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Macronix Annual Report 2023

Jun 18, 2024

52013_rns_2024-06-18_5beea56b-3a63-4ecc-b975-acbefbfbf650.pdf

Annual Report

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Stock Code: ２３３７

==> picture [505 x 90] intentionally omitted <==

Year 2023 Annual Report

Printed on February 29, 2024

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 2023 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 Title: Chairman and CEO Tel: 03-5786688 E-mail: [email protected] Deputy Spokesperson: Paul Yeh Title: Vice President Tel: 03-5786688 E-mail: [email protected]

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

Table of Contents Table of Contents
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 ............................................................................. 7
I. Organization ........................................................................................................................... 7
II. Profile of Directors, Supervisors, the President, Vice Presidents, Assistant Managers,
and Department Directors .................................................................................................... 9
III Remuneration of Directors, Supervisors, President, and Vice Presidents in the Most
Recent Fiscal Year ............................................................................................................. 28
IV. Implementation of Corporate Governance .......................................................................... 34
V. Information on the Professional Fees of the Attesting CPAs .............................................. 95
VI. CPA Replacement Information ............................................................................................ 96
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 .................................................................................................................................... 96
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 ................................................... 96
IX. Relationship Among the Top Ten Shareholders .................................................................. 98
X. The Total and Combined Shareholding in a Single Enterprise by the Company, its
Directors, Supervisors, Managers, and the Directly or Indirectly Controlled Entities ...... 99
Chapter IV. Capital Overview ................................................................................................ 100
I. Capital and Shares ............................................................................................................. 100
II. Corporate Bonds ................................................................................................................ 108
III. Preferred Shares ................................................................................................................. 108
IV. Global Depository Receipts ............................................................................................... 108
V. Employee Stock Options ................................................................................................... 108
VI. Employee Restricted Stock Awards .................................................................................. 108
VII. Mergers, Acquisitions or Issuance of New Shares for Acquisition of Shares of other
Companies ........................................................................................................................ 108
VIII. Financing Plans and Implementation ................................................................................. 108
Chapter V. Operation Summary ............................................................................................ 109
I. Business Activities ............................................................................................................. 109
II. Market and Sales Overview ............................................................................................... 113
III. Employees Information ...................................................................................................... 117
IV. Environmental Protection Expenditures ............................................................................ 118
V. Labor Relations .................................................................................................................. 119
VI. Information Security Management .................................................................................... 125
VII. Important Contracts ........................................................................................................... 130
Chapter VI. Financial Summary ............................................................................................ 132
I. Condensed Balance Sheet and Comprehensive Income Statement in the Last Five
Fiscal Years ...................................................................................................................... 132
II. Financial Analysis for the Last Five Fiscal Years ............................................................. 136
III. Audit Committee’s Report for the Most Recent Fiscal Year............................................. 140
IV. Financial Statements for the Most Recent Fiscal Year ...................................................... 141
V. Stand-Alone Financial Statements for the Most Recent Fiscal Year Certified by the
Accountant ....................................................................................................................... 141
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 ........... 141
Chapter VII. Review, Analysis, and Risks of Financial Position and Performance .......... 142
I. Analysis of Financial Status .............................................................................................. 142
II. Analysis of Financial Performance .................................................................................... 143
III. Analysis of Cash Flow ....................................................................................................... 144
IV. Major Capital Expenditures and Impact on Financial and Business in the Most Recent
Fiscal Year........................................................................................................................ 144
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 ..................................................................... 145
VI. Analysis of Risk Management in the Most Recent Fiscal Year and Up to the Printing
Date of this Annual Report............................................................................................... 145
VII. Other Significant Events .................................................................................................... 149
Chapter VIII. Special Disclosure ............................................................................................ 150
I. Summary of Affiliated Companies .................................................................................... 150
II. Private Placement Securities of the Most Recent Fiscal Year and Up to the Printing
Date of this Annual Report............................................................................................... 153
III. Subsidiaries’ Holding or Disposing the Company’s Sharesin the Most Recent Fiscal
Year and Up to the Printing Date of this Annual Report ................................................. 154
IV. Other Necessary Supplements ........................................................................................... 154
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. ................................................ 154

Chapter I. Letter to Shareholders

Last (2023) year, the world embarked on the post-epidemic era. Nevertheless, the economy remained erratic and uncertain, and economic recovery still faced challenges. In particular, amid the U.S.-China friction, geopolitical turmoil, inflation and high interest rates, the overall economy was sluggish. In response, Macronix adopted a conservative strategy, including persistently maintaining high-quality products and services to the best of our ability, and proactively adjusted inventory and postponed certain capital expenditures. However, due to the persisting downturn of the memory market, the destocking process was also extended, causing Macronix's consolidated revenue to decrease by 36% in 2023 compared with that of 2022, while the gross profit margin also dropped by 19.7 percentage points in comparison with 2023. As such, the results did not meet expectation.

The operating performance of 2023 is as follows: the consolidated net operating revenue for the year was NT$27.624 billion; annual consolidated gross profit was NT$6.761 billion; the annual averaged gross margin was 24.5%; the net loss after tax was NT$1.699 billion; loss per share was NT$0.92; and EBITDA was NT$2.6 billion. Cash expenditures from operating activities was NT$0.526 billion, whereas, cash expenditures from investment activities was NT$7.592 billion, with NT$11.906 billion in cash equivalents at the end of the period. The inventory was NT$13.369 billion; the debt ratio was 37.9%, and the book value per share was NT$26.07. All of the above indicate Macronix’s financial remains stable.

As always, Macronix believes that R&D is the core of the company's competitiveness. About 10%-15% of its annual revenue has been invested in the R&D, and.despite the sluggish economy, the forward-looking R&D in memory has never stopped. We obtained 309 patents in various countries in 2023; and 9,203 patents were obtained in total worldwide as of the end of 2023. In the past year (2023), we have also deepened our cooperation with major international manufacturers and launched a development plan for enterprise SSD storage technology and products, aiming to meet the marketdemand for efficient, reliable and high-quality storage in advanced application fields such as AI.

With regard to the processes and products, ROM accounted for 34% of the annual revenue in 2023. Total memory density shipment remained stable. NOR Flash accounted for 51% of the annual revenue, while automotive products accounted for 24% of NOR Flash’s annual revenue. Various demands in the electric vehicle market are expected to continue to increase, and new computer and servers markets will drive demand for higher density NOR Flash. Moreover, last year (2023), Macronix has delivered samples of 45 nm NOR Flash products and completed the 4Gb 3D NOR Flash testing. In terms of NAND Flash, the annual revenue accounted for 9%. The 192-layer 3D NAND Flash has currently entered the final adjustment stage in the production process. The stacking technology is able to move towards increasing the number of layers, thereby strengthening and improving Macronix’s long-term competitiveness.

Furthermore, given the development wave of the artificial intelligence and new technologies, Macronix will continue to promote applications in automotive, medical, servers, smart products and other fields. Our products are currently widely used in automobile intelligence, autonomous driving and other fields, and Macronix has become an important partner for international top-tier automotive electronics manufacturers. For example, Macronix’s high-performance OctaFlash™ not only passed the highest vehicle safety standard ISO 26262 ASIL D certification, but also won the best memory product of the EE Awards 2023 (Asia Award), showing that Macronix has become a trustworthy solution provider for customers. In addition, the COVID-19 epidemic and the global carbon reduction trend have also accelerated the advent of the digital era and the digitalization transformation of the medical industry. Macronix will uphold its competitive advantages by supplying high-quality and low energy consumption products. Meanwhile, we will deepen the related research, and a blue ocean strategy to accelerate the creation of the global smart medical market.

  • 1 -

In recent years, climate change issues have further accelerated the promotion of environment, society and governance (ESG) sustainable development in various countries, with declarations and actions proposed for “2050 Net-Zero Emissions.” As Macronix is a major international memory supplier and plays an important role in the international memory market, it has already formulated short, medium and long-term carbon reduction strategies and pathways, and promoted specific actions required, including using green materials and LED lighting system in newly built clean rooms, instal new greenhouse exhaust gas treatment equipment in the manufacturing machinery, having AI-controlled and energy-saving installation adopted in the refrigerating machinery system of the fab, and having rooftop solar photovoltaic equipmentinstalled. Our outstanding performance has been recognized by the authorities and won the 19th “National Sustainable Development Award,” the “2023 Occupational Safety Award” conferred by SGS, and the “Green Procurement Outstanding Unit” awarded by the Hsinchu City Government. The Macronix Education Foundation has been established for more than 20 years, also deeply involved in R&D related champions as well as encouraging cultural creative works. For example, Macronix has invited local Taiwanese artists for design competitions, and won the Ministry of Culture's “Arts and Business Awards” for two consecutive terms. As for the corporate governanceand risk management, Macronix follows the global corporate governance and legal norms, adheres to and strengthens professionalism, honest management and responsibilities. In addition, in response to the hacking and information security threats, Macronix has integrated information security into the corporate strategic systems and passed the ISO 27001, the international information security management system certification. In the future, we will implement the ISO management doctrine with a more rigorous attitude and continue to improve information security. All these efforts fully demonstrate Macronix’s commitment and ability to achieve our sustainable development goals.

Looking forward to the future, the global economic recovery remains uncertain, and the environment is full of challenges. The situation can better display the resilience and adaptability of enterprises. Our management team will adopt a prudent attitude to undertake destocking, and continue to expand the highquality application market. In addition, we will accelerate research and development, and work hard to create applications that are memory-centered and involve solid-state disks. Macronix will also create ultra-high-speed and ultra-high-density 3D memory solutions, and incorporate AI computing to meet the demand for in-memory computing solutions. This will help us secure new opportunities for our operations.

We are grateful for the long-term support extended by our shareholders. Macronix is determined to uphold the business philosophy of honesty. By adhering to our five major values, namely innovation, quality, efficiency, service, and teamwork, we have established and implemented corporate governance and risk management mechanisms to create a business environment that is conducive for sustainable development. We trust that our perseverance will be rewarded with light at the end of the economic downturn tunnel. We will be most delighted to share our operational results with employees, shareholders and customers!

Chairman: Miin Wu

President: C. Y. Lu

  • 2 -

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 to apply in consumption, communication, computing, automotive electronics, networking, and other fields. 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 150 to 154 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.

  • 3 -

(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
May2003 ‧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®
  • 4 -
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
  • 5 -
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)Prizein Engineering Sciences
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 theMinistry of 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
"BusinessParadigm Entrepreneur"of EY EntrepreneurOf TheYear
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 19nm 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
Ministry of Labor
April.
Dec.
2022		 ‧Mr. Miin Wu, Chairman & CEO of Macronix was awarded of 5th "Presidential Innovation
Award".
‧Mr. Miin Wu, Chairman & CEO of Macronix was awarded of "Executive of the Year" of
2022 EE Awards Asia.
‧Samples delivery of 68 nm 1.2V Serial Flash products.
‧Massproduction of96-Layer3DNAND Flashproducts.
Jan.
Aug.
Nov.
2023		 ‧Mass production of 45nm 3V Serial Flash products.
‧Sample delivery of 45 nm 1.8V Serial Flash products
‧Awarded the 19th National Sustainable Development Award by the National Council
For Sustainable Development

(VII) ESG Milestones and Other Awards: Please refer to page 78 of this annual report.

  • 6 -

Chapter III. Corporate Governance Report

I. Organization

  • (I) Organizational Structure

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  • 7 -

(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 controling critical advanced technologies
for the manufacture of high-quality products to be provided to Macronix’s
customers.
Foundry Business Group
(FBG)		 The 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.
  • 8 -

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
February29,2024
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
75		 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
56		 2022.05.27 3 2021.06.30 None None None None None None BS in electronics
engineering from
Kogakuin
University		 Officer / General Manager, Sensor Development Department,
MegaChips Corporation
Director R.O.C C. Y. Lu Male
73		 2022.05.27 3 2003.04.18 2,815,766 0.15% 2,941,766 0.16% None None PhD 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 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.
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
64		 Omitted Omitted 2007.06.29 Omitted Omitted 19,446 0.00% None None PhD 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
81		 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.
  • 9 -
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
77		 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.		 Independent Director of Sunplus Technology Co., Ltd.
Director R.O.C Yan-Kuin Su Male
75		 2022.05.27 3 2007.06.29 None None None None None None PhD degree in
electrical
engineering from
National Cheng
Kung University		 Independent Director of Himax Technologies, Inc
Independent Director of Epileds Technologies.Inc
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 Male
56		 2022.05.27 3 2022.05.27 370,159 0.02% 375,159 0.02% 60,000 0.00% PhD degree in
Material Science
and Engineering
from Stanford
University		 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
71		 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
65		 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.
(Note4)		 - 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
67		 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
64		 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
Independent Director of Walsin Lihwa Corporation
Independent
Director		 R.O.C Chiang Kao Male
71		 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
  • 10 -
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 Male
65		 2022.05.27 3 2022.05.27 None None None None 4,000 0.00% PhD degree in
Electrical and
Computer
Engineering from
University of
California, Santa
Barbara		 President of Southern Taiwan University of Science and
Technology
Independent Director of Global Unichip Corp.
Independent Director of M31 Technology Corporation
Independent
Director		 R.O.C Chien-Kuo Yang Male
65		 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. 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 5: 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 6: Managers or Directors who are spouses or within second-degree relative of consanguinity to the directors: None.

  • 11 -

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 (47.74%)
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(0.60%)
Hui Ying Investment Ltd. Macronix International Co., Ltd. (100%)
  • 12 -

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)
(10.60%)
Shindo Co., Ltd. (6.74%)
Shindo and Associates (6.74%)
Custody Bank of Japan, Ltd. (Trust Account) (3.65%)
Masahiro Shindo (3.01%)
GOVERNMENT OF NORWAY (City Bank, N.A. Tokyo
Branch, Permanent Agent) (2.97%)
Ritsuko Shindo (2.92%)
The Bank of New York 133652 (Standing proxy Mizuho Bank,
Ltd. Settlement Sales Department) (2.83%)
Noriko Matsui (2.76%)
Mika Aoki(2.69%)
Top Harvest Investment Ltd. (Samoa) Hannah Chen (100%)
Macronix International Co., Ltd. Syue-Rong Shen (2.93%)
Yuanta/P-shares Taiwan Dividend Plus ETF (2.68%)
Cathay Life Insurance (2.40%)
New Labor Pension Fund (2.17%)
Robeco Capital Growth Funds (1.35%)
Mercuries Life Insurance Co., Ltd. (1.29%)
Shun Yin Investment Ltd. (1.22%)
JPMorgan Chase Bank N.A., Taipei Branch in Custody for
Vanguard Total International Stock Index Fund, A Series of
Vanguard Star Funds (1.17%)
Vanguard Emerging Markets Stock Index Fund, A Series of
Vanguard International Equity Index Funds (1.03%)
Morgan Stanley & Co. International Plc (0.94%)
  • 13 -

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

of Independent Directors

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., the subsidiary
of Macronix. He has over 30-year
experience in the field of
semiconductors and the background 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 including the
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),
and The Stars of Asia (Business Week).
He was also awarded an “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 to the
integrated circuits and system design
fields. In addition, he received the
Social Education Contribution Awards
from Ministry of Education, “Country
Winner” and “Business Paradigm
Entrepreneur” from EY Entrepreneur
Of The Year, “Digital Transforming
Leader Award” from Harvard Business
Review, Industrial Technology
Research Institute (ITRI) Laureate,
“Lifetime Achievement Award” from
Global Views Leaders Forum,
“Presidential Innovation Award” and
the “Executive of the Year” from 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
  • 14 -
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 MegaChips Corporation’s
investment company. Previously, he
held positions as a director of
MegaChips Corporation and the head of
the 1st Business Division of ASIC.
Currently, Mr. Yamaguchi is an Officer
/ General Manager, Sensor
Development Department, MegaChips
Corporation
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 director 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
  • 15 -
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 PhD degree in
Physics from Columbia University, and
was previously the president of
Vanguard International Semiconductor
Corporation. He has a background in
industry technology, education, and
marketing. Mr. Lu has worked as a
professor at National Chiao Tung
University and participated in the
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 he successfully
developed the first 8-inch high-density
DRAM/SRAM manufacturing
technology in Taiwan. He has been the
president of Macronix and is currently
the chairman and CEO of Ardentec
Technology Inc.
Mr. Lu has been fellow 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, the
Engineering Sciences Award from the
World Academy of Sciences (TWAS),
the Technology Management Award
from the Chinese Society for
Management of Technology, Fellow of
the National Academy of Inventors, the
Academician of Academia Sinica, the
Materials Technology Contribution
Award from the Materials Research
Society-Taiwan (MRS-T), and the
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”.
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
  • 16 -
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 has
over 40-year experience in the practice
of law and qualifications of a patent
attorney and an arbitrator. Mrs. Lee
also served 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 VDU Office of the
Ministry of Economic Affairs. She also
served as the chairperson of the North
Area Fellowship and the director of the
Council for Industrial and Commercial
Development, chairperson 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.
Furthermore, Mrs. Lee served as the
Legislator of the 8thand 10thLegislative
Yuan of Republic of China (Taiwan)
and has more than 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 often
been invited to participate in various
domestic and/or foreign financial,
technological, legal, international
political and economic forums,
interviews as well as related media
events. She has also been a
commentator on TV shows. In short,
Mrs. Lee has a solid background in the
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”.
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
  • 17 -
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 has a
background in industry technology and
education. He has been the vice
president of National Chiao Tung
University and the director of Arcadyan
Technology Corporation. Currently
serves as an Independent Director of
Sunplus Technology Co., Ltd.
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
  • 18 -
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 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 Construction
Personnel, Electrical Engineering
Division, Electric Power Section; Mr.
Su has a background 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 the 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”.
2. 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
Director Sung-Jen Fang has a PhD in
Material Science and Engineering 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
  • 19 -
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, design,
and marketing, with nearly 100 patents
in the United States, Europe, Japan, and
Taiwan, etc., and has 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
its subsidiary Macronix (Hong Kong)
Co., Ltd.		 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
  • 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
Hui Ying Investment
Ltd. (Note 4)
Representative: Paul
Yeh		 Director Paul Yeh graduated with an
MBA from National Chengchi
University and has a background 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 a
background in 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 2024 Q1.		 3
  • 21 -
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 a background 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 Honorary
Professor of 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 2024 Q1.		 0
Cheng-Wen Wu Independent Director Cheng-Wen Wu
has a PhD 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 serves as
an Independent Director for Global
Unichip Corp. and M31 Technology
Corporation. He 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 2024 Q1.		 2
Chien-Kuo Yang
Independent Director Chien-Kuo Yan
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 2024Q1.		 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. Paul Yeh was appointed to attend the 12th-term Board of Directors, and represent the company exercising any and all director's rights thereof.

  • 22 -

3. 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 objectives in 2023 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
  • 23 -

(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 a spouse or a relative within two generations of other directors. Please refer to page 14 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 director 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, which include corporate governance, internal control system, and financial reporting responsibility. Completion of such courses will continue to improve directors' professional knowledge and skills, and provide for director succession planning and candidates arrangements.

  • (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 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.

  • 24 -

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

February29,2024 February29,2024 February29,2024
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 a 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 PhD 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 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
  • 25 -
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 a spouse
or a relative within second
degree		 Other officer, director or
supervisor who is a spouse
or a relative within second
degree		 Other officer, director or
supervisor who is a 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
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
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
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 PhD 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
  • 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 a spouse
or a relative within second
degree		 Other officer, director or
supervisor who is a spouse
or a relative within second
degree		 Other officer, director or
supervisor who is a 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 0.01% 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 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
(Note 2)		 Male Omitted Omitted Omitted Omitted Omitted Omitted Omitted Omitted Omitted Omitted Omitted Omitted
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.Hui-Chi Liretired on May 31, 2023.
  • 27 -

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

(I) Remuneration of Directors and Independent Directors

(I) Remuneration (I) Remuneration of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors of Directors and Independent Directors
December 31, 2023
Unit: NT$ thousands
Title Name Remuneration The Total of
Remuneration
(A+B+C+D) and the
Ratio Between it and Net
Income(%)		 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(%)		 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 0 0 120 120 120
(0.01%)		 120
(0.01%)		 26,624 26,624 1,059 1,059 0 0 0 0 27,803
(1.64%)		 27,803
(1.64%)		 0
Director Shun Yin Investment
Ltd.
Representative:
Ikuo Yamaguchi		 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 0 0 0 0 0 0 0 0 120
(0.01%)		 120
(0.01%)		 0
Director C. Y. Lu 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 20,016 20,016 1,059 1,059 0 0 0 0 21,195
(1.25%)		 21,195
(1.25%)		 82,479
Director Achi Capital Limited 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 0 0 0 0 0 0 0 0 120
(0.01%)		 120
(0.01%)		 0
Director Chien Hsu Investment
Corporation		 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 0 0 0 0 0 0 0 0 120
(0.01%)		 120
(0.01%)		 0
Director Che-Ho Wei 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 0 0 0 0 0 0 0 0 120
(0.01%)		 120
(0.01%)		 0
Director Yan-Kuin Su 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 0 0 0 0 0 0 0 0 120
(0.01%)		 120
(0.01%)		 0
Director Sung-Jen Fang 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 0 0 0 0 0 0 0 0 120
(0.01%)		 120
(0.01%)		 0
Director Tom Yiu 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 10,865 10,865 1,059 1,059 0 0 0 0 12,044
(0.71%)		 12,044
(0.71%)		 1,000
Director F. L. Ni 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 14,054 14,054 1,059 1,059 0 0 0 0 15,233
(0.90%)		 15,233
(0.90%)		 0
Director Hui Ying Investment
Ltd.		 0 0 0 0 0 0 120 120 120
(0.01%)		 120
(0.01%)		 0 0 0 0 0 0 0 0 120
(0.01%)		 120
(0.01%)		 0
Independent
Director		 Tyzz-Jiun Duh 3,600 3,600 0 0 0 0 120 120 3,720
(0.22%)		 3,720
(0.22%)		 0 0 0 0 0 0 0 0 3,720
(0.22%)		 3,720
(0.22%)		 0
Independent
Director		 Chiang Kao 3,600 3,600 0 0 0 0 120 120 3,720
(0.22%)		 3,720
(0.22%)		 0 0 0 0 0 0 0 0 3,720
(0.22%)		 3,720
(0.22%)		 0
Independent
Director		 Cheng-Wen Wu 3,600 3,600 0 0 0 0 120 120 3,720
(0.22%)		 3,720
(0.22%)		 0 0 0 0 0 0 0 0 3,720
(0.22%)		 3,720
(0.22%)		 0
Independent
Director		 Chien-Kuo Yang 3,600 3,600 0 0 0 0 120 120 3,720
(0.22%)		 3,720
(0.22%)		 0 0 0 0 0 0 0 0 3,720
(0.22%)		 3,720
(0.22%)		 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

Note 2: Explanation of the correlation and rationality of after-tax changes in the profit and remuneration.

(1)In 2022, the after-tax net profit of our company amounted to NT$8,969,775 thousand, and in 2023, an after-tax net loss of NT$1,699,593 thousand occurred. Consequently, director remuneration and employee compensation were not distributed, leading to a decrease in director remuneration and additional part-time employee compensation in 2023 compared to 2022.

(2) Considering the professionalism and contributions of "independent directors," they receive a fixed monthly compensation and transportation expenses regardless of the company's profit or loss. However, they do not participate in profit distribution, which is deemed reasonable. As for "non-independent directors," in the absence of company profits, not receiving director remuneration (only transportation expenses) is also considered reasonable.

  • 28 -

December 31, 2023 Unit: NT$ thousands

(II) Remuneration of the President and Vice Presidents

Title Name (Note 1) Salary (A) Salary (A) Severance Pay (B)
(Note)		 Severance Pay (B)
(Note)		 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 82,009 82,009 10,592 10,592 57,772 57,772 0 0 0 0 150,373
(8.85%)		 150,373
(8.85%)		 83,479
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
(Note 1)

Note : Estimated amount

  • 29 -

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)		 Paul Yeh Paul Yeh
NT$10,000,000 (inclusive) –
NT$ 15,000,000 (exclusive)		 Tom Yiu / Chun-Hsiung Hung/
Yen-Hie Chao/ Jon-Ten Chung /
Jui-Kun Chen		 Tom Yiu / Chun-Hsiung Hung/ Yen-
Hie Chao/ Jon-Ten Chung / Jui-Kun
Chen
NT$15,000,000 (inclusive) –
NT$30,000,000(exclusive)		 Miin Wu/ C. Y. Lu/ F. L. Ni /
Kuang-Chao Chen		 Miin Wu/ F. L. Ni /
Kuang-Chao Chen
NT$30,000,000 (inclusive) –
NT$50,000,000 (exclusive)
NT$50,000,000 (inclusive) –
NT$100,000,000(exclusive)
Over NT$100,000,000 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.

  • 30 -

December 31, 2023 Unit: NT$ thousands

(III) The compensation of the top five highest-paid executives.

Title Name (Note 1) Salary (A) Salary (A) Severance Pay (B)
(Note)		 Severance Pay (B)
(Note)		 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 from 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 13,987 13,987 1,059 1,059 12,637 12,637 0 0 0 0 27,683
(1.63%)		 27,683
(1.63%)		 0
President C. Y. Lu 11,755 11,755 1,059 1,059 8,261 8,261 0 0 0 0 21,075
(1.24%)		 21,075
(1.24%)		 82,479
Vice President F. L. Ni 8,101 8,101 1,059 1,059 5,953 5,953 0 0 0 0 15,113
(0.89%)		 15,113
(0.89%)		 0
Vice President Kuang-Chao Chen 8,467 8,467 1,059 1,059 5,485 5,485 0 0 0 0 15,011
(0.88%)		 15,011
(0.88%)		 0
Vice President Chun-Hsiung Hung 7,771 7,771 1,059 1,059 5,693 5,693 0 0 0 0 14,523
(0.85%)		 14,523
(0.85%)		 0

Note : Estimated amount

  • 31 -

(IV). Employees Compensation Distributed to Management Team

December 31, 2023 Unit: NT$ thousands

Title Name Stock
(Fair Market
Value)		 Cash Total Ratio of
Total
Amount to
Net Income
(%)
Managers CEO Miin Wu 0 0 0 0%
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
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

  • 32 -

  • (V) 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.

2022 2022 2023
The Company Companies in the
consolidated
financial statements
The Company		 Companies in the
consolidated
financial statements
Directors 2.94% 2.94% (0.95%) (0.95%)
Presidents and Vice
Presidents		 5.33% 5.33% (8.85%) (8.85%)

  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. 33 -

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)
Remarks
Chairman Miin Wu 7 0 100%
Director Shun Yin Investment Ltd.
Representative: Ikuo Yamaguchi
7		 0 100%
Director C. Y. Lu 7 0 100%
Director Achi Capital Limited
Representative: Stacey Lee		 7 0 100% 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		 6 1 86% 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%
Director Yan-Kuin Su 7 0 100%
Director Sung-Jen Fang 7 0 100%
Director Tom Yiu 6 1 86%
Director F. L. Ni 7 0 100%
Director Hui Ying Investment Ltd.
Representative: Paul Yeh		 7 0 100% 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.
Independent
Director		 Tyzz-Jiun Duh 7 0 100%
Independent
Director		 Chiang Kao 7 0 100%
Independent
Director		 Cheng-Wen Wu 7 0 100%
Independent
Director		 Chien-Kuo Yang 7 0 100%
  • 34 -

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
2023.02.14
The 4th meeting of
the 12th Term of the
Board of Directors		 Submitted for approval of the
2023 salary adjustment of the
CompanyManagers		 Approved Not applicable
For tax saving and in response to
the enforcement of the new tax
regulations regarding Controlled
Foreign Corporation, it is hereby
proposed to have the Company
acquire certain subsidiaries’
shares from the Company’s
wholly owned subsidiary, i.e.
Macronix (BVI) Co., Ltd..		 Approved Not applicable
2023.03.03
The 5th meeting of
the 12th Term of the
Board of Directors		 Submitted for approval of the
2022 employee bonus to be
distributed to the managers.		 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
2023.04.25
The 6th 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
ServicesProcess.		 Approved Not applicable
  • 35 -

==> picture [456 x 316] intentionally omitted <==

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

The Company’s
Board of Directors Motion Independent Directors’ Response to
Date/ Term Independent
Opinions Directors’ Opinions
Submitted for approval of the
Company's financial and tax
accountants for the year 2024 Approved Not applicable
and resolved by the Audit
Committee.
Submitted for approval of the
fees and expenses of CPAs in
Approved Not applicable
2023.12.19 2024 and resolved by the Audit
The 9th meeting of Committee.
the 12th Term of the Submitted for approval of 2024
Board of Directors annual incentive bonus of the Approved Not applicable
Company Managers.
Submitted for approval of the
transactions (sales & purchases)
with related party, MegaChips
Approved Not applicable
Corporation, in 2024 and
resolved by the Audit
Committee.
(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.
----- End of picture text -----

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 2023 salary
adjustment 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 the 2022 employee
bonus to be distributed
to the managers.		 Related persons Recusal and no
participation in the
resolution by proxy
  • 36 -
Name of Directors who avoid
conflict of interest		 Motion Causes of
Avoiding
Conflicts of
Interest		 Voting
Participation
Shun Yin Investment Ltd.
Representative:
Ikuo Yamaguchi		 Submitted for approval
of the transactions (sales
& purchases) with
related party,
MegaChips Corporation,
in 2024 and resolved by
the Audit Committee.		 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 2024 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 of the entire board of directors, individual board members, and functional committees (including the Audit Committee, Remuneration Committee, and Nomination Committee) for the year 2023 were conducted in January 2024. In addition, in October 2023, EY Advisory Services Inc. was commissioned to conduct the external performance evaluation of the board of directors for the year 2023.Evaluation results are shown in the table below and were reported to the Nomination Committee and Board of Directors meeting on February 27, 2024.

