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PSMC AGM Information 2026
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AGM Information
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TSE Code: 6770
Powerchip Semiconductor Manufacturing Corporation Meeting Minutes for the 2026 Annual Shareholders Meeting (Translation)
Date: April 10, 2026
Important Disclaimer
This English-version meeting minutes is a summary translation of the Chinese version and is not an official document of the shareholders meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.
Powered by the Board of Directors
Powered by the Board of Directors
Powered by the Board of Directors
Proposal : To report Business Status of 2025.
Explanation: 1. The president will report the Company’s business status for 2025.
2. The 2025 Business Report (Please refer to the attachment 1, Page 11~Page 12).
Powered by the Board of Directors
1. The 2026 Annual Shareholders Meeting
Time: 09:00 a.m., April 10, 2026 (Friday)
Location: No.773, Ming-Hu Rd. Hsinchu, Taiwan, ROC (Hsinchu Lakeshore Hotel B1)
Meeting type: Physical Shareholders Meeting (and live streamed on YouTube)
Attendants: The total outstanding shares: 4,243,803,715 shares
The total shares represented by shareholders present in person and by proxy: 2,858,839,030 shares (among them, 821,782,219 shares voted via electronic transmission)
The percentage of shares held by shareholders present in person and by proxy: 67.36%
Chairman: Brian Shieh, the Vice Chairman of the Board of Director
Minutes Recorder: Mei-Shan Hsu
Directors Present: Brian Shieh/ Vice Chairman, Martin Chu/ Director and President, Wen-Liang Chen/ Director, Chong-Yu Wu/ Independent Director and Convener of Audit Committee, Shu Ye/ Independent Director; 5 seats of Directors attended the meeting
In attendance: Jerry Shao/ CFO, Ming-Yuan Chung/ Independent Accountant, Jin-Long Chen/ Lawyer, Dong-Yuan Jiang/ Lawyer
2. The master of ceremonies read out the Assignment Letter: Chairman Frank Huang is unable to host the 2026 Shareholders Meeting of the Company and has appointed Vice Chairman Brian Shieh as the chairperson.
Vice Chairman announced the commencement: The aggregate shareholding of the shareholders present in person or by proxy constituted a quorum. The Vice Chairman called the meeting to order.
3. Vice Chairman Address: (omitted)
4. Proposed by the Board of Directors
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Item 2
Proposed by the Board of Directors
Proposal : Audit Committee’s Review Report of 2025.
Explanation : Audit Committee’s Review Report of 2025 (Please refer to the attachment 2, Page 13).
Summary of statement by Shareholder Surnamed Tao (Shareholder Account No. 6176):
① Please explain the specific reasons for the losses in 2025. ② Operating status in 2026 Quarter 1. ③ Specific, detailed description of legal order/article basis for Audit Committee Review Report. ④ Asking about how the Audit Committee is convened and how it oversees the Company’s operations. ⑤ Capital usage status in the disposal of the Tongluo Fab to Micron.
Chairman’s explanation and response to the above Shareholder statement:
- The loss status for 2025 has been explained by the President in Reported Matters (1): Business Status.
- Taiwan is the largest supplier of AI servers. However, the import value for HBM from South Korea is approximately US$25 billion. Thus, this trade with Micron will expand HBM production capacity in Taiwan, and will reduce future reliance on imports from South Korea. In addition, the major impacts and benefits for the Company will be reported in Reported Matters (7): Other Reports. The details will be reported to all shareholders by the President and Chief Financial Officer.
- The Audit Committee Review Report is governed by the Securities and Exchange Act, Article 14-4 and the Company Act, Article 219. Convening and the duties of the Audit Committee are as stipulated in the Securities and Exchange Act; they prudently and rigorously oversee the Company’s operations.
Item 3
Proposed by the Board of Directors
Proposal : To report Earnings Distribution of 2025.
Explanation : 1. According to Article 34 of the Articles of Incorporation of the Company, after becoming a public company, the distribution of dividends and bonuses or all or part of the legal reserve and capital surplus reserve, if cash is distributed, authorizes the Board of Directors to have more than two-third of the Directors are present, and after more than half of the presented Directors agree and report to the Shareholders Meeting.
- Distribution of earnings for the first and second halves of 2025 were approved at the 17th meeting of the 9th term and the 23th meeting of the 9th term of the Board of Directors, respectively. Considering the business environment and future operating expenditures, the Company has decided to retain all earnings and not to distribute dividends.
Item 4
Proposed by the Board of Directors
Proposal : To report Distributable Compensation for Employees and Directors of 2025.
Explanation : 1. It is handled in accordance with Article 235-1 of the Company Act and Article 33 of the Articles of Incorporation of the Company.
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The Company loss before tax in 2025, therefore not to distribute compensation for employees and directors.
-
The Directors’ remuneration including the remuneration policy, the details and
amount of the remuneration received by individual Directors. (Please refer to the attachment 3, Page 14).
Item 5
Proposed by the Board of Directors
Proposal : Amendment to the Company’s “Corporate Governance Best Practice Principles”
Explanation:
1. It is proposed to make part amendment of the “Corporate Governance Best Practice Principles” of the Company was in accordance with Letter No. 1130348897 of the Financial Supervisory Commission issued on August 15, 2024.
2. The comparison table for the “Corporate Governance Best Practice Principles” (Please refer to the attachment 4, Page 15).
Item 6
Proposed by the Board of Directors
Proposal : Amendment to the Company’s “Sustainable Development Best Practice Principles”
Explanation:
1. It is proposed to make part amendment of the “Sustainable Development Best Practice Principles” of the Company was in accordance with Letter No. 11400161181 of the Taiwan Stock Exchange issued on September 2, 2025.
2. The comparison table for the “Sustainable Development Best Practice Principles” (Please refer to the attachment 5, Page 16~Page 17).
Item 7
Other Reports.
Regarding the shareholder question in (1) on disposal of the Tongluo Fab, a summary of the response from the Chairman’s designated representative is as follows:
Chief Financial Officer: Disposal of the Tongluo Fab includes three major parts. One is sale of the plant, approximately US$1.8 billion (including technical services income of US$200 million). Two is Micron’s pre-payment of approximately US$300 million, to be used as equipment investments for high-bandwidth memory (HBM) post-wafer finish (PWF) foundry work, and signing long-term foundry agreements. Three is assistance in refining DRAM process technologies. Capital from disposal of the fab will be used as a priority in repaying bank debts related to the Tongluo Fab; we project to first repay approximately NT$44 billion in 2025. This will help in lowering overall debt pressures, and in concretely improving the financial structure. As to long-term plans, in response to demand for HBM PWF foundry work and DRAM technology refinements, we will issue overseas depositary receipts sponsored via cash capital increase plan, in a volume not exceeding 420 million shares. In addition, we will implement a bank refinancing plan.
President: The Tongluo Fab (which was planned in response to the pandemic and client demand) was originally planned for monthly production of 35,000 wafers. However, due to the later effects from the economic downturn, changes in demand, and financing pressures, actual production capacity in the first phase was reduced to 8,500 wafers. This did not achieve an economy of scale, became the primary drag on operations for the past year and a half, and resulted in large losses for 2025. The Micron deal was originally to be strictly for purchase of the fab. However, this deal would not result in a very large contribution to the Company’s overall operations; and in consideration of this, we required that the deal be accompanied by collaboration on HBM-related PWF business,
DRAM technology refinements, etc. Only then would the deal create synergies to improve our operating soundness. The property rights transfer was smoothly completed in March, and US$1.36 billion was also deposited in March. Handover of the fab has proceeded as scheduled. The balance of US$440 million will be fully received by the end of 2026. This deal will have 3 major benefits for PSMC: It will improve our financial structure; Micron will pre-pay the loans; and we will become a Micron HBM supplier. In addition, Micron will also assist PSMC in refining our DRAM process technologies, helping PSMC rapidly rise to a level where we can compete with industry peers in Taiwan.
Summary of statement by Shareholder Surnamed Lin (Shareholder Account No. 926059):
- Question regarding operating status in 2026 Q1, earnings per share. 2. Google has put out the TurboQuant algorithm AI memory compression technology. Will this have a major impact on the Company's operations.
Explanation and response from the Chairman and Chairman's designated representative to the above Shareholder statement:
Operating status in 2026 Q1 is projected to be explained at the April 21 investor conference. Regarding the TurboQuant algorithm presented by Google, market reactions have fallen into two general camps. One is foreseeing that AI demand for HBM may decline. The other is that memory usage efficiency will rise, possibly encouraging broader application of artificial intelligence, and accelerating growth of the overall potential market for AI. Time will tell. However, products related to HBM AI applications will impact the Company's revenues by at most approximately $20 - 30\%$ .
IV. Acknowledged Matters
Item 1
Proposed by the Board of Directors
Proposal : To accept Business Report and Financial Statements of 2025.
Explanation : 1. The Company's 2025 Financial Statements, including Balance Sheets, Statements of Comprehensive Income, Statements of Changes in Equity, and Statements of Cash Flows, have been approved at the 23th meeting of the 9th term of the Board of Directors and audited by the CPAs of Deloitte Taiwan, Mr. Ming-Yuan Chung and Ms. Mei-Chen Tsai. The Financial Statements mentioned above, along with the Business Report, have been reviewed by the Audit Committee and the review report was issued, accordingly.
2.2025 Business Report, Independent Auditors' Report and the Financial Statements mentioned above (Please refer to attachment 1, Page 11~Page 12 and attachments 6~7, Page 18~Page 35)
Resolution : Approved, the voting result of this proposal had reached the standard by the law. Voting Result: 2,858,830,030 votes were represented at the time of voting (including 821,782,219 votes voted via electronic transmission)
| Voting Result | % of total representation at the time of voting |
|---|---|
| Votes in favor: 2,517,408,920 votes (including 488,071,659 votes voted via electronic transmission) | 88.05% |
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| Votes against : 459,786 votes
(including 459,786 votes voted via electronic transmission) | 0.01% |
| --- | --- |
| Votes invalid : 0 vote
(including 0 vote voted via electronic transmission) | 0.00% |
| Votes abstained : 340,961,324 votes
(including 333,250,774 votes voted via electronic transmission) | 11.92% |
Item 2
Proposed by the Board of Directors
Proposal : To accept Earnings Distribution of 2025.
Explanation : 1. The Company’s 2025 Earnings Distribution Table has been reviewed by the Audit Committee and approved by the 23th meeting of the 9th term of the Board of Directors.
-
The unappropriated earnings at the beginning of the year is NT$15,495,333,888, after deducting the 2025 net loss of NT$7,812,659,510 and the special reserve of NT$720,842. After adding up remeasurement of the defined benefit plans of NT$74,649,803, therefore the total amount of earnings available for distribution is NT$7,756,603,339.
-
2025 Earnings Distribution Table (Please refer to the attachment 8, Page 36)
Resolution : Approved, the voting result of this proposal had reached the standard by the law. Voting Result: 2,858,830,030 votes were represented at the time of voting (including 821,782,219 votes voted via electronic transmission)
| Voting Result | % of total representation at the time of voting |
|---|---|
| Votes in favor : 2,519,089,573 votes | |
| (including 489,782,612 votes voted via electronic transmission) | 88.11% |
| Votes against : 759,961 votes | |
| (including 759,961 votes voted via electronic transmission) | 0.02% |
| Votes invalid : 0 vote | |
| (including 0 vote voted via electronic transmission) | 0.00% |
| Votes abstained : 338,980,496 votes | |
| (including 331,239,646 votes voted via electronic transmission) | 11.85% |
Item 3
Proposed by the Board of Directors
Proposal : To accept amendment to issue new common shares for cash to sponsor issuance of GDR in the 2022 Plan.
Explanation : 1. The Company issued new common shares to sponsor the issuance of GDR through ordinary shares, with a total capital increase of US$409,494,000 in 2022. The purpose of the funds was to purchase machinery and facilities for Phase 1 of the Tongluo fab. This was aimed at expanding capacity, enhancing international competitiveness, and meeting client demand.
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Given the impacts of fluctuations in the global semiconductor market, the fab construction plan has not gone as expected; there has been a shortfall in Phase 1 production capacity as compared to the originally-expected levels. In order to implement asset streamlining and enhance fund utilization efficiency, a resolution was made to sell its fabrication site and facilities in Tongluo to Micron Technology, Inc., on behalf of itself and its worldwide subsidiaries and affiliates. The related disposition contract was approved at the 22nd meeting of the 9th term of the Board of Directors. Funds raised by the original plan have been fully used up. To respond to this transformation in operations, the Company will make no new investments in machinery or facilities for the Tongluo fab, and plans to relocate personnel, equipment, and product lines originally located at Tongluo back to the current fabs, in a phased manner.
-
Change Proposal Report and Original Undertaking Underwriter Assessment Opinions for the issuance of new common shares to sponsor the issuance of GDR through ordinary shares in 2022 (Please refer to the attachment 9~10, Page 37~Page 45)
-
The change proposal has been approved at the 23rd meeting of the 9th term of the Board of Directors. The disposition of the Tongluo fab and termination of the fab construction plan will not only lower fixed asset depreciation burdens, but also accelerate the Company's memory process technologies and improve the Company's financial structure. This will indeed have positive benefits for shareholder interests.
-
The company has already obtained approval from the Central Bank on March 5, 2026, and will follow the change plan for future implementation.
