NTC — Interim / Quarterly Report 2021

Nov 19, 2021

Nuvoton Technology Corporation and Subsidiaries

Consolidated Financial Statements for the Six Months Ended June 30, 2021 and 2020 and Independent Auditors' Review Report

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Shareholders Nuvoton Technology Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of Nuvoton Technology Corporation and its subsidiaries (collectively, the "Group") as of June 30, 2021 and 2020, the related consolidated statements of comprehensive income for the three months ended June 30, 2021 and 2020 and for the six months ended June 30, 2021 and 2020, the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2021 and 2020, and the related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the "consolidated financial statements"). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

We conducted our reviews in accordance with Statement of Auditing Standards No. 65 "Review of Financial Information Performed by the Independent Auditor of the Entity". A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of June 30, 2021 and 2020, its consolidated financial performance for the three months ended June 30, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

	June 30, 2021 (Reviewed)		December 31, 2020 (Audited)		June 30, 2020 (Reviewed)
ASSETS	Amount	%	Amount	%	Amount	%
CURRENT ASSETS
Cash and cash equivalents (Notes 6 and 31)	\$ 6,269,889	20	\$ 5,881,733	18	\$ 6,674,362	49
Financial assets at fair value through profit or loss - current (Note 7)	6,245	-	13,223	-	5,800	-
Notes and accounts receivable, net (Note 8)	4,506,726	15	4,155,816	13	1,136,213	8
Accounts receivable from related parties, net (Notes 8 and 30)	83,489	-	90,577	-	58,996	1
Other receivables (Notes 9 and 30)	1,033,858	4	1,710,051	5	516,117	4
Inventories (Note 10)	6,279,683	20	6,250,131	20	1,906,315	14
Other current assets	385,455	1	259,015	1	141,073	1
Total current assets	18,565,345	60	18,360,546	57	10,438,876	77
NON-CURRENT ASSETS
Financial assets at fair value through other comprehensive income - non-current
(Note 11)	2,388,406	8	1,806,580	6	1,071,992	8
Property, plant and equipment (Notes 12 and 31)	5,626,244	18	6,547,107	20	734,704	5
Right-of-use assets (Notes 13 and 30)	1,312,824	4	1,498,888	5	541,695	4
Investment properties (Notes 14 and 31) Intangible assets (Note 15)	2,176,948 743,046	7 2	2,466,667 802,691	8 2	40,879 619,686	- 4
Deferred tax assets (Note 4)	188,091	1	188,397	-	108,373	1
Refundable deposits (Notes 6 and 30)	101,319	-	651,497	2	86,466	1
Other non-current assets	4,545	-	328	-	310	-
Total non-current assets	12,541,423	40	13,962,155	43	3,204,105	23
TOTAL	\$ 31,106,768	100	\$ 32,322,701	100	\$ 13,642,981	100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 17 and 31)	\$ 378,150	1	\$ 1,821,210	6	\$ -	-
Financial liabilities at fair value through profit or loss - current (Note 7)	1,952	-	3,191	-	-	-
Notes payable	268,160	1	365,870	1	-	-
Accounts payable	2,586,405	8	2,653,008	8	1,111,575	8
Accounts payable to related parties (Note 30)	431,250	1	827,543	3	26,891	-
Other payables (Notes 18 and 30)	4,354,371	14	4,008,274	12	1,098,744	8
Dividends payables (Note 21)	311,733	1	-	-	345,065	2
Current tax liabilities (Note 4)	249,138	1	221,412	1	131,146	1
Provisions - current (Note 19)	558,654	2	928,719	3	-	-
Lease liabilities - current (Notes 13 and 30)	267,487	1	300,067	1	112,475	1
Other current liabilities	528,247	2	421,034	1	86,618	1
Total current liabilities	9,935,547	32	11,550,328	36	2,912,514	21
NON-CURRENT LIABILITIES
Bonds payable (Note 16)	375,413	1	1,207,820	4	2,006,339	15
Long-term borrowings (Notes 17 and 31)	1,500,000	5	1,500,000	5	500,000	3
Provisions - non-current (Note 19)	2,856,083	9	3,120,468	10	101,891	1
Deferred tax liabilities	4,363	-	52,132	-	-	-
Lease liabilities - non-current (Notes 13 and 30)	1,256,289	4	1,474,041	4	402,052	3
Net defined benefit liabilities - non-current (Note 4)	1,655,350	5	1,780,008	5	286,735	2
Other non-current liabilities	131,269	1	116,536	-	106,076	1
Total non-current liabilities	7,778,767	25	9,251,005	28	3,403,093	25

Total liabilities	17,714,314	57	20,801,333	64	6,315,607	46
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 21)
Share capital	3,906,736	12	3,759,616	12	2,875,544	21
Certificates of bond-to-stock conversion	193,692	1	124,320	-	-	-
Capital surplus	6,408,718	21	5,796,731	18	2,906,976	21
Retained earnings
Legal reserve	596,905	2	596,905	2	596,905	5
Unappropriated earnings	2,139,234	7	1,103,083	3	860,872	6
Exchange differences on translation of financial statements of foreign operations	(749,875)	(3)	(128,352)	-	(37,049)	-
Unrealized gains (losses) on financial assets at fair value through other
comprehensive income	897,044	3	269,065	1	124,126	1
Total equity	13,392,454	43	11,521,368	36	7,327,374	54
TOTAL	\$ 31,106,768	100	\$ 32,322,701	100	\$ 13,642,981	100

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

	For the Three Months Ended June 30			For the Six Months Ended June 30
	2021 Amount	%	2020 Amount	%	2021 Amount	%	2020 Amount	%
OPERATING REVENUE (Notes 22 and 30)	\$ 10,614,689	100	\$ 3,061,142	100	\$ 20,687,169	100	\$ 5,194,297	100
OPERATING COST (Notes 10, 24 and 30)	6,272,260	59	1,798,837	59	12,425,133	60	3,087,929	59
GROSS PROFIT	4,342,429	41	1,262,305	41	8,262,036	40	2,106,368	41
OPERATING EXPENSES
(Notes 24 and 30) Selling expenses General and administrative	322,996	3	55,711	2	624,733	3	108,464	2
expenses Research and development	714,116	7	133,555	4	1,503,096	7	261,110	5
expenses	2,376,212	23	729,528	24	4,819,628	24	1,386,992	27
Expected credit loss (gain)	13,400	-	6,104	-	18,197	-	2,459	-
Total operating expenses	3,426,724	33	924,898	30	6,965,654	34	1,759,025	34
PROFIT FROM OPERATIONS	915,705	8	337,407	11	1,296,382	6	347,343	7
NON-OPERATING INCOME AND EXPENSES (Note 30)
Finance costs	(23,332)	-	(6,825)	-	(51,069)	-	(11,325)	-
Interest income Dividend income	14,809 62,000	- 1	6,234 67,694	- 2	18,844 62,000	- -	14,314 67,694	- 1
Other gains and losses Gains (losses) on disposal of property, plant and	(24,355)	-	5,470	-	63,730	-	8,492	-
equipment	137,047	1	10	-	125,188	1	29	-
Foreign exchange (losses) gains Gains (losses) on financial assets at fair value through	(13,017)	-	(11,252)	-	(33,693)	-	(3,313)	-
profit or loss	37,467	-	1,540	-	15,174	-	(3,511)	-
Total non-operating
income and expenses	190,619	2	62,871	2	200,174	1	72,380	1
PROFIT BEFORE INCOME TAX	1,106,324	10	400,278	13	1,496,556	7	419,723	8
INCOME TAX EXPENSE (Notes
4 and 23)	(167,131)	(1)	(67,602)	(2)	(286,767)	(1)	(75,832)	(2)
NET PROFIT FOR THE
PERIOD	939,193	9	332,676	11	1,209,789	6	343,891	6
OTHER COMPREHENSIVE INCOME (LOSS) (Note 21) Items that will not be reclassified subsequently to profit or loss: Unrealized gains (losses) on investments in equity instruments at fair value through other
comprehensive income	230,712	2	20,594	1	766,074	4	(45,418)	(1)

(Continued)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

	For the Three Months Ended June 30				For the Six Months Ended June 30
	2021		2020		2021
	Amount	%	Amount	%	Amount	%	2020 Amount	%
Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations	\$ (172,247)	(2)	\$ (11,878)	(1)	\$ (621,523)	(3)	\$ (18,065)	-
Other comprehensive income (loss) for the period, net of income tax	58,465	-	8,716	-	144,551	1	(63,483)	(1)
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD	\$ 997,658	9	\$ 341,392	11	\$ 1,354,340	7	\$ 280,408	5
EARNINGS PER SHARE (Note 26) From continuing operations Basic Diluted	\$ 2.36 \$ 2.30		\$ 1.16 \$ 1.15		\$ 3.07 \$ 3.00		\$ 1.20 \$ 1.19

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

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

	Equity Attributable to Owners of the Company
	Ordinary Share	Certificates of		Retained Earnings		Exchange Differences on Translation of Financial Statements of	Other Equity Unrealized Gains (Losses) on Financial Assets at Fair Value Through Other
		Bond-to-stock Conversion	Capital Surplus	Legal Reserve	Unappropriated Earnings	Foreign Operations	Comprehensive Income	Total Equity
BALANCE AT JANUARY 1, 2020	\$ 2,875,544	\$ -	\$ 2,906,976	\$ 541,722	\$ 917,229	\$ (18,984)	\$ 169,544	\$ 7,392,031
Net profit for the six months ended June 30, 2020	-	-	-	-	343,891	-	-	343,891
Other comprehensive income (loss) for the six months ended June 30, 2020, net of income tax	-	-	-	-	-	(18,065)	(45,418)	(63,483)
Total comprehensive income (loss) for the six months ended June 30, 2020	-	-	-	-	343,891	(18,065)	(45,418)	280,408
Appropriation of 2019 earnings (Note 21) Legal reserve Cash dividends	- -	- -	- -	55,183 -	(55,183) (345,065)	- -	- -	- (345,065)
BALANCE, JUNE 30, 2020	\$ 2,875,544	\$ -	\$ 2,906,976	\$ 596,905	\$ 860,872	\$ (37,049)	\$ 124,126	\$ 7,327,374
BALANCE AT JANUARY 1,2021	\$ 3,759,616	\$ 124,320	\$ 5,796,731	\$ 596,905	\$ 1,103,083	\$ (128,352)	\$ 269,065	\$ 11,521,368
Net profit for the six months ended June 30, 2021	-	-	-	-	1,209,789	-	-	1,209,789
Other comprehensive income (loss) for the six months ended June 30, 2021, net of income tax	-	-	-	-	-	(621,523)	766,074	144,551
Total comprehensive income (loss) for the six months ended June 30, 2021	-	-	-	-	1,209,789	(621,523)	766,074	1,354,340
Convertible bonds converted to ordinary shares (Note 16)	147,120	69,372	611,977	-	-	-	-	828,469
Unclaimed dividends from claims extinguished by prescriptions	-	-	10	-	-	-	-	10
Disposals of investments in equity instruments designated as at fair value through other comprehensive income (Notes 11 and 21)	-	-	-	-	138,095	-	(138,095)	-
Appropriation of 2020 earnings (Note 21) Cash dividends	-	-	-	-	(311,733)	-	-	(311,733)
BALANCE, JUNE 30, 2021	\$ 3,906,736	\$ 193,692	\$ 6,408,718	\$ 596,905	\$ 2,139,234	\$ (749,875)	\$ 897,044	\$ 13,392,454

