note 1: The Company fully re-elected the directors at the Shareholders’ meeting on May 27, 2022. A total of 5 meetings were convened by the Nomination Committee in the most recent year. The 11th- term convened 1 meeting and the 12th-term convened 4 meetings. Attendance rate (%) is calculated based on the number of meetings convened by the Nomination Committee and the actual attendance during the service term.

• Note 2: Mr. Cheng-Wen Wu was appointed as the Company's new independent director and Nomination Committee member on May 27, 2022.

• Note 3: Mr. Yan-Kuin Su was relieved of the position as the Company's independent director and member of the Nomination Committee on May 27, 2022.

Note 4: Please refer to page 15 of this annual report for information on directors and supervisors.

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(VI) The Implementation Status of the Company's Promotion of Sustainable Development, and differences between it and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons

Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
I. Has the company established the governance framework for sustainable development and established a fully (or partially) dedicated sustainable development unit? Does the Board of Directors authorize the senior management to handle such matters under its supervision?			The Company's president led the establishment of the Sustainable Development Committee on February 22, 2022. The committee conducts risks assessments of sustainable development issues and promotes the Company's environment, social, and governance (ESG) affairs. The committee reported the sustainable development policy, organization, and strategies to the Board of Directors in July the same year. The Sustainable Development Committee includes the Company's centers, in which the Environment Health and Safety (EHS) Center serves as the executive secretary and tracks the implementation progress of strategies during quarterly work meetings. Related issues and management performance are reported to the Board of Directors at the beginning of each year. The Board of Directors supervises the progress of the Company’s sustainable development strategy and related review measures, and provides the guidance and suggestions. Six plans were implemented in 2022, in which a strategy was formulated in response to Macronix’s low carbon transformation plan to achieve net zero emissions by 2050. Furthermore, Macronix completed the RBA (Responsible Business Alliance)VAP(Validated Audit Process)and through	None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
			third-party impartial audit received the platinum level with the full score for all three plants to show its ESG management performance. Six plans were successfully completed under the supervision of the president, and ESG implementation results in 2022 were reported to the Board of Directors at the beginning of 2023.
II. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies?			The Company plans its ESG strategy and assesses risks based on requirements of GRI (Global Reporting Initiative) Standards, which include all sites of the Company in Taiwan. The materiality assessment is determined by how much attention the stakeholders pay and how serious the influence will be on the Company’s operations, and those issues will be managed and responded after being sorted by the materiality. The ESG risks are identified every year, and the high-risk items will be managed. We have formed the TCFD (Task Force on Climate-related Financial Disclosures) Group in response to the impact of climate change on the operation of the company, and the group will propose effective strategies for the risk of climate change. Please refer to the ESG Report of our company. With regard to the risk management, the Company analyzed the risks of main locations between January and December 2022 based on the principle of materiality in the sustainability report, and communicates with internal and external stakeholders. With regard to operations,Macronix examined domestic and overseas	None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
			research reports, and integrated evaluation data of each department to evaluate material ESG issues. The Company established an effective risk management policy and implemented concrete action strategies for effective identification, assessment, supervision, and management, in order to lower the impact of related risks. Risk management policies or strategies are formulated based on risk assessments and responses are provided in the annual ESG report.
III. Environmental issues (I) Has the Company established a suitable environmental management system based on the characteristics of the industry? (II) Is the Company committed to improving the efficiency of various resources and utilizing	 		(I) The Company established an environmental management system in 1997 and obtains ISO 14001 certification every year to ensure that the system complies with PDCA (Plan-Do- Check-Act) of ISO management systems, thereby achieving continuous improvement goals. All sites of Macronix have obtained the environmental management system certification (ISO 14001:2015). In additional to the environmental management of the factory area, in 2007, the IECQ QC 080000 Hazardous Substance Process Management System was established and passed to promote environmental management of both the operational and product aspects. (II) The Company continues to carry out energy conservation and carbon reduction work each year, and continues to be recognized by Hsinchu City Government for purchasing	None None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
renewable materials to reduce the environmental impact? (III) Does the company evaluate potential risks and opportunities brought by climate change, and take response measures to climate-related issues?			products with the green label and eco-friendly label. Each factory site has a goal of improving energy usage efficiency. In particular, Fab 2 is expected to reduce electricity consumption by 1,493,428 kWh and carbon emissions by 724. 263 metric tons this year after replacing equipment with variable-frequency equipment and improving processes. The Company has spared no effort in improving resource efficiency and producing green products to reduce the environmental impact of its operations and enhance corporate competitiveness. (III) Macronix referenced the TCFD recommendations when evaluating the impact of climate change on Macronix, and gathered specialists of each center to form a TCFD work team, applying the TCFD framework to identify climate risks and opportunities, come up with ways to manage impacts, and quantify the financial impact of material risks and opportunities through scenario analysis, in order to take response measures that will lower the impact on Macronix’s operations. Macronix defines short-term as within 1 year, mid-term as 1- 8 years, and long-term as 8 years and above. The TCFD analyzed and identified main climate risks and opportunities at the company-level based on job characteristics. Sources include the transition risk of carbon tax and low carbon	None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
			technologies in the mid-term, and physical risks from changes in average temperature. Long-term risks include transition risk of total emission control/emissions trading and physical risks of sea level rise. In terms of opportunities, production processes are short-term, low carbon products/services and adaptation/mitigation plans are mid- term, and changes in customer behavior and searching for new business opportunities are Macronix’s long-term development opportunities. Macronix will face transformation risk that will directly impact operating costs in the short-, mid-, and long-term. Hence, we actively track international trends and regulatory developments, and ensure that our climate management is in full compliance with government laws. For green energy management, we are considering installing solar panels and formulating a green energy purchasing policy. For technology transformation, we are actively purchasing new process machinery, lowering the carbon emission of products, and producing low-carbon products that meet the expectations of our customers to enhance our competitiveness for sustainability. Long-term risks: Establish a weather forecast and refrigerating machine optimization mechanism, replace machinery with more efficient machinery, and require two or more sources for suppliers that are assessed to be high risk,in

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
(IV) Does the company compile statistics of greenhouse gas emissions, water use, and total weight of waste in the past two years, and does it establish policies for energy conservation & carbon reduction, greenhouse gas emission reduction, water use reduction, and other waste management?			order to respond to the potential impact of risks and opportunities. (IV) Macronix cooperates with the Environmental Protection Administration's annual inspection of Greenhouse Gas (“GHG”) emissions and files reports accordingly. The Company set the policy of energy conservation and carbon reduction in its ISO 14001 Environmental Management System, and promotes water conservation, waste reduction, and waste recycling and reuse based on the Macronix EHS policy and CSR management approach. We compiled a GHG inventory for all plants, excluding the subsidiaries, according to ISO 14064-1 and domestic environmental protection laws and regulations, and the GHG inventory was verified by a third party. A total of 7 types of GHG was verified, including carbon dioxide, methane, nitrous oxide, HFCs, PFCs, sulfur hexafluoride, and nitrogen trifluoride. Statistics of GHG emissions in 2021 and 2022 are as follows: Item Unit 2021 2022 Scope 1 tonCO2e 148,853.6200 135,818.8572 Scope 2 256,991.0941 254,129.1632 Scope 3 325,464.5601 264,671.7807 Intensity tonCO2e/Per NT$1 million in revenue 8.0 9.0				None
			Item	Unit	2021	2022
			Scope 1	tonCO2e	148,853.6200	135,818.8572
			Scope 2		256,991.0941	254,129.1632
			Scope 3		325,464.5601	264,671.7807
			Intensity	tonCO2e/Per NT$1 million in revenue	8.0	9.0

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
			Remark: 1. An external inspection of 2022 data will be conducted from March to April in 2023 2. FAB 1 is counted up to September 1, 2021, and the ownership was subsequently transferred. 3. With consideration to the direct association with operations, intensity is not included in Scope 3. The Company’s GHG reduction policy is listed in the EHS policy and sets out from the perspective of hazard prevention to implement hazard identification, risk assessment, environmental impact analysis, hazardous sources control, implementation of energy conservation, carbon reduction, greenhouse gas reduction, water conservation, and waste reduction. Since plants were established in different years, we set 2011 as the inspection baseline year for the GHG inventory, and emission was determined to be 491,861.29 tonCO2e after third party verification, after deduction of the FAB 1 emissions it equals 392,366.59 tonCO2e. The reduction goal is≧1% per year. Senior management gave instructions in 2022 to support the government's pathway and plans for net zero emissions. Macronix set the goal to achieve net zero emissions by 2050, and will be adjusted according to government laws and regulations, customer needs,and international trends.

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
			Carbon reduction measures implemented in response to climate change include but is not limited to: 1.Compiling a greenhouse gas inventory every year to understand changes in emissions from plants. 2.Managing PFCs emissions, which has high GHG potential, every month and reviewing emissions quarterly. 3.Evaluating the feasibility of carbon reduction measures and continuing to encourage energy conservation and carbon reduction plans, managing the quarterly progress of projects using the EHS goal planning system, and summarizing the results of energy conservation plans each year. 4. Active participation in projects of the Environmental Protection Administration and making an effort to obtain carbon reduction quota. The Company has currently passed one offset project of the Environmental Protection Administration, and the machinery in the project are periodically monitored to ensure carbon reduction effectiveness. The project's carbon reduction potential is approximately 11,821 tonCO2e every year. After third party verification, total reduction during the monitoring period of December 31, 2020 to December 31, 2021 was 8,836 tonCO2e. Macronix will apply for an offset quota from the Environmental Protection Administration in 2023. 5. Continue to evaluate the feasibility of purchasing and installing renewable energydevices;solar PV devices with installed

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
			capacity of approximately 400 kW will be installed on the rooftop of some facilities at the end of 2023, and is expected to generate 500,000 kWh of green electricity each year after completion. We will also purchase approximately 5 million kWh of green electricity each year starting in 2023, reducing carbon emissions by 2,800 tonCO2e per year. 6. GHG emissions in 2021 and 2022 decreased by 17% and 0.1% respectively compared to the baseline year, which didn’t reach the goal due to the Company’s expansion in 2022 resulting in additional emissions compared to the original plan. Macronix sets annual goals for water consumption and waste generation, and conducts quarterly reviews to verify that operations are on track to achieving the goals: The water consumption data and water balance chart submitted to the Science Park Bureau each month are used to regularly track and manage the usage data of water resources, and conduct risk assessment and management. Our water consumption was 2,836 million liters in 2022, and 85.7% of process water was recycled; our goal is to maintain process water recycling rate at≧84% in 2023. Our internal units also monitor the process water recycling rate on a daily basis through wastewater recycling technology and the SCADA system. We set up a rainwater harvesting tank at our head office and store rainwater in the water tower. The water is

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
			then used to water plants and flush toilets. We are continuing to actively develop a water resource recycling strategy to achieve the water conservation and increase the efficiency of water use. As for waste reduction, we compile statistics of waste storage, generation, and clearance on a monthly basis to determine the generation of waste in our plants. We reduce waste by cutting down the consumption of materials through the joint efforts of engineering departments based on a feasible reduction plan. As for improving waste recycling and reuse, prior to waste disposal, we verify if the way contractors process the waste is appropriate, giving priority to reuse. We generated nearly 11,303 metric tons of waste in 2022. General waste and hazardous waste are mainly recycled and reused with a recycling/reuse rate reaching 94.4% (general waste) and 99.8% (hazardous waste), and overall recycling/reuse rate reaching 97.9%; our goal is to maintain recycling/reuse rate ≧94% in 2023.We hope to reduce the environmental load caused by production through vendor selection, auditing, and self-management measures.
IV. Social issues (I) Has the Company formulated management policies and procedures in accordance with relevant laws and regulations as well as the International Bill of Human Rights?			(I) The Company supports the Universal Declaration of Human Rights, ILO international labor standards, SA8000, and RBA CoC, and formulated the Macronix Human Rights Policy accordingto requirements of the international standards on	None

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Items of the Promotion				Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No		Summarized Explanation
(II) Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries?			(II)	human rights protection. We strive to "build an excellent human resources management system and labor system through comprehensive planning and execution." Macronix’s goal is to fully comply with local labor regulations and it has already committed to corporate social responsibility norms to ensure the protection of human rights. Macronix conducts thorough due diligence according to the RBA CoC to ensure that its conduct reaches or exceeds the standards, and uses the Self-Assessment Questionnaire (SAQ) designed by the Responsible Business Alliance for self-assessment of labor, health and safety, ethics, and environment. Macronix identifies social and environmental risks on this basis and continues to monitor implementation results of improvement plans. Please refer to the company website (https://www.macronix.com/zh-tw/about/CSR/Pages/human- right-policy.aspx) for information on the Company's human rights policy. The Company has established and implemented reasonable employee benefit measures; please refer to V. Labor/Management Relations on page 117 of this Annual Report. The Company’s performance is reflected by the employees’ and directors’ salaries; please refer to (VIII) Remuneration of employees, Directors and Supervisors on page 101 of this Annual Report.	None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
(III) Has the Company provided employees with a safe and healthy working environment, and routinely implemented safety and health education for employees? (IV) Has the Company established an effective career developmentalplan for its employees?	 		(III) The Company has established a safety and healthy work environment that is better than other company in the same sector based on the ideal of providing a warm and happy environment for employee’s growth. The Company provides comprehensive training for the employees, which has received recognition from the competent authority, including the National Work Safety Award from the Executive Yuan, Contribution to Work Opportunity Creation from the Ministry of Economic Affairs, and the Excellent Employee Assistance Program Award from the Ministry of Labor. The Company’score philosophy is "people orientation". We fully understand the effect of employees' safety and health on our competitiveness, and constantly promote occupational safety and health concepts through training and promotion measures. We work together with employees and vendors to jointly create a healthy, safe, and comfortable working environment. 1. In 2022, the Company experienced two minor injury and the injury rate (IR) is 0.05%. Following Macronix’s Safety and Health Management System, root cause analysis and corrective measures are adopted immediately in response to occupational injuries. The administration management, protection, equipment and other measures have been improved, and their effectiveness has been confirmed. (IV) The individual development plan of Macronix employees is closed connected to the performance management system.	None None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
(V) Does the company comply with relevant regulations and international standards and establish rights protection policies for consumers and clients and complaint procedures in issues like customer health and safety, customer privacy, marketing, and labeling?			The Company conducts a performance review once every year to examine individual and organizational performance. In order to gradually develop various professional knowledge and skills, employees can have face-to-face discussions with their supervisor to develop their personalized development plan based on their performance and the career development needs. (V) The Company’s products have green product. The products meet the requirements of the European Union’s RoHS directive SVHC (Substances of Very High Concern) and ELV (End-of-Life Vehicle). We comply with NDAs with customers and the Personal Data Protection Act to maintain customer privacy, and we also established a personal data protection policy, which employees are required to comply with when performing work that may not be disclosed. Labeling on our products comply with the Commodity Labeling Act, this involves clearly labeling all necessary information, such as product datasheets, outer box and all necessary labels with product specifications and manufacturing information. The Company established a dedicated unit for customer complaint handling procedures, and management process to properly handle customer complaints.	None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
(VI) Does the company have a supplier management policy, require suppliers to comply with regulations on environmental protection, occupational safety and health, and labor rights, and what is its implementation status?			(VI) We proposed due diligence for suppliers in our CSR policy for supplier management. We make suppliers aware of the importance of CSR during annual supplier meetings, and require suppliers to jointly achieve RBA Code of Conducts requirements together with us. We also transformed our expectations for suppliers into actual management requirements on the Code of Conducts Compliance Certificate, which suppliers must sign and submit to us. Responsible units conduct on-site audits or documentary audits of suppliers each year based on their risk, so as to verify whether or not suppliers met our requirements. We also transformed our expectations for suppliers into actual management requirements on the Code of Conducts Compliance Certificate (CoC) that shall be signed by suppliers then submitted to us. The CoC requires suppliers to obtain ISO14001 (environmental protection) and ISO45001 (safety) certifications. Responsible units conduct on-site audits or documentary audits of suppliers each year based on their risk to verify whether suppliers met our requirements. Standards are set in the Company's normative documents.	None
V. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company,such as ESG reports? Have the reports			Macronix began structuring its CSR Report in accordance with the GRI Standards in 2014, and obtained a third-party assurance report that there are no deviations in the CSR Report.	None

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Items of the Promotion	Implementation Status	Implementation Status	Implementation Status	Differences Between the Implementation Status and the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies with Reasons
	Yes	No	Summarized Explanation
above obtained assurance from a third-party verification unit?			Over the years, we have obtained assurance according to AA1000AP(2018) through third party certification companies, such as SGS and BV.
VI. If the Company has established corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies", please describe anydiscrepancybetween theprinciples and their implementation: There was no substantial difference.
VII. Other important information that will help understand the ESG operations: Relevant information is detailed in the ESG Report of the Company and websites of the Companyand the Macronix Education Foundation(http://www.macronix.com).

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CSR Milestones for Macronix

	CSR Milestones for Macronix
Year	Milestones
2000	•Founded the first “Golden Silicon Award – Semiconductor Design and Application Contest”
2001	•Established the Macronix Education Foundation
2002	•Held The first “Macronix Science Award”
2004	•Awarded as an Excellent Energy Conservation Enterprise by the Bureau of Energy, Ministry of Economic Affairs •Became the first company in the science park to complete the greenhouse inventory and verification •Established the “Macronix Science Award Winners' Club”
2005	•Passed the BSI ISO 14001: 2004 Environmental Management System Certification •Won the 14th Enterprise Environmental Protection Award for four consecutiveyears
2006	•Achieved RoHS compliance and awarded green product certificates from internationally- renowned companies such as SONY,CANON,and LG
2007	•Obtained verification from the IECQ QC080000 Hazardous Substance Process Management System •Awarded as the “Excellent Enterprise for Voluntary Greenhouse Gas Reduction” by the Industrial Development Bureau, Ministry of Economic Affairs •Certified by the British Standards Institute (BSI)and obtained the "ISO 14064 Greenhouse Gas Inventory and Reduction Certificate” •Obtained the CG6002 Corporate Governance System Assessment Certification from the Corporate Governance Association of the Republic of China
2008	•Became the first semiconductor company in the science park certified by the “SA 8000 Enterprise Social Responsibility Management System” •Donated NT$300 million to Tsinghua University for the new learning resource center, Macronix Hall •The Group donated RMB5 million for the Sichuan Earthquake. •Promoted the “Code of Conduct for Electronic Industry” for the upstream and downstream supply chain partners •Passed the new SGS OHSAS 18001: 2007 certification •Passed the TOSHMS (Taiwan Occupational Safety and Health Management System) certification •Awarded the Green Procurement Award bythe Environmental Protection Administration
2009	•Won the 3rd National Work Safety Award •Became a semiconductor company that obtained a quality enterprise certificate •Donated NT$100 million to relieve the damage caused by Typhoon Morakot to Taiwan •Won the "Role Model Award" from 5th Global Views Monthly's CSR Awards
2010	•Won the first prize "Five-Star Award" at the 6th Global Views Monthly's CSR Awards •Won the "Corporate Citizen Award" from the Common Wealth Magazine in 2010 •Increased the donation to the Macronix Hall, Tsinghua University by NT$ 100 million •Awarded the “Contribution to Work OpportunityCreation Award” bythe Executive Yuan
2011	•Donated NT$30 million for the aftermath of the 2011 Tohoku earthquake and tsunami •Awarded the “Contribution to Work Opportunity Creation Award” by the Executive Yuan •Received the "Top 100 Brand in Taiwan" award from the Ministry of Economic Affairs •Won the Corporate Citizen Award from the Common Wealth Magazine again •Won the 2011 National Invention Award •Awarded the Corporate Governance System Assessment Certificate by CG 6006 •Awarded as the enterprise for offering an excellent "Employee Assistance Program" by the Council of Labor and Welfare,Executive Yuan
2012	•Won the 8th "Corporate Social Responsibility Award" from Global Views Monthly •Won the Corporate Citizen Award from the Common Wealth Magazine again
2013	•Macronix Hall, the new learning resource center of Tsinghua University, was officially put to use •The Macronix Education Foundation was given the Award of Excellence by the Ministry of Education amongeducation foundations

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Year	Milestones
2014	•Hong-chi Wang, the Deputy Head, was chosen as an "Excellent Internal Auditor" by the Internal Audit Committee of the Republic of China •Won the "Balanced Lifestyle" and "Healthy Happy Life" awards from the first work-life balance competition held bythe Ministryof Labor
2015	•Received the "Excellent Healthy Workplace" from the Health Promotion Administration, Ministry of Health and Welfare •Ranked in the top5% in the first corporategovernance evaluation of Taiwan Stock Exchange
2016	•The Water Conservation Plant V was awarded the 2016 Water Conservation Excellence Award by the National Water Conservation Agency,the Ministryof Economic Affairs
2017	•Mr. Miin Wu, Chairman & CEO of Macronix was awarded of social Education Contribution Award from the Ministryof Education
2018	•Mr. Miin Wu, Chairman & CEO of Macronix was awarded of "Country Winner" and "Business Paradigm Entrepreneur" of EY’s Entrepreneur of the Year
2019	•Company receives the CSR 1stAnnual Sustainable Elite Award •Donation of NT$420 million to National Cheng Kung University for its construction of "Cheng KungInnovation Center-MACRONIX Hall"
2020	•Company receives the 2nd CSR Annual Sustainable Elite Award •Annual donation of NT$100 million to National Cheng Kung University for the next ten years to establish Miin Wu School of Computing
2021	•National Occupational Safety and Health Award-the Enterprise Benchmarking Award •Received the 2021 Air Quality Purification Areas Special Award from the Environmental Protection Administration of the Executive Yuan •Macronix Education Foundation was awarded of Social Education Contribution Awards of the Ministryof Education
2022	•Macronix was awarded of "Featured Vehicle Electronics Solution Supplier" of 2022 EE Awards Asia •Macronix Ultra-Low-Power 1.2V Serial NOR Flash Memory was awarded of the "Best Memory of the Year" of 2022 EE Awards Asia •Won the 2022 National OutstandingHealthyWorkplace "Health Model Award"

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(VII) Ethical Corporate Management, and Departure from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and Reasons Thereof

Listed Companies,and Reasons Thereof
Evaluation Item	Implementation Status			Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
I. Establishment of ethical corporate policies and programs (I) Does the Company establish a board-approved ethical corporate management policy and state in its regulations or external correspondence the policies and practices of the ethical corporate management policy? Are the board of directors and the managerial officers committed to fulfilling this commitment? (II) Does the Company establish mechanisms to assess the risks of unethical conduct and perform regular analysis and assessment of operating activities with higher risks of unethical conduct? Does the Company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least precautionary measures described in Article 7, Paragraph 2 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies?	 		(I) The Ethical Corporate Management Best Practice Principles and the Code of Conduct and Ethics of the Company are approved by the board of directors and published on the Company website and internal electronic bulletin board, and they require our employees and the employees of subsidiaries included in our consolidated financial statements to exhibit honest and ethical conduct when performing their duties. (II) Macronix developed ethical and social responsibility risk assessments for each department, which are carried out on a regular basis and cover all departments of the Company. The Company has established the " Ethical Corporate Management Principles " and " Code of Business Conduct and Ethics " which prohibit giving and taking bribes, receiving unreasonable gifts, benefits, and other improper benefits (avoiding conflicts of interest); intellectual property rights, confidential information, and personal data infringement; and unfair competition and discrimination. The above regulations apply to all Macronix staff. The promotion is further strengthened for departments with a higher risk of integrity violation. The effectiveness is regularly evaluated. Suppliers must sign the "Code of	None None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(III) Does the Company establish procedures, guidelines of conduct, punishment for violation, and reporting system clearly stated in the mechanisms to prevent unethical conduct? Does the Company enforce the programs effectively and perform regular reviews of the preceding?			Conducts Compliance Certificate" which stipulates that supplier shall not conduct any inappropriate commercial behavior such as bribery. Should any incidents occur, the Company can terminate the contract or transactions with the supplier as well as request compensation for any damages. (III) The Company has established the "Ethical Corporate Management Principles" and "Code of Business Conduct and Ethics". In addition to promoting these principles to the Directors and managers, the Company has also included relevant educational training and testing for employees as well as taking the employees' implementation status into consideration in the annual performance evaluation. The task force established under the Company’s Committee for the Promotion of Ethical Corporate Management Best Practice Principles host regular meetings to establish and enhance relevant measures as well as follow-up procedures of the Ethical Corporate Management based on related laws and regulations, Macronix’s Ethical Corporate Management Best Practice Principles, resolutions of the board of directors and functional committees, and procedures of the Committee for the Promotion of Ethical Corporate Management Best Practice Principles.	None
II、Fulfill operations integrity policy

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(I) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (II) Does the Company have a unit under the board of directors to promote ethical corporate management on a full-time basis, report ethical corporate management, and regularly report on the programs for the prevention of unethical conduct (at least once a year) to the board of directors, and oversee the operations thereof?	 		(I) Before engaging in business, the company conducts a credit investigation on the potential partner's records to avoid doing business with those who have records of illegal or unethical behavior. The Company has drafted the "Code of Conducts Compliance Certificate" to regulate supplier behavior. Should a supplier engage in improper business conduct such as bribery, the Company may terminate the contract or transaction at any time as well as request damages. (II) In addition to establishing functional committees under the board of directors, the Company also established the Committee for the Promotion of Ethical Corporate Management, which should be convened at least one time per year, under the management executives that consists of the president as the chairperson and level-1 managers of all departments as committee members. The committee aims to establish an ethical corporate management policy that will be submitted for discussion during the meeting of the board of directors and report the implementation status of the policy to the board at least once a year in accordance with the law. Macronix’s Committee for the Promotion of Ethical Corporate Management shall hold a meeting at least once a year. The task forces established under the committee should host regular meetings to establish and enhance relevant measures as well as follow-up procedure of the	None None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(III)Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (IV) Does the Company have an effective accounting system and internal control system set up to facilitate ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit compliance to the prevention of unethical conduct? Or are the audits commissioned to a CPA? (V) Does the company provide educational training on corporate social responsibilityon a regular basis?	  		Ethical Corporate Management based on related laws and regulations, Macronix’s Ethical Corporate Management Best Practice Principles, resolutions of the board of directors and functional committees, and procedures of the Committee for the Promotion of Ethical Corporate Management Best Practice Principles. (III) The Company has established the "Ethical Corporate Management Principles" and "Code of Business Conduct and Ethics" to prevent conflicts of interests. The Audit Committee has been set up to assist the Board in overseeing the Company's implementation status. Directors shall be excused from voting or discussions during the Board meeting when their interests as individuals or representatives of institutions are in potential conflicts. (IV) The Company's accounting and internal control systems are approved by the Audit Committee and the Board. The internal auditing unit is responsible for auditing the actual operations as well as preparing the draft and report of the audit results for the Audit Committee. The goal is to effectively prevent malpractices and oversee the implementation of the Company's policies and ensure the effectiveness of the internal control system. (V) The Company has established the "Ethical Corporate Management Principles " and " Code of	None None None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			Business Conduct and Ethics " which are published on the Company's website and the internal e- bulletin system. The employees' implementation status is taken into consideration in the annual performance evaluation. To implement ethical corporate management and ethical behavior, the Company arranges courses for directors and online courses for employees every year and organizes educational courses on business secrets, domestic and international data privacy regulations, information security management, and the prevention of insider trading for the purpose of raising the awareness of corporate ethics and compliance. In 2022, there were a total of 18,963 participants, and the number of training hours amounted to 6,263. Suppliers were also invited to the courses to ensure that they understand the regulations of Macronix’s ethical corporate management. Macronix organizes training and promotion events every year to prevent insider trading, and gave a report on the prevention of insider trading to the Board of Directors on December 20, 2022. We offered and announced online courses for employees in the second half of the year. The content of the courses includes insider trading regulations, structure elements, legal liabilities, prohibited conduct, prevention items etc. In 2022, there were a total of 3,777participants,and the

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			number of training hours amounted to 315. In 2022, there were a total of 175 supplier participations, and the number of training hours received amounted to 700.
III、Operation of the integrity channel (I) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for a follow-up? (II) Does the Company establish standard operating procedures for investigating reported cases, the follow-up measures after investigations, and relevant confidentiality mechanisms?	 		(I) The Company has set up a "No Topic is Off Limits" suggestion box and a hotline. The staff can report any fraud they discover to prevent damages to the Company's image caused by dishonest behavior. The Company also enhanced internal and external reporting channels, and set up an audit office hotline (03-5786688 ext. 78119). In addition, the Company established a process for reporting breaches of ethical corporate management. Once a case is reported and accepted for processing, a task force is established based on the nature and type of the case the case is sent to the relevant units for investigation. The board of directors will also be informed. (II) All cases reported through the “No Topic is Off Limits” suggestion box, the reporting hotline, and the audit office hotline will be given file numbers, documented, investigated, handled, and stored as required by the law. Once a case is reported and accepted for processing, a task force is established based on the nature and type of the case, the case is sent to	None None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(III) Does the company provide proper whistleblower protection?			relevant units for investigation. The board of directors will also be informed. Macronix takes measures to maintain the confidentiality of previous cases to guarantee the legal rights of members. (III) The management regulations of the “No Topic is Off Limits” suggestion box and the reporting hotline specify that the Company will strictly fulfill its responsibility to maintain the confidentiality of whistleblowers and prohibit retaliation against reports made with good intentions. The Company will impose an appropriate penalty for any violations thereof. Macronix takes measures to maintain the confidentiality of cases reported through the audit office hotline to guarantee the legal rights of members.	None
IV. Strengthening information disclosure (I) Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?			The Company has disclosed the content and relevant effectiveness of the Company's "Code of Business Conduct and Ethics" on the Company's website and MOPS. The content of the "Ethical Corporate Management Principles" is disclosed on the Company’s website. Implementation results of the ethical corporate management were reported to the Board of Directors on January25,2022.	None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			The annual meeting of the Committee for the Promotion of Ethical Corporate Management was convened on January 7, 2022. Completed the Ethical Corporate Management Best Practice Principles related training in 2022. There was no violation of the Ethical Corporate Management Best Practice Principles in 2022.
V、If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/GTSM Listed Companies, please describe anydiscrepancybetween thepolicies and their implementation: There was no substantial difference.
VI、Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies) The Company believes that a corporate culture of integrity is a key factor for the sustainable and sound development of the Company. Therefore, the Company has actively complied with the Responsible Business Alliance (RBA) code of conduct. A supplier conference is held annually to announce and promote important policies and messages of the Company. The Company also conducts regular training courses for its suppliers to ensure their quality. In the future, the Company will continue to pay attention to the development of domestic regulations related to integrityand review relevant Companyregulations accordinglyin order to enhance the effectiveness of the Company's corporategovernance.

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(VIII) The Method for Inquiry if the Company has Established Corporate Governance Principles and Relevant Regulations

The Company has set up the "Corporate Governance" section for investors to inquire about the Company's corporate governance information or regulations.

• (IX) Other Important Information for Better Understanding of Implementation of Corporate Governance

• Implementation of risk management policies and risk assessment standards: The Company gradually implemented risk management mechanisms according to the Corporate Governance 3.0 – Sustainable Development Roadmap of the Financial Supervisory Commission. The Board of Directors established the risk management policy in 2022 as the highest guiding principles of the Company's risk management. Furthermore, the Company established a Risk Management Task Force to plan, implement, review, and improve the risk management system. The president serves as the chair of the Risk Management Committee, and regularly identifies risk factors and manages risks with business units. Every year the committee reports risk assessment and risk management of the previous year to the Board of Directors. Please - -

refer to the company website (https://www.macronix.com/zh tw/about/CSR/Pages/risk management.aspx) for information on the Company's risk management.

1. Handling of Company's Internal Material Information The Company established the Procedures for Disclosing Material Insider Information to provide effective mechanisms to handle and disclose material insider information, prevent information leakage, and ensure the consistency and correctness of information announced by the Company. The procedures cover confidentiality and evaluation of material information, preservation of approval records, and violations handling.

The handling and disclosure of material insider information is in accordance with related laws, orders, and the Company's Procedures for Disclosing Material Insider Information. The Company has three principles for public disclosure: (1) accurate, complete and timely; (2) information disclosure shall have a solid base; and (3) fair disclosure to ensure that the interests of the Company and all stakeholders are protected.

Furthermore, the Company has established the "Code of Business Conduct and Ethics" and "Preventing Insider Trading." Besides periodic promotion, the content is provided on the company website for all directors, managers, and employees to avoid violation.

1. Directors’ training records

The Directors’ training records for the most recent year are set out in the table below. For further information, please refer to the Market Observation Post System (MOPS).

Title	Name	Date	Organizer	Course Name	Hours
Chairman	Miin Wu	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director Representative of the Corporation	Ikuo Yamaguchi	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.05.04	Taiwan Stock Exchange Corporation	International Twin Summit	2
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director	C.Y. Lu	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of	3

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Title	Name	Date	Organizer	Course Name	Hours
				carbon neutrality
		2022.04.28	Taiwan Corporate Governance Association	Comprehensively raising the digital resilience of companies – Emergency response and recovery from ransomware incidents	3
Director Representative of the Corporation	Stacey Lee	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.05.04	Taiwan Stock Exchange Corporation	International Twin Summit	2
		2022.05.31	Taiwan Corporate Governance Association	Hostile takeover case analysis and countermeasures	3
		2022.06.21	Taiwan Corporate Governance Association	How to prevent internal worries Analysis of internal investigations of companies	3
		2022.07.19	Taiwan Corporate Governance Association	Carbon management trends towards net-zero and response measures	3
		2022.08.16	Taiwan Corporate Governance Association	Overview of ESG governance – From knowing to doing	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director Representative of the Corporation	Ching-Yun Li	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director	Che-Ho Wei	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director	Yan-Kuin Su	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.05.04	Taiwan Stock Exchange Corporation	International Twin Summit	2
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director	Sung-Jen Fang	2022.03.03	Taiwan Corporate Governance Association	The only way to corporate sustainability – External innovation	3
		2022.07.20	Taiwan Stock Exchange Corporation	Sustainable development roadmap industry promotion	2
		2022.08.15	Taiwan Investor Relations Institute	Outlook on the global macroeocnomic situation in the second half of 2022	3

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Title	Name	Date	Organizer	Course Name	Hours
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director	Tom Yiu	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director	F. L. Ni	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Director Representative of the Corporation	Paul Yeh	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.08.18~ 2022.08.19	Accounting Research and Development Foundation	Continuing Education Course for Chief Accounting Officers of Issuers, Securities Firms, and Securities Exchanges	12
		2022.09.26	Chinese National Association of Industry and Commerce	2023 Global economy and industry outlook	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
		2022.11.23	Securities & Futures Institute	Latest development trends in international carbon tax and response measures	3
Independent Director	Tyzz-Jiun Duh	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.08.10	Taiwan Corporate Governance Association	Business administration practices: New knowledge of digital transformation	3
		2022.09.12	Taiwan Academy of Banking and Finance	Information security lecture – Important information security standards and compliance in the financial industry	3
		2022.11.07	Taiwan Corporate Governance Association	Challenges and impact of IFRS 17 on the insurance industry	3
		2022.11.10	Taiwan Corporate Governance Association	Cross-border management and sustainable operation	3
Independent Director	Chiang Kao	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
Independent Director	Cheng-Wen Wu	2022.08.02	Chinese National Association of Industry and Commerce	Intellectual property management responsibility of directors and supervisors	3
		2022.08.16	Chinese National Association of	Supply chain development trends of theglobal technology	3

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Title	Name	Date	Organizer	Course Name	Hours
			Industry and Commerce	industry in the post-pandemic era
		2022.08.24	Chinese National Association of Industry and Commerce	AI security	3
		2022.08.26	Chinese National Association of Industry and Commerce	Latest amendment to the Business Mergers and Acquisition Act and discussion on tax issues	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
		2022.10.26	Taiwan Stock Exchange	2022 Conference on compliance with insider trading laws	3
Independent Director	Chien-Kuo Yang	2022.06.09	Taiwan Corporate Governance Association	Intellectual property opportunities and risks of companies in the metaverse	3
		2022.08.10	Taiwan Corporate Governance Association	Controlled Foreign Company (CFC)	3
		2022.08.10	Taiwan Corporate Governance Association	Updates to tax regulations	3
		2022.08.11	Taiwan Corporate Governance Association	Ethical Corporate Management Best Practice Principles and how to avoid crossing the red line of directors and supervisors'responsibilities	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3

1. Education of corporate governance supervisor within the most recent year is shown in the table below:

below:
Date	Organizer	Course Name	Hours
2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotionofcarbon neutrality	3
2022.09.26	Chinese National Association of Industry and Commerce	2023 Global economy and industry outlook	3
2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
2022.11.23	Securities & Futures Institute	Latest development trends in international carbon tax and response measures	3
Total Hours of Education within themost recent yearof Appointment			12

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5. Manager Training Records

Miin Wu, C. Y. Lu, Tom Yiu, F. L. Ni, and Paul Yeh are also managers of the Company. Please refer to the table above for the training records. Corporate governance training records for other managers and the audit supervisors of the Company in the most recent year are as follows:

Title	Name	Date	Organizer	Course Name	Hours
Vice President	Yen-Hai Chao	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.04.28	Taiwan Corporate Governance Association	Comprehensively increase the digital resilience of companies - Emergency response and recovery in the case of ransomware	3
		2022.10.25	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3
		2022.10.27	Taiwan Corporate Governance Association	Latest trends and analysis of amendments to the Company Act	3
Deputy Director of the Auditing Office	Hong-Chi Wang	2022.02.25	Taiwan Institute of Directors	Risks and opportunities under climate action - Promotion of carbon neutrality	3
		2022.03.18	The Institute of Internal Auditors- Chinese Taiwan	Analysis of regulations for the Board of Directors and functional committees (audit, remuneration) and key points of audits	6
		2022.10.06	The Institute of Internal Auditors- Chinese Taiwan	Knowledge of labor regulations that auditors need to know - From recruitment to separation	6
		2022.10.27	Taiwan Institute of Directors	Latest trends in corporate governance evaluation that cannot be overlooked - IP management	3

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(X) Implementation of Internal Control System

1. Internal Control System Statement

Macronix International Co., Ltd . Internal Control System Statement

Date: February 14, 2023

• The Company states the following with regard to its internal control system during the period from January 1, 2022 to December 31, 2022, based on the findings of a self-assessment:

• (1) The Company is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management. The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable laws, regulation and bylaws.

• (2) An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of the Company contains selfmonitoring mechanisms, however, and the Company takes corrective actions as soon as a deficiency is identified.

• (3) The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. control environment 2. risk assessment 3. control activities 4. information and communications 5. monitoring activities. Each element further contains several items. Please refer to the Regulations for details.

• (4) The Company has assessed the design and operating effectiveness of its internal control system according to the aforesaid criteria.

• (5) Based on the findings of the assessment mentioned in the preceding paragraph, the Company believes that as of December 31, 2022 its internal control system (including its supervision of subsidiaries), encompassing internal controls for understanding of the degree of achievement of operational effectiveness and efficiency objectives, reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable laws, regulation and bylaws, was effectively designed and operating, and reasonably assured the achievement of the above-stated objectives.

• (6) This Statement will become a major part of the content of the Company's Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

• (7) This statement has been passed by the Board of Directors Meeting of the Company held on February 14, 2023, with zero of the 15 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Macronix International Co., Ltd.

Chairman: Miin Wu

President: C.Y. Lu

1. If the company engages an accountant to examine its internal control system, disclose the CPA examination report: None.

2. 86 -

3. (XI) 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 up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder equity or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement: None

4. (XII) Major Resolutions of Shareholders’ Meeting and Board Meetings during the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report:

5. 1.2022 Major Resolutions of Shareholders’ Meeting

Major Resolutions	Review of Implementation
1. Ratification of the 2021 Business Report and Financial Statements	Resolution announced in accordance with Article 230 of the CompanyAct
2. Ratification of the Company’s 2021 Distribution	July 19, 2022 was set as the Ex-dividend Record Date and cash dividends were paid on August 17, 2022. Due to the Company’s outstanding common shares varied, the cash dividends per share to be distributed was adjusted from NT$1.8, determined by the Shareholders’ Meeting,to NT$1.80008968.
3. Approval of amending the Company’s “Procedure Rules for Acquisition or Disposal of Assets.”	Implemented in accordance with the resolution of the shareholders' meeting.
4. Approval of fund raising by issuance of new shares, overseas depositary receipts through cash capital increase, and/or the private placement of common shares and/or domestic or overseas convertible bonds	The capital increase proposal was approved but was not carried out in 2022. The capital increase proposal was approved by the Board of Directors again on March 3, 2023 and submitted to the 2023 Annual Shareholders’ Meeting.
5.To elect the directors of the 12th term.	Elected 15 directors (including 4 independent directors), the elected list is as follows. The elected directors were approved and registered by the Hsinchu Science Park Bureau on June 15, 2022. Directors: Miin Wu, Shun Yin Investment Ltd. Representative: Ikuo Yamaguchi, C. Y. Lu, Achi Capital Limited, Chien Hsu Investment Corporation, Che-Ho Wei, Yan-Kuin Su, Sung-Jen Fang, Tom Yiu, F. L. Ni, Hui Ying Investment Ltd. Independent directors: Tyzz-Jiun Duh, Chiang Kao, Cheng-Wen Wu,Chien-Kuo Yang
6. Approval of releasing competition restrictions of the directors	Resolution and announcement according to law.

