MSI — Audit Report / Information 2020

Nov 12, 2020

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2020 AND 2019

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For the convenience of readers and for information purpose only, the 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. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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Representation Letter

In connection with the Consolidated Financial Statements of Affiliated Enterprises of MICRO-STAR INTERNATIONAL CO., LTD. and its subsidiaries (the “Consolidated FS of the Affiliates”), we represent to you that, the entities required to be included in the Consolidated FS of the Affiliates as of and for the year ended December 31, 2020 in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as those required to be included in the Consolidated Financial Statements of MICRO-STAR INTERNATIONAL CO., LTD. and its subsidiaries (the “Consolidated FS of the Group”) in accordance with International Financial Reporting Standard 10. Additionally, the information required to be disclosed in the Consolidated FS of Affiliates is disclosed in the Consolidated FS of the Group. Consequently, MICRO-STAR INTERNATIONAL CO., LTD. and its subsidiaries do not prepare a separate set of Consolidated FS of Affiliates.

Very truly yours,

MICRO-STAR INTERNATIONAL CO., LTD. By

Hsu Hsiang, Chairman March 22, 2021

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Opinion

We have audited the accompanying consolidated balance sheets of MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES (the “Group”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

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, 2020 and 2019, 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s 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 Accountants in the Republic of China (the “Norm”), and we have fulfilled our ethical responsibilities in accordance with the Norm. Based on our audits and the audit reports of other independent auditors, we believe that the audit evidences we have obtained are sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in

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our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2020 are stated as follows:

Recognition of sales revenue generated from own-brand products

Description

Please refer to Note 4(26) for accounting policies on revenue recognition. The sales revenue from own-brand products for the year ended December 31, 2020 is higher than previous year due to the substantial increase in demand for notebook computers and peripherals. The recognition of sales revenue generated from own-brand products is critical to the Group’s consolidated financial statements. Therefore, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

• A. Obtained an understanding of and assessed internal controls in relation to sales revenue, and validated the operating effectiveness of those above-mentioned internal controls.

• B. Obtained detailed listing of sales revenue from own-brand products in the current year, and validated supporting documents, including sales invoices, customer purchase orders and delivery documents to ensure the appropriateness of recognition.

• C. Inspected contents and relevant evidences in relation to sales returns and discounts occurring subsequent to the reporting period.

• D. Performed accounts receivable confirmation procedure to significant customers.

Estimation of allowance for inventory valuation losses

Description

Please refer to Note 4(13) for accounting policies on inventory valuation, Note 5(2) for the uncertainty of accounting estimates and assumptions applied on inventory valuation, and Note 6(6) for details of inventories. As of December 31, 2020, the balances of inventories and allowance for inventory

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valuation losses are NT$27,966,905 thousand and NT$484,368 thousand, respectively.

The Group is primarily engaged in manufacturing and sales of motherboards, interface cards, notebook computers and other electronic products. Due to the rapid technological innovations and competition within the industry as well as frequent releases of new products resulting in potential price fluctuations, there is a higher risk of inventory losses due from market value decline or obsolescence. The Group recognises inventories at the lower of cost and net realisable value. As the monetary values of allowance for inventory valuation losses is critical to the financial statements as of December 31, 2020. Therefore, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

• A. Inquired with management, and assessed the reasonableness in relation to the provision of allowance for inventory valuation losses.

• B. Validated the accuracy of the system logic in calculating the ageing of inventories, and confirmed the consistency with the Group’s policies.

• C. Validated the appropriateness of system logic of the report of individually identified obsolete inventory prepared by management and confirmed the consistency with the Group’s policies.

• D. Sampled and tested the net realisable value basis of the individual inventory and validated the appropriateness.

Other matter –Reference to audits of other independent auditors

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under the equity method that are included in the consolidated financial statements. Those financial statements were audited by other independent auditors, whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on reports of the other independent auditors. Total assets of the above-mentioned entities (including investments accounted for under the equity method) amounted to NT$18,755,869 thousand and NT$11,727,830 thousand as of December 31, 2020 and 2019, constituting 24% and 19% of consolidated total assets, respectively. Sales revenue of the above-mentioned entities amounted to NT$35,899,397 thousand and NT$23,178,240 thousand for the years ended December 31, 2020 and 2019, constituting 25% and 19% of consolidated total sales revenue, respectively.

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Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion with other matter section on the parent company only financial statements of MICRO-STAR INTERNATIONAL CO., LTD. as of and for the years ended December 31, 2020 and 2019.

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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Independent 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 ROC GAAS 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

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decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgement 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.

5.

6.

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period 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.

Liang, Hua-Ling

[Lai, Chung-Hsi ]

For and on behalf of PricewaterhouseCoopers, Taiwan March 22, 2021

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) 6(5) 6(5) 6(6) 6(7) 6(3) 6(4) and 8 6(8) and 8 6(9) 6(11) 6(26)	December 31, 2020 AMOUNT % $ 18,585,955 24 203,737 - 1,000,447 1 113,287 - 21,867,246 28 265,987 - 34,759 - 27,482,537 35 1,807,513 3 71,361,468 91 124,338 - 226,937 - 5,130,094 7 502,400 1 207,637 - 769,613 1 75,028 - 7,036,047 9 $ 78,397,515 100	December 31, 2019	December 31, 2019
		AMOUNT $ 18,585,955 203,737 1,000,447 113,287 21,867,246 265,987 34,759 27,482,537 1,807,513 71,361,468 124,338 226,937 5,130,094 502,400 207,637 769,613 75,028 7,036,047 $ 78,397,515	AMOUNT $ 10,709,045 152,805 1,200,000 47,114 17,205,783 227,116 16,417 22,527,840 1,675,701 53,761,821 151,975 227,848 4,893,433 474,897 300,559 471,523 66,652 6,586,887 $ 60,348,708	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Current financial assets at amortised cost 1150 Notes receivable, net 1170 Accounts receivable, net 1200 Other receivables 1220 Current income tax assets 130X Inventories, net 1410 Prepayments 11XX Total current assets Non-current assets 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property - net 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets				18 - 2 - 29 - - 37 3
				89
				- - 8 1 1 1 -
				11
				100

(Continued)

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December 31, 2020 December 31, 2019 Notes AMOUNT % AMOUNT % 6(12) $ 3,000,000 4 $ 1,500,000 3 6(2) 103,885 - 24,943 - 27,177,751 35 20,391,520 34 6(13) 5,344,410 7 3,844,835 6 1,604,500 2 402,714 1 6(16) 850,435 1 556,720 1 218,182 - 159,081 - 3,555,792 5 1,636,499 3 337,535 - 108,961 - 42,192,490 54 28,625,273 48 6(14) and 8 - - 15,095 - 6(26) 6,928 - 27,214 - 225,548 1 247,767 1 6(15) 220,314 - 221,974 - 212,383 - 198,920 - 665,173 1 710,970 1 42,857,663 55 29,336,243 49 6(17) 8,448,562 11 8,448,562 14 6(18) 804,214 1 803,918 1 6(19) 5,541,298 7 4,982,577 8 794,525 1 505,966 1 20,625,711 26 17,065,967 28 ( 674,458) ( 1) ( 794,525) ( 1 ) 35,539,852 45 31,012,465 51 35,539,852 45 31,012,465 51 $ 78,397,515 100 $ 60,348,708 100

Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2170 Accounts payable 2200 Other payables 2230 Current income tax liabilities 2250 Provision for liabilities - current 2280 Current lease liabilities 2365 Refund liabilities- current 2399 Other current liabilities, others 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Non-current lease liabilities 2640 Net defined benefit liability, non- current 2670 Other non-current liabilities, others 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of parent Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 3XXX Total equity 3X2X Total liabilities and equity

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

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share)

Items

Year ended December 31 2020 2019 Notes AMOUNT % AMOUNT % 6(20) $ 146,502,789 100 $ 120,491,417 100 6(6)(24) ( 125,199,949) ( 85) ( 104,629,261) ( 87) 21,302,840 15 15,862,156 13 6(24) ( 7,053,359) ( 5) ( 5,508,321) ( 4) ( 1,345,054) ( 1) ( 1,070,509) ( 1) ( 3,724,340) ( 3) ( 3,315,224) ( 3) 7,741 - ( 15,696) - ( 12,115,012) ( 9) ( 9,909,750) ( 8) 9,187,828 6 5,952,406 5 6(21) 88,822 - 82,368 - 6(22) 576,975 - 632,915 - 6(23) ( 224,787) - ( 125,710) - ( 31,945) - ( 23,546) - 409,065 - 566,027 - 9,596,893 6 6,518,433 5 6(26) ( 1,637,388) ( 1) ( 931,223) ( 1) $ 7,959,505 5 $ 5,587,210 4 6(15) ($ 5,106) - ($ 10,079) - 6(3) ( 27,637) - - - 6(26) 1,021 - 2,016 - ( 31,722) - ( 8,063) - 147,704 - ( 288,559) - 147,704 - ( 288,559) - $ 115,982 - ($ 296,622) - $ 8,075,487 5 $ 5,290,588 4 $ 7,959,505 5 $ 5,587,210 4 $ 8,075,487 5 $ 5,290,588 4 6(27) $ 9.42 $ 6.61 $ 9.34 $ 6.56

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit gain(loss) 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period Other comprehensive income Components of other comprehensive loss that will not be reclassified to profit or loss 8311 Actuarial loss on defined benefit plan 8316 Unrealised losses from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive loss that will not be reclassified to profit or loss Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Total other comprehensive income (loss) for the period 8500 Total comprehensive income for the period Profit attributable to: 8610 Owners of the parent Comprehensive income attributable to: 8710 Owners of the parent Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