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

	For the Six Months Ended June 30
	2021	2020
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax	\$ 1,496,556	\$ 419,723
Adjustments for:
Depreciation expense	557,199	164,107
Amortization expense	115,028	70,045
Finance costs	51,069	11,325
Expected credit loss (gain) recognized on accounts receivable	18,197	2,459
Interest income	(18,844)	(14,314)
Dividend income	(62,000)	(67,694)
(Gains) losses on disposal of property, plant and equipment	(125,188)	(29)
Other adjustment to reconcile (profit) loss	-	(5)
Changes in operating assets and liabilities
(Increase) decrease in financial assets at fair value through profit
or loss	(4,419)	5,437
(Increase) decrease in notes and accounts receivable	(368,766)	(127,865)
(Increase) decrease in accounts receivable from related parties	7,088	8,398
(Increase) decrease in other receivables	147,597	(22,227)
(Increase) decrease in inventories	(29,552)	(301,657)
(Increase) decrease in other current assets	(136,136)	1,369
(Increase) decrease in other non-current assets	(4,217)	308
Increase (decrease) in notes payable	(97,710)	-
Increase (decrease) in accounts payable	(462,896)	9,091
Increase (decrease) in other payables	466,909	(9,720)
Increase (decrease) in provisions	(316,438)	-
Increase (decrease) in other current liabilities	107,213	18,207
Increase (decrease) in accrued pension liabilities	4,469	(830)
(Increase) decrease in other non-current liabilities	14,733	25,933
Cash flows from (used in) operations	1,359,892	192,061
Income tax paid	(256,766)	(32,735)
Interest received	15,816	14,301
Interest paid	(47,955)	(8,561)
Dividend income	62,000	64,394
Net cash flows generated from (used in) operating activities	1,132,987	229,460
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of intangible assets	(140,638)	(243,116)
Proceeds from disposal of financial assets at fair value through other
comprehensive income	235,166	-
Acquisition of subsidiaries (Note 27)	(77,934)	-
Acquisition of property, plant and equipment	(282,336)	(101,175)
Proceeds from disposal of property, plant and equipment	888,417	31
		(Continued)

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

	For the Six Months Ended June 30
	2021	2020
(Increase) decrease in refundable deposits (Increase) decrease in other receivables-time deposits	\$ 550,178 19,527	\$ 413 5,166
Net cash flows generated from (used in) investing activities	1,192,380	(338,681)
CASH FLOWS FROM FINANCING ACTIVITIES Repayment of short-term borrowings Proceeds from issuance of bond payables Repayment of the principal portion of lease liabilities Net cash flows generated from (used in) financing activities	(1,443,060) - (147,133) (1,590,193)	- 1,998,428 (59,000) 1,939,428
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES	(347,018)	(15,068)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	388,156	1,815,139
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD	5,881,733	4,859,223
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	\$ 6,269,889	\$ 6,674,362

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Nuvoton Technology Corporation (the "Company") was incorporated in the Republic of China ("ROC") in April 2008 and commenced business in July 2008. The Company is engaged mainly in the research, design, development, manufacture, and sale of logic integrated circuits ("ICs") and the manufacturing, testing and OEM of 6-inch wafers.

For the specialization and division of labor and the reinforcement of core competitive ability, the Company's parent company, Winbond Electronics Corporation (WEC), spun off its Logic IC business into the Company on July 1, 2008 in accordance with the Business Mergers and Acquisitions Act. WEC held approximately 52%, 55% and 62% of the ownership interest of the Company as of June 30, 2021, December 31, 2020 and June 30, 2020, respectively.

The Company's shares have been listed on the Taiwan Stock Exchange since September 27, 2010.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company's Board of Directors and authorized for issue on August 3, 2021.

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

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

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

b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2022

New IFRSs	Effective Date Announced by IASB
"Annual Improvements to IFRS Standards 2018-2020"	January 1, 2022 (Note 1)
Amendments to IFRS 3 "Reference to the Conceptual Framework"	January 1, 2022 (Note 2)
Amendments to IAS 16 "Property, Plant and Equipment - Proceeds	January 1, 2022 (Note 3)
before Intended Use"
Amendments to IAS 37 "Onerous Contracts - Cost of Fulfilling a	January 1, 2022 (Note 4)
Contract"

• Note 1: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 "Agriculture" will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 "First-time Adoptions of IFRSs" will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
• Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
• Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
• Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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

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

New IFRSs	Effective Date Announced by IASB (Note 1)
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets	To be determined by IASB
between An Investor and Its Associate or Joint Venture"
IFRS 17 "Insurance Contracts"	January 1, 2023
Amendments to IFRS 17"Insurance Contracts"	January 1, 2023
Amendments to IAS 1 "Classification of Liabilities as Current or	January 1, 2023
Non-current"
Amendments to IAS 1 "Disclosure of Accounting Policies"	January 1, 2023 (Note 2)
Amendments to IAS 8 "Definition of Accounting Estimates"	January 1, 2023 (Note 3)
Amendments to IAS 12 "Deferred Tax related to Assets and	January 1, 2023 (Note 4)
Liabilities arising from a Single Transaction"

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
• Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
• Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
• Note 4: Except that deferred taxes will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 "Interim Financial Reporting" as endorsed and issued into effect by the FSC. The consolidated financial statements do not present all disclosures required for a complete set of annual consolidated financial statements under the IFRSs as endorsed and issued into effect by the FSC.

Basis of Preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets, that are measured at fair values. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

Subsidiary included in the consolidated financial statements:

			% of Ownership
			June 30,	December 31,	June 30,
Investor	Investee	Main Business	2021	2020	2020
The Company	Nuvoton Electronics Technology (H.K.) Limited ("NTHK")	Sales of semiconductor	100	100	100
	Marketplace Management Limited ("MML")	Investment holding	100	100	100
	Nuvoton Investment Holding Ltd. ("NIH")	Investment holding	100	100	100
	Song Yong Investment Corporation ("SYI")	Investment holding	100	100	100
	Nuvoton Technology India Private Limited ("NTIPL")	Design, sales and after-sales service of semiconductor	100	100	100
	Nuvoton Technology Corporation America ("NTCA")	Design, sales and after-sales service of semiconductor	100	100	100
	Nuvoton Technology Holding Japan ("NTHJ") (Note1)	Investment holding	100	100	-
	Nuvoton Technology Singapore Pte. Ltd ("NTSPL")	Design, sales and after-sales service of semiconductor	100	100	100
	Nuvoton Technology Korea Limited ("NTKR")	Design, sales and after-sales service of semiconductor	100	100	100
NTHK	Nuvoton Electronics Technology (Shenzhen) Limited ("NTSZ")	Computer software service (except I.C. design), wholesale business for computer, supplement and software	100	100	100
MML	Goldbond LLC ("GLLC")	Investment holding	100	100	100
GLLC	Nuvoton Electronics Technology (Shanghai) Limited ("NTSH")	Provides projects for sale in China and repairing, testing and consulting of software and leasing business	100	100	100
	Winbond Electronics (Nanjing) Ltd. ("WENJ")	Computer software service (except I.C. design)	100	100	100
NTSH	Song Zhi Electronics Technology (Suzhou) ("Song Zhi Suzhou")	Provide development, consult and equipment lease of semiconductor	100	-	-
NIH	Nuvoton Technology Israel Ltd. ("NTIL")	Design and service of semiconductor	100	100	100
NTHJ	Nuvoton Technology Corporation Japan ("NTCJ", formerly PSCS company) (Note)	Design, sales and after-sales service of semiconductor	100	100	-
NTCJ	Atfields Manufacturing Technology Corporation ("AMTC", formerly PIDE company) (Note)	Design and service of semiconductor	100	100	-
	Miraxia Edge Technology Corporation ("METC", formerly PIDST company) (Note)	Design and service of semiconductor	100	100	-

Note: The Group acquired the semiconductor business of Panasonic Corporation on September 1, 2020 and held NTHJ, NTCJ (formerly "PSCS"), AMTC (formerly "PIDE"), and METC (formerly "PIDST") with 100% ownership, refer to Note 27 to the consolidated financial statements.

Retirement Benefits

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

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

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

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period's pre-tax income the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

6. CASH AND CASH EQUIVALENTS

	June 30,	December 31,	June 30,
	2021	2020	2020
Cash and deposits in banks Repurchase agreements collateralized by bonds	\$ 5,973,389 296,500	\$ 4,898,733 983,000	\$ 6,294,562 379,800
	\$	\$	\$
	6,269,889	5,881,733	6,674,362

• a. Please refer to Note 31 to the consolidated financial statements for the amount of refundable deposits pledged to secure land leases, customs tariff obligations and borrowings.
• b. The Group has time deposits which are not held for the purpose of meeting short-term cash commitments and are reclassified to "other receivables" as follows (Note 9):

	June 30,	December 31,	June 30,
	2021	2020	2020
Time deposits	\$	\$	\$
	177,962	197,489	442,559

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	June 30,	December 31,	June 30,
	2021	2020	2020
Financial assets at FVTPL - current
Cross-currency swap contracts Forward exchange contracts Right of redemption of convertible bonds	\$ - 810 5,435	\$ 4,128 - 9,095	\$ - - 5,800
	\$	\$	\$
	6,245	13,223	5,800
Financial liabilities at FVTPL - current
Foreign exchange forward contracts	\$	\$	\$
	1,952	3,191	-

At the end of the reporting period, the outstanding foreign exchange forward and cross-currency swap contracts not treated under hedge accounting were as follows:

	Currency Maturity Date				Contract Amount (In Thousands)
June 30, 2021
Sell forward exchange contracts	USD/NTD	2021.07.02-2021.08.05	USD31,000/NTD862,499
December 31, 2020
Sell forward exchange contracts Cross-currency swap contracts	USD/NTD USD/NTD	2021.01.21-2021.02.25 2021.01.22	USD21,000/NTD594,889 USD16,000/NTD459,808

The Group entered into foreign exchange forward and cross-currency swap contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. These foreign exchange forward and cross-currency swap contracts did not meet the criteria for hedge accounting, therefore, the Group did not apply hedge accounting treatment.