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• Major Resolutions Adopted by the Board of Directors in the Most Recent Year up to the Publication Date

Publication Date
Board of Directors	Date	Major Resolutions
The 17th meeting of the 11th Term of the Board of Directors	2022.01.25	1. Approval of the record date of the capital reduction for the redeemed shares of Employee Restricted Stock Awards 2. Approval of stopping the purchase and donation of the WHO-approved COVID-19vaccines.
The 18th meeting of the 11th Term of the Board of Directors	2022.02.25	1. Approval of the Company’s 2021 Financial Statements. 2. Approval of the Company’s 2021 Distribution Plan 3. Approval of fund raising by issuance of new shares, overseas depositary receipts through cash capital increase, and/or the private placement of common shares and/or domestic or overseas convertible bonds 4. Board of Directors resolved to convene the 2022 Annual Shareholders Meeting.
The 19th meeting of the 11th Term of the Board of Directors	2022.04.26	1. Approval of the Company’s First Quarter 2022 Financial Statements. 2. Approval of the record date of the capital reduction for the redeemed shares of Employee Restricted Stock Awards.
The 1st Provisional meeting of the 12th Term of the Board of Directors	2022.05.27	1. Approval of the Chairman & CEO and the President appointment. 2. Board of Directors appointed its Compensation Committee Members. 3. Board of Directors appointed its Nomination Committee Members.
The 1st meeting of the 12th Term of the Board of Directors	2022.07.26	1. Approval of the Company’s Second Quarter 2022 Financial Statements. 2. Approval of the record date of the capital reduction for the redeemed shares of Employee Restricted Stock Awards.
The 2nd meeting of the 12th Term of the Board of Directors	2022.10.25	1. Approval of the Company’s Third Quarter 2022 Financial Statements. 2. Approval of the record date of the capital reduction for the redeemed shares of Employee Restricted Stock Awards 3. Board of Directors appointed the Chief Information Security Officer.
The 3rd meeting of the 12th Term of the Board of Directors	2022.12.20	1. Board of Directors replaced the Chief Information Security Officer. 2. Board of Directors approved the capital expenditure budget 3. Board of Directors approved the year 2023 donation to Macronix Education Foundation
The 4th meeting of the 12th Term of the Board of Directors	2023.02.14	1. Approval of the Company’s 2022 Financial Statements. 2. Approval of the record date of the capital reduction for the redeemed shares of Employee Restricted Stock Awards 3. Macronix’s Board of Directors resolved to acquire certain subsidiaries’ shares from the Company's wholly owned subsidiaryMacronix(BVI)Co.,Ltd.
The 5th meeting of the 12th Term of the Board of Directors	2023.03.03	1. Approval of the Company’s 2022 Distribution Plan 2. Approval of fund raising by issuance of new shares, overseas depositaryreceipts through cash capital increase,and/or the

• 88 -

Board of Directors	Date	Major Resolutions
		private placement of common shares and/or domestic or overseas convertible bonds 3. Board of Directors resolved to convene the 2023 Annual Shareholders Meeting.

• (XIII) Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None.

• (XIV) In the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report, A Summary of the Resignation and Dismissal of Chairman, President, and Heads of Accounting, Finance, Internal Audit, Corporate Governance and R&D: None.

V. Information on the Professional Fees of the Attesting CPAs

Unit: NT$ thousands

Accounting Firm	Name of CPAs	Period Covered by CPA’s Audit	Audit Fee	Non- Audit Fee	Total	Remarks
Deloitte & Touche	Tung-Hui Yeh	2022.01.01 ~2022.12.31	5,685	4,075	9,760	Non-audit fees mainly included tax certification fee NT$960,000, ISO27001 implementation NT$840,000, application for preferential tax rates NT$660,000, appointment of tax consultant NT$625,000, transfer pricing report service fee NT$300,000, bonded inventory NT$230,000, and other services.
	Kuo-Tyan Hong

• (I) Where The Accounting Firm Changed the Audit Partners and the Audit Fee Paid for the Year is Less than that of the Previous Year, the Sum, Proportion, and Cause of the Reduction Shall be Disclosed: Not applicable.

• (II) Where the Audit Fee Paid for the Year is Reduced by more than 10% Compared to that of the Previous Year, the Sum, Proportion, and Cause of the Reduction Shall be Disclosed: Not applicable.

• 89 -

VI. CPA Replacement Information: No change in the last two years.

• VII. If Chairman, President, or Chief Financial Officer Holding Positions at the Independent Audit Firm or its Affiliated Company within the Most Recent Fiscal Year: None.

VIII. Equity Transfer and Pledge by Directors, Supervisors, Managers and/or Shareholders, Who Hold More Than 10% of Outstanding Shares, in the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report

Title	Name	2022	2022	upto February28, 2023	upto February28, 2023
		Increase (decrease) in shares held	Increase (decrease) in shares pledged	Increase (decrease) in shares held	Increase (decrease) in shares pledged
Chairman / CEO	Miin Wu	140,000	0	0	0
Director	Shun Yin Investment Ltd.	0	0	0	0
	Representative: Ikuo Yamaguchi	0	0	0	0
Director / President	C.Y. Lu	126,000	0	0	0
Director	Achi Capital Limited	0	0	0	0
	Representative: StaceyLee(Note 1)	0	0	0	0
Director	Chien Hsu Investment Corporation(Note 2)	0	0	0	0
	Representative: Ching- Yun Li	0	0	0	0
Director	Che-Ho Wei	0	0	0	0
Director	Yan-Kuin Su(Note 3)	0	0	0	0
Director	Sung-Jen Fang (Note 4)	Omitted	Omitted	0	0
Director / Senior Vice President & Chief Marketing Officer	Tom Yiu	24,000	0	0	0
Director / Vice President	F. L. Ni	84,000	0	0	0
Director / Vice President	Hui Ying Investment Ltd.	0	0	0	0
	Representative: Paul Yeh(Note 5)	54,000	0	0	0
Independent Director	Tyzz-Jiun Duh	0	0	0	0
Independent Director	Chiang Kao	0	0	0	0
Independent Director	Cheng-Wen Wu	Omitted	Omitted	0	0
Independent Director	Chien-Kuo Yang	Omitted	Omitted	0	0
Vice President	Yen-Hie Chao	60,000	0	0	0

• 90 -

Title	Name	2022	2022	upto February28, 2023	upto February28, 2023
		Increase (decrease) in shares held	Increase (decrease) in shares pledged	Increase (decrease) in shares held	Increase (decrease) in shares pledged
Vice President	Chun-HsiungHung	78,000	0	0	0
Vice President	Jui-Kun Chen	75,000	0	0	0
Vice President	Jon-Ten Chung	75,000	0	0	0
Vice President	Kuang-Chao Chen (Note 5)	60,000	0	0	0
Senior Associate V.P.	Wen-Pin Lu (Note 6)	60,000	0	0	0
Head of EmergingR&D	Ko-Chung Wang (Note 6)	24,000	0	0	0
Executive Director	Hsin-Cheng Liu	18,000	0	0	0
Executive Director	Kai-Wen Tu	24,000	0	0	0
Executive Director	Ting-Chang Lin	13,500	0	0	0
Executive Director	Kun-Lung Chang	30,000	0	0	0
Executive Director	Ta-Hone Yang (Note 7)	Omitted	Omitted	0	0
Project Executive Director	Hui-Chi Li	4,800	0	0	0

• Note 1: Ms. Stacey Lee was appointed to attend the 12th Term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof.

• Note 2: Ms. Ching-Yun Li was appointed to attend the 12th Term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof.

• Note 3: Mr. Yan-Kuin Su was relieved of the position as the Company's independent director on May 27,2022, and was appointed as a director.

Note 4: Mr. Sung-Jen Fang was appointed as the Company's new director on May 27, 2022.

Note 5: Mr. Paul Yeh was appointed to attend the 11th Term of the Board of Directors and represent the company exercising any and all of a director’s rights thereof.

• Note 6: Mr. Cheng-Wen Wu and Chin-Kuo Yang were appointed as the Company's new independent directors on May 27, 2022.

Note 7: Mr. Tung-Hui Yeh was promoted to Executive Director on February 26, 2022

Note 8: Mr. Cheng-Yi Fang was relieved of the position as the Company's director on May 27, 2022.

Note 9: Mr. John C. F. Chen was relieved of the position as the Company's independent director on May 27, 2022. Note 10: The counterparts of equity transfer or equity pledge in the table above are not related parties.

• 91 -

IX. Relationship Among the Top Ten Shareholders

July 19, 2022

Unit: shares / %

Name	Current Shareholding	Current Shareholding	Spouse’s/minor’ s Shareholding	Spouse’s/minor’ s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relationship
Syue-Rong Shen	55,937,000	3.01%	None	None	None	None	None	None
Cathay Life Insurance Representative: Tiao- Kuei Huang	30,715,000	1.65%	None	None	None	None	None	None
The New Labor Pension Fund	27,562,832	1.49%	None	None	None	None	None	None
Robeco Capital Growth Funds	26,354,000	1.42%	None	None	None	None	None	None
Vanguard Emerging Markets Stock Index Fund A Series of Vanguard International Equity Index Funds	25,610,737	1.38%	None	None	None	None	None	None
Mercuries Life Insurance Co., Ltd. Representative: Chao- Hsi Weng	24,000,000	1.29%	None	None	None	None	None	None
JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard Total International Stock Index Fund A Series of Vanguard Star Funds	23,489,546	1.27%	None	None	None	None	None	None
Shun Yin Investment Ltd. Representative: Ikuo Yamaguchi	22,587,265	1.22%	None	None	None	None	None	None
	None	None	None	None	None	None	None	None
Goldman Sachs International	17,372,517	0.94%	None	None	None	None	None	None
J.P. Morgan Securities Plc	14,202,892	0.77%	None	None	None	None	None	None

Note 1: Base date of shareholding, which was the record date for the distribution of 2022 cash dividend. Note 2: There was no information on the person responsible for the investment account.

• 92 -

X. The Total and Combined Shareholding in a Single Enterprise by the Company, its Directors, Supervisors, Managers, and the Directly or Indirectly Controlled Entities

	December 31, 2022 Unit: shares / %	December 31, 2022 Unit: shares / %	December 31, 2022 Unit: shares / %	December 31, 2022 Unit: shares / %	December 31, 2022 Unit: shares / %	December 31, 2022 Unit: shares / %
Affiliated Enterprises (Note)	Ownership by the Company		Direct or Indirect Ownership by Directors/Supervisors/ Managers		Total Ownership
	Shares	%	Shares	%	Shares	%
Macronix America, Inc.	100,000	100.00%	0	0%	100,000	100.00%
Macronix(BVI)Co., Ltd.	212,048,000	100.00%	0	0%	212,048,000	100.00%
Hui YingInvestment Ltd.	None	100.00%	None	0%	None	100.00%
Run HongInvestment Ltd.	None	100.00%	None	0%	None	100.00%
Mxtran Inc.	69,627,323	90.43%	3,914,600	5.08%	73,541,923	95.51%

Note: Invested by the Company using the equity method.

• 93 -

Chapter IV. Capital Overview

I. Capital and Shares

(I) Source of capital

Year/ month	Issue price	Authorized capital	Authorized capital	Paid-upcapital	Paid-upcapital	Comments	Comments	Comments
		Shares (1,000 shares)	Amount (NT$1,000)	Shares (shares)	Amount (NTD)	Source of capital	Subscriptions paid with property other than cash	Other
1989.12	-	150,000	1,500,000	81,583,000	815,830,000	Established with a capital of NT$815,830,000	5,200,000 technology shares	-
1990.12	10	300,000	3,000,000	209,717,000	2,097,170,000	Cash capital increase in the amount of NT$1,281,340,000	-	Note 1
1992.06	10	300,000	3,000,000	239,717,000	2,397,170,000	Cash capital increase in the amount of NT$300,000,000	-	Note 2
1993.05	10	300,000	3,000,000	300,000,000	3,000,000,000	Cash capital increase in the amount of NT$602,830,000	-	Note 3
1995.02	28.5	500,000	5,000,000	350,000,000	3,500,000,000	Cash capital increase in the amount of NT$500,000,000	-	Note 4
1995.08	-	500,000	5,000,000	433,218,172	4,332,181,720	Capital increase out of earnings in the amount of NT$832,181,720	-	-
1995.12	40	500,000	5,000,000	500,000,000	5,000,000,000	Cash capital increase in the amount of NT$667,818,280	-	Note 5
1996.05	48	850,000	8,500,000	600,000,000	6,000,000,000	Issuance of GDRs in the amount of NT$1,000,000,000 for cash capital increase	-	Note 6
1996.08	-	1,160,000	11,600,000	941,676,940	9,416,769,400	Earnings and capital surplus in the amount of NT$3,416,769,400 transferred to capital	-	-
1997.04	-	1,160,000	11,600,000	945,824,135	9,458,241,350	Corporate bonds conversion in the amount of NT$41,471,950	-	-
1997.07	-	2,500,000	25,000,000	1,274,939,621	12,749,396,210	Earnings and capital surplus in the amount of NT$3,291,154,860 transferred to capital	-	-
1997.08	-	2,500,000	25,000,000	1,415,586,910	14,155,869,100	Corporate bonds conversion in the amount of NT$1,406,472,890	-	-
1997.12	-	2,500,000	25,000,000	1,441,815,433	14,418,154,330	Corporate bonds conversion in the amount of NT$262,285,230	-	-
1998.03	-	2,500,000	25,000,000	1,442,334,998	14,423,349,980	Corporate bonds conversion in the amount of NT$5,195,650	-	-
1998.08	-	2,500,000	25,000,000	1,785,823,693	17,858,236,930	Earnings and capital surplus in the amount of NT$3,434,886,950 transferred to capital	-	-
1999.09	-	2,500,000	25,000,000	1,964,406,063	19,644,060,630	Capital surplus in the amount of NT$1,785,823,700 transferred to capital	-	-
2000.03	30	2,500,000	25,000,000	2,099,996,063	20,999,960,630	Cash capital increase in the amount of NT$1,355,900,000	-	Note 7
2000.03	-	2,500,000	25,000,000	2,126,074,584	21,260,745,840	Convertible bonds conversion in the amount of NT$260,785,210	-	-
2000.03	-	2,500,000	25,000,000	2,127,526,851	21,275,268,510	Convertible bonds conversion in the amount of NT$14,522,670	-	-
2000.07	-	3,500,000	35,000,000	2,404,105,343	24,041,053,430	Earnings and capital surplus in the amount of NT$2,765,784,920 transferred to capital	-	-
2000.07	-	3,500,000	35,000,000	2,472,586,493	24,725,864,930	Corporate bonds conversion in the amount of NT$684,811,500	-	-
2000.12	-	3,500,000	35,000,000	2,474,409,144	24,744,091,440	Corporate bonds conversion in the amount of NT$18,226,510	-	-
2001.06	-	4,500,000	45,000,000	3,359,342,613	33,593,426,130	Earnings and capital surplus in the amount of NT$8,849,334,690 transferred to capital	-	-

• 94 -

Year/ month	Issue price	Authorized capital	Authorized capital	Paid-upcapital	Paid-upcapital	Comments	Comments	Comments
		Shares (1,000 shares)	Amount (NT$1,000)	Shares (shares)	Amount (NTD)	Source of capital	Subscriptions paid with property other than cash	Other
2002.08	-	5,350,000	53,500,000	3,691,276,875	36,912,768,750	Capital surplus in the amount of NT$3,319,342,620 transferred to capital	-	-
2003.04	-	5,350,000	53,500,000	3,733,149,529	37,331,495,290	Corporate bonds conversion in the amount of NT$418,726,540	-	-
2003.07	-	5,350,000	53,500,000	3,779,349,500	37,793,495,000	Corporate bonds conversion in the amount of NT$461,999,710	-	-
2003.11	-	5,350,000	53,500,000	3,927,758,305	39,277,583,050	Corporate bonds conversion in the amount of NT$1,484,088,050	-	-
2003.12	**8.11 **	6,550,000	**65,500,000 **	**4,402,758,305 **	**44,027,583,050 **	Cash capital increase in the amount of NT$4,750,000,000	-	Note 8
2004.03	-	6,550,000	65,500,000	4,430,251,943	44,302,519,430	Corporate bonds conversion in the amount of NT$274,936,380	-	-
2004.04	10.9	6,550,000	65,500,000	4,955,251,943	49,552,519,430	Issuance of GDRs in the amount of NT$5,250,000,000 for cash capital increase	-	Note 9
2004.05		6,550,000	65,500,000	5,003,704,439	50,037,044,390	Corporate bonds conversion in the amount of NT$484,524,960	-
	-
2004.09	-	6,550,000	65,500,000	5,034,928,514	50,349,285,140	Corporate bonds conversion in the amount of NT$312,240,750	-	-
2004.11	-	6,550,000	65,500,000	5,035,296,328	50,352,963,280	Corporate bonds conversion in the amount of NT$3,678,140	-	-
2005.09	-	6,550,000	65,500,000	4,995,296,328	49,952,963,280	Decrease in treasury stock in the amount of NT$400,000,000	-	-
2006.03	-	6,550,000	65,500,000	2,915,821,786	29,158,217,860	Capital reduction in the amount of NT$20,794,745,420	-	Note 10
2006.03	**8.07 **	6,550,000	**65,500,000 **	**2,915,921,786 **	**29,159,217,860 **	Private placement in the amount of NT$1,000,000	-	-
2007.02	-	6,550,000	65,500,000	2,916,157,808	29,161,578,080	Exercise of employee stock options in the amount of NT$2,360,220	-	-
2007.04	-	6,550,000	65,500,000	2,916,415,946	29,164,159,460	Exercise of employee stock options in the amount of NT$2,581,380	-	-
2007.09	-	6,550,000	65,500,000	2,917,058,354	29,170,583,540	Exercise of employee stock options in the amount of NT$6,424,080	-	-
2007.10	-	6,550,000	65,500,000	2,978,817,751	29,788,177,510	Capital increase out of earnings in the amount of NT$617,593,970	-	-
2007.11	-	6,550,000	65,500,000	3,050,653,298	30,506,532,980	Exercise of employee stock options in the amount of NT$718,355,470	-	-
2008.02	-	6,550,000	65,500,000	3,060,226,622	30,602,266,220	Exercise of employee stock options in the amount of NT$95,733,240	-	-
2008.05	-	6,550,000	65,500,000	3,062,751,980	30,627,519,800	Exercise of employee stock options in the amount of NT$25,253,580	-	-
2008.08	-	6,550,000	65,500,000	3,063,677,465	30,636,774,650	Exercise of employee stock options in the amount of NT$9,254,850	-	-
2008.09	-	6,550,000	65,500,000	3,124,019,472	31,240,194,720	Capital increase out of earnings in the amount of NT$603,420,070	-	-
2008.11	-	6,550,000	65,500,000	3,126,296,368	31,262,963,680	Exercise of employee stock options in the amount of NT$22,768,960	-	-
2009.02	-	6,550,000	65,500,000	3,126,775,749	31,267,757,490	Exercise of employee stock options in the amount of NT$4,793,810	-	-
2009.02	-	6,550,000	65,500,000	3,123,962,749	31,239,627,490	Decrease in treasury stock in the amount of NT$28,130,000	-	-

• 95 -

Year/ month	Issue price	Authorized capital	Authorized capital	Paid-upcapital	Paid-upcapital	Comments	Comments	Comments
		Shares (1,000 shares)	Amount (NT$1,000)	Shares (shares)	Amount (NTD)	Source of capital	Subscriptions paid with property other than cash	Other
2009.05	-	6,550,000	65,500,000	3,135,134,847	31,351,348,470	Exercise of employee stock options in the amount of NT$111,720,980	-	-
2009.08	-	6,550,000	65,500,000	3,147,538,945	31,475,389,450	Exercise of employee stock options in the amount of NT$124,040,980	-	-
2009.09	-	6,550,000	65,500,000	3,272,552,230	32,725,522,300	Capital increase out of earnings in the amount of NT$1,250,132,850	-	-
2009.11	-	6,550,000	65,500,000	3,289,772,530	32,897,725,300	Exercise of employee stock options in the amount of NT$172,203,000	-	-
2010.02	-	6,550,000	65,500,000	3,303,027,880	33,030,278,800	Exercise of employee stock options in the amount of NT$132,553,500	-	-
2010.05	-	6,550,000	65,500,000	3,330,319,836	33,303,198,360	Exercise of employee stock options in the amount of NT$272,919,560	-	-
2010.08	-	6,550,000	65,500,000	3,350,388,992	33,503,889,920	Exercise of employee stock options in the amount of NT$200,691,560	-	-
2010.11	-	6,550,000	65,500,000	3,355,417,899	33,554,178,990	Exercise of employee stock options in the amount of NT$50,289,070	-	-
2011.02	-	6,550,000	65,500,000	3,362,301,642	33,623,016,420	Exercise of employee stock options in the amount of NT$68,837,430	-	-
2011.05	-	6,550,000	65,500,000	3,378,174,280	33,781,742,800	Exercise of employee stock options in the amount of NT$158,726,380	-	-
2011.08	-	6,550,000	65,500,000	3,381,545,259	33,815,452,590	Exercise of employee stock options in the amount of NT$33,709,790	-	-
2011.11	-	6,550,000	65,500,000	3,382,456,382	33,824,563,820	Exercise of employee stock options in the amount of NT$9,111,230	-	-
2012.02	-	6,550,000	65,500,000	3,384,748,566	33,847,485,660	Exercise of employee stock options in the amount of NT$22,921,840	-	-
2012.05	-	6,550,000	65,500,000	3,392,196,696	33,921,966,960	Exercise of employee stock options in the amount of NT$74,481,300	-	-
2012.08	-	6,550,000	65,500,000	3,392,302,064	33,923,020,640	Exercise of employee stock options in the amount of NT$1,053,680	-	-
2012.08	-	6,550,000	65,500,000	3,521,142,831	35,211,428,310	Capital increase out of earnings in the amount of NT$1,288,407,670	-	-
2012.11	-	6,550,000	65,500,000	3,521,369,314	35,213,693,140	Exercise of employee stock options in the amount of NT$2,264,830	-	-
2013.02	-	6,550,000	65,500,000	3,521,462,303	35,214,623,030	Exercise of employee stock options in the amount of NT$929,890	-	-
2014.02	-	6,550,000	65,500,000	3,521,473,020	35,214,730,200	Exercise of employee stock options in the amount of NT$107,170	-	-
2015.01	-	6,550,000	65,500,000	3,558,773,970	35,587,739,700	New restricted employee shares in the amount of NT$373,009,500	-	-
2015.08	-	6,550,000	65,500,000	3,620,052,730	36,200,527,300	New restricted employee shares in the amount of NT$612,787,600	-	-
2015.08	-	6,550,000	65,500,000	3,618,598,730	36,185,987,300	Reduction of new restricted employee shares in the amount of NT$14,540,000	-	-

• 96 -

Year/ month	Issue price	Authorized capital	Authorized capital	Paid-upcapital	Paid-upcapital	Comments
		Shares (1,000 shares)	Amount (NT$1,000)	Shares (shares)	Amount (NTD)	Source of capital	Subscriptions paid with property other than cash	Other
2015.11	-	6,550,000	65,500,000	3,617,848,930	36,178,489,300	Reduction of new restricted employee shares in the amount of NT$7,498,000	-	-
2016.02	-	6,550,000	65,500,000	3,617,159,130	36,171,591,300	Reduction of new restricted employee shares in the amount of NT$6,898,000	-	-
2016.05	-	6,550,000	65,500,000	3,616,471,930	36,164,719,300	Reduction of new restricted employee shares in the amount of NT$6,872,000	-	-
2016.08	-	6,550,000	65,500,000	3,615,716,830	36,157,168,300	Reduction of new restricted employee shares in the amount of NT$7,551,000	-	-
2016.11	-	6,550,000	65,500,000	3,615,353,570	36,153,535,700	Reduction of new restricted employee shares in the amount of NT$3,632,600	-	-
2017.01	-	6,550,000	65,500,000	3,672,829,150	36,728,291,500	New restricted employee shares in the amount of NT$574,755,800	-	-
2017.02	-	6,550,000	65,500,000	3,672,063,730	36,720,637,300	Reduction of capital for new restricted employee shares in the amount of NT$7,654,200	-	-
2017.05	-	6,550,000	65,500,000	3,671,002,330	36,710,023,300	Reduction of capital for new restricted employee shares in the amount of NT$10,614,000	-	-
2017.07	-	6,550,000	65,500,000	1,805,895,303	18,058,953,030	Capital reduction in the amount of NT$18,651,070,270	-	Note 11
2017.09	-	6,550,000	65,500,000	1,805,028,142	18,050,281,420	Reduction of capital for new restricted employee shares in the amount of NT$8,671,610	-	-
2017.11	-	6,550,000	65,500,000	1,804,938,491	18,049,384,910	Reduction of capital for new restricted employee shares in the amount of NT$896,510	-	-
2018.02	-	6,550,000	65,500,000	1,804,775,803	18,047,758,030	Reduction of capital for new restricted employee shares in the amount of NT$1,626,880	-	-
2018.05	-	6,550,000	65,500,000	1,804,478,493	18,044,784,930	Reduction of capital for new restricted employee shares in the amount of NT$2,973,100	-	-
2018.09	-	6,550,000	65,500,000	1,840,574,009	18,405,740,090	Capital increase out of earnings in the amount of NT$360,955,160	-	-
2018.11	-	6,550,000	65,500,000	1,840,291,935	18,402,919,350	Reduction of capital for new restricted employee shares in the amount of NT$2,820,740	-	-
2019.02	-	6,550,000	65,500,000	1,840,166,993	18,401,669,930	Reduction of capital for new restricted employee shares in the amount of NT$1,249,420	-	-
2019.05	-	6,550,000	65,500,000	1,840,144,856	18,401,448,560	Reduction of capital for new restricted employee shares in the amount of NT$221,370	-	-
2019.08	-	6,550,000	65,500,000	1,840,013,422	18,400,134,220	Reduction of capital for new restricted employee shares in the amount of NT$1,314,340	-	-
2019.11	-	6,550,000	65,500,000	1,839,927,014	18,399,270,140	Reduction of capital for new restricted employee shares in the amount of NT$864,080	-	-
2020.03	-	6,550,000	65,500,000	1,839,908,862	18,399,088,620	Reduction of capital for new restricted employee shares in the amount of NT$181,520	-	-
2020.07	-	6,550,000	65,500,000	1,856,309,082	18,563,090,820	New restricted employee shares in the amount of NT$164,002,200	-	-
2020.08	-	6,550,000	65,500,000	1,856,301,702	18,563,017,020	Reduction of capital for new restricted employee shares in the amount of NT$73,800	-	-

• 97 -

Year/ month	Issue price	Authorized capital	Authorized capital	Paid-upcapital	Paid-upcapital	Comments	Comments	Comments
		Shares (1,000 shares)	Amount (NT$1,000)	Shares (shares)	Amount (NTD)	Source of capital	Subscriptions paid with property other than cash	Other
2021.02	-	6,550,000	65,500,000	1,856,186,402	18,561,864,020	Reduction of capital for new restricted employee shares in the amount of NT$1,153,000	-	-
2021.05	-	6,550,000	65,500,000	1,856,127,002	18,561,270,020	Reduction of capital for new restricted employee shares in the amount of NT$594,000	-	-
2021.08	-	6,550,000	65,500,000	1,856,046,002	18,560,460,020	Reduction of capital for new restricted employee shares in the amount of NT$810,000	-	-
2021.11	-	6,550,000	65,500,000	1,856,017,802	18,560,178,020	Reduction of capital for new restricted employee shares in the amount of NT$282,000	-	-
2022.02	-	6,550,000	65,500,000	1,855,976,783	18,559,767,830	Reduction of capital for new restricted employee shares in the amount of NT$410,190	-	-
2022.05	-	6,550,000	65,500,000	1,855,925,783	18,559,257,830	Reduction of capital for new restricted employee shares in the amount of NT$510,000	-	-
2022.08	-	6,550,000	65,500,000	1,855,884,320	18,558,843,200	Reduction of capital for new restricted employee shares in the amount of NT$414,630	-	-
2022.11	-	6,550,000	65,500,000	1,855,854,341	18,558,543,410	Reduction of capital for new restricted employee shares in the amount of NT$299,790	-	-
2023.03	-	6,550,000	65,500,000	1,855,827,941	18,558,279,410	Reduction of capital for new restricted employee shares in the amount of NT$264,000	-	-

Note 1: Letter Tai-Cai-Zheng (1)-Zi No. 03305 dated December 7, 1990 Note 2: Letter Tai-Cai-Zheng (1)-Zi No. 03489 dated December 24, 1991

Note 3: Letter Tai-Cai-Zheng (1)-Zi No. 00335 dated February 15, 1993 Note 4: Letter Tai-Cai-Zheng (1)-Zi No. 43729 dated November 5, 1994 Note 5: Letter Tai-Cai-Zheng (1)-Zi No. 49345 dated September 25, 1995 Note 6: Letter Tai-Cai-Zheng (1)-Zi No. 18164 dated March 26, 1996 Note 7: Letter Tai-Cai-Zheng (1)-Zi No. 95699 dated November, 1999 Note 8: Letter Tai-Cai-Zheng-1-Zi No. 0920139445 dated October 15, 2003 Note 9: Letter Tai-Cai-Zheng-1-Zi No. 0920161647 dated January 30, 2004 Note 10: Letter Jin-Guan-Zheng-1-Zi No. 0940156791 dated February 3, 2006 Note 11: Letter Jin-Guan-Zheng-Fa-Zi No. 1060022715 dated June 26, 2017

	March 5, 2023 Unit: shares	March 5, 2023 Unit: shares	March 5, 2023 Unit: shares	March 5, 2023 Unit: shares
Type of stock	Authorized capital			Remarks
	Shares issued and outstanding (Note 1)	Un-issued shares	Total
Common stocks	1,855,827,941	4,694,172,059	6,550,000,000	Note 2

Note 1: 1,855,772,290 shares are public shares; 55,651 shares are private placement shares.

Note 2: Retained 650,000,000 shares of authorized capital for employee stock option certificates, and authorized the Board of Directors to issue the certificates in batches as needed. Retained 864,703,672 for conversion to corporate bonds, which may be adjusted by resolution of the Board of Directors in view of the market situation and business needs.

• 98 -

(II) Composition of Shareholders

(II) Composition of Shareholders	(II) Composition of Shareholders	(II) Composition of Shareholders	(II) Composition of Shareholders	(II) Composition of Shareholders	(II) Composition of Shareholders	(II) Composition of Shareholders
July19,2022
Type of Shareholders	Government Agencies	Financial Institutions	Other Legal Persons	Domestic Natural Persons	Foreign Institutions and Natural Persons	Total
Number of Shareholders	14	61	441	302,748	783	304,047
Shareholding	32,896,768	78,062,595	99,034,434	1,222,729,328	423,202,658	1,855,925,783
Shareholding Percentage(%)	1.77%	4.21%	5.34%	65.88%	22.80%	100.00%

Note: Base date of shareholding, which was the record date for the distribution of 2022 cash dividend.

(III) The Dispersal of Shareholdings

July19,2022	July19,2022	July19,2022	July19,2022
Class of Shareholding (Unit: Share)	Number of Shareholders	Shareholding	Shareholding Percentage (%)
1 ~ 999	138,235	30,470,351	1.64%
1,000 ~ 5,000	127,140	265,265,576	14.29%
5,001 ~ 10,000	20,897	158,182,081	8.52%
10,001 ~ 15,000	6,219	76,545,865	4.12%
15,001 ~ 20,000	3,505	63,969,851	3.45%
20,001 ~ 30,000	3,044	76,155,302	4.10%
30,001 ~ 40,000	1,355	47,788,403	2.58%
40,001 ~ 50,000	882	40,674,359	2.19%
50,001 ~ 100,000	1,499	105,994,819	5.71%
100,001 ~ 200,000	641	89,747,200	4.84%
200,001 ~ 400,000	322	90,186,467	4.86%
400,001 ~ 600,000	87	42,316,439	2.28%
600,001 ~ 800,000	50	35,632,917	1.92%
800,001 ~ 1,000,000	27	24,222,090	1.30%
1,000,001 and above	144	708,774,063	38.19%
Total	304,047	1,855,925,783	100.00%

Note: Base date of shareholding, which was the record date for the distribution of 2022 cash dividend.

• 99 -

July 19, 2022

(IV) Major Shareholders

		July19,2022
Name of Shareholders	Shareholding	Shareholding Percentage (%)
Syue-Rong Shen Cathay Life Insurance New Labor Pension Fund Robeco Capital Growth Funds Vanguard Emerging Markets Stock Index Fund A Series of Vanguard International Equity Index Funds Mercuries Life Insurance Co., Ltd. JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard Total International Stock Index Fund A Series of Vanguard Star Funds Shun Yin Investment Ltd. Goldman Sachs International J.P. Morgan Securities Plc	55,937,000 30,715,000 27,562,832 26,354,000 25,610,737 24,000,000 23,489,546 22,587,265 17,372,517 14,202,892	3.01% 1.65% 1.49% 1.42% 1.38% 1.29% 1.27% 1.22% 0.94% 0.77%

Note: Base date of shareholding, which was the record date for the distribution of 2022 cash dividend.

(V) Market Price, Net Worth, Earnings, and Dividends Per Share

Unit: NT$

					Unit: NT$
Item	Year		2021		By the End of
				2022
					March 5,2023
Market Price per Share (Note 1)	Highest Market Price		50	45.15	37.45
	Lowest Market Price		34	28.2	33.5
	Average Market Price		42.87	37.23	35.48
Net Worth per Share	Before Distribution		25.20	28.38	Not applicable
	After Distribution		23.40	(Note 5)
Earnings per Share	Weighted Average Shares (thousand shares)		1,845,347	1,850,115
	Earningsper Share		6.48	4.85
Dividends per Share	Cash Dividends		1.80008968	1.8
	Stock Dividends	Dividends from Retained Earnings	-	-
		Dividends from Capital Surplus	-	-
	Accumulated Undistributed Dividends		-	-
Return on Investment	Price / Earnings Ratio(Note 2)		6.42	7.44
	Price / Dividend Ratio(Note 3)		23.11	20.05
	Cash Dividend Yield Rate(Note 4)		4.33%	4.99%

Note 1: Source of data: Taiwan Stock Exchange.

Note 2: Price / Earnings Ratio = Average Market Price / Earnings per Share

Note 3: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 4: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 5: The distribution of earnings for 2022 will be resolved at the 2023 Shareholders' Meeting.

• 100 -

(VI) Dividend Policy and Implementation

1. Dividend policy in the articles of incorporation

If there is a surplus in the Company's annual final accounts, it will first be used to pay taxes and make up for accumulated losses before the next 10% is taken for legal capital reserve (except when the legal capital reserve has reached the amount of the total capital). A special capital reserve is listed or reversed in accordance with relevant regulations. The remaining balance and the undistributed surplus of the previous year are the shareholder dividends.

The Company belongs to a capital-intensive industry. In line with the long-term financial planning, all or part of the shareholder dividends in the preceding paragraph may be reserved as undistributed earnings depending on the resolution by the shareholders' meeting. The dividends will then be distributed in the following year, together or separately.

The Company prioritizes cash dividends for surplus distribution. However, the Company shall still be able to distribute the surplus as shares depending on the financial, business, or operational status. The ratio follows the principle of not exceeding 50% of the total distributable surplus for the year.

1. Distribution of dividend proposed at the shareholders' meeting: NT$3,340,487,593 (NT$1.8 per share).

2. Expected material changes to the dividend policy: None.

3. (VII) Effect to Business Performance and EPS of the Proposed Stock Dividends Distribution: Not applicable.

(VIII) Compensation for Employees, Directors, and Supervisors

1. Percentage or scope of compensation for employees, directors and supervisors provided in the Company's Articles of Incorporation

2. According to the Articles of Incorporation, if there is profit for the year, 15% and 2% (or below) of the remaining balance should be allocated as employee and director compensation after accumulated losses have been deducted from the profit. Employee compensation should also be distributed to employees of subordinate companies that meet certain conditions.

3. The basis for estimating the amount of employee, director, and supervisor compensation, 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

4. The Company's employee and director compensation in 2022, as stipulated by the Articles of Incorporation, were NT$1,854,831,467 and NT$247,310,862 respectively. The basis of the above estimate is the balance after deducting accumulated losses from the profit of the previous year. If the actual distribution amount differs from the estimated figure, accounting treatment will be given to the changes. The amount will be adjusted in the following year.

5. Distribution of compensation approved in the board of directors meeting On February 14, 2023, the Board of Directors approved NT$1,854,831,467 for employee compensation and NT$247,310,862 for director compensation.

6. Information of distribution of compensation of employees, directors, and supervisors for the previous year, and, if there are any discrepancies between the actual distribution and the recognized employee, director, or supervisor compensation, and the discrepancy, cause, and its treatment: None.

7. 101 -

(IX) Redemption of Common Stock: None.

II. Corporate Bonds: None.

III. Preferred Shares: None.

IV. Global Depository Receipts: None.

V. Employee Stock Options : None.

• 102 -

VI. Operation of Restricted Stock Awards

• (I) New Shares of Employee Restricted Stock Awards

March 5, 2023

	March 5,2023
Types of new shares of employee Restricted Stock Awards	The 1st issuance of 2019 New shares of employee Restricted Stock Awards Plan
Effective date and the total number of shares	October 8, 2019 35,294,000 shares
Distribution date	October 21,2019
Issue date	June 16,2020
New Shares of employee Restricted Stock Awards issued	16,400,220 shares
Shares of employee Restricted Stock Awards still available for issue	0 shares
Issuedprice	NT$0
Ratio of New shares of employee Restricted Stock Awards to total issued	0.89%
The vesting conditions of new shares of employee Restricted Stock Awards	(1) Remain employed by the Company within one year after the grant date; and has a current year’s performance rating of A0 or A1: 40% of restricted shares will be vested. (2) Remain employed by the Company within two years after the grant date; and has a current year’s performance rating of A0 or A1: 30% of restricted shares will be vested. (3) Remain employed by the Company within three years after the grant date; and has a current year’s performance rating of A0 or A1: 30% of restricted shares will be vested.
Restricted rights of new shares of employee Restricted Stock Awards	(1) Except for being inherited, the new shares of employee Restricted Stock Awards not be sold, transferred, pledged, or gifted to others or disposed of using any other methods. (2) The new shares of employee Restricted Stock Awards shall be kept in a stock trust. (3) When a new share is returned in cash due to the Company’s capital reduction, the refund of the vested capital loss shall be under custodian trust. In accordance with the issuance method, such capital and shares shall be granted if the vesting conditions for new shares of employee restricted stock awards are met. The vested shares are granted to employees without interests; if the vested conditions are not met, such cash will be recovered by the Company.
Custody status of new shares of employee Restricted Stock Awards	The exercise of shareholder rights, while the new shares of employee Restricted Stock Awards restricted are held during trust period shall be in accordance with the custodial agreement.
Measures to handling employees that do not meet the vesting conditions for receiving or subscribing to new shares	The Company will redeem and cancel the granted but not yet vested shares
Number of new shares of employee Restricted Stock Awards taken back or bought back	475,261 shares
Number of released new shares of employee Restricted Stock Awards	15,924,959 shares
Number of unreleased new shares of employee Restricted Stock Awards	0 shares
Ratio of unreleased new shares of employee Restricted Stock Awards to total issued (%)	0%

• 103 -

Types of new shares of employee Restricted Stock Awards	The 1st issuance of 2019 New shares of employee Restricted Stock Awards Plan
Impact on shareholder’s equity	Dilution of the Company's EPS during the vesting period is limited and should not have a significant impact on shareholders' equity.