2019 Balance at January 1, 2019 Profit for the year Other comprehensive loss for the year Total comprehensive income (loss) Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends Cash distribution from capital surplus Due to donated assets received Balance at December 31, 2019 2020 Balance at January 1, 2020 Profit for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends Due to donated assets received Balance at December 31, 2020	Notes									Equity attributa	Equity attributa	bl	e to owners of th	e parent	e parent	e parent						Total equity
			Share capital - common stock				Capital Surplus								Retained Earnings			Other Equity	In	terest
					Additional paid-in capital		Treasury stock transactions		Donated assets received	Employee stock warrants			Legal reserve		Special reserve		Unappropriated retained earnings	Financial statements translation differences of foreign operations	a f	Unrealized losses from financial ssets measured at air value through other comprehensive income
	6(19) 6(19) 6(19)		$ 8,448,562 - - - - - - - - $ 8,448,562 $ 8,448,562 - - - - - - - $ 8,448,562	$ 1,050,563 - - - - - - ( 422,429 ) - $ 628,134 $ 628,134 - - - - - - - $ 628,134			$ 130,592 - - - - - - - - $ 130,592 $ 130,592 - - - - - - - $ 130,592		$ 434 - - - - - - - 298 $ 732 $ 732 - - - - - - 296 $ 1,028		$ 44,460 - - - - - - - - $ 44,460 $ 44,460 - - - - - - - $ 44,460		$ 4,378,464 - - - 604,113 - - - - $ 4,982,577 $ 4,982,577 - - - 558,721 - - - $ 5,541,298		$ 421,815 - - - - 84,151 - - - $ 505,966 $ 505,966 - - - - 288,559 - - $ 794,525	$ 15,976,937 5,587,210 ( 8,063 ) 5,579,147 ( 604,113 ) ( 84,151 ) ( 3,801,853 ) - - $ 17,065,967 $ 17,065,967 7,959,505 ( 4,085 ) 7,955,420 ( 558,721 ) ( 288,559 ) ( 3,548,396 ) - $ 20,625,711		($ 505,966 ) - ( 288,559 ) ( 288,559 ) - - - - - ($ 794,525 ) ($ 794,525 ) - 147,704 147,704 - - - - ($ 646,821 )	$ - - - - - - - - - $ - $ - - ( 27,637 ) ( 27,637 ) - - - - ($ 27,637 )		$ 29,945,861 5,587,210 ( 296,622 ) 5,290,588 - - ( 3,801,853 ) ( 422,429 ) 298 $ 31,012,465 $ 31,012,465 7,959,505 115,982 8,075,487 - - ( 3,548,396 ) 296 $ 35,539,852

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

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation (including right-of-use assets and investment properties) Amortization Expected credit (gain) loss Net loss (gain) on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Loss (gain) on disposal of property, plant and equipment Gain on lease modification Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss Notes receivable, net Accounts receivable Other receivables Inventories, net Prepayments Other non-current assets Changes in operating liabilities Notes payable Accounts payable Other payables Provision for liabilities - current Refund liabilities- current Other current liabilities, others Net defined benefit liability Cash inflow generated from operations Interest received Interest paid Income tax paid Net cash flows from operating activities

Year ended December 31 Notes 2020 2019 $ 9,596,893 $ 6,518,433 6(24) 1,095,818 890,056 6(24) 200 224 ( 7,741 ) 15,696 31,850 ( 39,222 ) 31,945 23,546 6(21) ( 88,822 ) ( 82,368 ) 6(23) 540 ( 2,906 ) 6(9) ( 366 ) ( 214 ) 900 - ( 66,173 ) ( 11,931 ) ( 4,652,441 ) ( 1,179,668 ) ( 37,322 ) ( 70,951 ) ( 4,954,697 ) ( 474,978 ) ( 131,812 ) ( 294,679 ) 18,207 97,176 - ( 200 ) 6,786,231 5,457,896 1,497,850 427,104 293,715 55,625 1,919,293 ( 160,406 ) 215,321 16,728 ( 6,766 ) ( 5,714 ) 11,542,623 11,179,247 86,784 84,991 ( 29,945 ) ( 23,559 ) ( 774,794 ) ( 1,520,287 ) 10,824,668 9,720,392

(Continued)

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at amortised cost Proceeds from disposal of financial assets at amortised cost Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of investment properties Increase in refundable deposits Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Repayment of the principal portion of lease liabilities Payment of long-term borrowings Increase (decrease) in guarantee deposits received Cash dividends paid Cash distribution from capital surplus Due to donated assets received Net cash flows used in financing activities Effect of exchange rate Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Year ended December 31 Notes 2020 2019 6(3) $ - ($ 151,975 ) - ( 616,024 ) 200,464 - 6(8) ( 970,766 ) ( 982,667 ) 557 57,700 6(11) ( 316 ) ( 3,602 ) ( 22,474 ) ( 15,894 ) ( 792,535 ) ( 1,712,462 ) 1,500,000 ( 1,500,000 ) ( 239,125 ) ( 152,916 ) ( 1,039 ) ( 843 ) 13,463 ( 27,983 ) 6(19) ( 3,548,396 ) ( 3,801,853 ) 6(19) - ( 422,429 ) 296 298 ( 2,274,801 ) ( 5,905,726 ) 119,578 ( 208,839 ) 7,876,910 1,893,365 6(1) 10,709,045 8,815,680 6(1) $ 18,585,955 $ 10,709,045

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

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MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANISATION

MICRO-STAR INTERNATIONAL CO., LTD. (the “Company”) was incorporated as a company limited by shares under the laws of the Republic of China (R.O.C.) in August 1986 and started its operations in the same year. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the manufacture and sale of motherboards and computer hardware. The shares of the Company have been listed on the Taiwan Stock Exchange since October 1998. The Company is the Group’s ultimate parent company.

1. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on March 22, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

• (1) Effect of the adoption of new standards and amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’ Note：Earlier application from January 1, 2020 is allowed by FSC.	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

• A. Amendment to IFRS 16, ‘Covid-19-related rent concessions’

This amendment provides a practical expedient for lessees from assessing whether a rent concession related to COVID-19, and that meets all of the following conditions, is a lease modification:

• (a) Changes in lease payments result in the revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

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• (b) Any reduction in lease payments affects only payments originally due on or before June 30 2021; and

• (c) There is no substantive change to other terms and conditions of the lease.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

	Effective date by
	International Accounting
New Standards,Interpretations and Amendments	Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption from	January 1, 2021
applying IFRS 9’
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘	January 1, 2021
Interest Rate Benchmark Reform— Phase 2’

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

• (3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

New Standards,Interpretations and Amendments

Effective date by International Accounting Standards Board

Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, 'Insurance contracts' Amendments to IAS 1, ‘Classification of liabilities as current or non -current’ Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’ Amendments to IAS 16, ‘Property, plant and equipment:proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020

January 1, 2022 To be determined by International Accounting Standards Board January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2022 January 1, 2022 January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers’’, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “ IFRSs ” ).

(2) Basis of preparation

• A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

• (b) Financial assets at fair value through other comprehensive income.

• (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

• (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

• (b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• (c) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of

~17~

the consideration paid or received is recognised directly in equity.

• (d) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

Name of investor	Name of subsidiaries	Main business activities	Ownership(%)	Ownership(%)	Note
			2020/12/31	2019/12/31
MICRO-STAR INTERNATIONAL CO., LTD. 〃 〃 〃 〃 〃 〃 MSI (HOLDING)	MICRO-STAR NETHERLANDS HOLDING B.V. [MSI (HOLDING)] MSI COMPUTER CORP. [MSI (LA)] MSI PACIFIC INTERNATIONAL HOLDING CO., LTD. [MSI (PACIFIC)] MSI COMPUTER JAPAN CO., LTD. [MSI (JAPAN)] MSI COMPUTER (AUSTRALIA) PTY. LTD. [MSI (AUSTRALIA)] MSI COMPUTER (CAYMAN) CO., LTD. [MSI COMPUTER (CAYMAN)] MICRO-STAR CANADA LTD. [MSI (CANADA)] MYSTAR COMPUTER B.V. [MYSTAR]	Investment holding company Sales and maintenance of computers and electronic components Investment holding company Sales support and maintenance of computers and electronic components 〃 Investment holding company Sales support of computers and electronic components 〃	100 100 100 100 100 100 100 100	100 100 100 100 100 100 - 100	B 〃 A 〃 〃 B C and F B

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Main business Ownership(%)
Name of investor Name of subsidiaries activities 2020/12/31 2019/12/31 Note
----- End of picture text -----

MSI (HOLDING)	MSI COMPUTER SARL	Sales support of	100	100	B
	[MSI (SARL)]	computers and
		electronic components
〃	MSI COMPUTER (UK)	〃	100	100	〃
	LTD. [MSI (UK)]
〃	MSI POLSKA SP. Z O. O.	Sales support and	99	99	〃
	[MSI (POLSKA)]	maintenance and
		after-sales services of
		computers and
		electronic components
〃	MSI COMPUTER	Logistics services of	100	100	〃
	EUROPE B.V.	computers and
	[MSI (EUROPE)]	electronic components
〃	LLC MSI COMPUTER	Sales support and	99	99	〃
	[MSI (RUSSIA)]	maintenance of
		computers and
		electronic components
〃	MSI COMPUTER	Sales support of	99	99	B and D
	TECHNOLOGIES	computers and
	LIMITED COMPANY	electronic components
	[MSI (TURKEY)]
〃	MSI ITALY S.R.L.	〃	100	100	B
	[MSI (ITALY)]
〃	MSI IBERIA S.L.	〃	100	100	B and E
	[MSI (IBERIA)]
MSI (EUROPE)	MSI POLSKA SP. Z O. O.	Sales support and	1	1	B
	[MSI (POLSKA)]	maintenance and
		after-sales services of
		computers and
		electronic components
〃	LLC MSI COMPUTER	Sales support and	1	1	〃
	[MSI (RUSSIA)]	maintenance of
		computers and
		electronic components
〃	MSI COMPUTER	Sales support of	1	1	B and D
	TECHNOLOGIES	computers and
	LIMITED COMPANY	electronic components
	[MSI (TURKEY)]
MSI (PACIFIC)	MSI KOREA CO.,	Sales and	100	100	B
	LTD. [MSI (KOREA)]	maintenance of
		computers and
		electronic components

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Main business Ownership(%)
Name of investor Name of subsidiaries activities 2020/12/31 2019/12/31 Note
----- End of picture text -----

MSI (PACIFIC)	STAR INFORMATION	Investment holding	100	100	A
	HOLDING CO., LTD.	company
	[STAR INFORMATION]
〃	MICRO-STAR	〃	100	100	〃
	INTERNATIONAL
	(B.V.I) HOLDING
	CO., LTD. [MSI (B.V.I.)]
〃	MICRO ELECTRONICS	〃	100	100	〃
	HOLDING CO., LTD.
	[MICRO ELECTRONICS]
〃	MEGA TECHNOLOGY	〃	100	100	〃
	HOLDING CO., LTD.
	[MEGA TECHNOLOGY]
〃	MEGA COMPUTER CO.,	Sales support of	100	100	B
	LTD. [MEGA	computers and
	COMPUTER]	electronic components
〃	MHK INTERNATIONAL	〃	100	100	〃
	CO., LTD. [MSI (MHK)]
〃	MSI (SHANGHAI) CO.,	Sales and	100	100	A
	LTD. [MSI (SHANGHAI)]	maintenance of
		computers and
		electronic components
〃	SHENZHEN MEGA	Examination and	100	100	〃
	INFORMATION CO.,	maintenance of
	LTD. [SHENZHEN	computers, and
	MEGA INFORMATION]	electronic components
MICRO	MSI ELECTRONICS	Manufacture and	100	100	〃
ELECTRONICS	(KUNSHAN) CO., LTD.	maintenance of
	[MSI ELECTRONICS	computers, and
	(KUNSHAN)]	electronic components
STAR	MSI (SHENZHEN) CO.,	Sales and	100	100	〃
INFORMATION	LTD. [MSI SHENZHEN]	maintenance
		of computers and
		electronic components
MSI (B.V.I.)	MSI COMPUTER	Manufacture and	100	100	〃
	(SHENZHEN) CO., LTD.	maintenance of
	[MSI COMPUTER	computers, and
	(SHENZHEN)]	electronic components
MEGA	MSI COMPUTER	Sales and	-	100	A and G
TECHNOLOGY	TRADING (SHENZHEN)	maintenance
	CO., LTD. [MSI	of computers and
	TRADING (SHENZHEN)]	electronic components
〃	RAIDEALS INC.	Sales computers	100	100	A
	[RAIDEALS]	and electronic
		components

Note A: These investee companies are included in the consolidated financial statement based on

~20~

their financial statements which were audited by the Group’s independent auditors for the corresponding period.