Resolution: Approved, the voting result of this proposal had reached the standard by the law. Voting Result: 2,858,830,030 votes were represented at the time of voting (including 821,782,219 votes voted via electronic transmission)
| Voting Result | % of total representation at the time of voting |
|---|---|
| Votes in favor: 2,516,576,339 votes (including 487,274,378 votes voted via electronic transmission) | 88.02% |
| Votes against: 3,039,348 votes (including 3,039,348 votes voted via electronic transmission) | 0.10% |
| Votes invalid: 0 vote (including 0 vote voted via electronic transmission) | 0.00% |
| Votes abstained: 339,214,343 votes (including 331,468,493 votes voted via electronic transmission) | 11.86% |
V. Matters for Discussion
Item 1
Proposed by the Board of Directors
Proposal: Discussion of the issuance of new common shares for cash to sponsor the GDR offering.
Explanation: 1. The Company aims to enhance its operating funds, repay bank loans, or meet other financial needs for future development, in order to strengthen its international competitiveness. It will be proposed that the shareholders meeting to authorize the Board of Directors to issue up to 420 million new common shares to sponsor issuance of GDR, as it deems appropriate considering market conditions and the capital needs of the Company and to authorize the Board of Directors to issue new common in one or several tranches pursuant.
-
For the cash injection, it is planned to reserve 10%~15% of the total new shares to be subscribed by employees in accordance with Article 267 of the Company Law and the regulation for employees stock subscription is intended to authorize to be approved by the Chairman. According to Article 28-1 Paragraphs 2 and 3 of the Securities Exchange Act, the remaining 85% to 90% of the total new shares shall be allocated for public offering with the original shareholders waiving his/her preemptive subscription rights, serving as the original securities for the issuance of global depositary receipts. If the employee subscription is insufficient or waived, the Company proposes to authorize the chairman shall be contact specific parties for subscription base on issuing price, or dependency on the demands of the market, to list it as original securities for issuing GDR.
-
Subject to Article 9 of the "Taiwan Securities Association Regulation Governing the Offering and Issuance of Securities by Securities Issuers Managed by Underwriters", the issuing price of the new shares by cash capital increase for the sponsoring GDRs offering shall not be lower than the closing price of the Company's common shares on the Taiwan Stock Exchange, or 80% of the average closing price of the common shares of the Company in one, three, or five business days prior to the pricing date after adjustment for any distribution of stock (or capital reduction) and ex-dividend. However, if the relevant domestic laws and regulations change, the pricing must also be adjusted in accordance with the laws and regulations. In view of the short-term dramatic volatility of domestic share price from time to time, it is proposed that the Chairman of the Company be authorized to determine the actual issue price with its securities underwriter in accordance with the international capital markets, domestic market price and the overall book building situations, to improve the subscription motivation of international investors.
-
Within the limit of 420,000,000 common shares, the maximum amount of the issuance of the new common shares to sponsor the GDR offering to the original shareholder's equity dilution ratio is 9.94%. After the benefits of this new issuance realized, the competitiveness of the Company will be improved to benefit shareholders. Regarding, the issuance price of GDR shall be based on the fair trade market price of common shares in the domestic securities exchange market. The original shareholders may still be able to purchase common shares in domestic market at the price closing to the issuance price of GDR without taking the exchange risk and liquidity risk, while taking into account the original shareholders' equity; therefore, it should not cause a significant impact on the original shareholders' equity.
-
The proposed use of funds in this new issuance plan is to meet one or more purposes
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required by the Company's long-term development. The implementation of this plan is anticipated to enhance the Company's global competitiveness, improve operational efficiency, and have a positive impact on shareholders' equity.
-
It is proposed to request the shareholders meeting to authorize the Board of Directors to adjust, formulate and handle the important contents of this new issuance plan (including the issuance price, the actual number of shares issued, the issuance conditions, the planned projects, the amount raised, the scheduled progress and the expected potential benefits, the contract for the collection of payment of shares and other related matters) as well as all other matters related to this cash injection based on market conditions, including the need to carry out correction due approval of the competent authority, or in response to changes in laws or the objective environment in the future.
-
After the approval of the offering by authorities, the Chairman is authorized to handle or complete all the process or matters with regard to the issuance of new shares.
-
Rights and obligations about the issuance of new shares in this new issuance are the same with those of the issued shares.
-
To complete the issuance, the board, the Chairman or the Chairman's assignee is authorized, on behalf of the Company, to handle all matters relating to, and sign all agreements and sign all agreements and documents in connection with the issuance of the new common shares to sponsor the GDR offering.
-
For matters not covered above, the Chairman is authorized to handle them in accordance with the laws and regulations.
Resolution: Approved, the voting result of this proposal had reached the standard by the law. Voting Result: 2,858,830,030 votes were represented at the time of voting (including 821,782,219 votes voted via electronic transmission)
| Voting Result | % of total representation at the time of voting |
|---|---|
| Votes in favor: 2,436,075,252 votes (including 406,773,291 votes voted via electronic transmission) | 85.21% |
| Votes against: 23,174,843 votes (including 23,174,843 votes voted via electronic transmission) | 0.81% |
| Votes invalid: 0 vote (including 0 vote voted via electronic transmission) | 0.00% |
| Votes abstained: 399,579,935 votes (including 391,834,085 votes voted via electronic transmission) | 13.97% |
VI. Election Matters
Item 1
Proposed by the Board of Directors
Proposal: By-election Directors (including Independent Directors)
Explanation: 1. The current (9th term) Directors (including Independent Directors) of the Company have a term of office from May 30, 2023 to May 29, 2026. In order to operate flexibility, it is proposed to conduct by election at 2026 Annual Shareholders
Meeting. According to the regulations of the Company Act, all Directors (including Independent Directors) will be dismissed in advance on April 10, 2026, when the new directors are elected.
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According to the Company's Articles of Incorporation, it is proposed to elect new five Directors and six Independent Directors, the Company's Director election adopts a candidate nomination system, who will take office from the date of their election, serve a term of three years, and may continue to serve if re-elected, from April 10, 2026 to April 9, 2029.
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The candidates for Directors (including Independent Directors) of the "List of Candidates for the 9th Term Directors (including Independent Directors)" has been reviewed and approved by the 23th meeting of the 9th term of the Board of Directors on February 24, 2026. (Please refer to the attachment 11, Page 46~Page 48)
4 Please vote.
Election Results: The list of the 10th Board of Directors of votes received by the shareholders present are listed as follow:
| Title | Name | Votes Received |
|---|---|---|
| Director | Frank Huang | 3,670,091,707 |
| Director | Zei-Li Investment Corporation | |
| Representative: Brian Shieh | 2,856,326,564 | |
| Director | Jendan Investment Inc. | |
| Representative: Martin Chu | 2,372,135,294 | |
| Director | Novax Technologies, Inc. | |
| Representative: Wen-Liang Chen | 2,269,814,146 | |
| Director | Powerchip Investment Holding Corporation | |
| Representative: Milton Shieh | 2,269,096,438 | |
| Independent Director | Chong-Yu Wu | 2,268,592,976 |
| Independent Director | Jia-Lin Chang | 2,216,853,113 |
| Independent Director | Chun-Shen Chen | 2,212,729,277 |
| Independent Director | Shu Ye | 2,196,078,106 |
| Independent Director | Chun-Shen Chen | 2,191,953,322 |
| Independent Director | Grace Lee | 2,191,644,159 |
VII. Other Proposals
Item 1
Proposed by the Board of Directors
Proposal : Discussion to release of restriction on competitive of activities for Directors.
Explanation : 1. According to Paragraph 1, Article 209 of the Company Act: "A Director, who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval".
- It is proposed to request the Shareholders Meeting to authorize the lifting of the non-compete restrictions on Directors who engage in actions that are within the Company's business scope in accordance with the provision of Paragraph 1, Article 209 of the Company Act.
- The table of the non-compete status of the 10th term of Directors (Please refer to attachment 12, Page 49~Page 51).
- It's hereby proposed to submit to the Shareholders Meeting for approval of releasing the Director's and representative's competitive restriction from the date of their appointment as Directors in other companies of the same businesses.
Resolution : Approved, the voting result of this proposal had reached the standard by the law. Voting Result: 2,858,830,030 votes were represented at the time of voting (including 821,782,219 votes voted via electronic transmission)
| Voting Result | % of total representation at the time of voting |
|---|---|
| Votes in favor : 2,448,195,646 votes (including 419,609,377 votes voted via electronic transmission) | 85.63% |
| Votes against : 8,362,073 votes (including 8,362,073 votes voted via electronic transmission) | 0.29% |
| Votes invalid : 0 vote (including 0 vote voted via electronic transmission) | 0.00% |
| Votes abstained : 402,272,311 votes (including 393,810,769 votes voted via electronic transmission) | 14.07% |
VIII. Extemporary Motions: None.
IX. Adjournment: Meeting was adjourned at 11:11 am.
Business Report
In 2025, Powerchip Semiconductor Manufacturing Corporation ("PSMC") recorded total revenue of NT$46.7 billion, for an increase of 4% (or 8% in US dollar terms) on the previous year. Logic foundry contributed 61% of total annual revenue; memory foundry, 37%; and advanced packaging, 2%. Within the logic foundry segment, revenue from power management ICs and power discrete devices increased from 28% in the previous year to 36%. The proportion of revenue derived from advanced packaging also rose from 0.2% to 2%. However, the new Tongluo Fab has not yet achieved economies of scale, and so PSMC recorded a net loss after tax of NT$7.8 billion for the year.
Looking back at 2025, the global economy continued to be affected by geopolitical tensions and tariff-related uncertainties. Demand for consumer electronics experienced modest growth, partly stimulated by subsidy policies in China; however, the industry continued to face structural challenges including the absence of a "new killer app," substantial capacity expansion in mature process nodes in China, and the ongoing "China for China" localization policy in the semiconductor sector. As a result, good performance was difficult both in pricing and capacity utilization rates for mature-node wafer foundry services. In addition, intense competition in China's automotive market posed significant challenges for non-Chinese automakers. The automotive and industrial semiconductor markets experienced only a gradual recovery. 2025 was a year in which advanced process technologies related to AI-driven semiconductor applications remained the relative bright spot.
However, for customers targeting markets outside of China, the supply chain diversification trend driven by geopolitical developments (the "Out of China" trend mentioned above) continues to gain momentum. At the same time, Taiwan's leadership in AI server manufacturing and advanced semiconductor process technologies has positioned the island at the forefront of global AI hardware. This momentum has in turn driven demand for mature-node foundry services supporting AI server-related applications, including power management ICs (PMICs), silicon interposers, gallium nitride (GaN) devices, and integrated passive devices (IPDs) such as silicon capacitors. Many well-known major enterprises are already in position for pilot production. Beginning in 2026, these products are expected to begin entering mass production, which will generate significant contributions to PSMC's revenue and profitability. In addition, PSMC has invested for many years in 3D wafer-on-wafer stacking and hybrid bonding technologies (3D WoW hybrid-bonding). Our four-layer 3D_AI_DRAM technology has obtained advanced logic manufacturer certification, and we are working toward eight-layer stacked hybrid bonding. When applied to next-generation edge AI computing applications, this technology will provide high-bandwidth, low-power solutions for Edge AI systems, and will bring the next phase of growth momentum for PSMC.
The Company has recently entered into a comprehensive strategic partnership with Micron Technology. The Board of Directors has already resolved to transfer the Tongluo fab (P5) to Micron Technology Taiwan in phases within 18 months following the execution of the definitive agreement, in order to support Micron in accelerating and expanding their DRAM deployment in Taiwan. The equipment and personnel at the P5 fab will be gradually relocated to the Hsinchu facilities without any layoffs or operational disruption. We will also phase out and upgrade aging equipment and low-margin product lines at the Hsinchu fabs. In addition, Micron has engaged PSMC to provide post wafer fabrication (PWF) services, formally incorporating PSMC into their HBM advanced packaging supply chain and establishing a long-term foundry partnership with PSMC. Micron will also support PSMC in advancing our specialty DRAM foundry business and by giving us access to next-generation DRAM process technologies. Through this collaboration with a world-leading memory manufacturer, we expect to optimize PSMC's financial structure, technology roadmap, and operational fundamentals, thus moving toward the vision of stable profitability and sustainable development. Furthermore, the cooperation project with Tata Electronics in India continues to
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proceed as planned, with good mutual engagement. To date, technical service fees have reached US$143 million, with no delays in payment. We and Tata have also initiated further collaboration to jointly expand the logic IC semiconductor market in India.
2025 marked the bottom of the operational cycle. In 2026, PSMC will embark on our fourth transformation, leveraging our technological innovation and the synergies we have generated through collaboration with customers and strategic partners. We believe that 2026 is a year to look forward to. We will continue to uphold our core values of integrity, service, quality, and innovation by strengthening technology research and development, advancing product innovation, and expanding into global markets. We also remain committed to ESG and sustainable development principles of promoting environmental stewardship, giving back to society, and strong corporate governance, so as to share prosperity with our customers, society, and the environment. We would like to again express our sincere gratitude to you, our shareholders, for your long-standing support and trust in PSMC. We will continue to make every effort to create greater value for our shareholders and to fulfill our commitment to stable profitability and sustainable development.