• 104 -

(II) New Shares of Employee Restricted Stock Awards received by Managers and the Top Ten Employees

March 5, 2023

									March 5,2023	March 5,2023	March 5,2023	March 5,2023
	Title	Name	No. of New Restricted Shares	New Restricted Shares as a Percentage of Shares Issued	Released				Unreleased
					No. of Shares	Issued Price (NT$)	Amount (NT$ thousands)	Released Restricted Shares as a Percentage of Shares Issued	No. of Shares	Strike Price (NT$)	Amount (NT$ thousands)	Unreleased Restricted Shares as a Percentage of Shares Issued
Managers	CEO	Miin Wu	3,586,000	0.193%	3,586,000	0	0	0.193%	0	0	0	0%
	President	C. Y. Lu
	Senior Vice President & Chief MarketingOfficer	Tom Yiu
	Vice President	F. L. Ni
	Vice President	Paul Yeh
	Vice President	Yen-Hie Chao
	Vice President	Chun-Hsiung Hung
	Vice President	Jui-Kun Chen
	Vice President	Jon-Ten Chung
	Vice President.	Kuang-Chao Chen
	Senior Associate V.P.	Wen-Pin Lu
	Head of Emerging R&D	Ke-Zhong Wang
	Executive Director	Hsin-Cheng Liu
	Executive Director	Kai-Wen Tu
	Executive Director	Ting-Chang Lin
	Executive Director	Kun-Lung Chang
	Executive Director	Ta-Hone Yang (Note)
	Project Executive Director	Hui-Chi Li

• 105 -

	Title	Name	No. of New Restricted Shares	New Restricted Shares as a Percentage of Shares Issued	Released	Released	Released	Released	Unreleased	Unreleased	Unreleased	Unreleased
					No. of Shares	Issued Price (NT$)	Amount (NT$ thousands)	Released Restricted Shares as a Percentage of Shares Issued	No. of Shares	Strike Price (NT$)	Amount (NT$ thousands)	Unreleased Restricted Shares as a Percentage of Shares Issued
Employees	Senior Director	Han-Song Chen	1,235,000	0.067%	1,235,000	0	0	0.067%	0	0	0	0%
	Senior Director	Shuo-Nan Hung
	Senior Director	Tao-Cheng Lu
	Senior Director	Yen-Hao Shih
	Senior Director	Keng-Hui Chen
	Senior Project Director	Ming-Xiang Chen
	Senior Project Director	Ling-Wu Yang
	Senior Project Director	Nan-Tzu Lien
	Senior Project Director	Tien-Chu Yang
	Senior Project Director	Ming-Xiang Chen
	Senior Project Director	Nai-Ping Kuo
	Project Director	Suzuki Junhiro
	Project Director	Hung-Chih Li
	Project Director	Rong-Yu Xie
	Project Director	Tong Luo
	Project Director	Tsung-Ting Han

Note: Mr. Ta-Hone Yang was promoted to Executive Director on July 26, 2022

VII. Mergers, Acquisitions or Issuance of New Shares for Acquisition of Shares of other Companies: None.

VIII. Financing Plans and Implementation

As of one quarter before the printing date of this annual report, the Company has not experienced any previous issuance or private placement of marketable securities that have not been completed, or that have been completed but any benefits are yet to be recorded within the past three fiscal years.

• 106 -

Chapter V. Operation Summary

I. Business Activities

(I) Scope of Business:

1. Main Business:

The Company's main business concentrates on the design, manufacture, sales, and foundry services of integrated circuits and memory chips, as well as the commissioned design, development, and consultancy of relevant products. The Company concurrently engages in the import and export of relevant affairs. For the main businesses of the consolidated company, please refer to the main section regarding the Consolidated Financial Report on page 178 of this annual report.

2. Business Proportion

	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Products	2021		2022
	Net Revenue	%	Net Revenue	%
Flash	33,504,267	66.25%	29,001,475	66.69%
ROM	13,556,983	26.81%	10,670,968	24.54%
Foundry	3,501,876	6.92%	3,796,517	8.73%
Others	9,865	0.02%	18,494	0.04%
Total	50,572,991	100.00%	43,487,454	100.00%

3. Current Products of the Company

urrent Products of the Company
Product Category	Main Products
Non-Volatile Memory IC	Flash Memory (NOR Flash, NAND Flash)
	Read-Only Memory (ROM)
Wafer Foundry Services	Sub-micron logic process / high voltage CMOS and BCD process
	BCD and logic processes of embedded non-volatile memory (NVM)

Currently, most of Macronix’s flash memory products are NOR Flash. With excellent technology and quality, the product range covers various storage capacities, including 3V, 1.8V or 1.2V operating voltage, Serial or Parallel interfaces, and mainstream or niche specifications. Macronix has a complete range of products, which are widely adopted by customers around the world.

In addition to NOR Flash, the independently-developed NAND Flash product line has stable quality and mass production, making Macronix one of the few suppliers of both NOR Flash and NAND Flash in the world.

Macronix has also passed the IATF 16949 certification of the quality management system in the fastgrowing automotive electronics industry. The Company has equally managed to win the reliability standard AEC-Q100 certification for the two main product categories, namely NOR Flash and NAND Flash. Passing the two most important standards in the electronic IC supply chain makes Macronix an important partner of the first-class automotive electronics manufacturers.

Macronix’s read-only memory products adopt world-class technologies with a complete lineup of storage capacity and a high level of security. With rich manufacturing experience and a comprehensive management system, Macronix has reached the highest level in the world in terms of delivery speed and shipment volume.

• 107 -

• Plans for New Product Development

• (1) Non-Volatile Memory Product Line

The Company makes good use of the advantages of the new equipment in the 12-inch wafer lab to create a higher-level R&D environment, and continues to develop the following two core technologies of the new generation. The Company will create the innovative memory product series and combinations based on this foundation.

※ 3D NAND Flash: The third-generation project

※ NOR Flash: 45-nanometer plan

• (2) Wafer Foundry Service

• ※ Integrating Macronix’s own embedded non-volatile memory logic platform technology into MCU and IoT markets

• ※ BCD (Bipolar-CMOS-DMOS) technology integrated with Macronix’s own embedded nonvolatile memory that will greatly enhances the added value of analog and smart power management ICs.

※ Embedded ROM and OTP are applied to voice ICs.

(II) State of the Industry

1. Industry Development and Competition

Memory IC can be divided into two types according to their functions. Volatile memory refers to the memory that loses data when the power has been switched off, such as DRAM and SRAM. On the other hand, non-volatile memory retains the memory even when the power is switched off. The Company specializes in non-volatile memory, especially Flash Memory and ROM (read-only memory).

Flash Memory can be read and written repeatedly, and is widely used in consumer electronics, communications, information, mobile phones, automotive, and industrial fields. Macronix is the world's leading supplier of NOR Flash and SLC NAND Flash. It has the advantages of sound finance, stable supply, a 12-inch wafer lab, and production capacity. It will grow with the development of emerging applications in the future.

The special feature of ROM is that the data cannot be modified after storage. The main advantage is large storage capacity with low cost. Its application focuses on electronic gaming cards, electronic toys, and game consoles. The industry has become application-oriented. Macronix has long been ranked as the largest ROM supplier in the world, with more than half of the market share.

• 108 -

• Correlation with Upstream, Midstream, and Downstream Sections of the Industry

==> picture [428 x 199] intentionally omitted <==

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

Upstream Midstream Downstream
Consumer
Electronics
Communication
Industry
Information
Industry
Wafer Chemical
Substrate
Material ingredients Industry and
Others
Mask
IC design IC Final
IC Package
IC Wafer Test
IC manufacturing
----- End of picture text -----

Source: ITRI Industrial Economics and Knowledge Center

The Company provides customers with a complete range of flexible solutions from R&D, manufacturing to backend package testing and is one of the few professional suppliers in the world that specialize in non-volatile memory.

(III) Overview of Technology and Research & Development

1. R&D Expenses

R&D Expenses	R&D Expenses	R&D Expenses
Unit: NT$thousands
Year Item	2021	2022
R&D expenses	5,615,664	5,912,844
Operating Revenue	50,572,991	43,487,454
% of R&D expenses to OperatingRevenue	11.10%	13.60%

1. Successfully Developed Technologies or Products

In 2022, Macronix successfully implemented product and technology innovations to extend its superior product competitiveness.

• (1) Technology Innovation

• ※ The innovation and demonstration of the third-generation 3D NAND flash IC and control technology.

• (2) Product Innovation

• ※ Suitable for the applications of automotive electronic and IoT, and the innovation and mass production of the new-generation-designed ultra-fast encryption and protected NOR Flash.

• ※ Preparation for the innovation and mass production of the second-generation 3D NAND flash IC and control technology.

• ※ Macronix’s mature proprietary 0.11 µm embedded non-volatile memory technology and 0.18 µm BCD (Bipolar-CMOS-DMOS) technology are integrated to provide foundry services in MCU and analog IC related markets.

• 109 -

• (3) Intellectual Rights Achievements

Macronix is persistent in its pursuit of innovation and invention. It is proactive in its application for patents and in the deployment of its international patent strategy network. The Company regularly reports on issues related to intellectual property in each quarterly meeting of the board of directors. Intellectual Property Strategy: In today's international industrial environment, intellectual property rights are gradually becoming the weapon used in the competition for strategic technologies. For Macronix, a company that strives to become a mainstream leader and a global provider of comprehensive solutions, the key strategy to sustainable operations is in the planning, deployment, production, and accumulation of equal amounts of quality and quantity in its patent rights strategy network, which entails the creation of high-quality innovative technology and intellectual property that can protect high-value-added products.

Intellectual Property Management: To encourage employees to pro-actively submit their inventions, Macronix has established the Patent Management and Incentive Guidelines, and has also introduced the Intellectual Property Rights and Patent Service Network, which incorporates patent engineers, developers, and the patent office and offers real-time control of each step in the intellectual property process.

Intellectual Property Risk and Countermeasures: The Company values R&D and innovation, and actively applies for patents as a form of intellectual property rights. By the end of 2022, the Company has obtained 3,296 patents in the U.S., 3,147 patents in Taiwan, 2,124 patents in China, and 327 patents in other countries. More than 1,100 patents are pending in the patent offices of different countries. The Company will continue to seek the protection of patent and intellectual property rights for the innovative technologies it has developed.

The Company will continue to seek the protection of patent and intellectual property rights for the innovative technologies it has developed.

(IV) Short/Long-Term Business Development Plans

1. Short-term

• ※ Develop XtraROM[®] and NAND Flash customized product solutions for video games and entertainment to enhance the business growth of niche-based applications.

• ※ Promote the compact nature of NOR Flash in order to increase adoption in consumer electronics, information applications, and IoT.

• ※ Make good use of the high quality of the Company's products and the excellent production management to develop high value-added business in automotive electronics and medical electronics.

• ※ Macronix’s mature proprietary embedded non-volatile memory logical platform and BCD (Bipolar-CMOS-DMOS) technology are integrated to provide foundry services in MCU, IoT, and analog and smart power management IC related markets and make international leaders in related markets our long-term clients.

2. Long-term

• ※ Develop high-capacity NOR Flash and 3D NAND Flash technologies and products to provide solutions for niche applications.

• 110 -

II. Market and Sales Overview

(I) Market Analysis

1. Net Revenue by Geography

		Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Geography		2021		2022
		Net revenue	%	Net revenue	%
Domestic		11,663,044	23.06	8,361,409	19.23
Export	Japan	15,938,468	31.52	14,195,816	32.64
	USA	2,419,083	4.78	3,116,958	7.17
	Europe	3,948,345	7.81	4,658,146	10.71
	Asia	16,604,051	32.83	13,155,125	30.25
	Subtotal	38,909,947	76.94	35,126,045	80.77
	Total	50,572,991	100.00	43,487,454	100.00

2. Market Share

(1) ROM

The Company's ROM products account for more than 50% of the global market and has been

firmly established as the market leader.

(2) NOR Flash

We remain a global leader in non-volatile memory devices with the market share of our NOR flash product line reaching approximately 25.5% in 2022.

3. Competitive Niches

The Company has been developing ROM and Flash technology and products for more than 30 years. The continuous innovation enhances competitiveness while maintaining stable product quality and supply. Recently, IoT and automotive electronics applications are in the ascendant. One of the trends is the need to integrate NOR Flash into compact wafer products. Macronix’s emphasis on quality and supply is its competitive advantage.

• 111 -

• Favorable and Unfavorable Factors Affecting the Company's Development Prospects and Corresponding Countermeasures

The Company's operations and finance are currently sound and stable. The independent technologies and production of Flash Memory and ROM, and stable supply has won customers' trust as Macronix’s competitive advantage.

In order to achieve sustainable development, the Company will continue to develop advanced nonvolatile memory technology and update the 12-inch fab equipment to create an advanced R&D environment and production base. Our goal is to provide customers with superior products and services in order to gain a stable foothold in the industry.

(II) Important Applications and Production Processes of the Primary Products

1. Major Uses of the Primary Products

Product Category	PrimaryProducts	Use and Function
Non-Volatile Memory IC	Flash Memory	Used in mobile phones, set-top boxes, IoT, personal computers, digital cameras, automotive electronics, CD players, printers, hard drives, network devices, tablets, wireless communications (Bluetooth, WLAN), and large entertainmentequipment.
	ROM	Mainly used in TV game cards, electronic entertainment equipment, electronic toys and so on.
Wafer Foundry Services	Sub-micron logic process / high voltage CMOS and BCDprocess	Providing high-voltage CMOS manufacturing technology in order to serve analogIC design customers.
	BCD and logic processes of embedded non-volatile memory (NVM)	Provides integrated technology of BCD and logic processes of embedded NVM to serve microcontroller and smart power management IC design customers.

2. Production Process

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• 112 -

(III) Supply of Primary Raw Materials

The ICs manufactured by our fabs are mainly made of silicon wafers, photoresist chemicals, and special gases. The suppliers are well-known large factories at home and abroad, with stable supply and excellent quality.

• (IV) Suppliers/Customers Accounted for at Least 10% of Purchase/Sales and Respective Amount and Percentage

• Information on Major Suppliers in the Last Two Fiscal Years

Unit: NT$ thousands

					Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
	2021				2022
Item	Name	Amount	Percentage of Annual Net Purchase (%)	Relationship with the Issuer	Name	Amount	Percentage of Annual Net Purchase (%)	Relationship with the Issuer
1	Supplier A	5,895,828	49.27	Related party	Supplier A	3,234,286	31.68	Related party
	Others	6,069,885	50,73		Others	6,974,126	68.32
	Net Purchase	11,965,713	100.00		Net Purchase	10,208,412	100.00

Note1: Names of suppliers taking up more than 10% of the total purchase for the last two years and the amount as well as percentage are listed. However, because the contract stipulates that the name of the supplier should not be disclosed, or the counterparty is an individual but not a related party, it can be represented by a code instead. Note 2: The increase/decrease is caused by changes in market trends and customer demands.

2. Information on Major Customers in the Last Two Fiscal Years

Unit: NT$ thousands

					Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
	2021				2022
Item	Name	Amount	Percentage of Annual Net Sales (%)	Relationship with the Issuer	Name	Amount	Percentage of Annual Net Sales (%)	Relationship with the Issuer
1	Customer A	13,704,352	27.10	Related party	Customer A	10,739,770	24.70	Related party
	Others	36,868,639	72.90		Others	32,747,684	75.30
	Net Sales	50,572,991	100.00		Net Sales	43,487,454	100.00

Note 1: Names of customers taking up more than 10% of the total sales for the last two years and the amount as well as percentage are listed. However, because the contract stipulates that the name of the customer should not be disclosed, or the counterparty is an individual but not a related party, it can be represented by a code instead. Note 2: The increase/decrease is caused by fluctuating customer needs.

• 113 -

(V) Table of Production Volume and Value in the Most Recent Two Years

Capacity/Output Unit: Kea or PC Revenue Unit: NT$ thousands

				Capacity/Output Unit: Kea or PC Revenue Unit: NT$thousands	Capacity/Output Unit: Kea or PC Revenue Unit: NT$thousands	Capacity/Output Unit: Kea or PC Revenue Unit: NT$thousands
Year Produce Amount Main Products	2021			2022
	Capacity	Output	Amount	Capacity	Output	Amount
Flash		3,017,076	17,758,738		1,554,396	12,258,181
ROM		141,907	9,972,945		105,782	7,616,073
Subtotal(Kea)		3,158,983	27,731,683		1,660,178	19,874,254
Foundry (PC)		297,067	1,912,611		216,260	1,432,067
Capacity (PC)	1,163,352			1,154,250

Note 1: Capacity refers to the quantity that can be produced under normal operations using existing production equipment after the company has taken factors such as necessary downtime, holidays, etc. into consideration. Note 2: If the product is substitutable, capacity can be jointly calculated and explained in the note. Note 3: Capacity and Foundry output are estimated in 8-inch equivalent wafers. Note 4: Amount refers to the manufacturing cost of the finish goods that are available for sale in the year.

(VI) Sales & Shipments in the Most Recent Two Years

Unit: Shipments (Kea or PC) Revenue Unit: NT$ thousands

					Unit: Shipments (Kea or PC) Revenue Unit: NT$thousands	Unit: Shipments (Kea or PC) Revenue Unit: NT$thousands	Unit: Shipments (Kea or PC) Revenue Unit: NT$thousands	Unit: Shipments (Kea or PC) Revenue Unit: NT$thousands
Year Sales & Shipments Products	2021				2022
	Domestic		Export		Domestic		Export
	Shipments	Net revenue	Shipments	Net revenue	Shipments	Net revenue	Shipments	Net revenue
Flash	916,239	8,926,375	1,779,043	24,577,892	384,961	5,436,999	1,077,072	23,564,476
ROM	-	-	139,585	13,556,983	-	-	107,089	10,670,968
Foundry (PC)	230,362	2,736,069	64,253	765,807	164,809	2,922,818	47,982	873,699
Others	-	600	-	9,265	-	1,592	-	16,902
Total(Kea)	916,239	11,663,044	1,918,628	38,909,947	384,961	8,361,409	1,184,161	35,126,045

Note: The total amount of sales does not include Foundry (PC); unit of Foundry shipments is 8-inch equivalent wafers.

• 114 -

III. Employees Information

• (I) Company Employees Information

Year	Year	Year	2021	2022	By the End of March 5,2023
Number of employees		Management Personnel	724	719	717
		R&D and Technical Personnel	1,664	1,750	1,741
		Operators	1,402	1,453	1,430
		Total	3,790	3,922	3,888
Average age			38.5 years old	38.7 years old	38.9 years old
Average Length of Service			11 years and 11 months	11 years and 7 months	11 years and 8 months
Education Level (%)	Ph.D.		2	2	2
	Master's Degree		31.6	32.2	32.3
	Bachelor's		49.7	49.5	49.4
	High School		16.5	16.1	16.1
	Below High School		0.2	0.2	0.2

(II) Subsidiary Employees information

		2021	2022	By the End of
	Year			March
				5,2023
	Management Personnel	118	111	113
				153
	R&D and Technical Personnel	158	152
Number of
employees				0
	Operators	0	0
	Total	276	263	264
				40.5 years old
	Average age	40 years old	40.4 years old
		9 years and 2 months	9 years and 5 months	9 years and 6 months
Average Length of Service
	Ph.D.	0.7	0.8	0.8
	Master's Degree	38.4	36.9	37.1
Educational Level	Bachelor's	58.7	60.0	59.8
(%)
	High School	2.2	2.3	2.3
	Below High School	0.0	0.0	0.0

• 115 -

IV. Environmental Protection Expenditures

• (I) Any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in environmental inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided.

The Company has not been penalized for polluting the environment in the most recent fiscal year and up to the printing date of this annual report. The Company will continue to keep up with equipment maintenance and the implementation of an environmental management system in the future.

• (II) Countermeasures and Expenditures

• 1.The Company's investment and improvement fees in environmental protection engineering, equipment operation maintenance fee, depreciation expenses for environmental protection equipment, clearance and disposal fees, and detection, project research, and training expenses amounted to NT$179,461,000 in 2022.

• Impact on competitive position and capital expenditures:

• (1) The Company promotes energy-saving, water-saving, and waste reduction by investing in and maintaining various pollution prevention equipment. The Company continues to work toward the goal of establishing a green wafer plant that is high in efficiency and low in pollution.

• (2) The Company has established the "ISO 14001 Environmental Management System", "ISO 14064-1 Guidelines for quantification and reporting of greenhouse gas emissions and removals at the organization level", "IECQ QC 080000 Hazardous Substance Process Management System", etc., and continues to invest manpower in the promotion and maintenance of strengthening its competitive edge on the international stage.

• (3) The Company has received the Green Partner certificate from customers in meeting their requirements for “Green Products”.

• (4) The Company has been recognized and praised by competent authorities numerous times over the years, including receiving the 2021 Excellence in Green Procurement for private enterprises and non-government organizations in Hsinchu City in 2022; First Class Award in the "Excellence in Water Conservation and Water Conservation Expert Selection" of the Water Resources Agency, MOEA; Excellence Award for waste reduction and circular economy performance in Hsinchu Science Park; Excellence Award for adoption of air quality purification area from the Environmental Protection Administration in 2022; Certificate of Appreciation for Adopting Bicycle Paths in Hsinchu City.

• (5) Purchase domestic and overseas products with eco-friendly, energy conservation, and water conservation marks and carbon reduction labels to fulfill our corporate social responsibility.

• (6) Based on respect and care toward social responsibility, the Company will continue to engage and invest in environmental protection in order to achieve the goal of sustainable development.

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(III) The Company's Measures in Response to Restriction of Hazardous Substances (RoHS)

With the trend of green consumption awareness and the increasingly strict international environmental protection regulations, the Company strives to manage chemical substances in product components in addition to efforts of reducing environmental pollution caused by the production process.

1. Green Products

• (1) The products comply with the requirements of the European Union's Restriction of Hazardous Substances (RoHS).

• (2) The products meet the requirements of the European Union's Substance of Very High Concern (SVHC) and ELV (End-of-Life Vehicle).

• (3) No "conflict minerals" are used in the products (conflict minerals refer to minerals such as gold, tin, tungsten, tantalum and those related to labor exploitation in the Democratic Republic of the Congo and its adjoining countries).

• (4) The products have obtained green product certificates from internationally renowned customers such as Sony.

• Management System

• (1) In September 2007, the Company passed the certification of the IECQ QC 080000 Hazardous Substance Process Management System. It obtained the certification once again in 2022, which ensured the effectiveness of green products management.

• (2) The Company Implements Risk Assessment of Suppliers (RAS) to ensure that the EU RoHS Directive and the requirements of SVHC are implemented both for the upstream and downstream of the supply chain, in compliance with international regulations and customer specifications.

V. Labor Relations

(I) Employee Benefits

1. Labor insurance and national health insurance: Employees' insurance and national health insurance coverage is handled according to laws and regulations. The employees enjoy the protection of both labor insurance and national health insurance from the first day of work.

2. Group insurance: Employees are covered by the Company's group insurance policies since the first day of work. The premiums are paid by the Company according to their positions. Group insurance is also open to the employees' family members provided that the employees pay the premiums, which provides extra protection and care for their families.

3. Cancer insurance: The employees receive cancer insurance coverage from the first day of work with the premiums borne by the Company. The employees can opt to pay for the same coverage for their spouses and children.

4. Travel insurance for business trips abroad: Employees' travel insurance is provided by the Company during business trips, covering incidents such as accidental death, injuries, and medical care.

5. Restaurants, accommodation, transportation, free parking space, and healthcare services.

6. Bonuses and employee benefits

7. Employee recreation and fitness center: The center is equipped with a 50-meter heated swimming pool, a hydrotherapy SPA, a children's swimming pool, an aerobics classroom, a fitness room, a massage room, karaoke, courses for billiard, table tennis, badminton, and squash, a family reading room, a children's play room, a video game room, and a common room.

8. Employee Welfare Committee: In order to promote employee welfare, the Company has set up the Employee Welfare Committee in accordance with the provisions of the Employee Welfare Fund

9. 117 -

Act. The Company sets aside employee welfare fund to organize various welfare measures, activities, and the operation and management of employee clubs.

(II) Staff Training and Development

The Company held a total of 2,765 internal and external training courses in 2022. The average training hours of employees were 65.7 hours. The total number of trainees was 78,258 and the total number of their training hours was 257,794 hours. The total training cost was NT$14,801,066.

Macronix’s performance management system is closely integrated with individual development plans. Performance interviews are conducted twice a year to examine the setting of individual performance goals and the achievement of individual performance goals and organizational goals. Employees can communicate and discuss with supervisors face-to-face based on the individual job performance and career development needs. A personal development plan is customized to develop various professional knowledge and skills in a step-by-step manner.

※ Comprehensive Learning Development System

The learning development system of the Company is planned according to its strategies, job requirements, and individual development.

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The Company's training is designed based on the principles of advancement, function, planning, and continuity. Through a clear and strategically oriented system structure, the Company provides clear and detailed learning maps for the employees to understand their learning path.

1. The Company's learning roadmap system consists of four categories:

2. (1) A newcomer roadmap is designed for new recruits to shorten the adjustment period and quickly integrate into corporate culture.

3. (2) A competency roadmap is developed in accordance with the Company's values, in the hope that employees can demonstrate behavior in line with the Company's expectations.

4. (3) The management roadmap is developed for different management levels in order to strengthen their management capacity step-by-step.

5. (4) Professional roadmaps are developed according to professional competences required in different fields of work; internal and external lecturers are employed to carry out professional training courses to strengthen employees' professional capacity.

6. 118 -

7. Other training courses:

8. (1) Providing language learning in line with individual needs to strengthen employees' language skills and competitiveness; organizing computer application software courses to improve work efficiency.

9. (2) Offering opportunities for employees to participate in foreign academic seminars to understand the latest development trends of technology and industry abroad; providing opportunities of working overseas which can increase international vision and personal competitiveness

※ Diverse Learning Channels

The Company offers different learning channels to meet different employee learning needs.

==> picture [140 x 121] intentionally omitted <==

1. Internal training:

The Company hires internal and external lecturers to hold various training courses in the Company.

1. External training:

The employees can participate in external training courses and seminars that are closely related to work.

1. On-the-job training:

Through professional learning in the workplace, the employees can "learn by doing" and acquire the knowledge and skills necessary for work.

1. Online learning:

The employees can use the Internet to learn without the limits of time and space and learn according to their individual learning speed.

1. Self-learning:

The employees can engage in cross-disciplinary learning of knowledge, skills, etc. according to their personal career plan. They can also advance individual learning through reading or participating in on-the-job training courses.

※Comprehensive Training Facilities

Macronix Academy's comprehensive facilities and professional equipment enable each employee to study in a good environment.

1. Audio-visual study room: With multimedia computers, books, CDs, video tapes, and audio tapes, the rich learning channel allows employees to learn without boundaries.

2. 2.Training classroom: Several lecture halls and group discussion rooms provide appropriate learning environment according to the curriculum design.

3. Computer classroom: One person is equipped with one computer to maximize learning efficiency.

4. International lecture hall: The hall can accommodate 250 people, and it is the ideal venue for large-scale training, seminars, and lectures.

5. Library: There are a large number of books, periodicals, and audio-visual materials to meet diverse reading needs.

6. 119 -

(III) Retirement system

The Company's retirement policy is set according to the relevant provisions of the Labor Standards Act, and the “Retirement Reserve Supervision Committee” has been set up to supervise and manage the retirement reserve. In addition, pension is withheld according to the relevant provisions of the Labor Pension Act.

(IV) Employee Working Environment and Personal Safety Protection Measures

In order to achieve sustainable management, the Company implements Environmental Safety and Health Policy and lays emphasis on corporate social responsibility. It has obtained outstanding achievements in protecting the environment as well as the safety and health of employees. It has won many awards from the government and recognition from customers. The specific management measures include:

1. Management System

2. (1) Passed verification from ISO 14001 Environmental Management System, ISO 45001 Occupational Safety and Health Management System, and TOSHMS Taiwan Occupational Safety and Health Management System.

3. (2) Verified by the IECQ QC080000 Hazardous Substance Process Management System. The products meet the requirements of EU RoHS and have obtained the Green Product (GP) certificates from international customers.

4. (3) Passed the verification "IOS 14064-1 Guidelines for quantification and reporting of greenhouse gas emissions and removals at the organization level".

5. Environmental Protection and Safety Management

6. (1) Implementing strict and comprehensive monitoring of the work environment and monitoring air quality on site 24 hours a day to ensure the health and safety of employees.

7. (2) Complying with laws and regulations as well as customer requirements to regularly identify and review environmental safety management measures.

8. (3) Setting up various environmental pollution prevention measures (water, air, waste, toxic waste, and noise) and strictly monitoring the quality of the environment.

9. (4) Implementing "Green Procurement" to purchase equipment or product with the domestic and foreign Environmental Protection Label, such as "Environmental Protection Label" from the Environmental Protection Administration or the "Energy Conservation Label" and "Water Conservation Label" from the Ministry of Economic Affairs, which include energy-saving lamps, water dispensers, personal computers and their peripheral equipment, etc. to realize corporate social responsibility; recognized as an Excellent Green Procurement Unit in the private sector by the Hsinchu Municipal Government in 2022.

10. (5) Fully providing employees with personal protective equipment (PPE) and comprehensive safety, health, and environmental protection training.

11. (6) Establishing an Emergency Response Team (ERT) with dedicated staff on call 24 hours a day and establishing a Business Continuity Plan (BCP), implementing training, to ensure the safety of all employees and the Company's factory buildings.

12. (7) Regularly inspecting the fire safety equipment and complying with the buildings' public safety; regularly holding evacuation drills to improve staff resilience.

13. (8) Regularly improving and reviewing human factors in the work environment to provide employees with a comfortable work environment.

14. 120 -

15. (9) Assisting the Hsinchu Science Park Administration Bureau to organize the work safety and environmental protection promotion month.

16. (10) Adopting the Hsinchu Environmental Bikeway and implementing environmental protection public welfare events; won the Outstanding Adopter of Air Quality Purification Zones from the Environmental Protection Administration of the Executive Yuan.

17. Health Management

18. (1) Regularly holding employee health promotion activities and providing quality health management services. Macronix won the "National Excellent Healthy Workplace – Health Model Award" from the Ministry of Health and Welfare in 2022.

19. (2) Regularly bringing doctors on site to provide employee health consultation and health promotion activities, as well as conducting health risk assessment and graded health management.

20. (3) The responsible unit collects the latest epidemic prevention information to strengthen the epidemic prevention management, provides vaccination services and gives "anti-epidemic packages" for employees on business trips abroad to protect their health.

21. (4) In response to the COVID-19 outbreak the "Epidemic Prevention Office" was established to carry out overall planning of the matters related to epidemic prevention, and to conduct rolling review and adjustment of emergency response plans based on the situation in Taiwan and overseas, thereby preventing the pandemic from affecting our operations, while protecting the health of our employees and visitors.

22. (5) Improving the employee assistance program and providing the best psychological counseling services.

23. (6) Implementing maternal health protection measures to take care of pregnant employees and implementing the principle of three noes (no night shifts, no carrying heavy loads, and no engaging in free radiation operations) to build a friendly workplace.

24. (7) Regularly monitoring the work environment to ensure a good working environment and protect employee health.

25. (8) Conducting spot checks of food ingredients such as meat, oil, and flour products in the Company's kitchen; entrusting government-accredited institution to inspect and ensure the safety of employees’ food.

26. (9) Setting up a "breastfeeding room" for employees, which has gained employee satisfaction with its lovely environment and comprehensive equipment and received the triennial "Excellence Award" from the Hsinchu City Public Health Bureau in 2020.

(V) Measures for Safeguarding Labor Agreements and Employees' Rights and Interests

1. The Company regularly organizes various meetings as channels of communication, including orientation, departmental meetings, cadre meetings, and labor-management meetings, etc. The goal is to facilitate communication and ensure all opinions are heard.

2. The Company has set up the "No Topic is Off Limits" suggestion box for the employees to communicate and express their opinions. Employees can make inquiries, suggestions, and complaints through the suggestion box.

3. The Company has set up a paper and digital bulletin board to facilitate timely delivery of information that is relevant to the employees' rights and interests.

4. "Regulations Governing Sexual Harassment" has been developed to prevent sexual harassment and maintain gender equality at work, detailing the prevention, complaint filing, and punishment of sexual harassment.

5. 121 -

6. The Company has set up the "Our Family Employee Relationship Portal Website" as a channel of communication with features including an interface for communicating employee needs directly with the management team, information sharing, lifestyle tips sharing, passing on culture, and employee assistance. Positive behavior is encouraged to enhance motivation and maintain a harmonious labor-management relationship.

7. (VI) List any Losses Suffered by the Company in the Most Recent Fiscal Years and Up to the Annual Report Publication Date Due to Labor Disputes, Including any Violations of the Labor Standards Act found in Labor Inspection, Specifying the Disposition Dates, Disposition Reference Numbers, the Articles of Law Violated, the Substance of the Legal Violations, and the Content of the Dispositions, and Disclosing an Estimate of Possible Expenses that Could be Incurred Currently and in the Future and Measures Being or to Be Taken. If a Reasonable Estimate Cannot Be made, an Explanation of the Facts of Why It Cannot Be Made Shall Be Provided.

Since its establishment in 1989, the Company has maintained harmonious labor-management relations. There have not been and will not be losses due to labor disputes. The Company has received recognition of the highest level from the competent authority. The awards regarding labormanagement relations received in the past five years are as follows:

Year	Awards	Issued by
2018	Sports EnterpriseCertification	Sports Administration,Ministryof Education
2018	Validated Assessment Program-Gold Level	Responsible Business Alliance
2018	Badge of Accredited Healthy Workplace	Health Promotion Administration, Ministry of Health and Welfare
2018	Healthy Workplace Creative Gold Award	Health Promotion Administration, Ministry of Health and Welfare
2019	CSR AnnualSustainable Elite	SGSTaiwan Ltd. (SGS)
2019	National Outstanding Healthy Workplace "Health Model Award"	Health Promotion Administration, Ministry of Health andWelfare
2019	【Award for Workplace Innovation】from the Creativity Gold Award for Healthy Workplace	Health Promotion Administration, Ministry of Health and Welfare
2019	Healthy Workplace Certification	Health Promotion Administration, Ministry of Health andWelfare
2020	Sports Enterprise Certification	Sports Administration,Ministryof Education
2020	【Award of Excellence】for Workplace Equality Promotion	Hsinchu Science Park Bureau
2020	Platinum Level	Responsible Business Alliance
2020	CSR Annual Sustainable Elite	SGS Taiwan Ltd.(SGS)
2020	Award of Excellence for Breastfeeding Room Certification	Public Health Bureau, Hsinchu City
2021	National Occupational Safety and Health Award-the Enterprise BenchmarkingAward	Occupational Safety and Health Administration,Ministryof Labor
2021	Sports EnterpriseCertification	Sports Administration,Ministryof Education
2021	Award of Excellence for Workplace Equality Promotion	Hsinchu Science Park Bureau
2021	Award of Excellence for Breastfeeding Room Certification	Public Health Bureau, Hsinchu City
2022	National Outstanding Healthy Workplace "Health Model Award"	Health Promotion Administration, Ministry of Health andWelfare
2022	Sports Enterprise Certification	Sports Administration,Ministryof Education
2022	Award of Excellent Enterprise for Corporate Sustainability Report -Occupational Safety and Health Targets	Occupational Safety and Health Administration, Ministry of Labor

• 122 -

VI. Information Security Management

(I) Information Security Management Strategy, Framework, and Efficacy

1.Information Security Policy

Information security is an important issue for the Company's operation. the Company has formulated the information security policy and established related management systems, which is announced on the company website, to protect the Company's information assets from internal, external, intentional, or accidental threats and damages, and lower the incidence of information security incidents and mitigate risks arising from the incidents to an acceptable level.

With proactive action to protect the confidentiality, integrity, and availability, the Company could comply with requirements of the competent authorities and related regulations and ensure the normal operation of the Company's business.

2.Information Security Management Organization and Its Responsibilities

The Company appointed a chief information security officer in accordance with the Regulations Governing the Establishment of Internal Control Systems by Public Companies to strengthen the information security administration and information protection. Furthermore, to implement our information security policies and ensure the purposes of information security management could be achieved, we established the Information Security Committee that led by the vice president with the highest-level management from all divisions and business units serve as representatives, in addition, we formed the Information Security Core Team and the Information Security Task Force to implement related affairs.

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Information Security Organizations and Its Responsibilities

**Organization **	Responsibilities
Information Security Committee	1. Formulate the Company’s information security policy 2. Review information security management systems 3. Formulate/review major work plans for information security
Information Security Core Team	1. Develop information security management systems 2. Formulate information security regulations 3. Promote and implement information security maintenance and management measures 4. Execute the various resolutions of the Information Security Committee 5. Coordinate with the information security task force in performing information security operations 6. Provide consultation on information security management
Information Security Task Force	1. Propose suggestions for improvements on information security maintenance and management measures 2. Carry out information security tasks 3. Act as the information security contact of all units, assist in the promotion of security maintenance and management measures

• 123 -

3. Information Security Management Framework

Macronix has formulated relevant management procedures for confidential information protection in terms of policy and standards, classified and labeled information assets of the Company. We utilize a variety of information security mechanisms and system framework designs, such as a DLP (Data Loss Prevention) system, data encryption, file management, network security control, endpoint protection, to provide mechanisms to control and protect confidential information and thereby ensure the best interests of the Company, shareholders, employees, customers, and suppliers.

Macronix raises the information security awareness of all employees through training and awareness events, which include trade secrets and confidential data protection, anti-virus, anti-hacking, and anti-fraud. We provide professional knowledge, related cases, and explanations and sharing of practices through the training, information security e-newsletter, information security website, social engineering drills, etc., which strengthen employees' concepts of information security. "Encouraging everyone to be responsible for information security" is not just a slogan for information security management, but the internal action guideline for Macronix employees to protect the Company's intellectual property and customers' confidential information.

Besides requiring employees to gain awareness of information security, we also included contractors/suppliers into the scope of information security protection. Suppliers are required to understand Macronix’s supplier information security must-knows before working with Macronix. Before outsiders enter the Company, to guarantee the information security, they must complete our information security course and test.

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4. Specific Objectives for Information Security Management

Macronix applies a variety of information security mechanisms and system architecture designs to block constantly emerging information security threats. The preventative measures include establishing appropriate safety control mechanisms for the use of computers, regulatory information devices, and network resources. In order to prevent malicious software attacks and reduce the damage they cause, the Company has established enhancement mechanisms and systems, such as mandatory requirement for the equipment to be sent to the factory for the anti-virus to prevent malicious software from entering the Company network, strengthening firewalls and network controls to prevent computer viruses from spreading into other regions, establishing endpoint anti-virus and anti-hacker measures, introducing advanced solutions to detect and process malware, establishing an integrated network security monitoring center, and regularly entrusting external experts to perform information security assessments. To ensure the effective implementation of the management measures above, the Company established an information security digital management system and implemented the spirit of zero trust.

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5. Achievements of the Promotion of Information Security

The Company implemented numerous information security strengthening measures in 2022 to execute the information security management plan “Plan-Do-Check-Act” (“P-D-C-A”), and obtained ISO 27001 Information Security Management System certification in December 2022. Important implementation results are summarized in the chart below.

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6. Investment of Resources in Information Security Management

Macronix invested resources into the establishment and maintenance of defense measures and hedging mechanisms for its information security management needs. Such include more than 100 people of information security personnel and allocation of approximately 7.5% of the information-related budget for the information security. Key items are as follows:

Category	Content
Defense Measures	 Built functions of document-labeling and information watermark-printing to enhance identification of confidential documents  Built a company-wide anti-virus and anti-hacking framework that includes IT and OT areas  Built firewalls and intrusion detection and prevention systems on the network segments where confidential data is kept  Built a DLP system at the external data transmission node to safeguard the transmission of confidential data  Cooperated with information security information units, professional manufacturers, and consultants to ensure agility with respect to information securityincidents
Hedging Mechanisms	 Signed non-disclosure agreements with external customers and suppliers  Invested in information security insurance to reduce the damages and impact caused by information security incidents and ensure that the Company can make upforpart of the losses in the event of an information securityincident

• (II) In the Most Recent Year and Up to the Publication Date of this Annual Report, If the Losses, Possible Impacts, and Response Measures Caused by Major Information Security Incidents Cannot Be Reasonably Estimated, an Explanation of the Facts of Why They Cannot be Estimated Shall be Provided.

Macronix has established information security incident reporting and handling procedures to enhance information security risk management, so that information security incidents can be immediately reported and handled when they occur. There were no material information security incidents in the past three years and up to the date of report.