Assessment
cycle		 Assessment
period		 Assessment
scope		 Assessment
method		 Assessment content Evaluation
result
1. Participation in the
Company's Operations
2. Raising the Quality of
Performed
once per
year		 January 1,
2023 to
December
31, 2023		 Entire Board
of Directors		 Self-
assessment of
the board of
directors		 the Board of Directors'
Decisions
3. Composition and
Structure of the Board
of Directors		 Overall
average 4.97
(out of 5)
4. Election and Continuing
Education of Directors
5. Internal controls
1. Understanding of the
Company's
Objectives and Tasks
2. Directors’
Responsibilities
Performed
once per
year		 January 1,
2023 to
December
31, 2023		 each member
of the board
of directors		 Self-
assessment of
each member
of the board
of directors		 3. Participation in the
Company's
Operations
4. Management and
Communication of		 Overall average
4.98
(out of 5)
Internal Relations
5. Directors' Expertise
and Continuing
Education
6. Internal controls
  • 37 -
Performed
once per
year		 January 1,
2023 to
December
31, 2023		 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)
Assessment
cycle
Performed
once per
year
Performed
once per
year
Performed
once every
three years		 Assessment
period		 Assessment
scope		 Assessment
method		 Assessment content Evaluation
result
January 1,
2023 to
December
31, 2023		 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)
January 1,
2023 to
December
31, 2023		 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
5.00
(out of 5)
January 1,
2023 to
December
31, 2023		 Entire Board
of Directors		 Evaluation by
an external
professional
institution		 1. Board structure
‧ Board structure and
processes
‧ Composition of the
Board of Directors
2. Task force members
‧ Legal persons and
organizational
structure
‧ Roles and
responsibilities
‧ Conduct and culture
3. Process and
information
‧ Director training
and development
‧ Risk control
supervision
‧ Reporting/disclosure
and performance
monitoring		 The
comprehensive
performance
level of the
three aspects
listed on the left
is "Advanced."
(Note)
  • 38 -

(Note) Levels of the assessment conclusion:

  • ‧Basic: Comply with the basic requirements of the competent authorities and relevant regulations. ‧Advanced: Comply with the basic requirements of the competent authorities and relevant regulations, and have a set of established and effective practices, or the ability to improve performance in each aspect.

  • ‧Exemplary: The practice exceeds the basic requirements of the competent authorities and relevant laws and regulations. It is exemplary.

  • 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 Committee, Compensation Committee and Nomination Committee, 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 the course information from external institutions for the Directors' reference. Please refer to page 88 of this annual report for the Company's Director training in the most recent year.

  • 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 fair presentation of the Company's financial reports, hiring or dismissal, independence, and performance of CPAs, effective implementation of internal control system, compliance with applicable laws and regulations, and management of the Company’s existing and/or potential risks. In the most recent year, the Audit Committee has duly reviewed and resolved the following matters:

  1. Assessment of the internal control system and efficiency.

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

  3. Engagement and/or dismissal of auditing CPA and the compensation.

  4. Annual and first quarter to third quarter financial reports.

  5. Business report and earnings distribution

  6. A material asset transaction.

  7. A matter involving personal interest of a director.

A total of 6 (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 6 0 100%
Member ChiangKao 6 0 100%
Member Cheng-Wen Wu 6 0 100%
Member Chien-Kuo Yang 6 0 100%
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
2023.02.14
The 4th meeting
of the 12th Term
of the Audit
Committee
Year 2022 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
For tax saving and in
response to the
enforcement of the
new tax regulations
regarding Controlled
Foreign Corporation,
it is hereby proposed
to have the Company
acquire certain
subsidiaries’ shares
from the Company’s
wholly owned
subsidiary, i.e.
Macronix (BVI) Co.,
Ltd..
None
Unanimously
approved by all the
members attending the
meeting and will be
submitted to the Board
of Directors meeting
for approval.
Not
applicable
  • 40 -
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
Submitted for
approval of the
Company’s 2022
“Internal Control
System Statement”		 None Unanimously
approved by all the
members attending the
meeting and will be
submitted to the Board
of Directors meeting
for approval.		 Not
applicable
2023.03.03
The 5th meeting
of the 12th Term
of the Audit
Committee		 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
2023.04.25
The 6th meeting
of the 12th Term
of the Audit
Committee		 The company 2023
Q1 Consolidated
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
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
2023.07.25
The 7th meeting
of the 12th Term
of the Audit
Committee		 The company 2023
Q2 Consolidated
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
2023.10.24
The 8th meeting
of the 12th Term
of the Board of
Directors		 The company 2023
Q3 Consolidated
Financial Statements.		 None Unanimously
approved by all
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
2023.12.19
The 9th meeting
of the 12th Term
of the Audit
Committee		 Submitted for
approval of the
Company's financial
and tax accountants
for the year 2024
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 2024 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
transactions (sales &
purchases) with
related party,
MegaChips
Corporation, in 2024.		 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
2023.02.14
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		 ．Audit report
．2022 Statement on
Internal Control
．Review results and
key review items
for the 2022 stand-
alone and
consolidated
financial
statements		 Full attendance
No objections
from Independent
Directors
2023.03.03
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
2023.04.25
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		 ．Results of review
of the consolidated
financial
statements for Q1
2023
2023.07.25
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		 ．Results of review
of the consolidated
financial
statements for Q2
2023
2023.10.24
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 Q3
2023
2023.12.19
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 2024 Audit
Plan
  • 43 -

(III)Corporate Governance Implementation Status and Deviations from the “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companiesand 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” andReasons
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” andReasons
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 23
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” andReasons
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 53 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 37 of this Annual Report for implementation
status in 2023.
(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” andReasons
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.
Additionally, according to this firm, it has implemented
cloud-based audit platform and tools, utilized digital
technologies, and expanded the audit support center to
enhance auditqualityand efficiency.
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 position
was established. Mr. Paul Yeh, Vice President, who has over
three years of experience in financial management in publicly
traded companies, was appointed to oversee and manage
director requests and supervise matters related to corporate
governance. 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;		 None
  • 47 -
Evaluation Item ImplementationStatus ImplementationStatus ImplementationStatus Deviations from “the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies” andReasons
Yes No Abstract Illustration
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.
(2) Please refer to page 90 of this annual report for education
of corporategovernance supervisor in 2023.
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. Please
refer to page 92 of this annual report and the Company's ESG
Report. Communications with stakeholders are reported to the
Board of Directors every year. The Company has set up a
special area, “Contact Us”(https://www.macronix.com/zh-
tw/about/contacts/Pages/default.aspx), on the company website, for
the related parties to contact, communicate with, ask questions
or express opinions to the Company.		 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?		 (I) The Company has established a corporate website to
disclose information on financial operations and corporate
governance.		 None
  • 48 -
Evaluation Item ImplementationStatus ImplementationStatus ImplementationStatus Deviations from “the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies” andReasons
Yes No Abstract Illustration
(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)?
(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?
(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
deputy spokesperson to disclose material inside
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 2023 financial statements
were announced and reported within two months after the
end of the fiscal year.		 None
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 88 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 directors received 6 hours of training in 2023.
Please refer to page 88 of this annual report for Directors’
trainingrecords.		 None
  • 49 -
Evaluation Item ImplementationStatus ImplementationStatus ImplementationStatus Deviations from “the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies” andReasons
Yes No Abstract Illustration
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).
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 2022 (9th) Corporate Governance Evaluation in April 2023. Macronix ranked top 6-20% of public
companies and top 11-20% of electronic companies with a market cap of NT$10 billion or above. Regarding the previously disclosed evaluation results, key
improvements are as follows: (1) Refer to provisions of audit quality indicators (AQIs) to evaluate the independence and suitability of CPAs, (2) Report the
English version of the annual report and changes in insider shareholdings before the regulatory deadline, (3) Invest in energy-saving machinery and
equipment and disclose its investment status and specific benefits, (4) The Board of Directors adopts risk management policies and procedures, and the Audit
Committee supervises risk management, and (5) Passed ISO 27001 international information security management system certification. We will continue to
improve our corporate governance pursuant to “Corporate Governance 3.0 – Sustainable Development Roadmap” and “Sustainable Development Guidemap
for TWSE- and TPEx-Listed Companies.”

  • 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 31,2023
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		 2

Note: Please refer to page 14 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) 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.

  • (2) The Compensation Committee convened 3 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)		 Remarks
Convener Chiang Kao 3 0 100%
Committee
Member		 Tyzz-Jiun Duh 3 0 100%
Committee
Member		 Cheng-Wen Wu 3 0 100%
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
  • 51 -
The Company's
Compensation Resolution results of response to the
Committee Motion
the Compensation		 comments of the
Date/ Term Committee Compensation
Committee
Submitted for approval of the
patents award to C.H. Hung,
K.C. Chen, K.L. Chang and Ta-
HoneYang (“Managers’).
2023.02.14
The 3rd meeting
of the 12th Term
of the
Compensation
Committee		 Unanimously
approved by all
members attending
the meeting and will
be submitted to the
Board of Directors
meeting for approval.
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
2023 salary adjustment of the
Company Managers
(“Adjustments”).		 Not applicable
Submitted for approval of 2022
compensation for employees and
directors.
2023.03.03
The 4th meeting
of the 12th Term
of the
Compensation
Committee		 Submitted for approval of the
directors’ compensation in 2022.
Unanimously
approved by all
members attending
the meeting and will
be submitted to the
Board of Directors
meeting for approval.
Submitted for approval of the
2022 employee bonus to be
distributed to the managers
(“Company Managers”).		 Not applicable
2023.12.19
The 5th
meeting of the
12th Term of the
Compensation
Committee		 Submitted for approval of 2024
annual incentive bonus of the
Company Managers.
Unanimously
approved by all
members attending
the meeting and will
be submitted to the
Board of Directors
meeting for approval.		 Not applicable
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.
  • 52 -

(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 discussion:

  • (1) Establish the standards for directors and senior executives, such as expertise, skills, experience, and gender. As well as searching, reviewing, and nominating directors and senior executive candidates based on such standards.

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

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

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

2. Professional Qualifications, Experience and the Operation

  • (1) 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.

  • (2) The Nomination Committee convened 4 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)		 Remarks
Convener Miin Wu Note 4 0 100%
Committee
Member		 Chiang Kao 4 0 100%
Committee
Member		 Cheng-Wen
Wu		 4 0 100%
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
  • 53 -
Nomination
Committee
Date/ Term
2023.03.03
The 4th meeting
of the 12th Term
of the
Nomination
Committee
2023.07.25
The 5th meeting
of the 12th Term
of the
Nomination
Committee
2023.10.24
The 6th meeting
of the 12th Term
of the
Nomination
Committee
2023.12.19
The 7th meeting
of the 12th Term
of the
Nomination
Committee		 Nomination
Committee
Date/ Term
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Motion Nomination
Committee’s
Opinions or
Objections		 Resolution results of the
Nomination Committee		 Nomination
Committee
Date/ Term
The 2022 Performance
Assessments Report of
the Board of Directors.
None		 All attending members are in
agreement and no other
comments and will be
submitted to the Board of
Directors meeting for
approval.		 Not
applicable
The Examination Report
of the Qualification and
Independence of
Independent Directors.		 None All attending members are in
agreement and no other
comments and will be
submitted to the Board of
Directors meeting for
approval.		 Not
applicable
It is hereby proposed to
determine the assessed
units and assessment
method of the
Company’s 2023 “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
It is hereby proposed to
determine the external
professional institution
of the Company’s 2023
external evaluation of
the Board of Directors.		 None Unanimously approved by
all members attending the
meeting and will be
submitted to the Board of
Directors meeting for
approval.		 Not
applicable
2023 "Board of
Directors Performance
Evaluation" self-
evaluation questionnaire.		 None Unanimously approved by
all members attending the
meeting.		 Not
applicable
Submitted for the
approval of 2023
Performance
Assessments Report of
the Managers.		 None All attending members are in
agreement and no other
comments.		 Not
applicable
Propose the 2024
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 : Please refer to page 14 of this annual report for information on directors and supervisors.

  • 54 -

(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.
Macronix already implemented a total of six plans in 2023. The
progress towards achieving net zero carbon emissions by 2050
includes completing the installation of solar panels on the
rooftops of its activitycenter,dormitories and BuildingP of Fab
None
  • 55 -
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
5, and successfully obtaining the Hsinchu City equipment
registration approval. In addition, in response to the obligations
that major electricity users must prioritize in 2023 in accordance
with the Renewable Energy Development Act, we will continue to
increase renewable energy consumption. Other plans are under the
supervision of the president. Six plans were successfully
completed, and implementation results were reported to the Board
of Directors in the early2024.
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. Please refer to page
70 of this annual report for other important information that will
help understand the ESG operations. We 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 has already proposed effective strategies
for the risk of climate change.
Regarding the risk management, the Company already established
the "Risk Management Principles" which were approved bythe
None
  • 56 -
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
board of directors as the highest guiding principles for Macronix's
risk management.
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
renewable materials to reduce the environmental
impact?
(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
electricity-saving and water-saving products or products with
the eco-friendly label for numerous consecutive years.
We will continue to actively implement energy conservation
and carbon reduction policies. Besides installing solar power
generation facilities, we have also taken the following
measures: 1. Replacing the original equipment with variable-
None
None
  • 57 -
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) Does the company evaluate potential risks and
opportunities brought by climate change, and take
response measures to climate-related issues?		 frequency equipment or more energy efficient equipment to
improve equipment efficiency. 2. Improving and upgrading
components of existing equipment to reduce equipment power
consumption. 3. Optimize equipment operation procedures. 4.
Recycling waste heat, generated during operations, for reuse in
other equipment. The measures above are estimated to reduce
electricity consumption by 5,049,357 kWh and carbon
emissions by 2,499 metric tons. This shows that the Company
has spared no effort in improving resource efficiency and
implementing green production to reduce the environmental
impact of its operations and enhance its 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 onjob characteristics. Sources		 None
  • 58 -
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
include the transition risk of carbon tax and low carbon
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 maintaining the efficiency of the solar
power generation system at 80% or above 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 refrigeratingmachine optimization mechanism,replace
  • 59 -
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?





machinery with more efficient machinery, and require two or
more sources for suppliers that are assessed to be high risk, in
order to respond to the potential impact of risks and
opportunities.
(IV) Macronix cooperates with the Ministry of Environment'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 2022 and 2023 are as follows:
Item
Unit
2022
2023
Scope 1
tonCO2e
135,818.8572
120,502.225
4
Scope 2
254,129.1632
254,499.054
7

None
Item Unit 2022 2023
Scope 1 tonCO2e 135,818.8572 120,502.225
4
Scope 2 254,129.1632 254,499.054
7
  • 60 -
Items of the Promotion 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










Scope 3 264,671.7807 245,775.899
3




Intensity tonCO2e/Per
NT$1 million in
revenue		 9.0 13.6
  • 61 -
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
announced GHG emission coefficients will apply starting from
2024, based on ISO 14064-1:2018, article 6.4.2 Review of base-
year GHG inventory, rule (b) we adjusted the inspection
baseline year for the GHG inventory as 2023, and emission was
determined to be 375,001.280 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.
Carbon reduction measures implemented in response to climate
change include but are 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 Ministry of Environment
and makingan effort to obtain carbon reductionquota. The
  • 62 -
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
Company has currently passed 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 the third party verification, total
reduction during the monitoring period of December 31, 2020 to
December 31, 2021 was 8,836 tonCO2e. Macronix applied for
an offset quota from the Climate Change Administration,
Ministry of Environment in 2023.
5. Continue to evaluate the feasibility of purchasing and installing
renewable energy devices; solar PV devices with the capacity of
approximately 430 kW were installed on the rooftop of some
facilities at the end of 2023, and generated more than 340
thousand kWh of green electricity in 2023. We have also started
to purchase 6.15 million kWh of green electricity each year
starting from 2023, reducing carbon emissions by 3214 tonCO2e
per year.
6. Compared with the target review year of 2025, the GHG
omissions in 2023 are still 17000 metric tons of CO2e. It is
expected that the reduction measures in 2024 and 2025 include
the installation of fluorine gas reduction equipment, increasing
the utilization rate of green electricity and energy saving to
achieve the target.

  • 63 -
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
The process water recycling rates for the years 2023 and 2024 are
targeted to be ≥84% and ≥85% respectively. 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
2,684 million liters in 2023, and 87.03% of process water was
recycled. 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 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
engineeringdepartments based on a feasible reductionplan.
  • 64 -
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
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 10,106 metric tons of waste in 2023.
General waste and hazardous waste are mainly recycled and
reused with a recycling/reuse rate reaching 95.4% (general
waste) and 99.6% (hazardous waste), and overall recycling/reuse
rate reaching 97.7%; our goal is recycling/reuse rate≧95% in
2024. We established a cross-departmental waste management
platform, and periodically convene meetings for review and
improvement. It is expected to reduce the environmental load
caused by the production through the vendor selection, partner
vendor audits, and self-management inspections, achieving the
ultimategoal ofgreenproduction and waste reduction.
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, and RBA CoC, and
formulated the Macronix Human Rights Policy according to
requirements of the international standards on 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 responsibilitynorms to ensure theprotection		 None
  • 65 -
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
(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?
(III) Has the Company provided employees with a safe
and healthy working environment, and routinely
implemented safety and health education for
employees?
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.
(II) The Company has established and implemented reasonable
employee benefit measures; please refer to V. Labor Relations
on page 119 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 107 of this Annual Report.
(III) Based on the ideal of providing a warm and pleasant
environment for employee’s growth, the Company has
established a safe and healthy work environment that is better
than at another companies. The Company provides
comprehensive training for the employees, which has received
recognition from the competent authorities, including the
National Occupational Safetyand Health Enterprise

None
None
  • 66 -
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
(IV) Has the Company established an effective career
developmental plan for its employees?		 Benchmarking Award from the Ministry of Labor,
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.
There were no major occupational or fire accidents in 2023.
There were 4 accidents that resulted in minor injuries, and the
injury rate (IR) was 0.1. Following the occupational safety and
health management system, we immediately carry out root
cause analysis and corrective measures for occupational
injuries, made improvements to management and construction
tools, and verified its effectiveness.
(IV) The individual development plan of Macronix employees is
closed connected to the performance management system.
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
None
  • 67 -
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?
(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?
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.
(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		 None
None
  • 68 -
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
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
(Occupational safety and Health) 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.
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
above obtained assurance from a third-party
verification unit?		 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.
Over the years, we have obtained assurance according to
AA1000AP(2018) through third party certification companies,
such as SGS and BV.
None
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.
  • 69 -

VII. Other important information that will help understand the ESG operations:

  1. Please refer to the ESG Report of the Company and websites of the Company and the Macronix Education Foundation relevant information. (http://www.macronix.com).

  2. The risk items, management policies, or strategies related to significant issues in environmental, social, and corporate governance are as follows:

Risk Assessment
Material Issues Risk Management Policy, or Strategy
Item
Environment Environmental
protection
management and
pollutionprevention		 Introduced and passed the ISO 14001 Environmental Management System Certification. We ensure that our
environmental management systems fully comply with the Plan-Do-Check-Act (PDCA) operations of the ISO
system to maintain a healthy and safe environment, and continuously make improvements to reach our goal.
Environment Energy and climate
Change management
1. Macronix is dedicated to reducing energy use and consumption every year. We follow the instructions provided
by the Bureau of Energy, Ministry of Economic Affairs each year to report our energy conservation audit
system for energy users.
2. In response to the trend of greenhouse gas control and reduction in the supply chain due to global warming, we
planned for greenhouse gas checks, control, and reduction, and described the process of compiling ISO14064-1
GHG inventory in the report.
Society The spread of
COVID-19
Influenced employee
attendance and
operations
1. Convened the epidemic prevention meetings to formulate anti-epidemic policies and various management
measures, and to establish a standard operating procedure, a reporting mechanism, and countermeasures.
2. Assigned dedicated staff to track and pay attention to the epidemic prevention and management measures.
Daily pop-ups on computers remind employees about health and safety anti-epidemic measures, and rolling
reviews are conducted for the results inspection.
Society Health and safety 1. Physical, 2. Chemical, 3. Human factors engineering/Ergonomics, 4. Traffic collision, 5. Violent destruction, 6.
Force majeure, 7. Stress at work
Corporate
Governance		 Material supply 1. Establish emergency procurement procedures
2. Prepare a safety stock
3. Audit suppliers’ capability to plan regarding business continuity
4. Continue to develop alternative suppliers
5. Sign supplycontracts with major suppliers
  • 70 -
Material Issues Risk Assessment
Risk Management Policy, or Strategy
Item
Corporate
Governance		 Cyber attacks 1. Block malicious attacks with a firewall
2. Use a mail and website filtering system to intercept malware
3. Regularly update computer software and deploy end point protection software
4. Regularly back up important data
5. Cyber-attack simulation drills
Corporate
Governance		 Contractor’s supply
chain cut off		 1. Check the coordination and distribution of delivered materials
2. Estimate contractor’s production capacity recovery time, and work-in-progress control
3. Ability to support outsourcing factories and audit capability to plan regarding business continuity
Corporate
Governance		 Information System
interruption		 1. Install Uninterruptible Power Supply (UPS)
2. Remote backup
3. Backup data
4. Information system interruption simulation drill
Corporate
Governance		 Water outage 1. Sign a service agreement with water wagon suppliers
2. Water conservation and drought preparation continuity plan for fabs
3. Water storage and mutual support between fabs
4. Water restrictions emergency response drill
Corporate
Governance		 Power outage 1. The Park offers dual-circuit power supply design
2. Emergency power generators and support machinery; clean room temperature and humidity; delivery resources
3. Diesel fuel resource distribution and procurement priority
4. Abnormal power supply emergency response drill
Corporate
Governance		 Earthquake 1. Seismic resistant design of buildings and machines
2. Seismic resistance improvements: Stocker seismic reinforcement; purchase of new machines with active
seismic resistance and fastening devices; steel cylinder seismic reinforcement; clean room automated handling
system seismic improvement
3. Sign human resource service agreements with major suppliers
4. Earthquake emergency response drill
  • 71 -
Material Issues Risk Assessment
Risk Management Policy, or Strategy
Item
Corporate
Governance		 Fire 1. Machine CO2 fire extinguisher system; environmental sprinkler system
2. Very early warning smoke detectors
3. FM certified fireproof lockers
4. Fire prevention improvements: replace plastic flammable pipelines each year; fireproof the supply end of
flammable gases; replace CO2 fire extinguisher systems that are about to expire; upgrade explosion prevention
equipment; improve environment fireproofing; gas cabinet automated fire extinguishing system
5. Fire accident emergency response drill
Corporate
Governance		 Green product
management		 1. Deliver products to ISO 17025 certified, credible domestic and foreign laboratories for testing
2. Green product instruments self-inspection
3. Suppliers provide documentary proof of non-use of environment-related substances
4. Identify new law amendments and periodically check regulatory compliance
5. Supplier communication and audit management
6. Qualified materials and supplier management system
7. Training courses relating to green products are organized each year
Corporate
Governance		 Conflict minerals 1. Non-use of Conflict Minerals Policy
2. Suppliers provide documentary proof of non-use of conflict minerals
3. Identify and amend management rules relating to conflict minerals and periodically check compliance
4. Supplier non-use of conflict minerals training and audit management
5. Supplier management system for non-use of conflict minerals
Corporate
Governance		 Information
security		 Established a dedicated information management unit and related management procedures to protect the safety
of computer systems, prevent the risk of data leakage, and provide the basis for compliance by employees and
responsible units.
Corporate
Governance		 Laws and Code of
Ethics,etc.		 All new employees receive training and evaluation during their orientation.
Corporate
Governance		 Anticorruption 1. Regularly conduct ethical and social responsibility risk assessments for each department
2. Regularly organize courses on trade secrets, domestic and international data privacy regulations, information
security management, and prevention of insider trading
  • 72 -

Climate-Related Information of TWSE/TPEx Listed Company

1. Implementation of Climate-Related Information

1. Implementation of Climate-Related Information
Item Implementation status
1. Describe the board of directors' and management's
oversight and governance of climate-related risks
and opportunities.
2. Describe how the identified climate risks and
opportunities affect the business, strategy, and
finances of the business (short, medium, and long
term).		 1. Board of Directors: In the first quarter of each year, the Environment, Safety and Health
(EHS) Center summarizes Macronix's sustainability performance, progress, and
implementation results in the past year, including carbon inventory management, and reports
it to the Board of Directors. Such include: Material issues such as performance in
sustainability, results of communication with stakeholders, management of energy and
climate change. Managers: The TCFD（Task Force on Climate-related Financial
Disclosures）task force is composed of members appointed by the directors of each center,
which jointly reviews internal and external risks, and formulates risk response strategies for
material risk issues.
2. In the climate risks and opportunities analysis model, 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 that require attention at the company level based
on job characteristics. Main climate risk sources include the transition risk of carbon tax and
low carbon 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. Hence, Macronix continually tracks international trends and regulatory
developments, and ensures that we are 100% in compliance with government laws for climate
management. In terms of green energy management, we cooperate with national policy by
evaluating the installation of solar panels and formulation of a green energy purchasing policy.
For technology transformation, we are actively purchasing low-carbon (new process)
machinery, lowering the carbon emission of products, and producing low-carbon products that
meet the expectations of our customers to enhance the sustainability competitiveness. For long-
term risks, we established a weather forecast and refrigerating machine optimization
mechanism and replaced machinerywith more efficient models.
  • 73 -
Item Implementation status
3. Describe the financial impact of extreme weather events and
transformative actions.
4. Describe how climate risk identification, assessment, and
management processes are integrated into the overall risk
management system.
5. If scenario analysis is used to assess resilience to climate
change risks, the scenarios, parameters, assumptions,
analysis factors and major financial impacts used should
be described.
6. If there is a transition plan for managing climate-related
risks, describe the content of the plan, and the indicators
and targets used to identifyand managephysical risks and		 3. Extreme weather events, such as the change in average temperature has been listed as a major
risk in the risk identification results. The impact of average temperature rise will lead to an
increase in air conditioning load, power consumption, and electricity bills, resulting in an
increase in the Company's direct operating costs. Transition actions, such as the use of new
technologies and machinery to meet market expectations for energy conservation and carbon
reduction goals of manufacturing, may lead to adjustments in process-related technologies and
increases in production cost, which will cause the Company's R&D cost increase.
4. Macronix divides the TCFD task force into following five working groups based on the
correlation between climate opportunities and risks with various businesses: product
customers, finance, fab environmental protection, supply chain, and logistics support. The
members of each working group include middle and senior management. Each working group,
based on executive business and professional judgment, reaches a consensus on risks and
opportunities that the Company may face, and formulates a list of such risks and opportunities.
The current situation is reviewed based on TCFD identification results, and project
management is implemented by the Sustainable Development Committee based on the risk and
opportunity review results. Each working group will formulate a material risk management
approach based on the feasibility, and assess the financial impact and effect on the Company's
operations.
5. Positing regulatory pressures in transition risks as the main object for scenario analysis, and
forecasting emissions growth based on historical data and future operational growth. Macronix
assumes three scenarios of external pressures from rising temperatures: 1.5°C, 2°C, and NDC.
Future carbon costs and expenses are projected for these three scenarios, and the financial
impact of carbon fees, carbon tax, and renewable energy are analyzed. Analysis results show
that the main financial impact will come from the purchase of renewable energy and carbon
taxes (fees) up to 2040. Using renewable energy as a means of reducing carbon emissions can
reduce overall emissions by over 60%, while carbon fees or excess emission fees will need to
be paid based on the current control system for emissions that cannot be reduced.
6. In response to the risk identification results, Macronix set the long-term carbon reduction target
to achieve net-zero emissions by 2050 in the face of physical and transformation risks, and set
a target reviewyear everyfiveyears(the first reviewpoint is 2025). Reduction measures are
  • 74 -
Item Implementation status
transition risks.
7. If internal carbon pricing is used as a planning tool, the basis for
setting the price should be stated.
8. If climate-related targets have been set, the activities covered,
the scope of greenhouse gas emissions, the planning horizon,
and the progress achieved each year should be specified. If
carbon credits or renewable energy certificates (RECs) are
used to achieve relevant targets, the source and quantity of
carbon credits or RECs to be offset should be specified.
9. Greenhouse gas inventory and assurance status and reduction
targets, strategy, and concrete action plan (separately fill out in
points 1-1 and 1-2 below).		 flexibly introduced or established according to production capacity planning during the period.
The indicator is set as annual greenhouse gas emissions with the target of net zero emissions
by 2050.
7. Macronix has not established an internal carbon pricing mechanism yet.
8. Macronix set the long-term carbon reduction target of net-zero emissions by 2050, and set a
target review year every five years (the first review point is 2025). Reduction measures are
flexibly introduced or established according to production capacity planning during the period.
The scope covers all locations in Taiwan (Fab 2, Fab 5, Head Office and Testing Plant), and
covers Scope 1 and Scope 2 emissions. The short-term annual target is to reduce the annual
emissions by≧1% on average compared with the baseline year. The medium-term target is
to reduce emissions in 2025 by 20% compared with estimated emissions, and the long-term
target is for Macronix’s Taiwan locations to achieve net-zero emissions by 2050, in line with
the national goal. In addition to focusing on process improvement, energy efficiency
improvement, increasing the proportion of renewable energy use, and planning to obtain
carbon rights, Macronix is also actively evaluating participation in government guidance
projects. Compared with the target review year of 2025, greenhouse gas emissions in 2023 are
still 17000 metric tons of CO2e. It is expected that the reduction measures in 2024 and 2025
include the installation of fluorine gas reduction equipment, increasing the utilization rate of
green electricity and energy-saving to achieve the target..
9. Please see the descriptions in 1-1 and 1-2 below.
  • 75 -

1-1. Greenhouse Gas Inventory and Assurance Status for the Most Recent 2 Fiscal Years

1-1-1 Greenhouse Gas Inventory Information

Describe the emission volume (metric tons CO2e), intensity (metric tons CO2e/NT$ million), and data coverage of greenhouse gases in the most recent 2 fiscal years.