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<Attachment 2>
Audit Committee’s Review Report
The Board of Directors has prepared and submitted to us the Company’s 2025 Business Report, Financial Statements, and proposal for earnings distribution. Financial Statements were audited by Deloitte & Touche and they issued an audited report accordingly. We, as the Audit Committee of the Company, have reviewed the Business Report, Financial Statements, and proposal for earnings distribution and do not find any discrepancies. According to relevant requirements of the Securities and Exchange Act and the Company Law, we hereby submit this report.
Powerchip Semiconductor Manufacturing Corp.
Chairman of Audit Committee:
February 24, 2026
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- Unit: NT$ thousand
2025 Directors' Remuneration
| Title | Name | Remuneration of Directors | Amount and Ratio of Total Remuneration (A+B+C+D) and proportion of Net Income (%) | Relevant Remuneration Received by Directors Who are Also Employees | Amount and Ratio of Total Compensation (A+B+C+D+E+F+G) and proportion of Net Income(%) | Remuneration from ventures other than subsidiaries or from the parent company |
|---|---|---|---|---|---|---|
| Base Compensation (A) | Severance Pay (B) | Directors Compensation (C) | Allowances (D) | Salary, Bonuses, and Allowances (E) | Severance Pay (F) | Employee Compensation (G) |
| PSMC | All Company in the consolidated financial statements | PSMC | All Company in the consolidated financial statements | PSMC | All Company in the consolidated financial statements | PSMC |
| Cash | Stock | Cash | Stock | |||
| Chairman | Frank Huang | - | - | - | - | - |
| Vice Chairman | Brian Shieh | - | - | - | - | - |
| Director | Powerchip Investment Holding Corporation | - | - | - | - | - |
| Representative: Charles Hsu (Note2) | - | - | - | - | - | - |
| Representative: Wen-Liang Chen (Note2) | - | - | - | - | - | - |
| Director | Jordan Investment Inc. | - | - | - | - | - |
| Representative: Martin Chu | - | - | - | - | - | - |
| Independent Director | Cheng-Yu Wu | 3,150 | 3,150 | - | - | - |
| Independent Director | Na-Lin Chang | 3,150 | 3,150 | - | - | - |
| Independent Director | Shu Ye | 3,150 | 3,150 | - | - | - |
| Independent Director | Chan-Shen Chen | 3,150 | 3,150 | - | - | - |
| Independent Director | Shih-Lun Tsao | 3,150 | 3,150 | - | - | - |
In addition to the above remuneration, director remuneration shall be disclosed as follows when received from companies included in the consolidated financial statements and reinvestment companies in the most recent year to compensate directors for their services, such as being independent contractors: None.
Note1: Please describe the policy, system, standard, and structure of remuneration to directors and independent directors, and the correlation between duties, risk, and time input with the amount of remuneration:
(1) Formulated in accordance with the Articles of Incorporation and Rules of remuneration for directors and managerial officers of the Company
a. The Chairman and directors shall be remunerated in accordance with their respective involvement and contribution regarding business operation of the Company, and in an amount comparable with that offered by others in the same industry.
b. The Company's annual net income, before deducting employee and director remuneration, shall allocate no less than 5% for employees compensation and no more than 3% for director remuneration, director remuneration shall be paid in cash only.
c. The Company's independent directors perform their duties independently and participate in corporate governance. They receive fixed remuneration and do not participate in the distribution of director remuneration.
(2) The allowances is traffic allowance.
Note2: The institutional director Powerchip Investment Holding Corporation, changed its representative on March 11, 2025, from Mr. Charles Hsu to Mr. Wen-Liang Chen.
The Comparison Table for the "Corporate Governance Best Practice Principles" Of the Original and the Amended Articles
| Original Article | Amended Article | Note |
|---|---|---|
| Article 13-3 | Article 13-3 | |
| The Company should formulate and disclose its operational strategies and business plans, clearly outlining specific measures to enhance corporate value. These should be presented to the Board of Directors and actively communicated with Shareholders. | The article added is conform to related regulations. |
The Comparison Table for the "Sustainable Development Best Practice Principles" Of the Original and the Amended Articles
| Original Article | Amended Article | Note |
|---|---|---|
| Article 15 | ||
| The Company shall take into account the effect of business operations on ecological efficiency, promote and advocate the concept of sustainable consumption, and conduct research and development, procurement, production, operations, and services in accordance with the following principles to reduce the impact on the natural environment and human beings from its business operations: | ||
| 1. Reduce resource and energy consumption of its products and services. | ||
| 2. Reduce emission of pollutants, toxins and waste, and dispose of waste properly. | ||
| 3. Improve recyclability and reusability of raw materials or products. | ||
| 4. Maximize the sustainability of renewable resources. | ||
| 5. Enhance the durability of products. | ||
| 6. Improve efficiency of products and services. | Article 15 | |
| The Company shall take into account the effect of business operations on ecological efficiency, promote and advocate the concept of sustainable consumption, and conduct research and development, procurement, production, operations, and services in accordance with the following principles to reduce the impact on the natural environment and human beings from its business operations: | ||
| 1. Reduce resource and energy consumption of its products and services. | ||
| 2. Reduce emission of pollutants, toxins and waste, and dispose of waste properly. | ||
| 3. Improve recyclability and reusability of raw materials or products. | ||
| 4. Maximize the sustainability of renewable resources. | ||
| 5. Enhance the durability of products. | ||
| 6. Improve efficiency of products and services. | ||
| 7. Enhance the conservation of marine and terrestrial biodiversity and ecosystems, promote the sustainable use of resources, and ensure fair and equitable benefits. | The article added is conform to related regulations. | |
| Article 21 | ||
| The Company shall create an environment conducive to the development of its employees' careers and establish effective training programs to foster career skills. | ||
| The Company shall establish placement programs to cultivate future industry talents. | ||
| The Company shall establish and implement reasonable employee welfare measures (including remuneration, leave and other | Article 21 | |
| The Company shall create an environment conducive to the development of its employees' careers and establish effective training programs to foster career skills. | ||
| The Company shall establish placement programs to cultivate future industry talents. | ||
| The Company shall establish placement programs to cultivate future industry talents. | ||
| The Company shall establish and implement reasonable employee | The article added is conform to related regulations. |
| Original Article | Amended Article | Note |
|---|---|---|
| welfare etc.) and appropriately reflect the business performance or achievements in the employee remuneration, to ensure the recruitment, retention, and motivation of human resources, and achieve the objective of sustainable operations. | welfare measures (including remuneration, leave and other welfare etc.) and appropriately reflect the business performance or achievements in the employee remuneration, to ensure the recruitment, retention, and motivation of human resources, and achieve the objective of sustainable operations. |
- 17 -
Deloitte.
<Attachment 6>
勤業眾信
勤業眾信聯合會計師事務所
110016 台北市信義區松仁路100號20樓
Deloitte & Touche
20F, Taipei Nan Shan Plaza
No. 100, Songren Rd.,
Xinyi Dist., Taipei 110016, Taiwan
Tel: +886 (2) 2725-9988
Fax: +886 (2) 4051-6688
www.deloitte.com.tw
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Powerchip Semiconductor Manufacturing Corporation
Opinion
We have audited the accompanying parent company only financial statements of Powerchip Semiconductor Manufacturing Corporation (the “Company”), which comprise the parent company only balance sheets as of December 31, 2025 and 2024, the parent company only statements of comprehensive (loss) income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including material accounting policy information.
In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the accompanying parent company only financial position of the Company as of December 31, 2025 and 2024, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2025. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters of the Company’s parent company only financial statements for the year ended December 31, 2025 are described as follows:
Occurrence of Sales Revenue
There is a significant risk to revenue recognition. Thus, we believe that there is a validity risk regarding the transactions of sales revenue of the Company and certain products involve relatively higher risk. Therefore, the risk relating to the validity of sales revenue from the specific products is deemed a key audit matter.
-18-
Our main audit procedures performed with respect to the above-mentioned key audit matter are as follows:
- We obtained an understanding of the design and implementation of internal controls for revenue recognition and tested if these controls were performed effectively.
- We sampled and inspected the validity of the background of the customers and assessed their credit assessments and whether they had been appropriately approved.
- We confirmed the validity of sales revenue, and we sampled the sales revenue from specific products and inspected the contracts or customer orders, delivery orders confirmed by the counterparties and invoices, and whether the sales counterparties were the same as the counterparties collecting payment.
- We reviewed significant sales returns and discounts that happened after year end to confirm the occurrence of sales revenue from specific products.
Acceptance of Property, Plant and Equipment
- The capital expenditure of the Company relating to property, plant and equipment is significant to its financial statements. Refer to Note 11 to the accompanying financial statements for details on property, plant and equipment.
- To ensure the accuracy of the cost amounts, the acquisition, purchase, verification and record keeping of the Company's property, plant and equipment are all subject to appropriate sign-off procedures. Based on the list of equipment under installation and construction in progress, the Company records the capitalized items that are confirmed to be available for their intended use into the computer system under fixed assets every month. The Company regularly examines items that are not capitalized for more than three months after their receipt date and requests that the department responsible for utilizing the items provide an explanation for the reasons for not yet acceptance.
- Because of the significance of such capital expenditure amounts, delays in acceptance or errors in the cost amounts thereof may lead to misstatements of the financial statements.
- We reviewed the Company's property, plant and equipment capital expenditure policy, assessed the reasonableness of the timing of acceptance, and conducted the following procedures:
1) We selected samples of newly acquired items from the record of property, plant and equipment and verified that the costs were recognized in the appropriate period.
2) We selected samples from the list of equipment under installation and construction in progress at year end, performed an on-site physical inventory, and confirmed that such items were not yet available for their intended use.
3) We selected samples of items that were not capitalized for more than three months after their receipt date from the list of equipment under installation and construction in progress and examined the reasons for not yet acceptance.
Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements
Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.
-19-
In preparing the parent company only financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including members of the Audit Committee, are responsible for overseeing the Company’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements
Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.
As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
-
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
-
Obtain sufficient appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
-20-
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2025, and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audits resulting in this independent auditors’ report are Ming-Yuan Chung and Mei-Chen Tsai.
Ming-Yuan Chung Mei-Chen Tsai
Deloitte & Touche
Taipei, Taiwan
Republic of China
February 24, 2026
Notice to Readers
The accompanying parent company only financial statements are intended only to present the parent company only financial position, parent company only financial performance and parent company only cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and parent company only financial statements shall prevail.