==> picture [444 x 264] intentionally omitted <==

Figure: Information Security Incident Notification and Handling Process

• 126 -

VII. Important Contracts

Number	Contract	Party	Dates	Main Content	Restriction terms
1	Technology Transfer	Industrial Technology Research Institute	From February 1997	Technology transfer of MEPG-2 Audio Decoder	Intellectual property rights, use, confidentiality and other restrictions
2	License Agreement	Cybernetics, USA	From April 2000	Low Rate Coder technologylicense	Use, confidentiality and other restrictions
3	License Agreement	Saifun Semiconductors, Israel	From May 2000 until Saifun NROM patent validity period ends	“NROM” technology license	Intellectual property rights, use, confidentiality and other restrictions
4	License Agreement	Zoran, USA	From June 2000	Technology license of TV decoder/TV signal decoder+3Dimentional color signal enhancement function	Intellectual property rights, use, confidentiality and other restrictions
5	License Agreement	ARM, England	From August 2002	Obtained ARM technology license	Intellectual property rights, use, confidentiality and other restrictions
6	License Agreement	Saifun Semiconductors, Israel	From April 2004	MLC Flash technology license	Intellectual property rights, use, confidentiality and other restrictions
7	License Agreement	Mentor Graphics, Ireland	From July 2005	Work system technology license	Intellectual property rights, use, confidentiality and other restrictions
8	Strategic Alliance	Tower Semiconductor, Israel	From December 2000	Strategic alliance investment in Tower Semiconductor	Confidentiality and other obligations
9	License Agreement	Qimonda	From March 2011	Obtained a specific flash memory design related license	Use, confidentiality and other restrictions
10	Joint Developme nt	IBM, USA	January 22, 2019- January 21, 2025	Joint research for phase- change non-volatile memory	Intellectual property rights, use, confidentiality and other restrictions
11	License Agreement	Creative Integrated Systems, Inc., USA	From April 2014	U.S. Patent 5,241,497 and 5,812,461 and related licensing	License, warranties, exemption, confidentiality and other terms
12	Settlement Agreement	Spansion, USA	From January 2015	Reached a settlement for both parties’ litigation and disputes over global patents, and was granted cross-licensing of disputed patents.	Special patent license, settlement fee, confidentiality and other terms
13	License Agreement	RPX Corporation, USA	December 15, 2019- December 14, 2025	RPX and Round Rock technology license	License, use, confidentiality and other terms

• 127 -

Number	Contract	Party	Dates	Main Content	Restriction terms
14	Distribution Agreement	Avnet, Inc.	From September 2017	Expanded product sales on the international market	Confidentiality, license, liability and other terms
15	Syndicated Loan	Seven financial institutions including Taiwan Cooperative Bank	November 24, 2017- December 18, 2022	NT$7.7 billion syndicated loan	Annual financial statements’ liability ratio, current ratio, interest coverage multiples and others are subject to restrictions.
16	Settlement and License Agreement	Toshiba Corporation/ Toshiba Memory Corporation	From October 9, 2018	Settlement of patent litigation in the United States, Japan and Taiwan and cross-licensing patents	Special patent license, settlement fee, confidentiality and other terms
17	Syndicated Loan	Nine financial institutions including Taiwan Cooperative Bank	February 25, 2019- February 24, 2024	NT$8 billion syndicated loan	Annual financial statements’ liability ratio, current ratio, interest coverage multiples and others are subject to restrictions.
18	Assets Transaction	Hon Hai Precision Industry Co., Ltd.	From August 05, 2021	Transaction of the 6-inch wafer fab	Use, intellectual property rights, confidentiality, liability for damages and other terms
19	License Agreement	IBM, USA	From November 23, 2021	Obtained a AI technology license	License, disclaimer, confidentiality and other terms
20	License Agreement	Synopsys	From February 25, 2022	Technologies related to SSD Controller	License, use, confidentiality and otherterms

• 128 -

Chapter VI. Financial Summary

I. Condensed Balance Sheet and Comprehensive Income Statement in the Most Recent Five Fiscal Years

• (I) Condensed Balance Sheets

• Condensed Consolidated Balance Sheets

Unit: NT$ thousands

				Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item				Financial Information for the Most Recent Five Fiscal Years
				2018	2019	2020	2021	2022
Current Assets				36,677,290	26,886,695	30,161,824	38,932,255	39,710,023
Property,Plant,and Equipment				19,308,675	29,365,507	31,462,800	32,218,383	37,982,047
Intangible Assets				45,223	47,022	57,280	96,873	125,929
Other Assets				3,017,633	4,357,554	4,210,314	5,460,637	6,074,708
Total Assets				59,048,821	60,656,778	65,892,218	76,708,148	83,892,707
Current Liabilities			Before Distribution	20,152,229	15,794,226	16,568,758	17,860,670	16,653,230
			After Distribution	22,360,429	18,002,117	18,796,182	21,201,428	Note
Non-current			Liabilities	7,536,235	12,369,884	13,129,068	12,122,001	14,629,118
Total Liabilities			Before Distribution	27,688,464	28,164,110	29,697,826	29,982,671	31,282,348
			After Distribution	29,896,664	30,372,001	31,925,250	33,323,429	Note
Equity Attributable to Shareholders of the Parent				31,360,023	32,491,392	36,193,592	46,724,791	52,609,699
Share Capital				18,401,670	18,399,089	18,561,864	18,559,768	18,558,279
Capital Surplus				(56,241)	543,920	384,772	399,210	402,710
Retained Earnings		Before Distribution		14,077,527	14,685,430	17,771,636	27,095,127	32,807,299
		After Distribution		11,869,327	12,477,539	15,544,212	23,754,369	Note
Other Equity				(903,872)	(977,986)	(365,619)	829,747	1,000,472
TreasuryShares				(159,061)	(159,061)	(159,061)	(159,061)	(159,061)
Non-controllingInterests				334	1,276	800	686	660
Total Equity	Before Distribution			31,360,357	32,492,668	36,194,392	46,725,477	52,610,359
	After Distribution			29,152,157	30,284,777	33,966,968	43,384,719	Note

Note: Pending approval from the shareholders' meeting.

• 129 -

• Parent Company Only Balance Sheet

Unit: NT$ thousands

		Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item		Financial Information for the Last Five Fiscal Years
		2018	2019	2020	2021	2022
Current Assets		35,483,232	25,503,411	28,628,546	37,301,782	37,565,588
Property, Plant, and Equipment		18,829,669	28,904,312	31,016,511	31,792,537	37,529,981
Intangible Assets		42,755	43,559	54,629	95,108	124,699
Other Assets		4,689,353	6,075,266	6,059,348	7,362,814	8,440,978
Total Assets		59,045,009	60,526,548	65,759,034	76,552,241	83,661,246
Current Liabilities	Before Distribution	20,149,508	15,733,930	16,504,303	17,754,438	16,461,056
	After Distribution	22,357,708	17,941,821	18,731,727	21,095,196	Note
Non-current Liabilities		7,535,478	12,301,226	13,061,139	12,073,012	14,590,491
Total Liabilities	Before Distribution	27,684,986	28,035,156	29,565,442	29,827,450	31,051,547
	After Distribution	29,893,186	30,243,047	31,792,866	33,168,208	Note
Equity Attributable to Owners of the Company		31,360,023	32,491,392	36,193,592	46,724,791	52,609,699
Share Capital		18,401,670	18,399,089	18,561,864	18,559,768	18,558,279
Capital Surplus		(56,241)	543,920	384,772	399,210	402,710
Retained Earnings	Before Distribution	14,077,527	14,685,430	17,771,636	27,095,127	32,807,299
	After Distribution	11,869,327	12,477,539	15,544,212	23,754,369	Note
Other Equity		(903,872)	(977,986)	(365,619)	829,747	1,000,472
Treasury Shares		(159,061)	(159,061)	(159,061)	(159,061)	(159,061)
Non-controlling Interests		-	-	-	-	-
Total Equity	Before Distribution	31,360,023	32,491,392	36,193,592	46,724,791	52,609,699
	After Distribution	29,151,823	30,283,501	33,966,168	43,384,033	Note

Note: Pending approval from the shareholders' meeting.

• 130 -

(II) Statement of Comprehensive Income

1. Consolidated Statements of Comprehensive Income

Unit: NT$ thousands

	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item	Financial Information for the Last Five Fiscal Years
	2018	2019	2020	2021	2022
Net Operating Revenue	36,953,032	34,995,411	39,800,947	50,572,991	43,487,454
Gross Profit	13,926,319	9,615,494	13,409,355	21,049,979	19,237,819
Income from Operations	6,509,338	3,098,877	5,866,477	11,064,105	9,369,161
Non-operating Income and Expenses	2,755,049	(72,551)	(25,431)	2,263,584	923,233
Income before Income Tax	9,264,387	3,026,326	5,841,046	13,327,689	10,292,394
Net Income from Continuing Operations	8,992,849	3,012,901	5,325,612	11,962,839	8,969,775
Income from Discontinued Operations	-	-	-	-	-
Net Income	8,992,849	3,012,901	5,325,612	11,962,839	8,969,775
Other Comprehensive Income, net of income tax	(943,048)	240,854	288,014	678,177	208,450
Total Comprehensive Income	8,049,801	3,253,755	5,613,626	12,641,016	9,178,225
Net Income (loss) Attributable to Shareholders of the parent	8,993,006	3,011,960	5,326,083	11,962,952	8,969,775
Net Income (loss) Attributable to Non- controlling interest	(157)	941	(471)	(113)	-
Comprehensive Income Attributable to Shareholders of the parent	8,049,958	3,252,814	5,614,102	12,641,130	9,178,251
Comprehensive Income Attributable to Non-controlling interest	(157)	941	(476)	(114)	(26)
Earnings Per Share	4.94	1.64	2.90	6.48	4.85

• 131 -

2. Parent Company Only Statements of Comprehensive Income

Unit: NT$ thousands

	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Year Item	Financial Information for the Last Five Fiscal Years
	2018	2019	2020	2021	2022
Net Operating Revenue	36,280,727	34,235,969	38,995,968	49,598,199	42,509,017
Gross Profit	13,297,451	8,872,210	12,631,084	20,068,015	18,277,667
Income from Operations	6,391,270	2,966,762	5,691,103	10,701,751	9,141,971
Non-operating Income and Expenses	2,847,107	45,198	119,895	2,559,748	1,121,430
Income before income tax	9,238,377	3,011,960	5,810,998	13,261,499	10,263,401
Net Income from Continuing Operations	8,993,006	3,011,960	5,326,083	11,962,952	8,969,775
Income from Discontinued Operations	-	-	-	-	-
Net Income	8,993,006	3,011,960	5,326,083	11,962,952	8,969,775
Other Comprehensive Income, net of income tax	(943,048)	240,854	288,019	678,178	208,476
Total Comprehensive Income	8,049,958	3,252,814	5,614,102	12,641,130	9,178,251
Net Income (Loss) Attributable to Shareholders of the parent	8,993,006	3,011,960	5,326,083	11,962,952	8,969,775
Net Income Attributable to Non- controlling interest	-	-	-	-	-
Comprehensive Income Attributable to Shareholders of the parent	8,049,958	3,252,814	5,614,102	12,641,130	9,178,251
Comprehensive Income Attributable to Non-controlling interest	-	-	-	-	-
Earnings Per Share	4.94	1.64	2.90	6.48	4.85

(III) Independent Auditors’ Opinions in the Most Recent Five Fiscal Years

Year	Name of CPA	Audit opinions
2022	Tung Hui Yeh, Kuo Tyan Hong	An Unmodified Opinion
2021	Tung Hui Yeh, Kuo Tyan Hong	An Unmodified Opinion
2020	Tung Hui Yeh, Kuo Tyan Hong	An Unmodified Opinion
2019	Ming Hui Chen, Ching Pin Shih	An Unmodified Opinion
2018	Ming Hui Chen, Ching Pin Shih	An Unmodified Opinion

• 132 -

II. Financial Analysis for the Most Recent Five Fiscal Years

1. Consolidated Financial Analysis-IFRS

1. Consolidated Financial Analysis-IFRS	1. Consolidated Financial Analysis-IFRS
Year Items analyzed(Note 1)		Financial analysis for the Most Recent Five fiscalyears
		2018	2019	2020	2021	2022
Financial Structure Analysis(%)	Debt ratio	46.89	46.43	45.07	39.09	37.29
	Long-term capital to property, plant and equipment ratio	201.45	152.77	156.77	182.65	177.03
Liquidity Analysis (%)	Current ratio	182.00	170.23	182.04	217.98	238.45
	Quick ratio	90.76	87.52	103.20	143.24	149.02
	Interest coverage multiples	65.63	16.37	24.65	57.34	50.16
Operating performance Analysis	Accounts receivable turnover (times)	7.25	7.44	7.94	8.60	7.63
	Days Sales Outstanding	50.34	49.05	45.96	42.44	47.83
	Inventory turnover (times)	1.65	1.65	2.04	2.26	1.74
	Average payable turnover (times)	2.60	2.76	3.78	3.93	3.66
	Average Inventory turnover days	221.21	221.21	178.92	161.50	209.77
	Property, plant and equipment turnover (times)	2.08	1.44	1.31	1.59	1.24
	Total assets turnover (times)	0.72	0.58	0.63	0.71	0.54
Profitability Analysis	Return on total assets (%)	17.64	5.30	8.73	17.04	11.38
	Return on equity (%)	32.11	9.44	15.51	28.85	18.06
	Pre-tax income to paid-in capital ratio (%)	50.34	16.45	31.47	71.81	55.46
	Net income ratio (%)	24.34	8.61	13.38	23.65	20.63
	Basic Earnings per share (NT$)	4.94	1.64	2.90	6.48	4.85
Cash flow	Cash flow ratio (%)	50.08	28.76	59.48	90.23	69.99
	Cash flow adequacy ratio (%)	100.94	77.63	83.96	94.85	87.17
	Cash reinvestment ratio (%)	5.83	1.58	4.91	9.00	4.98
Leverage	Operating leverage	1.33	1.88	1.64	1.39	1.48
	Financial leverage	1.02	1.07	1.04	1.02	1.02
Analysis of deviation over 20% for the most recent two years: ‧ A decrease in Inventory turnover: Mainly due to the increase in Net Average Inventory in 2022. ‧ An increase in Average Inventory turnover days: Mainly due to the increase in Net Average Inventory in 2022. ‧ A decrease in property, plant and equipment turnover: Mainly due to the decrease in net sales in 2022. ‧ A decrease in total assets turnover: Mainly due to the decrease in net sales in 2022. ‧ A decrease in return on total assets: Mainly due to the decrease in net Income in 2022. ‧ A decrease in return on equity: Mainly due to the decrease in net Income in 2022. ‧ A decrease in pre-tax income to paid-in capital ratio: Mainly due to the decrease in Pre-tax income in 2022. ‧ A decrease in basic Earnings per share: Mainly due to the decrease in net income in 2022. ‧ A decrease in cash flow ratio: Mainly due to the decrease in Net cash flow from operating activities in 2022. ‧ A decrease in cash reinvestment ratio: Mainly due to the decrease in Net cash flow from operating activities in 2022.

Note 1: Please refer to page 134 to 135 of this annual report for the calculation formula.

• 133 -

2. Parent Company Only Statements of Financial Analysis-IFRS

Year Items analyzed(Note 2)	Year Items analyzed(Note 2)	Financial analysis for the Most Recent Five fiscalyears	Financial analysis for the Most Recent Five fiscalyears	Financial analysis for the Most Recent Five fiscalyears	Financial analysis for the Most Recent Five fiscalyears	Financial analysis for the Most Recent Five fiscalyears
		2018	2019	2020	2021	2022
Financial Structure Analysis(%)	Debt ratio	46.89	46.32	44.96	38.96	37.12
	Long-term capital to property, plant and equipment ratio	206.56	154.97	158.80	184.94	179.06
Liquidity Analysis (%)	Current ratio	176.10	162.09	173.46	210.10	228.21
	Quick ratio	85.16	79.50	94.62	135.10	138.01
	Interest coverage multiples	65.44	16.46	24.94	58.01	50.79
Operating Performance Analysis	Accounts receivable turnover (times)	7.02	7.56	7.83	7.85	7.05
	DaysSalesOutstanding	51.99	48.28	46.61	46.49	51.77
	Inventoryturnover(times)	1.66	1.65	2.05	2.26	1.74
	Average payable turnover (times)	2.59	2.76	3.78	3.93	3.66
	Average inventoryturnover days	219.87	221.21	178.04	161.50	209.77
	Property, plant and equipment turnover(times)	2.10	1.43	1.30	1.58	1.23
	Total assets turnover(times)	0.70	0.57	0.62	0.70	0.53
Profitability Analysis	Return on total assets(%)	17.64	5.30	8.74	17.07	11.40
	Return on equity (%)	32.11	9.43	15.51	28.85	18.06
	Pre-tax income to paid-in capital ratio(%)	50.20	16.37	31.30	71.45	55.30
	Net income ratio(%)	24.79	8.80	13.66	24.12	21.10
	Basic Earningsper share(NT$)	4.94	1.64	2.90	6.48	4.85
Cash Flow	Cash flow ratio(%)	51.59	27.54	56.68	85.20	74.53
	Cash flowadequacyratio(%)	104.79	78.34	82.83	91.64	85.81
	Cash reinvestment ratio(%)	6.07	1.44	4.60	8.39	5.37
Leverage	Operatingleverage	1.33	1.90	1.65	1.40	1.49
	Financial leverage	1.02	1.07	1.04	1.02	1.02
Analysis of deviation over 20% for the most recent two years: ‧ A decrease in Inventory turnover: Mainly due to the increase in Net Average Inventory in 2022. ‧ An increase in Average Inventory turnover days: Mainly due to the increase in Net Average Inventory in 2022. ‧ A decrease in property, plant and equipment turnover: Mainly due to the decrease in net sales in 2022. ‧ A decrease in total assets turnover: Mainly due to the decrease in net sales in 2022. ‧ A decrease in return on total assets: Mainly due to the decrease in net Income in 2022. ‧ A decrease in return on equity: Mainly due to the decrease in net Income in 2022. ‧ A decrease in pre-tax income to paid-in capital ratio: Mainly due to the decrease in Pre-tax income in 2022. ‧ A decrease in basic Earnings per share: Mainly due to the decrease in net income in 2022. ‧ A decrease in cash reinvestment ratio: Mainly due to the decrease in Net cash flow from operating activities in 2022.

Note1: The formula for calculation of the preceding table are as follows:

1. Financial structure

2. (1) Debt-asset Ratio = Total Liabilities / Total Assets.

3. (2) Long-term Capital to Property, Plant, and Equipment ratio = (Total Equity + Noncurrent Liabilities) / Net Property, Plant, and Equipment.

4. Solvency

5. (1) Current Ratio = Current Assets / Current Liabilities.

6. (2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities.

7. (3) Interest coverage multiples = Net income before Tax and Interest / Interest Expenses.

8. Operating Performance

9. (1) Receivables turnover rate (including bills receivable resulting from accounts receivable

10. 134 -

and business operations) = Net sales / Average accounts receivable in various periods

(including bills receivable resulting from accounts receivable and business operations).

  - (2) Days Sales Outstanding = 365 / Receivables Turnover Rate.

  - (3) Inventory Turnover Rate = Cost of Sales / Average Inventory.

  - (4) Payables turnover rate (including bills payable resulting from accounts payable and business operations) = Cost of sales / Average accounts payable in various periods (including bills payable resulting from accounts payable and business operations).

  - (5) Average Inventory Turnover Days = 365 / Inventory Turnover Rate.

  - (6) Property, Plant, and Equipment Turnover Rate = Net Sales / Average Net Property, Plant, and Equipment.

  - (7) Total Asset Turnover Rate = Net Sales / Average Total Assets.

1. Profitability

   • (1) Return on assets (ROA) = [Net income + Interest expenses x (1 - interest rates)] / Average total asset.

   • (2) Return on Equity = Net Income / Average Total Equity.

   • (3) Net Income ratio = Net Income / Net Sales.

   • (4) Basic Earnings per Share = (Income Attributable to Owners of Parent Company – Dividends on Preferred Stock) / Weighted Average Number of Shares Issued. (Note 2)

2. Cash flow

   • (1) Cash Flow Ratio = Net Cash Flow from Operating Activities / Current Liabilities.

   • (2) Cash Flow Adequacy Ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend) for the most recent five years.

   • －

   • (3) Cash Reinvestment Ratio = (Net cash flow from operating activities cash dividend) ／(gross property, plant, and equipment + long-term investment + other non-current assets + working capital). (Note 3)

3. Leverage

   • (1) Operating Leverage = (Net Operating Revenue - Variable Operating Costs and Expenses) / Operating Income (Note 4).

   • (2) Financial Leverage = Operating Income / (Operating Income - Interest Expenses).

4. Note 2: Special attention shall be paid to the following matters when using the calculation formula of earning per share above:

5. The calculation should be based on the weighted average shares of common stock, rather than the number of issued shares at the end of the year.

6. For any cash capital increase or transaction of treasury stock, the circulation period should be taken into consideration when calculating the weighted average number of shares.

7. For capital increase by retained earnings or capital surplus, the Company shall retrospectively adjust the earnings per share for the past fiscal year and the semi-annual earnings according to the ratio of the capital increase, without considering the issuance period of the capital increase.

8. If the preferred share is a non-convertible cumulative preferred share, the dividend of the year (whether it is issued or not) shall be deducted from net income after tax (NIAT), or net loss after tax. If the preferred stock is non-cumulative, the dividend of the preferred stock should be deducted from the net profit after tax if the Company has net profit after tax. If the Company has a deficit, no adjustment is necessary.

9. Note 3: Special attention should be paid to the following matters when measuring cash flow analysis:

10. Net cash flow from operating activities is the net cash inflow from operating activities in the cash flow statement.

11. Capital expenditure is the annual cash outflow of capital investment.

12. The increase in inventory is calculated only when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory decreases at the end of the year, it is counted as zero.

13. Cash dividends include cash dividends from ordinary shares and preferred stocks. 5. The gross property, plant, and equipment refer to the total value of PP&E prior to accumulated depreciation.

14. Note 4: The issuer shall classify the operating costs and operating expenses as fixed or variable in accordance with their nature. If it involves estimation or subjective judgment, the classification shall remain reasonable and consistent.

15. Note 5: If the Company's shares have no par value or a par value other than NT$10, this value shall be replaced in any calculations that involve the paid-in capital ratio with the equity ratio attributable to owners of parent Company as shown in the balance sheet.

16. 135 -

III. Audit Committee’s Report for the Most Recent Fiscal Year

Audit Committee’s Report of 2022

To: 2022 Annual Shareholders’ Meeting of Macronix International Co., Ltd.

The 2022 Financial Statements of the Company (including the parent company only financial statements), the 2022 Business Report, and the proposed 2022 Distribution Plan have been duly reviewed and concluded by the undersigned as accurate. According to Article 14-4 of Securities and Exchange Act and Article 219 of the Company Act, it is hereby reported as above.

Independent director: Tyzz-Jiun Duh Independent director: Chiang Kao Independent director: Cheng-Wen Wu Independent director: Chien-Kuo Yang

Dated: March 3, 2023

• 136 -

• IV. Financial Statements for the Most Recent Fiscal Year: Please refer to pages 150 to 219 of this annual report.

• V. Stand-Alone Financial Statements for the Most Recent Fiscal Year Certified by the Accountant: Please refer to pages 220 to 285 of this annual report.

• VI. Financial Difficulties Encountered by the Company and its Affiliated Companies in the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report: None.

• 137 -

Chapter VII. Review, Analysis, and Risks of Financial Position and Performance

I. Analysis of Financial Status

Unit: NT$ thousands

Item	2022	2021	Difference	Increase/Decrease (%)
Current Assets	39,710,023	38,932,255	777,768	2.00%
Non-current Assets	44,182,684	37,775,893	6,406,791	16.96%
Total Assets	83,892,707	76,708,148	7,184,559	9.37%
Current Liabilities	16,653,230	17,860,670	(1,207,440)	(6.76%)
Non-current Liabilities	14,629,118	12,122,001	2,507,117	20.68%
Total Liabilities	31,282,348	29,982,671	1,299,677	4.33%
Equity Attributed to Shareholders of the Parent	52,609,699	46,724,791	5,884,908	12.59%
Non-controlling Interest	660	686	(26)	(3.79%)
Total Equity	52,610,359	46,725,477	5,884,882	12.59%
If the difference in comparison with the previous period exceeds 20%, and the main reason and the impact are analyzed as follows: ․ Non-Current Liabilities: The increase compared to 2021 was mainly due to long-term borrowings in 2022.

• 138 -

II. Analysis of Financial Performance

Unit: NT$ thousands

Item		2022		2021		Difference	% (14.01%) (17.86%) (8.61%) - (8.61%) (1.17%) (15.32%) (59.21%) (22.77%) (3.09%) (25.02%) (69.26%) (27.39%)
Net Operating Revenue Operating Costs Gross Profit Realized (Unrealized) Gains from the Affiliated Companies Realized Gross Profit Operating Expenses Income from Operations Non-operating Income and Expenses Net Income before Tax Income Tax Expenses Net Income for the Year Other Comprehensive Income (Loss) Total Comprehensive Income for the Year		$43,487,454 24,249,635		$50,572,991 29,523,012		($7,085,537) (5,273,377)
		19,237,819 -		21,049,979 -		(1,812,160) -
		19,237,819 9,868,658		21,049,979 9,985,874		(1,812,160) (117,216)
		9,369,161 923,233		11,064,105 2,263,584		(1,694,944) (1,340,351)
		10,292,394 1,322,619		13,327,689 1,364,850		(3,035,295) (42,231)
		8,969,775 208,450		11,962,839 678,177		($2,993,064) (469,727)
		$9,178,225		$12,641,016		($3,462,791)
Analysis of any increase/decrease in ratio exceeding 20%: ‧Non-operating Income and Expense: The decrease compared to 2021 was mainly due to the disposal of the 6-inch wafer fab in 2022. ‧Net Income before Tax: The decrease compared to 2021 was mainly due to lower gross profit in 2021. ‧Net Income for the Year: The increase compared to 2021 was mainly due to decrease Operating Revenue in 2022. ‧Other Comprehensive Income (Loss): The decrease compared to 2021 was mainly due to higher Unrealized losse on investments in equity instruments at FVTOCI in 2022. ‧Total Comprehensive Income for the Year: The decrease compared to 2021 was mainly due to decrease Non-operatingIncome andgrossprofit in 2022.

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III. Analysis of Cash Flow

• (I) Cash Flow Analysis and Remedy for Liquidity Shortfall

Unit: NT$ thousands

				Unit: NT$thousands
Cash Balance 12/31/2020	Net Cash Provided by Operating Activities in 2021	Net Cash used in Investing and Financing Activities in 2021	Cash Balance 12/31/2021 +-	Remedy for Liquidity Shortfall Investing Plan Financing Plan
18,565,221	11,656,115	(10,457,058)	19,764,278	None None

Note 1: Analysis of net cash change in 2022:

(1) NT$11,656.115 million net cash generated by operating activities; mainly from net income and depreciation expenses.

• (2) NT$10,338.764 million net cash used in investing activities; mainly due to the expansion of

  • plant operations, expenditures for purchasing machinery.

• (3) NT$67.973 million net cash used in financing activities; primarily for long-term debt proceeds and cash dividend payment.

(4) NT$50.321 million net decrease was effect of exchange rate changes

Note 2: Remedial Actions for Liquidity shortfall: Not applicable.

(II) Cash Flow Projection for Next Year:

The Company plan to pay capital expenditures and cash dividends by bank financing and cash on hand.

IV. Major Capital Expenditures and Impact on Financial and Business in the Most Recent Fiscal Year

• (I) Capital Expenditure and Source of Funds

Unit: NT$ thousands

Project	Actual or Planned Source of Capital	Actual use of Capital	Actual use of Capital	Actual use of Capital	Total Amount
		2020	2021	2022
Facility engineering, production equipment and advanced process equipment	Self-owned funds, bank borrowings	6,036,935	4,706,096	9,869,012	20,612,043

(II) Expected Benefits

The capital expenditure mentioned above is for expanding capacity of high-end production and accelerating the development of advanced processes (including 3D NAND); its aim is lowering unit costs and enhancing product competitiveness.

• 140 -

V. Reinvestment Policy for the Most Recent Fiscal Year, the Main Reasons for the Profits/Losses Generated Thereby, the Plan for Improving ReInvestment Profitability, and Investment Plans for the Coming Year

The Company's reinvestment policy is in line with its operating policies and long-term strategic purposes. Most of the investee companies are consolidated financial statements entities. The value of non-consolidated entities accounts for 4% of the total assets. The dividend income for fiscal year 2022 was NT$159,668 thousand on a consolidated basis.

VI. Analysis of Risk Management in the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report

• (I) Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

1. Interest rate

• American and European central banks’ simultaneous interest rates raise has affected the stability of international financial markets, and increased the downside risk of the global economy. Furthermore, conflict between the United States and China has impacted globalization, and extreme weather, the ongoing Russo-Ukrainian War, and Europe's energy crisis will impact prices of commodities, creating uncertainty regarding global inflation. The Central Bank of Taiwan held its joint supervisors meeting on December 15, 2022, where it made the decision to raise the interest rate by 0.125 percentage points to lower expectations of domestic inflation. This will also maintain price stability and achieve the goal of sound overall economic and financial development.

The Company regularly assesses the changes in bank loan rates. It negotiates with banks to reduce interest rates, and allocate project loans to obtain financing credits with more favorable interest rates, the aim of which is to reduce the impact of interest rate fluctuations on the Company’s overall operations.

2. Foreign exchange rate

As more than 90% of the Company's revenue is denominated in US dollars and Japanese Yen, and about 40% of operating expenses as well as 60% of capital expenditure are paid in US dollars and Japanese Yen, exchange rate fluctuations in New Taiwan Dollar against the US Dollar (and Japanese Yen) will have a certain impact on the Company's financial position. The Company takes hedging actions such as disposing US dollars (Japanese Yen) and pre-selling forward foreign exchange based on the account exchange rate, and will continue to implement these measures in the future in the hope of reducing the impact of exchange rate fluctuations on the Company's profit and loss. In addition, the USD has appreciated from 27.68 to 30.71 against NTD, and the Japanese Yen has depreciated from 0.2405 to 0.2324 against NTD with respect to USD-denominated net assets held by the Company, the net profit from foreign currency exchange was NT$700,294 thousand in 2022.

3. Inflation

Major economies have continued to tighten their monetary policy since 2022. The global economy has clearly slowed as downside risk continues to increase, and it has affected export and investment momentum in Taiwan. The Central Bank estimates Taiwan's economic growth rate at 2.53% this year (2023). It is expected that the supply bottleneck will be resolved, international freight rates will decrease, and raw material prices, such as crude oil, will decrease. The domestic inflationary trend will continue to be affected by changes in international raw material prices. The forecasted inflation rate for this year (2023) is 1.88%, which is still mild compared to that in major economies and will have limited impact on the Company’s profits and losses.

• (II) Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Loans of funds to Others or Endorsement Guarantees, and Derivatives Transactions

• 141 -

• As of the beginning of 2022 to the printing date of this Annual Report, the Company has not engaged in high-risk and leveraged financial investments. Neither did the Company loan any funds or provide any endorsements/guarantees to other parties.

• The Company's derivative trading transactions are mainly hedged. The choice of the option for commodity trading is aimed at avoiding risks arising from the Company's business operations and hedging for the expected foreign exchange net position. In addition, the transaction and settlement difference contributed to the profit and loss of the transaction.

• The Company has established the Procedures for Loaning of Funds to Others, the Operating Procedures for Endorsements and Guarantees, the Procedures for Handling Derivatives Transactions, and the Procedures for Acquisition and Disposal of Assets. All processes adhere strictly to these procedures in order to keep operation and financial risks under control.

(III) Future R&D Projects and the Expected Expenditure

※ Four Domains of the R&D Plan:

1. Advanced technology

2. (1) The core technology and patents of the new-generation memory PCM (Phase Change Memory).

3. (2) The core technology and patents of the new-generation memory ReRAM.

4. (3) The core technology and patents of the 3D NAND Flash

5. Manufacturing process

(1) The manufacturing process of the 3D NAND Flash and subsequent derivative developments.

(2) The manufacturing process of the 45 nm NOR Flash and subsequent derivative developments.

3. Product

• (1) High-capacity 3D NAND Flash.

• (2) Encryption protected NOR Flash.

• (3) Ultra-low power consumption NOR Flash.

4. Quality and Testing

• (1) Development of quality certification and management processes for automobiles.

• ※ Expected Expenditure for R&D:

The estimated R&D expenditure for 2023 is approximately NT$5.6 billion. (The expenditure includes personnel costs, equipment royalty, patent rights, trademark application fee, etc.)

• (IV) Changes in Domestic and Overseas Policies and Laws That Have an Impact on the Company’s Financial and Business and the Countermeasures:

The Company has always complied with policies and laws and keeps a close eye on significant changes in policies and laws that may affect the Company’s financial position and business performance, and makes adjustments accordingly. There were no changes to policies and laws that had a material impact on the Company's financial position and business performance in 2022 and up to the date of report.

• (V) Impact of Changes in Technology and Industry to the Company's Finance and Business and the Countermeasures

Different sectors have begun to value and emphasize ESG (Environmental, Social, and Governance) and sustainable development issues in recent years, and this has accelerated the industry's participation in carbon reduction projects and eco-friendly measures. Macronix has fabs and focuses on GHG reduction items. Preliminary plans and implementation results include: (1) Increasing the percentage of green

• 142 -

electricity (2) Smart energy conservation and monitoring (3) Replacing old equipment with new ones and a year-by-year budget allocation.

Information security and intellectual property protection are important items of operational risk, and the information security concept of the new generation is: "the right people have the right access rights on the right devices for limited and secure access, which is continuously monitored and analyzed." Macronix uses digital automated management technologies to replace the manual management method, and has established a strict modernized information security management system to ensure that business operations are not interrupted and to protect intellectual property rights, effectively lowering operational risk.

In recent years, the ever-innovating technology applications, such as mobile devices and the Internet, has greatly improved convenience and efficiency for individuals and corporations but accompanied by potential threats of information security of corporations. Once a major information security incident occurs, the Company's information assets will be under internal, external, intentional, or accidental threats and damage, which could harm the confidentiality, usability, and integrity of the Company’s confidential information. In addition, it will damage the Company's competitiveness, sales and operations, and even further affect the Company’s financial results, image, and reputation.

In order to lower the probability of information security incidents, manage risks caused by incidents to an acceptable level, and thus ensure the normal operations of the Company, Macronix appointed a chief information security officer to strengthen its information security governance and information protection in accordance with the Regulations Governing Establishment of Internal Control Systems by Public Companies. Macronix also has an Information Security Committee, Iinformation Security Core t Team, and Information Security Task Force to implement its information security policy.

To block the ever-changing information security threats, Macronix has employed a variety of information security mechanisms and system architecture designs. The preventative measures include establishing appropriate safety control mechanisms for the use of computers, regulatory information devices, and network resources, and classification, labeling, and external delivery control for confidential information. In order to prevent malicious software attacks and reduce the accompanied damage, the Company has established enhancement mechanisms and systems as follows: mandating that equipment sent to the factory should undergo virus scanning to prevent malicious software from entering the Company network; strengthening firewalls and network controls to prevent computer viruses from spreading into other regions; the establishments of endpoint anti-virus and anti-hacking measures; introducing advanced solutions to detect and process malware; the establishment of integrated network security monitoring center; regular information security assessments from outside experts . Besides, the Company requires suppliers to comply with requirements of confidentiality and information security in collaboration.

With comprehensive network and computer protection measures to ensure information security, Macronix is still under the potential risks of being affected by information security threats and cyberattacks. As a result, Macronix has established the information security events reporting and handling procedures to respond to information security events with immediate action. In addition, the Company has bought information security insurance to reduce resulting damage and impact. Only with employees’ awareness of information security can the expensive and complicated management measures and tools work effectively, therefore, Macronix has launched educational training in raising the awareness of information security and protection of trade secrets, and issued monthly information security e-newsletters.

• (VI) Impact of Corporate Image Change on Risk Management and Response Measures: Not applicable.

• (VII) Expected Benefits and Potential Risks of Merger and Acquisition: Not applicable.

• (VIII) Expected Benefits, Potential Risks, and Countermeasures of Factory Expansion

The global economy was impacted by the pandemic, inflation, and geopolitics in 2022. The market adopted a wait-and-see attitude and made inventory adjustments, which caused the demand decline. In response to changes in the market situation, the Company upholds the principle of pursuing innovation and high quality as it focused its efforts on the R&D of high density 3D NOR Flash and 192-layer 3D NAND Flash products and technologies. Besides enhancing the Company's competitiveness, Macronix carried out capacity adjustment, inventory management, and monitoring of customer products and needs development. The Company has production and sales management

• 143 -

mechanisms capable of rapidly responding to potential changes in our business situation, in hopes of lowering our operational risks.

• (IX) Risks Relating to the Concentration of Purchasing or Sales and the Countermeasures

The Company's primary raw materials are silicon wafers, raw chemicals, and gases used for processing. For purposes of ensuring the recognition and trust of our customers, the Company's procurement policy complies with the principle of smooth supply chain information with stable supply. It adopts a strategy of establishing long-term and excellent collaborative relationships with suppliers and decentralized sources for purchasing. In order to avoid the impact of fluctuations in supplier capacity, we continue to improve our inventory monitoring system, increase the accuracy of demand forecasting, and ensure that the supply chain maintains sufficient inventory levels to reduce unpredictable risks.

Macronix’s main customers are all world-class, and its main sales strategy is to work closely with customers, to create long-term partnerships. The largest customers accounted for 27% and 25% of the total revenue in 2021 and 2022 respectively, while no other customer accounted for 10% and above of our revenue. Macronix has maintained a good relationship with the customers over the years, and has properly managed operational risks. The Company is also actively expanding customers that are stably growing in various fields of application, especially automotive, healthcare, industry, and data centers, to lower the over-concentration in sales and the risks of changes in demand.

• (X) The Impact of Mass Transfer or Change of Equity by Directors, Supervisors, or Shareholders Holding More than 10% of Shares on the Company, Associated Risks and Response Measures: Not applicable.

• (XI) The Impact of Change of Operating Rights on the Company, Associated Risk and Response Measures: Not applicable.

• (XII) Litigious or Non-litigious Events

T-Bridge Technology Inc. on behalf of New Ray Innovation Inc. filed a complaint regarding account payable to New Ray Innovation Inc., which Macronix refused to pay due to product defects. On January 13, 2022 Hsinchu District Court rendered a judgement in favor of Macronix and dismissed the abovecomplaint.

(XIII) Other Important Risks and Countermeasures:

Tax risks

Tax Policy: Macronix seeks to manage its tax risks in the best way, and devotes itself to information transparency and compliance. The Company also supports government tax policy to drive economic development and sustainability. Macronix’s 6 guidelines for tax management are as follows:

• (1) All operations comply with tax laws and regulations of Taiwan.

• (2) Transactions between affiliated enterprises comply with the internationally recognized pricing principles announced by the OECD, and BEPS related regulations, so that the pricing policy of related parties complies with the arm's length principle.

• (3) In response to the global trend of anti-tax evasion, avoid using countries with low tax rates in tax planning with the purpose of tax evasion.

• (4) Make information in tax reports transparent, submit the Country-by-Country Report, Master File, and Local File to the tax authority, so that tax disclosure complies with laws, regulations, and guidelines.

• (5) The Company's tax planning and decisions all take into consideration the effect of tax risks.

• (6) Establish a good interaction with the tax authority based on the principles of mutual trust and information transparency.

VII. Other Significant Events: None.

• 144 -

Chapter VIII. Special Disclosure

I. Summary of Affiliated Companies (Ended on December 31,2022)

• (I) Consolidated Business Report

• Corporate Affiliation Chart

==> picture [475 x 439] intentionally omitted <==

• 145 -

2. Basic Information of Affiliated Companies

Unit: NT$ thousands

				Unit: NT$ thousands
Company Name	Establishment Date	Address	Paid-in Capital	Primary Business or Production
Macronix America, Inc.	March,1994	680 N. McCarthy Blvd Suite 200, Milpitas, CA 95035	2,640	Sales and marketing
Macronix (BVI) Co., Ltd.	February,1997	Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110,British Virgin Islands	6,977,791	Investment holding company
Hui Ying Investment Ltd.	May,1998	20F, 4, Min-Chuan E. Road, Sec.3, Taipei, Taiwan, R.O.C	150,000	Investment
Run Hong Investment Ltd.	October,2001	19F, 4, Min-Chuan E. Road, Sec. 3, Taipei, Taiwan, R.O.C	150,000	Investment
Mxtran Inc.	August.2006	9F, 16, Li-Hsin Road, Science Park, Hsinchu,		IC design
			770,000
		Taiwan, R.O.C
Mxtran Holding (Samoa) Co., Ltd.	May,2009			Investment holding company
		Portcullis Chambers, P.O. Box 1225, Apia, Samoa	35,979
Mxtran (H.K.) Holding Co., Limited	June,2009	Rm 1702, Sino Centre 582-592 Nathan Road,		Investment holding company
			23,880
		Mongkok,HongKong
New Trend Technology Inc.	January,1999	680 N. McCarthy Blvd Suite 200, Milpitas,		IC design
			923,403
		CA95035
Macronix Europe N.V.	July,1999	Koningin Astridlaan 49 Bus 6 1780 Wemmel,		After-sales services
			2,106
		Belgium
Macronix Pte Ltd	August,2000	133 Cecil Street #05-02 Keck Seng Tower	3,291	After-sales services
		Singapore (069535)
Macronix (Hong Kong) Co., Limited.	March,2003	702-703, 7/F, Building 9, Hong Kong Science Park, 5 Science Park West Avenue, Sha Tin, N.T.	378,427	Sales and marketing
Macronix Microelectronics (Suzhou)Co.,Ltd.	September,2005	No.55, Su Hong Xi Street, Suzhou Industrial Park, SuZhou City,Jiangsu,China	296,160	development of integrated circuit system and software
Macronix (Asia) Limited	October,2004	P.O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205, Cayman Islands	19,744	After-sales services

• 3.Presumed to be in Effective Control of the Same Shareholder Information with the Affiliate: None.