  - Note B: There investee companies are included in the consolidated financial statement based on their financial statements which were audited by other independent auditors for the corresponding period.

  - Note C: As of December 31, 2020, these investee companies are included in the consolidated financial statements based on their financial statements which were audited by the Group’s independent auditors for the correponding period.

  - Note D: The subsidiary is in the process of liquidation.

  - Note E: Registration of MSI IBERIA was completed on May 6, 2019. Thus, it has been included in the consolidated financial statements from that date.

  - Note F: MSI CANADA received capital infusion from MSI on April 8, 2020. Thus, it has been included in the consolidated financial statements from that date.

  - Note G: On June 10, 2020, this subsidiary has cancelled the registration.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

• (4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

• (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair

~21~

value are translated using the historical exchange rates at the dates of the initial transactions.

• (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

• B. Translation of foreign operations

• (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

  • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

  • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

  • iii. All resulting exchange differences are recognised in other comprehensive income.

• (b) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

(5) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

• (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

• (b) Assets held mainly for trading purposes;

• (c) Assets that are expected to be realized within twelve months from the balance sheet date;

• (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

• B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

• (a) Liabilities that are expected to be settle within the normal operating cycle;

• (b) Liabilities arising mainly from trading activities;

• (c) Liabilities that are to be settled within twelve months from the balance sheet date;

• (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. 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.

~22~

(6) Cash equivalents

Cash equivalents refer to short-term highly liquid investments that readily convert to known amount of cash and subject to an insignificant effect of value of changes in rate. Time deposits and money market fund that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

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

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• (8) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

  • (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

  • (b) The assets’ contractual cash flows represents solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

  • The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

(9) Financial assets at amortised cost

• A. Financial assets at amortised cost are those that meet all of the following criteria:

• (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

• (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

• C. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

~23~

(10) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (11) Impairment of financial assets

• For financial assets measured at amortised cost including accounts receivable that have a significant financing component, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

• －

• (12) Leasing arrangements (lesser) Operating leases

Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

• (13) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work-in-process comprises raw materials, direct labour, other direct costs and related production overheads. The item-by-item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(14) Property, plant and equipment

• A Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful

~24~

lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 3~55 years Machinery and equipment 2~10 years Other properties (includes transportation equipment, office equipment, 1.5~10 years and leasehold improvements)

(15) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are mainly fixed payments, less any lease incentives that can be received.

• The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost mainly comprising the amount of the initial measurement of lease liability.

• The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

• D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.

(16) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 20 years.

(17) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which

~25~

the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(18) Borrowings

• Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(19) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

(21) Provisions

• Provisions of warranties are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(22) Employee benefits

• A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees, and should be recognised as expense in that period when the employees render service.

• B. Pensions

~26~

• (a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

  - (b) Defined benefit plans

     - i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past service costs. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date).

     - ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

     - iii. Past service costs are recognised immediately in profit or loss.

• C. Termination benefits

  • Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

• D. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ remuneration and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is distributed by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

• (23) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively

~27~

enacted at the balance sheet date in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

(24) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• (25) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are approved by the Company’s shareholders. Cash dividends are recorded as liabilities.

• (26) Revenue recognition

• A. Sales of goods

  • (a) The Group manufactures and sells motherboards, graphic cards, a variety of computer hardware, and electronic components. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full

~28~

discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

• (b) Revenue from the products is recognised based on the price specified in the contract, net of the estimated value added tax, returns and volume discounts and rebates. The volume discounts to the customers are estimated based on the anticipated annual sales quantities and the right of return for defective products is estimated on the basis of historical experience. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. The period between the transfer of the promised goods or services to the customer and payment by the customer does not exceed one year. As a result, the Group does not adjust any of the transaction prices for the time value of money.

• (c) The Group’s obligation to provide a refund for faulty products under the standard warranty terms is recognised as a provision.

• (d) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

• B. Incremental costs of obtaining a contract

Given that the contractual period lasts less than one year, the Group recognises the incremental costs of obtaining a contract as an expense when incurred although the Group expects to recover those costs.

(27) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. The information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies

None.

~29~

(2) Critical accounting estimates and assumptions

Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation. As of December 31, 2020, the carrying amount of inventories was $27,482,537.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

inventories was $27,482,537. TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand and petty cash Checking accounts and demand deposits Time deposits Total	December 31, 2020 2,979 $ 13,480,057 5,102,919 18,585,955 $	December31,2019
		4,210 $ 9,526,040 1,178,795
		10,709,045 $

• A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The Group’s time deposits with maturity periods over three months or pledged to others are reclassified as “financial assets at amortised cost.” Details of financial assets at amortised cost are provided in Notes 6(4) and 8.

(2) Financial assets and liabilities at fair value through profit or loss - current

Assetitems	December	31,2020	December	31,2019
Financial assets mandatorily measured at fair value
through profit or loss
Stock of publicly traded or listed companies	$	126,045	$	119,571
Derivatives – Forward exchange contract		37		3,660
Derivatives – Foreign exchange swap		79,260		52,981
		205,342		176,212
Evaluation adjustment	(	1,605)	(	23,407)
Total	$	203,737	$	152,805
Liabilityitems	December	31,2020	December	31,2019
Financial liabilities held for trading
Derivatives – Forward exchange contract	$	103,885	$	24,943

• A. Amounts recognised in profit or loss in relation to financial assets and liabilities at fair value through profit or loss are listed below:

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		2020		2019
Financial assets and liabilities mandatorily
measured at fair value through profit or loss
Equity instruments	$	24,436	$	16,301
Derivatives	(	57,442)	(	21,390)
	($	33,006)	($	5,089)

B. The Group entered into contracts related to derivative financial assets and liabilities which were not accounted for under hedge accounting. The contract information are as follows:

Derivative Financial Assets		December	31,2020
		Contract Amount Notional Principal (In thousands) CAD 1,000 USD 80,000 CNY 591,911 December	Contract period
Forward exchange contracts Foreign exchange swap 〃 Derivative Financial Liabilities			2020.12.16～2021.03.24 2020.11.06～2021.02.09 2020.08.13～2021.05.17 31,2020
		Contract Amount Notional Principal (In thousands) GBP 6,000 AUD 8,200 CAD 6,000 KRW 6,576,400 SEK 7,575 EUR 68,000	Contract period
Forward exchange contracts 〃 〃 〃 〃 〃			2020.10.22～2021.03.08 2020.10.28～2021.02.24 2020.11.06～2021.03.24 2020.12.02～2021.01.28 2020.11.20～2021.02.08 2020.08.25～2021.03.16

〃 〃 〃 〃 〃		AUD 8,200 CAD 6,000 KRW 6,576,400 SEK 7,575 EUR 68,000	2020.10.28～2021.02.24 2020.11.06～2021.03.24 2020.12.02～2021.01.28 2020.11.20～2021.02.08 2020.08.25～2021.03.16
Derivative Financial Assets		December	31,2019
		Contract Amount Notional Principal (In thousands) EUR 2,000 GBP 500 KRW 1,156,000 SEK 4,650 JPY 216,310 USD 94,000 CNY 473,584	Contract period
Forward exchange contracts 〃 〃 〃 〃 Foreign exchange swap 〃			2019.10.21~2020.02.10 2019.12.09~2020.02.18 2019.12.30~2020.01.15 2019.12.30~2020.02.10 2019.12.04~2020.02.03 2019.11.07~2020.02.24 2019.08.14~2020.05.18

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	December	31,2019
	Contract Amount
	Notional Principal
Derivative Financial Liabilities	(In thousands)	Contract period
Forward exchange contracts	CAD 8,000	2019.10.21~2020.03.24
〃	RUB 224,291	2019.12.05~2020.01.16
〃	EUR 44,000	2019.10.15~2020.04.08
〃	SEK 2,852	2019.12.03~2020.01.08
〃	GBP 5,500	2019.10.17~2020.02.18
〃	AUD 6,500	2019.10.31~2020.02.24

The Group entered into forward foreign exchange contracts to hedge exchange risk. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

• C. The Group has no financial assets at fair value through profit or loss pledged to others.

• D. Information relating to price risk and fair value of financial assets at fair value through profit or loss is provided in Note 12(2)(3).

(3) Financial assets at fair value through other comprehensive income

loss is provided in Note 12(2)(3). Financial assets at fair value through other comprehensive income
Items December 31, 2020 Non-current items: Equity instruments Unlisted stocks 151,975 $ Valuation adjustment 27,637) ( Total 124,338 $	December31,2019
	151,975 $ -
	151,975 $

Total

• A. The Group has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $124,338 and $151,975 as at December 31, 2020 and 2019, respectively.

• B. As at December 31, 2020 and 2019 , without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Group were $124,338 and $151,975, respectively.

• C. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.

• D. Information relating to price risk and fair value of financial assets at fair value through other comprehensive income is provided in Note 12(2)(3).

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(4) Financial assets at amortised cost

==> picture [486 x 123] intentionally omitted <==

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

Items December 31, 2020 December 31, 2019
Current items:
$ 1,000,447 $ 1,200,000
Time deposits over three months
Non-current items:
Pledge bank deposits $ 225,844 $ 226,083
Others 1,093 1,765
Total $ 226,937 $ 227,848
----- End of picture text -----

• A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed below:

Interest income	2020 2019 7,362 $ 8,310 $

• B. As at December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group were $1,227,384 and $1,427,848, respectively.

• C. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.

• D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

• (5) Notes and Accounts receivable

	December31,2020	December31,2020	December31,2019	December31,2019
Notes receivable	$	113,287	$	47,114
Accounts receivable	$	21,885,338	$	17,237,493
Less: Allowance for doubtful accounts	(	18,092)	(	31,710)
	$	21,867,246	$	17,205,783

A. The ageing analysis of accounts receivable and notes receivable:

Not past due 1 to 75 days 76 to 365 days Over 365 days	December	Notes receivable 113,287 $ - - - 113,287 $ 31,2020	December	31,2019
	Accounts receivable 19,204,696 $ 2,633,841 45,859 942 21,885,338 $		Accounts receivable 14,068,801 $ 3,044,781 120,008 3,903 17,237,493 $	Notes receivable
				47,114 $ - - -
				47,114 $

The above ageing analysis was based on past due date.