-21-
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION
PARENT COMPANY ONLY BALANCE SHEETS
DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| ASSETS | 2025 | 2024 | ||
|---|---|---|---|---|
| Amount | % | Amount | % | |
| CURRENT ASSETS | ||||
| Cash and cash equivalents (Notes 4, 6 and 29) | $ 24,201,866 | 14 | $ 18,348,499 | 10 |
| Financial assets at amortized cost - current (Notes 4, 7, 29 and 31) | 2,534,059 | 1 | 13,678,734 | 7 |
| Contract assets - current (Notes 4 and 21) | 266,376 | - | - | - |
| Accounts receivable - net (Notes 4, 8, 21 and 29) | 6,484,467 | 4 | 6,397,151 | 3 |
| Accounts receivable - related parties (Notes 4, 8, 21, 29 and 30) | 65,115 | - | 20,182 | - |
| Other receivables (Notes 4 and 29) | 445,285 | - | 880,963 | 1 |
| Inventories (Notes 4 and 9) | 9,291,111 | 5 | 9,849,796 | 5 |
| Prepayments (Note 14) | 840,606 | 1 | 1,173,998 | 1 |
| Other current assets - others (Note 14) | 3,713 | - | 1,793 | - |
| Total current assets | 44,132,598 | 25 | 50,351,116 | 27 |
| NON-CURRENT ASSETS | ||||
| Financial assets at amortized cost - non-current (Notes 4, 7, 29 and 31) | - | - | 1,000,000 | - |
| Investments accounted for using the equity method (Notes 4 and 10) | 18,930 | - | 13,111 | - |
| Contract assets - non-current (Notes 4 and 21) | 48,789 | - | - | - |
| Property, plant and equipment (Notes 4, 11 and 31) | 121,997,401 | 68 | 124,230,690 | 66 |
| Right-of-use assets (Notes 4, 12 and 30) | 3,804,684 | 2 | 7,053,561 | 4 |
| Intangible assets (Notes 4 and 13) | 88,432 | - | 170,863 | - |
| Deferred tax assets (Notes 4, 5 and 23) | 6,319,398 | 3 | 3,864,634 | 2 |
| Prepayments for equipment | 1,016,456 | 1 | 783,252 | - |
| Refundable deposits - non-current (Notes 4, 29 and 30) | 5,638 | - | 6,575 | - |
| Costs to fulfil a contract - non-current (Note 4) | 63,401 | - | 34,262 | - |
| Other non-current assets - others (Note 14) | 1,185,088 | 1 | 1,408,737 | 1 |
| Total non-current assets | 134,548,217 | 75 | 138,565,685 | 73 |
| TOTAL | $ 178,680,815 | 100 | $ 188,916,801 | 100 |
| LIABILITIES AND EQUITY | 2025 | 2024 | ||
| --- | --- | --- | --- | --- |
| Amount | % | Amount | % | |
| CURRENT LIABILITIES | ||||
| Contract liabilities - current (Notes 4, 21 and 30) | $ 1,428,724 | 1 | $ 1,457,857 | 1 |
| Accounts payable - unrelated parties (Note 29) | 2,996,701 | 2 | 2,632,985 | 1 |
| Payables for equipment (Note 29) | 1,710,694 | 1 | 4,352,136 | 2 |
| Other payables (Notes 16, 29 and 30) | 4,517,960 | 3 | 4,394,877 | 2 |
| Current tax liabilities (Notes 4, 5 and 23) | 35,822 | - | 19,293 | - |
| Provisions (Notes 4 and 18) | 921,800 | - | 903,236 | 1 |
| Lease liabilities - current (Notes 4, 5, 12, 29 and 30) | 671,785 | - | 1,610,929 | 1 |
| Long-term borrowings - current portion (Notes 15, 29 and 31) | 4,061,671 | 2 | 5,699,608 | 3 |
| Other current liabilities - others (Notes 17, 29 and 30) | 6,435,253 | 4 | 9,349,787 | 5 |
| Total current liabilities | 22,780,410 | 13 | 30,420,708 | 16 |
| NON-CURRENT LIABILITIES | ||||
| Contract liabilities - non-current (Notes 4 and 21) | 1,004,445 | - | - | - |
| Long-term borrowings (Notes 15, 29 and 31) | 59,237,761 | 33 | 57,034,856 | 30 |
| Deferred income tax liabilities (Notes 4, 5 and 23) | 10,203,403 | 6 | 7,748,639 | 4 |
| Lease liabilities - non-current (Notes 4, 5, 12, 29 and 30) | 2,960,200 | 2 | 3,695,219 | 2 |
| Net defined benefit liabilities - non-current (Notes 4 and 19) | 164,532 | - | 360,296 | - |
| Guarantee deposits (Notes 17, 29 and 30) | 226,202 | - | 899,943 | 1 |
| Other non-current liabilities (Note 17) | 103,675 | - | 111,475 | - |
| Total non-current liabilities | 73,900,218 | 41 | 69,850,428 | 37 |
| Total liabilities | 96,680,628 | 54 | 100,271,136 | 53 |
| EQUITY (Notes 4 and 20) | ||||
| Share capital | ||||
| Ordinary shares | 42,238,882 | 24 | 41,720,692 | 22 |
| Advance receipts for ordinary shares | 19,753 | - | 14,170 | - |
| Total share capital | 42,258,635 | 24 | 41,734,862 | 22 |
| Capital surplus | 27,949,944 | 16 | 27,380,465 | 15 |
| Retained earnings | ||||
| Appropriated as legal reserve | 4,035,004 | 2 | 4,035,004 | 2 |
| Appropriated as special reserve | 4,087 | - | 3,623 | - |
| Unappropriated earnings | 7,757,324 | 4 | 15,495,798 | 8 |
| Total retained earnings | 11,796,415 | 6 | 19,534,425 | 10 |
| Others | (4,807) | - | (4,087) | - |
| Total equity | 82,000,187 | 46 | 88,645,665 | 47 |
| TOTAL | $ 178,680,815 | 100 | $ 188,916,801 | 100 |
The accompanying notes are an integral part of the parent company only financial statements.
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION
PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars, Except Loss Per Share)
| 2025 | 2024 | |||
|---|---|---|---|---|
| Amount | % | Amount | % | |
| OPERATING REVENUE (Notes 4, 21 and 30) | $ 46,730,113 | 100 | $ 44,725,710 | 100 |
| COST OF REVENUE (Notes 4, 9, 13, 22 and 30) | 48,267,110 | 103 | 44,200,285 | 99 |
| GROSS (LOSS) PROFIT | (1,536,997) | (3) | 525,425 | 1 |
| OPERATING EXPENSES (Notes 13, 22 and 30) | ||||
| Selling and marketing expenses | 462,882 | 1 | 417,478 | 1 |
| General and administrative expenses | 2,334,315 | 5 | 4,319,542 | 10 |
| Research and development expenses | 5,235,061 | 11 | 5,074,609 | 11 |
| Total operating expenses | 8,032,258 | 17 | 9,811,629 | 22 |
| OTHER OPERATING INCOME AND EXPENSES, NET (Notes 21, 22, 26 and 30) | 3,597,639 | 7 | 1,317,187 | 3 |
| LOSS FROM OPERATIONS | (5,971,616) | (13) | (7,969,017) | (18) |
| NON-OPERATING INCOME AND EXPENSES | ||||
| Interest income (Note 22) | 829,500 | 2 | 1,441,998 | 3 |
| Other gains and losses (Note 22) | (562,040) | (1) | 1,225,577 | 3 |
| Financial costs (Notes 4, 22 and 30) | (1,783,912) | (4) | (1,534,307) | (3) |
| Share of (loss) gain of subsidiaries (Notes 4 and 10) | 6,539 | - | (86) | - |
| Total non-operating income and expenses | (1,509,913) | (3) | 1,133,182 | 3 |
| LOSS BEFORE INCOME TAX | (7,481,529) | (16) | (6,835,835) | (15) |
| INCOME TAX EXPENSE (INCOME) (Notes 4, 5 and 23) | 331,131 | 1 | (58,536) | - |
| NET LOSS | (7,812,660) | (17) | (6,777,299) | (15) |
| OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 19 and 20) | ||||
| Items that will not be reclassified subsequently to profit or loss: | ||||
| Remeasurement of defined benefit plans | 74,650 | - | 201,126 | - |
| Item that may be reclassified subsequently to profit or loss: | ||||
| Exchange differences arising on translation of the financial statements of foreign operations | (720) | - | (464) | - |
| Share of other comprehensive profits and losses of subsidiaries recognized using the equity method | - | - | - | - |
| Total other comprehensive income, net of income tax | 73,930 | - | 200,662 | - |
| TOTAL COMPREHENSIVE LOSS FOR THE YEAR | $ (7,738,730) | (17) | $ (6,576,637) | (15) |
| LOSS PER SHARE (Note 24) | ||||
| Basic loss per share | $ (1.86) | $ (1.64) | ||
| Diluted loss per share | $ (1.86) | $ (1.64) |
The accompanying notes are an integral part of the parent company only financial statements.
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POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION
PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
| Share Capital | Capital Surplus | Retained Earnings | Others Exchange Differences on Translating the Financial Statements of Foreign Operations | Total Equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of Shares (In Thousands) | Ordinary Shares | Advance Receipts for Ordinary Shares | Issuance of Shares | Donations | Employee Stock Options | Others | Total | Legal Reserve | Special Reserve | Unappropriated Earnings | |||
| BALANCE, JANUARY 1, 2024 | 4,085,937 | $ 40,859,369 | $ 45,636 | $ 25,823,715 | $ 166,208 | $ 785,318 | $ 2,639 | $ 26,777,880 | $ 4,035,004 | $ 2,662 | $ 22,072,932 | $(3,623) | $ 93,789,860 |
| Appropriation of earnings | |||||||||||||
| Special reserve | - | - | - | - | - | - | - | - | - | 961 | (961) | - | - |
| Net loss for the year ended December 31, 2024 | - | - | - | - | - | - | - | - | - | - | (6,777,299) | - | (6,777,299) |
| Other comprehensive income (loss) for the year ended December 31, 2024 | - | - | - | - | - | - | - | - | - | - | 201,126 | (464) | 200,662 |
| Total comprehensive loss for the year ended December 31, 2024 | - | - | - | - | - | - | - | - | - | - | (6,576,173) | (464) | (6,576,637) |
| Share-based payment transaction | 86,132 | 861,323 | (31,466) | 587,702 | - | 13,659 | 1,224 | 602,585 | - | - | - | - | 1,432,442 |
| BALANCE, DECEMBER 31, 2024 | 4,172,069 | 41,720,692 | 14,170 | 26,411,417 | 166,208 | 798,977 | 3,863 | 27,380,465 | 4,035,004 | 3,623 | 15,495,798 | (4,087) | 88,645,665 |
| Appropriation of earnings | |||||||||||||
| Special reserve | - | - | - | - | - | - | - | - | - | 464 | (464) | - | - |
| Net loss for the year ended December 31, 2025 | - | - | - | - | - | - | - | - | - | - | (7,812,660) | - | (7,812,660) |
| Other comprehensive income (loss) for the year ended December 31, 2025 | - | - | - | - | - | - | - | - | - | - | 74,650 | (720) | 73,930 |
| Total comprehensive loss for the year ended December 31, 2025 | - | - | - | - | - | - | - | - | - | - | (7,738,010) | (720) | (7,738,730) |
| Share-based payment transaction | 51,819 | 518,190 | 5,583 | 409,263 | - | 153,111 | 7,105 | 569,479 | - | - | - | - | 1,093,252 |
| BALANCE, DECEMBER 31, 2025 | 4,223,888 | $ 42,238,882 | $ 19,753 | $ 26,820,680 | $ 166,208 | $ 952,088 | $ 10,968 | $ 27,949,944 | $ 4,035,004 | $ 4,087 | $ 7,757,324 | $(4,807) | $ 82,000,187 |
The accompanying notes are an integral part of the parent company only financial statements.
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| 2025 | 2024 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Loss before income tax | $ (7,481,529) | $ (6,835,835) |
| Adjustments for: | ||
| Depreciation expense | 11,135,386 | 9,564,729 |
| Amortization expense | 86,625 | 120,067 |
| Finance costs | 1,783,912 | 1,534,307 |
| Interest income | (829,500) | (1,441,998) |
| Share-based compensation | 400,156 | 389,097 |
| Share of (gain) loss of subsidiaries | (6,539) | 86 |
| Loss on disposal of property, plant and equipment, net | 10,836 | 203,532 |
| (Reversal of) write-downs of inventories | (634,613) | 657,670 |
| Net (gain) loss on foreign currency exchange | (478,791) | 934,205 |
| Refund liabilities recognized | 292,000 | 44,000 |
| Provisions recognized | 56,820 | 939,946 |
| Interest income from refundable deposits | 96 | 94 |
| Interest expense from guarantee deposits | - | (1) |
| Guaranteed deposits transferred to other income | (25) | (1,312,963) |
| Others | (7,544) | (7,737) |
| Changes in operating assets and liabilities: | ||
| Contract assets | (315,165) | - |
| Accounts receivable (including related parties) | (135,452) | 225,922 |
| Other receivables | 130,122 | (112,093) |
| Inventories | 1,155,042 | (1,764,359) |
| Prepayments | 515,723 | 2,297,472 |
| Other current assets | (1,920) | 13,278 |
| Costs to fulfil a contract | (29,139) | (34,262) |
| Contract liabilities | 975,312 | 530,299 |
| Accounts payable | 363,716 | (519,511) |
| Other payables | 120,042 | 132,118 |
| Other current liabilities | 13,960 | 26,078 |
| Net defined benefit liabilities | (121,114) | (141,827) |
| Cash generated from operations | 6,998,417 | 5,442,314 |
| Interest received | 941,298 | 1,317,336 |
| Income tax paid | (126,148) | (267,572) |
| Net cash generated from operating activities | 7,813,567 | 6,492,078 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Increase in current financial assets at amortized cost | - | (11,855,578) |
| Decrease in financial assets at amortized cost | 12,144,675 | - |
| Payments for property, plant and equipment | (8,587,829) | (23,499,655) |
| Proceeds from disposal of property, plant and equipment | 817 | 41,583 |
| Refundable deposits paid | (65) | (1,103) |
| (Continued) |
-25-
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| 2025 | 2024 | |
|---|---|---|
| Refundable deposits refunded | $ 998 | $ 50,235 |
| Payments for intangible assets | (1,884) | (33,603) |
| Net cash generated from (used in) investing activities | 3,556,712 | (35,298,121) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from long-term borrowings | 3,335,500 | 20,078,100 |
| Repayments of long-term borrowings | (2,804,166) | (5,710,398) |
| Guarantee deposits received | 1,153 | 4,976 |
| Guarantee deposits refunded | (3,475,967) | (5,011,304) |
| Repayment of the principal portion of lease liabilities | (1,557,124) | (2,332,078) |
| Exercise of employee stock options | 693,096 | 1,043,345 |
| Interest paid | (1,709,404) | (1,446,847) |
| Other prepayments | - | (46,800) |
| Net cash generated from (used in) financing activities | (5,516,912) | 6,578,994 |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 5,853,367 | (22,227,049) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 18,348,499 | 40,575,548 |
| CASH AND CASH EQUIVALENTS, END OF YEAR | $ 24,201,866 | $ 18,348,499 |
The accompanying notes are an integral part of the parent company only financial statements. (Concluded)
-26-
Deloitte.
<Attachment 7>
勤業眾信
勤業眾信聯合會計師事務所
110016 台北市信義區松仁路100號20樓
Deloitte & Touche
20F, Taipei Nan Shan Plaza
No. 100, Songren Rd.,
Xinyi Dist., Taipei 110016, Taiwan
Tel: +886 (2) 2725-9988
Fax: +886 (2) 4051-6888
www.deloitte.com.tw
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Powerchip Semiconductor Manufacturing Corporation
Opinion
We have audited the accompanying consolidated financial statements of Powerchip Semiconductor Manufacturing Corporation and its subsidiaries (the "Company"), which comprise the consolidated balance sheets as of December 31, 2025 and 2024, and the consolidated statements of comprehensive (loss) income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2025. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters of the Company's consolidated financial statements for the year ended December 31, 2025 are described as follows:
Occurrence of Sales Revenue
There is a significant risk to revenue recognition. Thus, we believe that there is a validity risk regarding the transactions of sales revenue of the Company and certain products involve relatively higher risk. Therefore, the risk relating to the validity of sales revenue from the specific products is deemed a key audit matter.