4.Overall Business Scope of Affiliated Companies

The business scope of the Company and its affiliated companies include the research and development, design, manufacture, testing, sales, consultancy of integrated circuits, various semiconductor components, and their system applications, and general investment.

• 146 -

• Directors, Supervisors, and President in all Affiliated Companies:

Company Name	Directors, Supervisors, and President	Directors, Supervisors, and President	Shares Held	Shares Held
	Title	Name or Representative	Number of Shares	Percentage of Shares
Macronix America, Inc.	Chairman of the Board	C. Y. Lu	0	0%
	Director	Miin Wu	0	0%
	Director	Tom Yiu	0	0%
	President	Ya-Sheng Yang	0	0%
Macronix (BVI) Co., Ltd.	Director	Miin Wu	0	0%
Hui Ying Investment Ltd.	Director	Macronix International Co., Ltd. Representative:MiinWu	-	100%
Run Hong Investment Ltd.	Director	Macronix International Co., Ltd. Representative: Miin Wu	-	100%
Mxtran Inc.	Chairman of the Board	Miin Wu	420,000	0.55%
	Director	Macronix International Co., Ltd. Representative: Tom Yiu	69,627,323	90.43%
	Director/President	Macronix International Co., Ltd. Representative: Showen Huang	69,627,323	90.43%
	Director	Achi Capital Limited	90,000	0.12%
	Supervisor	Run Hong Investment Ltd. Representative: Paul Yeh	3,393,200	4.41%
Mxtran Holding (Samoa) Co.,Ltd.	Director	Showen Huang	0	0%
Mxtran (H.K.) Holding Co.,Limited	Director	Showen Huang	0	0%
New Trend Technology Inc.	Director	Paul Yeh	0	0%
Macronix Europe N.V.	Chairman of the Board	F. L. Ni	0	0%
	Director	Miin Wu	0	0%
	Director	C. Y. Lu	0	0%
	Director	Paul Yeh	0	0%
	Director	Jon-Ten Chung	0	0%
	President	TimothyPusey	0	0%
Macronix Pte Ltd	Director	Jon-Ten Chung	0	0%
	Director	F. L. Ni	0	0%
	Director/President	Tan Siah Cheae	0	0%
Macronix (Hong Kong) Co., Limited.	Director	Miin Wu	0	0%
	Director	C. Y. Lu	0	0%
	Director	F. L. Ni	0	0%
	Director	Paul Yeh	0	0%
	Director	Jon-Ten Chung	0	0%
	President	Hao-Wei Hsieh	0	0%
Macronix Microelectronics (Suzhou)Co.,Ltd.	Executive Director	Miin Wu	-	0%
	President	Hsieng-HungChang	-	0%
	Supervisor	Hsiu-Mei Lin	-	0%
Macronix(Asia)Limited	Director	Miin Wu	0	0%

• 147 -

6. Operational Highlights of Affiliated Companies

Unit: NT$ thousands

Company Name	Capital	Total Assets	Total Liabilities	Net Value	Operating Revenue	Operating Profit	Net Profit (Loss) (after tax)	Earnings per Share (NT$) (after tax)
Macronix America, Inc.	2,640	738,304	357,896	380,408	3,305,353	99,503	93,240	932.40
Macronix(BVI)Co., Ltd.	6,977,791	2,951,736	236	2,951,500	-	(474)	124,321	0.59
Hui YingInvestment Ltd.	150,000	164,466	150	164,316	-	(150)	19,008	NA
Run HongInvestment Ltd.	150,000	32,170	150	32,020	-	(150)	(90)	NA
Mxtran Inc.	770,000	14,668	1,880	12,788	16,897	(762)	5	0 .00
Mxtran Holding (Samoa)Co., Ltd.	35,979	1,063	-	1,063	-	-	620	0.53
Mxtran(H.K.)HoldingCo., Limited	23,880	-	-	-	-	-	617	0.10
New Trend TechnologyInc.	923,403	303,885	-	303,885	-	(10,506)	(10,529)	(0.37)
Macronix Europe N.V.	2,106	159,855	17,950	141,905	166,428	11,636	8,841	8,841
Macronix Pte Ltd	3,291	8,255	2,883	5,372	28,504	1,357	1,175	6.75
Macronix(HongKong)Co., Limited.	378,427	1,018,120	416,776	601,344	6,038,062	75,609	98,213	1.09
Macronix Microelectronics(Suzhou)Co., Ltd.	296,160	552,840	107,174	445,666	393,972	17,554	25,548	NA
Macronix (Asia) Limited	19,744	89,772	18,277	71,495	112,419	6,721	5,804	9.67

(II) Consolidated Financial Statements: please refer to page 151 of this annual report.

(III) Affiliation Report: None.

II. Private Placement Securities of the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report: None.

• 148 -

III. Subsidiaries’ Holding or Disposing the Company’s Shares in the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report

Unit: NT$ thousands; Shares; %

Name of Subsidiary	Stock Capital Collected	Fund Source	Shareholding Ratio of the Company	Date of Acquisition or Disposition	Shares and Amount Acquired	Shares and Amount Disposed of	Investment Gain (Loss)	Shareholdings and Amount Up to the Printing Date of this Annual Report	Mortgage	Endorsement Amount Made for the Subsidiary	Amount Loaned to the Subsidiary
Hui Ying Investment Ltd.	NT$150,000	Parent company	100%	2022	None	None	None	1,956,619 shares NT$69,949 (Note)	None	None	None
				This fiscal year up to the date of publication of the annual report	None	None	None		None	None	None

Note: The amount is calculated based on the closing price of the common shares at NT$ 35.75 per share on March 03, 2023.

IV. Other Necessary Supplements: None.

• V. The Events Resulting in Significant Impact to Shareholders’ Equity or Stock Prices Under Article 36(3)(ii) of Securities and Exchange Act in the Most Recent Fiscal Year and Up to the Printing Date of this Annual Report: None.

• 149 -

Macronix International Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

• 150 -

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The entities that are required to be included in the consolidated financial statements of Macronix International Co., Ltd. as of and for the year ended December 31, 2022 under the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are all the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standard 10 “Consolidated Financial Statements”. In addition, all the relevant information required to be disclosed in the consolidated financial statements have been disclosed. Hence, we do not prepare a separate set of consolidated financial statements.

Very truly yours,

Macronix International Co., Ltd.

By

Miin Wu Chairman February 14, 2023

• 151 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the Shareholders Macronix International Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Macronix International Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

• 152 -

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2022 are stated as follows:

Valuation of inventory

The Group manufactures and sells ROM products, NOR Flash, and NAND Flash, which are widely used in consumer electronic devices. As of December 31, 2022, inventory was NT$14,679,705 thousand, accounting for 17% of the total assets in the consolidated balance sheet. With the rapid changes in technology development and the improvements in manufacturing processes and skills, market demand for memory chip could change significantly and result in inventory obsolescence. Since inventory valuation and estimates of net realizable value of inventory are subject to management’s judgment, they are considered as accounting estimates with relatively high uncertainty. Therefore, valuation of inventory has been identified as a key audit matter. Refer to notes 4 (f), 5 (a), and 11 to the consolidated financial statements for the details of accounting policy, accounting judgment, key sources of estimation uncertainty and the related information about the valuation of inventory.

Our audit procedures performed in respect of the above area included the following:

1. We acknowledged and assessed the adequacy of the policy and procedures for the inventory valuation adopted by the management.

2. We obtained data on the assessment of inventory at the lower of cost or net realizable value made sampling to test the reasonableness of net realizable value by comparing inventory carrying amounts to recent selling prices; we tested the accuracy of allowance for inventory loss by comparing net realizable value with carrying amounts. We obtained the inventory aging report, and we tested the accuracy and completeness of the report by agreeing the age interval, quantity, and amount to the supporting documents of inbound inventory. We assessed the reasonableness of allowance for inventory loss by recalculating the amount in accordance with the stated valuation policy for the inventory.

3. We performed a retrospective review of inventory movements to evaluate the reasonableness of inventory obsolescence reserve policy and policy on scrapping of inventories.

Other Matter

We have also audited the parent company only financial statements of the Company as of and for the years ended December 31, 2022 and 2021 on which we have issued an unmodified opinion.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Tung Hui Yeh and Kuo Tyan Hong.

Deloitte & Touche Taipei, Taiwan Republic of China

February 14, 2023

Notice to Readers

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

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

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4, 6 and 32) Notes receivable and trade receivables, net (Notes 4, 10 and 32) Receivables from related parties, net (Notes 4, 32 and 33) Other receivables (Notes 4, 10, 27 and 32) Inventories (Notes 4, 5 and 11) Financial assets measured at amortized cost -current (Notes 4, 9 and 32) Other current assets (Note 17) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4, 7 and 32) Financial assets at fair value through other comprehensive income (FVTOCI) - non-current (Notes 4, 8 and 32) Financial assets measured at amortized cost - non-current (Notes 4, 9 and 32) Property, plant and equipment (Notes 4, 13, 18, 30, 34 and 35) Right-of-use assets (Notes 4 and 14) Intangible assets (Notes 4 and 15) Deferred tax assets (Notes 4 and 27) Other financial assets - non-current (Notes 4, 16, 32 and 34) Other non-current (Note 17) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Contract liabilities (Note 25) Notes payable and trade payables (Notes 19 and 32) Payables to related parties (Notes 32 and 33) Accrued compensation of employees and remuneration of directors (Notes 26, 32 and 33) Payables for purchases of equipment (Note 32) Other payables (Notes 20 and 32) Other payables to related parties (Notes 32 and 33) Current tax liabilities (Notes 4 and 27) Provisions - current (Notes 4 and 22) Lease liabilities - current (Notes 4 and 14) Current portion of long-term borrowings (Notes 4, 18, 30, 32 and 34) Other current liabilities (Note 21) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 4, 18, 30, 32 and 34) Deferred tax liabilities (Notes 4 and 27) Lease liabilities - non-current (Notes 4 and 14) Net defined benefit liabilities (Notes 4 and 23) Other non-current liabilities (Notes 4, 21 and 30) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT (Notes 4, 24 and 29) Share capital Ordinary shares Share capital to be cancelled Total share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Equity attributable to shareholders of the parent NON-CONTROLLING INTERESTS (Note 24) Total equity TOTAL		2022 Amount % $ 19,764,278 24 3,984,197 5 764,715 1 260,128 - 14,679,705 17 44,080 - 212,920 - 39,710,023 47 173,076 - 3,150,991 4 - - 37,982,047 45 790,618 1 125,929 - 856,877 1 769,999 1 333,147 1 44,182,684 53 $ 83,892,707 100 $ 30,886 - 2,585,539 3 2,742,156 3 3,121,948 4 999,899 1 1,589,836 2 10 - 1,390,986 2 26,283 - 97,154 - 3,683,542 4 384,991 1 16,653,230 20 11,970,314 14 755,946 1 704,168 1 1,075,577 1 123,113 - 14,629,118 17 31,282,348 37 18,558,543 22 (264) - 18,558,279 22 402,710 1 3,426,358 4 76,492 - 29,304,449 35 32,807,299 39 1,000,472 1 (159,061) - 52,609,699 63 660 - 52,610,359 63 $ 83,892,707 100		2021
				Amount % $ 18,565,221 24 5,690,688 8 961,722 1 366,048 1 13,156,387 17 - - 192,189 - 38,932,255 51 153,840 - 3,223,593 4 43,440 - 32,218,383 42 837,427 1 96,873 - 648,077 1 221,113 - 333,147 1 37,775,893 49 $ 76,708,148 100 $ 36,263 - 3,403,696 4 4,509,196 6 3,134,490 4 757,658 1 1,773,716 2 360 - 686,210 1 23,290 - 90,092 - 3,094,739 4 350,960 1 17,860,670 23 9,250,335 12 644,221 1 753,991 1 1,407,473 2 65,981 - 12,122,001 16 29,982,671 39 18,560,178 24 (410) - 18,559,768 24 399,210 1 2,271,266 3 291,361 - 24,532,500 32 27,095,127 35 829,747 1 (159,061) - 46,724,791 61 686 - 46,725,477 61 $ 76,708,148 100

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

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET OPERATING REVENUE (Notes 4, 25, 33 and 38) OPERATING COSTS (Notes 4, 11, 23, 26 and 33) GROSS PROFIT OPERATING EXPENSES (Notes 4, 23, 26 and 33) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income (Note 26) Other income (Notes 4, 8, 14, 26 and 30) Other gains and losses (Note 26) Gains on disposal of property, plant and equipment (Notes 4, 13 and 26) Finance costs (Notes 4, 26 and 30) Total non-operating income and expenses INCOME BEFORE INCOME TAX FROM CONTINUING OPERATIONS INCOME TAX EXPENSE (Notes 4 and 27) NET INCOME FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instruments at FVTOCI (Notes 24 and 32) Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations (Note 24) Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		2022 Amount % $ 43,487,454 100 24,249,635 56 19,237,819 44 1,794,296 4 2,161,518 5 5,912,844 13 9,868,658 22 9,369,161 22 128,952 - 328,072 1 675,572 2 - - (209,363) (1) 923,233 2 10,292,394 24 (1,322,619) (3) 8,969,775 21 83,155 - (230,765) (1) 356,060 1 208,450 - $ 9,178,225 21		2021
				Amount % $ 50,572,991 100 29,523,012 58 21,049,979 42 1,789,142 4 2,581,068 5 5,615,664 11 9,985,874 20 11,064,105 22 25,730 - 174,215 - (204,967) - 2,505,176 5 (236,570) - 2,263,584 5 13,327,689 27 (1,364,850) (3) 11,962,839 24 (153,365) (1) 944,505 2 (112,963) - 678,177 1 $ 12,641,016 25 (Continued)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Shareholders of the parent Non-controlling interests EARNINGS PER SHARE (Note 28) Basic Diluted		2022 Amount % $ 8,969,775 21 - - $ 8,969,775 21 $ 9,178,251 21 (26) - $ 9,178,225 21 $ 4.85 $ 4.68		2021
				Amount % $ 11,962,952 24 (113) - $ 11,962,839 24 $ 12,641,130 25 (114) - $ 12,641,016 25 $ 6.48 $ 6.25

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

(Concluded)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2021 Legal reserve Special reserve Cash dividends distributed by the Company - $1.20 per share Net income (loss) for the year ended December 31, 2021 Other comprehensive income (loss) for the year ended December 31, 2021, net of income tax Total comprehensive income (loss) for the year ended December 31, 2021 Disposal of investments in equity instruments designated as at fair value through other comprehensive income Compensation cost of restricted shares for employees Retirement of restricted shares for employees Dividends paid to subsidiaries to adjust capital surplus BALANCE AT DECEMBER 31, 2021 Legal reserve Special reserve Cash dividends distributed by the Company - $1.80 per share Net income (loss) for the year ended December 31, 2022 Other comprehensive income (loss) for the year ended December 31, 2022, net of income tax Total comprehensive income (loss) for the year ended December 31, 2022 Compensation cost of restricted shares for employees Retirement of restricted shares for employees Dividends paid to subsidiaries to adjust capital surplus BALANCE AT DECEMBER 31, 2022							Equity Attributable to Shar	Equity Attributable to Shar	eholders of the Pare	nt				Total $ 36,193,592 - - (2,227,424 ) 11,962,952 678,178 12,641,130 - 115,145 - 2,348 46,724,791 - - (3,340,758 ) 8,969,775 208,476 9,178,251 43,893 - 3,522 $ 52,609,699	Non-controlling Interests $ 800 - - - (113 ) (1) (114) - - - - 686 - - - - (26) (26) - - - $ 660	Total Equity $ 36,194,392 - - (2,227,424 ) 11,962,839 678,177 12,641,016 - 115,145 - 2,348 46,725,477 - - (3,340,758 ) 8,969,775 208,450 9,178,225 43,893 - 3,522 $ 52,610,359
			**Share Capital **	hare Capital to be Cancelled $ (1,153 ) - - - - - - - - 743 - (410 ) - - - - - - - 146 - $ (264)	Capital Surplus $ 384,772 - - - - - - - 9,994 2,096 2,348 399,210 - - - - - - (1,511 ) 1,489 3,522 $ 402,710			Retained Earnings	Unappropriated Earnings $ 15,408,584 (529,409 ) 329,834 (2,227,424 ) 11,962,952 (153,365) 11,809,587 (258,672 ) - - - 24,532,500 (1,155,092 ) 214,869 (3,340,758 ) 8,969,775 83,155 9,052,930 - - - $ 29,304,449		Other Equity	Unearned Compensation of Employees $ (150,555 ) - - - - - - - 105,151 - - (45,404 ) - - - - - - 45,404 - - $ -	Treasury Shares $ (159,061 ) - - - - - - - - - - (159,061 ) - - - - - - - - - $ (159,061)
										Exchange Differences on Translation of the Financial Statements of Foreign Operations $ (386,090 ) - - - - (112,962) (112,962) - - - - (499,052 ) - - - - 356,086 356,086 - - - $ (142,966)	Unrealized Gain (Loss) on Financial Assets at FVTOCI $ 171,026 - - - - 944,505 944,505 258,672 - - - 1,374,203 - - - - (230,765) (230,765) - - - $ 1,143,438
	S	hares (Thousands) 1,856,302 - - - - - - - - (284 ) - 1,856,018 - - - - - - - (164 ) - 1,855,854	S Ordinary Shares $ 18,563,017 - - - - - - - - (2,839 ) - 18,560,178 - - - - - - - (1,635 ) - $ 18,558,543				Legal Reserve $ 1,741,857 529,409 - - - - - - - - - 2,271,266 1,155,092 - - - - - - - - $ 3,426,358	Special Reserve $ 621,195 - (329,834 ) - - - - - - - - 291,361 - (214,869 ) - - - - - - - $ 76,492

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

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit loss reversed on trade receivables Net (gain) loss on fair value changes of financial assets at fair value through profit or loss Finance costs Interest income Dividend income Compensation cost of employee restricted shares Loss (gain) on disposal of property, plant and equipment Net loss on foreign currency exchange Gain from lease modifications Amortization of government grants deferred revenue Changes in operating assets and liabilities Trade receivables Receivables from related parties Other receivables Inventories Prepayments Other current assets Contract liabilities Notes payable and trade payables Payables to related parties Payables for compensation of employees and remuneration of directors Other payables Other payables to related parties Provisions Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Financial assets at fair value through other comprehensive income Proceeds from the disposal of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Acquisition of financial assets at fair value through profit or loss Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits	2022 $ 10,292,394 4,472,955 65,939 - (2,392) 209,363 (128,952) (159,668) 43,893 5,283 541,104 (358) (12,420) 1,654,694 236,080 (4,292) (1,523,318) - (9,528) (5,377) (811,011) (2,078,954) (12,542) (143,720) (5,211) 2,993 26,189 (248,741) 12,404,403 91,941 159,668 (247,322) (752,575) 11,656,115 - - - - (9,869,012) 173,780 (549,617) 10	2021 $ 13,327,689 4,238,607 45,625 (63) 12,280 236,570 (25,730) (124,741) 115,145 (2,566,001) 205,944 (2,213) (1,357) (2,225,842) 657,512 (71,905) (211,120) (333,147) (93,518) (55,932) 461,480 653,350 1,730,866 300,009 4,038 603 177,693 (178,365) 16,277,477 20,716 124,741 (242,011) (64,692) 16,116,231 (84,006) 95,880 (43,840) (168,645) (4,706,096) 2,418,597 - 171 (Continued)

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MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

Payments for intangible assets Decrease (increase) in other financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Payments of guarantee deposits received Repayment of leased liabilities Distribution of cash dividends Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET INCREASE 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	2022 $ (94,970) 1,045 (10,338,764) 6,357,000 (2,988,903) 26,778 (17,926) (107,686) (3,337,236) (67,973) (50,321) 1,199,057 18,565,221 $ 19,764,278	2021 $ (84,339) (50,603) (2,622,881) 3,330,000 (7,077,225) 2,094 (177,656) (111,824) (2,227,424) (6,262,035) (545,393) 6,685,922 11,879,299 $ 18,565,221

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

(Concluded)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

Macronix International Co., Ltd. (the “Company”) was incorporated in the Republic of China (ROC) on December 9, 1989 and commenced business in December 1989. The Company operates principally as a designer, manufacturer and supplier of integrated circuits (ICs) and memory chips. The Company also performs design, research and development, consultation and trade of relevant products.

The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since March 15, 1995.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors and were authorized for issue on February 14, 2023.

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

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

The initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Group’s accounting policies.

• b. The IFRSs endorsed by the FSC for application starting from 2023

New, Amended and Revised Standards and Interpretations Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”	Effective Date Announced by IASB
	January 1, 2023 (Note 1) January 1, 2023 (Note 2) January 1, 2023 (Note 3)

• Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 2: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

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• Note 3: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

• c. The IFRSs in issue but not yet endorsed and issued into effect by the FSC

New, Amended and Revised Standards and Interpretations

Effective Date Announced by IASB (Note 1)

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture” Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” January 1, 2024 (Note 2) IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - January 1, 2023 Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2024 Non-current” Amendments to IAS 1 “Non-current Liabilities with Covenants” January 1, 2024

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

• Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

• a. Statement of compliance

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

• b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and defined benefit liabilities.

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

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• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

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

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

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

• 3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 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.

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

• d. Basis of consolidation

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

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate.

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

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

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

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When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

The fair value of any investment retained in a former subsidiary at the date when control is lost is regarded as the fair value on initial recognition of financial assets at fair value through profit or loss or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

See Note 12 and Table 5 for the detailed information of subsidiaries (including the percentage of ownership and main business).

e. Foreign currencies

In preparing the financial statements of each individual group, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

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

f. Inventories

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

g. Property, plant, and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment loss.

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Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in estimates accounted for on a prospective basis.

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

• h. Intangible assets

• 1) Intangible assets acquired separately

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

• 2) Internally-generated intangible assets - research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from the development phase of an internal project is recognized if, and only if, all of the following have been demonstrated:

• a) The technical feasibility of completing the intangible asset so that it will be available for use or sale;

• b) The intention to complete the intangible asset and use or sell it;

• c) The ability to use or sell the intangible asset;

• d) How the intangible asset will generate probable future economic benefits;

• e) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

• f) The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

• 3) Derecognition of intangible assets

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

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

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

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

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

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

• j. Financial instruments

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

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

• 1) Financial assets

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

• a) Measurement category

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

• i. Financial assets at FVTPL

Financial assets is classified as at FVTPL when such financial assets is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

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Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income and interest income, respectively; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 32: Financial Instruments.

• ii. Financial assets measured at amortized cost

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

• i) The financial assets are 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 assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

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

• ii) Financial assets that have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such a financial asset.

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

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

• ii) Breach of contract, such as a default;

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

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

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

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iii. Investments in equity instruments at FVTOCI

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

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on the disposal of the equity investments; instead, they will be transferred to retained earnings.

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

• b) Impairment of financial assets

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

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

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

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

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

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

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.

• c) Derecognition of financial assets

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

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If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and any associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

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

2) Equity instruments

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

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

3) Financial liabilities

• a) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

• b) Derecognition of financial liabilities

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

k. Provisions

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

l. Revenue recognition

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

For contracts entered into with the same customer (or related parties of the customer) at or near the same time, those contracts are accounted for as a single contract if the goods or services promised in the contracts are a single performance obligation.

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• 1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of Memory products and wafer fabrication. Sales of Memory products and wafer fabrication are recognized as revenue when the goods are delivered to the customer’s specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, and has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. For Memory products and wafer fabrication, revenue is recognized when the goods are delivered to the customer’s specific location, and the transaction price received is recognized as a contract liability until the goods have been delivered to the customer.

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

2) Revenue from the rendering of services

As the Group provides rendering services, the related revenue is recognized when services are rendered. Payment for installation services is not due from the customer until the installation services are complete, and therefore, contract assets are recognized over the period in which the installation services are performed. The contract assets are reclassified to trade receivables when the installation is complete.

m. Leases

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

For a contract that contains a lease component and non-lease components, the Group allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

1) The Group as lessor

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

When the Group subleases right-of-use assets, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Group, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms. Lease modification that resulted from a negotiation with a lessee is accounted for as a new lease from the effective date of modification.

• 2) The Group as lessee

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

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

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

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. For a lease modification that is not accounted for as a separate lease, the Group accounts for the remeasurement of the lease liability by (a) decreasing the carrying amount of the right-of-use asset of lease modifications that decreased the scope of the lease, and recognizing in profit or loss any gain or loss on the partial or full termination of the lease; (b) making a corresponding adjustment to the right-of-use asset of all other lease modifications. Lease liabilities are presented on a separate line in the consolidated balance sheets.

n. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

• o. Government grants

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

Government grants related to income are recognized in other income on a systematic basis during the period when the related costs in which the government intends to compensate are recognized by the Group as expenses. Specifically, the primary condition of government grants is that the Group should purchase, construct or otherwise acquire non-current assets that are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

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

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p. Employee benefits

1) Short-term employee benefits

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

• 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

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

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

• 3) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plan except that remeasurement is recognized in profit or loss.

• 4) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognizes any related restructuring costs.

q. Share-based payment arrangements

The fair value at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options or other equity - employees’ unearned compensation. It is recognized as an expense in full at the grant date if vesting immediately.

When restricted shares for employees are issued, other equity - employees’ unearned compensation are recognized on the grant date, with a corresponding increase in capital surplus - restricted shares for employees.

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

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• r. Treasury shares

The parent company’s shares held by subsidiaries is reclassified to treasury shares from investment accounted for using equity method and recognized with the original investment cost. Cash dividends earned by subsidiaries are write-off with investment income and adjust capital surplus-treasury share transaction.

• s. Taxation

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

• 1) Current tax

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

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

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

• 2) Deferred tax

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

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carry forward and unused tax credits for purchases of machinery, equipment and technology, research and development expenditures and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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

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

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

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3) Current and deferred taxes

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The Group considers the possible impact of the recent development of the COVID-19 and its economic environment implications when making its critical accounting estimates in cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that period or in the period of the revision and future years if the revision affects both current and future years.

a. Write-down of inventory

The net realizable value of inventory is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of net realizable value was based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

b. Recognition and measurement of defined benefit plans

The net defined liabilities (assets) and the resulting defined benefit costs under the defined benefit pension plans are calculated using the projected unit credit method. Actuarial assumptions comprise the discount rates, rates of employee turnover, future salary increases, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of related expenses and the liabilities.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents Time deposits		**December 31 **	**December 31 **
		2022 $ 11 6,867,933 12,896,334 $ 19,764,278	2021 $ 10 7,048,266 11,516,945 $ 18,565,221

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7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Hybrid financial assets Foreign convertible preference shares		December 31	December 31
		2022 $ 173,076	2021 $ 153,840

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments Domestic investments Listed shares Unlisted shares Foreign investments Listed shares		December 31	December 31
		2022 $ 1,845,683 647,468 2,493,151 657,840 $ 3,150,991	2021 $ 2,067,920 614,379 2,682,299 541,294 $ 3,223,593

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

The Group sold its ordinary shares in Tower Semiconductor Ltd. at a fair value of $95,880 thousand for the years ended December 31, 2021. The related unrealized loss of financial assets at FVTOCI of $258,672 thousand under other equity was transferred to retained earnings.

The Group recognized dividend income of NT$159,668 thousand and NT$124,741 thousand for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the Group’s related investments still held amounted to NT$2,437,147 thousand and NT$2,598,293 thousand, respectively.

9. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

Current Time deposits with original maturities exceeding 1 year Non-Current Time deposits with original maturities exceeding 1 year		December	31
		2022 $ 44,080 $ -	2021 $ - $ 43,440

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The interest rate for time deposits with original maturities exceeding 1 year was 3.15% per annum as of December 31, 2022 and 2021.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Trade receivables Total amount of trade receivables measured at amortized cost Less: Allowance for impairment loss Other receivables Tax receivable Receivables from disposal of property, plant and equipment Others		**December 31 **	**December 31 **
		2022 $ 4,001,152 (16,955) $ 3,984,197 $ 192,785 - 67,343 $ 260,128	2021 $ 5,707,643 (16,955) $ 5,690,688 $ 179,499 173,565 12,984 $ 366,048

• a. Trade receivables

The average credit period for sales of goods was 60 days.

In determining the recoverability of a trade receivable, the Group evaluates each customer’s credibility and financial position and considers any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs.

The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of conditions at the reporting date. The Group estimates expected credit losses based on the number of days for which receivables are past due. As the Group’s historical credit loss experience shows significantly different loss patterns for different customer segments, the provision for losses based on past due status of receivables is not further distinguished according to different segments of the Group’s customer base.

The aging of trade receivables is as follows:

Neither past due nor impaired Past due but not impaired Within 60 days 61-120 days Over 120 days		December 31	December 31
		2022 $ 3,856,169 123,681 - 4,347 $ 3,984,197	2021 $ 5,413,261 276,675 752 - $ 5,690,688

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The above aging schedule was based on the past due days from the end of the credit term.

As of December 31, 2022 and 2021, the Group did not hold collateral for most of its receivables.

The movements of the allowance for doubtful trade receivables are as follows:

Balance at January 1 Less: Amounts reversed Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 16,955 - $ 16,955	2021 $ 17,018 (63) $ 16,955

• b. Other receivables

No allowance for impairment loss of other receivables was recognized since the other receivables of the Group were not past due and the Group assessed that there was no uncertainty of recoverability.

11. INVENTORIES

Finished goods and merchandise Work in progress Raw materials		**December 31 **	**December 31 **
		2022 $ 1,437,342 11,866,328 1,376,035 $ 14,679,705	2021 $ 1,326,783 11,064,802 764,802 $ 13,156,387

The costs of inventories recognized as cost of goods sold included inventory loss that resulted from the write-downs of inventory to net realizable value and reversal of inventory loss due to sold of part of the written-down inventory. The amounts were as follows:

Loss on inventory write-downs (reversal of inventory loss)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,292,372	2021 $ (1,548,422)

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements

As of December 31, 2022 and 2021, the Company has direct and indirect majority ownership in the following subsidiaries: Run Hong Investment Ltd. (Run Hong), Hui Ying Investment Ltd. (Hui Ying), Mxtran Inc. (Mxtran), Macronix America, Inc. (MXA), Macronix (BVI) Co., Ltd. (MXBVI), Mxtran Holding (Samoa) Co., Ltd. (Mxtran Samoa), Mxtran (H.K.) Holding Co., Limited (MxtranHK), New Trend Technology Inc. (NTTI), Macronix (Asia) Limited (MX Asia), Macronix Pte Ltd (MPL), Macronix Europe N.V. (MXE), Macronix (Hong Kong) Co., Limited (MXHK) and Macronix Microelectronics (Suzhou) Co., Ltd. (MXm).

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Investor Investee Nature of Activities The Company Run Hong Investment company The Company Hui Ying Investment company The Company and Run Hong Mxtran IC design The Company MXA Sales and marketing The Company MXBVI Investment holding company Mxtran Mxtran Samoa Investment holding company Mxtran Samoa Mxtran HK Investment holding company MXBVI NTTI IC design MXBVI MX Asia After-sales service MXBVI MPL After-sales service MXBVI MXE After-sales service MXBVI MXHK Sales and marketing MXHK MXm Development of integrated circuit system and software	% of Ownership
	**December 31 **
	2022 2021 100.00 100.00 100.00 100.00 94.84 94.84 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

On February 14, 2023, The Company’s board of directors approved to acquire the outstanding shares of Macronix (Hong Kong) Co., Limited and Macronix Pte Ltd held by MX(BVI) at book value US$ 19,756,278 as of December 31, 2022, and MX(BVI) buys-back 19,756,278 shares with par value US$1 per share and cancelled.

13. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Group

	December 31	December 31
	2022 $ 37,982,047	2021 $ 32,218,383

Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress Accumulated depreciation and impairment Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amount at December 31, 2022				Years Ended Decem	ber 31, 2022
		Balance, Beginning of Year $ 1,207,143 21,431,372 91,339,673 6,816,075 26,159 14,193 1,149,736 5,786,769 127,771,120 343,923 17,112,379 74,709,272 2,375,222 14,666 13,573 983,702 95,552,737 $ 32,218,383	Additions $ - - - - - - 506 10,097,384 $ 10,097,890 $ - 492,245 3,203,767 560,377 4,451 223 99,219 $ 4,360,282	Disposals $ - 89,257 129,639 39,476 192 - 23,688 - $ 282,252 $ - 83,905 129,551 39,420 192 - 23,686 $ 276,754	Net Exchange Differences $ 66,671 3,168 - 529 27 635 4,407 - $ 75,437 $ 37,648 1,112 - 448 18 602 3,821 $ 43,649	Reclassification Balance, End of Year $ - $ 1,273,814 1,047,399 22,392,682 2,738,042 93,948,076 1,276,321 8,053,449 900 26,894 - 14,828 96,692 1,227,653 (5,159,588) 10,724,565 $ (234) 137,661,961 $ - 381,571 - 17,521,831 205,802 77,989,290 (205,802 ) 2,690,825 - 18,943 - 14,398 - 1,063,056 $ - 99,679,914 $ 37,982,047

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Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress Accumulated depreciation and impairment Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amount at December 31, 2021				Years Ended Decem	ber 31, 2021
		Balance, Beginning of Year $ 1,224,746 25,439,896 100,853,676 4,236,751 22,633 15,045 1,188,858 5,090,704 138,072,309 353,863 20,992,618 82,255,045 1,962,791 14,037 13,990 1,017,165 106,609,509 $ 31,462,800	Additions $ - - - - - - 2,642 4,908,877 $ 4,911,519 $ - 432,550 3,162,587 433,152 4,001 378 86,929 $ 4,119,597	Disposals $ - 4,319,859 10,721,370 20,582 3,365 - 119,698 - $ 15,184,874 $ - 4,312,258 10,708,360 20,506 3,365 - 116,837 $ 15,161,326	Net Exchange Differences $ (17,603 ) (1,633 ) - (288 ) (14 ) (852 ) (3,560 ) - $ (23,950) $ (9,940 ) (531 ) - (215 ) (7 ) (795 ) (3,177) $ (14,665)	Reclassification Balance, End of Year $ - $ 1,207,143 312,968 21,431,372 1,207,367 91,339,673 2,600,194 6,816,075 6,905 26,159 - 14,193 81,494 1,149,736 (4,212,812) 5,786,769 $ (3,884) 127,771,120 $ - 343,923 - 17,112,379 - 74,709,272 - 2,375,222 - 14,666 - 13,573 (378) 983,702 $ (378) 95,552,737 $ 32,218,383

For the years ended December 31, 2022 and 2021, the Group assessed that no indication of an impairment loss was present; therefore, no impairment assessment was performed.

The carrying amount of the freehold land in the United States which was unutilized by the Group as of December 31, 2022 and 2021 was US$9,579 thousand, respectively.

The Group’s 6-inch fab ceased production in May 2021 and was disposed of in September 2021. The related gain on disposal of NT$2,505,176 thousand was recognized as gain on disposal of property, plant and equipment under non-operating income and expenses.

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Main buildings	31-40 years
Electronic equipment	11-20 years
Facility equipment	15 years
Landscape engineering	20 years
Machinery equipment	11 years
Research and development equipment	5-11 years
Transportation equipment	5 years
Leasehold improvements	6-16 years
Miscellaneous equipment	2-16 years

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 34.

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14. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts Freehold land Buildings Machinery equipment Transportation equipment Miscellaneous equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Freehold land Buildings Machinery equipment Transportation equipment Miscellaneous equipment Income from the subleasing of right-of-use assets (included in other income)		**December 31 **	**December 31 **
	2022 $ 710,350 68,433 4,638 6,697 500 $ 790,618 For the Year Ended		2021 $ 752,951 81,212 - 2,764 500 $ 837,427 December 31
		2022 $ 44,946 $ 57,274 38,678 11,817 2,905 1,999 $ 112,673 $ (4,035)	2021 $ 25,376 $ 65,972 38,015 10,050 2,973 2,000 $ 119,010 $ (4,006)

Except for the recognized depreciation, the Group did not have impairment of right-of-use assets for the years ended December 31, 2022 and 2021.

• b. Lease liabilities

Lease liabilities
Carrying amounts Current Non-current		December 31
		2022 $ 97,154 $ 704,168	2021 $ 90,092 $ 753,991

Range of discount rate for lease liabilities was as follows:

Freehold land Buildings Machinery equipment Transportation equipment Miscellaneous equipment	December 31
	2022 2021 1.22%-1.73% 1.67%-1.73% 1.03%-6.00% 1.03%-6.00% 1.17%-1.56% 1.18%-1.28% 1.03%-1.56% 1.03%-1.22% 1.22% 1.19%

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c. Material lease-in activities and terms

The Group also leased certain land and buildings for the use as plant and office in a period of one to twenty years. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Expenses relating to variable lease payments not included in the measurement of lease liabilities Total cash outflow for leases	For the Year Ended	For the Year Ended	December 31
		2022 $ 2,764 $ 156 $ 15,265 $ (141,517)	2021 $ 754 $ 207 $ 12,948 $ (144,298)

The Group leases certain office buildings which qualify as short-term leases and certain office equipment which qualifies as low-value asset leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

15. INTANGIBLE ASSETS

Balance, Beginning of Year Cost Software $ 179,067 Accumulated amortization Software 82,194 Carrying amount at December 31, 2022 $ 96,873 Balance, Beginning of Year Additions Cost Software $ 108,622 $ 84,339 Accumulated amortization Software 51,342 $ 45,625 Carrying amount at December 31, 2021 $ 57,280	Balance, Beginning of Year Cost Software $ 179,067 Accumulated amortization Software 82,194 Carrying amount at December 31, 2022 $ 96,873 Balance, Beginning of Year Additions Cost Software $ 108,622 $ 84,339 Accumulated amortization Software 51,342 $ 45,625 Carrying amount at December 31, 2021 $ 57,280				Years Ended December 31, 2022	Years Ended December 31, 2022
		Balance, Beginning of Year $ 179,067 82,194 $ 96,873			Additions Disposals Net Exchange Differences Balance, End of Year $ 94,970 $ 32,154 $ 319 $ 242,202 $ 65,939 $ 32,154 $ 294 116,273 $ 125,929 Years Ended December 31, 2021
	Balance, Beginning of Year $ 108,622 51,342 $ 57,280			Additions $ 84,339		Disposals Net Exchange Differences Reclassified Balance, End of Year $ 19,383 $ (292) $ 5,781 $ 179,067 $ 19,383 $ (278) $ 4,888 82,194 $ 96,873
				$ 45,625

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

Software

3 years

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16. OTHER FINANCIAL ASSETS

Non-current Refundable deposits Restricted time deposits (Note 34)		**December 31 **	**December 31 **
		2022 $ 562,776 207,223 $ 769,999	2021 $ 12,845 208,268 $ 221,113

17. OTHER ASSETS

Current Prepayments Others Non-current Prepayments		December 31	December 31
		2022 $ 212,249 671 $ 212,920 $ 333,147	2021 $ 192,087 102 $ 192,189 $ 333,147

The non-current prepayments were made according to the production capacity cooperation agreement signed between the Company and its suppliers; the prepayments were paid in accordance with the contract.

18. BORROWINGS

• Long term borrowings

Secured borrowings from financial institutions Unsecured borrowings from financial institutions Less: Current portion Less: Arrangement fee Less: Government loan discount Long-term borrowings Interest rate		December 31	December 31
		2022 $ 4,812,500 10,940,125 15,752,625 3,683,542 5,200 93,569 $ 11,970,314 1.13%-2.19%	2021 $ 6,737,500 5,670,625 12,408,125 3,094,739 10,000 53,051 $ 9,250,335 0.50%-1.79%

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Borrowing Type Repayment Terms Secured syndicated loan denominated in NT$ From June 2019 to February 2024 Unsecured bank borrowings denominated in NT$ From June 2020 to June 2023 Unsecured bank borrowings denominated in NT$ From August 2020 to February 2023 Unsecured bank borrowings denominated in NT$ From August 2020 to August 2023 Unsecured bank borrowings denominated in NT$ From August 2020 to August 2023 Unsecured bank borrowings denominated in NT$ From December 2020 to December 2023 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2031 Unsecured bank borrowings denominated in NT$ From December 2021 to December 2024 Unsecured bank borrowings denominated in NT$ From March 2022 to September 2024 Unsecured bank borrowings denominated in NT$ From March 2022 to March 2025 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2032 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2032 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2032 Unsecured bank borrowings denominated in NT$ From August 2022 to August 2025 Unsecured bank borrowings denominated in NT$ From August 2022 to August 2029 Less: Current portion Less: Arrangement fee Less: Government loan discount Total long-term borrowings		December 31	December 31
		2022 $ 4,812,500 125,000 300,000 187,500 140,625 500,000 1,000,000 2,300,000 600,000 1,100,000 787,000 500,000 600,000 500,000 263,000 116,000 109,000 100,000 54,000 557,000 243,000 58,000 300,000 500,000 3,683,542 5,200 93,569 $ 11,970,314	2021 $ 6,737,500 375,000 600,000 437,500 328,125 600,000 978,000 649,000 556,000 318,000 329,000 500,000 - - - - - - - - - - - - 3,094,739 10,000 53,051 $ 9,250,335

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To purchase equipment or machinery, the Group has entered into a 5-year syndicated loan agreement with 9 financial institutions including the Taiwan Cooperative Bank in January 2019 with the total amount of NT$8 billion. The Group provided notes used as refundable guarantees for syndicated loan mentioned above that will be cancelled upon termination of the guarantee.