8. NOTES AND ACCOUNTS RECEIVABLE, NET

	June 30,	December 31,	June 30,
	2021	2020	2020
Notes receivable	\$	\$	\$
	-	-	-
Accounts receivable (including related parties)
At amortized cost Gross carrying amount Less: Allowance for impairment loss	4,633,168 (42,953)	4,271,490 (25,097)	1,220,149 (24,940)
	\$	\$	\$
	4,590,215	4,246,393	1,195,209

The average credit period of sales of goods was 30-60 days. No interest was charged on accounts receivable. The Group adopted a policy of only dealing with entities that are rated the equivalent of investment grade or higher and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group uses other publicly available financial information and its own trading records to rate its major customers. The Group's exposure and the credit ratings of its counterparties are continuously monitored. Credit exposure is controlled by counterparty limits that are reviewed and approved by financial department annually.

In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group's credit risk was significantly reduced.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all accounts receivable. The expected credit losses on accounts receivable are estimated using a provision matrix by reference to past default experience of the customer and the customer's current financial position, adjusted for economic conditions of the industry in which the customer operates, as well as the GDP forecast and industry outlooks. As the Group's historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Group's different customer base.

The Group writes off accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of accounts receivable (including related parties) based on the Group's provision matrix.

June 30, 2021

	Not Overdue	Overdue under 30 Days	Overdue 31 to 90 Days	Overdue 91 to 180 Days	Over 180 Days	Total
Expected credit loss rate	0.1%-2%	2%	10%	20%	50%
Gross carrying amount Loss allowance (Lifetime ECL)	\$ 4,608,692 (34,660)	\$ 8,218 (164)	\$ - -	\$ - -	\$ 16,258 (8,129)	\$ 4,633,168 (42,953)
Amortized cost	\$ 4,574,032	\$ 8,054	\$ -	\$ -	\$ 8,129	\$ 4,590,215

December 31, 2020

	Not Overdue	Overdue under 30 Days	Overdue 31 to 90 Days	Overdue 91 to 180 Days	Over 180 Days	Total
Expected credit loss rate	0.1%-2%	2%	10%	20%	50%
Gross carrying amount Loss allowance (Lifetime ECL)	\$ 4,250,939 (21,694)	\$ 3,931 (79)	\$ - -	\$ 16,620 (3,324)	\$ - -	\$ 4,271,490 (25,097)
Amortized cost	\$ 4,229,245	\$ 3,852	\$ -	\$ 13,296	\$ -	\$ 4,246,393

June 30, 2020

	Not Overdue	Overdue under 30 Days	Overdue 31 to 90 Days		180 Days	Overdue 91 to	Over 180 Days	Total
Expected credit loss rate	2%	2%	10%		20%		50%
Gross carrying amount Loss allowance (Lifetime ECL)	\$ 1,219,180 (24,921)	\$ 969 (19)	\$	- -	\$	- -	\$ - -	\$ 1,220,149 (24,940)
Amortized cost	\$ 1,194,259	\$ 950	\$	-	\$	-	\$ -	\$ 1,195,209

The movements of the loss allowance of notes and accounts receivable were as follows:

	For the Six Months Ended June 30
	2021	2020
Balance at January 1 Add: Net remeasurement of loss allowance	\$ 25,097 18,197	\$ 22,566 2,459
Foreign exchange gains and losses	(341)	(85)
Balance at June 30	\$ 42,953	\$ 24,940

The Group's provision for losses on accounts receivable was recognized on a collective basis.

Refer to Note 29 to the consolidated financial statements for details of the factoring agreements for accounts receivable.

9. OTHER RECEIVABLES

	June 30, 2021	December 31, 2020	June 30, 2020
Royalty receivable	\$ 236,696	\$ 425,453	\$ -
Technical service receivable	204,553	175,667	-
Time deposits (Note 6)	177,962	197,489	442,559
Business tax refund receivable	30,675	165,647	26,548
Receivables for acquisition price adjustment	-	520,890	-
Others	383,972	224,905	47,010
	\$ 1,033,858	\$ 1,710,051	\$ 516,117

10. INVENTORIES

	June 30,	December 31,	June 30,
	2021	2020	2020
Raw materials and supplies	\$	\$	\$
	265,855	301,764	114,344
Work in process	4,248,536	4,008,947	1,365,664
Finished goods	1,750,529	1,934,294	426,307
Inventory in transit	14,763	5,126	-
	\$	\$	\$
	6,279,683	6,250,131	1,906,315

The operating cost for the three months ended June 30, 2021 and 2020, and the six months ended June 30, 2021 and 2020 were NT\$6,272,260 thousand, NT\$1,798,837 thousand, NT\$12,425,133 thousand and NT\$3,087,929 thousand, respectively. The inventory write-downs, obsolescence and abandonment of inventories for the three months ended June 30, 2021 and 2020, and the six months ended June 30, 2021 and 2020 were NT\$(5,285) thousand, NT\$(18,096) thousand, NT\$53,386 thousand and NT\$(86,852) thousand, respectively.

11. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investments in equity instruments at FVTOCI:

	June 30, 2021	December 31, 2020	June 30, 2020
Listed shares and emerging market shares
Nyquest Technology Co., Ltd.	\$ 208,725	\$ 80,685	\$ 51,315
Brightek Optoelectronic Co., Ltd.	1,620	894	545
Tower Semiconductor Ltd.	-	232,110	-
Unlisted shares
United Industrial Gases Co., Ltd.	404,800	396,000	413,600
Yu-Ji Venture Capital Co., Ltd.	14,805	14,479	13,932
Autotalks Ltd. - Preferred E. Share	557,200	569,600	592,600
Tower Partners Semiconductor Co., Ltd.
("TPSCo.")	1,201,256	512,812	-
Symetrix Corporation - Preferred A. Share	-	-	-
	\$ 2,388,406	\$ 1,806,580	\$ 1,071,992

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

In January, 2021, the Group sold remaining of its shares in Tower Semiconductor Ltd. in order to manage credit concentration risk. The shares sold had a fair value of NT\$235,166 thousand. Their related unrealized valuation gain of NT\$138,095 thousand was transferred from other equity to retained earnings. Refer to Note 21 to the consolidated financial statements for related information.

The Group recognized dividend income NT\$62,000 thousand, NT\$67,694 thousand, NT\$62,000 thousand and NT\$67,694 thousand for the three months ended and six months ended June 30, 2021 and 2020, respectively.

In September, 2020, the Company acquired the Preferred A Share of the Symetrix Corporation through the combination of Panasonic semiconductor business. The entitled rights of the Preferred A Share were as follows:

• a. Each Preferred A Shares grants its holder a number of votes equal to the number of votes per Ordinary Share.
• b. In the event of liquidation, the Preferred A Shares shall be prior to Ordinary Shares.
• c. The investor shall have the right to nominate board directors.
• d. The conversion rights (Each Preferred A share converts ten Ordinary Shares).

12. PROPERTY, PLANT AND EQUIPMENT

	June 30, 2021	December 31, 2020	June 30, 2020
Land	\$ 2,010,631	\$ 2,203,639	\$ -
Buildings	2,098,306	2,374,032	191,249
Machinery and equipment	1,129,991	1,574,487	447,871
Other equipment	247,314	256,600	94,849
Construction in progress and prepayments for
purchase of equipment	140,002	138,349	735
	\$ 5,626,244	\$ 6,547,107	\$ 734,704

	Land	Buildings	Machinery and Equipment	Other Equipment	Construction in Progress and Prepayments for Purchase of Equipment	Total
Cost
Balance at January 1, 2021 Additions Business combinations - subsequent adjustment	\$ 2,203,639 -	\$ 23,437,689 12,337	\$ 63,250,171 102,093	\$ 3,831,256 106,527	\$ 172,820 37,110	\$ 92,895,575 258,067
of fair value	-	-	437,628	-	-	437,628
Disposals Reclassified Effects of foreign	- -	(2,210) 553	(1,022,889) 18,931	(77,450) 4,276	- (23,760)	(1,102,549) -
currency exchange
differences Balance at June 30, 2021	(193,008) 2,010,631	(1,728,934) 21,719,435	(4,494,354) 58,291,580	(307,021) 3,557,588	(15,130) 171,040	(6,738,447) 85,750,274
Accumulated depreciation and impairment
Balance at January 1,
2021	-	21,063,657	61,675,684	3,574,656	34,471	86,348,468
Disposals	-	(2,185)	(276,235)	(60,900)	-	(339,320)
Depreciation expense Reclassified	- -	101,545 -	182,679 -	84,853 428	- (428)	369,077 -
Effects of foreign currency exchange differences	-	(1,541,888)	(4,420,539)	(288,763)	(3,005)	(6,254,195)
Balance at June 30, 2021	-	19,621,129	57,161,589	3,310,274	31,038	80,124,030
Carrying amounts at
June 30, 2021	\$ 2,010,631	\$ 2,098,306	\$ 1,129,991	\$ 247,314	\$ 140,002	\$ 5,626,244 (Continued)

	Land	Buildings	Machinery and Equipment	Other Equipment	Construction in Progress and Prepayments for Purchase of Equipment	Total
Cost
Balance at January 1, 2020 Additions Disposals Reclassified Effects of foreign	\$ - - - -	\$ 3,662,145 14,511 (1,400) -	\$ 11,557,247 52,068 (96,830) 867	\$ 405,918 5,617 (340) -	\$ 1,416 186 - (867)	\$ 15,626,726 72,382 (98,570) -
currency exchange differences Balance at June 30, 2020 Accumulated depreciation	- -	- 3,675,256	(1,248) 11,512,104	(3,405) 407,790	- 735	(4,653) 15,595,885
and impairment Balance at January 1, 2020 Disposals Depreciation expense Reclassified Effects of foreign	- - - -	3,472,390 (1,400) 13,017 -	11,092,214 (96,830) 69,785 -	301,801 (338) 14,046 -	- - - -	14,866,405 (98,568) 96,848 -
currency exchange differences Balance at June 30, 2020	- -	- 3,484,007	(936) 11,064,233	(2,568) 312,941	- -	(3,504) 14,861,181
Carrying amounts at June 30, 2020	\$ -	\$ 191,249	\$ 447,871	\$ 94,849	\$ 735	\$ 734,704 (Concluded)

Please refer to Note 31 to the consolidated financial statements for the amount of property, plant and equipment pledged as collateral for bank borrowings.