-27-
Our main audit procedures performed with respect to the above-mentioned key audit matter are as follows:
- We obtained an understanding of the design and implementation of internal controls for revenue recognition and tested if these controls were performed effectively.
- We sampled and inspected the validity of the background of the customers and assessed their credit assessments and whether they had been appropriately approved.
- We confirmed the validity of sales revenue, and we sampled the sales revenue from specific products and inspected the contracts or customer orders, delivery orders confirmed by the counterparties and invoices, and whether the sales counterparties were the same as the counterparties collecting payment.
- We reviewed significant sales returns and discounts that happened after year end to confirm the occurrence of sales revenue from specific products.
Acceptance of Property, Plant and Equipment
- The capital expenditure of the Company relating to property, plant and equipment is significant to its financial statements. Refer to Note 11 to the accompanying financial statements for details on property, plant and equipment.
- To ensure the accuracy of the cost amounts, the acquisition, purchase, verification and record keeping of the Company's property, plant and equipment are all subject to appropriate sign-off procedures. Based on the list of equipment under installation and construction in progress, the Company records the capitalized items that are confirmed to be available for their intended use into the computer system under fixed assets every month. The Company regularly examines items that are not capitalized for more than three months after their receipt date and requests that the department responsible for utilizing the items provide an explanation for the reasons for not yet acceptance.
- Because of the significance of such capital expenditure amounts, delays in acceptance or errors in the cost amounts thereof may lead to misstatements of the financial statements.
- We reviewed the Company's property, plant and equipment capital expenditure policy, assessed the reasonableness of the timing of acceptance, and conducted the following procedures:
1) We selected samples of newly acquired items from the record of property, plant and equipment and verified that the costs were recognized in the appropriate period.
2) We selected samples from the list of equipment under installation and construction in progress at year end, performed an on-site physical inventory, and confirmed that such items were not yet available for their intended use.
3) We selected samples of items that were not capitalized for more than three months after their receipt date from the list of equipment under installation and construction in progress and examined the reasons for not yet acceptance.
Other Matter
We have also audited the parent company only financial statements of Powerchip Semiconductor Manufacturing Corporation as of and for the years ended December 31, 2025 and 2024 on which we have issued an unmodified opinion.
-28-
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including members of the Audit Committee, are responsible for overseeing the Company's financial reporting process.
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the standards on auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with the standards on auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
-
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
-29-
- Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2025 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audits resulting in this independent auditors’ report are Ming-Yuan Chung and Mei-Chen Tsai.
Ming-Yuan Chung Mei-Chen Tsai
Deloitte & Touche
Taipei, Taiwan
Republic of China
February 24, 2026
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.
-30-
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| ASSETS | 2025 | 2024 | ||
|---|---|---|---|---|
| Amount | % | Amount | % | |
| CURRENT ASSETS | ||||
| Cash and cash equivalents (Notes 4, 6 and 29) | $ 24,214,250 | 14 | $ 18,355,000 | 10 |
| Financial assets at amortized cost - current (Notes 4, 7, 29 and 31) | 2,534,059 | 1 | 13,678,734 | 7 |
| Contract assets - current (Notes 4 and 21) | 266,376 | - | - | - |
| Accounts receivable - net (Notes 4, 8, 21 and 29) | 6,484,467 | 4 | 6,397,151 | 3 |
| Accounts receivable - related parties (Notes 4, 8, 21, 29 and 30) | 65,115 | - | 20,182 | - |
| Other receivables (Notes 4 and 29) | 447,195 | - | 881,869 | 1 |
| Inventories (Notes 4 and 9) | 9,291,111 | 5 | 9,849,796 | 5 |
| Prepayments (Note 14) | 840,871 | 1 | 1,176,412 | 1 |
| Other current assets - others (Note 14) | 3,713 | - | 1,793 | - |
| Total current assets | 44,147,657 | 25 | 50,360,937 | 27 |
| NON-CURRENT ASSETS | ||||
| Financial assets at amortized cost - non-current (Notes 4, 7, 29 and 31) | - | - | 1,000,000 | - |
| Contract assets - non-current (Notes 4 and 21) | 48,789 | - | - | - |
| Property, plant and equipment (Notes 4, 11 and 31) | 122,004,420 | 68 | 124,236,098 | 66 |
| Right-of use assets (Notes 4, 12 and 30) | 3,804,684 | 2 | 7,053,561 | 4 |
| Intangible assets (Notes 4 and 13) | 88,448 | - | 171,074 | - |
| Deferred tax assets (Notes 4, 5 and 23) | 6,319,398 | 3 | 3,864,634 | 2 |
| Prepayments for equipment | 1,016,456 | 1 | 783,252 | - |
| Refundable deposits (Notes 4, 29 and 30) | 7,283 | - | 8,295 | - |
| Contract fulfillment costs- non-current (Note 4) | 63,401 | - | 34,262 | - |
| Other non-current assets - others (Note 14) | 1,185,088 | 1 | 1,408,737 | 1 |
| Total non-current assets | 134,537,967 | 75 | 138,559,913 | 73 |
| TOTAL | $ 178,685,624 | 100 | $ 188,920,850 | 100 |
The accompanying notes are an integral part of the consolidated financial statements.
| LIABILITIES AND EQUITY | 2025 | 2024 | ||
|---|---|---|---|---|
| Amount | % | Amount | % | |
| CURRENT LIABILITIES | ||||
| Contract liabilities - current (Notes 4, 21 and 30) | $ 1,428,724 | 1 | $ 1,457,857 | 1 |
| Accounts payable (Note 29) | 2,996,701 | 2 | 2,632,985 | 1 |
| Payables for equipment (Note 29) | 1,710,694 | 1 | 4,352,136 | 2 |
| Other payables (Notes 16, 29 and 30) | 4,519,703 | 3 | 4,397,998 | 2 |
| Current tax liabilities (Notes 4, 5 and 23) | 36,904 | - | 19,611 | - |
| Provisions (Notes 4 and 18) | 921,800 | - | 903,236 | 1 |
| Lease liabilities - current (Notes 4, 5, 12, 29 and 30) | 671,785 | - | 1,610,929 | 1 |
| Long-term borrowings - current portion (Notes 15, 29 and 31) | 4,061,671 | 2 | 5,699,608 | 3 |
| Other current liabilities - others (Notes 17, 29 and 30) | 6,437,237 | 4 | 9,350,397 | 5 |
| Total current liabilities | 22,785,219 | 13 | 30,424,757 | 16 |
| NON-CURRENT LIABILITIES | ||||
| Contract liabilities - non-current (Notes 4 and 21) | 1,004,445 | - | - | - |
| Long-term borrowings (Notes 15, 29 and 31) | 59,237,761 | 33 | 57,034,856 | 30 |
| Deferred income tax liabilities (Notes 4, 5 and 23) | 10,203,403 | 6 | 7,748,639 | 4 |
| Lease liabilities - non-current (Notes 4, 5, 12, 29 and 30) | 2,960,200 | 2 | 3,695,219 | 2 |
| Net defined benefit liabilities - non-current (Notes 4 and 19) | 164,532 | - | 560,296 | - |
| Guarantee deposits (Notes 17, 29 and 30) | 226,202 | - | 899,943 | 1 |
| Other non - current liabilities (Note 17) | 103,675 | - | 111,475 | - |
| Total non-current liabilities | 73,900,218 | 41 | 69,850,428 | 37 |
| Total liabilities | 96,685,437 | 54 | 100,275,185 | 53 |
| EQUITY (Notes 4 and 20) | ||||
| Share capital | ||||
| Ordinary shares | 42,238,882 | 24 | 41,720,692 | 22 |
| Advance receipts for ordinary shares | 19,753 | - | 14,170 | - |
| Total share capital | 42,238,635 | 24 | 41,734,862 | 22 |
| Capital surplus | 27,949,944 | 16 | 27,380,465 | 15 |
| Retained earnings | ||||
| Appropriated as legal reserve | 4,035,004 | 2 | 4,035,004 | 2 |
| Appropriated as special reserve | 4,087 | - | 3,623 | - |
| Unappropriated earnings | 7,727,324 | 4 | 15,495,798 | 8 |
| Total retained earnings | 11,796,413 | 6 | 19,534,423 | 10 |
| Others | (4,007) | - | (4,087) | - |
| Total equity | 82,000,187 | 46 | 88,645,665 | 47 |
| TOTAL | $ 178,685,624 | 100 | $ 188,920,850 | 100 |
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)
| 2025 | 2024 | |||
|---|---|---|---|---|
| Amount | % | Amount | % | |
| OPERATING REVENUE (Notes 4, 21 and 30) | $ 46,730,113 | 100 | $ 44,725,710 | 100 |
| COST OF REVENUE (Notes 4, 9, 13, 22 and 30) | 48,267,110 | 103 | 44,200,285 | 99 |
| GROSS (LOSS) PROFIT | (1,536,997) | (3) | 525,425 | 1 |
| OPERATING EXPENSES (Notes 13, 22 and 30) | ||||
| Selling and marketing expenses | 462,882 | 1 | 417,478 | 1 |
| General and administrative expenses | 2,334,315 | 5 | 4,319,542 | 10 |
| Research and development expenses | 5,257,279 | 11 | 5,083,629 | 11 |
| Total operating expenses | 8,054,476 | 17 | 9,820,649 | 22 |
| OTHER OPERATING INCOME AND EXPENSES, NET (Notes 21, 22, 26 and 30) | 3,631,395 | 7 | 1,329,759 | 3 |
| LOSS FROM OPERATIONS | (5,960,078) | (13) | (7,965,465) | (18) |
| NON-OPERATING INCOME AND EXPENSES | ||||
| Interest income (Note 22) | 829,516 | 2 | 1,442,001 | 3 |
| Other gains and losses (Note 22) | (562,528) | (1) | 1,226,022 | 3 |
| Finance costs (Notes 4, 22 and 30) | (1,783,912) | (4) | (1,534,307) | (3) |
| Total non-operating income and expenses | (1,516,924) | (3) | 1,133,716 | 3 |
| LOSS BEFORE INCOME TAX | (7,477,002) | (16) | (6,831,749) | (15) |
| INCOME TAX EXPENSE (INCOME) (Notes 4, 5 and 23) | 335,658 | 1 | (54,450) | - |
| NET LOSS | (7,812,660) | (17) | (6,777,299) | (15) |
| OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 19 and 20) | ||||
| Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans | 74,650 | - | 201,126 | - |
| Item that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of the financial statements of foreign operations | (720) | - | (464) | - |
| Total other comprehensive income, net of income tax | 73,930 | - | 200,662 | - |
| TOTAL COMPREHENSIVE LOSS FOR THE YEAR | $ (7,738,730) | (17) | $ (6,576,637) | (15) |
| LOSS PER SHARE (Note 24) | ||||
| Basic loss per share | $ (1.86) | $ (1.64) | ||
| Diluted loss per share | $ (1.86) | $ (1.64) |
The accompanying notes are an integral part of the consolidated financial statements.
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)
| Share Capital | Capital Surplus | Retained Earnings | Others Exchange Differences on Translating the Financial Statements of Foreign Operations | Total Equity | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of Shares (In Thousands) | Ordinary Shares | Advance Receipts for Ordinary Shares | Issuance of Shares | Donations | Employee Stock Options | Others | Total | Legal Reserve | Special Reserve | Unappropriated Earnings | |||
| BALANCE, JANUARY 1, 2024 | 4,085,937 | $ 40,859,369 | $ 45,636 | $ 25,823,715 | $ 166,208 | $ 785,318 | $ 2,639 | $ 26,777,880 | $ 4,035,004 | $ 2,662 | $ 22,072,932 | $(3,623) | $ 93,789,860 |
| Appropriation of earnings | |||||||||||||
| Special reserve | - | - | - | - | - | - | - | - | - | 961 | (961) | - | - |
| Net loss for the year ended December 31, 2024 | - | - | - | - | - | - | - | - | - | - | (6,777,299) | - | (6,777,299) |
| Other comprehensive income (loss) for the year ended December 31, 2024 | - | - | - | - | - | - | - | - | - | - | 201,126 | (464) | 200,662 |
| Total comprehensive loss for the year ended December 31, 2024 | - | - | - | - | - | - | - | - | - | - | (6,576,173) | (464) | (6,576,637) |
| Share-based payment transaction | 86,132 | 861,323 | (31,466) | 587,702 | - | 13,659 | 1,224 | 602,585 | - | - | - | - | 1,432,442 |
| BALANCE, DECEMBER 31, 2024 | 4,172,069 | 41,720,692 | 14,170 | 26,411,417 | 166,208 | 798,977 | 3,863 | 27,380,465 | 4,035,004 | 3,623 | 15,495,798 | (4,087) | 88,645,665 |
| Appropriation of earnings | |||||||||||||
| Special reserve | - | - | - | - | - | - | - | - | - | 464 | (464) | - | - |
| Net loss for the year ended December 31, 2025 | - | - | - | - | - | - | - | - | - | - | (7,812,660) | - | (7,812,660) |
| Other comprehensive income (loss) for the year ended December 31, 2025 | - | - | - | - | - | - | - | - | - | - | 74,650 | (720) | 73,930 |
| Total comprehensive loss for the year ended December 31, 2025 | - | - | - | - | - | - | - | - | - | - | (7,738,010) | (720) | (7,738,730) |
| Share-based payment transaction | 51,819 | 518,190 | 5,583 | 409,263 | - | 153,111 | 7,105 | 569,479 | - | - | - | - | 1,093,252 |
| BALANCE, DECEMBER 31, 2025 | 4,223,888 | $ 42,238,882 | $ 19,753 | $ 26,820,680 | $ 166,208 | $ 952,088 | $ 10,968 | $ 27,949,944 | $ 4,035,004 | $ 4,087 | $ 7,757,324 | $(4,807) | $ 82,000,187 |
The accompanying notes are an integral part of the consolidated financial statements.