1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation 1-1-1GreenhouseGas InventoryInformation
Describe the emission volume (metric tons CO2e), intensity (metric tons CO2e/NT$ million), and data coverage of greenhouse gases in the most
recent2 fiscalyears.
Scope 2022 2023
Carbon
emissions
(metric tons
CO2e/year)		 Percentage Intensity
(metric tons
CO2e
/NT$1,000,000)		 Carbon
emissions
(metric tons
CO2e/year)		 Percentage Intensity
(metric tons
CO2e
/NT$1,000,000)
Scope 1 + 2 Scope 1 + 2
+ 3		 Scope 1 + 2 Scope 1 + 2
+ 3
Scope 1 –
Direct
emissions		 135,818.8572 34.8 20.7 3.1 120,502.2254 32.1 19.4 4.4
Scope 2-
Energy
indirect
emissions		 254,129.1632 65.2 38.8 5.8 254,499.0547 67.9 41.0 9.2
Total 389,948.020 100 - 9.0 375,001.280 100 - 13.6
Scope 3-
Other
indirect
emissions		 264,671.7807 - 40.4 6.1 245,775.8993 - 39.6 8.9
Total of
Scope 1, 2,
and3		 654,619.801 - 100 15.1 620,777.179 - 100 22.5

Note: On February 5, 2024 Ministry of Environment announced the Greenhouse Gas Emission Factors, and Macronix immediately conducted the inventory and calculation of the GHG emissions for 2023. GWP refers to IPCC Fifth Assessment Report (IPCC AR5) and GWP for omission calculations before 2022 refers to IPCC AR4.

  • 76 -

1-1-2 Greenhouse Gas Assurance Information

Specify the greenhouse gas reduction base year and its data, the reduction targets, strategy and concrete action plan, and the status of achievement of the reduction targets.

The total greenhouse gas emissions disclosed by the Company in the past two years have been verified by the third-party institution BV. The scope of such assurance includes Scopes 1, 2 and 3, in which 375,001.280 metric tons of CO2e (accounting for 100% of total emissions) were verified by the certification body according to ISO 14064-3. Scope 1 and 2 are verified to a reasonable level of assurance, Scope 3 for 2022 is verified to a reasonable level of assurance and Scope 3 for 2023 is verified to a limited level of assurance..

1-2 Greenhouse Gas Reduction Targets, Strategy, and Concrete Action Plan

Specify the greenhouse gas reduction base year and its data, the reduction targets, strategy and concrete action plan, and the status of achievement of the reduction targets.

  • ‧ Baseline year for reduction: 2011 is maintained as the baseline year for reduction before review of the boundaries of consolidated financial statements is completed.

  • ‧ Baseline year emissions (Scope 1 and 2): 392,366.585 metric tons of CO2e (at the time Ministry of Environment stipulated that IPCC AR4 GWP shall be used for calculations)

  • ‧ Reduction target: Achieve net zero emissions by 2050

  • ‧ Strategy: Focus on process improvement, energy efficiency improvement, increasing the proportion of renewable energy use, and making plans to obtain carbon rights.

  • ‧ Specific action plans: 2025 is the first target review point, the key reduction strategy is to reduce fluorine-containing gases. The Company plans to add 32 local scrubbers, and achieve a 20% reduction of emissions compared with estimates using of solar power self-generated for self-use and purchased renewable energy.

  • ‧ Achievement of reduction targets: The status of achieving 2025 goals will be reviewed in 2026, and progress will be tracked through review and inspection results each year. Compared with the target review year of 2025, greenhouse gas emissions in 2023 (IPCC AR4 GWP is used for calculations) are still 17000 metric tons of CO2e. It is expected that the reduction measures in 2024 and 2025 include the installation of fluorine gas reduction equipment, increasing the utilization rate of green electricity and energy saving to achieve the level target.

  • 77 -

ESG Milestones for Macronix

ESG 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 •Established the “Macronix Science Award Winners' Club”
•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
•
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 •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 verification from the IECQ QC080000 Hazardous Substance Process Management
System
•Awarded as the “Excellent Enterprise for Voluntary Greenhouse Gas Reduction” by the Industrial
•Obtained the CG6002 Corporate Governance System Assessment Certification from the
Corporate Governance Association of the Republic of China
2008 •Awarded the Green Procurement Award by the Environmental Protection Administration
•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
•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
•
2009 •Won the "Role Model Award" from 5th Global Views Monthly's CSR Awards
•Donated NT$100 million to relieve the damage caused by Typhoon Morakot to Taiwan
•Won the 3rd National Work Safety Award
•Became a semiconductor company that obtained a quality enterprise certificate
•
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
•Awarded the “Contribution to Work Opportunity Creation Award” by the Executive Yuan
•Increased the donation to the Macronix Hall,Tsinghua UniversitybyNT$100 million
2011 •Donated NT$30 million for the aftermath of the 2011 Tohoku earthquake and tsunami
•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 the “Contribution to Work Opportunity Creation Award” by the Executive Yuan
•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 learningresource center of Tsinghua University,was officially put to use
  • 78 -
Year Milestones
•The Macronix Education Foundation was given the Award of Excellence by the Ministry of
Education amongeducation foundations
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 •Ranked in the top 5% in the first corporate governance evaluation of Taiwan Stock Exchange
•Received the "Excellent Healthy Workplace" from the Health Promotion Administration,
Ministryof Health and Welfare
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 •Donation of NT$420 million to National Cheng Kung University for its construction of "Cheng
Kung Innovation Center-MACRONIX Hall"
•Companyreceives the CSR 1stAnnual Sustainable Elite Award
2020 •Annual donation of NT$100 million to National Cheng Kung University for the next ten years to
establish Miin Wu School of Computing
•Companyreceives the 2nd CSR Annual Sustainable Elite Award
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"
2023 •LexisNexis recognized with "Innovation Momentum 2023: The Global Top 100"
•Won the 2022 "Air Quality Purification Areas Excellence Award" of Environmental Protection
Administration
•Awarded first place among outstanding R&D alternative service employers (private industry
group) in 2023
•The American Physical Society (APS) announced President Chih-Yuan Lu as the winner of the
George E. Pake Prize in 2024, a major award in applied physics.
•Won the SGS "2023 Occupational Safety and Health Performance Management Plus Award"
•Macronix Education Foundation was recognized with the 16thArts and Business Awards from
the Ministry of Culture
•Received the 19th National Sustainable Development Award from the Executive Yuan
•Macronix「OctaFlash LM/UM Series NOR Flash Memory」was awarded of the "Best
Memory of the Year" of 2023 EE Awards Asia
•Fab 5 won the Badge of Accredited Healthy Workplace in 2023
•Awarded Excellence in Green Procurement for private enterprises and organizations in
Hsinchu City in 2022
•
  • 79 -

(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 Principles”
and the “ Code of Business 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
  • 80 -
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, hosts 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
  • 81 -
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
II、Fulfill operations integrity policy
(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
  • 82 -
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
  • 83 -
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 2023, there were a total of 18,206
participants, and the number of training hours
amounted to 8,434. 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 19, 2023. 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
2023, there were a total of 3,741 participants, and the
number of training hours amounted to 312.
In 2023,there were a total of 188 supplier
  • 84 -
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
participations, and the number of training hours
received amounted to86 .
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
relevant units for investigation. The board of
directors will also be informed.

None
None
  • 85 -
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?		 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 February 14, 2023.
The annual meeting of the Committee for the
Promotion of Ethical Corporate Management was
convened on February 6, 2023.
Completed the Ethical Corporate Management Best
Practice Principles related trainingin 2023.		 None
  • 86 -
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
There was no violation of the Ethical Corporate
Management Best Practice Principles in 2023.
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.
  • 87 -

(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

  1. 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 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director
Representative
of the
Corporation		 Ikuo Yamaguchi 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director C.Y. Lu 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.04.27 Taiwan
Corporate
Governance
Association		 Corporate M&A Practice and
Case Analysis		 3
2023.10.26 Taiwan How companies can strengthen 3
  • 88 -
Title Name Date Organizer Course Name Hours
Corporate
Governance
Association		 the execution of strategies
Director
Representative
of the
Corporation		 Stacey Lee 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director
Representative
of the
Corporation		 Ching-Yun Li 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director Che-Ho Wei 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy
3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director Yan-Kuin Su 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director Sung-Jen Fang 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.06.02 Chinese National
Association of
Industry and
Commerce
2023 Taishin Net Zero
Electricity Summit		 3
Director Tom Yiu 2023.06.05 Chinese National
Association of
Industry and
Commerce
Corporate Information Security
Governance Issues in Board
Meetings - Performance and
Risk Agenda		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director F. L. Ni 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Director
Representative
of the
Corporation		 Paul Yeh 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.06.15~
2023.06.16		 Accounting
Research and
Development
Foundation		 Continuing Education Course
for Chief Accounting Officers
of Issuers, Securities Firms, and
Securities Exchanges
12
2024.07.04 Taiwan Stock
Exchange		 2023 Cathay Sustainable
Finance and Climate Change
Summit		 6
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
SecurityRisks		 3
Independent
Director		 Tyzz-Jiun Duh 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy		 3
2023.10.13 Accounting
Research and
Development
Foundation		 How Directors Supervise
Companies in Implementing
Effective Corporate Risk
Management and Crisis
Handling		 3
  • 89 -
Title Name Date Organizer Course Name Hours
2023.10.17 Taipei
Foundation Of
Finance		 Corporate Governance - Fair
Customer Treatment Principles
in the Financial Services
Industry		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Independent
Director		 Chiang Kao 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy
3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
Independent
Director		 Cheng-Wen Wu 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy
3
2023.07.18 Taiwan
Corporate
Governance
Association		 Corporate Governance 3.0:
Practical Analysis of
"Sustainability Reporting"		 3
2023.08.11 Taiwan
Corporate
Governance
Association		 The Role and Responsibilities
of Boards/Top Management in
ESG Governance		 3
Independent
Director		 Chien-Kuo Yang 2023.03.03 Taiwan Institute
of Directors		 Challenges and opportunities of
circular economy
3
2023.03.16 Taiwan
Corporate
Governance
Association		 How Boards Supervise ESG
Risks to Build Corporate
Sustainability Competitiveness		 3
2023.05.02 Taiwan
Corporate
Governance
Association		 Trends and Practical Analysis
of ESG		 3
2023.05.02 Taiwan
Corporate
Governance
Association		 Tax Legislation Updates and
Practical Analysis		 3
2023.10.24 Taiwan
Corporate
Governance
Association		 Information Security
Governance and Strategies and
Geopolitical and Information
Security Risks		 3
2023.11.09 Taiwan
Corporate
Governance
Association		 Corporate Governance in the
Context of ESG		 3
  1. Education of corporate governance supervisor within the most recent year is shown in the table below:
below:
Date Organizer Course Name Hours
2023.03.03 Taiwan Institute of Directors Challenges and opportunities of circular
economy		 3
2023.07.04 Taiwan Stock Exchange 2023 Cathay Sustainable Finance and Climate
Change Summit		 6
2023.10.24 Taiwan Corporate Governance
Association		 Information Security Governance and
Strategies and Geopolitical and Information
SecurityRisks		 3
Total Hours of Education within themost recent yearof Appointment 12
  • 90 -

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 2023.03.03 Taiwan Institute of
Directors		 Challenges and opportunities of
circular economy		 3
2023.04.27 Taiwan Corporate
Governance
Association		 Corporate M&A Practice and Case
Analysis		 3
2023.10.24 Taiwan Corporate
Governance
Association		 Information Security Governance and
Strategies and Geopolitical and
InformationSecurityRisks
3
2023.10.26 Taiwan Corporate
Governance
Association		 How companies can strengthen the
execution of strategies		 3
Deputy Director
of the Auditing
Office		 Hong-Chi Wang 2023.03.03 Taiwan Institute of
Directors		 Challenges and opportunities of
circular economy		 3
2023.06.01 The Institute of
Internal Auditors-
Chinese Taiwan		 Digital transformation of internal
audit and application of emerging
technologies		 6

2023.10.24		 Taiwan Corporate
Governance
Association		 Information Security Governance and
Strategies and Geopolitical and
Information SecurityRisks
3
2023.11.08 The Institute of
Internal Auditors-
Chinese Taiwan		 How to adjust the internal control
system to adapt to new ESG
standards		 6
  • 91 -

VI. Topics of Concern and communication channels of various stakeholder categories：

Stakeholders
Topics of Concern		 Communication channels
‧Shareholder equity
‧Intellectual Property Rights
‧Corporate Governance
‧Dividends distribution
‧Overview of Investments
‧Corporate operations
‧Innovative R&D
‧Product price
‧Industry development
‧Product use		 ‧Company’s Website and Sustainability Report (annually)
‧Corporate website, financial statements (annually)
‧Shareholders' meeting (annually)
‧Self-organized investor seminars (quarterly)
‧Participate in forums/visits by investors/visits to investors
(irregularly)
‧Investor service mailbox/phone calls(irregularly)
Investors
‧Product lead time/
price/technology/quality
‧Green Products
‧Future direction of products
‧Corporate Social
Responsibility
‧Customer application services
‧Business Continuity
Management		 ‧Customer satisfaction survey (annual)
‧Suppliers' conference (at the request of customers)
‧Customer communication platform (available 24-7)
‧Visits in person (irregularly)
‧Supplier audits (at the request of customers)
Customers
‧Employee Communication
‧Labor Relations
‧Compensation & Benefits
‧Human rights policy
‧Training System
‧Performance evaluation
results
‧Occupational safety and
health
‧Key points of the amendment
to the Labor Standards Act
‧Calculation/qualifications of
retirement pension
‧COVID-19 prevention and
management		 ‧Various open-discussion meetings (held periodically and ad hoc)
‧"No Topic is Off Limits" suggestion box (available 24-7)
‧Reporting hotline (available 24-7)
‧Printed copies and electronic bulletin boards (to irregularly
communicate information)
‧Employee Relationship Management Portal (available 24-7)
‧Learning map platform (available 24-7)
‧Performance evaluation procedure (annual)
‧Health consultation/promotion (held periodically and ad hoc)
‧Employees seek advice inperson or by phone(irregularly)
Employees
‧Occupational safety and health
‧Supplier evaluation
‧Green product requirements
‧Corporate Social
responsibility
‧Compliance with Business
Ethics
‧Quality improvement procedure
‧Supply and demand of
important materials
‧Supply chain information
security
‧Suppliers' conference (annual)
‧Supplier audits (performed annually based on risk levels)
‧Supplier evaluation (quarterly and annually)
‧Quality improvement meeting (irregularly)
‧Material supply/demand tracking (periodically and ad hoc)
‧Contractor training courses(as necessary)
‧Contractor coordination organization meetings(as necessary)
Suppliers

‧Compliance with regulations
‧Corporate Governance
‧Labor Relations
‧Occupational safety and health
‧Greenhouse gas emissions
reduction
‧Water resource management
‧Waste Management
‧Effect of the new version of
IFRS (accounting principles) on
the company
‧Charity event participation
‧Employee benefits and average
salary
‧Key points of the amendment
to the Labor Standards Act
‧Impact of the U.S.-China Trade
War
‧Employee overload
management
‧COVID-19 prevention and
management
‧Odor
‧Corporate sponsorship/funding
‧Information Security
Management
‧Official document delivery (as necessary)
‧Participation in presentations/ promotions/seminars/forums
(irregularly)
‧Competent authority audits (as necessary)
‧Phone call or e-mail (as necessary)
‧Communication through the Allied Association for Science Park
Industries and Chinese National Federation of Industries (as
necessary)
‧Visited competent authorities (as necessary)
‧PUBCSR communication mailbox
‧Charity organizations
Government
‧Operational performance
‧Innovative research and
development
‧Industrial development
‧General information about the
Company
‧Compensation & Benefits
‧Executive management
dynamics		 ‧Press releases (periodically and ad hoc)
‧Media press conference
‧Media communication group / Media visits / Incoming calls for
consultation (irregular)
‧Company website
‧Investor seminars
Media
‧Macronix Golden Silicon
Awards
‧Macronix Science Prize
Competition
‧The process and results of
Macronix Science Prize
Competition
‧Recruitment and appointment		 ‧Registration website
‧Campus promotion
‧Social media marketing
‧Macronix Science Awards Association annual meeting
School
  • 92 -

(X) Implementation of Internal Control System

  1. Internal Control System Statement

Macronix International Co., Ltd . Internal Control System Statement

Date: January 30, 2024

  • 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, 2023 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 January 30, 2024, 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. 93 -

  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. 1.2023 Major Resolutions of Shareholders’ Meeting

Major Resolutions Review of Implementation
1. Ratification of the 2022 Business Report and
Financial Statements		 Resolution announced in accordance with Article 230 of
the CompanyAct
2. Ratification of the Company’s 2022
Distribution		 June 30, 2023 was set as the Ex-dividend Record Date
and cash dividends were paid on July 28, 2023. The
cash dividends per share was distributed at NT$1.8,
determined bythe Shareholders’ Meeting.
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		 The capital increase proposal was approved but was not
carried out in 2023. The capital increase proposal was
approved by the Board of Directors again on February
27, 2024 and submitted to the 2023 Annual
Shareholders’ Meeting.
4. Approval of releasing competition restrictions
of the directors		 Resolution and announcement according to law.
  1. 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 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
depositary receipts through cash capital increase, and/or the
private placement of common shares and/or domestic or
overseas convertible bonds
3. Board of Directors resolved to convene the 2023 Annual
Shareholders Meeting.
The 6th meeting of the 12th
Term of the Board of
Directors		 2023.04.25 1. Approval of the Company’s First Quarter 2023 Financial
Statements.
2. Approval of the record date of the capital reduction for the
redeemed shares of Employee Restricted Stock Awards.
  • 94 -
Board of Directors Date Major Resolutions
The 7th meeting of the 12th
Term of the Board of
Directors		 2023.07.25 Approval of the Company’s Second Quarter 2023 Financial
Statements.
The 8th meeting of the 12th
Term of the Board of
Directors		 2023.10.24 Approval of the Company’s Third Quarter 2023 Financial
Statements.
The 9th meeting of the 12th
Term of the Board of
Directors		 2023.12.19 1. Board of Directors approved the capital expenditure budget
2. Board of Directors approved the donation to Macronix
Education Foundation
The 2nd Provisional meeting
of the 12th Term of the Board
of Directors		 2023.12.26 The Board of Directors approved the joint development project
with IBM regarding Enterprise SSD Storage.
The 11th meeting of the 12th
Term of the Board of
Directors		 2024.02.27 1. Approval of the Company’s 2023 Financial Statements.
2. Approval of the Company’s 2023 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 2024 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 2023.01.01
~2023.12.31		 5,995 6,395 12,390 Non-audit fees mainly
included ISO27001
implementation
NT$2,760,000,
sustainable counseling
project NT$1,435,000,
tax certification fee
NT$960,000,
temporary tax amount
declaration audit
NT$500,000, transfer
pricing report service
fee NT$300,000,
bonded inventory
NT$230,000, and other
services.
Kuo-Tyan Hong

  • 95 -

  • (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.

  • 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 2023 2023 upto February29, 2024 upto February29, 2024
Increase
(decrease) in
shares held		 Increase
(decrease) in
shares pledged
Increase
(decrease) in
shares held		 Increase
(decrease) in
shares pledged
Chairman / CEO Miin Wu 0

0

0

0
Director Shun Yin Investment Ltd. 0
0
0
0
Representative: Ikuo
Yamaguchi		 0
0
0
0
Director /
President		 C.Y. Lu 0
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 0
0
0
0
Director Sung-Jen Fang 0
0
0
0
Director / Senior
Vice President &
Chief Marketing
Officer		 Tom Yiu 0
0
0
0
Director / Vice
President		 F. L. Ni 0
0
0
0
Director / Vice
President		 Hui Ying Investment Ltd. 0
0
0
0
Representative:
Paul Yeh(Note 3)		 0
0
0
0
  • 96 -
Title Name 2023 2023 upto February29, 2024 upto February29, 2024
Increase
(decrease) in
shares held		 Increase
(decrease) in
shares pledged
Increase
(decrease) in
shares held		 Increase
(decrease) in
shares pledged
Independent
Director		 Tyzz-Jiun Duh 0

0

0

0
Independent
Director		 Chiang Kao 0
0
0
0
Independent
Director		 Cheng-Wen Wu 0
0
0
0
Independent
Director		 Chien-Kuo Yang 0
0
0
0
Vice President Yen-Hie Chao 0
0
0
0
Vice President Chun-HsiungHung 0
0
0
0
Vice President Jui-Kun Chen 0
0
0
0
Vice President Jon-Ten Chung 0
0
0
0
Vice President Kuang-Chao Chen 0
0
0
0
Head of
EmergingR&D		 Ko-Chung Wang 0
0
0
0
Senior Associate
V.P.		 Wen-Pin Lu 0
0
0
0
Executive
Director		 Hsin-Cheng Liu 0
0
0
0
Executive
Director		 Kai-Wen Tu 0
0
0
0
Executive
Director		 Ting-Chang Lin 0
0
0
0
Executive
Director		 Kun-Lung Chang 0
0
0
0
Executive
Director		 Ta-Hone Yang 0
0
0
0
Project Executive
Director
Hui-Chi Li (Note 4)		 Omitted
Omitted
Omitted
Omitted

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. 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 4: Mr. Hui-Chi Li retired on May 31, 2023.

Note 5: The counterparts of equity transfer or equity pledge in the table above are not related parties.

  • 97 -

IX. Relationship Among the Top Ten Shareholders

June30, 2023
Unit: shares / %		 June30, 2023
Unit: shares / %		 June30, 2023
Unit: shares / %		 June30, 2023
Unit: shares / %		 June30, 2023
Unit: shares / %		 June30, 2023
Unit: shares / %		 June30, 2023
Unit: shares / %
Name Current
Shareholding		 Spouse’s/minor’
s
Shareholding		 Shareholding
by Nominee
Arrangement
Name and
Relationship
Between the
Company’s Top
Ten Shareholders,
or Spouses or
Relatives Within
TwoDegrees		 Remarks
Shares % Shares % Shares
%		 Name Relationship
Syue-Rong Shen 54,383,000 2.93% None None None None None None
Yuanta/P-shares Taiwan
Dividend Plus ETF		 49,810,114 2.68% None None None None None None
Cathay Life Insurance
Representative: Ming-
Ho Hsiung		 44,542,000 2.40% None None None None None None
New Labor Pension
Fund		 40,335,764 2.17% None None None None None None
Robeco Capital Growth
Funds		 25,138,000 1.35% None None None None None None
Mercuries Life Insurance
Co., Ltd.
Representative: Jhao-Si
Wong
24,000,000		 1.29% None None None None None None
Shun Yin Investment
Ltd.		 22,587,265 1.22% None None None None None None
Representative:
Ikuo Yamaguchi		 None None 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		 21,793,546 1.17% None None None None None None
Vanguard Emerging
Markets Stock Index
Fund, A Series of
Vanguard International
EquityIndex Funds		 19,170,737 1.03% None None None None None None
Morgan Stanley & Co.
International Plc		 17,436,421 0.94% None None None None None None

Note 1: Base date of shareholding, which was the record date for the distribution of 2023 cash dividend. Note 2: There was no information on the person responsible for the investment account.

  • 98 -

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, 2023
Unit: shares / %		 December 31, 2023
Unit: shares / %		 December 31, 2023
Unit: shares / %		 December 31, 2023
Unit: shares / %		 December 31, 2023
Unit: shares / %		 December 31, 2023
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. 182,589,357 100.00% 0 0% 182,589,357
100.00%
Macronix (Hong Kong) Co.,
Limited.		 89,700,000 100.00%
0
0%
89,700,000
100.00%
Macronix Pte Ltd 174,000 100.00%
0
0%
174,000
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.

  • 99 -

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
-		 -
  • 100 -
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		 - -
  • 101 -
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		 - -
  • 102 -
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		 - -
  • 103 -
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		 - -
2023.05 - 6,550,000 65,500,000 1,855,826,441 18,558,264,410 Reduction of capital for new
restricted employee shares in the
amount of NT$15,000		 - -

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

February 29, 2024
Unit: shares		 February 29, 2024
Unit: shares		 February 29, 2024
Unit: shares		 February 29, 2024
Unit: shares
Type of stock Authorized capital Remarks
Shares issued and
outstanding (Note 1)		 Un-issued shares Total
Common stocks 1,855,826,441 4,694,173,559 6,550,000,000 Note 2

Note 1: 1,855,770,790 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.

  • 104 -

(II) Composition of Shareholders

June 30, 2023

June 30,2023
Type of
Shareholders		 Government
Agencies		 Financial
Institutions		 Other Legal
Persons		 Domestic
Natural
Persons		 Foreign
Institutions
and Natural
Persons		 Total
Number of
Shareholders		 14
59		 436
299,673
734		 300,916
Shareholding 51,401,603 110,682,172 132,225,791 1,217,754,385 343,762,490 1,855,826,441
Shareholding
Percentage(%)		 2.77%
5.96%		 7.13%
65. 62%
18.52%
100.00%

Note: Base date of shareholding, which was the record date for the distribution of 2023 cash dividend.

(III) The Dispersal of Shareholdings

June 30,2023 June 30,2023 June 30,2023 June 30,2023
Class of Shareholding
(Unit: Share)		 Number of Shareholders Shareholding Shareholding
Percentage (%)
1 ~999 136,463 29,297,729 1.58%
1,000 ~ 5,000 126,087 263,947,467 14.22%
5,001 ~ 10,000 20,851 158,185,656 8.52%
10,001 ~ 15,000 6,235 76,842,056 4.14%
15,001 ~ 20,000 3,467 63,326,010 3.41%
20,001 ~ 30,000 2,950 74,085,061 3.99%
30,001 ~ 40,000 1,330 46,846,291 2.53%
40,001 ~ 50,000 877 40,461,583 2.18%
50,001 ~ 100,000 1,443 102,395,943 5.52%
100,001 ~ 200,000 616 86,067,728 4.64%
200,001 ~ 400,000 302 84,287,252 4.54%
400,001 ~ 600,000 96 46,909,858 2.53%
600,001 ~ 800,000 35 23,591,599 1.27%
800,001 ~ 1,000,000 29 25,841,722 1.39%
1,000,001 and above 135 733,740,486 39.54%
Total 300,916 1,855,826,441 100.00%

Note: Base date of shareholding, which was the record date for the distribution of 2023 cash dividend.