The Ministry of Economic Affairs implemented the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” on January 1, 2019, which provided enterprises to make compliant investments with financial institutions at preferential interest rates. The Group has obtained the approval of the Ministry of Economic Affairs to qualify for the project loan and signed a loan contract with a financial institution to obtain a financing line of NT$21 billion, with a credit period of 7 to 10 years. The funds obtained are used for factory expansion, purchased machinery and equipment, buildings and operating turnover, etc. The details of government grants are set out in Note 30.

In addition, the Group’s floating borrowing rate on the above borrowing is reset every one to three months.

The loan agreement requires the maintenance of a current ratio, debt ratio, and interest coverage ratio based on the Group’s semi-annual and annual consolidated financial statements. For the year ended December 31, 2022 and 2021, the Group had met the financial ratio covenants.

The details of assets pledged as collateral for long-term loans are set in Note 34.

19. NOTES PAYABLE AND TRADE PAYABLES

Trade payables		December 31	December 31
		2022 $ 2,585,539	2021 $ 3,403,696

The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed upon credit terms.

20. OTHER PAYABLES

Payables for bonuses Payables for maintenance and repairs Payables for spare parts Payables for patents Payables for insurance Payables for pension Others		December 31	December 31
		2022 $ 362,941 254,008 112,400 98,518 87,997 74,798 599,174 $ 1,589,836	2021 $ 343,085 211,542 70,612 122,327 68,073 68,991 889,086 $ 1,773,716

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21. OTHER LIABILITIES

Current Refund liabilities Receipts under custody Temporary credits Non-current Government grants deferred revenue (Note 30) Guarantee deposits		December 31	December 31
		2022 $ 339,760 36,545 8,686 $ 384,991 $ 102,121 20,992 $ 123,113	2021 $ 307,035 36,767 7,158 $ 350,960 $ 55,226 10,755 $ 65,981

22. PROVISIONS

Current Employee benefits (a)		**December **	**31 **
		2022 $ 26,283	2021 $ 23,290

a. The provision for employee benefits represents vested long service leave entitlements accrued.

23. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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

The Group’s subsidiaries in Hong Kong, the USA, Europe, Japan, Korea, Singapore and China are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Act is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that

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should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

The amounts in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		December 31	December 31
		2022 $ 1,717,492 (1,274,760) $ 442,732	2021 $ 1,874,741 (1,021,636) $ 853,105

Movements in net defined benefit liability were as follows:

Present Value of Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2021 $ 1,898,790 $ 942,837 Service cost Current service cost 3,601 - Net interest expense 9,359 - Return on plan assets - 4,662 Recognized in profit or loss 12,960 4,662 Remeasurement Return on plan assets - 12,094 Actuarial loss - experience adjustments 53,453 - Actuarial loss - actuarial assumptions adjustments 39,519 - Recognized in other comprehensive income 92,972 12,094 Contributions from the employer - 192,024 Benefits paid (129,981) (129,981) Balance at December 31, 2021 1,874,741 1,021,636 Service cost Current service cost 2,829 - Net interest expense 9,155 - Return on plan assets - 4,974 Recognized in profit or loss 11,984 4,974 Remeasurement Return on plan assets - 83,305 Actuarial loss - experience adjustments 17,895 - Actuarial loss - actuarial assumptions adjustments (89,939) - Recognized in other comprehensive income (72,044) 83,305 Contributions from the employer - 262,034 Benefits paid (97,189) (97,189) Balance at December 31, 2022 $ 1,717,492 $ 1,274,760

Net Defined Benefit Liabilities (Assets) $ 955,953 3,601 9,359 (4,662) 8,298 (12,094) 53,453 39,519 80,878 (192,024) - 853,105 2,829 9,155 (4,974) 7,010 (83,305) 17,895 (89,939) (155,349) (262,034) - $ 442,732

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An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General and administration expenses Research and development expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 3,482 487 1,352 1,689 $ 7,010	2021 $ 4,307 528 1,552 1,911 $ 8,298

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

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

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

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

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

Discount rate Expected rate of salary increase Expected return on plan assets increase	**December 31 **
	2022 2021 1.25% 0.50% 3.00% 3.00% 1.25% 0.50%

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

Discount rate 0.50% increase 0.50% decrease Expected rate of salary increase 0.50% increase 0.50% decrease		December 31	December 31
		2022 $ (57,111) $ 59,373 $ 98,086 $ (92,390)	2021 $ (62,796) $ 66,474 $ 102,481 $ (96,601)

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2022 $ 32,018 6.9 years	2021 $ 87,610 6.9 years

The Group maintains a separate executive pension plan and the net periodic pension costs were NT$5,670 thousand and NT$5,218 thousand for the years ended December 31, 2022 and 2021, respectively.

Movements in net defined benefit liability were as follows:

	Present Value	Present Value
	of Defined
		Benefit
	Obligation
Balance at January 1, 2021	$ 475,200
Service cost
Current service cost		2,851
Net interest expense		2,367
Recognized in profit or loss		5,218
Remeasurement
Actuarial loss - experience adjustments		52,255
Actuarial loss - changes in assumptions		20,233
Recognized in other comprehensive income		72,488
Balance at December 31, 2021		552,906
Service cost
Current service cost		2,949
Net interest expense		2,721
Recognized in profit or loss		5,670
Remeasurement
Actuarial loss - experience adjustments		82,090
Actuarial loss - changes in assumptions		(9,896)
Recognized in other comprehensive income		72,194
Balance at December 31, 2022	$ 630,770

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

General and administration expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 5,670	2021 $ 5,218

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

Discount rate Expected rate of salary increase Expected return on plan assets increase	**December 31 **
	2022 2021 1.25% 0.50% - - 1.25% 0.50%

24. EQUITY

a. Share capital

Ordinary shares Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2022 6,550,000 $ 65,500,000 1,855,854 $ 18,558,543	2021 6,550,000 $ 65,500,000 1,856,018 $ 18,560,178

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

A total of 864,704 thousand shares and 650,000 thousand shares of the Company’s authorized shares were reserved for the issuance of convertible bonds and employee share options.

The change in the Company’s share capital is due to the withdrawal and cancellation of new shares that limit the rights of employees which do not meet the vested conditions.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of ordinary shares Donations Treasury share transactions May be used to offset a deficit only Changes in percentage of ownership interests in subsidiaries (2) May not be used for any purpose Employee restricted shares		December 31	December 31
		2022 $ 358,766 37 38,966 $ 397,769 $ 4,609 $ 332	2021 $ 253,624 37 35,444 $ 289,105 $ 4,609 $ 105,496

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• 1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s paid-in capital and once a year).

• 2) Such capital surplus arises from changes in capital surplus of subsidiaries accounted for by using the equity method.

c. Retained earnings and dividend policy

The Company’s Articles of Incorporation, state that, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside a legal reserve 10% of the remaining profit (until the amount of the legal reserve equals the amount of the Company’s paid-in capital), setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. The Company state the policies on the distribution of employees’ compensation and remuneration of directors state by the Company’s Articles of Incorporation refer to “Employees’ compensation and remuneration of directors” in Note 26 (h).

The Company is classified under the capital intensive industry. In accordance with the long-term financial program of the Company, the above shareholders’ dividends can be retained as undistributed earnings, and then be distributed in the future, as determined by the shareholders at the Annual General Meeting.

Distributions shall be prioritized to take the form of cash dividends. Nevertheless, it still depends on the Company’s financial, sales or operating condition. The Company’s Articles of Incorporation provide that no more than 50% of the current year’s total amount of distributable earnings can be distributed in the form of share dividends.

The appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset any deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriation of earnings for 2021 and 2020, which had been proposed by the Company’s general meeting of shareholders on May 27, 2022 and August 17, 2021, respectively. The appropriation and dividends per share were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 1,155,092 $ (214,869) $ 3,340,758 $ 1.8	2020 $ 529,409 $ (329,834) $ 2,227,424 $ 1.2

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d. Special reserve

Balance at January 1 Appropriations in respect of Treasury shares Reversals: Treasury shares reversal Reversal of the debits to other equity items Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 291,361 196 - (215,065) $ 76,492	2021 $ 621,195 - (9,979) (319,855) $ 291,361

According to the shareholding ratio, the special reserve is calculated based on the difference between the market value of the parent company’s stock holdings and the book value, and the special reserve will be partially reversed on market price.

e. Other equity items

• 1) Exchange differences on translating foreign operations

Balance at January 1 Exchange differences on translating foreign operations Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ (499,052) 356,086 $ (142,966)	2021 $ (386,090) (112,962) $ (499,052)

• 2) Unrealized valuation gain/(loss) on financial assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized gain - equity instrument Other comprehensive income recognized for the year Cumulative unrealized gain/(loss) of equity instruments transferred to retained earnings due to disposal Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,374,203 (230,765) 1,143,438 - $ 1,143,438	2021 $ 171,026 944,505 1,115,531 258,672 $ 1,374,203

3) Employee unearned benefit

In the meeting of shareholders on June 18, 2019, the shareholders approved a restricted share plan for employees. Refer to Note 29 for the information of restricted shares issued.

Balance at January 1 Share-based payment expenses recognized Adjustments for change of turnover rate Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ (45,404) 43,893 1,511 $ -	2021 $ (150,555) 115,145 (9,994) $ (45,404)

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f. Non-controlling interests

Balance at January 1 Share of loss for the year Other comprehensive income (loss) for the year Exchange difference on translating the financial statements of foreign operations Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 686 - (26) $ 660	2021 $ 800 (113) (1) $ 686

g. Treasury shares

The Company’s shares held by its subsidiaries at December 31, 2022 and 2021 were as follows:

		Number of
		Shares Held	Carrying
	Name of Subsidiary	(In Thousands)	Amount	Market Price
December	31, 2022
Hui Ying		1,957	$ 159,061	$	66,036
December	31, 2021
Hui Ying		1,957	$ 159,061	$	82,569

The Company’s shares held by subsidiaries are regarded as treasury shares; shareholder’s rights are retained, except for the rights to participate in any share issuances for cash and to vote.

25. REVENUE

• a. Segmentation of revenue from contracts with customers

Product type Flash ROM Foundry Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 29,001,475 10,670,968 3,796,517 18,494 $ 43,487,454	2021 $ 33,504,267 13,556,983 3,501,876 9,865 $ 50,572,991

• b. Contract balances

Contract liabilities (classified as current liabilities)		**December **	**31 **
		2022 $ 30,886	2021 $ 36,263

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The changes in the contract liability balances primarily result from the timing difference between the satisfaction of the performance obligations and the customer’s payment.

The Group recognized revenue from the beginning balance of contract liabilities as follows:

From the beginning balance of contract liabilities Sale of goods	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 36,092	2021 $ 89,081

26. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

a. Interest income Bank deposits b. Other income Dividend income Others c. Gain on disposal of property, plant and equipment Gain on disposal of idle assets d. Other gains and losses Net foreign exchange gains (losses) Financial assets at fair value through profit or loss Other losses	**For the Year Ended **	**For the Year Ended **	December 31
	2022 $ 128,952 **For the Year Ended **		2021 $ 25,730 December 31
	2022 $ 159,668 168,404 $ 328,072 For the Year Ended		2021 $ 124,741 49,474 $ 174,215 December 31
	2022 2021 $ - $ 2,505,176 For the Year Ended December 31
		2022 $ 700,294 - (24,722) $ 675,572	2021 $ (164,905) (12,280) (27,782) $ (204,967)

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e. Finance costs

Interest on loans Interest on lease liabilities Less: Amounts included in the cost of qualifying assets Information about capitalized interest was as follows: Capitalized interest Capitalization rate f. Depreciation and amortization An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses g. Employee benefits expense Post-employment benefits (Note 23) Defined contribution plans Defined benefit plans Share-based payments Equity-settled Other employee benefits Total employee benefits expense	For the Year Ended	For the Year Ended	For the Year Ended	December 31
	2022 $ 220,762 15,664 (27,063) $ 209,363 **For the Year Ended **			2021 $ 220,856 18,565 (2,851) $ 236,570 December 31
	2022 $ 27,063 0.99% For the Year Ended			2021 $ 2,851 1.20% December 31
	2022 2021 $ 3,688,632 $ 3,598,190 784,323 640,417 $ 4,472,955 $ 4,238,607 $ 30,503 $ 18,342 35,436 27,283 $ 65,939 $ 45,625 For the Year Ended December 31
		2022 $ 246,245 12,680 258,925 43,893 8,751,949 $ 9,054,767	2021 $ 240,792 13,516 254,308 115,145 9,161,053 $ 9,530,506 (Continued)

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An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 3,826,168 5,228,599 $ 9,054,767	2021 $ 4,069,134 5,461,372 $ 9,530,506 (Concluded)

• h. Employees’ compensation and remuneration of directors

In compliance with the Articles of Incorporation, the Company accrued employees’ compensation and remuneration of directors at the rates of 15% and no higher than 2%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. For the years ended December 31, 2022 and 2021, the estimated employees’ compensation and the remuneration of directors resolved by the board of directors on February 14, 2023 and February 25, 2022, respectively, were as follows:

Amount

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,854,831 $ 247,311	2021 $ 2,396,656 $ 319,554

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amount of employees’ compensation and remuneration of directors paid and the amount recognized in the consolidated financial statements for the years ended December 31, 2021 and 2020.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2022 and 2021 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

27. INCOME TAXES RELATING TO CONTINUING OPERATIONS

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

Current tax In respect of the current year Overseas income tax Adjustments for prior year Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,417,867 2,169 (342) (97,075) $ 1,322,619	2021 $ 693,758 1,793 12,861 656,438 $ 1,364,850

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A reconciliation of accounting loss and income tax expenses is as follows:

For the Year Ended December 31 2022 2021 Income before tax from continuing operations $ 10,292,394 $ 13,327,689 Income tax expense calculated at the statutory rate $ 2,082,928 $ 2,716,358 Non-deductible expenses in determining taxable income 10,032 7,969 Non-taxable income (32,536) (132,173) Deductible temporary differences 66,423 (1,236,665) Overseas income tax 2,169 1,793 Unrecognized investment credits (708,980) (337,368) Deferred tax in respect of the current year (97,075) - Adjustments for prior year (342) 12,861 Recognized loss carryforwards - 658,310 Realized investment losses - (242,886) Deductible tax-exemptions income credits - (83,349) Income tax expense recognized in profit or loss $ 1,322,619 $ 1,364,850 Current tax assets and liabilities December 31 2022 2021 Current tax assets Tax refund receivable $ 6,331 $ 1,072 Current tax liabilities Income tax payable $ 1,390,986 $ 686,210 Deferred tax assets and liabilities The movements of deferred tax assets and deferred tax liabilities were as follows: For the year ended December 31, 2022 Opening Balance Recognized in Profit or Loss Closing Balance Deferred tax assets Temporary differences Unrealized inventory losses $ 483,271 $ 204,740 $ 688,011 Net defined benefit liabilities 83,127 1,650 84,777 Unrealized refund liabilities 35,569 4,294 39,863 Others 46,110 (1,884) 44,226 $ 648,077 $ 208,800 $ 856,877 Deferred tax liabilities Temporary differences Depreciation $ (603,554) $ (152,383) $ (755,937) Unrealized exchange gains (40,667) 40,658 (9) $ (644,221) $ (111,725) $ (755,946)	For the Year Ended December 31	For the Year Ended December 31
		2022 2021 $ 10,292,394 $ 13,327,689 $ 2,082,928 $ 2,716,358 10,032 7,969 (32,536) (132,173) 66,423 (1,236,665) 2,169 1,793 (708,980) (337,368) (97,075) - (342) 12,861 - 658,310 - (242,886) - (83,349) $ 1,322,619 $ 1,364,850 December 31

• b. Current tax assets and liabilities

• c. Deferred tax assets and liabilities

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For the year ended December 31, 2021

Deferred tax assets Temporary differences Unrealized inventory losses Net defined benefit liabilities Unrealized refund liabilities Recognized loss carryforwards Others Deferred tax liabilities Temporary differences Depreciation Unrealized exchange gains	Opening Balance Recognized in Profit or Loss Closing Balance $ - $ 483,271 $ 483,271 - 83,127 83,127 - 35,569 35,569 658,310 (658,310) - 1,984 44,126 46,110 $ 660,294 $ (12,217) $ 648,077 $ - $ (603,554) $ (603,554) - (40,667) (40,667) $ - $ (644,221) $ (644,221)

d. Deductible temporary differences, unused loss carryforwards and unused investment credits for which no deferred assets have been recognized in the consolidated balance sheets

Loss carryforwards Expire in 2022 Expire in 2023 Expire in 2024 Expire in 2025 Expire in 2026 Expire in 2027 Expire in 2028 Expire in 2029 Expire in 2030 Expire in 2031 Expire in 2032 Investment credits Research and development expenditures Purchase of smart machines expenditures Deductible temporary differences		**December 31 **	**December 31 **
		2022 $ - 97,389 127,640 67,634 28,806 66,966 31,408 17 8,677 11,803 700 $ 441,040 $ 327,891 - $ 327,891 $ 5,517,785	2021 $ 184,390 97,389 141,421 67,634 28,806 66,966 31,408 17 8,677 11,803 - $ 638,511 $ 141,281 30,000 $ 171,281 $ 6,773,449

The unrecognized investment credits will expire in 2023.

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• e. Information about unused investment credits, unused loss carry-forwards and tax-exemptions

As of December 31, 2022, investment credits comprised of:

Law and Statutes Tax Credit Source Statute for Industrial Innovation Research and development expenditures	Remaining Creditable Amount Expiry Year $ 327,891 2023

Loss carryforwards as of December 31, 2022 comprised of:

Unused	Tax Amount	Expiry Year
$	19,478	2023
	25,528	2024
	13,527	2025
	5,761	2026
	13,393	2027
	6,282	2028
	3	2029
	1,735	2030
	2,361	2031
	140	2032
$	88,208

• f. Income tax assessments

The Company’s and Mxtran Inc.’ tax returns through 2020 and Run Hong Investment Ltd. and Hui Ying Investment Ltd. ’ tax returns through 2021 have been assessed by the tax authorities.

28. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31
		2022 $ 4.85 $ 4.68	2021 $ 6.48 $ 6.25

The income and weighted average number of ordinary shares outstanding in the computation of earnings per share from continuing operations were as follows:

Net Income for the Year

Income for the year attributable to owners of the Company	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 8,969,775	2021 $ 11,962,952

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Weighted average number of ordinary shares outstanding (in thousand shares):

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Restricted shares to employees Employees’ compensation or bonus issue to employees Weighted average number of ordinary shares in computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 1,850,115 3,820 63,490 1,917,425	2021 1,845,347 7,704 60,181 1,913,232

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

29. SHARE-BASED PAYMENT ARRANGEMENTS

Restricted share plan for employees

Information on share plan for employees were as follows:

		Board of
		Directors
		Approved			Issued
Approved	Grant Shares	Grant Shares			Shares
Date	(Thousand)	(Thousand)	Grant Date	Issued Date	(Thousand)	Fair	Value
2019/06/18	35,294	16,815	2019/10/21	2020/06/16	16,400	$	32.55

To meet the vesting conditions, an employee has to meet performance and other conditions over the vesting period listed as follows:

• a. If an employee remains employed by the Company for one year after the grant date; and has a current year’s performance rating of A0 or A1, 40% of the restricted shares will be vested;

• b. If an employee remains employed by the Company for two years after the grant date; and has a current year’s performance rating of A0 or A1, 30% of the restricted shares will be vested;

• c. If an employee remains employed by the Company for three years after grant date; and has a current year’s performance rating of A0 or A1, 30% of the restricted shares will be vested.

In addition to the vesting conditions, the limitations are as follows:

• a. Employees, except for inheritance, should not sell, transfer, pledge, donate or in any other way dispose of the shares.

• b. The shares should be held in stock trust.

• c. Except for the above two paragraphs, the other rights of the restricted share plan for employees, which include, but are not limited to, dividends, bonuses, the distribution rights of the legal reserve and capital

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surplus, share options of cash capital voting rights of shareholders, etc., are the same as the Group’s issued ordinary shares.

• d. The dividends of restricted share plan for employees are not restricted by existing conditions.

• e. When a new share is returned in cash due to the Company’s capital reduction, the refund of the vested capital loss shall be under custodian trust. In accordance with the issuance method, such capital and shares shall be granted if the vesting conditions for new restricted employee shares are met. The vested shares are granted to employees without interests; if the vested conditions are not met, such cash will be recovered by the Company.

When employees do not reach the vesting conditions of restricted share plan for employees during the year, the Company will recover and cancel the shares.

Information on restricted share plan for employees was as follows:

Balance at January 1 Vested Forfeited (Note) Balance at December 31	Number of Shares (In Thousands)	Number of Shares (In Thousands)	Number of Shares (In Thousands)
	For the Year Ended December 31
		2022 4,826 (4,662) (149) 15	2021 9,836 (4,800) (210) 4,826

Note: For the years ended December 31, 2022, the forfeited shares include 26 thousand shares, which will be cancelled, and 123 thousand shares, which were already cancelled; for the years ended December 31, 2021, the forfeited shares include 41 thousand shares, which will be cancelled, and 169 thousand shares, which were already cancelled.

For the years ended December 31, 2022 and 2021, the compensation cost recognized was NT$43,893 thousand and NT$115,145 thousand, respectively.

30. GOVERNMENT GRANTS

As of December 31, 2022, the Company obtained a government preferential interest rate loan of $7,787,000 thousand from the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan”. The loan will be repaid on an average monthly basis after the date of expiry. At the time of the borrowing, the fair value of the borrowing was estimated based on the market interest rate. The difference between the amount obtained and the fair value of the loan is $115,898 thousand, which is regarded as a government low interest loan and recognized as deferred income. For the year ended December 31, 2022 and 2021, the Company recognized other income of $12,420 thousand and $1,357 thousand, respectively. For the year ended December 31, 2022 and 2021, the interest expense of the loan was $18,797 thousand and $3,532 thousand, respectively.

31. CAPITAL MANAGEMENT

The Group manages its capital to ensure that the Group will be able to operate under the premises of going concerns and growth while maximizing the return to shareholders through the optimization of the debt and equity balance.

The Group’s strategy for managing the capital structure is to lay out the plan of product development and expand the market share considering the growth and the magnitude of industry and further developing an

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integral plan founded on the required capacity, capital outlay, and magnitude of assets in long-term development. Ultimately, considering the risk factors such as the fluctuation of the industry cycle and the life cycle of products, the Group determines the optimal capital structure by estimating the profitability of products, operating profit ratio, and cash flow based on the competitiveness of products.

The management of the Group periodically examines the capital structure and contemplates on the potential costs and risks involved while exerting different financial tools. In general, the Group implements prudent strategy of risk management.

32. FINANCIAL INSTRUMENTS

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

The management considers that the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values or their fair values cannot be reliably measured.

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

• 1) Fair value hierarchy

December 31, 2022 Financial assets at FVTPL Foreign convertible preference shares Financial assets at FVTOCI Equity securities Securities listed in the ROC Securities listed in other countries Securities unlisted December 31, 2021 Financial assets at FVTPL Foreign convertible preference shares Financial assets at FVTOCI Equity securities Securities listed in the ROC Securities listed in other countries Securities unlisted	Level 1 $ - $ 1,845,683 657,840 - $ 2,503,523 Level 1 $ - $ 2,067,920 541,294 - $ 2,609,214	Level 2 $ - $ - - - $ - Level 2 $ - $ - - - $ -	Level 3 $ 173,076 $ - - 647,468 $ 647,468 Level 3 $ 153,840 $ - - 614,379 $ 614,379	Total $ 173,076 $ 1,845,683 657,840 647,468 $ 3,150,991 Total $ 153,840 $ 2,067,920 541,294 614,379 $ 3,223,593

There were no transfers between Level 1 and Level 2 in the current and prior years.

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• 2) Reconciliation of Level 3 fair value measurements of financial assets

For the Year Ended December 31, 2022

Financial Assets Financial Assets at FVTPL - Foreign Convertible Preference Shares Financial Assets at FVTOCI - Equity Instruments Balance at January 1 $ 153,840 $ 614,379 Total gain recognized in profit or loss 2,392 - Total gain recognized in other comprehensive income (unrealized gain (loss) on financial assets at FVTOCI) - 33,089 Effects of foreign currency exchange differences 16,844 - Balance at December 31 $ 173,076 $ 647,468 For the Year Ended December 31, 2021 Financial Assets Financial Assets at FVTPL - Foreign Convertible Preference Shares Financial Assets at FVTOCI - Equity Instruments Balance at January 1 $ - $ 420,699 Additions 168,645 84,006 Total loss recognized in profit or loss (12,280) - Total gain recognized in other comprehensive income (unrealized gain (loss) on financial assets at FVTOCI) - 109,674 Effects of foreign currency exchange differences (2,525) - Balance at December 31 $ 153,840 $ 614,379

Total $ 768,219 2,392 33,089 16,844 $ 820,544 Total $ 420,699 252,651 (12,280) 109,674 (2,525) $ 768,219

• 3) Valuation used in Level 3 fair value measurement

The fair values of equity securities listed in the ROC and other countries and foreign convertible preference shares was arrived at using either the asset-based approach or based on the multiplier evaluated in the active market by the market approach and adjustments of liquidity.

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• c. Categories of financial instruments

Financial assets Measured at amortized costs (1) Measured at FVTPL Measured at FVTOCI Financial liabilities Measured at amortized cost (2)	December 31
	2022 2021 $ 25,350,532 $ 25,668,734 173,076 153,840 3,150,991 3,223,593 23,184,701 22,411,418

• 1) The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, trade receivables (including receivables from related parties), other receivables and other financial assets.

• 2) The balances included financial liabilities measured at amortized cost, which comprise, notes payable and trade payables (including payables to related parties), other payables (including other payables to related parties), payable for purchases of equipment, guarantee deposits and long-term loans (including current portion).

• d. Financial risk management objectives and policies

The Group manages its exposure to risks relating to the operations through market risk, credit risk, and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.

The plans for material treasury activities are reviewed by management in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Group must comply with certain treasury procedures that provide guiding principles for overall financial risk management.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below), interest rates (see (b) below), and other price risk (see (c) below).

• a) Foreign currency risk

The Group had foreign currency sales and purchases, which exposed the Group to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts.

Sensitivity analysis

The Group was mainly exposed to the USD and JPY.

The sensitivity analysis of foreign currency risk focuses mainly on exchange rates for transactions in currencies other than the entity’s functional currency (i.e. foreign currencies) which are recognized at the rates of exchange prevailing at the end of each reporting period.

The following table details the Group’s sensitivity to a 3% and 10% increase in the New Taiwan dollars (i.e. the functional currency) against the USD and JPY, respectively. The sensitivity

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rates used are 3% and 10% when reporting foreign currency risk internally to key management personnel.

Pre-tax profit decrease (increase)		USD Impact For the Year Ended December 31 2022 2021 $ 107,946 $ 113,995		JPY Impact	JPY Impact
				For the Year Ended December 31
		2022 $ 107,946		2022 $ (5,643)	2021 $ 1,079

b) Interest rate risk

The Group is exposed to interest rate risk from outstanding bank loans. Interest rates of the Group’s long-term bank loans are floating, and changes in interest rates would affect the future cash flows but not the fair value.

The sensitivity analysis of interest is performed based on the financial liabilities exposed to cash flow interest rate risk at the end of each reporting period.

If interest rates had been 50 basis points higher/lower, the Group’s pre-tax loss for the years ended December 31, 2022 and 2021 would decrease/increase by NT$78,269 thousand and NT$61,725 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through its investments in equity securities. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments.

Sensitivity analysis

A sensitivity analysis of equity prices is performed based on the fair values of equity investments at the end of each reporting period.

If equity prices had been 10% higher/lower, equity for the years ended December 31, 2022 and 2021 would have increase/decrease by NT$315,099 thousand and NT$322,359 thousand, respectively, as a result of the changes in fair value of available-for-sale investments.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s exposure to credit risk mainly arises from trade receivables - operating, bank deposits, and other financial instruments. Credit risk is managed separately for business related and financial related exposures.

Business related credit risk

In order to maintain the credit quality of trade receivables, the Group has established procedures to monitor and limit exposure to credit risk on trade receivables.

Credit evaluation is performed in the consideration of the relevant factors, such as financial condition, external and internal credit scoring, historical experience, and economic conditions, which may affect the customer’s paying ability. The Group holds some of the credit enhancements such as prepayments and collateral to mitigate its credit risks.

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Trade receivables consisted of a large number of customers, spread across diverse industries and geographical areas.

As of December 31, 2022 and 2021, the Group’s ten largest customers accounted for 37% and 41% of its total trade receivables (including receivables from related parties), respectively. The Group believed that the concentration of credit risk is relatively insignificant for the remaining trade receivables.

Financial credit risk

The Group’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Corporate Treasury function. The Group only deals with creditworthy counterparties and banks so that no significant credit risk was identified.

3) Liquidity risk

The objective of liquidity risk management is to ensure the Group has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual and undiscounted payments, including principal and estimated interest.

December 31, 2022

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 11,039,388 Lease liabilities 110,807 Interest bearing 3,975,985 $ 15,126,180	1-3 Years $ - 171,800 6,965,862 $ 7,137,662	3-5 Years $ - 129,344 3,635,747 $ 3,765,091	5+ Years $ - 469,412 1,838,682 $ 2,308,094	Total $ 11,039,388 881,363 16,416,276
				$ 28,337,027

Additional information about the maturity analysis for lease liabilities:

Less than 1 Year 1-5 Years Lease liabilities $ 110,807 $ 301,144 December 31, 2021 On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 13,579,116 Lease liabilities 105,175 Interest bearing 3,272,506 $ 16,956,797	5-10 Years $ 311,659 1-3 Years $ - 176,860 7,076,478 $ 7,253,338	10-15 Years $ 139,055 3-5 Years $ - 140,834 1,371,007 $ 1,511,841	$	15-20 Years $ 18,698 5+ Years - 512,042 1,036,924 1,548,966	20+ Years $ - Total $ 13,579,116 934,911 12,756,915
			$		$ 27,270,942

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 Year $ 105,175	1-5 Years $ 317,694	5-10 Years $ 320,221	10-15 Years $ 185,202	15-20 Years $ 6,619	20+ Years $ -

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The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates were to differ from those estimates of interest rates determined at the end of the reporting period.

33. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed below.

• a. Related parties and their relationships associated with the Company:

Related Parties MegaChips Corporation (MegaChips) Ardentec Corporation (Ardentec) Macronix Education Foundation (MXIC Foundation) NCKUEE Alumni Foundation (NCKUEE Foundation) Wolley Inc. (Wolley)	Relationship with the Company
	Key management personnel The Group is its major management authority Others Others Others

• b. Operating revenues

Line Items Related Parties Categories/Name Sales Key management personnel MegaChips	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 10,739,770	2021 $ 13,704,352

Sales prices for the related parties were not comparable to those for external customers as the Group was the sole provider of these customers. The sales terms for the related parties was 30 days.

• c. Purchases

Related Parties Categories/Name Key management personnel MegaChips	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 3,234,286	2021 $ 5,895,828

Materials purchased from related parties were for manufacturing process. The payment term was 30 days after monthly closing and after acceptance of materials.

• d. Receivables from related parties

Line Items Related Parties Categories/Name Receivables from related Key management personnel parties, net MegaChips		December 31	December 31
		2022 $ 764,715	2021 $ 961,722

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2022 and 2021, no impairment loss was recognized for trade receivables from related parties.

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e. Payables to related parties

Line Items Related Parties Categories/Name Payables to related parties Key management personnel MegaChips The Group is its major management authority Other payables to related Others parties NCKUEE Foundation Other		December 31	December 31
		2022 $ 2,628,765 113,391 $ 2,742,156 $ - 10 $ 10	2021 $ 4,388,398 120,798 $ 4,509,196 $ 300 60 $ 360

The outstanding trade payables from related parties are unsecured and will be settled in cash.

• f. Other transactions with related parties

Line Items Related Parties Categories/Name Manufacturing expenses The Group is its major management authority Ardentec Operating expenses Others MXIC Foundation Wolley Other	For the Year Ended 2022 $ 412,104 $ 21,158 12,076 - $ 33,234	For the Year Ended 2022 $ 412,104 $ 21,158 12,076 - $ 33,234	December 31
		2022 $ 412,104 $ 21,158 12,076 - $ 33,234	2021 $ 387,057 $ 21,628 - 300 $ 21,928

The manufacturing expenses of related parties were comparable to those with other vendors. The payment term was 75 days after monthly closing.

• g. Compensation of key management personnel

Short-term benefits Post-employment benefits Share-based payments Other long-term employee benefits	**For the Year Ended **	**For the Year Ended **	December 31
		2022 $ 730,936 5,670 7,071 (5) $ 743,672	2021 $ 905,782 5,218 18,545 (11) $ 929,534

The remuneration of key executives was determined by the remuneration committee based on the performance of individuals and market trends.

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34. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings, the tariff of imported raw materials guarantees, natural gas agreements, and land lease agreements:

Property, plant and equipment, net Pledge deposits (classified as other financial assets - non-current)		December 31	December 31
		2022 $ 8,275,831 207,223 $ 8,483,054	2021 $ 9,758,877 208,268 $ 9,967,145

35. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of December 31, 2022 and 2021 were as follows:

• a. As of December 31, 2022 and 2021, unused letters of credit amounted to approximately NT$1,045,461 thousand and NT$395,425 thousand, respectively.

• b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment		December 31	December 31
		2022 $ 8,623,775	2021 $ 11,312,421

• c. As a contribution to society, the Company’s board of directors passed a resolution to donate to National Cheng Kung University to establish the “School of Computing” in order to cultivate cross domain innovative talents with dual expertise “specific discipline” and “computing”, and to fulfill the Company’s social responsibilities with a donation amount of $100,000 thousand per year for the next ten years. As of December 31, 2022, the Company has made a donation of $300,000 thousand to National Cheng Kung University.

• d. On October 26, 2021, the board of directors of the Company approved the continued participation in the joint development plan of IBM “Phase Change Memory” and obtain the authorization of specific analog artificial intelligence technology. The period is from January 2022 to January 2025. The two parties jointly bear the related technology development fees, and the unrecognized contract amount is US$14,000 thousand.

• e. The Company signed a long-term purchase contract with supplier A and supplier B. According to the contract, the Company shall prepay a certain amount of money as a guarantee, and these suppliers shall supply the Company according to the quantity and price agreed in the contract. As of December 31, 2022, the Company’s prepayments and deposits for supplier A and supplier B were US$11,994 thousand and $549,580 thousand, respectively, and the unpaid contract amounts were US$31,719 thousand and US$87,120 thousand, respectively.

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36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2022

Foreign Currencies Exchange (In Thousands) Rate Financial assets Monetary items JPY $ 12,242,769 0.2324 USD 199,077 30.71 Financial liabilities Monetary items JPY 12,485,583 0.2324 USD 81,910 30.71 December 31, 2021 Foreign Currencies Exchange (In Thousands) Rate Financial assets Monetary items JPY $ 18,356,915 0.2405 USD 200,501 27.68 Financial liabilities Monetary items JPY 18,312,040 0.2405 USD 63,224 27.68	Carrying Amount $ 2,845,219 6,113,660
	$ 8,958,879
	$ 2,901,650 2,515,454
	$ 5,417,104
	Carrying Amount $ 4,414,838 5,549,865
	$ 9,964,703
	$ 4,404,046 1,750,043
	$ 6,154,089

For the years ended December 31, 2022 and 2021, realized and unrealized net foreign exchange gains (losses) were NT$700,294 thousand and NT$(164,905) thousand, respectively. It is impractical to disclose net foreign exchange losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the Group.

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37. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions:

• 1) Financing provided to others: None

• 2) Endorsements/guarantees provided: None

• 3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Table 1 (attached)

• 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None

• 5) Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in capital: None

• 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 2 (attached)

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 3 (attached)

• 9) Trading in derivative instruments: None

• 10) Intercompany relationships and significant intercompany transactions: Table 4 (attached)

• b. Information on investees: Table 5 (attached)

• c. Information on investments in mainland China:

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gains or losses, carrying amount of the investment at the end of the period, repatriation of investment gains or losses, and limit on the amount of investment in the mainland China area: Table 6 (attached)

• 2) Any of the significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses: Table 4 (attached)

• d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder: None

38. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance emphasizes on the types of goods or services delivered or provided. Considering the nature of the product and the process of manufacture, the management integrated those

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divisions of similar operation functions into one operation segment. The reporting segments of the Group were as follows:

Memory products and wafer fabrication

IC design

There was no material difference between the accounting policies of the reportable segment and those described in Note 4.

a. Segment revenues and results

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

Memory products and wafer fabrication IC design Total Memory products and wafer fabrication IC design Total Interest income Other income Other gains and losses Gains on disposal of property, plant and equipment Finance costs Income before tax (continuing operations)	Segment Net Operating Revenue	Segment Net Operating Revenue	Segment Net Operating Revenue
	For the Year Ended December 31
		2022 2021 $ 43,475,657 $ 50,569,261 11,797 3,730 $ 43,487,454 $ 50,572,991 Segment Income (Loss) from Operations and Net Income
	For the Year Ended December 31
		2022 $ 9,375,023 (5,862) 9,369,161 128,952 328,072 675,572 - (209,363) $ 10,292,394	2021 $ 11,075,249 (11,144) 11,064,105 25,730 174,215 (204,967) 2,505,176 (236,570) $ 13,327,689

b. Segment total assets and liabilities

Segment assets Memory products and wafer fabrication IC design Total segment assets Uncollected assets Consolidated total assets		December 31	December 31
		2022 $ 82,251,162 14,668 82,265,830 1,626,877 $ 83,892,707	2021 $ 75,823,994 14,963 75,838,957 869,191 $ 76,708,148 (Continued)

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Segment liabilities Memory products and wafer fabrication IC design Total segment liabilities Uncollected liabilities Consolidated total liabilities		**December 31 **	**December 31 **
		2022 $ 13,479,680 1,880 13,481,560 17,800,788 $ 31,282,348	2021 $ 16,305,498 1,668 16,307,166 13,675,505 $ 29,982,671 (Concluded)

For the purpose of monitoring segment performance and allocating resources between segments:

• 1) All assets were allocated to reportable segments other than interests in associates accounted for using the equity method, other financial assets, and current and deferred tax assets. Assets used jointly by reportable segments were allocated on the basis of the revenue earned by individual reportable segments; and

• 2) All liabilities were allocated to reportable segments other than borrowings and other financial liabilities. Liabilities for which reportable segments are jointly liable were allocated in proportion to segment assets.

• c. Geographical information

The Group operates in two principal geographical areas - Taiwan and China.

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

Taiwan China Others		Revenue from External Customers	Revenue from External Customers		Non-current Assets	Non-current Assets
		Year Ended December 31			December 31
		2022 $ 34,325,823 6,044,009 3,117,622 $ 43,487,454	2021 $ 38,520,916 9,631,521 2,420,554 $ 50,572,991		2022 $ 38,696,603 181,841 353,297 $ 39,231,741	2021 $ 32,972,749 184,487 328,594 $ 33,485,830

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

• d. Information about major customers

Single customers who contributed 10% or more to the Group’s revenue were as follows:

Customer A	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 10,739,770	2021 $ 13,704,352

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TABLE 1

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

MARKETABLE SECURITIES HELD DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2022	December 31, 2022		Shares as Collateral
				Shares/Units (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
The Company MXBVI Hui Ying Run Hong	Shares Ardentec Corporation United Industrial Gases Co., Ltd. Zowie Technology Co., Ltd. Shares Chipbond Technology Corporation Tower Semiconductor Ltd. Amphastar Pharmaceuticals, Inc. Foreign Convertible Preference Shares Kneron Holding Corporation Wolley Inc. Shares Macronix International Co., Ltd. Raio Technology Co., Ltd. Genovior Biotech Corporation Shares Genovior Biotech Corporation	The Company serves as member of its board of directors None None None None None None Associate (Note) The Company None None None	Financial assets at FVTOCI - non current ” ” Financial assets at FVTOCI - non current ” ” Financial assets at FVTPL - non current ” Financial assets at FVTOCI - non current ” ” Financial assets at FVTOCI - non current	35,951,871 6,671,877 20,426 1,088,319 464,000 49,116 566,711 2,400,000 1,956,619 1,247,288 6,270,000 4,500,000	$ 1,783,213 558,236 - 62,470 615,576 42,264 88,339 84,737 66,036 32,228 32,604 23,400	7.33 3.06 0.07 0.15 0.42 0.10 0.92 18.18 0.11 10.03 3.98 2.86	$ 1,783,213 558,236 - 62,470 615,576 42,264 88,339 84,737 66,036 32,228 32,604 23,400	None None None None None None None None None None None None

Note: The Company has the ability to participate in the decision-making of the company’s financial and operating policies and has significant influence on the company.