13. LEASE ARRANGEMENTS

a. Right-of-use assets

	June 30, 2021	December 31, 2020	June 30, 2020
Carrying amounts
Land	\$ 186,017	\$ 198,547	\$ 213,950
Buildings	274,215	326,004	294,266
Machinery and Equipment	824,307	940,671	-
Other equipment	28,285	33,666	33,479
	\$ 1,312,824	\$ 1,498,888	\$ 541,695

		For the Three Months Ended June 30		For the Six Months Ended June 30
		2021	2020	2021	2020
	Additions to right-of-use assets	\$ 3,845	\$ 9,858	\$ 12,514	\$ 12,392
assets	Depreciation for right-of-use
Land		\$ 6,265	\$ 6,316	\$ 12,530	\$ 12,631
Buildings		25,502	21,558	51,475	43,318
	Machinery and equipment	17,189	-	35,208	-
Other equipment		4,750	4,548	9,436	9,116
		\$ 53,706	\$ 32,422	\$108,649	\$ 65,065
in other income)	Income from the subleasing of right-of-use assets (presented	\$ (1,842)	\$ (1,861)	\$ (3,705)	\$ (3,854)
b. Lease liabilities
			June 30, 2021	December 31, 2020	June 30, 2020
Carrying amounts
Current			\$ 267,487	\$ 300,067	\$ 112,475
Non-current			\$ 1,256,289	\$ 1,474,041	\$ 402,052

Range of discount rate for lease liabilities was as follows:

	June 30, 2021	December 31, 2020	June 30, 2020
Land	1.76%-2.06%	1.76%-2.06%	1.76%-2.06%
Buildings	0.33%-3.75%	0.33%-3.75%	1.01%-3.75%
Machinery and Equipment	0.26%-0.80%	0.33%-0.80%	-
Other equipment	0.26%-3.61%	0.26%-3.61%	0.73%-3.61%

For the three months ended June 30, 2021 and 2020 and the six months ended June 30, 2021 and 2020, the interest expense under lease liabilities amounted to NT\$4,299 thousand, NT\$2,676 thousand, NT\$8,934 thousand and NT\$5,532 thousand, respectively.

c. Material lease-in activities and terms

The Group leases low-voltage protection equipment from others in Japan, and the lease term will expire in 2021 to 2035 years.

The Group leased parcels of land from Science Park Administration, and the lease term will expire in December 2027, which can be extended after the expiration of the lease periods.

The Group leased parcels of land from Taiwan Sugar Corporation under a twenty-year term from October 2014 to September 2034, which is allowed to extend after the expiration of lease. The chairman of the Company, is a joint guarantor of such lease (refer to Note 30 to the consolidated financial statements).

The Group leased some of the offices in the United States, China, Israel, India, Korea and Taiwan, and the lease terms will expire between 2021 and 2026 which can be extended after the expiration of the lease periods.

d. Subleases

The Group subleases its right-of-use assets for buildings under operating leases with lease terms between 1 and 5 years.

The maturity analysis of lease payments receivable under operating subleases is as follows:

	June 30, 2021	December 31, 2020	June 30, 2020
Year 1	\$ 7,204	\$ 6,816	\$ 7,559
Year 2	4,024	5,041	7,731
Year 3	1,038	1,224	4,263
Year 4	-	-	1,157
Year 5	-	-	-
Year 6 onwards	-	-	-
	\$ 12,266	\$ 13,081	\$ 20,710

To reduce the residual asset risk related to the subleased asset at the end of the relevant sublease, the lease contract between the Group and the lessee includes the receipt of the deposits and the compensation for damage due to the lack of management and maintenance.

e. Other lease information

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2021	2020	2021	2020
Expenses relating to short-term
leases	\$ 56,073	\$ 1,195	\$ 111,368	\$ 2,795
Total cash outflow for leases	\$ (132,636)	\$ (33,066)	\$ (267,486)	\$ (67,256)

The Group leases certain buildings and transportation equipment which qualify as short-term leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease labilities for these leases.

Lease-out arrangements under operating leases for investment properties are set out in Note 14 to the consolidated financial statements.

14. INVESTMENT PROPERTIES

	June 30,	December 31,	June 30,
	2021	2020	2020
Investment properties, net	\$	\$	\$
	2,176,948	2,466,667	40,879

The Group acquired investment properties through business combinations in Niigata and Toyama, Japan on September 1, 2020. The fair value of investment properties was NT\$2,503,591 thousand on the purchase price allocation report. The Group's management team evaluated the fair value of investment properties and determined that the fair value of the investment properties had not changed significantly, compared to the fair value of the investment properties as of June 30, 2021.

The remaining investment properties are located in Shenzhen, China. As of December 31, 2020 and 2019, the fair value of such investment properties was both approximately NT\$200,000 thousand, which used as reference the neighboring area transactions. The Group's management team evaluated the fair value of investment properties and determined that the fair value of the investment properties had not changed significantly, compared to the fair value of the investment properties as of June 30, 2021 and 2020.

	For the Six Months Ended June 30
	2021	2020
Cost
Balance at January 1	\$ 9,090,968	\$ 98,511
Disposals	(1,176)	-
Effects of foreign currency exchange differences	(788,985)	(2,608)
Balance at June 30	8,300,807	95,903
Accumulated depreciation and impairment
Balance at January 1	6,624,301	54,304
Disposals	(1,176)	-
Depreciation expense	79,473	2,194
Effects of foreign currency exchange differences	(578,739)	(1,474)
Balance at June 30	6,123,859	55,024
Carrying amount at June 30	\$ 2,176,948	\$ 40,879

The investment properties were leased out for 3 to 12 years. The lease contracts contain market review clauses in the event that the lessees exercise their options to extend. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

The maturity analysis of lease payments receivable under operating leases of investment properties was as follows:

	June 30, 2021	December 31, 2020	June 30, 2020
Year 1	\$ 224,957	\$ 265,390	\$ 5,073
Year 2	164,144	203,485	4,011
Year 3	162,604	178,214	205
Year 4	110,609	159,218	-
Year 5	93,277	102,231	-
Year 6 onwards	629,620	741,175	-
	\$ 1,385,211	\$ 1,649,713	\$ 9,289

To reduce the residual asset risk related to the subleased asset at the end of the relevant sublease, the lease contract between the Group and the lessee includes the receipt of the deposits and the compensation for damage due to the lack of management and maintenance.

Please refer to Note 31 to the consolidated financial statements for the amount of investment properties pledged as collateral for bank borrowings.

15. INTANGIBLE ASSETS

	June 30, 2021	December 31, 2020	June 30, 2020
Deferred technical assets Other intangible assets	\$ 469,667 273,379	\$ 537,497 265,194	\$ 596,559 23,127
	\$ 743,046	\$ 802,691	\$ 619,686
	Deferred Technical Assets	Other Intangible Assets	Total
Cost
Balance at January 1, 2021 Additions Effects of foreign currency exchange differences Balance at June 30, 2021	\$ 1,640,243 23,397 (5,310) 1,658,330	\$ 1,360,969 50,488 (111,848) \$ 1,299,609 626,849	\$ 3,001,212 73,885 (117,158) 2,957,939
Accumulated amortization and impairment
Balance at January 1, 2021 Amortization expense Effects of foreign currency exchange differences Balance at June 30, 2021	1,102,746 89,359 (3,442) 1,188,663	1,095,775 25,669 (1,86595,214) ) 1,026,230	2,198,521 115,028 (1,86598,6) ) 2,214,893
Carrying amounts at June 30, 2021	\$ 469,667	\$ 273,379	\$ 743,046
Cost
Balance at January 1, 2020 Additions Effects of foreign currency exchange differences Balance at June 30, 2020	\$ 1,202,455 403,062 (1,864) 1,603,653	\$ 3,426 26,271 (91) \$ 626,849 29,606	\$ 1,205,881 429,333 (1,955) 1,633,259
Accumulated amortization and impairment
Balance at January 1, 2020 Amortization expense Effects of foreign currency exchange differences Balance at June 30, 2020	941,618 66,516 (1,040) 1,007,094	3,033 3,529 (1,865(83) ) 6,479	944,651 70,045 (1,865 (1,123) ) 1,013,573
Carrying amounts at June 30, 2020	\$ 596,559	\$ 23,127	\$ 619,686

16. BONDS PAYABLE

	June 30,	December 31,	June 30,
	2021	2020	2020
Unsecured domestic convertible bonds	\$	\$	\$
	375,413	1,207,820	2,006,339

In May 2020, the Company issued 20 thousand units, \$100,000 per unit, 0% NTD-denominated unsecured convertible bonds in Taiwan, with an aggregate principal amount of \$2,000,000 thousand. The terms of issuance, amounts and interest rate as follows:

• a. The conversion price was set at \$39.9 per share at the time of issuance. When meeting certain criteria, adjustments on the conversion price are made in accordance with the terms and conditions. Since the Company issued ordinary shares in December 2020, the conversion price should be adjusted according to issuance and conversion measures, the conversion price was adjusted to \$38.2 since December 10, 2020.
• b. After the first three months of the issuance and forty days before the maturity date, if the closing price of the Company's common shares listed on the Taiwan Stock Exchange exceeds or equals 30% of the conversion price or the outstanding balance of the bonds is less than 10% in principal amount of the bonds originally outstanding for thirty consecutive business days, the Company may redeem the bonds in cash at the principal amount.
• c. After the bonds has been issued for over five years, the bondholders may request the Company to redeem the bonds at 106.41% of the principal amount (annual rate of return 1.25%). The right of the redemption was recognized as financial instruments at fair value through profit or loss - current. The fair value was \$5,435 thousand, \$9,095 thousand and \$5,800 thousand on June 30, 2021, December 31, 2020 and June 30, 2020, respectively.
• d. Except for the bonds that have been redeemed, sold back, converted, or bought back by the Company in the market, the principal will be repaid in cash upon maturity at a rate of 109.09% (annual rate of return 1.25% upon maturity).

The effective interest rate of the convertible bonds liability component was 1.22% per annum on initial recognition.

Proceeds from issuance (less transaction costs of \$6,426 thousand)	\$ 1,998,428
The right of redemption	5,200
Liability component at the date of issue	2,003,628
Convertible bonds converted into ordinary shares	(1,648,141)
Interest charged at an effective interest rate of 1.22%	19,926
Liability component at June 30, 2021	\$ 375,413

17. BORROWINGS

a. Short-term borrowings

		June 30, 2021		December 31, 2020		June 30, 2020
Secured borrowings	Interest Rate	Amount	Interest Rate	Amount	Interest Rate	Amount
Bank of Taiwan (Note 6)	-	\$ -	4.35%	\$ 1,544,910	-	\$ -
Chinatrust Commercial Bank Co., Ltd. (Note 30)	1.27%	378,150	1.29%	276,300	-	-
		\$ 378,150		\$ 1,821,210		\$ -

The short-term borrowings of Chinatrust Commercial Bank Co., Ltd. are secured and guaranteed by the parent company (refer to Note 30 to the consolidated financial statements).

b. Long-term Borrowings

	Period	Interest Rate	June 30, 2021	December 31, 2020	June 30, 2020
Unsecured borrowings
The Export-Import Bank of ROC	2019.09.20- 2026.09.21	0.92%	\$ 500,000	\$ 500,000	\$ 500,000
The Export-Import Bank of ROC	2020.08.25- 2027.08.25	0.92%	1,000,000	1,000,000	-
			\$ 1,500,000	\$ 1,500,000	\$ 500,000

The proceeds of the Group's unsecured loan was invested in Autotalks Ltd. and acquired Panasonic's semiconductor business in Japan.