  • 105 -

(IV) Major Shareholders

(IV) Major Shareholders (IV) Major Shareholders (IV) Major Shareholders
June 30,2023
Name of Shareholders Shareholding Shareholding
Percentage (%)
Syue-Rong Shen
Yuanta/P-shares Taiwan Dividend Plus ETF
Cathay Life Insurance
New Labor Pension Fund
Robeco Capital Growth Funds
Mercuries Life Insurance Co., Ltd.
Shun Yin Investment Ltd.
JPMorgan Chase Bank N.A., Taipei Branch in Custody for
Vanguard Total International Stock Index Fund, A Series of
Vanguard Star Funds
Vanguard Emerging Markets Stock Index Fund, A Series of
Vanguard International Equity Index Funds
Morgan Stanley & Co. International Plc		 54,383,000
49,810,114
44,542,000
40,335,764
25,138,000
24,000,000
22,587,265
21,793,546
19,170,737
17,436,421		 2.93%
2.68%
2.40%
2.17%
1.35%
1.29%
1.22%
1.17%
1.03%
0.94%

Note: Base date of shareholding, which was the record date for the distribution of 2023 cash dividend.

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

Unit: NT$

Unit: NT$
Item Year 2022 By the End of
2023
February29,2024
Market Price
per Share
(Note 1)		 Highest Market Price 45.15 37.45 31.85
Lowest Market Price 28.2 26.6 28
Average Market Price 37.23 32.69 29.65
Net Worth per
Share
Before Distribution		 28.38 26.07 Not applicable
After Distribution 26.58 (Note5)
Earnings per
Share		 Weighted Average Shares (thousand
shares)		 1,850,115 1,853,868
Earningsper Share 4.85 (0.92)
Dividends per
Share		 Cash Dividends 1.8 0.5

Stock
Dividends		 Dividends from Retained
Earnings		 - -
Dividends from Capital
Surplus		 - -
Accumulated Undistributed Dividends - -
Return on
Investment		 Price / Earnings Ratio(Note 2) 7.44 -
Price / Dividend Ratio(Note 3) 20.05 64.8
Cash Dividend Yield Rate(Note 4) 4.99% 1.54%

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 2023 will be resolved at the 2024 Shareholders' Meeting.

  • 106 -

(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$927,913,221 (NT$0.5 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

The company incurred a loss for the fiscal year 2023. In accordance with the company bylaws, no provision has been made for employee and director remuneration.

  1. Distribution of compensation approved in the board of directors meeting: None.

  2. 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.

(IX) Redemption of Common Stock: None.

  • 107 -

II. Corporate Bonds: None.

  • III. Preferred Shares: None.

IV. Global Depository Receipts: None.

  • V. Employee Stock Options : None.

VI. Employee Restricted Stock Awards : None.

  • 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.

  • 108 -

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 183 of this annual report.

2. Business Proportion

Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands
Products 2022 2023
Net Revenue % Net Revenue %
Flash 29,001,475 66.69% 16,959,567 61.40%
ROM 10,670,968 24.54% 9,036,841 32.71%
Foundry 3,796,517 8.73% 1,619,489 5.86%
Others 18,494 0.04% 7,711 0.03%
Total 43,487,454 100.00% 27,623,608 100.00%

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.

  • 109 -

  • Plans for New Product Development

  • ※ 3D NAND Flash: Projects for the third and fourth generations.

  • ※ eMMC control chip project for 3D NAND Flash.

  • ※ NOR Flash: 45-nanometer product series plan.

  • ※ NOR Flash: High-speed enhancement plan for protective and encrypted storage chips.

  • ※ 3D NOR Flash: Plan for the industry's highest single-chip NOR Flash storage capacity.

(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.

  1. Correlation with Upstream, Midstream, and Downstream Sections of the Industry

==> picture [406 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 Package
IC Wafer Test IC Final 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.

  • 110 -

(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		 2022 2023
R&D expenses 5,912,844 5,785,863
OperatingRevenue 43,487,454 27,623,608
% of R&D expenses to OperatingRevenue 13.60% 20.95%
  1. Successfully Developed Technologies or Products

In recent years, Macronix has successfully implemented product and technology innovations to extend its superior product competitiveness.

(1) Technology Innovation

  • ※ Adopt big data and artificial intelligence (AI) to establish an exclusive system platform for improving the performance and quality control of semiconductor mass production. Become the world's first semiconductor company to elevate the product defect rate measurement indicator from PPM (parts per million) to PPB (parts per billion) level.

  • ※ Use various AI technologies to establish an exclusive production process R&D platform to improve resource efficiency and shorten development time.

  • ※ Build proprietary design and mass production process technology of 3D NAND flash.

  • ※ Macronix's mature proprietary 0.11 µm embedded non-volatile memory technology and 0.18 µm BCD (Bipolar-CMOS-DMOS) technology are integrated into foundry services to meet demands of the MCU and analog IC-related markets.

(2) Product Innovation

  • ※ For automotive electronics and Internet of Things applications, Macronix has proposed an innovative protection and encryption ArmorFlash product series, and won the “Best Memory Product of the Year” at the “EE Awards 2021 (Asia Award).”

  • ※ In response to the design and development trend of lower power consumption and energysaving efficiency, Macronix launched the 1.2V SPI NOR flash product series, which saves more than 50% power than the 1.8V product series, and won the “Best Memory Product of the Year” at the “EE Awards 2022 (Asia Award).”

  • ※ To meet the demand for high performance, Macronix proposed the OctaFlash product series, which doubled the maximum speed of SPI NOR flash in the industry and won the “Best Memory Product of the Year” at the “EE Awards 2023 (Asia Award).”

  • ※ In addition to NOR flash, Macronix developed and mass-produced proprietary NAND flash, making us one of the few suppliers in the industry to possess high-quality products of both NOR flash and NAND flash in the world.

(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 various 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

  • 111 -

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 2023, the Company has obtained 3,402 patents in the U.S., 3,290 patents in Taiwan, 2,170 patents in China, and 341 patents in other countries. More than 1,400 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 high-value storage.

  • 112 -

II. Market and Sales Overview

(I) Market Analysis

1. Net Revenue by Geography

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands
Year
Geography		 2022 2023
Net revenue % Net revenue %
Domestic 8,361,409
19.23
5,475,358
19.82
Export Japan 14,195,816
32.64
10,324,765
37.38
USA 3,116,958
7.17
1,684,168
6.10

Europe		 4,658,146
10.71
3,605,977
13.05
Asia 13,155,125
30.25
6,533,340
23.65
Subtotal 35,126,045
80.77
22,148,250
80.18
Total 43,487,454
100.00
27,623,608
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 17% in 2023.

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.

  1. 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 non-volatile 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.

  • 113 -

(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, artificial intelligence,
automotive electronics, medical
technology, industrial applications, storage
equipment, network devices, tablets,
wireless communications (Bluetooth,
WLAN, 5G), and large entertainment
equipment.
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
serveanalogIC designcustomers.
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

==> picture [480 x 165] intentionally omitted <==

  • 114 -

(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
2022 2023
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 3,234,286 31.68 Related
party		 Supplier A 1,282,576 17.34 Related party
Others 6,974,126 68.32 Others 6,112,311 82.66
Net
Purchase		 10,208,412 100.00 Net
Purchase		 7,394,887 100.00

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
2022 2023
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 10,739,770 24.70 Related
party		 Customer A 9,123,959 33.03 Related party
Others 32,747,684 75.30 Others 18,499,649
66.97
Net Sales 43,487,454 100.00 Net Sales 27,623,608
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.

  • 115 -

(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		 2022 2023
Capacity Output Amount Capacity Output Amount
Flash 1,554,396
12,258,181		 1,364,499
9,147,026
ROM 105,782
7,616,073		 90,186
6,259,185
Subtotal(Kea) 1,660,178
19,874,254		 1,454,685
15,406,211
Foundry (PC) 216,260
1,432,067		 115,655
807,867
Capacity (PC) 1,154,250 1,160,700

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		 2022 2023
Domestic Export Domestic Export
Shipments Net revenue Shipments Net revenue Shipments Net revenue Shipments Net revenue
Flash 384,961
5,436,999		 1,077,072 23,564,476 342,044 4,205,634
775,174		 12,703,845
ROM -
-
107,089		 10,670,968
-
-
88,263
9,036,840
Foundry (PC) 164,809
2,922,818
47,982
873,699
90,566		 1,242,350
27,136
375,790
Others -
1,592
-
16,902
-
27,373
-
31,775
Total(Kea) 384,961
8,361,409		 1,184,161 35,126,045 342,044 5,475,358
863,437		 22,148,250

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

  • 116 -

III. Employees Information

(I) Company Employees Information

Year Year Year 2022 2023 By the End of
February29,2024
Number of employees Management Personnel 719 706 697
R&D and Technical
Personnel		 1,750 1,713 1,708
Operators 1,453 1,386 1,356
Total 3,922 3,805 3,761
Average age 38.7 years old 39.2 years old 39.4 years old
Average Length of Service 11 years and
7months		 12 years and
1 months		 12 years and
5months
Education Level
(%)		 PhD 2 2 2
Master's Degree 32.2 32.9 33.1
Bachelor's 49.5 46.8 46.7
High School 16.1 18.1 18.0
Below High School 0.2 0.2 0.2

(II) Subsidiary Employees information

2022 2023 By the End of
Year
February
29,2024
Management Personnel 111 112 111
153
R&D and Technical Personnel
152		 153
Number of
employees 0
Operators 0 0
Total 263 265 264
41.2 years old
Average age 40.4 years old 41.0 years old
9 years and
5 months		 9 years and
11 months		 10 years and
1 months
Average Length of Service
PhD 0.8 0.8 0.8
Master's Degree 36.9 37.7 37.5
Educational Level Bachelor's 60.0 59.2 59.4
(%)
High School 2.3 2.3 2.3
Below High School 0.0 0.0 0.0
  • 117 -

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$209,969,000 in 2023.

  • 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 being awarded the 19th National Sustainable Development Award by the National Council For Sustainable Development, receiving recognition from non-government organizations in Hsinchu City in 2022 and Certificate of Appreciation for Adopting Bicycle Paths by the Hsinchu City Government.

  • (5) Purchase domestic and overseas products and services with eco-friendly, energy conservation, and water conservation marks and carbon reduction labels and renewable energy 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.

  • 118 -

(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. Our efforts in the green products area include:

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 2023, 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. 119 -

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 3,256 internal and external training courses in 2023. The average training hours of employees were 71.7 hours. The total number of trainees was 85,334 and the total number of their training hours was 272,982 hours. The total training cost was NT$18,284,577.

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.

==> picture [310 x 229] intentionally omitted <==

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. 120 -

  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 [139 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:

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

  3. 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.

4. 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. 121 -

(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. The management system operates excellently and was honored with the ISO 45001 Plus Awards Occupational Health and Safety Performance Management Exemplary Award by SGS in the year 2023.

  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 2023.

  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. 122 -

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

  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; receiving the Air Quality Purification Areas Excellence Award from the Environmental Protection Administration from Executive Yuan.

3. Health Management

  • (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.

  • (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.

  • (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.

  • (4) In response to the COVID-19 outbreak the "Epidemic Prevention Office" continued 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.

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

  • (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.

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

  • (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.

  • (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.

(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. 123 -

  5. "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.

  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
2019 CSR AnnualSustainable Elite SGSTaiwan Ltd. (SGS)
2019 National Outstanding Healthy Workplace "Health
Model Award"		 Health Promotion Administration, Ministry of
Health and Welfare
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
2023 Awarded by Health Promotion Administration,
Ministry of Health and Welfare: Health
Promotion Badge		 Health Promotion Administration, Ministry of
Health and Welfare
  • 124 -
Year Awards Issued by
2023 SGS ISO Plus Awards - ISO 45001 Occupational
Health andSafetyPerformance Excellence Award		 SGS Taiwan Ltd. (SGS)
2023 19th National Sustainable Development Awards National Council For Sustainable
Development

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 are announced on the company website, to protect the Company's information assets from internal, external, intentional, or accidental threats and damages, 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 led by the Chief Information Security Officer and the highest-level management from all divisions and business units serving as representatives. In addition, we formed the Information Security Core Team and the Information Security Task Force to implement related affairs.

The Information Security Committee convenes a meeting on a regular basis every year. The covered topics include review of information security policies and management methods, information security work report, and annual budget and work plans. Whereas, important results related to continuous improvement of information security protection and trade secret protection are reported to the Board of Directors by the President every quarter.

==> picture [390 x 208] intentionally omitted <==

  • 125 -
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.Establish the objectives and implementation scope of the information
security management system
2.Establish the information security management system and related
regulations
3. Review the information security audit plan and follow up on
improvement measures
4. Review the implementation progress of information security
management operations
5. Supervise the implementation of business continuity drills
6. Review the information security management regulations of each
unit
7. Review the implementation status of information security awareness
training
8. Execute the various resolutions of the Information Security
Committee
9. Promote and implement information security maintenance and
management measures
10. Coordinate with the information security task force in performing
information security operations
Information
Security Task
Force		 1. Perform information security maintenance and management
operations
2. Act as the information security contact of all units, assist in the
promotion of security maintenance and management measures
3. Promote and communicate information security-related matters
4. Execute resolutions of the Information Security Core Team.
5. Propose suggestions for improvements on information security
maintenance and management measures

Information Security Organizations and Its Responsibilities

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.

In addition to requiring employees to be aware of information security, we also include contractors/suppliers into the scope of information security protection. Vendors are required to be familiar with Macronix's supplier instructions on information security before working with us and agree to comply with and implement the information-security protection related provisions of the Code of Conduct (CoC). Before entering Macronix's premises, external personnel must complete our information security course and test to ensure the information security.

  • 126 -

==> picture [259 x 222] intentionally omitted <==

4. Specific Objectives for Information Security Management

To stop various information security threats, Macronix continues to strengthen its information security defense and data protection network. The preventative measures include establishing information security control mechanisms for the use of computers, controlled information devices, and network resources. Macronix uses data loss prevention (DLP) systems, data encryption, file management and other tools to protect sensitive data and prevent leakage.

To prevent and reduce the damage caused by hackers’ attacks, Macronix has established relevant protection mechanisms and systems. It is strictly required for factory equipment to be scanned for viruses before installation to prevent malicious software from entering the company network. Network partition control is implemented to prevent computer viruses from spreading across regions. Furthermore, endpoint anti-virus and anti-hacking measures are implemented, and an integrated network security operations center (SOC) is established. Each year, cross-departmental information security incident response and disaster recovery drills are held, and business units are invited to participate.

In addition, to supervise the protection strength of the information security system, Macronix adopts a third-party information security assessment tool, Security Scorecard, to monitor weaknesses. Furthermore, external experts are engaged on a regular basis to perform information security assessments. To ensure the effectiveness of the information security management measures, the Information Security Core Team reviews the implementation results of relevant operations every week.

==> picture [416 x 196] intentionally omitted <==

  • 127 -

5. Achievements of the Promotion of Information Security

Macronix’s information security strategy takes into account both efficiency and information security protection through unified digital information security management. As of the end of 2023, the following has been implemented: the intelligent information security notification system ; automatic detection of, follow-up with and processing of anomalies through the digital information security instruments, and anomalies reporting to replace manual work, thereby ensuring the effective management and anomalies monitoring.

Based on the scoring results of the third-party security assessment tool, Security Scorecard, Macronix's annual performance averaged over 90 points, which is higher than the global manufacturing average of approximately 80 points. In addition, the security consultant evaluated Macronix’s information security maturity based on 108 standards of the National Institute of Standards and Technology Cyber Security Framework (NIST CSF). In the identification (ID), protection (PR), and detection (DE) areas, Macronix has shown significant improvement compared with last year.

A summary of major implementation results is shown in the figure below.

==> picture [463 x 263] intentionally omitted <==

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 over 10% of the information-related budget for the information security. Key items are as follows:

Category Content
Defense
Measures		  Continue to strengthen the information security defense and data protection
network
 Establish an intelligent information security reporting system and initiate the
digital transformation of information security
 Cooperated with information security information units, professional
manufacturers, and consultants to ensure agility with respect to information
security incidents
  • 128 -
Category Content
Hedging
Mechanisms		  Sign written agreements and documents with external customers and suppliers,
and require suppliers to comply with the information security protection
provisions of the Code of Conduct (CoC)
 Invested in information security insurance to reduce the damages and impact
caused by information security incidents and ensure that the Company can
make upforpartof thelossesin the eventof an informationsecurityincident
  • (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 265] intentionally omitted <==

Figure: Information Security Incident Notification and Handling Process

  • 129 -

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 the
end of Saifun
NROM
patent
validity
period
“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
  • 130 -
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 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
16 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
17 License
Agreement		 IBM, USA From
November 23,
2021
Obtained a AI technology
license		 License, disclaimer,
confidentiality and
other terms
18 License
Agreement		 Synopsys From
February 25,
2022		 Technologies related to
SSD Controller		 License, use,
confidentiality and
other terms
19 Joint
Research		 National Cheng
Kung University		 April 1,
2023-March
31,2025		 Computing in memory
circuit setup		 Intellectual property
rights, confidentiality
and other terms
20 Joint
Developme
nt		 IBM, USA December 31,
2023-
December 30,
2026

Joint development of
Enterprise SSD Storage		 Intellectual property
rights, confidentiality
and other restrictions
  • 131 -

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
2019 2020 2021 2022 2023
Current Assets 26,886,695
30,161,824
38,932,255
39,710,023
28,692,369
Property,Plant,and Equipment 29,365,507
31,462,800
32,218,383
37,982,047
41,498,097
Intangible Assets 47,022
57,280
96,873
125,929
115,219
Other Assets 4,357,554
4,210,314
5,460,637
6,074,708
7,505,788
Total Assets 60,656,778
65,892,218
76,708,148
83,892,707
77,811,473
Current
Liabilities		 Before Distribution 15,794,226
16,568,758
17,860,670
16,653,230
9,254,124
After Distribution 18,002,117
18,796,182
21,201,428
19,993,718
Note
Non-current Liabilities 12,369,884
13,129,068
12,122,001
14,629,118
20,231,394
Total
Liabilities		 Before Distribution 28,164,110
29,697,826
29,982,671
31,282,348
29,485,518
After Distribution 30,372,001
31,925,250
33,323,429
34,622,836
Note
Equity Attributable to
Shareholders of the Parent		 32,491,392
36,193,592
46,724,791
52,609,699
48,324,821
Share Capital 18,399,089
18,561,864
18,559,768
18,558,279
18,558,264
Capital Surplus 543,920
384,772
399,210
402,710
406,198
Retained
Earnings		 Before Distribution 14,685,430
17,771,636
27,095,127
32,807,299
27,639,541
After Distribution 12,477,539
15,544,212
23,754,369
29,466,811
Note
Other Equity (977,986) (365,619) 829,747
1,000,472
1,879,879
TreasuryShares (159,061) (159,061) (159,061) (159,061) (159,061)
Non-controllingInterests 1,276
800
686
660
1,134
Total
Equity		 Before Distribution 32,492,668
36,194,392
46,725,477
52,610,359
48,325,955
After Distribution 30,284,777
33,966,968
43,384,719
49,269,871
Note

Note: Pending approval from the shareholders' meeting.

  • 132 -

Unit: NT$ thousands

2. Parent Company Only Balance Sheet


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
2019 2020 2021 2022 2023
Current Assets 25,503,411
28,628,546
37,301,782
37,565,588
26,532,596
Property, Plant, and Equipment 28,904,312
31,016,511
31,792,537
37,529,981
41,062,530
Intangible Assets 43,559
54,629
95,108
124,699
113,981
Other Assets 6,075,266
6,059,348
7,362,814
8,440,978
9,668,634
Total Assets 60,526,548
65,759,034
76,552,241
83,661,246
77,710,888
Current
Liabilities		 Before Distribution 15,733,930
16,504,303
17,754,438
16,461,056
9,170,175

After Distribution		 17,941,821
18,731,727
21,095,196
19,804,544
Note
Non-current Liabilities 12,301,226
13,061,139
12,073,012
14,590,491
20,215,892
Total
Liabilities		 Before Distribution 28,035,156
29,565,442
29,827,450
31,051,547
29,386,067

After Distribution		 30,243,047
31,792,866
33,168,208
34,392,035
Note
Equity Attributable to Owners of
the Company		 32,491,392
36,193,592
46,724,791
52,609,699
48,324,821
Share Capital 18,399,089
18,561,864
18,559,768
18,558,279
18,558,264
Capital Surplus 543,920
384,772
399,210
402,710
406,198
Retained
Earnings		 Before Distribution 14,685,430
17,771,636
27,095,127
32,807,299
27,639,541
After Distribution 12,477,539
15,544,212
23,754,369
29,466,811
Note
Other Equity (977,986) (365,619) 829,747
1,000,472
1,879,879
Treasury Shares (159,061) (159,061) (159,061) (159,061) (159,061)
Non-controlling Interests - - - - -
Total
Equity		 Before Distribution 32,491,392
36,193,592
46,724,791
52,609,699
48,324,821
After Distribution 30,283,501
33,966,168
43,384,033
49,269,211
Note

Note: Pending approval from the shareholders' meeting.

  • 133 -

(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
2019 2020 2021 2022 2023
Net Operating Revenue 34,995,411 39,800,947 50,572,991 43,487,454 27,623,608
Gross Profit 9,615,494 13,409,355 21,049,979 19,237,819
6,760,660
Income (loss) from Operations 3,098,877
5,866,477		 11,064,105
9,369,161		 (2,407,099)
Non-operating Income and Expenses (72,551)
(25,431)
2,263,584
923,233
522,863
Income (loss) before Income Tax 3,026,326
5,841,046		 13,327,689 10,292,394 (1,884,236)
Net Income from Continuing
Operations		 3,012,901
5,325,612		 11,962,839
8,969,775		 (1,699,147)
Income from Discontinued Operations - - - - -
Net Income (loss) 3,012,901
5,325,612		 11,962,839
8,969,775		 (1,699,147)
Other Comprehensive Income, net of
income tax		 240,854
288,014
678,177
208,450
751,758
Total Comprehensive Income 3,253,755
5,613,626		 12,641,016
9,178,225
(947,389)
Net Income (loss) Attributable to
Shareholders of the parent		 3,011,960
5,326,083		 11,962,952
8,969,775		 (1,699,593)
Net Income (loss) Attributable to Non-
controlling interest		 941
(471)
(113)
-
446
Comprehensive Income Attributable to
Shareholders of the parent		 3,252,814
5,614,102		 12,641,130
9,178,251
(947,863)
Comprehensive Income Attributable to
Non-controllinginterest		 941
(476)
(114)
(26)
474
Earnings (loss) Per Share 1.64
2.90
6.48
4.85
(0.92)
  • 134 -

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
2019 2020 2021 2022 2023
Net Operating Revenue 34,235,969
38,995,968
49,598,199
42,509,017
26,953,133
Gross Profit 8,872,210
12,631,084
20,068,015
18,277,667
6,103,140
Income (loss) from Operations 2,966,762
5,691,103
10,701,751
9,141,971
(2,402,641)
Non-operating Income and
Expenses		 45,198
119,895
2,559,748
1,121,430
501,793
Income (loss) before income tax 3,011,960
5,810,998
13,261,499
10,263,401
(1,900,848)
Net Income from Continuing
Operations		 3,011,960
5,326,083
11,962,952
8,969,775
(1,699,593)
Income from Discontinued
Operations		 - - - - -
Net Income (loss) 3,011,960
5,326,083
11,962,952
8,969,775
(1,699,593)
Other Comprehensive Income, net
of income tax		 240,854
288,019
678,178
208,476
751,730
Total Comprehensive Income 3,252,814
5,614,102
12,641,130
9,178,251
(947,863)
Net Income (loss) Attributable to
Shareholders of the parent		 3,011,960
5,326,083
11,962,952
8,969,775
(1,699,593)
Net Income Attributable to Non-
controlling interest		 - - - - -
Comprehensive Income
Attributable to Shareholders of the
parent		 3,252,814
5,614,102
12,641,130
9,178,251
(947,863)
Comprehensive Income
Attributable to Non-controlling
interest		 - - - - -
Earnings (loss) Per Share 1.64
2.90
6.48
4.85
(0.92)

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

Year Name of CPA Audit opinions
2023 Tung Hui Yeh, Kuo Tyan Hong An Unmodified Opinion
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
  • 135 -

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 (Note1)		 FinancialanalysisfortheMostRecentFivefiscalyears
2019 2020 2021 2022 2023
Financial
Structure
Analysis(%)		 Debtratio 46.43 45.07 39.09 37.29 37.89
Long-term capital to property,
plant and equipmentratio		 152.77 156.77 182.65 177.03 165.21
Liquidity
Analysis (%)		 Currentratio 170.23 182.04 217.98 238.45 310.05
Quick ratio 87.52 103.20 143.24 149.02 163.64
Interest coveragemultiples 16.37 24.65 57.34 50.16 (6.23)
Operating
performance
Analysis		 Accounts receivable turnover
(times)		 7.44 7.94 8.60 7.63 7.08
Days Sales Outstanding 49.05 45.96 42.44 47.83 51.55
Inventory turnover(times) 1.65 2.04 2.26 1.74 1.48
Average payable turnover(times) 2.76 3.78 3.93 3.66 5.00
AverageInventory turnoverdays 221.21 178.92 161.50 209.77 246.62
Property, plant and equipment
turnover(times)		 1.44 1.31 1.59 1.24 0.70
Totalassets turnover(times) 0.58 0.63 0.71 0.54 0.34
Profitability
Analysis		 Returnontotalassets (%) 5.30 8.73 17.04 11.38 (1.84)
Returnonequity (%) 9.44 15.51 28.85 18.06 (3.37)
Pre-tax income to paid-in capital
ratio (%)		 16.45 31.47 71.81 55.46 (10.15)
Net income ratio (%) 8.61 13.38 23.65 20.63 (6.15)
BasicEarnings pershare (NT$) 1.64 2.90 6.48 4.85 (0.92)
Cash flow Cash flowratio (%) 28.76 59.48 90.23 69.99 (5.68)
Cash flow adequacy ratio (%) 77.63 83.96 94.85 87.17 74.16
Cash reinvestmentratio (%) 1.58 4.91 9.00 4.98 (2.24)
Leverage Operating leverage 1.88 1.64 1.39 1.48 (0.75)
Financial leverage 1.07 1.04 1.02 1.02 0.90
Analysis of deviation over 20% for the most recent two years:
․
Increase in Current Ratio: Mainly due to the decrease in current liabilities in 2023 compared to 2022.
․
Decrease in Interest coverage multiples: Mainly caused by the reduction in pre-tax net income in 2023 compared
to 2022.
․
Increase in Accounts Payable Turnover: Mainly attributed to the decrease in the average total accounts payable in
2023 compared to 2022.
․
Decrease in Property, Plant, and Equipment Turnover: Mainly due to the decrease in net sales in 2023 compared
to 2022.
․
Decrease in Total Asset Turnover: Mainly attributed to the decrease in net sales in 2023 compared to 2022.
․
Decrease in Return on total assets: Mainly caused by the reduction in after-tax net income in 2023 compared to
2022.
․
Decrease in Return on Equity: Mainly attributed to the decrease in after-tax net income in 2023 compared to
2022.
․
Decrease in Pre-tax Net Income to Paid-up Capital Ratio: Mainly caused by the reduction in pre-tax net income
in 2023 compared to 2022.
․
Decrease in Net income ratio: Mainly due to the decrease in after-tax net income in 2023 compared to 2022.
․
Decrease in Basic Earnings per share: Mainly caused by the reduction in after-tax net income in 2023 compared
to 2022.
․
Decrease in Cash Flow Ratio: Mainly attributed to the decrease in net cash flow from operating activities in 2023
compared to 2022.
․
Decrease in Cash Reinvestment Ratio: Mainly due to the decrease in net cash flow from operating activities in
2023 compared to 2022.
․
Decrease in OperatingLeverage: Mainlyattributed to the decrease in net sales in 2023 compared to 2022.

Note 1: Please refer to page 138 to 139 of this annual report for the calculation formula.