B. As of December 31, 2020 and 2019, accounts receivable and notes receivable were all from

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contracts with customers. And as of January 1, 2019, the balance of receivables from contracts with customers amounted to $16,075,372.

• C. Most of the Group’s accounts receivable have been insured or have collateral as security, and the Group will be able to obtain insurance claims or enforce a collateral in case these accounts default.

• D. As of December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes and accounts receivable were $113,287 and $47,114; $21,867,246 and $17,205,783, respectively.

• E. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

(6) Inventories

Raw materials Work-in-process Finished goods	Cost 8,292,346 $ 1,502,072 18,172,487 27,966,905 $	Allowance for valuation loss Book value 154,873) ($ 8,137,473 $ 2,198) ( 1,499,874 327,297) ( 17,845,190 484,368) ($ 27,482,537 $ December31,2020

Raw materials Work-in-process Finished goods	December 31, 2019
	Cost Allowance for valuation loss 6,579,127 $ 130,049) ($ 1,378,828 1,311) ( 15,104,505 403,260) ( 23,062,460 $ 534,620) ($	Bookvalue
		6,449,078 $ 1,377,517 14,701,245
		22,527,840 $

The cost of inventories recognised as expense for the period:

			2020		2019
Cost of inventories recognised as expense		$	125,199,949		104,629,261 $
Gains on reversal of decline in market value	(		48,625)	(	191,805)

The Group reversed a previous inventory write-down and accounted for as reduction of cost of goods sold because some inventories which were recognized as expense have been sold for the years ended December 31, 2020 and 2019.

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(7) Prepayments

Overpaid tax for offsetting the future tax payable Office supplies Prepayment for goods Others	December31,2020 972,344 $ 539,955 57,650 237,564 1,807,513 $	December31,2019 922,464 $ 490,408 30,266 232,563 1,675,701 $

(8) Property, plant and equipment

At January 1 Cost Accumulated depreciation Balance at January 1 Additions Reclassifications Disposals Depreciation charge Net exchange differences Balance At December 31 At December 31 Cost Accumulated depreciation	Land Buildings Machineries Others Total 1,462,282 $ 5,251,609 $ 2,550,199 $ 1,776,223 $ 11,040,313 $ - 3,387,842) ( 1,443,341) ( 1,315,697) ( 6,146,880) ( 1,462,282 $ 1,863,767 $ 1,106,858 $ 460,526 $ 4,893,433 $ 1,462,282 $ 1,863,767 $ 1,106,858 $ 460,526 $ 4,893,433 $ - 49,919 638,484 282,363 970,766 - 85,038 43,543 84,090) ( 44,491 - 225) ( 106) ( 766) ( 1,097) ( - 267,855) ( 356,338) ( 173,271) ( 797,464) ( 525 9,187 8,870 1,383 19,965 1,462,807 $ 1,739,831 $ 1,441,311 $ 486,145 $ 5,130,094 $ 1,462,807 $ 5,635,658 $ 3,239,657 $ 1,906,219 $ 12,244,341 $ - 3,895,827) ( 1,798,346) ( 1,420,074) ( 7,114,247) ( 1,462,807 $ 1,739,831 $ 1,441,311 $ 486,145 $ 5,130,094 $ 2020	Total
		5,130,094 $

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									2019
			Land			Buildings		Machineries				Others			Total
At January 1
Cost		$	1,467,630		$	5,368,187		$	3,713,051		$	1,715,434		$	12,264,302
Accumulated depreciation			-	(		3,298,694)	(		2,889,051)	(		1,338,013)	(		7,525,758)
		$	1,467,630		$	2,069,493		$	824,000		$	377,421		$	4,738,544
Balance at January 1		$	1,467,630		$	2,069,493		$	824,000		$	377,421		$	4,738,544
Additions			-			59,515			636,031			287,121			982,667
Reclassifications			-			25,963			800	(		61,740)	(		34,977)
Disposals			-			-	(		53,085)	(		1,709)	(		54,794)
Depreciation charge			-	(		255,071)	(		282,872)	(		133,078)	(		671,021)
Net exchange differences	(		5,348)	(		36,133)	(		18,016)	(		7,489)	(		66,986)
Balance At December 31		$	1,462,282		$	1,863,767		$	1,106,858		$	460,526		$	4,893,433
At December 31
Cost		$	1,462,282		$	5,251,609		$	2,550,199		$	1,776,223		$	11,040,313
Accumulated depreciation			-	(		3,387,842)	(		1,443,341)	(		1,315,697)	(		6,146,880)
		$	1,462,282		$	1,863,767		$	1,106,858		$	460,526		$	4,893,433

Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

－ (9) Leasing arrangements lessee

A. The Group leases various assets including land, buildings, machinery and equipment, and other equipment. Rental contracts are typically made for periods of 3 months to 9 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

0 Land Buildings Machinery and equipment Other equipment	December31,2020 Carryingamount 62,903 $ 387,566 7,803 44,128 502,400 $	December 31, 2019
		Carryingamount
		70,355 $ 361,312 6,717 36,513
		474,897 $

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Land Buildings Machinery and equipment Other equipment	2020 Depreciation charge 8,594 $ 217,471 2,760 21,127 249,952 $	2019 Depreciation charge 8,809 $ 132,799 2,433 20,153 164,194 $

• C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $301,039 and $290,570, respectively.

• D. The information on profit and loss accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on leases of low-value or short-term assets Expense on variable lease payments Gain on lease modification	2020 2019 $ 10,050 $ 6,450 58,122 52,040 29,530 37,443 366 214

• E. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $336,687 and $248,697, respectively.

• F. The Group has applied the practical expedient to “Covid-19-related rent concessions”. The amount is not significant, and the Group recognised changes in lease payments caused by rent concessions as deductions for expenses.

• (10) Leasing arrangements – lessor

• A. The Group leases buildings. Rental contracts are typically made for periods of 1 to 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

• B. The Group recognised rental income of $102,153 and $116,675 based on operating lease contracts for the years ended December 31, 2020 and 2019, respectively. None of these included variable lease payments.

• C. The maturity analysis of the undiscounted lease payments in the operating lease is as follows:

Less than 1 year Between 1 and 5 years Total	December31,2020 83,885 $ 105,775 189,660 $	December31,2019
		71,211 $ 61,051
		132,262 $

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(11) Investment property

Investment property
			2020			2019
			Buildings			Buildings
At January 1
Cost		$	1,167,190		$	1,129,777
Accumulated depreciation	(		866,631)	(		788,536)
		$	300,559		$	341,241
Balance at January 1		$	300,559		$	341,241
Additions			316			3,602
Reclassifications	(		48,800)			21,319
Depreciation charge	(		48,402)	(		54,841)
Net exchange differences			3,964	(		10,762)
Balance At December 31		$	207,637		$	300,559
At December 31
Cost		$	950,590		$	1,167,190
Accumulated depreciation	(		742,953)	(		866,631)
		$	207,637		$	300,559

• A. Rental income from the lease of the investment and direct operating expenses arising from the investment property:

investment property:
Rental income from the lease of the investment property Direct operating expenses arising from the investment property	2020 102,153 $ 67,220 $	2019
		116,675 $
		76,351 $

• B. As of December 31, 2020 and 2019, the fair value of the Group’s investments in property amounting to $2,437,773 and $3,403,426, respectively, as derived from market prices in the nearby area, are included in Level 2.

• (12) Short-term borrowings

nearby area, are included in Level 2. Short-term borrowings
Type ofborrowings Bank borrowings Unsecured borrowings Type ofborrowings Bank borrowings Unsecured borrowings	December31,2020 3,000,000 $ December31,2019 1,500,000 $	Interestraterange 0.73%~0.85% Interestraterange 0.88%～0.90%	Collateral
			None Collateral
			None

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(13) Other payables

Accrued salary and bonus Accrued freight Directors’ remuneration and employees’ compensation Advertising expenses payable Accrued molding expense Other accrued expenses	December31,2020 1,685,707 $ 945,457 796,500 659,268 333,861 923,617 5,344,410 $	December31,2019 1,303,131 $ 617,251 554,500 355,107 217,077 797,769 3,844,835 $

- (14) Long term borrowings

Long-term borrowings
Type ofborrowings	Borrowing period and repayment term	Interestraterange	Collateral December31,2020 Land and Building 14,184 $ 14,184) ( - $ Collateral December31,2019 Land and Building 16,026 $
Long-term bank borrowings Secured borrowings Less: current portion Type ofborrowings	Starting from March 24, 2016 to March 24, 2021, repayment of principal and interest of USD 4,307.77 monthly and remaining principal on the due date. Borrowing period and repayment term	Three month LIBOR plus 1.75% Interestraterange
Long-term bank borrowings Secured borrowings	Starting from March 24, 2016 to March 24, 2021, repayment of principal and interest of USD 4,307.77 monthly and remaining principal on the due date.	Three month LIBOR plus 1.75%		16,026 $

Less: current portion

( 931) $ 15,095

(15) Pensions

A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two

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units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

(b) The amounts recognised in the balance sheet are as follows:

	December	31,2020	December	December	31, 2019
Present value of defined benefit obligations	$	535,344		$	524,869
Fair value of plan assets	(	315,030)	(		302,895)
Net defined benefit liability	$	220,314		$	221,974

(c) Movements in net defined benefit liabilities are as follows:

2020 Balance at January 1 Current service cost Interest expense (income) Remeasurements: Return on plan assets (excluding amounts included in interest income or expense) Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31		Present value of defined benefit obligations	Fair value of plan assets		Net defined benefit liability
	524,869 $ 3,359 3,674 531,902 - 20,532 5,112) ( 15,420 - 11,978) ( 535,344 $		302,895) ($ - 2,120) ( 305,015) ( 10,314) ( - - 10,314) ( 11,679) ( 11,978 315,030) ($	221,974 $ 3,359 1,554 226,887 10,314) ( 20,532 5,112) ( 5,106 11,679) ( - 220,314 $

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	Present value of	Present value of		Fair value of
	defined benefit			plan			Net defined
		obligations		assets		benefit liability
2019
Balance at January 1	$	502,487	($	284,878)		$	217,609
Current service cost		3,710		-			3,710
Interest expense (income)		5,025	(	2,849)			2,176
		511,222	(	287,727)			223,495
Remeasurements:
Return on plan assets
(excluding amounts included in
interest income or expense)		-	(	9,912)	(		9,912)
Change in financial assumptions		15,767		-			15,767
Experience adjustments		4,224		-			4,224
		19,991	(	9,912)			10,079
Pension fund contribution		-	(	11,600)	(		11,600)
Paid pension	(	6,344)		6,344			-
Balance at December 31	$	524,869	($	302,895)		$	221,974

• (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and its domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and its domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

• (e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	2020 0.30% 2.75%	2019
		0.70%
		2.75%

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Assumptions regarding future mortality experience are set based on the fifth round of empirical life tables of the Taiwan life insurance industry.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

==> picture [449 x 135] intentionally omitted <==

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

Discount rate Future salary increases
Increase 0.25% Decrease 0.25% Increase 0.25% Decrease 0.25%
December 31, 2020
Effect on present value of
defined benefit obligation ($ 12,970) $ 13,446 $ 11,756 ($ 11,422)
December 31, 2019
Effect on present value of
defined benefit obligation ($ 13,187) $ 13,680 $ 12,065 ($ 11,713)
----- End of picture text -----

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

• (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $11,593.