To repay outstanding debt and enhance mid-term working capital, NTCJ entered into a JPY30 billion syndicated loan agreement with banks on May 17, 2021, which include Chinatrust Commercial Bank Co., Ltd. and other banks. Pursuant to the loan contract, the Company should directly or indirectly hold at least 100% of the issued shares or capital and maintain control over the operation of NTCJ, and NTCJ must maintain the financial debt ratio not to be lower than certain ratio during the loan period. The aforementioned financial ratio is calculated based on the audited consolidated financial statements.

Please refer to Note 31 to the consolidated financial statements for the collateral of the syndicated loan.

18. OTHER PAYABLES

	June 30, 2021	December 31, 2020	June 30, 2020
Payable for salaries or employee benefits	\$ 1,555,576	\$ 1,035,436	\$ 350,698
Payable for royalties	348,792	421,639	339,483
Payable for investment	200,620	242,960	-
Payable for maintenance	199,161	199,508	43,642
Payable for service	159,613	169,828	94,237
Payable for utilities	157,984	172,638	-
Payable for purchase of equipment	107,012	131,281	64,826
Payable for software	50,706	320,223	24,519
Others	1,574,907	1,314,761	181,339
	\$ 4,354,371	\$ 4,008,274	\$ 1,098,744

19. PROVISIONS

	June 30, 2021	December 31, 2020	June 30, 2020
Current
Decommissioning costs Employee benefits	\$ 558,654 -	\$ 612,281 316,438	\$ - -
	\$ 558,654	\$ 928,719	\$ -
Non-current
Employee benefits Decommissioning costs Warranties	\$ 1,611,171 685,208 559,704	\$ 1,765,833 750,983 603,652	\$ - - 101,891
	\$ 2,856,083	\$ 3,120,468	\$ 101,891

The Group acquired Panasonic's semiconductor business in September 2020. Some fabs will be closed due to low capacity utilization, decommissioning costs and labor costs were accounted separately for decommissioning liabilities and employee benefit provision.

20. RETIREMENT BENEFIT PLANS

Employee benefit expense in respect of the Company's defined benefit retirement plans was calculated using the actuarially determined pension cost discount rate as of December 31, 2020 and 2019, and recognized \$10,540 thousand, \$9,709 thousand, \$20,590 thousand and \$19,511 thousand for the three months ended and six months ended June 30, 2021 and 2020, respectively.

21. EQUITY

a. Share capital

Ordinary Shares

	June 30,	December 31,	June 30,
	2021	2020	2020
Shares authorized (in thousands of shares)	500,000	500,000	500,000
Shares authorized	\$	\$	\$
Shares issued and fully paid (in thousands of	5,000,000	5,000,000	5,000,000
shares) Shares issued and fully paid Par value (in New Taiwan dollars)	390,674 \$ 3,906,736 \$ 10	375,962 \$ 3,759,616 \$ 10	287,554 \$ 2,875,544 \$ 10

On August 21, 2020, the Company's board of directors resolved to issue 80,000 thousand ordinary shares with a par value of NT\$10 to repay bank loans and enhance working capital. On September 25, 2020, the resolution was approved by the FSC. The consideration of NT\$38 per share was determined by the chairman which was authorized by the board of directors of the Company, the subscription base date was December 10, 2020. The associated issuance cost of \$8,832 thousand was deducted from capital surplus - additional paid-in capital.

For the six months ended June 30, 2021, the Company has issued 21,649 thousand shares of ordinary shares due to the conversion of unsecured convertible bonds, the registration of 19,369 thousand ordinary shares issuance has not been completed as of June 30, 2021.

As of June 30, 2021, December 31, 2020 and June 30, 2020, the balance of the Company's capital account amounted to NT\$3,906,736 thousand, NT\$3,759,616 thousand and NT\$2,875,544 thousand, divided into 390,674 thousand ordinary shares, 375,962 thousand ordinary shares and 287,554 thousand ordinary shares with a par value of NT\$10.

b. Capital surplus

	June 30, 2021	December 31, 2020	June 30, 2020
May be used to offset a deficit, distributed as cash dividends, or transferred to share capital*
Additional paid-in capital Conversion of bonds	\$ 5,088,159 1,208,324	\$ 5,088,159 596,347	\$ 2,856,991 -
May only be used to offset a deficit
Cash capital increase reserved for employee share options Overdue dividends unclaimed	112,160 62	112,160 52	49,920 52
May not be used for any purpose
Employee share options	13	13	13
	\$ 6,408,718	\$ 5,796,731	\$ 2,906,976

• * Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company's capital surplus and to once a year).
• c. Retained earnings and dividends policy

The shareholders held their regular meeting on May 29, 2020 and resolved the amendments to the Company's dividend distribution policy in the Company's Articles of Incorporation (the "Articles"). Under the dividends policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company's board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders' meeting for the distribution of dividends and bonuses to shareholders. The board of directors shall be authorized to distribute the profit, the legal reserve, and the capital plus in cash upon resolution by a majority vote at a board meeting attended by two-thirds or more of the directors, and shall report the same to the shareholders' meeting. In principle, not less than 10% of the total shareholders' bonus shall be distributed in the form of cash. For the policies on the distribution of employees' compensation and remuneration of directors, refer to employees' compensation and remuneration of directors in Note 24 to the consolidated financial statements.

Appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company's paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company's paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of earnings for 2020 and 2019 were as follows:

		Appropriation of Earnings		Dividends Per Share (NT\$)
	For Year 2020	For Year 2019	For Year 2020	For Year 2019
Legal reserve Cash dividends	\$ 58,610 311,733	\$ 55,183 345,065	\$0.80	\$1.20
	\$ 370,343	\$ 400,248

The above 2020 and 2019 appropriations for cash dividends had been resolved by the Company's board of directors on March 16, 2021 and March 12, 2020, respectively. The other proposed appropriations for 2020 will be resolved by the shareholders in their meeting to be held on August 20, 2021; the other proposed appropriations for 2019 had been resolved by the shareholders in their meetings on May 29, 2020.The Group suspends its originally scheduled shareholders' meeting in response to the FSC's announcement: "For pandemic prevention, the FSC demands public companies to postpone their shareholders' meetings". The shareholders' meeting will be held on August 20, 2021.

• d. Other equity items
• 1) The exchange differences arising on translation of foreign operations' net assets from its functional currency to the Group's presentation currency (New Taiwan dollar) are recognized directly in other comprehensive income. For the three months ended June 30, 2021 and 2020 and the six months ended June 30, 2021 and 2020, other comprehensive loss was NT\$172,247 thousand, NT\$11,878 thousand, NT\$621,523 thousand and NT\$18,065 thousand, respectively.

2) Unrealized valuation gains (losses) on financial assets at FVTOCI

	June 30	For the Six Months Ended
	2021	2020
Balance at January 1 Recognized for the period	\$ 269,065 766,074	\$ 169,544 (45,418)
Cumulative unrealized gains (losses) of equity instruments transferred to retained earnings due to disposal	(138,095)	-
Balance at June 30	\$ 897,044	\$ 124,126

Unrealized gains (losses) on financial assets at FVTOCI represents the cumulative gains or losses arising from the fair value measurement on financial assets at FVTOCI that are recognized in other comprehensive income. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

22. REVENUE

Refer to Note 35 to the consolidated financial statements for the Group's revenue.

23. INCOME TAXES RELATING TO CONTINUING OPERATIONS

a. Income tax recognized in profit or loss

Major components of income tax expense are as follows:

	For the Three Months Ended June 30		For the Six Months Ended June 30
	2021	2020	2021	2020
Current tax
In respect of the current year	\$ 157,477	\$ 70,931	\$ 286,650	\$ 97,531
Adjustment for prior years'
tax	1	(11,245)	(189)	(11,245)
Deferred tax
In respect of the current year	9,653	7,916	306	(10,454)
Income tax expense recognized in profit or loss	\$ 167,131	\$ 67,602	\$ 286,767	\$ 75,832

b. Income tax assessments

The income tax returns through 2018 have been assessed by the tax authorities.

24. EMPLOYEE BENEFITS EXPENSE, DEPRECIATION AND AMORTIZATION

					For the Three Months Ended June 30
			2021				2020
	Classified as Operating Costs	Classified as Operating Expenses	Classified as Non-operating Income and Losses	Total	Classified as Operating Costs	Classified as Operating Expenses	Classified as Non-operating Income and Losses	Total
Employee benefits expense Short-term employment benefits Post-employment	\$ 329,821	\$ 1,845,711	\$ -	\$ 2,175,532	\$ 201,311	\$ 570,597	\$ -	\$ 771,908
benefits	11,080	106,564	-	117,644	7,627	33,850	-	41,477
Depreciation	131,054	96,908	38,752	266,714	31,898	48,378	1,085	81,361
Amortization	6,640	48,740	-	55,380	8,341	34,145	-	42,486
			2021		For the Six Months Ended June 30		2020
	Classified as Operating Costs	Classified as Operating Expenses	Classified as Non-operating Income and Losses	Total	Classified as Operating Costs	Classified as Operating Expenses	Classified as Non-operating Income and Losses	Total
Employee benefits expense Short-term employment benefits	\$ 586,506	\$ 3,630,512	\$ -	\$ 4,217,018	\$ 375,345	\$ 1,023,661	\$ -	\$ 1,399,006
Post-employment
benefits Depreciation	13,408 279,745	244,381 197,981	- 79,473	257,789 557,199	15,051 64,566	71,587 97,347	15,051 - 2,194	86,638 164,107
Amortization	15,578	99,450	-	115,028	16,681	53,364	-	70,045

According to the Company's Articles, the Company accrued employees' compensation and remuneration of directors at rates of no less than 6% and no higher than 1%, respectively, of net profit before income tax, employees' compensation, and remuneration of director.

For the three months ended June 30, 2021 and 2020 and the six months ended June 30, 2021 and 2020, the employees' compensation and remuneration of directors were as follows:

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2021	2020	2021	2020
Employees' cash compensation Remuneration of directors	\$ 68,851 \$ 11,475	\$ 24,996 \$ 4,166	\$ 89,664 \$ 14,944	\$ 25,913 \$ 4,319

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

The employees' compensation and remuneration to the directors of 2020 and 2019, which were approved by the Company's board of directors on February 18, 2021 and February 6, 2020, respectively, were as below:

	2020		2019
	Amount	%	Amount	%
Employees' cash compensation	\$ 42,422	6	\$ 40,868	6
Remuneration of directors	7,070	1	6,811	1

There is no difference between the actual amounts of employees' compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2020 and 2019.