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| 2025 | 2024 | |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| Loss before income tax | $ (7,477,002) | $ (6,831,749) |
| Adjustments for: | ||
| Depreciation expense | 11,136,612 | 9,566,047 |
| Amortization expense | 86,816 | 120,265 |
| Finance costs | 1,783,912 | 1,534,307 |
| Interest income | (829,516) | (1,442,001) |
| Share-based compensation | 400,156 | 389,097 |
| Loss on disposal of property, plant and equipment, net | 10,836 | 203,532 |
| (Reversal of) write-downs of inventories | (634,613) | 657,670 |
| Net (gain) loss on foreign currency exchange | (478,791) | 934,205 |
| Refund liabilities recognized | 292,000 | 44,000 |
| Provisions recognized | 56,820 | 939,946 |
| Interest income from refundable deposits | 96 | 94 |
| Interest expense from guarantee deposits | - | (1) |
| Guaranteed deposits transferred to other income | (25) | (1,312,963) |
| Others | (7,544) | (7,737) |
| Changes in operating assets and liabilities: | ||
| Contract assets | (315,165) | - |
| Accounts receivable (including related parties) | (135,452) | 225,922 |
| Other receivables | 129,078 | (111,858) |
| Inventories | 1,155,042 | (1,764,359) |
| Prepayments | 517,766 | 2,297,404 |
| Other current assets | (1,920) | 13,278 |
| Costs to fulfil a contract | (29,139) | (34,262) |
| Contract liabilities | 975,312 | 530,299 |
| Accounts payable | 363,716 | (519,511) |
| Other payables | 118,801 | 133,202 |
| Other current liabilities | 15,360 | 25,875 |
| Net defined benefit liabilities | (121,114) | (141,827) |
| Cash generated from operations | 7,012,042 | 5,448,875 |
| Interest received | 941,314 | 1,317,339 |
| Income tax paid | (129,897) | (271,585) |
| Net cash generated from operating activities | 7,823,459 | 6,494,629 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Increase in financial assets at amortized cost | - | (11,855,578) |
| Decrease in financial assets at amortized cost | 12,144,675 | - |
| Payments for property, plant and equipment | (8,590,945) | (23,499,655) |
| Proceeds from disposal of property, plant and equipment | 817 | 41,583 |
| Refundable deposits paid | (65) | (1,166) |
| Refundable deposits refunded | 998 | 50,235 |
| Payments for intangible assets | (1,884) | (33,603) |
| Net cash generated from (used in) investing activities | 3,553,596 | (35,298,184) |
(Continued)
POWERCHIP SEMICONDUCTOR MANUFACTURING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(In Thousands of New Taiwan Dollars)
| 2025 | 2024 | |
|---|---|---|
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from long-term borrowings | $ 3,335,500 | $ 20,078,100 |
| Repayments of long-term borrowings | (2,804,166) | (5,710,398) |
| Guarantee deposits received | 1,153 | 4,976 |
| Guarantee deposits refunded | (3,475,967) | (5,011,304) |
| Repayment of the principal portion of lease liabilities | (1,557,124) | (2,332,078) |
| Exercise of employee stock options | 693,096 | 1,043,345 |
| Interest paid | (1,709,404) | (1,446,847) |
| Other prepayments | - | (46,800) |
| Net cash generated from (used in) financing activities | (5,516,912) | 6,578,994 |
| EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES | (393) | (167) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 5,859,750 | (22,224,728) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 18,355,000 | 40,579,728 |
| CASH AND CASH EQUIVALENTS, END OF YEAR | $ 24,214,750 | $ 18,355,000 |
The accompanying notes are an integral part of the consolidated financial statements.
(Concluded)
-35-
<Attachment 8>
Powered Semiconductor Manufacturing Corporation 2025 Earnings Distribution Table
Unit: NTD$
| Item | Amount | |
|---|---|---|
| Unappropriated Earnings at the Beginning of the Year | 15,495,333,888 | |
| Less: Net Loss of 2025 | (7,812,659,510) | |
| Less: Special Reserve | (720,842) | |
| Plus: Remeasurement of the Defined Benefit Plans | 74,649,803 | |
| Unappropriated Earnings at the End of the Year | 7,756,603,339 |
Change Proposal Report for the issuance of new common shares to sponsor the issuance of GDR through ordinary shares in 2022
1. The reason for this project change
The original cash capital increase plan was to purchase machinery and facilities for Phase 1 of the Tongluo fab. This was aimed at expanding capacity, enhancing international competitiveness, and meeting client demand. However, during the construction period, the Company faced challenges from mainland Chinese competitors who were actively expanding their mature process foundry market capacity and engaging in price-cutting competition, amid a global environment of high inflation and elevated interest rates, and the shadow of war, downstream demand for consumer electronics weakened. The Company adjusted its production capacity planning, slowed down equipment procurement, and gradually expanded its capacity for AI-related applications to respond to the situation. Nevertheless, the first phase of the Tongluo factory still faced a gap between its production capacity and the original target, as well as a depreciation burden, which were the main reasons for the company's losses.
Considering the global memory market is experiencing a shortage due to AI applications, in order to accelerate the improvement of the Company's memory process technology and enhance its financial structure, the Company's Board of Directors approached on February 10, 2026, to sell the Tongluo Fab and its facilities to Micron Technology, Inc., on behalf of itself and its worldwide subsidiaries and affiliates. It is expected that after the remaining balance is paid in the second quarter of 2026, all machinery and equipment procurement activities will be formally stopped. Therefore, an application for a change in the plan is submitted. The table below compares the total amount of funds required before and after the plan change:
Before and after change plan comparison table
Unit: NT$ Thousand
| Item | Currency | Total funds required | Variance | |
|---|---|---|---|---|
| before change | after change | |||
| Tongluo fab machinery and equipment | USD | 3,092,190 | 1,778,636 | (1,313,554) |
| NTD | 91,838,038 | 52,825,499 | (39,012,539) |
Note: Estimated based on an exchange rate of NT$29.7:US$1.
2. After change project and schedule for fund usage
Unit: NT$ Thousand
| Item | Estimated Completion Date | Total funds required | 2025 | 2026 | ||
|---|---|---|---|---|---|---|
| As of Q4 | Q1 | Q2 | ||||
| (Actual) | (Estimated) | (Estimated) | ||||
| Tongluo fab machinery and equipment | Q2 2026 | USD | 1,778,636 | 1,748,538 | 29,264 | 834 |
| NTD | 52,825,499 | 51,931,585 | 869,134 | 24,780 |
Note: Estimated based on an exchange rate of NT$29.7:US$1.
The funds raised in this offering have been fully utilized in accordance with the original plan. In response to adjustments in our operational strategy and in connection with the disposal of the Tongluo Fab, the Company has concurrently terminated the Tongluo Fab construction project. With respect to the existing resources of the Tongluo Fab, the Company has adopted a phased disposition approach, integrating core personnel, key equipment, and high value-added product lines into our existing fabrication facilities. Through a strategy of retaining the strongest assets and eliminating
-37-
underperforming ones, the Company aims to accelerate replacement for outdated equipment and reduce low-margin product lines. This approach is intended to decrease reliance on the mature-process foundry market and further optimize the Company's product portfolio and profitability structure.
3. Expected after change benefits
After the plan change, the Company can significantly reduce the idle capacity costs generated by the Tongluo Fab's first phase due to the initial capacity utilization rate not meeting expectations. Through asset disposal, the Company can optimize its asset turnover rate and cash flow. The posttransformation technology path will help the Company enter the high-performance computing market, enhance long-term shareholder value, and strengthen its competitive position in the industry.
The total amount of NT$52,825,499,000 (approximately US$1,778,636,000 at an exchange rate of NT$29.7:US$1) was used to purchase machinery and equipment for the Tongluo Fab, mainly to meet the needs of the semiconductor market demand and the Company's project development plan. As of the end of 2025, the total amount of equipment invested was NT$51,931,585,000 (approximately US$1,748,538,000 at an exchange rate of NT$29.7:US$1), and the remaining amount is expected to be fully paid in the second quarter of 2026.
To optimize production base allocation, the purchased equipment will be transferred in phases from the Tongluo Fab to the existing facilities in Hsinchu for integration. Upon completion, the centralized management of production bases is expected to more effectively drive revenue contribution and enhance operational synergies. Based on an evaluation of post-transfer capacity benefits and product portfolio optimization effects, the estimated recovery period for this machinery and equipment investment is approximately 14.35 years. The projected future profitability and benefits are summarized in the table below.
Unit: Kpcs/NT$ Thousand
| Year | Sales volume | Operating revenue | Gross profit | Net operating income |
|---|---|---|---|---|
| 2025 | 260 | 7,476,200 | (245,899) | (953,534) |
| 2026 | 269 | 8,411,220 | 1,021,587 | 1,586,294 |
| 2027 | 268 | 9,032,316 | 1,241,478 | (187,147) |
| 2028 | 265 | 8,891,479 | 1,667,296 | 186,864 |
| 2029 | 252 | 8,344,550 | 1,502,945 | (77,505) |
| 2030 | 249 | 8,160,409 | 1,617,255 | 111,829 |
| 2031 | 249 | 8,157,857 | 1,694,144 | 173,956 |
| 2032 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2033 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2034 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2035 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2036 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2037 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2038 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2039 | 249 | 8,199,769 | 1,717,377 | 197,190 |
Note 1: From 2033 onward, operations are assumed to remain at the 2032 operating level.
Note 2: Depreciation is calculated using the straight-line method based on the average useful life of the equipment.
Note 3: Changes in sales volume are mainly attributable to adjustments in product mix.
Estimated Payback Period
Unit: NT$ Thousand
| Year | Net operating income (A) | Depreciation expense (B) | Cash flow (A+B) | Cumulative cash flow |
|---|---|---|---|---|
| 2025 | (953,534) | 3,521,700 | 2,568,166 | 2,568,166 |
| 2026 | 1,586,294 | 3,521,700 | 5,107,994 | 7,676,160 |
| 2027 | (187,147) | 3,521,700 | 3,334,553 | 11,010,713 |
| 2028 | 186,864 | 3,521,700 | 3,708,564 | 14,719,278 |
| 2029 | (77,505) | 3,521,700 | 3,444,195 | 18,163,473 |
| 2030 | 111,829 | 3,521,700 | 3,633,529 | 21,797,001 |
| 2031 | 173,956 | 3,521,700 | 3,695,656 | 25,492,658 |
| 2032 | 197,190 | 3,521,700 | 3,718,889 | 29,211,547 |
| 2033 | 197,190 | 3,521,700 | 3,718,889 | 32,930,436 |
| 2034 | 197,190 | 3,521,700 | 3,718,889 | 36,649,326 |
| 2035 | 197,190 | 3,521,700 | 3,718,889 | 40,368,215 |
| 2036 | 197,190 | 3,521,700 | 3,718,889 | 44,087,105 |
| 2037 | 197,190 | 3,521,700 | 3,718,889 | 47,805,994 |
| 2038 | 197,190 | 3,521,700 | 3,718,889 | 51,524,884 |
| 2039 | 197,190 | 3,521,700 | 3,718,889 | 55,243,773 |
Note 1: The depreciation period is 15 years, calculated based on the average useful life of the equipment using the straight-line method.
Note 2: From 2033 onward, operations are assumed to remain at the 2032 operating level.
For the estimation of future benefits presented in the above table, has taken into consideration industry prospects, current operating conditions, the timeline for equipment relocation, and the synergies arising from product portfolio optimization. Depreciation and operating costs have been recognized in accordance with accounting principles.
4. Impact of the plan change on shareholder equity
This plan change is mainly due to the Company's sale of the Tongluo Fab, which led to the termination of the construction plan. This will not only reduce the depreciation burden of fixed assets but also accelerate the improvement of the Company's memory process technology, enhance its financial structure, and have a positive impact on shareholder equity.
Powerchip Semiconductor Manufacturing Corporation
Original Undertaking Underwriter Assessment Opinions for the issuance of new common shares to sponsor the issuance of GDR through ordinary shares in 2022
Yuanta Securities Co., Ltd.
February 12, 2026
With respect to Powerchip Semiconductor Manufacturing Corporation (below, "PSMC" or the "Company")'s proposal to change the funding utilizations and implementation schedule for the 2022 Issuance of Overseas Depositary Receipts Sponsored via Cash Capital Increase Plan through New Shares Plan, the matter has been submitted to the Board of Directors for resolution and will be presented to the next annual general meeting of shareholders for ratification. In accordance with Article 9, Paragraph 1, Subparagraph 9 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the underwriter hereby provides the following assessment and explanation regarding the before and after change cash capital increase plan, progress, and expected benefits:
1. Original plans
(1) Plan details
1) Approval date and document number from the authority: July 13, 2022, FSC Letter No. 1110348188.