• (g) As of December 31, 2020, the weighted average duration of the retirement plan is 10 years. The analysis of timing of the future pension payment was as follows:

The analysis of timing of the future pension payment was as follows:
Within 1 year 1-2 year(s) 2-3 years 3-4 years 4-5 years 6-10 years Over 10 years	40,867 $ 43,253 30,900 19,385 16,930 131,293 268,910
	551,538 $

• B. (a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The Company’s mainland China subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the

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pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

• (c) The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2020 and 2019 were $247,872 and $279,412, respectively.

(16) Provisions for liabilities

	Warranty		2020			2019
At January 1		$	556,720		$	501,095
Additional provisions			852,712			748,955
Used during the period	(		558,931)	(		693,294)
Exchange differences	(		66)	(		36)
At December 31		$	850,435		$	556,720
Analysis of total provisions:
	December31,2020			December31,2019
Current		$	850,435		$	556,720

The Group gives warranties on computer components and personal computers sold. Provision for warranty is estimated based on historical warranty data.

• (17) Share capital

As of December 31, 2020, the Company’s authorized capital was $15,000,000 (including 80,000 thousand shares reserved for employee stock options and 150,000 thousand shares reserved for convertible bonds issued by the Company), and the paid-in capital was $8,448,562 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

(18) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(19) Retained earnings

• A. Under the Company's Articles of Incorporation, the current year's earnings, if any, shall first be used to pay all taxes and offset prior year's operating losses, then 10% of the remaining amount shall be set aside or reversed as legal reserve. The balance plus unappropriated retained earnings at the beginning of the period shall be appropriated 10%~90% as proposed by the Board of Directors and resolved by the stockholders during their meeting.

• B. The Company’s dividend policy is summarized below: as the Company operates in a volatile business environment and is in the stable growth stage, except for the Company’s future

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expansion plans, stockholders’ interest is taken into consideration. The Group appropriated dividends in proportion to total number of shares, dividends could be distributed in stock or cash, and cash dividends shall account for at least 30% of the total dividends distributed.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

• E. The appropriations of 2019 and 2018 earnings had been resolved at the stockholders’ meeting on June 10, 2020 and June 14, 2019, respectively, were as follows:

	2019	2019	Dividends per	2018	2018	Dividends per
	Amount		share(dollar)	Amount		share(dollar)
Legal reserve	558,721 $			604,113 $
Special reserve	288,559			84,151
Cash dividend	3,548,396	$	4.20	3,801,853	$	4.50

The cash dividends of the Company from capital surplus that has been approved by the stockholders on June 14, 2019 amounted to $422,429.

The appropriation of 2019 earnings as approved by the stockholders is the same as with the appropriation resolved by the Board of Directors during its meeting on April 30, 2020. Information about earnings appropriation of the Company as resolved by Board of Directors will

be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(20) Operating revenue

The Group derives revenue from the transfer of goods at a point in time in the following major segment:

~44~

(21) (22) (23) (24)

Interest income Other income Other gains and losses Expenses by nature 2020 Computer and peripherals segment Other Total Total segment revenue 146,342,698 $ 160,091 $ 146,502,789 $ Timing of revenue recognition At a point in time 146,342,698 $ 160,091 $ 146,502,789 $ 2019 Computer and peripherals segment Other Total Total segment revenue 120,486,414 $ 5,003 $ 120,491,417 $ Timing of revenue recognition At a point in time 120,486,414 $ 5,003 $ 120,491,417 $ 2020 2019 Interest income from bank deposits 81,460 $ 74,058 $ Interest income from financial assets measured at amortised cost 7,362 8,310 88,822 $ 82,368 $ 2020 2019 Rental revenue 102,153 $ 116,675 $ Others 474,822 516,240 576,975 $ 632,915 $ 2020 2019 Net currency exchange losses 77,078) ($ 34,836) ($ Losses on financial assets and liabilities at fair value through profit or loss 33,006) ( 5,089) ( Net (losses) gains on disposal of property, plant and equipment 540) ( 2,906 Other losses 114,163) ( 88,691) ( 224,787) ($ 125,710) ($ 2020 2019 Employee benefit expense 8,192,801 $ 7,247,568 $ Depreciation charges 1,095,818 890,056 Amortisation charges 200 224 9,288,819 $ 8,137,848 $

~45~

(25) Employee benefit expense

Employee benefit expense
2020 Wages and salaries 7,229,216 $ Labor and health insurance fees 415,089 Pension costs 252,785 Other personnel expenses 295,711 Total 8,192,801 $	2019 6,241,522 $ 396,369 285,297 324,380
	7,247,568 $

• A. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall be 6%~10% for employees’ compensation and shall not be higher than 1% for directors’ remuneration.

• B. For the years ended December 31, 2020 and 2019, employees’ remuneration was accrued at $725,000 and $505,000, respectively; while directors’ remuneration was accrued at $71,500 and $49,500, respectively. The aforementioned amounts were recognized in salary expenses respectively.

The employees’ compensation and directors’ remuneration were estimated and accrued based on the historical distribution ratio and the profit of the current year for the year ended December 31, 2020.

Employees’ compensation and directors’ remuneration of 2019 as resolved at the meeting of Board of Directors were in agreement with those amounts recognized in the 2019 financial statements.

Information about employees’ compensation and directors’ remuneration of the Company as resolved by the Board of Directors and shareholders will be posted in the “Market Observation Post System” website of the Taiwan Stock Exchange.

(26) Income tax

• A. Income tax expense

• (a) Components of income tax expense:

t System” website of the Taiwan Stock Exchange. e tax ome tax expense Components of income tax expense:
			2020			2019
Current tax:
Current tax on profits for the period		$	1,906,717		$	999,237
Tax on undistributed earnings			52,357			76,902
Prior year income tax overestimation	(		4,331)	(		138,530)
Total current tax			1,954,743			937,609
Deferred tax:
Origination and reversal of temporary differences	(		317,355)	(		6,386)
Total deferred tax	(		317,355)	(		6,386)
Income tax expense		$	1,637,388		$	931,223

~46~

(b) The income tax charge relating to components of other comprehensive income:

Remeasurement of defined benefit obligations	2020 2019 1,021 $ 2,016 $

• (c) The income tax charged/(credited) to equity during the period: None.

• B. Reconciliation between income tax expense and accounting profit

			2020			2019
Tax calculated based on profit before tax and
statutory tax rate (Note)		$	2,063,059		$	1,409,440
Effect from items disallowed by tax regulation			16,800			16,800
Temporary differences not recognised as deferred tax
liabilities	(		133,514)	(		137,196)
Effect from investment tax credits	(		302,078)	(		282,279)
Prior year income tax overestimation	(		4,331)	(		138,530)
Effect of different tax rates in countries in which the
group operates	(		54,499)	(		13,914)
Tax on undistributed earnings			52,357			76,902
Other			(406)			-
Income tax expense		$	1,637,388		$	931,223

Note: The basis for computing the applicable tax rate are the rates applicable in the respective countries where the Group entities operate.

C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

Temporary differences: -Deferred tax assets: Unrealized gross profit Loss on inventory Allowance for bad debts excess tax limitation Unrealized losses on forward exchange contract Remeasurement of defined benefit obligations Others Subtotal		2020	2020	2020
	January1 203,265 $ 110,357 7,258 - 34,135 116,508 471,523	Recognised in profit or loss		Recognised in other comprehensive income - $ - - - 1,021 - 1,021	December31
		234,846 $ 13,816) ( 4,981) ( 4,918 - 76,102 297,069			438,111 $ 96,541 2,277 4,918 35,156 192,610
					769,613

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January 1 -Deferred tax liabilities: Unrealised exchange gain 20,490) ( Unrealized gains on forward exchange contract 6,340) ( Others 384) ( Subtotal 27,214) ( Total 444,309 $ January1 Temporary differences: -Deferred tax assets: Unrealized gross profit 148,181 $ Loss on inventory 147,632 Allowance for bad debts excess tax limitation 1,257 Unrealized exchange loss 3,462 Remeasurement of defined benefit obligations 32,119 Others 105,553 Subtotal 438,204 -Deferred tax liabilities: Unrealised exchange gain - Unrealized gains on forward exchange contract 1,755) ( Others 542) ( Subtotal 2,297) ( Total 435,907 $	Recognised in profit or loss Recognised in other comprehensive income December31 2020 14,406 - 6,084) ( 6,340 - - 460) ( - 844) ( 20,286 - 6,928) ( 317,355 $ 1,021 $ 762,685 $ Recognised in profit or loss Recognised in other comprehensive income December31 55,084 $ - $ 203,265 $ 37,275) ( - 110,357 6,001 - 7,258 3,462) ( - - - 2,016 34,135 10,955 - 116,508 31,303 2,016 471,523 20,490) ( - 20,490) ( 4,585) ( - 6,340) ( 158 - 384) ( 24,917) ( - 27,214) ( 6,386 $ 2,016 $ 444,309 $ 2019	Recognised in profit or loss Recognised in other comprehensive income December31 2020 14,406 - 6,084) ( 6,340 - - 460) ( - 844) ( 20,286 - 6,928) ( 317,355 $ 1,021 $ 762,685 $ Recognised in profit or loss Recognised in other comprehensive income December31 55,084 $ - $ 203,265 $ 37,275) ( - 110,357 6,001 - 7,258 3,462) ( - - - 2,016 34,135 10,955 - 116,508 31,303 2,016 471,523 20,490) ( - 20,490) ( 4,585) ( - 6,340) ( 158 - 384) ( 24,917) ( - 27,214) ( 6,386 $ 2,016 $ 444,309 $ 2019	Recognised in profit or loss Recognised in other comprehensive income December31 2020 14,406 - 6,084) ( 6,340 - - 460) ( - 844) ( 20,286 - 6,928) ( 317,355 $ 1,021 $ 762,685 $ Recognised in profit or loss Recognised in other comprehensive income December31 55,084 $ - $ 203,265 $ 37,275) ( - 110,357 6,001 - 7,258 3,462) ( - - - 2,016 34,135 10,955 - 116,508 31,303 2,016 471,523 20,490) ( - 20,490) ( 4,585) ( - 6,340) ( 158 - 384) ( 24,917) ( - 27,214) ( 6,386 $ 2,016 $ 444,309 $ 2019
		Recognised in profit or loss
	55,084 $ 37,275) ( 6,001 3,462) ( - 10,955 31,303 20,490) ( 4,585) ( 158 24,917) ( 6,386 $

• D. The Company has not recognised taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2020 and 2019, the amounts of temporary difference unrecognised as deferred tax liabilities were $5,887,126 and $5,042,672, respectively.