  • 136 -

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
2019 2020 2021 2022 2023
Financial
Structure
Analysis(%)		 Debt ratio 46.32 44.96 38.96 37.12 37.81
Long-term capital to property,
plant and equipment ratio		 154.97 158.80 184.94 179.06 166.92
Liquidity
Analysis (%)		 Current ratio 162.09 173.46 210.10 228.21 289.34

Quick ratio		 79.50 94.62 135.10 138.01 142.02

Interest coverage multiples		 16.46 24.94 58.01 50.79 (6.36)
Operating
Performance
Analysis		 Accounts receivable turnover
(times)		 7.56 7.83 7.85 7.05 6.97
DaysSalesOutstanding 48.28 46.61 46.49 51.77 52.36
Inventoryturnover(times) 1.65 2.05 2.26 1.74 1.48
Average payable turnover
(times)		 2.76 3.78 3.93 3.66 5.00
Average inventoryturnover days
221.21		 178.04 161.50 209.77 246.62
Property, plant and equipment
turnover(times)		 1.43 1.30 1.58 1.23 0.69
Total assets turnover(times) 0.57 0.62 0.70 0.53 0.33
Profitability
Analysis		 Return on total assets(%) 5.30 8.74 17.07 11.40 (1.85)
Return on equity (%) 9.43 15.51 28.85 18.06 (3.37)
Pre-tax income to paid-in capital
ratio(%)		 16.37 31.30 71.45 55.30 (10.24)
Net income ratio(%) 8.80 13.66 24.12 21.10 (6.31)
Basic Earningsper share(NT$) 1.64 2.90 6.48 4.85 (0.92)
Cash Flow Cash flow ratio(%) 27.54 56.68 85.20 74.53 (8.18)
Cash flowadequacyratio(%) 78.34 82.83 91.64 85.81 71.80
Cash reinvestment ratio(%) 1.44 4.60 8.39 5.37 (2.39)
Leverage Operatingleverage 1.90 1.65 1.40 1.49 (0.73)
Financial leverage 1.07 1.04 1.02 1.02 0.90
Analysis of deviation over 20% for the most recent two years:
‧
Increase in Current Ratio: Mainly due to the decrease in current liabilities in 2023 compared to 2022.
‧
Decrease in Interest coverage multiples: Mainly caused by the reduction in pre-tax net income in 2023
compared to 2022.
‧
Increase in Accounts Payable Turnover: Mainly attributed to the decrease in the average total accounts
payable in 2023 compared to 2022.
‧
Decrease in Property, Plant, and Equipment Turnover: Mainly due to the decrease in net sales in 2023
compared to 2022.
‧
Decrease in Total Asset Turnover: Mainly attributed to the decrease in net sales in 2023 compared to
2022.
‧
Decrease in Return on total assets: Mainly caused by the reduction in after-tax net income in 2023
compared to 2022.
‧
Decrease in Return on Equity: Mainly attributed to the decrease in after-tax net income in 2023
compared to 2022.
‧
Decrease in Pre-tax Net Income to Paid-up Capital Ratio: Mainly caused by the reduction in pre-tax net
income in 2023 compared to 2022.
‧
Decrease in Net income ratio: Mainly due to the decrease in after-tax net income in 2023 compared to
2022.
‧
Decrease in Basic Earnings per share: Mainly caused by the reduction in after-tax net income in 2023
compared to 2022.
‧
Decrease in Cash Flow Ratio: Mainly attributed to the decrease in net cash flow from operating
activities in 2023 compared to 2022.
‧
Decrease in Cash Reinvestment Ratio: Mainlydue to the decrease in net cash flow from operating
  • 137 -

activities in 2023 compared to 2022. ‧ Decrease in Operating Leverage: Mainly attributed to the decrease in net sales in 2023 compared to 2022.

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

  1. Financial structure

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

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

  2. Solvency

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

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

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

  3. Operating Performance

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

  4. 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)

  5. 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)

  6. 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).

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

  8. 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.

  9. 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.

  10. 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.

  11. 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.

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

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

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

  15. 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

  16. 138 -

of the year, it is counted as zero.

  1. 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.

  2. 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.

  3. 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.

  4. 139 -

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

Audit Committee’s Report of 2023

To: 2024 Annual Shareholders’ Meeting of Macronix International Co., Ltd.

The 2023 Financial Statements of the Company (including the parent company only financial statements), the 2023 Business Report, and the proposed 2023 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: February 27, 2024

  • 140 -

  • IV. Financial Statements for the Most Recent Fiscal Year: Please refer to pages 155 to 223 of this annual report.

  • V. Stand-Alone Financial Statements for the Most Recent Fiscal Year Certified by the Accountant: Please refer to pages 224 to 288 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.

  • 141 -

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

I. Analysis of Financial Status

I.
Analysis of Financial Status		 I.
Analysis of Financial Status		 I.
Analysis of Financial Status		 I.
Analysis of Financial Status		 I.
Analysis of Financial Status
Unit: NT$thousands
Item 2023 2022 Difference Increase/Decrease
(%)
Current Assets 28,692,369
39,710,023
(11,017,654)
(27.75%)
Non-current Assets 49,119,104
44,182,684
4,936,420
11.17%
Total Assets 77,811,473
83,892,707
(6,081,234)
(7.25%)
Current Liabilities 9,254,124
16,653,230
(7,399,106)
(44.43%)
Non-current Liabilities 20,231,394
14,629,118
5,602,276
38.30%
Total Liabilities 29,485,518
31,282,348
(1,796,830)
(5.74%)
Equity Attributed to
Shareholders of the Parent		 48,324,821
52,609,699
(4,284,878)
(8.14%)
Non-controlling Interest 1,134
660
474
71.82%
Total Equity 48,325,955
52,610,359
(4,284,404)
(8.14%)
If the difference in comparison with the previous period exceeds 20%, and the main reason and the impact
are analyzed as follows:
‧
Current Assets: Decreased compared to 2022, primarily due to a reduction in cash and cash equivalents
in 2023.
‧
Current Liabilities: Decreased compared to 2022, mainly due to a decrease in accounts payable in 2023.
‧
Non-Current Liabilities: The increase compared to 2022 was mainly due to long-term borrowings in
2023.
‧
Non-controlling Interests: Increased compared to 2022, primarily due to an increase in equity of
subsidiaries with less than 100% ownershipin 2023.
  • 142 -

II. Analysis of Financial Performance

Unit: NT$ thousands

Item 2023











2022











Difference %

(36.48%)

(13.97%)

(64.86%)

-

(64.86%)

(7.10%)

(125.69%)

(43.37%)

(118.31%)

(113.99%)

(118.94%)

260.64%

(110.32%)
Net Operating Revenue
Operating Costs
Gross Profit
Realized (Unrealized) Gains from the
Affiliated Companies
Realized Gross Profit
Operating Expenses
Income (Loss) from Operations
Non-operating Income and Expenses
Net Income (Loss) before Tax
Income Tax (Benefit) Expenses
Net Income (Loss) for the Year
Other Comprehensive Income (Loss)
Total Comprehensive Income for the
Year		 $27,623,608
20,862,948		 $43,487,454
24,249,635		 ($15,863,846)
3,386,687
6,760,660
-		 19,237,819
-		 (12,477,159)
-
6,760,660
9,167,759		 19,237,819
9,868,658		 (12,477,159)
(700,899)
(2,407,099)
522,863		 9,369,161
923,233		 (11,776,260)
(400,370)
(1,884,236)
(185,089)		 10,292,394
1,322,619		 (12,176,630)
(1,507,708)
(1,699,147)
751,758		 8,969,775
208,450		 ($10,668,922)
543,308
($947,389) $9,178,225 ($10,125,614)
Analysis of any increase/decrease in ratio exceeding 20%:
‧Net Operating Revenue: Decreased compared to 2022, mainly due to slowing market demand.
‧Gross Profit: Decreased compared to 2022, mainly due to the reduction in operating revenue in the year
2023.
‧Realized Gross Profit: Decreased compared to 2022, mainly due to the reduction in operating revenue in
2023.
‧Income (Loss) from Operations: Decreased compared to 2022, mainly due to the reduction in operating
revenue in 2023.
‧Non-operating Income and Expenses: Non-operating Income decreased compared to 2022, mainly due to
the reduction in foreign exchange gains in 2023.
‧Net Income (Loss) before Tax: Decreased compared to 2022, mainly due to the reduction in both
operating revenue and non-operating income in 2023.
‧Income Tax (Benefit) Expenses: Decreased compared to 2022, mainly due to the decrease in profit before
tax in 2023.
‧Net Income (Loss) for the Year: Decreased compared to 2022, mainly due to the reduction in operating
revenue in 2023.
‧Other Comprehensive Income (Loss): Increased compared to 2022, mainly due to the increase in
unrealized valuation gains in 2023.
‧Total Comprehensive Income for the Year: Decreased compared to 2022, primarily due to the reduction
in operatingrevenue in 2023.
  • 143 -

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
19,764,278 (525,712) (7,332,654) 11,905,912 None
None

Note 1: Analysis of net cash change in 2022:

  • (1) NT$525.712 million net cash used in operating activities; mainly from operating cash outflows exceeding cash inflows.

  • (2) NT$7,591.963 million net cash used in investing activities; mainly due to the expansion of plant operations, expenditures for purchasing machinery.

  • (3) NT$426.908 million net cash generated by financing activities; primarily for long-term debt proceeds and cash dividend payment.

  • (4) NT$167.599 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
(I)
Capital Expenditure and Source of Funds		 (I)
Capital Expenditure and Source of Funds		 (I)
Capital Expenditure and Source of Funds		 (I)
Capital Expenditure and Source of Funds		 (I)
Capital Expenditure and Source of Funds		 (I)
Capital Expenditure and Source of Funds
Unit: NT$ thousands
Project Actual or Planned
Source of Capital		 Actual use of Capital Total Amount
2021 2022 2023
Facility engineering,
production equipment
and advanced process
equipment		 Self-owned funds,
bank borrowings		 4,706,096 9,869,012 7,609,696 22,184,804

(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.

  • 144 -

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 5% of the total assets. The dividend income for fiscal year 2023 was NT$178,235 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

The international labor market and inflation both showed signs of slowing down at the end of 2023. Central banks in America and Europe kept policy interest rates unchanged. The market expects that interest rate hike cycle is ending and interest rate cuts will start, and the yields of long-term government bonds of major countries fall, etc. Based on the domestic and foreign economic situation, the global economy is expected to cool down in 2024 and inflation will continue to fall. However, there are still many uncertainties. The decision of Taiwan's Central Bank at the joint meeting of directors and supervisors on December 14, 2023 to keep the policy interest rate unchanged will benefit steady 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 30% 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 2023, the US dollar appreciated against New Taiwan Dollar from 30.71 at the beginning of the year to 32.425 in October, and then began to depreciate after November to 30.705. The Japanese yen depreciated against the New Taiwan Dollar from 0.2324 at the beginning of the year to 0.2172. The Company's net profit on foreign exchange in 2023 was NT$109,855 thousand.

3. Inflation

The effects of monetary tightening policies of major economies continued to emerge in the second half of 2023. The global manufacturing industry remained sluggish and business of the service industry slowed down. Looking towards 2024, global trade in goods will return to growth, and business opportunities for emerging technology applications continue to expand, which is expected to build momentum for Taiwan's exports and private investments. The Central Bank estimates Taiwan's economic growth rate will be 3.12% this year (2024). Bulk commodity prices, such as crude oil, will slightly rise compared with 2023, and domestic commodity prices will rise moderately. In the future, domestic inflation will still be affected by the price trends of international bulk commodities and domestic services, as well as weather factors. Inflation is expected to continue to drop to 1.89% this (2024) year, which is still moderate, compared with major economies and will have limited impact on the Company's profits and losses.

  • 145 -

  • (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

  • As of the beginning of 2023 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 2024 is approximately NT$6.9 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 2023 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

  • 146 -

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 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 also created potential threats of information security for 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 established internal control system standards in accordance with the Regulations Governing Establishment of Internal Control Systems by Public Companies, and, in compliance with the request of the competent authority, appointed a chief information security officer to strengthen its information security and information protection. Macronix also has an Information Security Committee, Information Security Core Team, and Information Security Task Force to implement its information security policy.

Moreover, Macronix employs a variety of information security mechanisms and system architecture designs to block the ever-changing information security threats. The related 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 of confidential information. Also, in order to prevent malicious software attacks and reduce the accompanied damage, the Company has established enhancement mechanisms and systems, such as : mandating that equipment sent to the factory should previously 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, establishing endpoint anti-virus and anti-hacking measures, introducing advanced solutions to detect and process malware, establishing integrated network security monitoring center, and having regular information security assessments from outside experts . Even though Macronix has established the comprehensive network and computer protection measures to ensure information security, it is still under the potential risks of being affected by information security threats and cyberattacks. As a result, Macronix has established the information security incidents reporting and handling procedures to respond with immediate action. In addition, the Company has bought information security insurance to reduce resulting damage and impact. Macronix has launched annual educational training, and information security e-newsletters to strengthen the information security awareness and training, and to enable employees to jointly protect Company’s information security.

  • (VI) Impact of Corporate Image Change on Risk Management and Response Measures: Macronix is determined to uphold the business philosophy of honesty. By adhering to such major values, as innovation, quality, efficiency, service, and teamwork, we have established and implemented corporate governance and risk management mechanisms to create the business environment for sustainable development. To effectively prevent and control risks and meet expectations of competent authorities, customers, investors and related parties, the Company is committed to implementing the risk management in such areas as operational, financial, legal compliance, information security and climate change. This way Macronix fulfills its social responsibilities and ensures the Company's international competitiveness and sustainable operation.

Macronix understands that it is vital to communicate with competent authorities, customers, investors and related parties. Therefore, Macronix has established the diverse communication channels to gain

  • 147 -

understanding of and respond to reasonable expectations, requirements and issues of concern towards the Company. All related parties can contact the Company and express their opinions through the Company website (http://www.macronix.com).

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

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

Last (2023) year the world was impacted by the poor overall economy, inflation, and Russo-Ukranian war. The time for customers to remove the inventory in the memory market was delayed, and inventory consumption was lower than expected, weakening sales of technology products. To respond to the market requirements and to reduce export control and other risks arising from ChinaUS competition, the Company upholds the principles of pursuing innovation and high quality as it focuses its efforts on the R&D of high density 3D NOR Flash, 192-layer and 312-layer 3D NAND Flash products and technologies. Besides enhancing the Company's international competitiveness, we will carry out capacity adjustment, domestic and overseas inventory management, and monitoring of developments in customers' products and needs. Through the production and sales management mechanisms, we can timely respond to possible changes and operating conditions, 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. In order to ensure the stable supply and gain recognition and trust of our customers, the relationship with suppliers is established based on a long-term, smooth and stable supply. Company’s procurement policy has always aimed at establishing long-term and excellent collaborative relationships and decentralized sources for purchasing. Furthermore, in order to reduce the impact of raw materials and price fluctuation risks, we continue to improve our inventory monitoring system and increase the accuracy of demand forecasting. Therefore, Macronix ensures that the supply chain maintains appropriate inventory levels and reduces unpredictable risks.

Our largest customer accounted for 25% and 33% of our revenue in 2022 and 2023, respectively, while no other customer accounted for 10% and above of our revenue. We have maintained a good long-term relationship with the major customers, and are properly managing related operational risks. Our main customers are world-renowned manufacturers. After years of joint hard work, these customers have become Macronix’s long-term partners. At the same time we continue to engage in product R&D and innovation, and are actively expanding customers that are stably growing in various fields of application, especially automotive, healthcare, industry, and data centers, to lower the risk of over-concentration in sales and 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: Company’s main litigation cases of 2023 are the foreign trademark opposition

(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.

  • 148 -

  • (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.

  • 149 -

Chapter VIII. Special Disclosure

I. Summary of Affiliated Companies (Ended on December 31, 2023)

(I) Consolidated Business Report

  1. Corporate Affiliation Chart

==> picture [390 x 348] intentionally omitted <==

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

100% Macronix America, 100% New Trend
Inc. Technology Inc.
Macronix
100% Macronix (BVI) Co., 100% Macronix Europe
International
Ltd. N.V.
Co., Ltd.
100% Macronix Pte Ltd 100% Macronix (Asia)
Limited
100% 100% Macronix
Macronix (Hong
Microelectronics
Kong) Co., Limited.
(Suzhou) Co., Ltd.
90.43%
Mxtran Inc.
100% Hui Ying
Investment Ltd.
100% Run Hong 4.41%
Mxtran Inc.
Investment Ltd.
----- End of picture text -----

  • 150 -

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		 6,071,708 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 IC design
9F, 16, Li-Hsin Road, Science Park, Hsinchu,
770,000
Taiwan, R.O.C
New Trend Technology Inc. January,1999 680 N. McCarthy Blvd Suite 200, Milpitas, IC design
936,053

CA95035
Macronix Europe N.V. July,1999 After-sales services
Koningin Astridlaan 49 Bus 6 1780 Wemmel,
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,
SuZhouCity, 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.

  • 151 -

5. 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%
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%
  • 152 -

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
726,012
339,995
386,017
1,896,244
(1,505)		 6,039
60.39
Macronix(BVI)Co., Ltd. 6,071,708
2,369,865
233
2,369,632
-
(526)		 266,582
1.46
Hui YingInvestment Ltd. 150,000
229,569
200
229,369
-
(150)
15,658
NA
Run HongInvestment Ltd. 150,000
72,165
200
71,965
-
(150)		 320
NA
Mxtran Inc. 770,000
57,894
35,928
21,966
64,542
9,148
8,634
0.11
New Trend Technology Inc. 936,053
304,524
-
304,524
-
(11,732)
(11,757)
(0.41)
Macronix Europe N.V. 2,106
171,991
14,853
157,138
183,851
13,529
9,694
9.69
Macronix Pte Ltd 3,291
8,476
1,756
6,720
30,464
1,451
1,245
7.16
Macronix (HongKong) Co., Limited. 378,427
1,027,008
460,691
566,317
2,886,038
(46,079)
(21,290)
(0.24)
Macronix Microelectronics(Suzhou)Co., Ltd.
296,160
555,130
95,127
460,003
388,784
10,875
22,922
NA
Macronix (Asia) Limited 19,744
87,935
13,378
74,557
138,567
8,656
6,148
10.25

(II) Consolidated Financial Statements: please refer to page 156 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.

  • 153 -

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%		 2023 None None None 1,956,619 shares
NT$55,666 (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$ 28.45 per share on February 29, 2024.

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.

  • 154 -

Macronix International Co., Ltd. and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022 and Independent Auditors’ Report

  • 155 -

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, 2023 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 27, 2024

  • 156 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and 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, 2023 and 2022, 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 material accounting policy information (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. 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.

  • 157 -

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2023 are stated as follows:

Valuation of inventory

The Group manufactures and sells ROM products, including NOR Flash, and NAND Flash, which are widely used in consumer electronic devices. As of December 31, 2023, inventory was NT$13,368,867 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 chips could change significantly and result in inventory obsolescence. Since inventory valuation and estimates of the net realizable value of inventory are subject to management’s judgment, they are considered accounting estimates with relatively high uncertainty. Therefore, the 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 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 by 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 on the age interval, quantity, and amount of the supporting documents of inbound inventory. We assessed the reasonableness of the 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 the inventory movements to evaluate the reasonableness of inventory obsolescence reserve policy and the policy on scrapping 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, 2023 and 2022 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.

  • 158 -

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

  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 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.

  7. 159 -

We communicate with those charged with governance regarding, among other ma ers, 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 state1nent that we have complied with relevant ethical requirements regarding independence, and to cmnmunicate 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 1natters that were of 1nost significance in the audit of the consolidated financial statements for the year ended December 31, 2023 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 circun1stances, we determine that a 1natter should not be cmnmunicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the i c publi interest benefits of such c01nmunication.

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

==> picture [67 x 47] intentionally omitted <==

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勺仁
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==> picture [102 x 48] intentionally omitted <==

二；二三

Deloitte & Touche · Taipei, Taiwan Republic of China February 27, 2024

Notice to ReG;.ders

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司readers, the ind ndent 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 ind ndent auditors'report and consolidated financial statements shall prevail.

  • 160 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 32)
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 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 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)
Prepayments for equipment
Other financial assets - non-current (Notes 4, 16, 32 and 34)
Other non-current assets (Note 17)
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Contract liabilities (Note 25)
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 OWNERS OF THE COMPANY (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
Total equity attributable to owners of the Company
NON-CONTROLLING INTERESTS (Note 24)
Total equity
TOTAL		 2023
Amount
%
$ 11,905,912
16
2,561,602
3
489,154
1
186,967
-
13,368,867
17
-
-

179,867

-

28,692,369
37
261,911
-
4,016,384
5
43,270
-
41,498,097
53
693,553
1
115,219
-
1,155,327
2
235,195
-
767,001
1

333,147

1

49,119,104
63
$ 77,811,473
100
$ 41,027
-
2,039,130
3
986,617
1
965,965
1
1,147,179
2
1,499,934
2
10
-
3,237
-
24,805
-
83,522
-
2,117,062
3

345,636

-

9,254,124
12
17,346,721
22
840,797
1
622,770
1
1,243,360
2

177,746

-

20,231,394
26

29,485,518
38
18,558,264
24

-

-

18,558,264
24

406,198

1
4,331,651
5
93,025
-

23,214,865
30

27,639,541
35

1,879,879

2

(159,061)

-
48,324,821
62

1,134

-

48,325,955
62
$ 77,811,473
100		 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

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

  • 161 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except (Loss) 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, 10, 23, 26 and 33)
Selling and marketing expenses
General and administrative expenses
Research and development expenses
Expected credit loss
Total operating expenses
(LOSS) 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)
Finance costs (Notes 4, 26 and 30)
Total non-operating income and expenses
(LOSS) INCOME BEFORE INCOME TAX FROM
CONTINUING OPERATIONS
INCOME TAX BENEFIT (EXPENSE) (Notes 4 and 27)
NET (LOSS) 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 (loss) 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 (LOSS) INCOME FOR THE
YEAR		 2023
Amount
%
$ 27,623,608
100
20,862,948
76

6,760,660
24
1,644,637
6
1,731,793
6
5,785,863
21

5,466

-

9,167,759
33
(2,407,099)

(9)
247,294
1
347,494
1
188,769
1

(260,694)

(1)

522,863

2
(1,884,236)
(7)

185,089

1
(1,699,147)

(6)
(180,920)
(1)
949,573
4

(16,895)

-

751,758

3
$ (947,389)

(3)		 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
(Continued)
  • 162 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

NET (LOSS) INCOME ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests
TOTAL COMPREHENSIVE (LOSS) INCOME
ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests
(LOSS) EARNINGS PER SHARE (Note 28)
Basic
Diluted		 2023
Amount
%
$ (1,699,593)
(6)

446

-
$ (1,699,147)

(6)
$ (947,863)
(3)

474

-
$ (947,389)

(3)
$ (0.92)
$ (0.92)		 2022














Amount
%
$ 8,969,775
21

-

-
$ 8,969,775
21
$ 9,178,251
21

(26)

-
$ 9,178,225
21
$ 4.85
$ 4.68

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

(Concluded)

  • 163 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)


BALANCE AT JANUARY 1, 2022
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
Legal reserve
Special reserve
Cash dividends distributed by the Company -
$1.80 per share
Net (loss) income for the year ended
December 31, 2023
Other comprehensive income (loss) for the year
ended December 31, 2023, net of income tax

Total comprehensive income (loss) for the year
ended December 31, 2023

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, 2023
 Equity Attributable to Share Equity Attributable to Share holders of the Company holders of the Company Total
$ 46,724,791

-
-
(3,340,758 )
8,969,775

208,476


9,178,251

43,893
-

3,522


52,609,699
-
-
(3,340,488 )
(1,699,593 )

751,730


(947,863)

-
(49 )
-

3,522

$ 48,324,821
 Non-controlling
Interests
$ 686

-
-

-
-

(26)


(26)

-
-

-

660
-
-

-

446

28


474

-

-
-

-

$ 1,134
 Total Equity
$ 46,725,477
-
-
(3,340,758 )
8,969,775

208,450

9,178,225
43,893
-

3,522
52,610,359
-
-
(3,340,488 )
(1,699,147 )

751,758

(947,389)
-
(49 )
-

3,522
$ 48,325,955
**Share Capital ** hare Capital to be
Cancelled
$ (410 )
-
-
-
-

-


-

-

146

-

(264 )
-
-
-
-

-


-

-
-

264

-

$ -
 Capital Surplus
$ 399,210

-
-
-
-

-


-

(1,511 )
1,489

3,522


402,710
-
-
-
-

-


-

-
(49 )
15

3,522

$ 406,198
 Retained Earnings Unappropriated
Earnings

$ 24,532,500

(1,155,092 )

214,869
(3,340,758 )
8,969,775

83,155


9,052,930

-
-

-

29,304,449
(905,293 )
(16,533 )
(3,340,488 )
(1,699,593 )

(180,920)


(1,880,513)

53,243
-
-

-

$ 23,214,865
 Other Equity Unearned
Compensation
of Employees
$ (45,404 )
-
-
-
-

-


-

45,404
-

-

-
-
-
-
-

-


-


-
-
-

-

$ -
 Treasury Shares
$ (159,061 )
-
-
-
-

-


-

-
-

-

(159,061 )
-
-
-
-

-


-

-
-
-

-

$ (159,061)
Exchange
Differences on
Translation of the
Financial
Statements of
Foreign Operations
$ (499,052 )

-
-

-
-

356,086


356,086

-
-

-

(142,966 )

-

-

-

-

(16,923)


(16,923)

-
-
-

-

$ (159,889)
 Unrealized
Valuation
Gain (Loss) on
Financial
Assets at FVTOCI
$ 1,374,203

-
-
-
-

(230,765)


(230,765)

-
-

-


1,143,438
-
-
-
-

949,573


949,573

(53,243 )
-
-

-

$ 2,039,768
S






 hares (Thousands)
1,856,018

-
-
-
-

-


-

-
(164 )

-

1,855,854
-
-
-
-

-


-

-
-
(28 )

-


1,855,826
 S
Ordinary Shares
$ 18,560,178

-
-
-
-

-


-

-

(1,635 )

-

18,558,543
-
-
-
-

-


-

-
-

(279 )

-

$ 18,558,264








Legal Reserve
$ 2,271,266

1,155,092
-
-
-

-


-


-
-

-

3,426,358
905,293
-
-
-

-


-

-

-
-

-

$ 4,331,651
 Special Reserve
$ 291,361

-
(214,869 )
-
-

-


-

-
-

-

76,492
-
16,533
-
-

-


-

-
-
-

-

$ 93,025

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

  • 164 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) income before income tax

Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss recognized on trade receivables
Net gain 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
(Gain) loss on disposal of property, plant and equipment
Loss on disposal of subsidiary
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
Other current assets
Contract liabilities
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 (used in) generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of financial assets at fair value through other
comprehensive income
Purchase of financial assets at amortized cost
Proceeds from the return of principal of financial assets at amortized cost
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in refundable deposits		 2023
$ (1,884,236)

4,140,272
83,241
5,466
(91,009)
260,694
(247,294)
(178,235)
(49)
(80)
544
120,098
-
(9,646)
1,406,886
237,044
76,778
1,310,838
25,564
10,141
(534,036)
(1,727,325)
(2,155,983)
10,107
5,106
(1,478)
(33,604)

(13,137)

816,667
241,044
178,235
(356,035)

(1,405,623)


(525,712)

85,462
(42,820)
44,450
(7,609,696)
366
(11,273)		 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)
(Continued)
  • 165 -

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

Decrease in refundable deposits

Payments for intangible assets
Decrease 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 generated from (used in) financing activities

EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH
AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES

NET (DECREASE) 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
 2023
$ 43

(72,545)

14,050


(7,591,963)

10,500,000
(6,625,741)
1,769
(200)
(111,954)

(3,336,966)


426,908


(167,599)

(7,858,366)

19,764,278

$ 11,905,912
 2022
$ 10
(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

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

  • 166 -

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 27, 2024.

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

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

The initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies.

  • b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024
New, Amended and Revised Standards and Interpretations
Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback”
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Non-current Liabilities with Covenants”
Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”		 Effective Date
Announced by IASB (Note 1)
January 1, 2024 (Note 2)
January 1, 2024
January 1, 2024
January 1, 2024 (Note 3)

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

  • Note 2: 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.

  • Note 3: The amendments provide some transition relief regarding disclosure requirements.

  • 167 -

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

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” 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 21 “Lack of Exchangeability” January 1, 2025 (Note 2)

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

  • Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity.

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

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

  • a. Statement of compliance

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

  • b. Basis of preparation

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

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

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

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

  • 168 -

  • 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.

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

  • 169 -

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 other comprehensive income 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 entity, 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.

  • 170 -

The 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.

  • 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

  • 171 -

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 categories

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

i. Financial assets at FVTPL

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.

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.

  • 172 -

  • ii. Financial assets 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 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.

  • 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.

  • 173 -

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

  • b) Impairment of financial assets

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

The Group always recognizes lifetime expected credit 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 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.

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

  • 174 -

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.

  • 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.

  • 175 -

  • 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.

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.

  • 176 -

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.

  • 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

  • 177 -

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.

  • 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.

  • 178 -

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 carryforwards 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.

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. MATERIAL 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 estimates and underlying assumptions are reviewed on an ongoing basis.

  • 179 -

a. Write-down of inventory

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience in the sale of product 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, expected rates of 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 expenses and the liabilities.

6. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
Cash on hand
Checking accounts and demand deposits
Cash equivalents
Time deposits		 **December 31 **


2023
$ 12

5,219,685

6,686,215

$ 11,905,912
 2022
$ 11
6,867,933

12,896,334
$ 19,764,278

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 **
2023
$ 261,911		 2022
$ 173,076

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 **
2023
$ 2,739,124
842,438
3,581,562
434,822
$ 4,016,384		 2022
$ 1,845,683
647,468
2,493,151
657,840
$ 3,150,991
  • 180 -

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 Amphastar Pharmaceuticals, Inc. at a fair value of $85,462 thousand for the years ended December 31, 2023. The related unrealized gain of financial assets at FVTOCI of $53,243 thousand under other equity was transferred to retained earnings.

The Group recognized dividend income of NT$178,235 thousand and NT$159,668 thousand for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Group’s related investments still held amounted to NT$3,430,782 thousand and NT$2,437,147 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 **

2023
$ -

$ 43,270
 2022
$ 44,080
$ -

The interest rate for time deposits with original maturities exceeding 1 year was 2.40% and 3.15% per annum as of December 31, 2023 and 2022.

10. 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
Others		 **December 31 ** **December 31 **





2023
$ 2,584,023


(22,421)

$ 2,561,602

$ 146,956


40,011

$ 186,967
 2022
$ 4,001,152

(16,955)
$ 3,984,197
$ 192,785

67,343
$ 260,128

  • 181 -

  • 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


2023
$ 2,506,373

55,227
2

-

$ 2,561,602
 2022
$ 3,856,169
123,681
-

4,347
$ 3,984,197

The above aging schedule was based on the past due days from the end of the credit term.

As of December 31, 2023 and 2022, the Group did not hold collateral for most of its receivables.

The movements of the loss allowance for trade receivables were as follows:

Balance at January 1
Add: Net remeasurement of loss allowance
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2023
$ 16,955


5,466

$ 22,421
 2022
$ 16,955

-
$ 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.

  • 182 -

11. INVENTORIES

INVENTORIES
Finished goods and merchandise
Work in progress
Raw materials		 **December 31 **


2023
$ 902,661

11,260,794

1,205,412

$ 13,368,867
 2022
$ 1,437,342
11,866,328

1,376,035
$ 14,679,705

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. The amounts were as follows:

Loss on inventory write-downs For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2023
$ 2,737,614		 2022
$ 1,292,372

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements

As of December 31, 2023 and 2022, 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).

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
MXHK
Sales and marketing
The Company
MPL
After-sales service
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
Note 1:
Mxtran Samoa has been dissolved in May 2023.
Note 2:
Mxtran HK has been dissolved in March 2023		 % of Ownership
**December 31 **
2023
2022
100.00
100.00
100.00
100.00
94.84
94.84
100.00
100.00
100.00
-
100.00
-
100.00
100.00
Note 1
100.00
Note 2
100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
-
100.00
100.00
100.00

In order to adjust the investment structure of the subsidiaries, the Company’s board of directors approved on February 14, 2023 to acquire the outstanding shares of MXHK and MPL, which were held by MXBVI at carrying amount of US$19,756,278 as of December 31, 2022, and MXBVI bought back 19,756,278 shares at US$1 per share and canceled them on March 1, 2023.

On March 3, 2023 and May 12, 2023, the Group was dissolved into Mxtran (H.K.) Holding Co., Limited and Mxtran Holding (Samoa) Co., Ltd., respectively.

  • 183 -

13. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Group
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,
2023

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
 Assets used by the Group
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,
2023

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 be December 31 December 31 December 31
2023
$ 41,498,097

r31, 2023		 2022
$ 37,982,047





Balance,
Beginning of
Year
$ 1,273,814

22,392,682
93,948,076
8,053,449
26,894
14,828
1,227,653

10,724,565

137,661,961

381,571

17,521,831
77,989,290
2,690,825
18,943
14,398

1,063,056


99,679,914

$ 37,982,047		 Additions
$ -

-
-
-
-
-
2,080

7,544,806

$ 7,546,886

$ -

529,868
2,803,599
590,271
4,040
202

99,307

$ 4,027,287
 Disposals
$ -

9,020
103,639
2,501
2,400
-
12,707

-

$ 130,267

$ -

8,885
103,639
2,365
2,400
-

12,692

$ 129,981

Years Ended Decem		 Ne
D
$		 t Exchange
ifferences

(110 )

(4,010 )
-
(806 )
(34 )
(203 )
(829 )
-

(5,992)

(62 )

(1,659 )
-
(674 )
(35 )
(199 )
(747)

(3,376)

r31, 2022		 Reclassification
Balance, End of
Year
$ -
$ 1,273,704
1,145,952
23,525,604
1,976,723
95,821,160
(513,806 )
7,536,336
3,456
27,916
-
14,625
129,366
1,345,563

(2,742,338)

15,527,033
$ (647)
145,071,941
$ -
381,509
-
18,041,155
410,674
81,099,924
(410,674 )
2,867,383
-
20,548
-
14,401

-

1,148,924
$ -
103,573,844
$ 41,498,097
$
$
$
be





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
 Ne
D
$		 t Exchange
ifferences

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
$
$
$

For the years ended December 31, 2023 and 2022, the Group assessed that no indication of an impairment loss was present; therefore, no impairment assessment was performed.

  • 184 -

The carrying amount of the freehold land in the United States which was unutilized by the Group as of December 31, 2023 and 2022 was US$9,579 thousand, respectively.

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.

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		 December 31 December 31
2023
$ 653,069

35,308
-
4,678

498

$ 693,553

**For the Year Ended **		 2022
$ 710,350
68,433
4,638
6,697

500
$ 790,618
December 31



2023
$ 19,505

$ 56,977

40,463
10,823
2,730

1,992

$ 112,985
 2022
$ 44,946
$ 57,274
38,678
11,817
2,905

1,999
$ 112,673
(Continued)
  • 185 -
Income from the subleasing of right-of-use assets (included in
other income)		 **For the Year Ended ** **For the Year Ended ** December 31
2023
$ (3,738)
 2022
$ (4,035)
(Concluded)

Except for the recognized depreciation, the Group did not have impairment of right-of-use assets for the years ended December 31, 2023 and 2022.

b. Lease liabilities

Carrying amounts
Current
Non-current		 **December 31 ** **December 31 **

2023
$ 83,522

$ 622,770
 2022
$ 97,154
$ 704,168

Range of discount rate for lease liabilities was as follows:

Freehold land
Buildings
Machinery equipment
Transportation equipment
Miscellaneous equipment		 December 31
2023
2022
1.22%-1.73%
1.22%-1.73%
1.03%-6.00%
1.03%-6.00%
1.56%-1.96%
1.17%-1.56%
1.18%-2.15%
1.03%-1.56%
2.08%
1.22%
  • 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



2023
$ 1,253

$ 115

$ 9,739

$ (137,045)
 2022
$ 2,764
$ 156
$ 15,265
$ (141,517)

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.

  • 186 -

15. INTANGIBLE ASSETS

INTANGIBLE ASSETS
Cost
Software
Accumulated amortization
Software
Carrying amount at December 31,
2023
Cost
Software
Accumulated amortization
Software
Carrying amount at December 31,
2022		 Years Ended December 31, 2023
Balance,
Beginning of
Year
$ 242,202


116,273

$ 125,929		 Additions
Disposals
Net Exchange
Differences
Balance, End
of Year
$ 72,545
$ 48,718
$ (352)
$ 265,677
$ 83,241
$ 48,718
$ (338)

150,458
$ 115,219
Years Ended December 31, 2022
Balance,
Beginning of
Year
$ 179,067


82,194

$ 96,873		 Additions
$ 94,970

$ 65,939
 Disposals
Net Exchange
Differences
Balance, End
of Year
$ 32,154
$ 319
$ 242,202
$ 32,154
$ 294

116,273
$ 125,929

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

Software

3 years

16. OTHER FINANCIAL ASSETS

OTHER FINANCIAL ASSETS
Non-current
Refundable deposits
Restricted time deposits (Note 34)		 **December 31 **


2023
$ 573,828


193,173

$ 767,001
 2022
$ 562,776

207,223
$ 769,999

17. OTHER ASSETS

OTHER ASSETS
Current
Prepayments
Others		 **December 31 **


2023
$ 179,853


14

$ 179,867
 2022
$ 212,249

671
$ 212,920
(Continued)
  • 187 -
Non-current
Prepayments		 **December 31 ** **December 31 **
2023
$ 333,147
 2022
$ 333,147
(Concluded)

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
Borrowing Type
Repayment Terms
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		 December 31



2023
2022
$ -
$ 4,812,500

19,587,000

10,940,125
19,587,000
15,752,625
2,117,062
3,683,542
-
5,200

123,217

93,569
$ 17,346,721
$ 11,970,314
1.25%-2.26%
1.13%-2.19%
December 31
2023
2022
$ 1,000,000
$ 1,000,000
2,300,000
2,300,000
600,000
600,000
1,100,000
1,100,000
787,000
787,000
250,000
500,000
450,000
600,000
400,000
500,000
1,000,000
263,000
2,000,000
116,000
(Continued)
  • 188 -
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 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
Unsecured bank borrowings
denominated in NT$ From June 2023 to June 2030
Unsecured bank borrowings
denominated in NT$ From August 2023 to August
2030
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2025
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2026
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2026
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2026
Unsecured bank borrowings
denominated in NT$ Pay off in December 2023
Secured syndicated loan
denominated in NT$ Pay off in August 2023
Unsecured bank borrowings
denominated in NT$ Pay off in August 2023
Unsecured bank borrowings
denominated in NT$ Pay off in August 2023
Unsecured bank borrowings
denominated in NT$ Pay off in June 2023
Unsecured bank borrowings
denominated in NT$ Pay off in February 2023
Less: Current portion
Less: Arrangement fee
Less: Government loan discount
Total long-term borrowings		 **December 31 ** **December 31 **


2023
$ 109,000

400,000
400,000
1,228,000
1,005,000
58,000
262,500
500,000
800,000
2,000,000
437,500
1,000,000
900,000
600,000
-
-
-
-
-
-
2,117,062
-

123,217

$ 17,346,721
 2022
$ 109,000
100,000
54,000
557,000
243,000
58,000
300,000
500,000
-
-
-
-
-
-
500,000
4,812,500
187,500
140,625
125,000
300,000
3,683,542
5,200

93,569
$ 11,970,314
(Concluded)

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 a total amount of NT$8 billion, which was repaid in advance in August 2023. The Group provided notes used as refundable guarantees for syndicated loan mentioned above that will be cancelled upon termination of the guarantee.

  • 189 -

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, 2023 and 2022, 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. TRADE PAYABLES

Trade payables December 31 December 31
2023
$ 2,039,130
 2022
$ 2,585,539

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

OTHER PAYABLES
Payables for bonuses
Payables for maintenance and repairs
Payables for spare parts
Payables for insurance
Payables for pension
Payables for patents
Others		 December 31


2023
$ 362,498

253,903
119,330
81,746
76,294
75,634

530,529

$ 1,499,934
 2022
$ 362,941
254,008
112,400
87,997
74,798
98,518

599,174
$ 1,589,836

21. OTHER LIABILITIES

OTHER LIABILITIES
Current
Refund liabilities
Government grants deferred revenue
Receipts under custody
Temporary credits		 **December 31 **


2023
$ 201,030

100,000
37,131

7,475

$ 345,636
 2022
$ 339,760
-
36,545

8,686
$ 384,991

(Continued)

  • 190 -
Non-current
Government grants deferred revenue (Note 30)
Guarantee deposits		 **December 31 ** **December 31 **


2023
$ 156,807


20,939

$ 177,746
 2022
$ 102,121

20,992
$ 123,113
(Concluded)

22. PROVISIONS

Current
Employee benefits (a)		 **December ** **31 **
2023
$ 24,805		 2022
$ 26,283

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 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.

  • 191 -

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
Movements in net defined benefit liability were as follows:
Present Value
of Defined
Benefit
Obligation
Balance at January 1, 2022
$ 1,874,741
Service cost
Current service cost
2,829
Net interest expense
9,155
Return on plan assets

-
Recognized in profit or loss

11,984
Remeasurement
Return on plan assets
-
Actuarial loss - experience adjustments
17,895
Actuarial loss - actuarial assumptions
adjustments

(89,939)
Recognized in other comprehensive income

(72,044)
Contributions from the employer

-
Benefits paid

(97,189)
Balance at December 31, 2022

1,717,492
Service cost
Current service cost
2,762
Net interest expense
20,921
Return on plan assets

-
Recognized in profit or loss

23,683
Remeasurement
Return on plan assets
-
Actuarial loss - experience adjustments

251,220
Recognized in other comprehensive income

251,220
Contributions from the employer

-
Benefits paid

(77,999)
Balance at December 31, 2023
$ 1,914,396		 December 31 December 31
2023
$ 1,914,396

(1,250,659)

$ 663,737

Fair Value of
the Plan Assets
$ 1,021,636

-
-

4,974


4,974

83,305
-

-


83,305


262,034


(97,189)


1,274,760

-
-

15,587


15,587

5,997

-


5,997


32,314


(77,999)

$ 1,250,659
 2022
$ 1,717,492
(1,274,760)
$ 442,732
Net Defined
Benefit
Liabilities
(Assets)
$ 853,105
2,829
9,155

(4,974)

7,010
(83,305)
17,895

(89,939)

(155,349)

(262,034)

-

442,732
2,762
20,921

(15,587)

8,096
(5,997)

251,220

245,223

(32,314)

-
$ 663,737

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


2023
$ 3,665

571
1,830

2,030

$ 8,096
 2022
$ 3,482
487
1,352

1,689
$ 7,010
  • 192 -

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 **
2023
2022
1.25%
1.25%
3.00%
3.00%
1.25%
1.25%

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



2023
$ (54,357)

$ 57,174

$ 52,573

$ (50,518)
 2022
$ (57,111)
$ 59,373
$ 98,086
$ (92,390)

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 December 31
2023
$ 180,547

5.7 years		 2022
$ 32,018
6.9 years
  • 193 -

The Company maintains a separate executive pension plan which had been approved by the board of directors on December 20, 2011, and the net periodic pension costs were NT$10,592 thousand and NT$5,670 thousand for the years ended December 31, 2023 and 2022, respectively.

Movements in net defined benefit liability were as follows:

Present Value Present Value
of Defined
Benefit
Obligation
Balance at January 1, 2022 $ 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
Service cost
Current service cost 2,807
Net interest expense 7,785
Recognized in profit or loss 10,592
Remeasurement
Actuarial loss - experience adjustments (64,303)
Recognized in other comprehensive income (64,303)
Balance at December 31, 2023 $ 577,059

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
2023
$ 10,592		 2022
$ 5,670

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
2023
2022
1.25%
1.25%
-
-
1.25%
1.25%
  • 194 -

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 **


2023

6,550,000

$ 65,500,000

1,855,826

$ 18,558,264
 2022

6,550,000
$ 65,500,000

1,855,854
$ 18,558,543

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




2023
$ 359,064

37

42,488

$ 401,589

$ 4,609

$ -
 2022
$ 358,766
37

38,966
$ 397,769
$ 4,609
$ 332

  • 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.

  • 195 -

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 (g).

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 2022 and 2021, which had been proposed by the Company’s general meeting of shareholders on May 24, 2023 and May 27, 2022, 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



2022
$ 905,293

$ 16,533

$ 3,340,488

$ 1.8
 2021
$ 1,155,092
$ (214,869)
$ 3,340,758
$ 1.8

The appropriation of earnings for 2023, which were proposed by the Company’s board of directors on February 27, 2024.

For the Year For the Year
Ended
December 31,
2023
Special reserve $ (4,696)
Cash dividends $ 927,913
Cash dividends per share $ 0.50

The appropriation of earnings for 2023 is subject to the resolution of the shareholders in the shareholders’ meeting to be held on May 30, 2024.

  • 196 -

d. Special reserve

Balance at January 1
Appropriations in respect of
Treasury shares
Reversals:
Reversal of the debits to other equity items
Balance at December 31		 **For the Year Ended ** **For the Year Ended ** December 31


2023
$ 76,492

16,533

-

$ 93,025
 2022
$ 291,361
196
(215,065)
$ 76,492

The Company appropriated earnings to a special reserve for the difference between the market price and carrying amount of the Company’s shares held by subsidiaries proportional to its holding of those subsidiaries. The special reserve appropriated may be reversed to the extent that the market price reverses.

e. Other equity items

1) Exchange differences on translating foreign operations

Balance at January 1
Exchange differences on the translation of the financial
statements of foreign operations
Balance at December 31		 **For the Year Ended ** **For the Year Ended ** December 31

2023
$ (142,966)

(16,923)

$ (159,889)
 2022
$ (499,052)

356,086
$ (142,966)

2) Unrealized valuation gain/(loss) on financial assets at FVTOCI

Balance at January 1
Recognized for the year
Unrealized gain (loss) 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
2023
$ 1,143,438
949,573
2,093,011

(53,243)

$ 2,039,768		 2022
$ 1,374,203
(230,765)
1,143,438

-
$ 1,143,438

3) Unearned employee benefits

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 December 31 For the Year Ended December 31 For the Year Ended December 31
2023
$ -
-

-
$ -		 2022
$ (45,404)
43,893

1,511
$ -
  • 197 -

f. Non-controlling interests

Balance at January 1
Share of profit for the year
Other comprehensive income (loss) during 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
2023
$ 660
446

28

$ 1,134		 2022
$ 686
-

(26)
$ 660

g. Treasury shares

The Company’s shares held by its subsidiaries at December 31, 2023 and 2022 were as follows:

Number of
Shares Held Carrying
Name of Subsidiary (In Thousands) Amount Market Price
December 31, 2023
Hui Ying 1,957 $ 159,061 $ 61,340
December 31, 2022
Hui Ying 1,957 $ 159,061 $ 66,036

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


2023
$ 16,959,567

9,036,841
1,619,489

7,711

$ 27,623,608
 2022
$ 29,001,475
10,670,968
3,796,517

18,494
$ 43,487,454
  • 198 -

b. Contract balances

Contract liabilities (classified as current liabilities) December 31
2023
$ 41,027		 2022
$ 30,886

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
2023
$ 30,885		 2022
$ 36,092

26. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

  • a. Interest income
Bank deposits
b. Other income
Dividend income
Others
c. Other gains and losses
Net foreign exchange gains
Loss on disposal of subsidiary
Other gains (losses)		 For the Year Ended For the Year Ended December 31
2023
$ 247,294

For the Year Ended		 2022
$ 128,952
December 31
2023
$ 178,235


169,259

$ 347,494

**For the Year Ended **		 2022
$ 159,668

168,404
$ 328,072
December 31


2023
$ 109,855

(544)

79,458

$ 188,769
 2022
$ 700,294
-

(24,722)
$ 675,572
  • 199 -

d. 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 amount
Capitalization rate
e. Depreciation and amortization
An analysis of depreciation by function
Operating costs
Operating expenses
An analysis of amortization by function
Operating costs
Operating expenses
f. 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
An analysis of employee benefits expense by function
Operating costs
Operating expenses		 For the Year Ended For the Year Ended For the Year Ended December 31
2023
$ 337,422

13,984

(90,712)

$ 260,694

**For the Year Ended **		 2022
$ 220,762
15,664

(27,063)
$ 209,363
December 31
2023
$ 90,712
1.54%
For the Year Ended		 2022
$ 27,063
0.99%
December 31
2023
2022
$ 3,312,621
$ 3,688,632

827,651

784,323
$ 4,140,272
$ 4,472,955
$ 47,802
$ 30,503

35,439

35,436
$ 83,241
$ 65,939
For the Year Ended December 31






2023
$ 265,568


18,688

284,256
(49)

6,808,556

$ 7,092,763

$ 2,837,819


4,254,944

$ 7,092,763
 2022
$ 246,245

12,680
258,925
43,893

8,769,547
$ 9,072,365
$ 3,826,168

5,246,197
$ 9,072,365

  • 200 -

  • g. 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, 2023 and 2022, the estimated employees’ compensation and the remuneration of directors resolved by the board of directors on February 27, 2024 and February 14, 2023, 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

2023
$ -

$ -
 2022
$ 1,854,831
$ 247,311

In compliance with the Articles of Incorporation, the Company does not intend to contribute employees’ compensation and remuneration of directors for the year 2023 due to the Company’s net loss before tax.

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, 2022 and 2021.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2023 and 2022 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 (benefit) 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 (benefit) expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2023
$ 26,502

2,640
(632)

(213,599)

$ (185,089)
 2022
$ 1,417,867
2,169
(342)

(97,075)
$ 1,322,619
  • 201 -

A reconciliation of accounting loss and income tax (benefit) expenses is as follows:

(Loss) income before tax from continuing operations
Income tax (benefit) expense calculated at the statutory rate
Non-deductible expenses in determining taxable income
Non-taxable income
Deductible temporary differences
Overseas income tax
Unrecognized investment credits
Deferred tax in respect of the current year
Adjustments for prior year
Realized investment losses
Income tax (benefit) expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2023
$ (1,884,236)

$ (353,668)

12,566
(38,416)
466,427
2,640
-
(213,599)
(632)

(60,407)

$ (185,089)
 2022
$ 10,292,394
$ 2,082,928
10,032
(32,536)
66,423
2,169
(708,980)
(97,075)
(342)

-
$ 1,322,619
  • b. Current tax assets and liabilities
Current tax assets
Tax refund receivable
Current tax liabilities
Income tax payable		 December 31 December 31

2023
$ 19,252

$ 3,237
 2022
$ 6,331
$ 1,390,986

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, 2023

Deferred tax assets
Temporary differences
Unrealized inventory losses

Unallocated production overheads
Net defined benefit liabilities
Unrealized refund liabilities
Others


Deferred tax liabilities
Temporary differences
Depreciation

Unrealized exchange gains

 Opening
Balance
Recognized in
Profit or Loss
Closing Balance
$ 688,011
$ 218,648
$ 906,659
31,841
93,288
125,129
84,777
(6,375)
78,402
39,863
(16,343)
23,520

12,385

9,232

21,617
$ 856,877
$ 298,450
$ 1,155,327
$ (755,937)
$ (81,070)
$ (837,007)

(9)

(3,781)

(3,790)
$ (755,946)
$ (84,851)
$ (840,797)
  • 202 -

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

 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

46,110

(1,884)

44,226
$ 648,077
$ 208,800
$ 856,877
$ (603,554)
$ (152,383)
$ (755,937)

(40,667)

40,658

(9)
$ (644,221)
$ (111,725)
$ (755,946)

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 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
Expire in 2033
Investment credits
Research and development expenditures
Deductible temporary differences		 **December 31 ** **December 31 **




2023
$ 89,510

126,053
67,634
28,806
57,929
31,408
17
8,602
11,747
700

60

$ 422,466

$ 274,088

$ 9,716,854
 2022
$ 97,389
127,640
67,634
28,806
66,966
31,408
17
8,677
11,803
700

-
$ 441,040
$ 327,891
$ 5,517,785

The unrecognized investment credits will expire in 2024.

  • 203 -

  • e. Information about unused investment credits, unused loss carry-forwards and tax-exemptions

As of December 31, 2023, investment credits comprised of:

Remaining Creditable Expiry Law and Statutes Tax Credit Source Amount Year Statute for Industrial Innovation Research and development $ 274,088 2024 expenditures

Loss carryforwards as of December 31, 2023 comprised of:

Unused Tax Amount Expiry Year
$ 25,211 2024
13,527 2025
5,761 2026
11,586 2027
6,282 2028
3 2029
1,720 2030
2,349 2031
140 2032
12 2033
$ 66,591
  • f. Income tax assessments

The Company’s, Mxtran Inc.’s, Run Hong Investment Ltd.’s and Hui Ying Investment Ltd.’s tax returns through 2021 have been assessed by the tax authorities.

28. (LOSS) EARNINGS PER SHARE

Unit: NT$ Per Share

Basic (loss) earnings per share
Diluted (loss) earnings per share		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31

2023
$ (0.92)

$ (0.92)
 2022
$ 4.85
$ 4.68

The (loss) income and weighted average number of ordinary shares outstanding in the computation of (loss) earnings per share from continuing operations were as follows:

Net (loss) income for the Year

(Loss) 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
2023
$ (1,699,593)
 2022
$ 8,969,775
  • 204 -

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

2023
1,853,868
Note

Note


1,853,868
 2022
1,850,115
3,820

63,490

1,917,425

Note: The potential shares have an anti-dilution effect for the net loss for the year ended December 31, 2023. Such shares are not included in the calculation of loss per share.

The Company may settle the compensation of employees in cash or shares; therefore, the Company assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares are 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.

  • 205 -

  • 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 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:

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)
For the Year Ended December 31
2023
15
(13)
(2)
-		 2022
4,826
(4,662)
(149)
15

Note: For the year ended December 31, 2023, the forfeited shares include 2 thousand shares which were already cancelled; for the year 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, 2023 and 2022, the compensation cost recognized was NT$(49) thousand and NT$43,893 thousand, respectively.

30. GOVERNMENT GRANTS

As of December 31, 2023, the Company obtained a government preferential interest rate loan of $15,287,000 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 $180,230 thousand, which is regarded as a government low interest loan and recognized as deferred income. For the year ended December 31, 2023 and 2022, the Company recognized other income of $9,646 thousand and $12,420 thousand, respectively. For the year ended December 31, 2023 and 2022, the interest expense of the loan was $34,683 thousand and $18,797 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.

  • 206 -

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 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, 2023
Financial assets at FVTPL
Foreign convertible preference
shares

Financial assets at FVTOCI
Investments in equity
instruments
Securities listed in the ROC

Securities listed in other
countries
Securities unlisted


December 31, 2022
Financial assets at FVTPL
Foreign convertible preference
shares

Financial assets at FVTOCI
Investments in equity
instruments
Securities listed in the ROC

Securities listed in other
countries
Securities unlisted

 Level 1
$ -

$ 2,739,124

434,822

-

$ 3,173,946

Level 1
$ -

$ 1,845,683

657,840

-

$ 2,503,523
 Level 2
$ -

$ -

-

-

$ -

Level 2
$ -

$ -

-

-

$ -
 Level 3
$ 261,911

$ -

-

842,438

$ 842,438

Level 3
$ 173,076

$ -

-

647,468

$ 647,468
 Total
$ 261,911
$ 2,739,124
434,822

842,438
$ 4,016,384
Total
$ 173,076
$ 1,845,683
657,840

647,468
$ 3,150,991

There were no transfers between Level 1 and Level 2 in the current and prior years.

  • 207 -

  • 2) Reconciliation of Level 3 fair value measurements of financial assets

For the Year Ended December 31, 2023

Financial Assets
Financial Assets
at FVTPL -
Foreign
Convertible
Preference
Shares
Financial Assets
at FVTOCI -
Equity
Instruments
Balance at January 1
$ 173,076
$ 647,468

Recognized in profit or loss
91,009
-
Recognized in other comprehensive
income (unrealized gain (loss) on
financial assets at FVTOCI)
-
194,970
Effects of foreign currency exchange
differences

(2,174)

-

Balance at December 31
$ 261,911
$ 842,438

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

Recognized in profit or loss
2,392
-
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
 Total
$ 820,544
91,009
194,970

(2,174)
$ 1,104,349
Total
$ 768,219
2,392
33,089

16,844
$ 820,544



  • 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.

  • 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 **
2023
2022
$ 15,806,950
$ 25,350,532
261,911
173,076
4,016,384
3,150,991
24,757,177
23,184,701

  • 208 -

  • 1) The balances included financial assets 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 at amortized cost, which comprise 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 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
2023
2022
$ 49,162
$ 107,946		 JPY Impact JPY Impact
For the Year Ended
December 31
2023
$ 49,162
 2023
$ 109,509
 2022
$ (5,643)
  • 209 -

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, 2023 and 2022 would decrease/increase by NT$97,319 thousand and NT$78,269 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, 2023 and 2022 would have increase/decrease by NT$401,638 thousand and NT$315,099 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.

Trade receivables consisted of a large number of customers, spread across diverse industries and geographical areas.

As of December 31, 2023 and 2022, the Group’s ten largest customers accounted for 40% and 37% 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.