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TABLE 2

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Term	Ending Balance	% to Total
The Company MXHK MXA	MegaChips MXHK MXA MegaChips The Company The Company	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary	Sales Sales Sales Purchase Purchase Purchase	$ 10,739,770 5,452,475 2,733,475 3,234,286 US$ 187,990 US$ 92,560	25 13 6 31 100 100	30 days after monthly closing 45 days after monthly closing Net 60 days 30 days after monthly closing and after acceptance of materials 45 days after monthly closing Net 60 days	Note 33 Note 33 Note 33 Note 33 No material difference No material difference	Note 33 Note 33 Note 33 Note 33 No material difference No material difference	$ 764,715 260,898 214,742 2,628,765 US$ 8,496 US$ 6,993	17 6 5 49 100 100	- - - - - -

• 215 -

TABLE 3

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	**Action Taken **
The Company	MegaChips MXHK MXA	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary	$ 764,715 260,898 214,742	12.44 times 6.19 times 10.11 times	$ - - -	- - -	$ 701,677 thousand 178,027 thousand 152,587 thousand	$ - - -

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TABLE 4

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Counterparty	Relationship (Note 1)			Transaction Details
			Financial Statement Accounts	Amount	Payment Terms	% to Total Revenues or Assets
The Company	MXHK	1	Sales	$ 5,452,475	Note 2	13
			Net receivable from relatedparties	260,898	-	-
	MXE	1	Operatingexpenses	167,322	-	-
			Otherpayables to relatedparties	54,327	-	-
	MXA	1	Sales	2,733,475	Note 2	6
			Net receivable from relatedparties	214,742	-	-
			Operatingexpenses	189,869	-	-
			Otherpayables to relatedparties	9,986	-	-
	Mxtran	1	Sales	9,042	Note 2	-
			Net receivable from relatedparties	344	-	-
			Manufacturingcosts	4,400	-	-
			IT service revenue	349	-	-
			Rental revenue	435	Note3	-
	MX Asia	1	Operatingexpenses	112,602	-	-
			Otherpayables to relatedparties	21,093	-	-
MXHK	MXm	3	Operating expenses	387,614	-	1

Note 1: The transactions from the parent company to the subsidiary are denoted as 1.

The transactions from the subsidiary to the parent company are denoted as 2.

The transactions between two subsidiaries are denoted as 3.

Note 2: The sales price refers to the agreed upon product price for the end customer.

Note 3: The Company leased office space to related parties and collected rental revenue according to the floor space per month.

Note 4: The transaction terms with related parties were 30 to 60 days after monthly closing and were similar to those with third parties.

• 217 -

TABLE 5

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	**Balance **	as of December 31, 2022	as of December 31, 2022	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2022	December 31, 2021	Shares	%	Carrying Amount
The Company MXBVI Run Hong Mxtran Mxtran Samoa	MXA MXBVI Hui Ying Run Hong Mxtran NTTI MXE MPL MXHK MX Asia Mxtran Mxtran Samoa Mxtran HK	San Jose, California, USA. Tortola, British Virgin Islands Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan San Jose, California, USA. Belgium Singapore Hong Kong Cayman Island Hsinchu, Taiwan Samoa Hong Kong	Sales and marketing Investment holding company Investment Investment IC design IC design After-sales service After-sales service Sales and marketing After-sales service IC design Investment holding company Investment holding company	$ 2,640 7,348,057 500,000 1,014,432 755,287 923,403 2,106 3,291 378,427 19,744 40,318 35,979 23,880	$ 2,640 7,348,057 500,000 1,014,432 755,287 911,049 2,106 3,291 378,427 23,035 40,318 35,979 23,880	100,000 212,048,000 - - 69,627,323 28,250,000 1,000 174,000 89,700,000 600,000 3,393,200 1,170,000 6,152,000	100.00 100.00 100.00 100.00 90.43 100.00 100.00 100.00 100.00 100.00 4.41 100.00 100.00	$ 356,166 2,948,991 98,280 32,020 11,564 303,885 141,906 5,372 601,344 71,495 564 1,063 -	$ 93,240 124,321 19,008 (90 ) 5 (10,529 ) 8,841 1,175 98,213 5,804 5 620 617	$ 93,240 124,281 15,486 (90 ) - Note Note Note Note Note Note Note Note	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note: Under relevant regulations, no disclosure of investment gain (loss) is needed.

• 218 -

TABLE 6

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARY

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2022	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2022	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2022	Net Income (Loss) of the Investee	% Ownership for Direct or Indirect Investment	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2022	Accumulated Repatriation of Investment Income as of December 31, 2022
							Outward	Inward
MXm	Development of integrated system and software	circuit	$ 296,160	MXHK (Note 2)		$ 296,160	$ -	$ -	$ 296,160	$ 25,548	100	$ 25,548	$ 445,677	$ -
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2022		Investment Amount Authorized by the Investment Commission, MOEA				Upper Limit on the Amounts of Investment Stipulated by Investment Commission, MOEA
$ 296,160		$ 296,160				$ 31,565,819

Note 1: The amount was recognized based on the audited financial statements of the investee company.

Note 2: The Company invested in a company located in mainland China indirectly through the existing company in a third country.

• 219 -

Macronix International Co., Ltd.

Parent Company Only Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

• 220 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the Shareholders Macronix International Co., Ltd.

Opinion

We have audited the accompanying financial statements of Macronix International Co., Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2022 and 2021, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31, 2022 are stated as follows:

Valuation of inventory

The Company manufactures and sells ROM products, NOR Flash, and NAND Flash, which are widely used in consumer electronic devices. As of December 31, 2022, inventory was NT$14,662,778 thousand, accounting for 18% of the total assets. With the rapid changes in technology development and the improvements in manufacturing processes and skills, market demand for memory chip could change significantly and result in inventory obsolescence. Since inventory valuation and estimates of net realizable value of inventory are subject to management’s

• 221 -

judgment, they are considered as accounting estimates with relatively high uncertainty. Therefore, valuation of inventory has been identified as a key audit matter. Refer to Notes 4(e), 5(a) and 9 to the financial statements for the details of accounting policy, accounting judgment, key sources of estimation uncertainty and the related information about the valuation of inventory.

Our audit procedures performed in respect of the above area included the following:

1. We acknowledged and assessed the adequacy of the policy and procedures for the inventory valuation adopted by the management.

2. We obtained data on the assessment of inventory at the lower of cost or net realizable value made sampling to test the reasonableness of net realizable value by comparing inventory carrying amounts to recent selling prices; we tested the reasonableness of allowance for inventory loss by comparing net realizable value with carrying amounts. We obtained the inventory aging report, and we tested the accuracy and completeness of the report by agreeing the age interval, quantity and amount to the supporting documents of inbound inventory. We assessed the reasonableness of allowance for inventory loss by recalculating the amount in accordance with the stated valuation policy for the inventory.

3. We performed a retrospective review of inventory movements to evaluate the reasonableness of inventory obsolescence reserve policy and policy on scrapping of inventories.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

• 222 -

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

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

• 223 -

The engagement partners on the audit resulting in this independent auditors’ report are Tung Hui Yeh and Kuo Tyan Hong.

Deloitte & Touche Taipei, Taiwan Republic of China

February 14, 2023

Notice to Readers

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

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

• 224 -

MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4, 6 and 30) Notes receivable and trade receivables, net (Notes 4, 8 and 30) Receivables from related parties, net (Notes 4, 30 and 31) Other receivables (Notes 4, 8, 25, 30 and 31) Inventories (Notes 4, 5 and 9) Other current assets (Note 15) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (FVTOCI) - non-current (Notes 4, 7 and 30) Investments accounted for using equity method (Notes 4 and 10) Property, plant and equipment (Notes 4, 11, 16, 28, 32 and 33) Right-of use assets(Notes 4 and 12) Intangible assets (Notes 4 and 13) Deferred tax assets (Notes 4 and 25) Other financial assets - non-current (Notes 4, 14, 30 and 32) Other non-current assets (Note 15) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Contract liabilities (Note 23) Notes payable and trade payables (Notes 17 and 30) Payables to related parties (Notes 30 and 31) Accrued compensation of employees and remuneration of directors (Notes 24, 30 and 31) Payables for purchases of equipment (Note 30) Other payables (Notes 18 and 30) Other payables to related parties (Notes 30 and 31) Current tax liabilities (Notes 4 and 25) Provisions - current (Notes 4 and 20) Lease liabilities - current (Notes 4 and 12) Current portion of long-term borrowings (Notes 4, 16, 28, 30 and 32) Other current liabilities (Note 19) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 4, 16, 28, 30 and 32) Deferred tax liabilities (Notes 4 and 25) Lease liabilities - non-current (Notes 4 and 12) Net defined benefit liabilities (Notes 4 and 21) Other non-current liabilities (Notes 4, 19 and 28) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 22 and 27) Share capital Ordinary shares Share capital to be cancelled Total share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2022 Amount % $ 17,869,009 21 3,387,494 4 1,240,699 2 220,557 - 14,662,778 18 185,051 - 37,565,588 45 2,341,449 3 3,447,021 4 37,529,981 45 708,604 1 124,699 - 849,915 1 760,842 1 333,147 - 46,095,658 55 $ 83,661,246 100 $ 17,883 - 2,585,373 3 2,742,156 3 3,121,948 4 996,042 1 1,404,379 2 89,494 - 1,387,619 2 3,903 - 63,094 - 3,683,542 4 365,623 1 16,461,056 20 11,970,314 14 755,937 1 667,577 1 1,073,550 1 123,113 - 14,590,491 17 31,051,547 37 18,558,543 22 (264) - 18,558,279 22 402,710 1 3,426,358 4 76,492 - 29,304,449 35 32,807,299 39 1,000,472 1 (159,061) - 52,609,699 63 $ 83,661,246 100		2021
				Amount % $ 16,199,817 21 4,639,208 6 2,788,113 4 359,611 1 13,134,844 17 180,189 - 37,301,782 49 2,493,384 3 2,927,848 4 31,792,537 42 751,927 1 95,108 - 644,213 1 212,295 - 333,147 - 39,250,459 51 $ 76,552,241 100 $ 34,963 - 3,403,530 5 4,509,196 6 3,134,490 4 755,900 1 1,619,880 2 157,772 - 640,237 1 3,282 - 63,287 - 3,094,739 4 337,162 - 17,754,438 23 9,250,335 12 644,213 1 706,487 1 1,405,996 2 65,981 - 12,073,012 16 29,827,450 39 18,560,178 24 (410) - 18,559,768 24 399,210 1 2,271,266 3 291,361 - 24,532,500 32 27,095,127 35 829,747 1 (159,061) - 46,724,791 61 $ 76,552,241 100

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

• 225 -

MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET OPERATING REVENUE (Notes 4, 23 and 31) OPERATING COSTS (Notes 4, 9, 21, 24 and 31) GROSS PROFIT REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES (Note 4) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4, 21, 24 and 31) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income (Note 24) Other income (Notes 4, 7, 12, 24 and 28) Other gains and losses (Note 24) Gains on disposal of property, plant and equipment (Notes 4, 11 and 24) Finance costs (Notes 4, 24 and 28) Share of profit of subsidiaries, associates and joint ventures (Notes 4 and 10) Total non-operating income and expenses INCOME BEFORE INCOME TAX FROM CONTINUING OPERATIONS INCOME TAX EXPENSE (Notes 4 and 25) NET INCOME FOR THE YEAR		2022 Amount % $ 42,509,017 100 24,236,828 57 18,272,189 43 5,478 - 18,277,667 43 1,070,514 2 2,145,883 5 5,919,299 14 9,135,696 21 9,141,971 22 101,764 - 295,627 1 697,265 1 - - (206,143) (1) 232,917 1 1,121,430 2 10,263,401 24 (1,293,626) (3) 8,969,775 21		2021
				Amount % $ 49,598,199 100 29,509,886 59 20,088,313 41 (20,298) - 20,068,015 41 1,117,311 2 2,570,991 5 5,677,962 12 9,366,264 19 10,701,751 22 17,689 - 155,627 - (162,561) - 2,505,176 5 (232,632) (1) 276,449 1 2,559,748 5 13,261,499 27 (1,298,547) (3) 11,962,952 24 (Continued)

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MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instruments at FVTOCI (Notes 22 and 30) Share of other comprehensive gain of subsidiaries accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Note 22) Other comprehensive income for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 26) Basic Diluted		2022 Amount % $ 83,155 - (151,935) - (78,830) - 356,086 1 208,476 1 $ 9,178,251 22 $ 4.85 $ 4.68		2021
				Amount % $ (153,365) - 714,340 1 230,165 - (112,962) - 678,178 1 $ 12,641,130 25 $ 6.48 $ 6.25

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

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MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2021 Legal reserve Special reserve Cash dividends distributed by the Company - $1.20 per share Net income for the year ended December 31, 2021 Other comprehensive income (loss) for the year ended December 31, 2021, net of income tax Total comprehensive income (loss) for the year ended December 31, 2021 Disposal of investments in equity instruments designated as at fair value through other comprehensive income Compensation cost of restricted shares for employees Retirement of restricted shares for employees Dividends paid to subsidiaries to adjust capital surplus BALANCE AT DECEMBER 31, 2021 Legal reserve Special reserve Cash dividends distributed by the Company - $1.80 per share Net income for the year ended December 31, 2022 Other comprehensive income (loss) for the year ended December 31, 2022, net of income tax Total comprehensive income (loss) for the year ended December 31, 2022 Compensation cost of restricted shares for employees Retirement of restricted shares for employees Dividends paid to subsidiaries to adjust capital surplus BALANCE AT DECEMBER 31, 2022			Share Capital	hare Capital to be Cancelled $ (1,153 ) - - - - - - - - 743 - (410 ) - - - - - - - 146 - $ (264)	Capital Surplus $ 384,772 - - - - - - - 9,994 2,096 2,348 399,210 - - - - - - (1,511 ) 1,489 3,522 $ 402,710			**Retained Earnings **	Unappropriated Earnings $ 15,408,584 (529,409 ) 329,834 (2,227,424 ) 11,962,952 (153,365) 11,809,587 (258,672 ) - - - 24,532,500 (1,155,092 ) 214,869 (3,340,758 ) 8,969,775 83,155 9,052,930 - - - $ 29,304,449		Other Equity	Unearned Compensation of Employees $ (150,555 ) - - - - - - - 105,151 - - (45,404 ) - - - - - - 45,404 - - $ -	Treasury Shares $ (159,061 ) - - - - - - - - - - (159,061 ) - - - - - - - - - $ (159,061)	Total Equity $ 36,193,592 - - (2,227,424 ) 11,962,952 678,178 12,641,130 - 115,145 - 2,348 46,724,791 - - (3,340,758 ) 8,969,775 208,476 9,178,251 43,893 - 3,522 $ 52,609,699
										Exchange Differences on Translation of the Financial Statements of Foreign Operations $ (386,090 ) - - - - (112,962) (112,962) - - - - (499,052 ) - - - - 356,086 356,086 - - - $ (142,966)	Unrealized Gain (Loss) on Financial Assets at FVTOCI $ 171,026 - - - - 944,505 944,505 258,672 - - - 1,374,203 - - - - (230,765) (230,765) - - - $ 1,143,438
		Shares (In Thousands) 1,856,302 - - - - - - - - (284 ) - 1,856,018 - - - - - - - (164 ) - 1,855,854	Ordinary Shares S $ 18,563,017 - - - - - - - - (2,839 ) - 18,560,178 - - - - - - - (1,635 ) - $ 18,558,543				Legal Reserve $ 1,741,857 529,409 - - - - - - - - - 2,271,266 1,155,092 - - - - - - - - $ 3,426,358	Special Reserve $ 621,195 - (329,834 ) - - - - - - - - 291,361 - (214,869 ) - - - - - - - $ 76,492

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

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MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit loss reversed on trade receivables Finance costs Interest income Dividend income Compensation cost of employee restricted shares Share of gain of subsidiaries and associates Loss (gain) on disposal of property, plant and equipment Unrealized gain on transactions with associates and joint ventures Net loss on foreign currency exchange Gain from lease modifications Amortization of government grants deferred revenue Changes in operating assets and liabilities Notes receivable and trade receivables Receivables from related parties Other receivables Inventories Prepayments Other current assets Contract liabilities Notes payable and trade payables Payables to related parties Payables for compensation of employees and remuneration of directors Other payables Other payables to related parties Provisions Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities	2022 $ 10,263,401 4,424,294 64,896 - 206,143 (101,764) (151,552) 43,893 (232,917) 5,281 (5,478) 571,513 (356) (12,420) 1,199,916 1,586,487 (2,892) (1,527,934) - (4,862) (17,080) (811,011) (2,078,954) (12,542) (181,744) (72,225) 621 20,621 (249,291) 12,924,044 73,625 151,552 (237,697) (643,702) 12,267,822	2021 $ 13,261,499 4,190,129 43,860 (63) 232,632 (17,689) (118,914) 115,145 (276,449) (2,566,139) 20,298 263,506 (2,213) (1,357) (1,754,057) (482,755) (72,588) (222,827) (333,147) (80,636) (52,192) 461,598 653,355 1,730,866 259,513 23,156 (1) 172,612 (178,522) 15,268,620 14,099 118,914 (238,073) (37,277) 15,126,283 (Continued)

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MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Payments for investment properties Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Decrease (increase) in other financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits received Repayment of leased liabilities Distribution of cash dividends Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET INCREASE 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	2022 $ - (9,859,800) 173,780 (549,596) 10 (94,487) 1,045 (10,329,048) 6,357,000 (2,988,903) 26,777 (17,926) (76,079) (3,340,758) (39,889) (229,693) 1,669,192 16,199,817 $ 17,869,009	2021 $ (30,000) (4,696,428) 2,415,981 - 67 (84,339) (50,603) (2,445,322) 3,330,000 (7,077,225) 2,094 (177,656) (82,504) (2,227,424) (6,232,715) (545,894) 5,902,352 10,297,465 $ 16,199,817

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

(Concluded)

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NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

MACRONIX INTERNATIONAL CO., LTD.

1. GENERAL INFORMATION

Macronix International Co., Ltd. (the “Company”) was incorporated in the Republic of China (ROC) on December 9, 1989 and commenced business in December 1989. The Company operates principally as a designer, manufacturer and supplier of integrated circuits (ICs) and memory chips. The Company also performs design, research and development, consultation and trade of relevant products.

The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since March 15, 1995.

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors and were authorized for issue on February 14, 2023.

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

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

The initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies.

• b. The IFRSs endorsed by the FSC for application starting from 2023

Effective Date New, Amended and Revised Standards and Interpretations Announced by IASB Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 1) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 2) Amendments to IAS 12 “Deferred Tax related to Assets and January 1, 2023 (Note 3) Liabilities arising from a Single Transaction”

• Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 2: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

• Note 3: Except for deferred taxes that were recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

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As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

• c. The IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New, Amended and Revised Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture” Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” January 1, 2024 (Note 2) IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - January 1, 2023 Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2024 Non-current” Amendments to IAS 1 “Non-current Liabilities with Covenants” January 1, 2024

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

• Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance, and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIE

• a. Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and defined benefit liabilities.

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

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When preparing its parent company only financial statements, the Company used equity method to account for its investment in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owner of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and consolidated basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries, share of other comprehensive income of subsidiaries and related equity items, as appropriate, in the parent company only financial statements.

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

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

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

• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 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.

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

• d. Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

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For the purpose of presenting parent company only financial statements, the functional currencies of the Company and the Group (including subsidiaries and associates that use currency different from the currency of the Company) are translated into the presentation currency - the New Taiwan dollar as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

e. Inventories

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

• f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

Subsidiaries are the entities controlled by the Company.

Under the equity method, the investment in a subsidiary is initially recognized at cost and the carrying amount is increased or decreased to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary after the date of acquisition. Besides, the Company also recognizes the Company’s share of the change in other equity of the subsidiary.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

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When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent’s company only financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent’s company financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

• g. Property, plant and equipment

Property, plant and equipment are stated at cost, less recognized accumulated depreciation and accumulated impairment loss.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effects of any changes in estimates accounted for on a prospective basis.

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

• h. Intangible assets

• 1) Intangible assets acquired separately

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

• 2) Internally-generated intangible assets - research and development expenditure

Expenditure on research activities is recognized as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from the development phase of an internal project is recognized if, and only if, all of the following have been demonstrated:

• a) The technical feasibility of completing the intangible asset so that it will be available for use or sale;

• b) The intention to complete the intangible asset and use or sell it;

• c) The ability to use or sell the intangible asset;

• d) How the intangible asset will generate probable future economic benefits;

• e) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

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• f) The ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Subsequent to initial recognition, they are measured on the same basis as intangible assets that are acquired separately.

• 3) Derecognition of intangible assets

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

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

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

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.

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

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

• j. Financial instruments

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

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

• 1) Financial assets

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

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• a) Measurement category

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

• i. Financial assets measured at amortized cost

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

• i) The financial assets are 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 assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

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

• ii) Financial assets that have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such a financial asset.

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

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

• ii) Breach of contract, such as a default;

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

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

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

• ii Investments in equity instruments at FVTOCI

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

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Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on the disposal of the equity investments; instead, they will be transferred to retained earnings.

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

• b) Impairment of financial assets

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

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

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

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

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

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

The Company recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.

• c) Derecognition of financial assets

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

If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and any associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the

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Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

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

• 2) Equity instruments

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

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

• 3) Financial liabilities

• a) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

• b) Derecognition of financial liabilities

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

k. Provisions

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

• l. Revenue recognition

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

For contracts entered into with the same customer (or related parties of the customer) at or near the same time, those contracts are accounted for as a single contract if the goods or services promised in the contracts are a single performance obligation.

• 1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of Memory products and wafer fabrication. Sales of Memory products and wafer fabrication are recognized as revenue when the goods are delivered to the customer’s specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, and has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. For Memory products and wafer fabrication, revenue is recognized when the goods are delivered to

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the customer’s specific location, and the transaction price received is recognized as a contract liability until the goods have been delivered to the customer.

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

2) Revenue from the rendering of services

As the Company provides rendering services, the related revenue is recognized when services are rendered. Payment for installation services is not due from the customer until the installation services are complete and, therefore, contract assets are recognized over the period in which the installation services are performed. The contract assets are reclassified to trade receivables when the installation is complete.

m. Lease

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

For a contract that contains a lease component and non-lease components, the Company allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

1) The Company as lessor

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

When the Company subleases right-of-use assets, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Company, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms. Lease modification that resulted from a negotiation with a lessee is accounted for as a new lease from the effective date of modification.

2) The Company as lessee

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

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

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

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Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate, residual value guarantees, the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and payments of penalties for terminating a lease if the lease term reflects such termination, less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. For a lease modification that is not accounted for as a separate lease, the Company accounts for the remeasurement of the lease liability by (a) decreasing the carrying amount of the right-of-use asset of lease modifications that decreased the scope of the lease, and recognizing in profit or loss any gain or loss on the partial or full termination of the lease; (b) making a corresponding adjustment to the right-of-use asset of all other lease modifications. Lease liabilities are presented on a separate line in the balance sheets.

n. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Other than stated above, all other borrowing costs are recognized in profit or loss in the year in which they are incurred.

• o. Government grants

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

Government grants related to income are recognized in other income on a systematic basis during the period when the related costs in which the government intends to compensate are recognized by the Group as expenses. Specifically, the primary condition of government grants is that the Group should purchase, construct or otherwise acquire non-current assets that are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

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

p. Employee benefits

• 1) Short-term employee benefits

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

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2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

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

Net defined benefit liability represents the actual deficit in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

• 3) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plan except that remeasurement is recognized in profit or loss.

• 4) Termination benefits

A liability for a termination benefit is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefit and when the Company recognizes any related restructuring costs.

q. Share-based payment arrangements

The fair value at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options or other equity - employees’ unearned compensation. It is recognized as an expense in full at the grant date if vesting immediately.

When restricted shares for employees are issued, other equity - unearned employee benefits are recognized on the grant date, with a corresponding increase in capital surplus - restricted shares for employees.

At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the capital surplus - employee share options or capital surplus-restricted share option.

• r. Treasury shares

The parent company’s shares held by subsidiaries is reclassified to treasury shares from investment accounted for using equity method and recognized with the original investment cost. Cash dividends earned by subsidiaries are write-off with investment income and adjust capital surplus-treasury share transaction.

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s. Taxation

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

1) Current tax

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

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

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

• 2) Deferred tax

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

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carry forward and unused tax credits for purchases of machinery, equipment and technology, research and development expenditures and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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

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

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

• 3) Current and deferred taxes

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

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5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The Company considers the possible impact of the recent development of the COVID-19 and its economic environment implications when making its critical accounting estimates in cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that period or in the period of the revision and future years if the revision affects both current and future years.

a. Write-down of inventory

The net realizable value of inventory is the estimated selling price in the ordinary course of business less the estimated costs of completion and the disposal. The estimation of net realizable value was based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

b. Recognition and measurement of defined benefit plans

The net defined liabilities (assets) and the resulting defined benefit costs under the defined benefit pension plans are calculated using the projected unit credit method. Actuarial assumptions comprise the discount rates, rates of employee turnover, future salary increase, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of related expense and the liabilities.

6. CASH AND CASH EQUIVALENTS

Checking accounts and demand deposits Cash equivalents Time deposits		December 31	December 31
		2022 $ 6,281,929 11,587,080 $ 17,869,009	2021 $ 5,886,345 10,313,472 $ 16,199,817

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments Domestic investments Listed shares Unlisted shares		December 31	December 31
		2022 $ 1,783,213 558,236 $ 2,341,449	2021 $ 1,995,329 498,055 $ 2,493,384

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These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes.

The Company recognized dividends income of NT$151,552 thousand and NT$118,914 thousand for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the Company’s related investments still held amounted to NT$2,341,449 thousand and NT$2,493,384 thousand, respectively.

8. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Trade receivables Total amount of trade receivable measured at amortized cost Less: Allowance for impairment loss Other receivables Tax receivable Receivables from disposal of property, plant and equipment Others		December 31	December 31
		2022 $ 3,404,449 (16,955) $ 3,387,494 $ 192,679 - 27,878 $ 220,557	2021 $ 4,656,163 (16,955) $ 4,639,208 $ 178,544 173,565 7,502 $ 359,611

a. Trade receivables

The average credit period for sales of goods was 60 days.

In determining the recoverability of a trade receivable, the Company evaluates each customer’s credibility and financial position and considers any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs.

The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of the conditions at the reporting date. The Company estimates expected credit losses based on the number of days for which receivables are past due. As the Company’s historical credit loss experience shows significantly different loss patterns for different customer segments, the provision for losses based on past due status of receivables is not further distinguished according to the different segments of the Company’s customer base.

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The aging of trade receivables is as follows:

Neither past due nor impaired Past due but not impaired Within 60 days 61-120 days Over 120 days		December 31	December 31
		2022 $ 3,259,466 123,681 - 4,347 $ 3,387,494	2021 $ 4,505,220 133,236 752 - $ 4,639,208

The above aging schedule was based on the past due days from the end of the credit term.

As of December 31, 2022 and 2021, the Company did not hold collateral for most of its receivables.

The movements of the allowance for doubtful trade receivables are as follows:

Balance at January 1 Less: Amounts reversed Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 16,955 - $ 16,955	2021 $ 17,018 (63) $ 16,955

b. Other receivables

No allowance for impairment loss of other receivables was recognized since the other receivables of the Company were not past due and the Company assessed that there was no uncertainty of recoverability.

9. INVENTORIES

Finished goods and merchandise Work in progress Raw materials		December 31	December 31
		2022 $ 1,430,099 11,858,183 1,374,496 $ 14,662,778	2021 $ 1,314,928 11,056,652 763,264 $ 13,134,844

The costs of inventories recognized as cost of goods sold included inventory loss that resulted from the write-downs of inventory to net realizable value and reversal of inventory loss due to sold of part of the written-down inventory. The amounts were as follows:

Loss on inventory write-downs (reversal of inventory loss)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,292,372	2021 $ (1,548,422)

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10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investment in subsidiaries Investments in subsidiaries Macronix (BVI) Co., Ltd. (MXBVI) Macronix America, Inc. (MXA) Hui Ying Investment Ltd. (Hui Ying) Run Hong Investment Ltd. (Run Hong) Mxtran Inc. (Mxtran) Name of Subsidiaries MXBVI MXA Hui Ying Run Hong Mxtran		December 31
		2022 2021 $ 3,447,021 $ 2,927,848 **December 31 **
		2022 2021 $ 2,948,991 $ 2,548,353 356,166 228,970 98,280 94,664 32,020 43,833 11,564 12,028 $ 3,447,021 $ 2,927,848 Proportion of Ownership and Voting Rights
		**December 31 **
		2022 2021 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 90.43% 90.43%

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2022 and 2021 were based on the subsidiaries’ financial statements which have been audited for the same years.

On February 14, 2023, The Company’s board of directors approved to acquire the outstanding shares of Macronix (Hong Kong) Co., Limited and Macronix Pte Ltd held by MX(BVI) at book value US$ 19,756,278 as of December 31, 2022, and MX(BVI) buys-back 19,756,278 shares with par value US$1 per share and cancelled.

11. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Company		December 31	December 31
		2022 $ 37,529,981	2021 $ 31,792,537

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Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress Accumulated depreciation and impairment Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amount at December 31, 2022 Cost Freehold land Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Advance payments and construction in progress Accumulated depreciation and impairment Buildings Machinery equipment Research and development equipment Transportation equipment Leasehold improvements Miscellaneous equipment Carrying amount at December 31, 2021			Years Ended December 31, 2022	Years Ended December 31, 2022
		Balance, Beginning of Year $ 598,076 21,216,346 91,339,673 6,749,959 24,281 3,230 1,045,921 5,785,368 126,762,854 17,035,617 74,709,272 2,315,908 13,351 3,230 892,939 94,970,317 $ 31,792,537	Additions Disposals Reclassification $ - $ - $ - - 89,257 1,047,399 - 129,639 2,738,042 - 39,476 1,269,981 - 192 900 - - - - 20,301 94,917 10,086,579 - (5,151,239) $ 10,086,579 $ 278,865 $ - $ 485,642 $ 83,905 $ - 3,203,767 129,551 205,802 557,244 39,420 (205,802 ) 4,070 192 - - - - 92,916 20,301 - $ 4,343,639 $ 273,369 $ - Years Ended December 31, 2021		Balance, End of Year $ 598,076 22,174,488 93,948,076 7,980,464 24,989 3,230 1,120,537 10,720,708 136,570,568 17,437,354 77,989,290 2,627,930 17,229 3,230 965,554 99,040,587 $ 37,529,981
		Balance, Beginning of Year $ 598,076 25,223,237 100,853,676 4,167,190 20,741 3,230 1,078,664 5,089,153 137,033,967 20,921,810 82,255,046 1,903,183 13,091 3,078 921,248 106,017,456 $ 31,016,511	Additions $ - - - - - - - 4,901,959 $ 4,901,959 $ 426,065 3,162,587 430,023 3,625 152 80,074 $ 4,102,526	Disposals Reclassification $ - $ - 4,319,859 312,968 10,721,370 1,207,367 17,298 2,600,067 3,365 6,905 - - 110,802 78,059 - (4,205,744) $ 15,172,694 $ (378) $ 4,312,258 $ - 10,708,361 - 17,298 - 3,365 - - - 108,005 (378) $ 15,149,287 $ (378)	Balance, End of Year $ 598,076 21,216,346 91,339,673 6,749,959 24,281 3,230 1,045,921 5,785,368 126,762,854 17,035,617 74,709,272 2,315,908 13,351 3,230 892,939 94,970,317 $ 31,792,537

For the years ended December 31, 2022 and 2021, the Company assessed that no indication of an impairment loss was present; therefore, no impairment assessment was performed.

The Company’s 6-inch fab ceased production in May 2021 and was disposed of in September 2021. The related gain on disposal of NT$2,505,176 thousand was recognized as gain on disposal of property, plant and equipment under non-operating income and expenses.

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The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Main buildings	31 years
Electronic equipment	11 years
Facility equipment	15 years
Machinery equipment	11 years
Research and development equipment	11 years
Transportation equipment	5 years
Leasehold improvements	6 years
Miscellaneous equipment	3-6 years

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 32.

12. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts Freehold land Buildings Machinery equipment Transportation equipment Miscellaneous equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Freehold land Buildings Machinery equipment Transportation equipment Miscellaneous equipment Income from the subleasing of right-of-use assets (included in other income)		December 31	December 31
	2022 $ 693,393 6,163 4,638 3,910 500 $ 708,604 **For the Year Ended **		2021 $ 735,749 14,641 - 1,037 500 $ 751,927 December 31
		2022 $ 24,082 $ 56,774 8,523 11,817 1,542 1,999 $ 80,655 $ (4,035)	2021 $ 9,162 $ 65,481 8,477 10,050 1,595 2,000 $ 87,603 $ (4,006)

Except for the recognized depreciation, the Company did not have impairment of right-of-use assets for the years ended December 31, 2022 and 2021.

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b. Lease liabilities

Carrying amounts Current Non-current		December 31	December 31
		2022 $ 63,094 $ 667,577	2021 $ 63,287 $ 706,487

Range of discount rate for lease liabilities was as follows:

Freehold land Buildings Machinery equipment Transportation equipment Miscellaneous equipment	December 31
	2022 2021 1.22%-1.73% 1.67%-1.73% 1.03%-1.22% 1.03%-1.28% 1.17%-1.56% 1.18%-1.28% 1.45%-1.56% 1.03%-1.22% 1.22% 1.19%

c. Material lease-in activities and terms

The Company also leased certain land and buildings for the use as plant and office in a period of one to twenty years. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Expenses relating to variable lease payments not included in the measurement of lease liabilities Total cash outflow for leases	**For the Year Ended **	**For the Year Ended **	December 31
		2022 $ 2,337 $ 60 $ 13,775 $ (104,695)	2021 $ 385 $ 60 $ 10,200 $ (107,776)

The Company leases certain office buildings which qualify as short-term leases and certain office equipment which qualifies as low-value asset leases. The Company has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

13. INTANGIBLE ASSETS

INTANGIBLE ASSETS
Item Cost Software Accumulated amortization Software Carrying amount at December 31, 2022		Year Ended December 31, 2022
	Balance, Beginning of Year $ 158,640 63,532 $ 95,108	Additions $ 94,487 $ 64,896	Disposals Balance, End of Period $ 32,154 $ 220,973 $ 32,154 96,274 $ 124,699

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Item Balance, Beginning of Year Cost Software $ 88,796 Accumulated amortization Software 34,167 Carrying amount at December 31, 2021 $ 54,629 Intangible assets are amortized on a straight-line basis Software OTHER FINANCIAL ASSETS Non-current Refundable deposits Restricted time deposits (Note 32)			Year Ended December 31, 2021	Year Ended December 31, 2021	Year Ended December 31, 2021	Year Ended December 31, 2021
			Additions Disposals Reclassification Balance, End of Period $ 84,339 $ 19,383 $ 4,888 $ 158,640 $ 43,860 $ 19,383 $ 4,888 63,532 $ 95,108 over their estimated useful lives as follows: 3 years December 31 2022 2021 $ 553,619 $ 4,027 207,223 208,268 $ 760,842 $ 212,295
					2022 $ 553,619 207,223 $ 760,842	2021 $ 4,027 208,268 $ 212,295

14. OTHER FINANCIAL ASSETS

15. OTHER ASSETS

Current Prepayments Non-current Prepayments		December 31	December 31
		2022 $ 185,051 $ 333,147	2021 $ 180,189 $ 333,147

The non-current prepayments were made according to the production capacity cooperation agreement signed between the Company and its suppliers; the prepayments were paid in accordance with the contract.

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16. BORROWINGS

- Long term borrowings

Secured borrowings from financial institutions Unsecured borrowings from financial institutions Less: Current portion Less: Arrangement fee Less: Government loan discount Long-term borrowings Interest rate Borrowing Type Repayment Terms Secured syndicated loan denominated in NT$ From June 2019 to February 2024 Unsecured bank borrowings denominated in NT$ From June 2020 to June 2023 Unsecured bank borrowings denominated in NT$ From August 2020 to February 2023 Unsecured bank borrowings denominated in NT$ From August 2020 to August 2023 Unsecured bank borrowings denominated in NT$ From August 2020 to August 2023 Unsecured bank borrowings denominated in NT$ From December 2020 to December 2023 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2028 Unsecured bank borrowings denominated in NT$ From April 2021 to April 2031 Unsecured bank borrowings denominated in NT$ From December 2021 to December 2024 Unsecured bank borrowings denominated in NT$ From March 2022 to September 2024 Unsecured bank borrowings denominated in NT$ From March 2022 to March 2025 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029		December 31
		2022 2021 $ 4,812,500 $ 6,737,500 10,940,125 5,670,625 15,752,625 12,408,125 3,683,542 3,094,739 5,200 10,000 93,569 53,051 $ 11,970,314 $ 9,250,335 1.13%-2.19% 0.50%-1.79% **December 31 **
		2022 2021 $ 4,812,500 $ 6,737,500 125,000 375,000 300,000 600,000 187,500 437,500 140,625 328,125 500,000 600,000 1,000,000 978,000 2,300,000 649,000 600,000 556,000 1,100,000 318,000 787,000 329,000 500,000 500,000 600,000 - 500,000 - 263,000 - 116,000 - 109,000 -

(Continued)

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Borrowing Type Repayment Terms Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2029 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2032 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2032 Unsecured bank borrowings denominated in NT$ From July 2022 to July 2032 Unsecured bank borrowings denominated in NT$ From August 2022 to August 2025 Unsecured bank borrowings denominated in NT$ From August 2022 to August 2029 Less: Current portion Less: Arrangement fee Less: Government loan discount Total long-term borrowings		**December 31 **	**December 31 **
		2022 $ 100,000 54,000 557,000 243,000 58,000 300,000 500,000 3,683,542 5,200 93,569 $ 11,970,314	2021 $ - - - - - - - 3,094,739 10,000 53,051 $ 9,250,335 (Concluded)

To purchase equipment or machinery, the Company has entered into a 5-year syndicated loan agreement with 9 financial institutions including the Taiwan Cooperative Bank in January 2019 with the total amount of NT$8 billion. The Company provided notes used as refundable guarantees for syndicated loan mentioned above that will be cancelled upon termination of the guarantee.

The Ministry of Economic Affairs implemented the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” on January 1, 2019, which provided enterprises to make compliant investments with financial institutions at preferential interest rates. The Company has obtained the approval of the Ministry of Economic Affairs to qualify for the project loan and signed a loan contract with a financial institution to obtain a financing line of NT$21 billion, with a credit period of 7 to 10 years. The funds obtained are used for factory expansion, purchased machinery and equipment, buildings and operating turnover, etc. The details of government grants are set out in Note 28.

In addition, the Company’s floating borrowing rate on the above borrowing is reset every one to three months.

The loan agreement requires the maintenance of a current ratio, debt ratio, and interest coverage ratio based on the Company’s semi-annual and annual financial statements. For the year ended December 31, 2022 and 2021, the Company had met the financial ratio covenants.

The details of assets pledged as collateral for long-term loans are set in Note 32.

17. NOTES PAYABLE AND TRADE PAYABLES

NOTES PAYABLE AND TRADE PAYABLES
Trade payables		December 31
		2022 $ 2,585,373	2021 $ 3,403,530

The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed upon credit terms.