Information on the employees' compensation and remuneration of directors resolved by the Company's board of directors in 2021 and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

25. SHARE-BASED PAYMENT ARRANGEMENTS

The Company's board of directors resolved to reserve 10% of the shares from the issuance of 80,000 thousand shares approved by the FSC on September 25, 2020 to be subscribed for by its employees. The number of shares subscribed for by the employees was affirmed on October 21, 2020. The fair value of such share options subscribed for by the Company's employees on the grant date was measured using the Black-Scholes Option Pricing Model and amounted to NT\$62,240 thousand which was recorded as compensation costs with a corresponding increase in capital surplus.

a. As of December 31, 2020, the Company's Share-based payments agreements was as follows:

		Number of Shares
Agreement	Grant Date	Grant	Vesting Conditions
Cash capital increase reserved for employee share options	October 21, 2020	8,000 thousand shares	Vested immediately

b. The fair value of share options acquired by employees on grant day, October 21, 2020, was measured by using Black-Scholes Option Pricing Model. Relevant information was as follows:

Share Price (NT\$)	Exercise Price (NT\$)	Expected Price Volatility	Expected Vesting Period	Expected Dividend Yield Rate	Risk-free Interest Rate	Fair Value Per Share (NT\$)
\$45.6	\$38.0	34.80%	48 days	0.00%	0.18%	\$7.78

26. EARNINGS PER SHARE

The numerators and denominators used in calculating basic and diluted earnings per share ("EPS") were as follows:

		For the Three Months Ended June 30
		2021		2020
	Amounts		Earnings Per	Amounts		Earnings Per
	(Numerator)		Share (NT\$)	(Numerator)		Share (NT\$)
	After Income		After Income	After Income		After Income
	Tax (Attributable to Owners of the Company)	Shares (Denominator) (In Thousands)	Tax (Attributable to Owners of the Company)	Tax (Attributable to Owners of the Company)	Shares (Denominator) (In Thousands)	Tax (Attributable to Owners of the Company)
Basic earnings per share Net profit attributed to owners of the Company	\$ 939,193	397,583	\$ 2.36	\$ 332,676	287,554	\$ 1.16
Effect of potentially dilutive ordinary shares
Employees' compensation Convertible bonds	- 2,110	1,117 9,678		- -	670 -
Diluted earnings per share Net profit attributed to owners of the Company	\$ 941,303	408,378	\$ 2.30	\$ 332,676	288,224	\$ 1.15

				For the Six Months Ended June 30
		2021			2020
	Amounts (Numerator)		Earnings Per Share (NT\$)	Amounts (Numerator)		Earnings Per Share (NT\$)
	After Income Tax		After Income Tax	After Income Tax		After Income Tax
	(Attributable to Owners of the Company)	Shares (Denominator) (In Thousands)	(Attributable to Owners of the Company)	(Attributable to Owners of the Company)	Shares (Denominator) (In Thousands)	(Attributable to Owners of the Company)
Basic earnings per share Net profit attributed to owners of the Company Effect of potentially dilutive	\$ 1,209,789	393,441	\$ 3.07	\$ 343,891	287,554	\$ 1.20
ordinary shares Employees' compensation Convertible bonds	- 4,975	1,360 9,678		- -	869 -
Diluted earnings per share Net profit attributed to owners of the Company	\$ 1,214,764	404,479	\$ 3.00	\$ 343,891	288,423	\$ 1.19

If the Company offered to settle the compensation or bonuses paid to employees in cash or shares, the Company assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted EPS, as the effect is dilutive. The number of shares used in the computation of diluted EPS is estimated by the amount of compensation divided by the closing price of the potential common shares at the end of the reporting period. Such dilutive effect of the potential shares is included in the computation of diluted EPS until the number of shares to be distributed to employees is resolved in the following year.

27. BUSINESS COMBINATIONS

a. Subsidiaries acquired

	Principal Activity	Date of Acquisition	Proportion of Voting Equity Interests Acquired (%)	Consideration Transferred
Panasonic Semiconductor business	Semiconductor business	September 1, 2020	100	\$ 8,432,481

The Group acquired the semiconductor business of Panasonic Corporation on September 1, 2020, including the acquisition of 100% equity in NTHJ, NTCJ (formerly PSCS), AMTC (formerly PIDE) and METC (formerly PIDST), Panasonic Semiconductor (Suzhou) Co., Ltd. (referred to as PSCSZ) related semiconductor business equipment and inventory, and Panasonic Industrial Devices Semiconductor Asia (referred to as PIDSCA) assets and liabilities projects and contracts and other specific operating assets.

b. Consideration transferred

	Panasonic Semiconductor Business
Cash	\$ 8,358,041
Contingent consideration arrangement*	74,440
	\$ 8,432,481

* Under the contingent consideration arrangement, if the TPSCo. held by NTCJ Company (formerly PSCS) is a net profit after tax from the acquisition date to March 31, 2022, the net profit after tax must be reimbursed to Panasonic based on the shareholding ratio (49%).

c. Assets acquired and liabilities assumed at the date of acquisition

	Panasonic Semiconductor Business
Current assets
Cash and cash equivalents	\$ 1,102,882
Accounts receivable and other receivables	4,469,464
Inventories	4,613,102
Prepayments	216,082
Non-current assets
Financial asset at measured at fair value through other comprehensive income	960,800
Property, plant and equipment	6,241,162
Investment property	2,503,591
Right-of-use assets	997,787
Intangible assets	83,046
Deferred tax assets	103,259
Other assets	4,639
Total assets	\$ 21,295,814
Current liabilities
Accounts payable and other payables	\$ 5,999,366
Current tax liabilities	86,320
Provisions - current	617,821
Lease liabilities - current	176,138
Other current liabilities	57,635
Non-current liabilities
Provisions - non-current	2,539,589
Net defined benefit liabilities - non-current	1,473,458
Deferred tax liabilities	89,169
Products guarantee based on commitment	506,301
Lease liabilities - non-current	1,156,925
Total liabilities	\$ 12,702,722
Net assets	\$ 8,593,092

d. Gain on the bargain purchase

	Panasonic Semiconductor Business
Fair value of identifiable net assets obtained Less: Consideration transferred	\$ 8,593,092 (8,432,481)
Gain on the bargain purchase	\$ 160,611

The Group has completed to measure and allocate aforementioned assets and liabilities at fair value for the acquisition of Panasonic semiconductor business on June 16, 2021.

e. Net cash outflow on the acquisition of subsidiaries

	Panasonic Semiconductor Business
Consideration paid in cash	\$ 8,432,481
Less: Cash and cash equivalent balances acquired	(1,102,882) 7,329,599
Acquisition price adjustment
Investment payable	(74,440)
Business tax refund receivable	133,101
Other payable for contract (presented in provisions)	(316,438)
Effects of foreign currency exchange differences	(7,324)
	\$ 7,064,498

f. Impact of acquisitions on the results of the Group

The financial results of the acquirees from the acquisition dates (September 1, 2020) to December 31, 2020, which are included in the consolidated statements of comprehensive income, are as follows:

From September 1, 2020 to December 31, 2020

	Panasonic Semiconductor Business
Revenue	\$ 8,993,175
Net loss	\$ (460,607)

Because of the acquisition includes equipment and inventory related to semiconductor business of PSCSZ and assets and liabilities of PIDSCA, rather than a stand-alone entity, it is impractical to disclose the pro-forma revenue and the pro-forma profit.

28. CAPITAL MANAGEMENT

The Group's capital management objective is to ensure it has the necessary financial resources and operational plan so that it can cope with the next twelve months working capital requirements, capital expenditures, research and development expenses, debt repayments and dividends payments.

29. FINANCIAL INSTRUMENT

a. Categories of financial instruments

	June 30, 2021			December 31, 2020		June 30, 2020
	Carrying Amount	Fair Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Financial assets
Financial assets at amortized cost (Note 1) Financial assets at FVTPL	\$ 11,995,281	\$ 11,995,281	\$ 12,489,674	\$ 12,489,674	\$ 8,472,154	\$ 8,472,154
Derivative financial assets Financial assets at	6,245	6,245	13,223	13,223	5,800	5,800
FVTOCI Investment in equity instruments	2,388,406	2,388,406	1,806,580	1,806,580	1,071,992	1,071,992
Financial liabilities
Financial liabilities at amortized cost (Note 2) Financial liabilities at FVTPL	10,068,869	10,469,826	12,257,989	12,534,077	5,146,015	5,227,676
Derivative financial liabilities	1,952	1,952	3,191	3,191	-	-

• Note 1: Including cash and cash equivalents, notes and accounts receivable (including related parties), other receivables and refundable deposits.
• Note 2: Including notes and accounts payable (including related parties), other payables, convertible bonds, short-term loans, long-term loans and guarantee deposits.
• b. Fair value information
• 1) Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable and the significance in its entirety, which are described as follows:
  • a) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
  • b) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
  • c) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

• 2) Fair value measurements recognized in the consolidated balance sheets

  • a) The fair values of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices (includes listed shares and emerging market shares).
  • b) The fair value of the financial instruments at fair value through profit or loss is based on Level 2 inputs, either directly or indirectly. The fair value of foreign-currency derivative financial instrument could be determined by reference to the price and discount rate of currency swap quoted by financial institutions. Foreign exchange forward contracts are measured using individual maturity rate to calculate the fair value of each contract.

• c) Domestic unlisted equity instruments at FVTOCI were all measured based on Level 3 fair value. Fair values of such equity instruments were determined using discounted cash flow of income approach and comparable listed company approach, by referring to strike price of similar business in active market, implied value multiple of the price and relevant information. Significant unobservable inputs included P/E ratio, value multiple and market liquidity discount. As the discounted cash flow method was used, the discount rate used for lack of marketability was 29%; which increase by 1% while all the other variables are held constant, the fair value of investments will decrease by \$9,726 thousand and \$8,992 thousand for the six months ended June 30, 2021 and 2020, respectively.