  • 210 -

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, 2023

On Demand or
Less than
1 Year
1-3 Years
Non-derivative financial liabilities
Non-interest bearing
$ 6,638,835
$ -

Lease liabilities
96,271
142,660
Interest bearing

2,510,071

8,659,114

$ 9,245,177
$ 8,801,774

Additional information about the maturity analysis for lease
Less than 1
Year
1-5 Years
5-10 Years
Lease liabilities
$ 96,271
$ 271,359
$ 308,164
December 31, 2022
On Demand or
Less than
1 Year
1-3 Years
Non-derivative financial liabilities
Non-interest bearing
$ 11,039,388
$ -

Lease liabilities
110,807
171,800
Interest bearing

3,975,985

6,965,862

$ 15,126,180
$ 7,137,662
 3-5 Years
$ -

128,699

6,274,427

$ 6,403,126

liabilities:
10-15 Years
$ 83,984
3-5 Years
$ -

129,344

3,635,747

$ 3,765,091
 $ 5+ Years
-

405,063
3,254,838

3,659,901

15-20 Years
$ 12,915
5+ Years
-

469,412
1,838,682

2,308,094
 Total
$ 6,638,835
772,693

20,698,450		 Total
$ 6,638,835
772,693

20,698,450
$ $ 28,109,978

$		 20+ Years
$ -
Total
$ 11,039,388
881,363

16,416,276		 20+ Years
$ -
$ $ 28,337,027

Additional information about the maturity analysis for lease liabilities:

Lease liabilities
 Less than 1
Year
$ 110,807
 1-5 Years
$ 301,144
 5-10 Years
$ 311,659
 10-15 Years
$ 139,055
 15-20 Years
$ 18,698
 20+ Years
$ -

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities were subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

  • 211 -

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)
Wolley Inc. (Wolley)		 Relationship with the Company
Key management personnel
The Group is its major management
authority
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
2023
$ 9,123,959
 2022
$ 10,739,770

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 after monthly closing.

  • 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
2023
$ 1,282,576
 2022
$ 3,234,286

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
Other Receivables
Key management personnel
MegaChips		 **December 31 ** **December 31 **
2023
$ 489,154
$ 4		 2022
$ 764,715
$ -

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2023 and 2022, no impairment loss was recognized for trade receivables from related parties.

  • 212 -

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
Other		 December 31 December 31



2023
$ 899,359


87,258

$ 986,617

$ 10
 2022
$ 2,628,765

113,391
$ 2,742,156
$ 10

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
Wolley
MXIC Foundation
Other		 For the Year Ended
2023
$ 407,721

$ 25,435

24,150

300

$ 49,885
 For the Year Ended
2023
$ 407,721

$ 25,435

24,150

300

$ 49,885
 December 31
2023
$ 407,721

$ 25,435

24,150

300

$ 49,885
 2022
$ 412,104
$ 12,076
21,158

-
$ 33,234

The manufacturing expenses of related parties were comparable to those with other vendors. The payment term was 75 days after monthly closing.

  • g. Remuneration of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Other long-term employee benefits		 For the Year Ended For the Year Ended December 31


2023
$ 211,131

10,592
-

(9)

$ 221,714
 2022
$ 730,936
5,670
7,071

(5)
$ 743,672

The remuneration of key executives was determined by the remuneration committee based on the performance of individuals and market trends.

  • 213 -

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


2023
$ -


193,173

$ 193,173
 2022
$ 8,275,831

207,223
$ 8,483,054

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, 2023 and 2022 were as follows:

  • a. As of December 31, 2023 and 2022, unused letters of credit amounted to approximately NT$138,173 thousand and NT$1,045,461 thousand, respectively.

  • b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment December 31 December 31
2023
$ 4,509,478
 2022
$ 8,623,775

  • 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 on June 2, 2020. As of December 31, 2023, the Company has made a donation of $400,000 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. As of December 31, 2023, the unrecognized contract amount is US$7,000 thousand.

  • e. On December 26, 2023, the board of directors of the Company approved the joint development project with IBM regarding “Enterprise-class SSD Storage” from December 2023 to December 2026.

  • f. 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, 2023, 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$12,744 thousand and US$71,940 thousand, respectively.

  • 214 -

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, 2023

Foreign
Currencies
Exchange
(In Thousands)
Rate
Financial assets
Monetary items
JPY
$ 10,429,679
0.2172

USD
106,975
30.705


Financial liabilities
Monetary items
JPY
5,387,842
0.2172

USD
53,605
30.705


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

 Carrying
Amount
$ 2,265,326

3,284,653
$ 5,549,979
$ 1,170,239

1,645,948
$ 2,816,187
Carrying
Amount
$ 2,845,219

6,113,660
$ 8,958,879
$ 2,901,650

2,515,454
$ 5,417,104

Realized and unrealized net foreign exchange gains were NT$109,855 thousand and NT$700,294 thousand for the years ended December 31, 2023 and 2022, respectively. It is impractical to disclose net foreign exchange gains and losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the entities in the Group.

  • 215 -

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

  • 216 -

38. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and the assessment of segment performance emphasizes the types of goods or services delivered or provided. Considering the nature of the product and the process of manufacture, the management integrated those divisions of similar operation functions into one operation segment. The resource allocation and performance of the Group's overall business focus on the memory products and wafer fabrication segment, so the Group only takes the memory products and wafer fabrication segment as the reportable segment.

There was no material difference between the accounting policies of the Group reportable segment and those described in Note 4. For the revenue and operating results of the segment, refer to the consolidated financial statements.

  • a. 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
2023
$ 23,057,965
2,886,038
1,679,605
$ 27,623,608		 2022
$ 34,325,823
6,044,009
3,117,622
$ 43,487,454		 2023
$ 42,388,803
157,880
328,528
$ 42,875,211		 2022
$ 38,696,603
181,841
353,297
$ 39,231,741

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

  • b. Information on 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
2023
$ 9,123,959
 2022
$ 10,739,770
  • 217 -

TABLE 1

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2023

(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, 2023 December 31, 2023 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.
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
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
566,711
2,400,000
1,956,619
1,247,288
6,270,000
4,500,000		 $ 2,660,438

659,515

-

78,686

434,822

99,442

162,469

61,340

32,143

87,780

63,000		 7.33
3.06
0.07
0.15
0.42
0.83
18.13
0.11
10.03
3.98
2.86		 $ 2,660,438
659,515
-
78,686
434,822
99,442
162,469
61,340
32,143
87,780
63,000		 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.

  • 218 -

TABLE 2

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2023

(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
Subsidiary
Subsidiary
Its subsidiary, Shun Ying Investment,
is represented in MXIC’s board of
directors
Subsidiary
Subsidiary
Sales
Sales
Sales

Purchase
Purchase
Purchase		 $ 9,123,959
2,442,134
1,457,032

1,282,576
US$ 78,649
US$ 46,841		 34
9
5
17
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		 $ 489,154
320,225
248,968
899,359
US$ 10,429
US$ 8,108		 16
10
8
30
100
100		 -
-
-
-
-
-
  • 219 -

TABLE 3

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2023

(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
Subsidiary
Subsidiary		 $ 489,154
320,225
248,968		 14.55 times
8.40 times
6.28 times		 $ -
-
-		 -
-
-		 $ 419,497 thousand
320,225 thousand
248,968 thousand		 $ -
-
-
  • 220 -

TABLE 4

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2023 (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 $2,442,134 Note 2 9
Net receivable from relatedparties 320,225 - -
MXE 1 Operatingexpenses 184,990 - 1
Otherpayables to relatedparties 56,475 - -
MXA 1 Sales 1,457,032 Note 2 5
Net receivable from relatedparties 248,968 - -
Operatingexpenses 216,927 - 1
Otherpayables to relatedparties 59,318 - -
Mxtran 1 Sales 54,844 Note 2 -
Net receivable from relatedparties 25,381 - -
Operatingexpenses 5,700 - -
IT service revenue 191 - -
Rental revenue 435 Note3 -
MX Asia 1 Operatingexpenses 138,962 - 1
Otherpayables to relatedparties 27,719 - -
MXHK MXm 3 Operating expenses 390,823 - 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.

  • 221 -

TABLE 5

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2023 (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, 2023 as of December 31, 2023 Net Income (Loss)
of the Investee		 Share of Profit
(Loss)		 Note
December 31,
2023		 December 31,
2022		 Shares % Carrying Amount
The Company
MXBVI
Run Hong
Mxtran
Mxtran Samoa		 MXA
MXBVI
MXHK
MPL
Hui Ying
Run Hong
Mxtran
NTTI
MXE
MX Asia
MXHK
MPL
Mxtran
Mxtran Samoa
Mxtran HK		 San Jose, California, USA.
Tortola, British Virgin Islands
Hong Kong
Singapore
Taipei, Taiwan
Taipei, Taiwan
Hsinchu, Taiwan
San Jose, California, USA.
Belgium
Cayman Island
Hong Kong
Singapore
Hsinchu, Taiwan
Samoa
Hong Kong		 Sales and marketing
Investment holding company
Sales and marketing
After-sales service
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
6,744,008
598,700
5,348
500,000
1,014,432
755,287
936,053
2,106
19,744
-
-
40,318
-
-		 $ 2,640
7,348,057
-
-
500,000
1,014,432
755,287
923,403
2,106
19,744
378,427
3,291
40,318
35,979
23,880		 100,000
182,598,357
89,700,000
174,000
-
-
69,627,323
28,650,000
1,000
600,000
-
-
3,393,200
-
-		 100.00
100.00
100.00
100.00
100.00
100.00
90.43
100.00
100.00
100.00
-
-
4.41
-
-		 $ 376,146
2,369,766
560,246
6,719
168,029
71,964
23,577
304,524
157,137
74,556
-
-
969
-
-		 $ 6,039
266,582
(21,290 )
1,245
15,658
320
8,634
(11,757 )
9,694
6,148
-
-
8,634
-
-		 $ 6,039

97,534

32,219
988
12,136
320

7,818

Note
Note
Note
Note
Note
Note
Note
Note		 Subsidiary
Subsidiary
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.

  • 222 -

TABLE 6

MACRONIX INTERNATIONAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2023 (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, 2023		 Accumulated
Outward Remittance
for Investment from
Taiwan as of
January 1, 2023		 Remittance of Funds Remittance of Funds Accumulated
Outward Remittance
for Investment from
Taiwan as of
December 31, 2023		 Net Income (Loss) of
the Investee		 % Ownership for
Direct or Indirect
Investment		 Investment
Gain (Loss)
(Note 1)		 Carrying Amount as
of December 31, 2023		 Accumulated
Repatriation of
Investment Income
as of
December 31, 2023
Outward Inward
MXm Development of integrated
system and software		 circuit $ 296,160 MXHK
(Note 2)		 $ 296,160 $ - $ - $ 296,160 $ 22,922 100% $ 22,922 $ 459,998 $ -
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2023		 Investment Amount Authorized by the Investment
Commission, MOEA		 Upper Limit on the Amounts of Investment Stipulated by
Investment Commission, MOEA
$ 296,160 $ 296,160 $ 28,994,893

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.

  • 223 -

Macronix International Co., Ltd.

Parent Company Only Financial Statements for the Years Ended December 31, 2023 and 2022 and Independent Auditors’ Report

  • 224 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and 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, 2023 and 2022, 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 material accounting policy information (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, 2023 and 2022, 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 Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the 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, 2023. 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, 2023 are stated as follows:

Valuation of inventory

The Company manufactures and sells ROM products, including NOR Flash and NAND Flash, which are widely used in consumer electronic devices. As of December 31, 2023, inventory was NT$13,346,833 thousand, accounting for 17% of the total assets. With the rapid changes in technology development and the improvements in manufacturing processes and skills, market demand for memory chips could change significantly and result in inventory obsolescence. Since inventory valuation and estimates of the net realizable value of inventory are subject to

  • 225 -

management’s judgment, they are considered accounting estimates with relatively high uncertainty. Therefore, the 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 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 by 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 on the age interval, quantity, and amount of the supporting documents of inbound inventory. We assessed the reasonableness of the 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 the inventory movements to evaluate the reasonableness of inventory obsolescence reserve policy and the policy on scrapping 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.

  • 226 -

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 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, 2023 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.

  • 227 -

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

==> picture [70 x 50] intentionally omitted <==

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勺仁
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三三戸

Deloitte & Touche Taipei, Taiwan Republic of China

February 27, 2024

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.

  • 22 8 -

MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4, 6 and 30)
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)
Prepayments for equipment
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)
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		 2023
Amount
%
$ 9,757,670
13
2,023,900
3
1,083,728
1
158,639
-
13,346,833
17

161,826

-

26,532,596
34
3,319,953
4
3,576,447
5
41,062,530
53
643,813
1
113,981
-
1,135,377
2
235,195
-
757,849
1

333,147

-

51,178,292
66
$ 77,710,888
100
$ 22,724
-
2,038,964
3
986,617
1
965,965
1
1,147,179
2
1,351,166
2
145,504
-
-
-
2,256
-
59,098
-
2,117,062
3

333,640

-

9,170,175
12
17,346,721
22
840,788
1
609,780
1
1,240,857
2

177,746

-

20,215,892
26

29,386,067
38
18,558,264
24

-

-

18,558,264
24

406,198

-
4,331,651
6
93,025
-

23,214,865
30

27,639,541
36

1,879,879

2

(159,061)

-

48,324,821
62
$ 77,710,888
100		 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

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

  • 229 -

MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

NET OPERATING REVENUE (Notes 4, 23 and 31)
OPERATING COSTS (Notes 4, 9, 21, 24 and 31)
GROSS PROFIT
UNREALIZED GAIN ON TRANSACTIONS WITH
SUBSIDIARIES AND ASSOCIATES (Note 4)
REALIZED GROSS PROFIT
OPERATING EXPENSES (Notes 4, 8, 21, 24 and 31)
Selling and marketing expenses
General and administrative expenses
Research and development expenses
Expected credit loss
Total operating expenses
(LOSS) 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)
Finance costs (Notes 4, 24 and 28)
Share of profit of subsidiaries and associates (Notes
4 and 10)
Total non-operating income and expenses
(LOSS) INCOME BEFORE INCOME TAX FROM
CONTINUING OPERATIONS
INCOME TAX BENEFIT (EXPENSE) (Notes 4 and
25)
NET (LOSS) INCOME FOR THE YEAR		 2023
Amount
%
$ 26,953,133
100

20,864,697
77
6,088,436
23

14,704

-

6,103,140
23
991,531
4
1,715,130
6
5,793,654
22

5,466

-

8,505,781
32

(2,402,641)
(9)
177,985
1
317,688
1
107,363
-
(258,297)
(1)

157,054

1

501,793

2
(1,900,848)
(7)

201,255

1

(1,699,593)
(6)		 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
(Continued)
  • 230 -

MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars, Except (Loss) 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 (loss) on investments in equity
instruments at FVTOCI (Notes 22 and 30)
Share of the other comprehensive loss of
subsidiaries accounted for using the equity
method
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of the
financial statements of foreign operations (Note
22)
Other comprehensive income for the year, net
of income tax
TOTAL COMPREHENSIVE (LOSS) INCOME FOR
THE YEAR
(LOSS) EARNINGS PER SHARE (Note 26)
Basic
Diluted		 2023
Amount
%
$ (180,920)
(1)
978,504
4
(28,931)
-

(16,923)

-

751,730

3
$ (947,863)
(3)
$ (0.92)
$ (0.92)		 2022










Amount
%
$ 83,155
-
(151,935)
-
(78,830)
-

356,086

1

208,476

1
$ 9,178,251
22
$ 4.85
$ 4.68

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

  • 231 -

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

MACRONIX INTERNATIONAL CO., LTD.

BALANCE AT JANUARY 1, 2022
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
Legal reserve
Special reserve
Cash dividends distributed by the Company - $1.80 per share
Net loss for the year ended December 31, 2023
Other comprehensive income (loss) for the year ended December 31, 2023, net of
income tax

Total comprehensive income (loss) for the year ended December 31, 2023

Disposal of investments in equity instruments designated as at fair value through
other comprehensive income by a subsidiary
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, 2023
 Share Capital hare Capital to be
Cancelled
$ (410 )
-
-
-
-

-


-

-

146

-

(264 )
-
-
-
-

-


-

-
-

264

-

$ -
 Capital Surplus
$ 399,210

-
-
-
-

-


-

(1,511 )
1,489

3,522


402,710
-
-
-
-

-


-

-
(49 )
15

3,522

$ 406,198
 **Retained Earnings ** Unappropriated
Earnings
$ 24,532,500

(1,155,092 )

214,869
(3,340,758 )
8,969,775

83,155


9,052,930

-
-

-

29,304,449
(905,293 )
(16,533 )
(3,340,488 )
(1,699,593 )

(180,920)


(1,880,513)

53,243
-
-

-

$ 23,214,865
 Other Equity Unearned
Compensation of
Employees
$ (45,404 )
-
-
-
-

-


-

45,404
-

-

-
-
-
-
-

-


-


-
-
-

-

$ -
 Treasury Shares
$ (159,061 )
-
-
-
-

-


-

-
-

-

(159,061 )
-
-
-
-

-


-

-
-
-

-

$ (159,061)
 Total Equity
$ 46,724,791
-
-
(3,340,758 )
8,969,775

208,476

9,178,251
43,893
-

3,522

52,609,699
-
-
(3,340,488 )
(1,699,593 )

751,730

(947,863)
-
(49 )
-

3,522
$ 48,324,821
Exchange
Differences on
Translation of the
Financial
Statements of
Foreign Operations
$ (499,052 )

-
-

-
-

356,086


356,086

-
-

-

(142,966 )

-

-

-

-

(16,923)


(16,923)

-
-
-

-

$ (159,889)
 Unrealized
Valuation
Gain (Loss) on
Financial
Assets at
FVTOCI
$ 1,374,203

-
-
-
-

(230,765)


(230,765)

-
-

-


1,143,438
-
-
-
-

949,573


949,573

(53,243 )
-
-

-

$ 2,039,768






Shares
(In Thousands)
1,856,018

-
-
-
-

-


-

-
(164 )

-

1,855,854
-
-
-
-

-


-

-
-
(28 )

-


1,855,826
 Ordinary
Shares
S
$ 18,560,178

-
-
-
-

-


-

-

(1,635 )

-

18,558,543
-
-
-
-

-


-

-
-

(279 )

-

$ 18,558,264








Legal Reserve
$ 2,271,266

1,155,092
-
-
-

-


-


-
-

-

3,426,358
905,293
-
-
-

-


-

-

-
-

-

$ 4,331,651
 Special Reserve
$ 291,361

-
(214,869 )
-
-

-


-

-
-

-

76,492
-
16,533
-
-

-


-

-
-
-

-

$ 93,025

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

  • 232 -

MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) income before income tax

Adjustments for:
Depreciation expense
Amortization expense
Expected credit loss recognized on trade receivables
Finance costs
Interest income
Dividend income
Compensation cost of employee restricted shares
Share of profit of subsidiaries and associates
(Gain) loss on disposal of property, plant and equipment
Unrealized gain on transactions with subsidiaries and associates
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
Other current assets
Contract liabilities
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 (used in) generated from operating activities
 2023
$ (1,900,848)

4,090,686
82,400
5,466
258,297
(177,985)
(171,200)
(49)
(157,054)
(224)
(14,704)
115,625
-
(9,646)
1,347,885
118,454
73,024
1,315,945
23,225
4,841
(534,036)
(1,727,326)
(2,155,983)
46,810
60,631
(1,647)
(26,231)

(13,613)

652,743
179,708
171,200
(353,638)

(1,399,804)


(749,791)
 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
(Continued)
  • 233 -

MACRONIX INTERNATIONAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
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 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 generated from (used in) financing activities

EFFECT OF EXCHANGE RATE CHANGES ON THE BALANCE OF
CASH AND CASH EQUIVALENTS HELD IN FOREIGN
CURRENCIES

NET (DECREASE) 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
 2023
$ (7,602,912)

366
(11,054)
-
(71,682)

14,050


(7,671,232)

10,500,000
(6,625,741)
1,769
(200)
(76,420)

(3,340,488)


458,920


(149,236)

(8,111,339)

17,869,009

$ 9,757,670
 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

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

(Concluded)

  • 234 -

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (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 27, 2024.

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

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

The initial application of the IFRS Accounting Standards endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies.

  • b. The IFRS Accounting Standards endorsed by the FSC for application starting from 2024
New, Amended and Revised Standards and Interpretations
Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback”
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Non-current Liabilities with Covenants”
Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”		 Effective Date
Announced by IASB (Note 1)
January 1, 2024 (Note 2)
January 1, 2024
January 1, 2024
January 1, 2024 (Note 3)

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

  • Note 2: 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.

Note 3: The amendments provide some transition relief regarding disclosure requirements.

  • 235 -

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

  • c. The IFRS Accounting Standards 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” 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 21 “Lack of Exchangeability” January 1, 2025 (Note 2)

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

  • Note 2: An entity shall apply those amendments for annual reporting periods beginning on or after January 1, 2025. Upon initial application of the amendments, the entity recognizes any effect as an adjustment to the opening balance of retained earnings. When the entity uses a presentation currency other than its functional currency, it shall, at the date of initial application, recognize any effect as an adjustment to the cumulative amount of translation differences in equity.

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

4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION

  • a. Statement of compliance

The 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 net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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

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

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

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

  • 236 -

When preparing its parent company only financial statements, the Company used the 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 owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatment between the parent company only basis and consolidated basis were made to investments accounted for using the 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.

  • 237 -

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, an 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.

  • 238 -

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.

The 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

  • 239 -

  • 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.

  • 240 -

  • a) Measurement categories

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

  • i. Financial assets 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 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.

  • 241 -

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 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 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 Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

  • 242 -

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.

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, 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 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.

  • 243 -

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.

  • 244 -

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 Company 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 Company 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 Company as expenses. Specifically, the primary condition of government grants is that the Company 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.

  • 245 -

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.

  • 246 -

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 carryforwards 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.

  • 247 -

5. MATERIAL 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 estimates and underlying assumptions are reviewed on an ongoing basis.

  • a. Write-down of inventory

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience in the sale of product 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, expected rates of 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


2023
$ 4,591,705


5,165,965

$ 9,757,670
 2022
$ 6,281,929

11,587,080
$ 17,869,009

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
2023
$ 2,660,438
659,515
$ 3,319,953		 2022
$ 1,783,213
558,236
$ 2,341,449
  • 248 -

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$171,200 thousand and NT$151,552 thousand for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company’s related investments still held amounted to NT$3,319,953 thousand and NT$2,341,449 thousand, respectively.

8. 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
Others		 December 31 December 31





2023
$ 2,046,321


(22,421)

$ 2,023,900

$ 146,045


12,594

$ 158,639
 2022
$ 3,404,449

(16,955)
$ 3,387,494
$ 192,679

27,878
$ 220,557

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.

  • 249 -

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


2023
$ 1,974,748

49,150
2

-

$ 2,023,900
 2022
$ 3,259,466
123,681
-

4,347
$ 3,387,494

The above aging schedule was based on the past due days from the end of the credit term.

As of December 31, 2023 and 2022, the Company did not hold collateral for most of its receivables.

The movements of the loss allowance for trade receivables were as follows:

Balance at January 1
Add: Net remeasurement of loss allowance
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2023
$ 16,955


5,466

$ 22,421
 2022
$ 16,955

-
$ 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

INVENTORIES
Finished goods and merchandise
Work in progress
Raw materials		 December 31


2023
$ 890,578

11,252,381
1,203,874

$ 13,346,833
 2022
$ 1,430,099
11,858,183
1,374,496
$ 14,662,778

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. The amounts were as follows:

Loss on inventory write-downs For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2023
$ 2,737,544
 2022
$ 1,292,372

10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investment in subsidiaries December 31 December 31
2023
$ 3,576,447
 2022
$ 3,447,021
  • 250 -

Investments in subsidiaries

Macronix (BVI) Co., Ltd. (MXBVI)
Macronix America, Inc. (MXA)
Macronix Hong Kong, Inc. (MXHK)
Macronix Pte Ltd (MPL)
Hui Ying Investment Ltd. (Hui Ying)
Run Hong Investment Ltd. (Run Hong)
Mxtran Inc. (Mxtran)
Name of Subsidiaries
MXBVI
MXA
MXHK
MPL
Hui Ying
Run Hong
Mxtran		 **December 31 **


2023
2022
$ 2,369,765
$ 2,948,991
376,146
356,166
560,245
-
6,720
-
168,029
98,280
71,965
32,020

23,577

11,564
$ 3,576,447
$ 3,447,021
Proportion of Ownership and
Voting Rights
December 31
2023
2022
100.00%
100.00%
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, 2023 and 2022 were based on the subsidiaries’ financial statements which have been audited for the same years.

In order to adjust the investment structure of the subsidiaries, the Company’s board of directors approved on February 14, 2023 to acquire the outstanding shares of MXHK and MPL, which were held by MXBVI at carrying amount of US$19,756,278 as of December 31, 2022, and MXBVI bought back 19,756,278 shares at US$1 per share and canceled them on March 1, 2023.

11. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Company
Cost
Freehold land
Buildings
Machinery equipment
Research and development equipment
Transportation equipment
Leasehold improvements
Miscellaneous equipment
Advance payments and construction in progress		 December 31
2023
2022
$ 41,062,530
$ 37,529,981
Years Ended December 31, 2023		 December 31
2023
2022
$ 41,062,530
$ 37,529,981
Years Ended December 31, 2023		 December 31 December 31 December 31
2022
$ 37,529,981


Balance,
Beginning 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
 Additions
$ -

-
-
-
-
-
-

7,543,959

$ 7,543,959
 Disposals
Reclassification
$ -
$ -

9,020
1,145,952
103,639
1,976,723
1,138
(513,974 )
2,400
3,456
-
-
10,523
125,479

-

(2,737,636)

$ 126,720
$ -
 Balance,
End of Year
$ 598,076
23,311,420
95,821,160
7,465,352
26,045
3,230
1,235,493

15,527,031
143,987,807

(Continued)

  • 251 -
Accumulated depreciation and impairment
Buildings
Machinery equipment
Research and development equipment
Transportation equipment
Leasehold improvements
Miscellaneous equipment
Carrying amount at December 31, 2023		 Years Ended December 31, 2023 Years Ended December 31, 2023



Balance,
Beginning of
Year
$ 17,437,354

77,989,290
2,627,930
17,229
3,230

965,554


99,040,587

$ 37,529,981		 Additions
$ 523,300

2,803,599
587,000
3,848
-

93,521

$ 4,011,268
 Disposals
Reclassification
Balance,
End of Year
$ 8,885
$ -
$ 17,951,769
103,639
410,674
81,099,924
1,138
(410,674 )
2,803,118
2,400
-
18,677
-
-
3,230

10,516

-

1,048,559
$ 126,578
$ -
102,925,277
$ 41,062,530
(Concluded)
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		 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
$ -

-
-
-
-
-
-

10,086,579

$ 10,086,579

$ 485,642

3,203,767
557,244
4,070
-

92,916

$ 4,343,639
 Disposals
Reclassification
$ -
$ -

89,257
1,047,399
129,639
2,738,042
39,476
1,269,981
192
900
-
-
20,301
94,917

-

(5,151,239)

$ 278,865
$ -

$ 83,905
$ -
129,551
205,802
39,420
(205,802 )
192
-
-
-

20,301

-

$ 273,369
$ -

 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

For the years ended December 31, 2023 and 2022, the Company assessed that no indication of an impairment loss was present; therefore, no impairment assessment was performed.

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.

  • 252 -

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 **
2023
$ 636,914

3,178
-
3,223

498

$ 643,813

For the Year Ended		 2022
$ 693,393
6,163
4,638
3,910

500
$ 708,604
December 31
2023
$ 14,592
$ 56,479
8,709
10,823
1,415

1,992
$ 79,418
$ (3,738)		 2022
$ 24,082
$ 56,774
8,523
11,817
1,542

1,999
$ 80,655
$ (4,035)

Except for the recognized depreciation, the Company did not have impairment of right-of-use assets for the years ended December 31, 2023 and 2022.

  • b. Lease liabilities
Lease liabilities
Carrying amounts
Current
Non-current		 December 31

2023
$ 59,098

$ 609,780
 2022
$ 63,094
$ 667,577

Range of discount rate for lease liabilities was as follows:

Freehold land
Buildings
Machinery equipment
Transportation equipment
Miscellaneous equipment		 December 31
2023
2022
1.22%-1.73%
1.22%-1.73%
1.22%-1.96%
1.03%-1.22%
1.56%-1.96%
1.17%-1.56%
1.45%-2.15%
1.45%-1.56%
2.08%
1.22%
  • 253 -

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



2023
$ 581

$ 5

$ 7,857

$ (96,450)
 2022
$ 2,337
$ 60
$ 13,775
$ (104,695)

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

Item
Cost
Software
Accumulated amortization
Software
Carrying amount at December 31, 2023
Item
Cost
Software
Accumulated amortization
Software
Carrying amount at December 31, 2022		 Year Ended December 31, 2023 Year Ended December 31, 2023
Balance,
Beginning of Year
$ 220,973


96,274

$ 124,699		 Additions
Disposals
Balance,
End of Period
$ 71,682
$ 48,718
$ 243,937
$ 82,400
$ 48,718

129,956
$ 113,981
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

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

Software

3 years

  • 254 -

14. OTHER FINANCIAL ASSETS

Non-current
Refundable deposits
Restricted time deposits (Note 32)		 December 31 December 31


2023
$ 564,676


193,173

$ 757,849
 2022
$ 553,619

207,223
$ 760,842

15. OTHER ASSETS

Current
Prepayments
Non-current
Prepayments		 December 31 December 31

2023
$ 161,826

$ 333,147
 2022
$ 185,051
$ 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.