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18. OTHER PAYABLES

Payables for bonuses Payables for maintenance and repairs Payables for spare parts Payables for patents Payables for insurance Payables for pension Others OTHER LIABILITIES Current Refund liabilities Receipts under custody Temporary credits Non-current Government grants deferred revenue (Note 28) Guarantee deposits PROVISIONS Current Employee benefits (a)		December 31	December 31	December 31
		2022 2021 $ 281,899 $ 271,759 252,612 211,542 112,400 70,612 98,518 122,327 85,633 67,894 74,712 68,938 498,605 806,808 $ 1,404,379 $ 1,619,880 December 31
			2022 $ 321,999 34,938 8,686 $ 365,623 $ 102,121 20,992 $ 123,113 December	2021 $ 294,298 35,706 7,158 $ 337,162 $ 55,226 10,755 $ 65,981 31
			2022 $ 3,903	2021 $ 3,282

19. OTHER LIABILITIES

20. PROVISIONS

a. The provision for employee benefits represents vested long service leave entitlements accrued.

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21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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

b. Defined benefit plans

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

The amounts in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		December 31	December 31
		2022 $ 1,717,492 (1,274,760) $ 442,732	2021 $ 1,874,741 (1,021,636) $ 853,105

Movements in net defined benefit liability were as follows:

Present Value of Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2021 $ 1,898,790 $ 942,837 Service cost Current service cost 3,601 - Net interest expense 9,359 - Return on plan assets - 4,662 Recognized in profit or loss 12,960 4,662 Remeasurement Return on plan assets - 12,094 Actuarial loss - experience adjustments 53,453 - Actuarial loss - actuarial assumptions adjustments 39,519 - Recognized in other comprehensive income 92,972 12,094 Contributions from the employer - 192,024 Benefits paid (129,981) (129,981) Balance at December 31, 2021 1,874,741 1,021,636

Net Defined Benefit Liabilities (Assets) $ 955,953 3,601 9,359 (4,662) 8,298 (12,094) 53,453 39,519 80,878 (192,024) - 853,105 (Continued)

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Present Value of Defined Benefit Obligation Fair Value of the Plan Assets Service cost Current service cost $ 2,829 $ - Net interest expense 9,155 - Return on plan assets - 4,974 Recognized in profit or loss 11,984 4,974 Remeasurement Return on plan assets - 83,305 Actuarial loss - experience adjustments 17,895 - Actuarial loss - actuarial assumptions adjustments (89,939) - Recognized in other comprehensive income (72,044) 83,305 Contributions from the employer - 262,034 Benefits paid (97,189) (97,189) Balance at December 31, 2022 $ 1,717,492 $ 1,274,760

Net Defined Benefit Liabilities (Assets) $ 2,829 9,155 (4,974) 7,010 (83,305) 17,895 (89,939) (155,349) (262,034) - $ 442,732 (Concluded)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General and administration expenses Research and development expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 3,482 487 1,352 1,689 $ 7,010	2021 $ 4,307 528 1,552 1,911 $ 8,298

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

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

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

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

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

Discount rate Expected rate of salary increase Expected return on plan assets increase	**December 31 **
	2022 2021 1.25% 0.50% 3.00% 3.00% 1.25% 0.50%

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

Discount rate 0.50% increase 0.50% decrease Expected rate of salary increase 0.50% increase 0.50% decrease		**December 31 **	**December 31 **
		2022 $ (57,111) $ 59,373 $ 98,086 $ (92,390)	2021 $ (62,796) $ 66,474 $ 102,481 $ (96,601)

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		**December **	**31 **
		2022 $ 32,018 6.9 years	2021 $ 87,610 6.9 years

The Company maintains a separate executive pension plan and the net periodic pension costs were NT$5,670 thousand and NT$5,218 thousand for the years ended December 31, 2022 and 2021, respectively.

Movements in net defined benefit liability were as follows:

Movements in net defined benefit liability were as follows:
	Present Value
	of Defined
	Benefit
	Obligation
Balance at January 1, 2021	$ 475,200
Service cost
Current service cost	2,851
Net interest expense	2,367
Recognized in profit or loss	5,218
Remeasurement
Actuarial loss - experience adjustments	52,255
Actuarial loss - changes in assumptions	20,233
Recognized in other comprehensive income	72,488
Balance at December 31, 2021	552,906
	(Continued)

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	Present Value	Present Value
	of Defined
		Benefit
	Obligation
Service cost
Current service cost	$	2,949
Net interest expense		2,721
Recognized in profit or loss		5,670
Remeasurement
Actuarial loss - experience adjustments		82,090
Actuarial loss - changes in assumptions		(9,896)
Recognized in other comprehensive income		72,194
Balance at December 31, 2022	$	630,770
		(Concluded)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

General and administration expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 5,670	2021 $ 5,218

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

Discount rate Expected rate of salary increase Expected return on plan assets increase	December 31
	2022 2021 1.25% 0.50% - - 1.25% 0.50%

22. EQUITY

• a. Share capital

Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Share issued		December 31	December 31
		2022 6,550,000 $ 65,500,000 1,855,854 $ 18,558,543	2021 6,550,000 $ 65,500,000 1,856,018 $ 18,560,178

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

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A total of 864,704 thousand shares and 650,000 thousand shares of the Company’s authorized shares were reserved for the issuance of convertible bonds and employee share options.

The change in the Company’s share capital is due to the withdrawal and cancellation of new shares that limit the rights of employees which do not meet the vested conditions.

• b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of ordinary shares Donations Treasury share transactions May be used to offset a deficit only Changes in percentage of ownership interests in subsidiaries (2) May not be used for any purpose Employee restricted shares		**December 31 **	**December 31 **
		2022 $ 358,766 37 38,966 $ 397,769 $ 4,609 $ 332	2021 $ 253,624 37 35,444 $ 289,105 $ 4,609 $ 105,496

• 1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

• 2) Such capital surplus arises from changes in capital surplus of subsidiaries accounted for by using the equity method.

• c. Retained earnings and dividend policy

The Company’s Articles of Incorporation, state that, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside a legal reserve 10% of the remaining profit (until the amount of the legal reserve equals the amount of the Company’s paid-in capital), setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors stated by the Company’s Articles of Incorporation, refer to “Employees’ compensation and remuneration of directors” in Note 24 (h).

The Company is classified under the capital intensive industry. In accordance with the long-term financial program of the Company, the above shareholders’ dividends can be retained as undistributed earnings, and then be distributed in the future, as determined by the shareholders at the Annual General Meeting.

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Distributions shall be prioritized to take the form of cash dividends. Nevertheless, it still depends on the Company’s financial, sales or operating condition. The Company’s Articles of Incorporation provide that no more than 50% of the current year’s total amount of distributable earnings can be distributed in the form of share dividends.

The appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset any deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriation of earnings for 2021 and 2020, which had been proposed by the Company’s general meeting of shareholders on May 27, 2022 and August 17, 2021, respectively. The appropriation and dividends per share were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 1,155,092 $ (214,869) $ 3,340,758 $ 1.8	2020 $ 529,409 $ (329,834) $ 2,227,424 $ 1.2

• d. Special reserve

Balance at January 1 Appropriations in respect of Treasury shares Reversals: Treasury shares reversal Reversal of the debits to other equity items Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ 291,361 196 - (215,065) $ 76,492	2021 $ 621,195 - (9,979) (319,855) $ 291,361

According to the shareholding ratio, the special reserve is calculated based on the difference between the market value of the parent company’s stock holdings and the book value, and the special reserve will be partially reversed on market price.

• e. Other equity items

• 1) Exchange differences on translating foreign operations

Balance at January 1 Exchange differences on translating foreign operations Balance at December 31	**For the Year Ended **	**For the Year Ended **	December 31
		2022 $ (499,052) 356,086 $ (142,966)	2021 $ (386,090) (112,962) $ (499,052)

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• 2) Unrealized valuation gain/(loss) on financial assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized (loss)/gain - equity instrument Share from associates accounted for using the equity method Other comprehensive income recognized for the year Cumulative unrealized gain/(loss) of equity instruments transferred to retained earnings due to disposal in subsidiaries Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,374,203 (151,935) (78,830) 1,143,438 - $ 1,143,438	2021 $ 171,026 714,340 230,165 1,115,531 258,672 $ 1,374,203

3) Employee unearned benefit

In the meetings of shareholders on June 18, 2019, the shareholders approved a restricted share plan for employees. Refer to Note 27 for the information on restricted shares issued.

Balance at January 1 Share-based payment expenses recognized Adjustments for change of turnover rate Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ (45,404) 43,893 1,511 $ -	2021 $ (150,555) 115,145 (9,994) $ (45,404)

• f. Treasury shares

The Company’s shares held by its subsidiaries at December 31, 2022 and 2021 were as follows:

		Number of
		Shares Held	Carrying
	Name of Subsidiary	(In Thousands)	Amount	Market Price
December	31, 2022
Hui Ying		1,957	$ 159,061	$	66,036
December	31, 2021
Hui Ying		1,957	$ 159,061	$	82,569

The Company’s shares held by subsidiaries are regarded as treasury shares; shareholders’ rights are retained, except for the rights to participate in any share issuances for cash and to vote.

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23. REVENUE

• a. Segmentation of revenue from contracts with customers

Product type Flash ROM Foundry Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 28,040,782 10,670,968 3,796,517 750 $ 42,509,017	2021 $ 32,538,740 13,556,983 3,501,876 600 $ 49,598,199

• b. Contract balances

Contract liabilities (classified as current liabilities)		**December **	**31 **
		2022 $ 17,883	2021 $ 34,963

The changes in the contract liability balances primarily result from the timing difference between the satisfaction of the performance obligations and the customer’s payment.

The Company recognized revenue from the beginning balance of contract liabilities as follows:

From the beginning balance of contract liabilities Sale of goods	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 34,792	2021 $ 86,424

24. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

• a. Interest income

Bank deposits b. Other income Dividend income Others	For the Year Ended	For the Year Ended	December 31
	2022 $ 101,764 For the Year Ended		2021 $ 17,689 December 31
		2022 $ 151,552 144,075 $ 295,627	2021 $ 118,914 36,713 $ 155,627

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c. Gain on disposal of property, plant and equipment

Gain on disposal of idle assets d. Other gains and losses Net foreign exchange gains (losses) Other losses e. Finance costs Interest on loans Interest on lease liabilities Less: Amounts included in the cost of qualifying assets Information about capitalized interest was as follows: Capitalized interest Capitalization rate f. Depreciation and amortization An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2022 2021 $ - $ 2,505,176 For the Year Ended December 31
	2022 $ 698,078 (813) $ 697,265 For the Year Ended			2021 $ (162,247) (314) $ (162,561) December 31
	2022 $ 220,762 12,444 (27,063) $ 206,143 For the Year Ended			2021 $ 220,856 14,627 (2,851) $ 232,632 December 31
	2022 $ 27,063 0.99% For the Year Ended			2021 $ 2,851 1.20% December 31
		2022 $ 3,688,632 735,662 $ 4,424,294 $ 30,503 34,393 $ 64,896	2021 $ 3,598,189 591,940 $ 4,190,129 $ 18,342 25,518 $ 43,860

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g. Employee benefits expense

Post-employment benefits (Note 21) Defined contribution plans Defined benefit plans Share-based payments Equity-settled Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 213,554 12,680 226,234 43,893 7,924,031 $ 8,194,158 $ 3,799,775 4,394,383 $ 8,194,158	2021 $ 208,895 13,516 222,411 115,145 8,409,327 $ 8,746,883 $ 4,046,241 4,700,642 $ 8,746,883

h. Employees’ compensation and remuneration of directors

In compliance with the Articles of Incorporation, the Company accrued employees’ compensation and remuneration of directors at the rates of 15% and no higher than 2%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. For the years ended December 31, 2022 and 2021, the estimated employees’ compensation and the remuneration of directors resolved by the board of directors on February 14, 2023 and February 25, 2022, respectively, were as follows:

Amount

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,854,831 $ 247,311	2021 $ 2,396,656 $ 319,554

If there is a change in the amounts after the annual parent company only financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amount of employees’ compensation and remuneration of directors paid and the amount recognized in the financial statements for the years ended December 31, 2021 and 2020.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2022 and 2021 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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25. INCOME TAXES RELATING TO CONTINUING OPERATIONS

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

For the Year Ended December 31 2022 2021 Current tax In respect of the current year $ 1,387,619 $ 630,925 Adjustments for prior year (15) 9,312 Deferred tax In respect of the current year (93,978) 658,310 Income tax expense recognized in profit or loss $ 1,293,626 $ 1,298,547 A reconciliation of accounting loss and income tax expenses is as follows: For the Year Ended December 31 2022 2021 Income before tax from continuing operations $ 10,263,401 $ 13,261,499 Income tax expense calculated at the statutory rate $ 2,052,680 $ 2,652,300 Non-deductible expenses in determining taxable income 10,032 7,969 Non-taxable income (32,536) (131,393) Deductible temporary differences 66,423 (1,234,348) Unrecognized investment credits (708,980) (337,368) Deferred tax in respect of the current year (93,978) - Adjustments for prior year (15) 9,312 Recognized loss carryforwards - 658,310 Realized investment losses - (242,886) Deductible tax-exemptions income credits - (83,349) Income tax expense recognized in profit or loss $ 1,293,626 $ 1,298,547 b. Current tax assets and liabilities December 31 2022 2021 Current tax assets Tax refund receivable $ 6,225 $ 2,745 Current tax liabilities Income tax payable $ 1,387,619 $ 640,237	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 2021 $ 10,263,401 $ 13,261,499 $ 2,052,680 $ 2,652,300 10,032 7,969 (32,536) (131,393) 66,423 (1,234,348) (708,980) (337,368) (93,978) - (15) 9,312 - 658,310 - (242,886) - (83,349) $ 1,293,626 $ 1,298,547 December 31
		2022 $ 6,225 $ 1,387,619	2021 $ 2,745 $ 640,237

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• c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2022

Deferred tax assets Temporary differences Unrealized inventory losses Net defined benefit liabilities Unrealized refund liabilities Others Deferred tax liabilities Temporary differences Depreciation Unrealized exchange gains For the year ended December 31, 2021 Deferred tax assets Temporary differences Unrealized inventory losses Net defined benefit liabilities Unrealized refund liabilities Recognized loss carryforwards Others Deferred tax liabilities Temporary differences Depreciation Unrealized exchange gains

Opening Balance Recognized in Profit or Loss Closing Balance $ 483,271 $ 204,740 $ 688,011 83,127 1,650 84,777 35,569 4,294 39,863 42,246 (4,982) 37,264 $ 644,213 $ 205,702 $ 849,915 $ (603,554) $ (152,383) $ (755,937) (40,659) 40,659 - $ (644,213) $ (111,724) $ (755,937) Opening Balance Recognized in Profit or Loss Closing Balance $ - $ 483,271 $ 483,271 - 83,127 83,127 - 35,569 35,569 658,310 (658,310) - - 42,246 42,246 $ 658,310 $ (14,097) $ 644,213 $ - $ (603,554) $ (603,554) - (40,659) (40,659) $ - $ (644,213) $ (644,213)

• 266 -

• d. Deductible temporary differences and unused investment credits for which no deferred assets have been recognized in the parent company only balance sheets

Investment credits Research and development expenditures Purchase of smart machines expenditures Deductible temporary differences The unrecognized investment credits will expire in 2023.		December 31	December 31
		2022 $ 327,891 - $ 327,891 $ 5,507,894	2021 $ 141,281 30,000 $ 171,281 $ 5,537,304

• e. Information on unused investment credits and tax-exemptions

As of December 31, 2022, the investment tax credits comprised of:

Law and Statutes Tax Credit Source Statute for Industrial Innovation Research and development expenditures	Remaining Creditable Amount Expiry Year $ 327,891 2023

• f. Income tax assessments

The Company’s tax returns through 2020 have been assessed by the tax authorities.

26. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31	Unit: NT$ Per Share For the Year Ended December 31
		2022 $ 4.85 $ 4.68	2021 $ 6.48 $ 6.25

The income and weighted average number of ordinary shares outstanding in the computation of earnings per share from continuing operations were as follows:

Net Income for the Year

Income for the year attributable to owners of the Company	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 8,969,775	2021 $ 11,962,952

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Weighted average number of ordinary shares outstanding (in thousand shares):

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Restricted shares to employees Employees’ compensation or bonus issue to employees Weighted average number of ordinary shares in computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 1,850,115 3,820 63,490 1,917,425	2021 1,845,347 7,704 60,181 1,913,232

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

27. SHARE-BASED PAYMENT ARRANGEMENTS

Restricted share plan for employees

Information on share plan for employees were as follows:

		Board of
		Directors
		Approved
Approved	Grant Shares	Grant Shares			Issued Shares
Date	(Thousand)	(Thousand)	Grant Date	Issued Date	(Thousand)	Fair	Value
2019/06/18	35,294	16,815	2019/10/21	2020/06/16	16,400	$	32.55

To meet the vesting conditions, an employee has to meet performance and other conditions over the vesting period listed as follows:

• a. If an employee remains employed by the Company for one year after the grant date; and has a current year’s performance rating of A0 or A1, 40% of the restricted shares will be vested;

• b. If an employee remains employed by the Company for two years after the grant date; and has a current year’s performance rating of A0 or A1, 30% of the restricted shares will be vested;

• c. If an employee remains employed by the Company for three years after grant date; and has a current year’s performance rating of A0 or A1, 30% of the restricted shares will be vested.

In addition to the vesting conditions, the limitations are as follows:

• a. Employees, except for inheritance, should not sell, transfer, pledge, donate or in any other way dispose of the shares.

• b. The shares should be held in stock trust.

• 268 -

• c. Except for the above two paragraphs, the other rights of the restricted share plan for employees, which include, but are not limited to, dividends, bonuses, the distribution rights of the legal reserve and capital surplus, share options of cash capital voting rights of shareholders, etc., are the same as the Group’s issued ordinary shares.

• d. The dividends of restricted share plan for employees are not restricted by existing conditions.

• e. When a new share is returned in cash due to the Company’s capital reduction, the refund of the vested capital loss shall be under custodian trust. In accordance with the issuance method, such capital and shares shall be granted if the vesting conditions for new restricted employee shares are met. The vested shares are granted to employees without interests; if the vested conditions are not met, such cash will be recovered by the Company.

When employees do not reach the vesting conditions of restricted share plan for employees during the year, the Company will recover and cancel the shares.

Information on restricted share plan for employees was as follows:

Balance at January 1 Vested Forfeited (Note) Balance at December 31	Number of Shares (In Thousands)	Number of Shares (In Thousands)	Number of Shares (In Thousands)
	For the Year Ended December 31
		2022 4,826 (4,662) (149) 15	2021 9,836 (4,800) (210) 4,826

Note: For the years ended December 31, 2022, the forfeited shares include 26 thousand shares, which will be cancelled, and 123 thousand shares, which were already cancelled; for the years ended December 31, 2021, the forfeited shares include 41 thousand shares, which will be cancelled, and 169 thousand shares, which were already cancelled.

For the years ended December 31, 2022 and 2021, the compensation cost recognized was NT$43,893 thousand and NT$115,145 thousand, respectively.

28. GOVERNMENT GRANTS

As of December 31, 2022, the Company obtained a government preferential interest rate loan of $7,787,000 thousand from the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan”. The loan will be repaid on an average monthly basis after the date of expiry. At the time of the borrowing, the fair value of the borrowing was estimated based on the market interest rate. The difference between the amount obtained and the fair value of the loan is $115,898 thousand, which is regarded as a government low interest loan and recognized as deferred income. For the year ended December 31, 2022 and 2021, the Company recognized other income of $12,420 thousand and $1,357 thousand, respectively. For the year ended December 31, 2022 and 2021, the interest expense of the loan was $18,797 thousand and $3,532 thousand, respectively.

29. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to operate under the premises of going concerns and growth while maximizing the return to shareholders through the optimization of the debt and equity balance.

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The Company’s strategy for managing the capital structure is to lay out the plan of product development and expand the market share considering the growth and the magnitude of industry and further developing an integral plan founded on the required capacity, capital outlay, and magnitude of assets in long-term development. Ultimately, considering the risk factors such as the fluctuation of the industry cycle and the life cycle of products, the Company determines the optimal capital structure by estimating the profitability of products, operating profit ratio, and cash flow based on the competitiveness of products.

The management of the Company periodically examines the capital structure and contemplates on the potential costs and risks involved while exerting different financial tools. In general, the Company implements prudent strategy of risk management.

30. FINANCIAL INSTRUMENTS

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

The management considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values or their fair values cannot be reliably measured.

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

• 1) Fair value hierarchy

December 31, 2022 Financial assets at FVTOCI Equity securities Securities listed in ROC Securities unlisted in ROC December 31, 2021 Financial assets at FVTOCI Equity securities Securities listed in ROC Securities unlisted in ROC	Level 1 $ 1,783,213 - $ 1,783,213 Level 1 $ 1,995,329 - $ 1,995,329	Level 2 $ - - $ - Level 2 $ - - $ -	Level 3 $ - 558,236 $ 558,236 Level 3 $ - 498,055 $ 498,055	Total $ 1,783,213 558,236
				$ 2,341,449
				Total $ 1,995,329 498,055
				$ 2,493,384

There were no transfers between Level 1 and Level 2 in the current and prior years.

• 2) Reconciliation of Level 3 fair value measurements of financial assets

Financial Assets Balance at January 1 Total gain recognized in other comprehensive (unrealized gain on financial assets at FVTOCI) Balance at December 31	Financial Assets at FVTOCI	Financial Assets at FVTOCI	Financial Assets at FVTOCI
	For the Year Ended		December 31
		2022 $ 498,055 60,181 $ 558,236	2021 $ 389,504 108,551 $ 498,055

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• 3) Valuation used in Level 3 fair value measurement

The fair values of equity securities listed in the ROC and other countries was arrived at using either the asset-based approach or based on the multiplier evaluated in the active market by the market approach and adjustments of liquidity.

• c. Categories of financial instruments

Financial assets Measured at amortized cost (1) Measured at FVTOCI Financial liabilities Measured at amortized cost (2)	December 31
	2022 2021 $ 23,285,923 $ 24,020,500 2,341,449 2,493,384 23,165,747 22,484,396

• 1) The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, trade receivables (including receivables from related parties), other receivables and other financial assets.

• 2) The balances included financial liabilities measured at amortized cost, which comprise, notes payable and trade payables (including payables to related parties), other payables (including other payables to related parties), payable for purchases of equipment, guarantee deposits and long-term loans (including current portion).

• d. Financial risk management objectives and policies

The Company manages its exposure to risks relating to the operations through market risk, credit risk, and liquidity risk with the objective to reduce the potentially adverse effects the market uncertainties may have on its financial performance.

The plans for material treasury activities are reviewed by management in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Company must comply with certain treasury procedures that provide guiding principles for overall financial risk management.

• 1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below), interest rates (see (b) below), and other price risk (see (c) below).

a) Foreign currency risk

The Company had foreign currency sales and purchases, which exposed the Company to foreign currency risk. Exchange rate exposures were managed within approved policy parameters utilizing foreign exchange forward contracts.

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Sensitivity analysis

The Company was mainly exposed to the USD and JPY.

The sensitivity analysis of foreign currency risk focuses mainly on exchange rates for transactions in currencies other than the entity’s functional currency (i.e. foreign currencies) which are recognized at the rates of exchange prevailing at the end of each reporting period.

The following table details the Company’s sensitivity to a 3% and 10% increase in the New Taiwan dollars (i.e. the functional currency) against the USD and JPY, respectively. The sensitivity rates used are 3% and 10% when reporting foreign currency risk internally to key management personnel.

Pre-tax profit decrease (increase)		USD Impact For the Year Ended December 31 2022 2021 $ 117,032 $ 163,232		JPY Impact	JPY Impact
				For the Year Ended December 31
		2022 $ 117,032		2022 $ (6,802)	2021 $ 14

• b) Interest rate risk

The Company is exposed to interest rate risk from outstanding bank loans. Interest rates of the Company’s long-term bank loans are floating, and changes in interest rates would affect the future cash flows but not the fair value.

The sensitivity analysis of interest is performed based on the financial liabilities exposed to cash flow interest rate risk at the end of each reporting period.

If interest rates had been 50 basis points higher/lower, the Company’s pre-tax profit for the years ended December 31, 2022 and 2021 would decreased/increased by NT$78,269 thousand and NT$61,725 thousand, respectively.

• c) Other price risk

The Company was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments.

Sensitivity analysis

A sensitivity analysis of equity prices is performed based on the fair values of equity investments at the end of each reporting period.

If equity prices had been 10% higher/lower, equity for the years ended December 31, 2022 and 2021 would have increased/decreased by NT$234,145 thousand and NT$249,338 thousand, as a result of the changes in fair value of available-for-sale investments.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company’s exposure to credit risk mainly arises from trade receivables - operating, bank deposits, and other financial instruments. Credit risk is managed separately for business related and financial related exposures.

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Business related credit risk

In order to maintain the credit quality of trade receivables, the Company has established procedures to monitor and limit exposure to credit risk on trade receivables.

Credit evaluation is performed in the consideration of the relevant factors such as financial condition, external and internal credit scoring, historical experience, and economic conditions, which may affect the customer’s paying ability. The Company holds some of the credit enhancements such as prepayments and collateral to mitigate its credit risks.

Trade receivables consisted of a large number of customers, spread across diverse industries and geographical areas.

As of December 31, 2022 and 2021, the Company’s ten largest customers accounted for 46% and 59% of its total trade receivables (including receivables from related parties), respectively. The Company believed that the concentration of credit risk is relatively insignificant for the remaining trade receivables.

Financial credit risk

The Company’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Corporate Treasury function. The Company only deals with creditworthy counterparties and banks so that no significant credit risk was identified.

• 3) Liquidity risk

The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual and undiscounted payments, including principal and estimated interest.

December 31, 2022

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 10,939,392 Lease liabilities 74,543 Interest bearing 3,975,985 $ 14,989,920	1-3 Years $ - 134,123 6,965,862 $ 7,099,985	3-5 Years $ - 129,066 3,635,747 $ 3,764,813	5+ Years $ - 469,412 1,838,682 $ 2,308,094	Total $ 10,939,392 807,144 16,416,276
				$ 28,162,812

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 Year $ 74,543	1-5 Years $ 263,189	5-10 Years $ 311,659	10-15 Years $ 139,055	15-20 Years $ 18,698	20+ Years $ -

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December 31, 2021

On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing $ 13,580,768 Lease liabilities 75,639 Interest bearing 3,272,506 $ 16,928,913	1-3 Years $ - 137,111 7,076,478 $ 7,213,589	3-5 Years $ - 130,715 1,371,007 $ 1,501,722	5+ Years $ - 512,042 1,036,924 $ 1,548,966	Total $ 13,580,768 855,507 12,756,915
				$ 27,193,190

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 Year $ 75,639	1-5 Years $ 267,826	5-10 Years $ 320,221	10-15 Years $ 185,202	15-20 Years $ 6,619	20+ Years $ -

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates were to differ from those estimates of interest rates determined at the end of the reporting period.

31. TRANSACTIONS WITH RELATED PARTIES

In addition to those disclosed in other notes, detail of transactions between the Company and related parties are disclosed below.

• a. Related parties and their relationships associated with the Company:

Related Parties Macronix America, Inc. (MXA) Mxtran Inc. (Mxtran) Macronix (Hong Kong) Co., Limited (MXHK) Macronix Europe N.V. (MXE) Macronix Pte Ltd (MPL) Macronix (Asia) Limited (MX Asia) MegaChips Corporation (MegaChips) Ardentec Corporation (Ardentec) Macronix Education Foundation (MXIC Foundation) NCKUEE Alumni Foundation (NCKUEE Foundation) Wolley Inc. (Wolley)	Relationship with the Company
	Subsidiary Subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary Indirect subsidiary Key management personnel The Company is its major management authority Others Others Others

• b. Operating revenues

Line Items Related Parties Categories/Name Sales Key management personnel MegaChips Subsidiaries MXHK Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 10,739,770 5,452,475 2,742,517 $ 18,934,762	2021 $ 13,704,352 8,919,103 2,161,911 $ 24,785,366

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Sale prices to foreign related parties were negotiated based on those charged to ultimate customers and were not comparable to those with external customers as foreign related parties were the primary regional distributors. Sales to domestic related parties were priced at a markup on the unit cost of the product, price that was not comparable to those with other customers.

Sales prices for the related parties were not comparable to those for external customers as the Company sells the specific purpose product. The sales terms to the related parties were between 30 to 60 days after monthly closing, similar to those with external customers.

• c. Purchases

Related Parties Categories/Name Key management personnel MegaChips	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 3,234,286	2021 $ 5,895,828

Materials purchased from related parties were for manufacturing process. The payment term was 30 days after monthly closing and after acceptance of materials.

• d. Receivables from related parties

Line Items Related Parties Categories/Name Receivables from related Subsidiaries parties, net MXHK MXA Others Key management personnel MegaChips Other receivables Subsidiaries Mxtran MXHK		**December 31 **	**December 31 **
		2022 $ 260,898 214,742 344 764,715 $ 1,240,699 $ 113 48 $ 161	2021 $ 1,500,143 326,248 - 961,722 $ 2,788,113 $ 113 5 $ 118

The outstanding trade receivables from related parties are unsecured. For the year ended December 31, 2022 and 2021, no impairment loss was recognized for trade receivables from related parties.

• e. Payables to related parties

Line Items Related Parties Categories/Name Payables to related parties Key management personnel MegaChips The Company is its major management authority		December 31	December 31
		2022 $ 2,628,765 113,391 $ 2,742,156	2021 $ 4,388,398 120,798 $ 4,509,196 (Continued)

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December 31 Line Items Related Parties Categories/Name 2022 2021 Other payables to related Subsidiaries parties MXE $ 54,327 $ 45,069 MX Asia 21,093 22,908 MXA 9,986 82,498 Others 4,078 6,937 Others 10 360 $ 89,494 $ 157,772 (Concluded) The outstanding trade payables from related parties are unsecured and will be settled in cash. Other transactions with related parties For the Year Ended December 31 Line Items Related Parties Categories/Name 2022 2021 Manufacturing expense The Company is its major management authority Ardentec $ 412,104 $ 387,057 Subsidiaries 4,400 6,600 $ 416,504 $ 393,657 Operating expense Subsidiaries MXA $ 189,869 $ 215,187 MXE 167,322 146,596 MX Asia 112,602 113,092 Others 29,481 23,393 Others 33,234 21,928 $ 532,508 $ 520,196 IT service revenue Subsidiaries Mxtran $ 349 $ 324 Rental revenue Subsidiaries Mxtran $ 435 $ 435		**December 31 **	**December 31 **	**December 31 **
			2022 $ 412,104 4,400 $ 416,504 $ 189,869 167,322 112,602 29,481 33,234 $ 532,508 $ 349 $ 435	2021 $ 387,057 6,600 $ 393,657 $ 215,187 146,596 113,092 23,393 21,928 $ 520,196 $ 324 $ 435

• f. Other transactions with related parties

The manufacturing expense and operating expense of related parties were comparable to those with other vendors. The payment term was between 30 to 90 days after monthly closing.

The Company leases offices to its subsidiaries (rentals are classified under other income). The amount of lease payment was based on the office space leased by each related party and was collected on a monthly basis.

Under certain contracts, the Company provided the IT service to the above related parties. The specifically negotiated terms were not comparable to those with external customers.

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• g. Compensation of key management personnel

Short-term benefits Post-employment benefits Share-based payments Other long-term employee benefits	For the Year Ended	For the Year Ended	December 31
		2022 $ 682,557 5,670 7,071 (5) $ 695,293	2021 $ 863,154 5,218 18,545 (11) $ 886,906

The remuneration of key executives was determined by the remuneration committee based on the performance of individuals and market trends.

32. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings, the tariff of imported raw materials guarantees, natural gas agreements, and land lease agreements:

Property, plant and equipment, net Pledge deposits (classified as other financial assets - non-current)		December 31	December 31
		2022 $ 8,275,831 207,223 $ 8,483,054	2021 $ 9,758,877 208,268 $ 9,967,145

33. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company as of December 31, 2022 and 2021 were as follows:

• a. As of December 31, 2022 and 2021, unused letters of credit amounted to approximately NT$1,045,461 thousand and NT$395,425 thousand, respectively.

• b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment		**December 31 **	**December 31 **
		2022 $ 8,623,775	2021 $ 11,312,421

• c. As a contribution to society, the Company’s board of directors passed a resolution to donate to National Cheng Kung University to establish the “School of Computing” in order to cultivate cross domain innovative talents with dual expertise “specific discipline” and “computing” to contribute to the society, and to fulfill the Company’s social responsibilities with a donation amount of $100,000 thousand per year for the next ten years. As of December 31, 2022, the Company has made a donation of $300,000 thousand to National Cheng Kung University.

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• d. On October 26, 2021, the board of directors of the Company approved the continued participation in the joint development plan of IBM “Phase Change Memory” and obtain the authorization of specific analog artificial intelligence technology. The period is from January 2022 to January 2025. The two parties jointly bear the related technology development fees, and the unrecognized contract amount is US$14,000 thousand.

• e. The Company signed a long-term purchase contract with supplier A and supplier B. According to the contract, the Company shall prepay a certain amount of money as a guarantee, and these suppliers shall supply the Company according to the quantity and price agreed in the contract. As of December 31, 2022, the Company’s prepayments and deposits for supplier A and supplier B were US$11,994 thousand and $549,580 thousand, respectively, and the unpaid contract amounts were US$31,719 thousand and US$87,120 thousand, respectively.

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2022

Foreign Currencies Exchange (In thousands) Rate Financial assets Monetary items JPY $ 12,242,769 0.2324 USD 214,495 30.71 Non-monetary items Investments accounted for using the equity method USD 107,625 30.71 Financial liabilities Monetary items JPY 12,535,435 0.2324 USD 87,466 30.71	Carrying Amount $ 2,845,219 6,587,130
	$ 9,432,349
	$ 3,305,156
	$ 2,913,235 2,686,068
	$ 5,599,303

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December 31, 2021

Foreign Currencies Exchange (In thousands) Rate Financial assets Monetary items JPY $ 18,356,915 0.2405 USD 266,402 27.68 Non-monetary items Investments accounted for using the equity method USD 100,337 27.68 Financial liabilities Monetary items JPY 18,356,338 0.2405 USD 69,832 27.68	Carrying Amount $ 4,414,838 7,374,018
	$ 11,788,856
	$ 2,777,323
	$ 4,414,699 1,932,945
	$ 6,347,644

For the years ended December 31, 2022 and 2021, realized and unrealized net foreign exchange gains (losses) were NT$698,078 thousand and NT$(162,247) thousand, respectively. It is impractical to disclose net foreign exchange losses by each significant foreign currency due to the variety of the foreign currency transactions.

35. SEPARATELY DISCLOSED ITEMS

• a. Information on significant transactions:

• 1) Financing provided to others: None

• 2) Endorsements/guarantees provided: None

• 3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Table 1 (attached)

• 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None

• 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None

• 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 2 (attached)

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• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 3 (attached)

• 9) Trading in derivative instruments: None

• b. Information on investees: Table 4 (attached)

• c. Information on investments in mainland China:

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gain or loss, carrying amount of the investment at the end of the period, repatriation of investment gains, and limit on the amount of investment in the mainland China area: Table 5 (attached)

• 2) Any of the significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses: None

• d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder: None

• 280 -

TABLE 1

MACRONIX INTERNATIONAL CO., LTD.

MARKETABLE SECURITIES HELD DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2022	December 31, 2022		Shares as Collateral
				Shares/Units (In Thousands)	Carrying Amount	Percentage of Ownership (%)	Fair Value
The Company MXBVI Hui Ying Run Hong	Shares Ardentec Corporation United Industrial Gases Co., Ltd. Zowie Technology Co., Ltd. Shares Chipbond Technology Corporation Tower Semiconductor Ltd. Amphastar Pharmaceuticals, Inc. Foreign Convertible Preference Shares Kneron Holding Corporation Wolley Inc. Shares Macronix International Co., Ltd. Raio Technology Co., Ltd. Genovior Biotech Corporation Shares Genovior Biotech Corporation	The Company serves as member of its board of directors None None None None None None Associate (Note) The Company None None None	Financial assets at FVTOCI - non current ” ” Financial assets at FVTOCI - non current ” ” Financial assets at FVTPL - non current ” Financial assets at FVTOCI - non current ” ” Financial assets at FVTOCI - non current	35,951,871 6,671,877 20,426 1,088,319 464,000 49,116 566,711 2,400,000 1,956,619 1,247,288 6,270,000 4,500,000	$ 1,783,213 558,236 - 62,470 615,576 42,264 88,339 84,737 66,036 33,228 32,604 23,400	7.33 3.06 0.07 0.15 0.42 0.10 0.92 18.18 0.11 10.03 3.98 2.86	$ 1,783,213 558,236 - 62,470 615,576 42,264 88,339 84,737 66,036 33,228 32,604 23,400	None None None None None None None None None None None None

Note: The Company has the ability to participate in the decision-making of the company’s financial and operating policies and has significant influence on the company.

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TABLE 2

MACRONIX INTERNATIONAL CO., LTD.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Term	Ending Balance	% to Total
The Company MXHK MXA	MegaChips MXHK MXA MegaChips The Company The Company	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary	Sales Sales Sales Purchase Purchase Purchase	$ 10,739,770 5,452,475 2,733,475 3,234,286 US$ 187,990 US$ 92,560	25 13 6 31 100 100	30 days after monthly closing 45 days after monthly closing Net 60 days 30 days after monthly closing and after acceptance of materials 45 days after monthly closing Net 60 days	Note 31 Note 31 Note 31 Note 31 No material difference No material difference	Note 31 Note 31 Note 31 Note 31 No material difference No material difference	$ 764,715 260,898 214,742 2,628,765 US$ 8,496 US$ 6,993	17 6 5 49 100 100	- - - - - -

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TABLE 3

MACRONIX INTERNATIONAL CO., LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	**Action Taken **
The Company	MegaChips MXHK MXA	Its subsidiary, Shun Ying Investment, is represented in MXIC’s board of directors Indirect subsidiary Subsidiary	$ 764,715 260,898 214,742	12.44 times 6.19 times 10.11 times	$ - - -	- - -	$ 701,677 thousand 178,027 thousand 152,587 thousand	$ - - -

• 283 -

TABLE 4

MACRONIX INTERNATIONAL CO., LTD.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	**Balance **	as of December 31, 2022	as of December 31, 2022	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2022	December 31, 2021	Shares	%	Carrying Amount
The Company MXBVI Run Hong Mxtran Mxtran Samoa	MXA MXBVI Hui Ying Run Hong Mxtran New Trend Technology Inc. MXE MPL MXHK MX Asia Mxtran Mxtran Holding (Samoa) Co., Ltd. (Mxtran Samoa) Mxtran (H.K.) Holding Co., Limited	San Jose, California, USA. Tortola, British Virgin Islands Taipei, Taiwan Taipei, Taiwan Hsinchu, Taiwan San Jose, California, USA. Belgium Singapore Hong Kong Cayman Island Hsinchu, Taiwan Samoa Hong Kong	Sales and marketing Investment holding company Investment Investment IC design IC design After-sales service After-sales service Sales and marketing After-sales service IC design Investment holding company Investment holding company	$ 2,640 7,348,057 500,000 1,014,432 755,287 923,403 2,106 3,291 378,427 19,744 40,318 35,979 23,880	$ 2,640 7,348,057 500,000 1,014,432 755,287 911,049 2,106 3,291 378,427 23,035 40,318 35,979 23,880	100,000 212,048,000 - - 69,627,323 28,250,000 1,000 174,000 89,700,000 600,000 3,393,200 1,170,000 6,152,000	100.00 100.00 100.00 100.00 90.43 100.00 100.00 100.00 100.00 100.00 4.41 100.00 100.00	$ 356,166 2,948,991 98,280 32,020 11,564 303,885 141,906 5,372 601,344 71,495 564 1,063 -	$ 93,240 124,321 19,008 (90 ) 5 (10,529 ) 8,841 1,175 98,213 5,804 5 620 617	$ 93,240 124,281 15,486 (90 ) - Note Note Note Note Note Note Note Note	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

Note: Under relevant regulations, no disclosure of investment gain (loss) is needed.

• 284 -

TABLE 5

MACRONIX INTERNATIONAL CO., LTD.

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEARS ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2022	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2022	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2022	Net Income (Loss) of the Investee	% Ownership for Direct or Indirect Investment	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2022	Accumulated Repatriation of Investment Income as of December 31, 2022
							Outward	Inward
Macronix Microelectronics (Suzhou) Co., Ltd.	Development of integrated system and software	circuit	$ 296,160	MXHK (Note 2)		$ 296,160	$ -	$ -	$ 296,160	$ 25,548	100	$ 25,548	$ 445,677	$ -
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2022		Investment Amount Authorized by the Investment Commission, MOEA				Upper Limit on the Amounts of Investment Stipulated by Investment Commission, MOEA
$ 296,160		$ 296,160				$ 31,565,819

Note 1: The amount was recognized based on the audited financial statements of the investee company.

Note 2: The Company invested in a company located in mainland China indirectly through the existing company in a third country.

• 285 -

Macronix International Co., Ltd.

Chairman : Miin Wu