• E. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.

~48~

(27) Earnings per share

	(27)Earnings per share
7.	RELATED PARTY TRANSACTIONS (1)Names of related parties and relationship None. (2)Significant related party transactions None. Amount aftertax Basic earnings per share Profit attributable to ordinary shareholders of the parent 7,959,505 $ Diluted earnings per share Profit attributable to ordinary shareholders of the parent 7,959,505 $ Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 7,959,505 $ Amount aftertax Basic earnings per share Profit attributable to ordinary shareholders of the parent 5,587,210 $ Diluted earnings per share Profit attributable to ordinary shareholders of the parent 5,587,210 $ Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 5,587,210 $		2020
		Amount aftertax 7,959,505 $ 7,959,505 $ - 7,959,505 $	Retroactively adjusted weighted-average outstanding ordinary Earnings per share shares (inthousands) (inNTdollars) 844,856 9.42 $ 844,856 7,225 852,081 9.34 $ 2019
				9.42 $
				9.34 $
			Retroactively adjusted weighted-average outstanding ordinary Earnings per share shares (inthousands) (inNTdollars) 844,856 6.61 $ 844,856 7,378 852,234 6.56 $
				6.61 $
				6.56 $
	(1) (2)

~49~

(3) Key management compensation

Salaries and other employee benefits

2020 464,093 $	2019 350,353 $

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Asset items Non-current financial assets at amortised cost Property, plant and equipment	December 31, December 31, 2020 2019 Purpose 225,844 $ 226,083 $ Performance security guarantee 116,383 126,733 For guarantee of long-term loans 342,227 $ 352,816 $ Bookvalue

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

• (1) Contingencies ： None.

• (2) Commitments ： None.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or repurchase outstanding shares.

~50~

(2) Financial instruments

A. Financial instruments by category

December 31, 2020 December 31, 2019

	December31,2020	December31,2019
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Notes receivable Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Financial liabilities at amortised cost Short-term borrowings Accounts payable Other payables Long-term borrowings (including current portion) Guarantee deposits received Lease liabilities	203,737 $ 124,338 18,585,955 1,227,384 113,287 21,867,246 265,987 64,716 42,452,650 $ 103,885 $ 3,000,000 27,177,751 5,344,410 14,184 212,383 35,852,613 $ 443,730 $	152,805 $ 151,975 10,709,045 1,427,848 47,114 17,205,783 227,116 42,242
		29,963,928 $
		24,943 $ 1,500,000 20,391,520 3,844,835 16,026 198,920
		25,976,244 $
		406,848 $

~51~

B. Risk management policies

The Group’s activities expose it to a variety of financial risks: including market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

• ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency.

• iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.

• iv. The Group hedges foreign exchange rate by using forward exchange contracts. However, the Group does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(2).

• v. The Group’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December 31, 2020

(Foreign currency: functionalcurrency) Financial assets Monetary items USD: NTD EUR: NTD RMB: NTD GBP: NTD Financial liabilities Monetary items USD: NTD EUR: NTD USD: RMB	Foreign Currency Amount (In Thousands) 471,844 $ 94,927 142,167 10,763 982,170 25,630 23,215	Exchangerate 28.4800 35.0200 4.3770 38.9000 28.4800 35.0200 6.5067	Book Value (NTD)
			13,438,119 $ 3,324,351 622,264 418,664 27,972,190 879,561 661,151

~52~

			December31,2019
(Foreign currency:	Foreign Currency Amount				Book Value
functionalcurrency)		(In Thousands)	Exchangerate		(NTD)
Financial assets
Monetary items
USD: NTD	$	396,064	29.9800	$	11,873,988
EUR: NTD		51,697	33.5900		1,736,500
RMB: NTD		162,475	4.3050		699,454
GBP: NTD		7,794	39.3600		306,785
CAD: NTD		10,468	22.9900		240,670
Financial liabilities
Monetary items
USD: NTD		673,526	29.9800		20,192,315
USD: RMB		16,433	6.9640		492,673
EUR: NTD		11,924	33.5900		400,520

• vi. The exchange loss arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019 amounted to $77,078 and $34,836, respectively.

• vii. Analysis of foreign currency market risk arising from significant foreign exchange variation:

variation:
(Foreign currency: functional currency)			2020	Effect on other comprehensive income
			Sensitivity analysis
		Degree of variation	Effect on profit or loss (before tax)
Financial assets Monetary items USD: NTD EUR: NTD RMB: NTD GBP: NTD Financial liabilities Monetary items USD: NTD EUR: NTD USD: RMB		1% 1% 1% 1% 1% 1% 1%	134,381 $ 33,244 6,223 4,187 279,722 8,976 6,612	- $ - - - - - -

~53~

			2019
		Sensitivity analysis
			Effect on profit		Effect on other
(Foreign currency:	Degree of		or loss		comprehensive
functional currency)	variation		(before tax)		income
Financial assets
Monetary items
USD: NTD	1%	$	118,740	$	-
EUR: NTD	1%		17,365		-
RMB: NTD	1%		6,995		-
GBP: NTD	1%		3,068		-
CAD: NTD	1%		2,407		-
Financial liabilities
Monetary items
USD: NTD	1%		201,923		-
USD: RMB	1%		4,927		-
EUR: NTD	1%		4,005		-

Price risk

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

• ii. The Group has investments in equity securities. The prices of equity securities would change due to the change in the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, posttax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $996 and $769, as a result of gain or loss of equity instruments at fair value through profit or loss. Also, other components of equity would have increased/decreased by $995 and $1,216, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

• i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. For the years ended December 31, 2020 and 2019, the Group borrowings are issued at variable rate denominated in US dollars.

• ii. The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate

~54~

shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.

• iii. As at December 31, 2020 and 2019, if interest rates on USD and NTD denominated borrowings had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have been $113 and $128 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable, notes receivable and financial assets at amortised cost cash flow based on the agreed terms.

• ii. The Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions, only parties with a rating of investment grade are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the management. The utilisation of credit limits is regularly monitored. Credit risk arises from credit exposures to wholesale and retail customers, including outstanding receivables.

• iii. The Group adopts assumptions, if the contract payments were past due over 90 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• iv. The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 150 days.

• v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

  • (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

  • (ii) The disappearance of an active market for that financial asset because of financial difficulties;

  • (iii) Default or delinquency in interest or principal repayments;

  • (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

• vi. The Group applies the modified approach using provision matrix, loss rate methodology to estimate expected credit loss under the provision matrix basis.

~55~

• vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

• viii. The Group used the forecastability to adjust historical and timely information to assess the default possibility of debt instrument as at December 31, 2020 and 2019. The expected credit loss rate of the Group’s overdue accounts receivable was not material as of December 31, 2020 and 2019.

• ix. The Group applies the simplified approach to provide loss allowance for accounts receivable that have no significant impact. The Group had not recognized related impact as at December 31, 2020 and 2019.

• (c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Group’s internal balance sheet ratio targets and external regulatory or legal requirements.

• ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December 31, 2020 Short-term borrowings Accounts payable Other payables Lease liabilities Long-term borrowings (including current portion) Other financial liabilities	Less than 1 year	Between 1 to 2years	Between 2 to 3years	Over 3years
	3,001,922 $ 27,177,751 5,344,410 225,892 13,552 1,228	- $ - - 159,964 - 103,826	- $ - - 41,619 - -	- $ - - 22,011 - 107,329

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Non-derivative financial liabilities:

	Less than 1	Less than 1		Between 1		Between 2
December 31, 2019		year		to 2 years		to 3years	Over	3 years
Short-term borrowings	$	1,500,037	$	-	$	-	$	-
Accounts payable	20,391,520			-		-		-
Other payables		3,844,835		-		-		-
Lease liabilities		194,646		144,775		80,921		38,352
Long-term borrowings
(including current portion)		1,550		14,266		-		-
Other financial liabilities		605		106,506		-		91,809

Derivative financial liabilities

As of December 31, 2020 and 2019, the derivative financial liabilities mature within 1 year.

• iii. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an on going basis.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: Unobservable inputs for the asset or liability.

• B. The fair value information of the Group’s investments in property is provided in Note 6(11).

• C. Financial instruments not measured at fair value

• The Group’s cash and cash equivalents, financial assets at amortised cost, notes receivable, accounts receivable, other receivables, guarantee deposits paid, short-term borrowings, accounts payable, other payables, long-term borrowings and guarantee deposits received are approximate to their fair values. The transaction value information is provided in Note 12(2)A.

• D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

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December 31, 2020 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss -Equity security -Forward exchange contract -Foreign exchange swap Financial assets at fair value through other comprehensive income -Equity securities Total Liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contract December 31, 2019 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss -Equity security -Forward exchange contract -Foreign exchange swap Financial assets at fair value through other comprehensive income -Equity securities Total Liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss -Forward exchange contract	Level 1 124,440 $ - - - 124,440 $ - $ Level 1 96,164 $ - - - 96,164 $ - $	Level 2 - $ 37 79,260 - 79,297 $ 103,885 $ Level 2 - $ 3,660 52,981 - 56,641 $ 24,943 $	Level3 - $ - - 124,338 124,338 $ - $ Level3 - $ - - 151,975 151,975 $ - $	Total
				124,440 $ 37 79,260 124,338
				328,075 $
				103,885 $
				Total
				96,164 $ 3,660 52,981 151,975
				304,780 $
				24,943 $

• E. The methods and assumptions the Group used to measure fair value are as follows:

• (a) The level 1 financial instruments-equity security held by the Group are listed shares, and the market quoted price is determined by the closing price of the security.

• (b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes.

• (c) When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap

~58~

contracts and options, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• (d) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.

• F. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

• G. For the years ended December 31, 2020 and 2019, there was no transfer in or out from Level 3.

• H. The Group entrusts an external evaluation agency to evaluate the fair value classified as Level 3.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: None.

• B. Provision of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 1.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.

• E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: Please refer to table 2.

• H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 3.

• I. Derivative financial instruments transactions: Please refer to Note 6(2) and 12(2).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

• (2) Information on investees

• Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 5.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 6.