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		 December 31 December 31



2023
$ -


19,587,000

19,587,000
2,117,062
-

123,217

$ 17,346,721

1.25%-2.26%		 2022
$ 4,812,500

10,940,125
15,752,625
3,683,542
5,200

93,569
$ 11,970,314
1.13%-2.19%
  • 255 -
Borrowing Type
Repayment Terms
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
Unsecured bank borrowings
denominated in NT$ From June 2023 to June 2030
Unsecured bank borrowings
denominated in NT$ From August 2023 to August
2030
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2025
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2026
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2026
Unsecured bank borrowings
denominated in NT$ From September 2023 to
September 2026		 **December 31 **
2023
2022
$ 1,000,000
$ 1,000,000
2,300,000
2,300,000
600,000
600,000
1,100,000
1,100,000
787,000
787,000
250,000
500,000
450,000
600,000
400,000
500,000
1,000,000
263,000
2,000,000
116,000
109,000
109,000
400,000
100,000
400,000
54,000
1,228,000
557,000
1,005,000
243,000
58,000
58,000
262,500
300,000
500,000
500,000
800,000
-
2,000,000
-
437,500
-
1,000,000
-
900,000
-
600,000
-
(Continued)
  • 256 -
Borrowing Type
Repayment Terms
Unsecured bank borrowings
denominated in NT$ Pay off in December 2023
Secured syndicated loan
denominated in NT$ Pay off in August 2023
Unsecured bank borrowings
denominated in NT$ Pay off in August 2023
Unsecured bank borrowings
denominated in NT$ Pay off in August 2023
Unsecured bank borrowings
denominated in NT$ Pay off in June 2023
Unsecured bank borrowings
denominated in NT$ Pay off in February 2023
Less: Current portion
Less: Arrangement fee
Less: Government loan discount
Total long-term borrowings		 **December 31 ** **December 31 **


2023
$ -

-
-
-
-
-
2,117,062
-

123,217

$ 17,346,721
 2022
$ 500,000
4,812,500
187,500
140,625
125,000
300,000
3,683,542
5,200

93,569
$ 11,970,314
(Concluded)

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 a total amount of NT$8 billion, which was repaid in advance in August 2023. 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 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, 2023 and 2022, 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. TRADE PAYABLES

Trade payables December 31 December 31
2023
$ 2,038,964
 2022
$ 2,585,373

The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed upon credit terms.

  • 257 -

18. OTHER PAYABLES

Payables for bonuses
Payables for maintenance and repairs
Payables for spare parts
Payables for insurance
Payables for pension
Payables for patents
Others		 December 31 December 31


2023
$ 293,713

252,475
119,330
79,552
76,208
75,634

454,254

$ 1,351,166
 2022
$ 281,899
252,612
112,400
85,633
74,712
98,518

498,605
$ 1,404,379

19. OTHER LIABILITIES

Current
Refund liabilities
Government grants deferred revenue
Receipts under custody
Temporary credits
Non-current
Government grants deferred revenue (Note 28)
Guarantee deposits		 December 31 December 31





2023
$ 190,438

100,000
35,727

7,475

$ 333,640

$ 156,807


20,939

$ 177,746
 2022
$ 321,999
-
34,938

8,686
$ 365,623
$ 102,121

20,992
$ 123,113

20. PROVISIONS

PROVISIONS
Current
Employee benefits (a)		 December 31
2023
$ 2,256		 2022
$ 3,903

a. The provision for employee benefits represents vested long service leave entitlements accrued.

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.

  • 258 -

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


2023
$ 1,914,396

(1,250,659)

$ 663,737
 2022
$ 1,717,492
(1,274,760)
$ 442,732

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, 2022
$ 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

Service cost
Current service cost
2,762
-
Net interest expense
20,921
-
Return on plan assets

-

15,587

Recognized in profit or loss

23,683

15,587
 Net Defined
Benefit
Liabilities
(Assets)
$ 853,105
2,829
9,155

(4,974)

7,010
(83,305)
17,895

(89,939)

(155,349)

(262,034)

-

442,732
2,762
20,921

(15,587)

8,096
(Continued)
  • 259 -
Present Value
of Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Remeasurement
Return on plan assets
$ -
$ 5,997

Actuarial loss - experience adjustments

251,220

-

Recognized in other comprehensive income

251,220

5,997

Contributions from the employer

-

32,314

Benefits paid

(77,999)

(77,999)

Balance at December 31, 2023
$ 1,914,396
$ 1,250,659
 Net Defined
Benefit
Liabilities
(Assets)
$ (5,997)

251,220

245,223

(32,314)

-
$ 663,737
(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


2023
$ 3,665

571
1,830

2,030

$ 8,096
 2022
$ 3,482
487
1,352

1,689
$ 7,010

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.

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
2023
2022
1.25%
1.25%
3.00%
3.00%
1.25%
1.25%
  • 260 -

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 **



2023
$ (54,357)

$ 57,174

$ 52,573

$ (50,518)
 2022
$ (57,111)
$ 59,373
$ 98,086
$ (92,390)

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 December 31
2023
$ 180,547

5.7 years		 2022
$ 32,018
6.9 years

The Company maintains a separate executive pension plan which had been approved by the board of directors on December 20, 2011, and the net periodic pension costs were NT$10,592 thousand and NT$5,670 thousand for the years ended December 31, 2023 and 2022, respectively.

Movements in net defined benefit liability were as follows:

Present Value Present Value
of Defined
Benefit
Obligation
Balance at January 1, 2022 $ 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
Service cost
Current service cost 2,807
Net interest expense 7,785
Recognized in profit or loss 10,592
Remeasurement
Actuarial loss - experience adjustments (64,303)
Recognized in other comprehensive income (64,303)
Balance at December 31, 2023 $ 577,059
  • 261 -

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
2023
$ 10,592		 2022
$ 5,670

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
2023
2022
1.25%
1.25%
-
-
1.25%
1.25%

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



2023

6,550,000

$ 65,500,000


1,855,826

$ 18,558,264
 2022

6,550,000
$ 65,500,000

1,855,854
$ 18,558,543

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		 December 31 December 31


2023
$ 359,064

37

42,488

$ 401,589
 2022
$ 358,766
37

38,966
$ 397,769
(Continued)
  • 262 -
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 **

2023
$ 4,609

$ -
 2022
$ 4,609
$ 332
(Concluded)

  • 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 (g).

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.

  • 263 -

The appropriation of earnings for 2022 and 2021, which had been proposed by the Company’s general meeting of shareholders on May 24, 2023 and May 27, 2022, 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



2022
$ 905,293

$ 16,533

$ 3,340,488

$ 1.8
 2021
$ 1,155,092
$ (214,869)
$ 3,340,758
$ 1.8

The appropriation of earnings for 2023, which were proposed by the Company’s board of directors on February 27, 2024.

February 27, 2024.
For the Year
Ended
December 31,
2023
Special reserve $
(4,696)
Cash dividends $ 927,913
Cash dividends per share $
0.5

The appropriation of earnings for 2023 is subject to the resolution of the shareholders in the shareholders’ meeting to be held on May 30, 2024.

d. Special reserve

Balance at January 1
Appropriations in respect of
Treasury shares
Reversals:
Reversal of the debits to other equity items
Balance at December 31		 For the Year Ended For the Year Ended December 31


2023
$ 76,492

16,533

-

$ 93,025
 2022
$ 291,361
196
(215,065)
$ 76,492

The Company appropriated earnings to a special reserve for the difference between the market price and carrying amount of the Company’s shares held by subsidiaries proportional to its holding of those subsidiaries. The special reserve appropriated may be reversed to the extent that the market price reverses.

e. Other equity items

1) Exchange differences on translating foreign operations

Balance at January 1
Exchange differences on the translation of the financial
statements of foreign operations
Balance at December 31		 **For the Year Ended ** **For the Year Ended ** December 31

2023
$ (142,966)


(16,923)

$ (159,889)
 2022
$ (499,052)

356,086
$ (142,966)
  • 264 -

2) Unrealized valuation gain/(loss) on financial assets at FVTOCI

Balance at January 1
Recognized for the year
Unrealized gain/(loss) - equity instrument
Share from subsidiaries 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
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31

2023
$ 1,143,438
978,504

(28,931)

2,093,011

(53,243)

$ 2,039,768		 2022
$ 1,374,203
(151,935)

(78,830)
1,143,438

-
$ 1,143,438
  • 3) Unearned employee benefits

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 December 31 For the Year Ended December 31 For the Year Ended December 31


2023
$ -

-

-

$ -
 2022
$ (45,404)
43,893

1,511
$ -
  • f. Treasury shares

The Company’s shares held by its subsidiaries at December 31, 2023 and 2022 were as follows:

Number of
Shares Held Carrying
Name of Subsidiary (In Thousands) Amount Market Price
December 31, 2023
Hui Ying 1,957 $ 159,061 $ 61,340
December 31, 2022
Hui Ying 1,957 $ 159,061 $ 66,036

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.

  • 265 -

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


2023
$ 16,297,846

9,036,841
1,618,140

306

$ 26,953,133
 2022
$ 28,040,782
10,670,968
3,796,517

750
$ 42,509,017
  • b. Contract balances
Contract liabilities (classified as current liabilities) **December ** **31 **
2023
$ 22,724		 2022
$ 17,883

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
2023
$ 17,882		 2022
$ 34,792

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
2023
$ 177,985

For the Year Ended		 2022
$ 101,764
December 31


2023
$ 171,200


146,488

$ 317,688
 2022
$ 151,552

144,075
$ 295,627
  • 266 -

c. Other gains and losses

Net foreign exchange gains
Other losses
d. 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 amount
Capitalization rate
e. Depreciation and amortization
An analysis of depreciation by function
Operating costs
Operating expenses
An analysis of amortization by function
Operating costs
Operating expenses
f. 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		 **For the Year Ended ** **For the Year Ended ** **For the Year Ended ** December 31
2023
$ 108,684


(1,321)

$ 107,363

For the Year Ended		 2022
$ 698,078

(813)
$ 697,265
December 31
2023
$ 337,422

11,587

(90,712)

$ 258,297

**For the Year Ended **		 2022
$ 220,762
12,444

(27,063)
$ 206,143
December 31
2023
$ 90,712
1.54%
**For the Year Ended **		 2022
$ 27,063
0.99%
December 31
2023
2022
$ 3,312,620
$ 3,688,632

778,066

735,662
$ 4,090,686
$ 4,424,294
$ 47,802
$ 30,503

34,598

34,393
$ 82,400
$ 64,896
For the Year Ended December 31



2023
$ 221,118


18,688

239,806
(49)

5,916,042

$ 6,155,799
 2022
$ 213,554

12,680
226,234
43,893

7,924,031
$ 8,194,158
(Continued)
  • 267 -
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


2023
$ 2,799,315


3,356,484

$ 6,155,799
 2022
$ 3,799,775

4,394,383
$ 8,194,158
(Concluded)
  • g. 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, 2023 and 2022, the estimated employees’ compensation and the remuneration of directors resolved by the board of directors on February 27, 2024 and February 14, 2023, 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

2023
$ -

$ -
 2022
$ 1,854,831
$ 247,311

In compliance with the Articles of Incorporation, the Company does not intend to contribute employees’ compensation and remuneration of directors for the year 2023 due to the Company’s net loss before tax.

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, 2022 and 2021.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2023 and 2022 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

25. INCOME TAXES RELATING TO CONTINUING OPERATIONS

  • a. Major components of income tax (benefit) expense recognized in profit or loss
Current tax
In respect of the current year
Adjustments for prior year
Deferred tax
In respect of the current year
Income tax (benefit) expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2023
$ -

(645)

(200,610)

$ (201,255)
 2022
$ 1,387,619
(15)

(93,978)
$ 1,293,626
  • 268 -

A reconciliation of accounting loss and income tax (benefit) expenses is as follows:

(Loss) income before tax from continuing operations
Income tax (benefit) expense calculated at the statutory rate
Non-deductible expenses in determining taxable income
Non-taxable income
Deductible temporary differences
Unrecognized investment credits
Deferred tax in respect of the current year
Adjustments for prior year
Realized investment losses
Income tax (benefit) expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2023
$ (1,900,848)

$ (380,170)

12,566
(38,416)
466,427
-
(200,610)
(645)

(60,407)

$ (201,255)
 2022
$ 10,263,401
$ 2,052,680
10,032
(32,536)
66,423
(708,980)
(93,978)
(15)

-
$ 1,293,626
  • b. Current tax assets and liabilities
Current tax assets
Tax refund receivable
Current tax liabilities
Income tax payable		 December 31 December 31

2023
$ 19,054

$ -
 2022
$ 6,225
$ 1,387,619

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, 2023

Deferred tax assets
Temporary differences
Unrealized inventory losses

Unallocated production overheads
Net defined benefit liabilities
Unrealized refund liabilities
Others


Deferred tax liabilities
Temporary differences
Depreciation

Unrealized exchange gains

 Opening
Balance
Recognized in
Profit or Loss
Closing Balance
$ 688,011
$ 218,648
$ 906,659
31,841
93,288
125,129
84,777
(6,375)
78,402
39,863
(16,343)
23,520

5,423

(3,756)

1,667
$ 849,915
$ 285,462
$ 1,135,377
$ (755,937)
$ (81,070)
$ (837,007)

-

(3,781)

(3,781)
$ (755,937)
$ (84,851)
$ (840,788)
  • 269 -

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

 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)

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
Deductible temporary differences
The unrecognized investment credits will expire in 2024.		 December 31 December 31

2023
$ 274,088

$ 9,706,995
 2022
$ 327,891
$ 5,507,894
  • e. Information on unused investment credits and tax-exemptions

As of December 31, 2023, 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
$ 274,088
2024
  • f. Income tax assessments

The Company’s tax returns through 2021 have been assessed by the tax authorities.

  • 270 -

26. (LOSS) EARNINGS PER SHARE

Unit: NT$ Per Share

Basic (loss) earnings per share
Diluted (loss) earnings per share		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31

2023
$ (0.92)

$ (0.92)
 2022
$ 4.85
$ 4.68

The (loss) income and weighted average number of ordinary shares outstanding in the computation of (loss) earnings per share from continuing operations were as follows:

Net (loss) income for the Year

Net (loss) income for the Year
(Loss) income for the year attributable to owners of the Company For the Year Ended December 31
2023
$ (1,699,593)		 2022
$ 8,969,775

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
2023
1,853,868
Note
Note

1,853,868
 2022
1,850,115
3,820
63,490

1,917,425

Note: The potential shares have an anti-dilution effect for the net loss for the year ended December 31, 2023. Such shares are not included in the calculation of loss per share.

The Company may settle the compensation of employees in cash or shares; therefore, the Company assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares are 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
  • 271 -

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 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
2023
15
(13)
(2)
-		 2022
4,826
(4,662)
(149)
15

Note: For the year ended December 31, 2023, the forfeited shares include 2 thousand shares which were already cancelled; for the year 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, 2023 and 2022, the compensation cost recognized was NT$(49) thousand and NT$43,893 thousand, respectively.

  • 272 -

28. GOVERNMENT GRANTS

As of December 31, 2023, the Company obtained a government preferential interest rate loan of $15,287,000 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 $180,230 thousand, which is regarded as a government low interest loan and recognized as deferred income. For the year ended December 31, 2023 and 2022, the Company recognized other income of $9,646 thousand and $12,420 thousand, respectively. For the year ended December 31, 2023 and 2022, the interest expense of the loan was $34,683 thousand and $18,797 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.

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, 2023

Financial assets at FVTOCI
Investments in equity
instruments
Securities listed in ROC
Securities unlisted in ROC		 Level 1
$ 2,660,438
-
$ 2,660,438		 Level 2
$ -
-
$ -		 Level 3
$ -
659,515
$ 659,515		 Total
$ 2,660,438
659,515
$ 3,319,953
  • 273 -

December 31, 2022

Financial assets at FVTOCI
Investments in equity
instruments
Securities listed in ROC
Securities unlisted in ROC		 Level 1
$ 1,783,213
-
$ 1,783,213		 Level 2
$ -
-
$ -		 Level 3
$ -
558,236
$ 558,236		 Total
$ 1,783,213
558,236
$ 2,341,449

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
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


2023
$ 558,236


101,279

$ 659,515
 2022
$ 498,055

60,181
$ 558,236
  • 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
2023
2022
$ 13,635,741
$ 23,285,923
3,319,953
2,341,449
24,822,522
23,165,747

  • 1) The balances included financial assets 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 at amortized cost, which comprise 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).

  • 274 -

  • 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.

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
2023
2022
$ 63,816
$ 117,032		 JPY Impact JPY Impact
For the Year Ended
December 31
2023
$ 63,816
 2023
$ 108,143
 2022
$ (6,802)

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, 2023 and 2022 would decreased/increased by NT$97,319 thousand and NT$78,269 thousand, respectively.

  • 275 -

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, 2023 and 2022 would have increased/decreased by NT$331,995 thousand and NT$234,145 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.

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, 2023 and 2022, the Company’s ten largest customers accounted for 54% and 46% 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.

  • 276 -

December 31, 2023

On Demand or
Less than
1 Year
1-3 Years
Non-derivative financial liabilities
Non-interest bearing
$ 6,635,395
$ -

Lease liabilities
69,581
130,579
Interest bearing

2,510,071

8,659,114

$ 9,215,047
$ 8,789,693

Additional information about the maturity analysis for lease
Less than 1
Year
1-5 Years
5-10 Years
Lease liabilities
$ 69,581
$ 259,278
$ 308,164
December 31, 2022
On Demand or
Less than
1 Year
1-3 Years
Non-derivative financial liabilities
Non-interest bearing
$ 10,939,392
$ -

Lease liabilities
74,543
134,123
Interest bearing

3,975,985

6,965,862

$ 14,989,920
$ 7,099,985
 3-5 Years
$ -

128,699

6,274,427

$ 6,403,126

liabilities:
10-15 Years
$ 83,984
3-5 Years
$ -

129,066

3,635,747

$ 3,764,813
 $ 5+ Years
-

405,063
3,254,838

3,659,901

15-20 Years
$ 12,915
5+ Years
-

469,412
1,838,682

2,308,094
 Total
$ 6,635,395
733,922

20,698,450		 Total
$ 6,635,395
733,922

20,698,450
$ $ 28,067,767

$		 20+ Years
$ -
Total
$ 10,939,392
807,144

16,416,276		 20+ Years
$ -
$ $ 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
$ -

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities were subject to change if changes in variable interest rates 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 Pte Ltd (MPL)
Macronix Europe N.V. (MXE)
Macronix (Asia) Limited (MX Asia)		 Relationship with the Company
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Indirect subsidiary
Indirect subsidiary

(Continued)

  • 277 -
Related Parties
MegaChips Corporation (MegaChips)
Ardentec Corporation (Ardentec)
Macronix Education Foundation (MXIC Foundation)
Wolley Inc. (Wolley)		 Relationship with the Company
Key management personnel
The Company is its major management
authority
Others
Others
(Concluded)

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


2023
$ 9,123,959

2,442,134

1,511,876

$ 13,077,969
 2022
$ 10,739,770
5,452,475

2,742,517
$ 18,934,762

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
2023
$ 1,282,576
 2022
$ 3,234,286

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		 **December 31 ** **December 31 **
2023
$ 320,225
248,968
25,381
489,154
$ 1,083,728		 2022
$ 260,898
214,742
344
764,715
$ 1,240,699

(Continued)

  • 278 -
Line Items
Related Parties Categories/Name
Other receivables
Subsidiaries
Mxtran
MXHK
Key management personnel		 December 31 December 31
2023
$ 69
-
4
$ 73		 2022
$ 113
48
-
$ 161

(Concluded)

The outstanding trade receivables from related parties are unsecured. For the year ended December 31, 2023 and 2022, 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
Other payables to related
Subsidiaries
parties
MXA
MXE
MX Asia
Others
Others		 **December 31 ** **December 31 **





2023
$ 899,359


87,258

$ 986,617

$ 59,318

56,475
27,719
1,982

10

$ 145,504
 2022
$ 2,628,765

113,391
$ 2,742,156
$ 9,986
54,327
21,093
4,078

10
$ 89,494

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 expense
The Company is its major
management authority
Ardentec
Subsidiaries
Operating expense
Subsidiaries
MXA
MXE
MX Asia
Others
Others		 **For the Year Ended ** **For the Year Ended ** December 31





2023
$ 407,721


-

$ 407,721

$ 216,927

184,990
138,962
36,322

49,885

$ 627,086
 2022
$ 412,104

4,400
$ 416,504
$ 189,869
167,322
112,602
29,481

33,234
$ 532,508

(Continued)

  • 279 -
Line Items
Related Parties Categories/Name
IT service revenue
Subsidiaries
Mxtran
Rental revenue
Subsidiaries
Mxtran		 **For the Year Ended ** **For the Year Ended ** December 31

2023
$ 191

$ 435
 2022
$ 349
$ 435
(Concluded)

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.

  • g. Remuneration of key management personnel
Remuneration of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based payments
Other long-term employee benefits		 For the Year Ended December 31


2023
$ 159,959

10,592
-

(9)

$ 170,542
 2022
$ 682,557
5,670
7,071

(5)
$ 695,293

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:

guarantees, natural gas agreements, and land lease agreements:
Property, plant and equipment, net
Pledge deposits (classified as other financial assets - non-current)		 December 31


2023
$ -


193,173

$ 193,173
 2022
$ 8,275,831

207,223
$ 8,483,054

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, 2023 and 2022 were as follows:

  • a. As of December 31, 2023 and 2022, unused letters of credit amounted to approximately NT$138,173 thousand and NT$1,045,461 thousand, respectively.

  • 280 -

  • b. Unrecognized commitments are as follows:

Acquisition of property, plant and equipment December 31 December 31
2023
$ 4,509,478
 2022
$ 8,623,775

  • 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 on June 2, 2020. As of December 31, 2023, the Company has made a donation of $400,000 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. As of December 31, 2023, the unrecognized contract amount is US$7,000 thousand.

  • e. On December 26, 2023, the board of directors of the Company approved the joint development project with IBM for “Enterprise-class SSD Storage” from December 2023 to December 2026.

  • f. 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, 2023, 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$12,744 thousand and US$71,940 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, 2023

Foreign
Currencies
Exchange
(In thousands)
Rate
Financial assets
Monetary items
JPY
$ 10,429,679
0.2172

USD
126,090
30.705

 Carrying
Amount
$ 2,265,326

3,871,605
$ 6,136,931
(Continued)
  • 281 -
Foreign
Currencies
Exchange
(In thousands)
Rate
Non-monetary items
Investments accounted for using the equity
method
USD
$ 107,894
30.705

Financial liabilities
Monetary items
JPY
5,450,740
0.2172

USD
56,811
30.705


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
$ 3,312,877
$ 1,183,901

1,744,366
$ 2,928,267
(Concluded)
Carrying
Amount
$ 2,845,219

6,587,130
$ 9,432,349
$ 3,305,156
$ 2,913,235

2,686,068
$ 5,599,303

Realized and unrealized net foreign exchange gains were NT$108,684 thousand and NT$698,078 thousand for the years ended December 31, 2023 and 2022, respectively. It is impractical to disclose net foreign exchange gains and losses by each significant foreign currency due to the variety of the foreign currency transactions.

  • 282 -

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)

  • 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

  • 283 -

TABLE 1

MACRONIX INTERNATIONAL CO., LTD.

MARKETABLE SECURITIES HELD DECEMBER 31, 2023

(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, 2023 December 31, 2023 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.
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
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
566,711
2,400,000

1,956,619
1,247,288
6,270,000

4,500,000		 $ 2,660,438
659,515
-
78,686
434,822
99,442
162,469
61,340
32,143
87,780
63,000		 7.33
3.06
0.07
0.15
0.42
0.83
18.13
0.11
10.03
3.98
2.86		 $ 2,660,438
659,515
-
78,686
434,822
99,442
162,469
61,340
32,143
87,780
63,000		 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.

  • 284 -

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, 2023

(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
Subsidiary
Subsidiary
Its subsidiary, Shun Ying Investment,
is represented in MXIC’s board of
directors
Subsidiary
Subsidiary
Sales
Sales
Sales

Purchase
Purchase
Purchase		 $ 9,123,959
2,442,134
1,457,032

1,282,576
US$ 78,649
US$ 46,841		 34
9
5
17
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		 $ 489,154
320,225
248,968
899,359
US$ 10,429
US$ 8,108		 16
10
8
30
100
100		 -
-
-
-
-
-
  • 285 -

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, 2023

(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
Subsidiary
Subsidiary		 $ 489,154
320,225
248,968		 14.55 times
8.40 times
6.28 times		 $ -
-
-		 -
-
-		 $ 419,497 thousand
320,225 thousand
248,968 thousand		 $ -
-
-
  • 286 -

TABLE 4

MACRONIX INTERNATIONAL CO., LTD.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2023 (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, 2023 as of December 31, 2023 Net Income (Loss)
of the Investee		 Share of Profit
(Loss)		 Note
December 31,
2023		 December 31,
2022		 Shares % Carrying Amount
The Company
MXBVI
Run Hong
Mxtran
Mxtran Samoa		 MXA
MXBVI
MXHK
MPL
Hui Ying
Run Hong
Mxtran
NTTI
MXE
MX Asia
MXHK
MPL
Mxtran
Mxtran Holding (Samoa) Co., Ltd. (Mxtran
Samoa)
Mxtran (H.K.) Holding Co., Limited
(MxtranHK)		 San Jose, California, U.S.A.
Tortola, British Virgin Islands
Hong Kong
Singapore
Taipei, Taiwan
Taipei, Taiwan
Hsinchu, Taiwan
San Jose, California, U.S.A.
Belgium
Cayman Island
Hong Kong
Singapore
Hsinchu, Taiwan
Samoa
Hong Kong		 Sales and marketing
Investment holding company
Sales and marketing
After-sales services
Investment
Investment
IC design
IC design
After-sales services
After-sales services
Sales and marketing
After-sales services
IC design
Investment holding company
Investment holding company		 $ 2,640
6,744,008
598,700
5,348
500,000
1,014,432
755,287
936,053
2,106
19,744
-
-
40,318
-
-		 $ 2,640
7,348,057
-
-
500,000
1,014,432
755,287
923,403
2,106
19,744
378,427
3,291
40,318
35,979
23,880		 100,000
182,598,357
89,700,000
174,000
-
-
69,627,323
28,650,000
1,000
600,000
-
-
3,393,200
-
-		 100.00
100.00
100.00
100.00
100.00
100.00
90.43
100.00
100.00
100.00
-
-
4.41
-
-		 $ 376,146
2,369,765
560,245
6,720
168,029
71,965
23,577
304,524
157,137
74,556
-
-
969
-
-		 $ 6,039
266,582
(21,290 )
1,245
15,658
321
8,634
(11,757 )
9,694
6,148
-
-
8,634
-
-		 $ 6,039

97,534

32,219
988
12,136
321

7,818

Note
Note
Note
Note
Note

Note
Note
Note		 Subsidiary
Subsidiary
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.

  • 287 -

TABLE 5

MACRONIX INTERNATIONAL CO., LTD.

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEARS ENDED DECEMBER 31, 2023 (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, 2023		 Accumulated
Outward Remittance
for Investment from
Taiwan as of
January 1, 2023		 Remittance of Funds Remittance of Funds Accumulated
Outward Remittance
for Investment from
Taiwan as of
December 31, 2023		 Net Income (Loss)
of the Investee		 % Ownership for
Direct or Indirect
Investment		 Investment Gain
(Loss)
(Note 1)		 Carrying Amount as
of December 31, 2023		 Accumulated
Repatriation of
Investment
Income as of
December 31, 2023
Outward Inward
Macronix Microelectronics
(Suzhou) Co., Ltd.		 Development of integrated
system and software		 circuit $ 296,160 MXHK
(Note 2)		 $ 296,160 $ - $ - $ 296,160 $ 22,922 100% $ 22,922 $ 459,998 $ -
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2023		 Investment Amount Authorized by the Investment
Commission, MOEA		 Upper Limit on the Amounts of Investment Stipulated by
Investment Commission, MOEA
$ 296,160 $ 296,160 $ 28,994,893

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

  • 288 -

Macronix International Co., Ltd.

Chairman: Miin Wu

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