2) The total amount required for this project: US$3,092,190 thousand.
3) Sources of the funds:
① Issuance of 349,995,000 shares via Issuance of Overseas Depositary Receipts Sponsored via Cash Capital Increase through New Shares, at a par value of NT$10 per share and an issue price of NT$35.01 per share, for a total amount raised of US$403,411,000.
② The remaining US$2,688,779,000 will be funded by the Company's internal funds, bank borrowings, and/or other financing arrangements.
(2) Planned use of proceeds, implementation schedule, and expected benefits
1) Planned use of proceeds and implementation schedule
Unit: NT$ Thousand
| Item | Estimated Completion Date | Required Amount | Planned schedule for fund usage |
|---|---|---|---|
| Cumulative through Q1 2022 (actual) | Q2 2022 (estimated) | Q3 2022 (estimated) | Q4 2022 (estimated) |
| Tongluo Fab machinery and equipment | Q1 2026 | USD | 3,092,190 |
| NTD | 286,566 | 1,646,071 | 1,916,264 |
| Q2 2024 (estimated) | Q3 2024 (estimated) | Q4 2024 (estimated) | Q1 2025 (estimated) |
| NTD | 91,838,038 | USD | 349,924 |
| NTD | 10,392,749 | 7,316,992 | 18,545,238 |
Source: Provided by the Company.
2) Expected benefits
The Company projected that, upon completion of fundraising in the third quarter of 2022, it would be able to fully finance the acquisition of machinery and equipment for the Tongluo Fab. The total amount allocated by the Company for the purchase of machinery and equipment for the Tongluo Fab is US$3,092,190,000 (calculated at a tentative exchange rate of NT$29.7:US$1, equivalent to approximately NT$91,838,038,000). This investment is primarily intended to meet overall semiconductor market demand and to meet needs for the Company's long-term operational development. The Company initially planned to establish a production line at the Tongluo Fab with a monthly capacity of 32,000 wafers. Equipment procurement for this project began at the end of 2021. Acceptance was expected to commence in the fourth quarter of 2023, followed by stage-by-stage pilot production. The final installment is expected to be paid in the first quarter of 2026. Projected increases in profitability are provided in the table below. The estimated recovery period for this machinery and equipment investment was approximately 8.22 years.
Unit: Kpcs/NT$ Thousand
| Year | Item | Production volume | Sales volume | Operating revenue | Gross profit | Operating income |
|---|---|---|---|---|---|---|
| 2023 | Wafer Foundry | - | - | - | (1,330,020) | (1,330,020) |
| 2024 | 102 | 102 | 6,043,653 | (2,377,320) | (2,860,813) | |
| 2025 | 345 | 345 | 22,478,980 | 6,869,739 | 5,071,420 | |
| 2026 | 384 | 384 | 24,796,161 | 8,143,067 | 6,159,374 | |
| 2027 | 384 | 384 | 24,548,200 | 7,895,105 | 5,931,249 | |
| 2028 | 384 | 384 | 24,302,718 | 7,649,623 | 5,705,406 |
Source: Provided by the Company.
Note: From 2028 onward, operations are assumed to remain at the 2028 operating level.
3)Actual implementation status and benefit evaluation
The Company's 2022 Issuance of Overseas Depositary Receipts Sponsored via Cash Capital Increase Plan through New Shares completed fundraising on August 2, 2022, with actual proceeds received amounting to US$403,411,000. In alignment with adjustments to its production capacity planning, the Company has deferred the equipment procurement schedule.
Unit: NT$ Thousand
| Item | Implementation status | Amount utilized as of Q4 2025 | Progress ahead or behind schedule, reasons, and improvement plans | |||
|---|---|---|---|---|---|---|
| USD | NTD | Equivalent to NT$ (note) | ||||
| Tongluo fab machinery and equipment | Amount spent | Estimated | 2,993,107 | - | 88,895,308 | In alignment with adjustments to the Company's production capacity planning, the equipment procurement schedule has been deferred. |
| Actual | 1,538,347 | 6,242,680 | 51,931,585 | |||
| Implementation progress (%) | Estimated | 96.79 | - | 96.79 | ||
| Actual | 49.75 | 6.79 | 56.54 | |||
| Total | Amount spent | Estimated | 2,993,107 | - | 88,895,308 | Company's production capacity planning, the equipment procurement schedule has been deferred. |
| Actual | 1,538,347 | 6,242,680 | 51,931,585 | |||
| Implementation progress (%) | Estimated | 96.79 | - | 96.79 | ||
| Actual | 49.75 | 6.79 | 56.54 |
Source: Provided by the Company.
Note: Estimated based on an exchange rate of NT$29.7:US$1.
4)Utilization of unspent funds and reasonableness
The Company completed fundraising for its Issuance of Overseas Depositary Receipts Sponsored via Cash Capital Increase through New Shares on August 2, 2022, with actual proceeds received amounting to US$403,411,000. In response to changes in market conditions and in alignment with its production capacity planning, the Company has flexibly adjusted the equipment procurement schedule. As of December 31, 2025, cumulative payments made for machinery and equipment for the Tongluo Fab amounted to approximately US$1,538,347,000.
Of the aforementioned procurement payments, US$403,411,000 in funding came from proceeds raised in this offering, while the remaining approximately US$1,134,936,000 was financed through the Company's internal funds and bank borrowings. In summary, the proceeds raised in this offering have been fully utilized in accordance with the original plan.
2. Amended plan
(1)Rationale and necessity for the plan amendment
The Company's original fundraising plan was intended to finance the acquisition of Phase I
machinery and equipment for the Tongluo Fab, with the objective of expanding production capacity and enhancing international competitiveness. However, amid the global environment of high inflation and elevated interest rates, downstream demand for consumer electronics has weakened. At the same time, industry peers in China have aggressively expanded mature process capacity and adopted price-competition strategies, resulting in significant changes to the industry's supply-demand dynamics. Although the Company has flexibly adjusted our product mix and equipment procurement strategy, shifting toward development for AI-related applications, the Tongluo Fab has yet to achieve economies of scale and is subject to relatively high depreciation and amortization burdens, thereby constraining profitability momentum.
In light of the surge in AI application-driven memory market demand, and in order to reduce asset depreciation pressure, accelerate process technology advancement, and strengthen our financial structure, the Company's Board of Directors resolved on February 10, 2026, to dispose of the Tongluo Fab and its related facilities (excluding production-related machinery and equipment) to Micron Technology, Inc., on behalf of itself and its worldwide subsidiaries and affiliates. In connection with this asset disposal, the Company is expected that after the remaining balance is paid in the second quarter of 2026, all machinery and equipment procurement activities will be formally stopped at the Tongluo Fab.
In summary, this change to the plan for the use of proceeds is based on prudent consideration of the dramatic changes in the industry environment and operating performance falling short of expectations. The disposal of underperforming assets will optimize capital utilization, alleviate depreciation burdens, and improve the Company's financial structure, as well as also better concentrating resources on high-core-competency areas such as AI memory. This is why this change to the plan is both reasonable and necessary. A table comparing total funds required before and after change is given below.
Before and after change plan comparison table
Unit: NT$ Thousand
| Item | Currency | Total funds required | Difference | |
|---|---|---|---|---|
| before change | after change | |||
| Tongluo fab machinery and equipment | USD | 3,092,190,000 | 1,778,636,000 | (1,313,554,000) |
| NTD | 91,838,038,000 | 52,825,499,000 | (39,012,539,000) | |
| Total | USD | 3,092,190,000 | 1,778,636,000 | (1,313,554,000) |
| NTD | 91,838,038,000 | 52,825,499,000 | (39,012,539,000) |
Source: Provided by the Company.
Note: Estimated based on the exchange rate of NT$29.7:US$1 applied at the time of the GDR application.
(2)After change project and schedule for fund usage
Unit: NT$ Thousand
| Item | Expected date of completion | Total funds required | 2025 | 2026 | ||
|---|---|---|---|---|---|---|
| As of Q4 | Q1 | Q2 | ||||
| (Actual) | (Estimated) | (Estimated) | ||||
| Tongluo fab machinery and equipment | Q2 2026 | USD | 1,778,636 | 1,748,538 | 29,264 | 834 |
| NTD | 52,825,499 | 51,931,585 | 869,134 | 24,780 |
Source: Provided by the Company.
The proceeds raised in this offering have been fully utilized in accordance with the original plan. In response to adjustments in our operational strategy and in connection with the disposal of the Tongluo Fab, the Company has concurrently terminated the Tongluo Fab construction project. With respect to the existing resources of the Tongluo Fab, the Company has adopted a phased disposition approach, integrating core personnel, key equipment, and high value-added
product lines into our existing fabrication facilities. Through a strategy of retaining the strongest assets and eliminating underperforming ones, the Company aims to accelerate replacement for outdated equipment and reduce low-margin product lines. This approach is intended to decrease reliance on the mature-process foundry market and further optimize the Company's product portfolio and profitability structure.
(3)Expected after change benefits
After the plan is changed, the Company will be able to alleviate the substantial depreciation burden incurred during the Tongluo Fab's initial phase, when economies of scale had yet to be realized. By revitalizing asset disposal, we expect to significantly improve asset turnover and strengthen cash flow. In addition, the Company's strategic shift toward advanced technology development will facilitate our entry into the high-performance computing market, thereby enhancing long-term shareholder value and reinforcing our competitive position within the industry.
Under the amended plan, the total amount for the purchase of machinery and equipment for the Tongluo Fab is NT$52,825,499,000 (equivalent to c. US$1,778,636,000 at an exchange rate of NT$29.7:US$1). This investment is aligned with semiconductor market demand and the Company's long-term strategic initiatives. As of the end of 2025, cumulative investment in such machinery and equipment amounted to NT$51,931,585,000 (equivalent to US$1,748,538,000), with the balance expected to be fully paid in the second quarter of 2026.
To optimize production base allocation, the procured machinery and equipment will be relocated in phases from the Tongluo Fab to our existing facilities in Hsinchu for integration. Upon completion, we project that centralized management of our production bases will more effectively drive revenue contribution and enhance operational synergies. Based on an evaluation of post-transfer capacity benefits and product portfolio optimization effects, the estimated recovery period for this machinery and equipment investment is approximately 14.35 years. Projected future profitability and benefit details are summarized in the table below:
Unit: Kpcs/NT$ Thousand
| Year | Sales volume | Operating revenue | Gross profit | Net operating income |
|---|---|---|---|---|
| 2025 | 260 | 7,476,200 | (245,899) | (953,534) |
| 2026 | 269 | 8,411,220 | 1,021,587 | 1,586,294 |
| 2027 | 268 | 9,032,316 | 1,241,478 | (187,147) |
| 2028 | 265 | 8,891,479 | 1,667,296 | 186,864 |
| 2029 | 252 | 8,344,550 | 1,502,945 | (77,505) |
| 2030 | 249 | 8,160,409 | 1,617,255 | 111,829 |
| 2031 | 249 | 8,157,857 | 1,694,144 | 173,956 |
| 2032 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2033 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2034 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2035 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2036 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2037 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2038 | 249 | 8,199,769 | 1,717,377 | 197,190 |
| 2039 | 249 | 8,199,769 | 1,717,377 | 197,190 |
Source: Provided by the Company.
Note 1: From 2033 onward, operations are assumed to remain at the 2032 operating level.
Note 2: Depreciation is calculated using the straight-line method based on the average useful life of the equipment.
Note 3: Changes in sales volume are mainly attributable to adjustments in product mix.
Estimated Payback Period
Unit: NT$ Thousand
| Year | Net operating income (A) | Depreciation expense (B) | Cash flow (A+B) | Cumulative cash flow |
|---|---|---|---|---|
| 2025 | (953,534) | 3,521,700 | 2,568,166 | 2,568,166 |
| 2026 | 1,586,294 | 3,521,700 | 5,107,994 | 7,676,160 |
| 2027 | (187,147) | 3,521,700 | 3,334,553 | 11,010,713 |
| 2028 | 186,864 | 3,521,700 | 3,708,564 | 14,719,278 |
| 2029 | (77,505) | 3,521,700 | 3,444,195 | 18,163,473 |
| 2030 | 111,829 | 3,521,700 | 3,633,529 | 21,797,001 |
| 2031 | 173,956 | 3,521,700 | 3,695,656 | 25,492,658 |
| 2032 | 197,190 | 3,521,700 | 3,718,889 | 29,211,547 |
| 2033 | 197,190 | 3,521,700 | 3,718,889 | 32,930,436 |
| 2034 | 197,190 | 3,521,700 | 3,718,889 | 36,649,326 |
| 2035 | 197,190 | 3,521,700 | 3,718,889 | 40,368,215 |
| 2036 | 197,190 | 3,521,700 | 3,718,889 | 44,087,105 |
| 2037 | 197,190 | 3,521,700 | 3,718,889 | 47,805,994 |
| 2038 | 197,190 | 3,521,700 | 3,718,889 | 51,524,884 |
| 2039 | 197,190 | 3,521,700 | 3,718,889 | 55,243,773 |
Source: Provided by the Company.