• 3) Fair value of financial instruments not measured at fair value

		June 30, 2021
	Level 1	Level 2	Level 3	Total
Financial liabilities at amortized cost
Bonds payable (unsecured)	\$ 776,370	\$ -	\$ -	\$ 776,370
		December 31, 2020
	Level 1	Level 2	Level 3	Total
Financial liabilities at amortized cost
Bonds payable (unsecured)	\$ 1,483,908	\$ -	\$ -	\$ 1,483,908
		June 30, 2020
	Level 1	Level 2	Level 3	Total
Financial liabilities at amortized cost
Bonds payable (unsecured)	\$ 2,088,000	\$ -	\$ -	\$ 2,088,000

• 4) Fair value of financial instruments measured at fair value on a recurring basis
• Fair value hierarchy

	June 30, 2021
	Level 1	Level 2	Level 3	Total
Financial assets at FVTPL
Derivative financial assets	\$ -	\$ 6,245	\$ -	\$ 6,245
Financial assets at FVTOCI
Domestic and overseas listed shares and emerging market shares	\$ 210,345	\$ -	\$ -	\$ 210,345
Domestic and overseas unlisted shares	\$ -	\$ -	\$ 2,178,061	\$ 2,178,061
Financial liabilities at FVTPL
Derivative financial liabilities	\$ -	\$ 1,952	\$ -	\$ 1,952

	December 31, 2020
	Level 1	Level 2	Level 3	Total
Financial assets at FVTPL
Derivative financial assets	\$ -	\$ 13,223	\$ -	\$ 13,223
Financial assets at FVTOCI
Domestic and overseas listed shares and emerging market shares	\$ 313,689	\$ -	\$ -	\$ 313,689
Domestic and overseas unlisted shares	\$ -	\$ -	\$ 1,492,891	\$ 1,492,891
Financial liabilities at FVTPL
Derivative financial liabilities	\$ -	\$ 3,191	\$ -	\$ 3,191
	June 30, 2020
	Level 1	Level 2	Level 3	Total
Financial assets at FVTPL
Derivative financial assets	\$ -	\$ 5,800	\$ -	\$ 5,800
Financial assets at FVTOCI
Domestic listed shares and emerging market shares	\$ 51,860	\$ -	\$ -	\$ 51,860
Domestic and overseas unlisted shares	\$ -	\$ -	\$ 1,020,132	\$ 1,020,132

5) Reconciliation of Level 3 fair value measurements of financial instruments

The financial assets measured at Level 3 fair value were financial assets at FVTPL and equity investments classified as financial assets at FVTOCI. Reconciliations for the six months ended June 30, 2021 and 2020 were as follows:

	For the Six Months Ended June 30
	2021	2020
Balance at January 1 Recognized in other comprehensive income	\$ 1,492,891 685,170	\$ 1,056,205 (36,073)
Balance at June 30	\$ 2,178,061	\$ 1,020,132

c. Financial risk management objectives and policies

The Group seeks to minimize the effects of financial risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group's policies approved by the board of directors, which provide written principles on foreign currency risk, and the use of financial derivatives. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis.

1) Market risk

The Group's activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group entered into foreign exchange forward contracts to hedge the foreign currency risk arising on the export business.

a) Foreign currency risk

The Group has foreign currency denominated transactions, which expose the Group to foreign currency risk. Exchange rate exposures are managed within approved policy parameters utilizing foreign exchange forward contracts.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 34 to the consolidated financial statements.

The sensitivity analysis included only outstanding foreign currency denominated monetary items at the end of the reporting period and assuming an increase in net income and equity if New Taiwan dollars strengthen by 1% against foreign currencies. For a 1% weakening of New Taiwan dollars against the relevant currency, there would be impact on net income in the amounts of NT\$7,612 thousand decrease and NT\$14,157 thousand decrease for the six months ended June 30, 2021 and 2020, respectively. The amounts used in the 1% weakening of New Taiwan dollars against the relevant currency did not consider the impact of hedge contracts and hedged item.

b) Interest rate risk

Interest rate risk refers to the risk that the change in market value will influence the fair value of financial instruments. The Group's interest rate risk arises primarily from floating rate deposits and long-term loans.

The carrying amounts of the Group's financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

	June 30, 2021	December 31, 2020		June 30, 2020
Cash flow interest rate risk
Financial assets	\$ 8,413	\$	7,749	\$	108,313
Financial liabilities	1,500,000		3,321,210		500,000

The sensitivity analysis of cash flows based on the Group's exposure to interest rates for fair value of variable-rate non-derivatives instruments at the end of the reporting period. If interest rates increased by 1%, the Group's cash outflows for the six months ended June 30, 2021 and 2020 would have increased by NT\$7,458 thousand and increased by NT\$1,959 thousand, respectively.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. In this regard, the management of the Group consider that the Group's credit risk was significantly reduced.

3) Liquidity risk

The Group has enough operating capital to comply with loan covenants; liquidity risk is low.

The Group's non-derivative financial liabilities and their agreed repayment period are as follows:

		June 30, 2021
	Within 1 Year	1-2 Years	Over	2 Years	Total
Non-derivative financial liabilities
Non-interest bearing Lease liabilities Variable interest rate	\$ 7,740,041 273,964	\$ - 227,606	\$	- 1,043,127	\$ 7,740,041 1,544,697
liabilities Fixed interest rate liabilities	- 378,150	- -		1,500,000 403,306	1,500,000 781,456
	\$ 8,392,155	\$ 227,606	\$	2,946,433	\$ 11,566,194

Additional information about the maturity analysis of lease liabilities:

	Less than 2 Years		2-5 Years		Over 5 Years	Total
Non-derivative financial liabilities
Lease liabilities	\$ 501,570	\$	426,117	\$	617,010	\$ 1,544,697
		December 31, 2020
	Within 1 Year		1-2 Years		Over 2 Years	Total
Non-derivative financial liabilities
Non-interest bearing	\$ 7,659,385	\$	-	\$	-	\$ 7,659,385
Lease liabilities	308,294		264,121		1,231,072	1,803,487
Variable interest rate liabilities	1,821,210		-		1,500,000	3,321,210
Fixed interest rate liabilities	-		-		1,305,480	1,305,480
	\$ 9,788,889	\$	264,121	\$	4,036,552	\$ 14,089,562

Additional information about the maturity analysis of lease liabilities:

	Less than 2 Years	2-5 Years	Over 5 Years	Total
Non-derivative financial liabilities
Lease liabilities	\$ 572,415	\$ 500,296	\$ 730,776	\$ 1,803,487
		June 30, 2020
	Within 1 Year	1-2 Years	Over 2 Years	Total
Non-derivative financial liabilities
Non-interest bearing Lease liabilities Variable interest rate	\$ 2,577,936 122,212	\$ - 113,005	\$ - 309,190	\$ 2,577,936 544,407
liabilities	-	-	500,000	500,000
Fixed interest rate liabilities	\$ - 2,700,148	\$ - 113,005	\$ 2,181,800 2,990,990	\$ 2,181,800 5,804,143

Additional information about the maturity analysis of lease liabilities:

	Less than 2 Years	2-5 Years		Over 5 Years	Total
Non-derivative financial liabilities
Lease liabilities	\$ 235,217	\$	214,009	\$ 95,181	\$	544,407

4) Transfers of financial assets

Factored accounts receivable that are not yet overdue on June 30, 2021 and December 31, 2020, respectively were as follows:

June 30, 2021

Counterparty	Receivables Factoring Proceeds	Advances Received - Unused	Advances Received - Used	Annual Interest Rates on Advances Received (Used) (%)
Sumitomo Mitsui Banking	\$	\$	\$	0.9%
Corporation	125,327	-	125,327

December 31, 2020

Counterparty	Receivables Factoring Proceeds	Advances Received - Unused	Advances Received - Used	Annual Interest Rates on Advances Received (Used) (%)
Sumitomo Mitsui Banking	\$	\$	\$	0.9%
Corporation	230,449	-	230,449

Pursuant to the Group's factoring agreements, losses from commercial disputes (such as sales returns and discounts) are borne by the Group, while losses from credit risk are borne by the banks.

30. TRANSACTIONS WITH RELATED PARTIES

a. Related party name and categories

Related Party Name	Related Party Categories
Winbond Electronics Corporation ("WEC")	The Company's parent
Winbond Electronics (HK) Limited ("WEHK")	Associate
Winbond Electronics Corporation America ("WECA")	Associate
Winbond Electronics Corporation Japan ("WECJ")	Associate
Callisto Holding Limited	Associate
Tower Partners Semiconductor Co., Ltd. ("TPSCo.")	Related party in substance
Nyquest Technology Co., Ltd. ("Nyquest")	Related party in substance
Walton Advanced Engineering Inc.	Related party in substance
Chin Cherng Construction Co., Ltd.	Related party in substance
United Industrial Gases Co., Ltd.	Related party in substance
Glorystones Corporation	Related party in substance
Waltech Advanced Engineering (SuZhou), Inc. ("Waltech Suzhou")	Related party in substance

b. Operating activities

		For the Three Months Ended June 30	For the Six Months Ended June 30
	2021	2020	2021	2020
1) Operating revenue
Related party in substance	\$	\$	\$	\$
Waltech Suzhou	1,260,534	-	1,260,534	-
Others	137,051	48,389	283,142	85,490
Associate	20,613	24,918	44,771	46,202
	\$	\$	\$	\$
	1,418,198	73,307	1,588,447	131,692

		For the Three Months Ended		For the Six Months Ended
	2021	June 30 2020	June 30 2021	2020
2) Purchases of goods
Related party in substance
TPSCo. Others	\$ 1,600,714 28,691	\$ - -	\$ 3,363,222 28,691	\$ - -
Parent company	94,005	44,466	166,190	84,565
	\$ 1,723,410	\$ 44,466	\$ 3,558,103	\$ 84,565
3) Manufacturing expenses
Related party in substance
TPSCo. Others	\$ 513,559 4,022	\$ - -	\$ 1,034,863 7,465	\$ - -
Parent company	348	121	441	220
	\$ 517,929	\$ 121	\$ 1,042,769	\$ 220
4) Operating expenses
Related party in substance	\$ 104,068	\$ 2,695	\$ 229,109	\$ 5,390
Parent company	10,932	1,925	20,371	7,304
Associate	2,448	1,928	4,289	3,859
	\$ 117,448	\$ 6,548	\$ 253,769	\$ 16,553
5) Dividend income
Related party in substance United Industrial Gases
Co., Ltd.	\$ 62,000	\$ 64,394	\$ 62,000	\$ 64,394
Nyquest Technology Co., Ltd.	-	3,300	-	3,300
	\$ 62,000	\$ 67,694	\$ 62,000	\$ 67,694
6) Other income
Related party in substance	\$ 339	\$ -	\$ 339	\$ -
Parent company	-	20	-	20
	\$ 339	\$ 20	\$ 339	\$ 20

	June 30, December 31, 2021 2020		June 30, 2020
7) Accounts receivable from related parties
Related party in substance Associate	\$	69,281 14,208	\$ 77,760 12,817	\$ 35,901 23,095
	\$	83,489	\$ 90,577	\$ 58,996
8) Other receivables
Related party in substance
TPSCo.	\$	248,969	\$ 255,453	\$ -
Others		9,649	-	-
Associate		6,672	214	98
Parent company		363	-	-
	\$	265,653	\$ 255,667	\$ 98

Other receivables-related parties were collection or payment on behalf of others.