• B. Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas: Please refer to table 7.

(4) Major shareholders information

Major shareholders information: Please refer to table 8.

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14. SEGMENT INFORMATION

(1) General information and measurement of segment information

The Group operates business only in the manufacture and sale of motherboards and computer hardware and peripherals. The chief operating decision-maker is the Board of Directors, who considers the whole business as a single performance entity, and assesses performance, makes decisions and allocates resources based on financial information. It has identified that the Group has only one reportable operating segment.

(2) Information about segment profit or loss, assets and liabilities:

The Group's Board of Directors mainly evaluates the performance of the operating segments based on the Group's quarterly financial statements.

(3) Reconciliation for segment income

The Group is a single reportable segment. The profit and loss, assets and liabilities of the segment are the profit and loss, assets and liabilities shown in the financial statements, so there is no reconciliation required.

(4) Information on products and services

Revenue from external customers is mainly from the sales of computer and peripherals and related components. Details of revenue are as follows:

Computer and peripherals sale revenue

		2020	2019
	$	146,502,789	120,491,417 $

(5) Geographical information

Geographical information for the years ended December 31, 2020 and 2019 is as follows:

Asia Europe America Others	Revenue Non-current assets 53,798,428 $ 5,443,118 $ 43,454,599 262,533 45,972,863 191,987 3,276,899 12,274 146,502,789 $ 5,909,912 $ 2020	2019	2019
	Revenue 53,798,428 $ 43,454,599 45,972,863 3,276,899 146,502,789 $	Revenue 52,938,443 $ 32,331,545 33,122,365 2,099,064 120,491,417 $	Non-current assets
			5,395,625 $ 283,179 154,501 852
			5,834,157 $

(6) Major customer information

The Group had no individual customer whose sales amount accounts for more than 10% of net operating revenue in the consolidated statement of comprehensive income.

~60~

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

December 31, 2020

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account	As of December 31,2020	As of December 31,2020	As of December 31,2020	As of December 31,2020	Footnote
				Number of shares	Book value	Ownership (%)	Fair value
MSI (HOLDING)	Ahold Delhaize Kon	-	Financial assets at fair value through profit or loss - current	40,000	$ 32,373	-	$ 32,373	-
MSI (HOLDING)	CVA ING Groep	-	Financial assets at fair value through profit or loss - current	130,000	34,782	-	34,782	-
MSI (HOLDING)	Danone	-	Financial assets at fair value through profit or loss - current	20,000	37,653	-	37,653	-
MSI (HOLDING)	Deutsche Boerse	-	Financial assets at fair value through profit or loss - current	4,000	19,632	-	19,632	-
MICRO-STAR INTERNATIONAL CO., LTD.	BLUESTACK SYSTEM, INC.	-	Financial assets at fair value through other comprehensive income - non current	516,052	124,338	-	124,338	-

Table 1 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

For the year ended December 31, 2020

			For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020
Table 2			(Except as otherwise indicated) Expressed in thousands of NTD
Transaction company (Note 4)	Name of the counter party (Note 4)	Relationship with the counterparty	Description of the transaction				Description and reasons of difference in transaction terms compared to third party transactions		Accounts or notes receivable (payable)		Footnote
			Purchases/(Sales)	Amount (Note 3)	% of total purchase (sale)	Credit terms	Unit price	Credit terms	Balance (Note 3)	% of total accounts or notes receivable/(payable)
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (LA)	Subsidiary	Sales	(28,697,320) $	(20)	60-100 days	Insignificant difference	Note 1	8,887,796 $	38	-
MICRO-STAR INTERNATIONAL CO.,LTD.	MEGA COMPUTER	Second-tier Subsidiary	Sales	(6,899,121)	(5)	40-70 days	Insignificant difference	Note 1	1,007,998	4	-
MICRO-STAR INTERNATIONAL CO.,LTD.	MYSTAR	Second-tier Subsidiary	Sales	(2,305,767)	(2)	30-100 days	Insignificant difference	Note 1	370,601	2	-
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (KOREA)	Second-tier Subsidiary	Sales	(4,481,153)	(3)	50-70 days	Insignificant difference	Note 1	21,356	-	-
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI COMPUTER (SHENZHEN)	Second-tier Subsidiary	Processing overhead	2,986,307	2	Note 2	Insignificant difference	Note 2	3,141,850) (	(12)	-
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI ELECTRONICS (KUNSHAN)	Second-tier Subsidiary	Processing overhead	1,191,748	1	Note 2	Insignificant difference	Note 2	1,765,669) (	(7)	-
MEGA COMPUTER	MSI (SHANGHAI)	Affiliated company	Sales	(6,864,483)	(100)	40-70 days	Insignificant difference	Note 1	1,803,576	100	-
MSI (LA)	RAIDEALS	Affiliated company	Sales	(249,448)	(1)	40-70 days	Insignificant difference	Note 1	6,244	-	-

Note 1: The credit terms to third parties are approximately 30 to 120 days. Note 2: Credit terms depend on the financial condition of the paying firm. Note 3: Balances after elimination in conformity with regulations. Note 4: Corresponding transactions are not disclosed.

Table 2 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

December 31, 2020

Expressed in thousands of NTD

Table 3

(Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as of December 31, 2020	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
MICRO-STAR INTERNATIONAL CO., LTD.	MSI (LA)	Subsidiary	$ 8,887,796	4.06	$ -	-	$ 4,063,318	$ -
MICRO-STAR INTERNATIONAL CO., LTD.	MEGA COMPUTER	Second-tier Subsidiary	1,007,998	6.57	-	-	505,655	-
MICRO-STAR INTERNATIONAL CO., LTD.	MYSTAR	Second-tier Subsidiary	370,601	7.22	-	-	337,834	-
MSI (PACIFIC) (Note)	MICRO-STAR INTERNATIONAL CO.,LTD.	Ultimate parent company	5,129,249	-	-	-	778,929	-
MSI COMPUTER (SHENZHEN) (Note)	MSI (PACIFIC)	Parent Company	3,141,850	-	-	-	513,676	-
MSI ELECTRONICS (KUNSHAN) (Note)	MSI (PACIFIC)	Parent Company	1,765,669	-	-	-	265,253	-
MSI (B.V.I.)	MSI (PACIFIC)	Parent Company	133,094	-	-	-	-	-
MEGA COMPUTER	MSI (SHANGHAI)	Affiliated company	1,803,576	3.68	-	-	503,355	-

Note:Processing overhead receivable.

Table 3 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Significant inter-company transactions during the year ended December 31, 2020

Expressed in thousands of NTD

Table 4

(Except as otherwise indicated)

Table 4				合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)	合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)	合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)	合併資產 46,184,753 合併營收 24,553,252 (Except as otherwise indicated)
Number	Company name (Note 4)	Counterparty (Note 4)	Relationship	Transaction
				General ledger account	Amount (Note 1)	Transaction terms	Percentage of consolidated total operating revenues or total assets
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (KOREA)	Parent company to second-tier subsidiary	Sales	4,481,153 $	Note 2	3.06%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (LA)	Parent company to subsidiary	Sales	28,697,320	Note 2	19.59%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MEGA COMPUTER	Parent company to second-tier subsidiary	Sales	6,899,121	Note 2	4.71%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MYSTAR	Parent company to second-tier subsidiary	Sales	2,305,767	Note 2	1.57%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (LA)	Parent company to subsidiary	Accounts receivable	8,887,796	Note 2	11.34%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MEGA COMPUTER	Parent company to second-tier subsidiary	Accounts receivable	1,007,998	Note 2	1.29%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MYSTAR	Parent company to second-tier subsidiary	Accounts receivable	370,601	Note 2	0.47%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI ELECTRONICS (KUNSHAN)	Parent company to second-tier subsidiary	Processing overhead	1,191,748	Note 3	0.81%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI COMPUTER (SHENZHEN)	Parent company to second-tier subsidiary	Processing overhead	2,986,307	Note 3	2.04%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI ELECTRONICS (KUNSHAN)	Parent company to second-tier subsidiary	Manufacturing and operating expense	101,223	Note 2	0.07%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI COMPUTER (SHENZHEN)	Parent company to second-tier subsidiary	Manufacturing and operating expense	91,305	Note 2	0.06%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MEGA COMPUTER	Parent company to second-tier subsidiary	Manufacturing and operating expense	241,539	Note 2	0.16%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (EUROPE)	Parent company to second-tier subsidiary	Manufacturing and operating expense	275,315	Note 2	0.19%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MYSTAR	Parent company to second-tier subsidiary	Manufacturing and operating expense	149,663	Note 2	0.10%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (MHK)	Parent company to second-tier subsidiary	Manufacturing and operating expense	163,720	Note 2	0.11%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (POLSKA)	Parent company to second-tier subsidiary	Manufacturing and operating expense	143,747	Note 2	0.10%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (RUSSIA)	Parent company to second-tier subsidiary	Manufacturing and operating expense	92,714	Note 2	0.06%

Table 4 Page 1

Number	Company name (Note 4)	Counterparty (Note 4)	Relationship	Transaction	Transaction	Transaction	Transaction
				General ledger account	Amount (Note 1)	Transaction terms	Percentage of consolidated total operating revenues or total assets
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (LA)	Parent company to subsidiary	Manufacturing and operating expense	303,511 $	Note 2	0.21%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (SARL)	Parent company to second-tier subsidiary	Manufacturing and operating expense	101,380	Note 2	0.07%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (JAPAN)	Parent company to subsidiary	Manufacturing and operating expense	125,728	Note 2	0.09%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (KOREA)	Parent company to second-tier subsidiary	Manufacturing and operating expense	85,106	Note 2	0.06%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (UK)	Parent company to second-tier subsidiary	Manufacturing and operating expense	79,073	Note 2	0.05%
0	MICRO-STAR INTERNATIONAL CO., LTD.	MSI (LA)	Parent company to subsidiary	Other payables	81,708	Note 2	0.10%
1	MSI (PACIFIC)	MICRO ELECTRONICS	Subsidiary to second-tier subsidiary	Other payables	88,636	Note 3	0.11%
1	MSI (PACIFIC)	MSI (B.V.I.)	Subsidiary to second-tier subsidiary	Other payables	133,094	Note 3	0.17%
1	MSI (PACIFIC)	MSI ELECTRONICS (KUNSHAN)	Subsidiary to second-tier subsidiary	Other payables	1,765,669	Note 3	2.25%
1	MSI (PACIFIC)	MSI COMPUTER (SHENZHEN)	Subsidiary to second-tier subsidiary	Other payables	3,141,850	Note 3	4.01%
1	MSI (PACIFIC)	MICRO-STAR INTERNATIONAL CO., LTD.	Subsidiary to parent	Other receivables	5,129,249	Note 3	6.54%
2	MEGA COMPUTER	MSI (SHANGHAI)	Second-tier subsidiary to second-tier subsidiary	Sales	6,864,483	Note 2	4.69%
2	MEGA COMPUTER	MSI (SHANGHAI)	Second-tier subsidiary to second-tier subsidiary	Accounts receivable	1,803,576	Note 2	2.30%
3	MSI (LA)	RAIDEALS	Subsidiary to second-tier subsidiary	Sales	249,448	Note 2	0.17%

Note 1: Balances after elimination in conformity with regulations.

Note 2: Transaction terms were approximately the same as those to third parties.

Note 3: Processing overhead was determined based on the quantities, contract amount and delivery time. Note 4: Individual transactions not exceeding $50,000 and their corresponding transactions are not disclosed.

Table 4 Page 2

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Information on investees (not including investees in Mainland China)

For the year ended December 31, 2020

Expressed in thousands of NTD

Table 5

(Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Net profit (loss) of the investee for the year ended December 31, 2020	Investment income (loss) recognised by the Company for the year ended December 31, 2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (LA)	U.S.A	Sales and maintenance of computers and electronic components	258,468 $	258,468 $	575,458	100.00	72,605 $	39,396 $	39,396 $	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (AUSTRALIA)	Australia	Sales support and maintenance of computers and electronic components	57,420	57,420	221,836	100.00	8,644	1,321	1,321	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (JAPAN)	Japan	Sales support and maintenance of computers and electronic components	20,411	20,411	1,400	100.00	19,238	4,692	4,692	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (PACIFIC)	Cayman Islands	Holding company	1,511,382	1,511,382	30,204,118	100.00	7,406,724	579,510	579,510	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (HOLDING)	Netherlands	Holding company	45,724	45,724	424,000	100.00	685,857	41,428	41,428	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI COMPUTER (CAYMAN)	Cayman Islands	Holding company	99,093	99,093	50,000	100.00	117,549	175	175	Direct subsidiary
MICRO-STAR INTERNATIONAL CO.,LTD.	MSI (CANADA)	Canada	Sales support of computers and electronic components	2,150	-	100,000	100.00	3,297	1,047	1,047	Direct subsidiary
MSI (PACIFIC)	MSI (KOREA)	South Korea	Sales and maintenance of computers and electronic components	24,374	24,374	80,000	100.00	324,572	38,835	-	Indirect subsidiary
MSI (PACIFIC)	MSI (B.V.I.)	British Virgin Island	Holding company	1,784,681	1,784,681	47,465,071	100.00	4,342,436	315,470	-	Indirect subsidiary
MSI (PACIFIC)	MICRO ELECTRONICS	British Virgin Island	Holding company	1,168,593	1,168,593	33,315,472	100.00	2,707,503	247,401	-	Indirect subsidiary
MSI (PACIFIC)	STAR INFORMATION	British Virgin Island	Holding company	144,721	144,721	4,502,601	100.00	20,826	(5,931)	-	Indirect subsidiary
MSI (PACIFIC)	MEGA TECHNOLOGY	British Virgin Island	Holding company	92,819	92,819	3,050,000	100.00	5,545	6,786	-	Indirect subsidiary
MSI (PACIFIC)	MEGA COMPUTER	Hong Kong	Sales support of computers and electronic components	-	-	1	100.00	4,948	(1,190)	-	Indirect subsidiary

Table 5 Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Shares held as at December 31, 2020	Net profit (loss) of the investee for the year ended December 31, 2020	Investment income (loss) recognised by the Company for the year ended December 31, 2020	Footnote
				Balance as at December 31, 2020	Balance as at December 31, 2019	Number of shares	Ownership (%)	Book value
MSI (PACIFIC)	MSI (MHK)	Hong Kong	Sales support of computers and electronic components	- $	- $	1	100.00	24,773 $	2,942 $	- $	Indirect subsidiary
MSI (HOLDING)	MYSTAR	Netherlands	Sales support of computers and electronic components	71,353	71,353	-	100.00	169,231	16,019	-	Indirect subsidiary
MSI (HOLDING)	MSI (RUSSIA)	Russia	Sales support and maintenance of computers and electronic components	68,258	68,258	-	99.00	33,748	1,928	-	Indirect subsidiary
MSI (HOLDING)	MSI (POLSKA)	Poland	Sales support, maintenance and after-sales service of computers and electronic components	46,077	46,077	-	99.00	35,020	3,232	-	Indirect subsidiary
MSI (HOLDING)	MSI (SARL)	France	Sales support of computers and electronic components	26,646	26,646	-	100.00	59,955	5,072	-	Indirect subsidiary
MSI (HOLDING)	MSI (UK)	Britan	Sales support of computers and electronic components	37,226	37,226	-	100.00	19,341	3,826	-	Indirect subsidiary
MSI (HOLDING)	MSI (TURKEY)	Turkey	Sales support of computers and electronic components	3,229	3,229	-	99.00	(69)	-	-	Indirect subsidiary (Note 2)
MSI (HOLDING)	MSI (ITALY)	Italy	Sales support of computers and electronic components	2,153	2,153	-	100.00	4,400	1,673	-	Indirect subsidiary
MSI (HOLDING)	MSI (EUROPE)	Netherlands	Logistics services of computers and electronic components	37,620	37,620	-	100.00	53,482	6,159	-	Indirect subsidiary
MSI (HOLDING)	MSI (IBERIA)	Spain	Sales support of computers and electronic components	5,177	5,177	-	100.00	7,592	1,483	-	Indirect subsidiary
MSI (EUROPE)	MSI (RUSSIA)	Russia	Sales support and maintenance of computers and electronic components	689	689	-	1.00	560	1,928	-	Indirect subsidiary
MSI (EUROPE)	MSI (POLSKA)	Poland	Sales support, maintenance and after-sales service of computers and electronic components	467	467	-	1.00	179	3,232	-	Indirect subsidiary
MSI (EUROPE)	MSI (TURKEY)	Turkey	Sales support of computers and electronic components	33	33	-	1.00	27	-	-	Indirect subsidiary (Note2)
MEGA TECHNOLOGY	RAIDEALS	U.S.A	Sales of computers and electronic components	1,523	1,523	-	100.00	1,875	280	-	Indirect subsidiary

Note 1: The table is presented in New Taiwan dollars. Except for the initial investment amount is valued at historical exchange rate, the others are valued with exchange rate 1USD=28.48 NTD; 1EUR=35.02 NTD on December 31, 2020 and average rate with 1USD=29.5523 NTD; 1EUR=33.7135 NTD for the year ended December 31, 2020.

Note 2: As of December 31, 2020, the liquidation process has not been completed.

Table 5 Page 2

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China - Basic information

For the year ended December 31, 2020

Expressed in thousands of NTD

Table 6

(Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2020	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31, 2020	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the year ended December 31, 2020	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2020	Net income of investee as of December 31, 2020	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2020 (Note 2)	Book value of investments in Mainland China as of December 31, 2020	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2020	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
MSI COMPUTER (SHENZHEN)	Manufacture and maintenance of computers, and electronic components	$ 1,726,857	Note 1	1,726,857 $	$ -	$ -	$ 1,726,857	315,391 $	100.00	$ 315,391	$ 4,192,136	$ -	-
MSI ELECTRONICS (KUNSHAN)	Manufacture and maintenance of computers, and electronic components	1,772,675	Note 1	1,772,675	-	-	1,772,675	247,199	100.00	247,199	2,607,152	-	-
SHENZHEN MEGA INFORMATION	Examination and maintenance of computers, and electronic components	23,940	Note 1	23,940	-	-	23,940	1,071	100.00	1,071	22,964	-	-
MSI COMPUTER TRADING (SHENZHEN)	Sales and maintenance of computers and electronic components	-	Note 1	-	-	-	-	11,688	-	11,688	-	-	Note 3
MSI (SHENZHEN)	Sales and maintenance of computers and electronic components	30,092	Note 1	-	-	-	-	(5,986)	100.00	(5,986)	7,827	-	Note 4
MSI (SHANGHAI)	Sales and maintenance of computers and electronic components	29,275	Note 1	-	-	-	-	11,397	100.00	11,397	(15,790)	-	Note 5

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2020	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
MICRO-STAR INTERNATIONAL CO., LTD.	3,602,547 $	3,850,987 $	21,323,911 $

Note 1: The investments were made indirectly through 100% owned subsidiary of the Company.

Note 2: Evaluated based on financial statement not reviewed by other auditors of the investee companies. Note 3: The amount of US $3,000 thousand was remitted by the Company's subsidiary, MSI (Pacific), to MSI COMPUTER TRADING (SHENZHEN). Note 4: The amount of US $1,000 thousand was remitted by the Company's subsidiary, MSI (Pacific), to MSI (SHENZHEN).

Note 5: The amount of US $1,000 thousand was remitted by the Company's subsidiary, MSI (Pacific), to MSI (SHANGHAI).

Note 6: In pursuance of Shen-Zi Letter No.09704604680 from the Ministry of Economic Affairs dated August 29, 2008. The amended "Regulations for examination of investments and technical cooperation in Mainland Area" sets the limitation for investments in Mainland China to be higher of net book value or 60% of consolidated net book value. Note 7: The table is presented in New Taiwan dollars. Except for the initial investment amount is valued at historical exchange rate, the others are valued with exchange rate 1USD=28.48 NTD on December 31, 2020 and average rate with 1USD=29.5523 NTD for the year ended December 31, 2020.

Table 6 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China - Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in third areas

For the year ended December 31, 2020

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Sales/(Purchase)	Sales/(Purchase)	Propertytransaction	Propertytransaction	Accounts receivable/(payable)	Accounts receivable/(payable)	Amount of endorsements/guarantees secured with collaterals	Amount of endorsements/guarantees secured with collaterals		Accommodation of funds	Accommodation of funds		Others(Note)
	Amount	%	Amount	%	Balance as of December 31,2020	%	Balance as of December 31,2020	Purpose	Ceiling amount	Balance as of December 31,2020	Interest rate range	Interest expense
MSI COMPUTER (SHENZHEN) MSI ELECTRONICS (KUNSHAN) MSI (SHANGHAI)	$ - - 6,864,483	- - 100	$ - - -	- - -	(3,141,850) $ (1,765,669) 1,803,576	12) ( 7) ( 100	$ - - -	- - -	$ - - -	$ - - -	- - -	$ - - -	2,986,307 $ 1,191,748 -

Note: Processing overhead.

Table 7 Page 1

MICRO-STAR INTERNATIONAL CO., LTD. AND SUBSIDIARIES

Table 8

Major shareholders information

December 31, 2020

Name of major shareholders	Shares held as at December 31,2020	Shares held as at December 31,2020
	Number of shares	Ownership(%)
Hsu Hsiang	51,983,151	6.15%

Table 8 Page 1