	June 30, 2021	December 31, 2020	June 30, 2020
9) Refundable deposits
Parent company Related party in substance	\$ 1,780 1,722	\$ 1,780 1,722	\$ 1,780 1,722
	\$ 3,502	\$ 3,502	\$ 3,502
10) Accounts payable to related parties
Related party in substance TPSCo. Others Parent company	\$ 352,183 10,161 68,906 \$ 431,250	\$ 788,043 - 39,500 \$ 827,543	\$ - - 26,891 \$ 26,891
11) Other payables
Related party in substance Parent company	\$ 58,844 15,255	\$ 77,373 9,738	\$ - 1,818
	\$ 74,099	\$ 87,111	\$ 1,818
12) Guarantee deposits
Parent company	\$ 545	\$ 545	\$ 545

The sales and purchase prices and collection and payment terms with related parties were not significantly different from those with third parties. For other related party transactions, price and terms were determined in accordance with mutual agreement.

13) Disposal of property, plant and equipment

		Proceeds For the Three Months Ended June 30	Gain (Loss) on Disposal For the Three Months Ended June 30
Related Party Category	2021	2020	2021	2020
Related party in substance Waltech Suzhou	\$ 885,976	\$ -	\$ 143,793	\$ -
		Proceeds	Gain (Loss) on Disposal
		For the Six Months Ended		For the Six Months Ended
		June 30	June 30
Related Party Category	2021	2020	2021	2020
Related party in substance Waltech Suzhou	\$ 885,976	\$ -	\$ 143,793	\$ -

The price of above transaction were determined to base on the acquisition cost of the equipment and reference to the recent quoted market price.

c. Lease arrangements - Group is lessee

			June 30, 2021		December 31, 2020	June 30, 2020
1)	Lease liabilities
	Parent company Related party in substance Associate		\$	42,087 16,905 3,733	\$ 47,969 22,451 7,566	\$	53,932 27,680 11,704
			\$	62,725	\$ 77,986	\$	93,316
			June 30	For the Three Months Ended	For the Six Months Ended	June 30
		2021		2020	2021		2020
2)	Finance costs

Parent company Related party in substance Associate	\$ 114 72 38	\$ 147 115 110	\$ 236 155 94	\$ 301 240 238
	\$ 224	\$ 372	\$ 485	\$ 779

d. Lease arrangements - Group is lessor/Sublease arrangements

Sublease arrangements under operating leases

For the six months ended June 30, 2021 and 2020, the Group subleases its right-of-use assets to its associate companies WEC, WEHK and TPSCo. under operating leases with lease terms between 1 and 12 years, and the rental is based on similar asset's market rental rates and fixed lease payments are received monthly.

1) The balance of operating lease receivables was as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Related party in substance	\$	21,445	\$	23,504	\$	-
Parent company		398		-		386
Associate		239		245		255
	\$	22,082	\$	23,749	\$	641

2) Future lease payment receivables are as follows:

	June 30, 2021		December 31, 2020		June 30, 2020
Related party in substance Parent company Associate	\$ 1,374,827 5,885 1,191	\$	1,635,005 11,133 1,948	\$	- 9,568 3,040
	\$ 1,381,903	\$	1,648,086	\$	12,608

3) Lease income was as follows:

	For the Three Months Ended June 30			For the Six Months Ended June 30
	2021		2020		2021		2020
Related party in substance Parent company Associate	\$ 59,337 971 359	\$	- 936 386	\$	121,467 1,989 723	\$	- 1,919 778
	\$ 60,667	\$	1,322	\$	124,179	\$	2,697

e. Endorsements and guarantees

Endorsements and guarantees provided by the Group

The chairman of the Company is a joint guarantor of the land-leasing from Taiwan Sugar Corporation. Refer to Note 13 to the consolidated financial statements.

Endorsements and guarantees given by related parties

Related Party Category/Name	June 30,	December 31,	June 30,
	2021	2020	2020
Parent company	\$	\$	\$
Amount endorsed	11,614,499	4,440,417	-
Amount utilized (reported as secured bank	\$	\$	\$
loans)	378,150	276,300	-

According to the contract, the endorsements and guarantees given by the related party above mentioned shall maintain a specific financial ratio (current ratio, debt ratio) and net tangible value shall not be less than a specific amount during the every half year. The calculation of the foregoing financial standards is based on the consolidated financial report audited by certified public accountants.

f. Compensation of key management personnel

	For the Three Months Ended June 30			For the Six Months Ended June 30
		2021		2020		2021		2020
Short-term employee benefits Post-employment benefits	\$	37,706 834	\$	19,516 630	\$	98,749 1,663	\$	48,295 1,277
	\$	38,540	\$	20,146	\$	100,412	\$	49,572

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

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for land leases, customs tariff obligations and bank borrowings:

	June 30, 2021	December 31, 2020		June 30, 2020
Land	\$ 1,477,211	\$	-	\$	-
Buildings	753,261		-		-
Investment properties	462,435		-		-
Time deposits (accounted as refundable deposits)	86,318		636,102		76,000
	\$ 2,779,225	\$	636,102	\$	76,000

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant contingent liabilities and unrecognized commitments of the Group as of the end of the reporting period, excluding those disclosed in other notes, were as follows:

L Company filed a complaint in the U.S. District Court for the District of Delaware on April 29, 2021. The plaintiff alleged that NTCA (and NTCA only) infringes one of its patents. On June 22, 2021, NTCA signed the authorization and settlement agreement. According to the agreement, L Company then withdrew the complaint in the U.S. District Court for the District of Delaware on June 30, 2021.

The Company and NTCA received a complaint served by the court on June 29, 2020. The plaintiff charged in the California High Court that the gasoline generator produced by HD POWER SYSTEMS INC., exploded during use and caused damage to it. At the same time, the Company, NTCA and other related companies shall bear the relevant compensation liabilities. The plaintiff applied to withdraw the complaint against the Company in the Court on June 29, 2021, and applied to withdraw the complaint against NTCA in the Court on July 7, 2021.

33. OTHER ITEMS

The novel coronavirus (Covid-19) spreads all over the world, causing subsidiaries, customers and suppliers in some regions to implement quarantine and travel restrictions. The Group evaluated that there is no significant impact on the overall business operation and financial position of the Group. There are no concerns about the capability of the Group to be going concern, and the risk of assets impairment and fund raising.

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group's significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currency of the entities in the Group and the related exchange rates between foreign currencies and respective functional currency were as follows:

	June 30, 2021
	Foreign Currencies (Thousand)		Exchange Rate (Note)	New Taiwan Dollars (Thousand)
Financial assets
Monetary items USD	\$	71,634	27.86	\$ 1,995,714
ILS		14,986	8.5668	128,386
RMB		10,990	4.309	47,354
JPY		51,868	0.2521	13,076
Financial liabilities
Monetary items
USD		44,722	27.86	1,245,963
ILS		15,243	8.5668	130,580
RMB		5,861	4.309	25,256
JPY		52,472	0.2521	13,228

		December 31, 2020
	Foreign		New Taiwan
	Currencies	Exchange Rate	Dollars
	(Thousand)	(Note)	(Thousand)
Financial assets
Monetary items
USD	\$ 57,028	28.48	\$ 1,624,156
ILS	20,800	8.8712	184,522
RMB	8,724	4.377	38,186
JPY	48,824	0.276	13,490
Financial liabilities
Monetary items
USD	46,275	28.48	1,317,309
ILS	18,706	8.8712	165,943
RMB	7,098	4.377	31,067
JPY	68,971	0.276	19,057
		June 30, 2020
	Foreign		New Taiwan
	Currencies	Exchange Rate	Dollars
	(Thousand)	(Note)	(Thousand)
Financial assets
Monetary items
USD	\$ 80,581	29.63	\$ 2,387,610
ILS	15,369	8.5609	131,573
RMB	4,574	4.191	19,168
JPY	38,158	0.2751	10,497
Financial liabilities
Monetary items
USD	33,644	29.63	996,871
ILS	15,405	8.5609	131,882
RMB	5,134	4.191	21,518
JPY	40,838	0.2751	11,234

Note: The rate foreign currencies are exchanged to New Taiwan dollars and displayed as a rate.

For the three months ended June 30, 2021 and 2020 and the six months ended June 30, 2021 and 2020, realized and unrealized net foreign exchange losses were NT\$13,017 thousand, NT\$11,252 thousand, NT\$33,693 thousand and NT\$3,313 thousand, respectively. It is impractical to disclose net foreign exchange gains and losses by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the entities in the Group.

35. SEGMENT INFORMATION

• a. Basic information about operating segment
• 1) Classification of operating segments

The Group's reportable segments under IFRS 8 and IAS 34 were as follows:

a) General IC product segment

The general IC product segment engages mainly in research, design, manufacturing, sale and after-sales service.

b) Foundry service segment

The foundry service segment engages mainly in research, design, manufacturing and sale.

2) Principles of measuring reportable segments profit, assets and liabilities

The significant accounting principles of each operating segment are the same as those stated in Note 4 to the consolidated financial statements. The Group's operating segment profit or loss represents the profit or loss earned by each segment. The profit or loss is controllable by segment managers and is the basis for assessment of segment performance. The Group does not provide information on assets regularly to the Group's chief operating decision maker; thus, the measure of assets is zero. Major liabilities are arranged based on the capital cost and deployment of the whole company, which are not controlled by individual segment managers.

b. Segment revenues and operating results

The following is an analysis of the Group's revenue from continuing operations by reportable segments.

		Segment Revenue	Segment Profit and Loss For the Six Months Ended June 30
		For the Six Months Ended June 30
	2021	2020	2021	2020
General IC products	\$ 17,556,835	\$ 4,190,666	\$ 2,212,659	\$ 449,992
Foundry service	1,119,880	978,268	430,631	326,744
Total of segment revenue	18,676,715	5,168,934	2,643,290	776,736
Other revenue	2,010,454	25,363	970,954	22,060
Operating revenue	\$ 20,687,169	\$ 5,194,297	3,614,244	798,796
Unallocated expenditure Administrative and
supporting expense Sales and other common			(1,503,096)	(261,110)
expenses			(814,766)	(190,343)
Income from operations			1,296,382	347,343
Finance costs			(51,069)	(11,325)
Interest income			18,844	14,314
Dividend income			62,000	67,694
Other gains and losses			63,730	8,492
				(Continued)

	Segment Revenue			Segment Profit and Loss
	For the Six Months Ended June 30	For the Six Months Ended June 30
	2021 2020		2021		2020
Gains (losses) on disposal of property, plant and equipment			\$	125,188	\$	29
Foreign exchange gains (losses) Gains (losses) on financial instruments at fair value				(33,693)		(3,313)
through profit or loss				15,174		(3,511)
Profit before income tax			\$	1,496,556	\$	419,723 (Concluded)