Note 1: The depreciation period is 15 years, calculated based on the average useful life of the equipment using the straight-line method.
Note 2: From 2033 onward, operations are assumed to remain at the 2032 operating level.
For the estimation of future benefits presented in the above table, the Company has taken into consideration industry prospects, current operating conditions, the timeline for equipment relocation, and the synergies arising from product portfolio optimization. Depreciation and operating costs have been recognized in accordance with accounting principles. Based on a total investment amount of NT$52,162,943,000 for machinery and equipment acquired under this plan, the estimated recovery period is approximately 14.35 years. Upon evaluation, we consider the underlying assumptions to be consistent with the Company's long-term development strategy, and we deem the projected benefits to be reasonable.
(4) Impact of the plan change on shareholder equity
This plan change has been made to align with the Company's strategic transformation. In connection with the disposal of the Tongluo Fab, the Company has also decided to terminate the original construction project of the Tongluo Fab. This action will enhance asset allocation efficiency and improve asset turnover, while alleviating adverse impacts from depreciation on earnings. The Company intends to leverage this opportunity to reorganize our resources, eliminate underperforming production lines, and shift toward product portfolios with higher growth momentum, thereby mitigating risks associated with fluctuations in the mature-process market. Overall, these measures will help strengthen the Company's financial structure, enhance the efficiency of resource utilization, and have a positive impact on shareholder equity.
<Attachment 11>
List of Candidates for the 10th Term Directors (including Independent Directors)
| Title | Name | Education | Experience | Shareholdings | Nominee |
|---|---|---|---|---|---|
| Director | Frank Huang | M.D., Mount Sinai School of Medicine, New York University | Chairman and CEO of Powerchip Semiconductor Manufacturing Corporation | ||
| Chairman of Powerchip Group Technology/Strategy Officer of Powerchip Technology Corporation | 115,881,202 | The BOD of PSMC | |||
| Director | Zei-Li Investment Corporation Representative: Brian Shieh | PhD degree in Electrical Engineering, University of Cincinnati, Ohio | Vice Chairman of Powerchip Semiconductor Manufacturing Corporation | ||
| Deputy CEO and Chief Technology Advisor of Powerchip Technology Corporation | |||||
| Director of Powerchip Technology Corporation | 6,000,000 | ||||
| Director | Novax Technologies, Inc. Representative: Wen-Liang Chen | Ph.D. in Applied Physics, Yale University, USA | Chairman, CEO and CTO of AP Memory Senior R&D Manager of Cypress Semiconductor Corporation, USA | ||
| President of Cascade Semiconductor Corporation, USA | 7,000,000 | ||||
| Director | Jendan Investment Inc. Representative: Martin Chu | Master degree in Industrial Engineering, Pennsylvania State University | President of Powerchip Semiconductor Manufacturing Corporation | ||
| General Manager of Foundry Business Unit of Powerchip Technology Corporation | |||||
| President of Maxchip Electronics Corporation | 16,451,676 | ||||
| Director | Powerchip Investment Holding Corporation Representative: Milton Shieh | Master degree in Graduate Institute of Business Administration, National Taiwan University | President of Powerchip Investment Holding Corporation | ||
| Vice President of Powerchip Technology Corporation | |||||
| Vice President of Powerchip Semiconductor Manufacturing Corporation | 826,986,370 |
| Title | Name | Education | Experience | Shareholdings | Nominee |
|---|---|---|---|---|---|
| Independent Director | Jia-Lin Chang | PhD degree in Electrical Engineering, Princeton University | |||
| MBA of the Wharton School, University of Pennsylvania | Chairman of Changing. AI Inc. | ||||
| Chairman of Changing. AI Insurance Inc. | |||||
| Chairman of WonderFull Inc. | |||||
| Global partner of the Goldman Sachs Group, Inc. | |||||
| President of HTC Corporation | |||||
| Semiconductor engineer of Motorola, Inc. | 0 | ||||
| Independent Director | Chong-Yu Wu | PhD degree in Electronics Engineering, National Chiao Tung University | Chairman and CTO of A-Neuron Electronic Corporation | ||
| Independent Director of MediaTek Inc. | |||||
| Director of Amazing Microelectronic Corporation | |||||
| Former President, National Chiao Tung University | |||||
| Emeritus Professor, National Chiao Tung University | |||||
| Independent Director of Amazing Microelectronic Corporation | |||||
| Independent Director of Leadtrend Technology Corporation | 0 | The BOD of PSMC | |||
| Independent Director | Shu Ye | PhD degree in Accounting, University of California, Los Angeles | Independent Director of GEM Services, Inc. | ||
| Adjunct Professor of the Department of Accounting, National Taiwan University | |||||
| CFO, Executive Vice President and Independent Director of Chunghwa Telecom Co., Ltd. | |||||
| Independent Director of AP Memory Technology Corporation | |||||
| Professor of the Department of Accounting, National Taiwan University | 41,222 | ||||
| Independent Director | Chun-Shen Chen | Master degree in Business Administration, Missouri Columbia | Chairman and CEO of Acer Incorporated | ||
| Global President and CEO of Acer | 0 |
| Title | Name | Education | Experience | Shareholdings | Nominee |
|---|---|---|---|---|---|
| University | Incorporated | ||||
| Senior Vice President of Global Sales and Marketing of TSMC | |||||
| Vice President of Business Development of TSMC | |||||
| Global Vice President of Sales and Marketing of Intel Corporation | |||||
| Independent Director | Shih-Lun Tsao | Executive Master of Business Administration, National Taiwan University | |||
| Master of Business Administration, Baruch College - The City University of New York | Global Chief Marketing Officer and President of Taiwan, SEMI | ||||
| Director of Ye Slang Enterprise Co., Ltd. | |||||
| Master of Business Administration, Baruch College - The City University of New York | |||||
| Chief Executive officer of Southeast Asia, SEMI | |||||
| Director and President of International Data Corporation of Taiwan | 0 | ||||
| Independent Director | Grace Lee | Ph.D. and Master degree in Business Administration, National Chengchi University | |||
| Department of Economics, National Taiwan University | Independent Director of Jianhan Technology Co., Ltd. | ||||
| Director of Jianhan Technology Co., Ltd. | |||||
| Supervisor of Hongchin Corporation | |||||
| Director of FIH Mobile Ltd. | |||||
| Chairman of Hongfujin Precision Electronics (Chengdu) Co., Ltd. | |||||
| Chairman of Hongfucheng Precision Electronics (Chengdu) Co., Ltd. | |||||
| Executive Director of Hongfucheng Technology (Tianjin) Co., Ltd. | |||||
| Director of Foxconn Education Foundation | 20,000 |
-48-
<Attachment 12>
Non-Compete Status of the 10th Term of Directors
| Title | Name | Other Position |
|---|---|---|
| Director | Frank Huang | Chairman of Aerovision Avionics, Inc. |
| Chairman of Syntronix Corporation | ||
| Chairman of Zei-Li Investment Corporation | ||
| Chairman of Teknowledge Development Corporation | ||
| Chairman of Biogate Precision Medicine Corporation | ||
| Chairman of Skyvision Aviation Corporation | ||
| Chairman of Powerchip Investment Holding Corporation | ||
| Chairman of Powerax Quantum Electronic Corporation | ||
| Chairman of Retronix Technology Inc. | ||
| Chairman of Powerchip Micro Device Corporation | ||
| Chairman of Biorex Rejuvenate Medical Technology Corporation | ||
| Director of AI Memory Corporation | ||
| Director of Optigate Quantum Technology Inc. | ||
| Chairman of Powerchip Cultural Foundation | ||
| Chairman of Powerchip Environmental Protection Foundation | ||
| Director of Li-Ren Education Foundation | ||
| Managing Director of Sinocon Industrial Standards Foundation | ||
| Institution Director | Zei-Li Investment Corporation | Director of Syntronix Corporation |
| Director of Novax Technologies, Inc. | ||
| Director of Biogate Precision Medicine Corporation | ||
| Institution Director | Novax Technologies, Inc. | Chairman of Optigate Quantum Technology Inc. |
| Chairman of Synage Technology Corporation | ||
| Director of Teknowledge Development Corporation | ||
| Director of Beautimode Corporation | ||
| Director of Retronix Technology Inc. | ||
| Director of AI Memory Corporation | ||
| Institution Director | Jendan Investment Inc. | Chairman of Deutron Electronics Corporation |
| Director of Trendforce Corp. | ||
| Director of Hiyes International Co., Ltd. | ||
| Director of Beautimode Corporation | ||
| Director of Biogate Precision Medicine Corporation | ||
| Director of Powerchip Investment Holding Corporation | ||
| Institution Director | Powerchip Investment Holding Corporation | Chairman of Li Hsin Investment Corp. |
| Chairman of Quantum Vision Corp. | ||
| Chairman of Universal Venture Fund, Inc. | ||
| Chairman of Powercoin Technology Corporation | ||
| Chairman of Syntronix Corporation | ||
| Chairman of Power World Fund, Inc. | ||
| Chairman of Retronix Technology Inc. | ||
| Director of Powerchip Micro Device Corporation | ||
| Director of Optigate Quantum Technology Inc. | ||
| Director of Smart Art Corporation | ||
| Director of Novax Technologies, Inc. | ||
| Director of AI Memory Corporation |
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| Title | Name | Other Position |
|---|---|---|
| Director of Innostar service Inc. | ||
| Director of Skyvision Aviation Corporation | ||
| Director of Powerax Quantum Electronic Corporation | ||
| Director of Poly-Magic Materials Corporation | ||
| Representative of Institution Director | Brian Shieh | Director of AI Memory Corporation |
| Representative of Institution Director | Wen-Liang Chen | Chairman of AP Memory |
| Director of AI Memory Corporation | ||
| Director of AP Memory Corp., USA | ||
| Director of VIVR Corporation | ||
| Director of Onecent Technology Ltd. | ||
| Director of HamminX Ltd. | ||
| Legal Representative of VIVR Corporation, Taiwan Branch | ||
| Representative of Institution Director | Martin Chu | Director of PSMC Japan Corp. |
| Representative of Institution Director | Milton Shieh | Director of Powerchip Investment Holding Corporation |
| Director of Power World Fund, Inc. | ||
| Director of AP Memory | ||
| Director of Biogate Precision Medicine Corporation | ||
| Director of Syntronix Corporation | ||
| Director of Powercoin Technology Corporation | ||
| Director of Elite Semiconduvtor Microelectronics Technology Inc. | ||
| Director of Powerax Quantum Electronic Corporation | ||
| Director of Powerchip Micro Device Corporation | ||
| Director of Skyvision Aviation Corporation | ||
| Director of Innostar service Inc. | ||
| Director of Retronix Technology Inc. | ||
| Director of AI Memory Corporation | ||
| Director of Daikawakenn Technology., Ltd. | ||
| Director of Deutron Japan | ||
| Director of Poly-Magic Materials Corporation | ||
| Director of Retronix Japan | ||
| Director of Icatch Technology, Inc. | ||
| Independent Director | Jia-Lin Chang | Chairman of Changing. AI Inc. |
| Chairman of Changing. AI Insurance Inc. | ||
| Chairman of WonderFull Inc. | ||
| Independent Director | Chong-Yu Wu | Chairman of A-Neuron Electronic Corporation |
| Independent Director of MediaTek Inc. | ||
| Director of Amazing Microelectronic Corporation | ||
| Independent Director | Shu Ye | Independent Director of GEM Services, Inc. |
| Independent Director | Chun-Shen Chen | Chairman of Acer Incorporated |
| Chairman of Weblink International Inc. | ||
| Chairman of Acer E-Enabling Service Business Inc. | ||
| Chairman of Acer Being Communication Inc. | ||
| Chairman of Acer Its Inc. |
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| Title | Name | Other Position |
|---|---|---|
| Chairman of Acer Beingware Holding Inc. | ||
| Chairman of Acer Asset Management Incorporated | ||
| Chairman of Mu Zhen Financial Limited | ||
| Chairman of Mu Shi Financial Limited | ||
| Chairman of Acer Digital Service Co. | ||
| Chairman of Acer SoftCapital Incorporated | ||
| Director of FocalTech Systems Co., Ltd. | ||
| Director of AOPEN Incorporated | ||
| Director of Beijing Altos Computing Limited | ||
| Director of Altos Computing Inc. | ||
| Director of Acer Medical Inc. | ||
| Director of Acer (Chongqing) Ltd. | ||
| Director of Acer Being Signage Inc. | ||
| Director of Acer Cloud Technology (Taiwan) Inc. | ||
| Director of Acer Computer (Shanghai) Ltd. | ||
| Director of Acer Cloud Technology (Chongqing) Ltd. | ||
| Director of Acer Gaming Inc. | ||
| Director of Acer Gadget Inc. | ||
| Director of Pecer Bio-Medical Technology Incorporated | ||
| Director of MPS Energy Inc. | ||
| Director of Protrade Applied Materials Corp. | ||
| Director of Yunchuan Enterprise Co., Ltd. | ||
| Director of Acer America Corporation | ||
| Director of Acer American Holdings Corp. | ||
| Director of Acer Asia Pacific Sdn Bhd | ||
| Director of Acer Cloud Technology Inc. | ||
| Director of Acer Computer(Far East) Limited | ||
| Director of Acer Europe SA | ||
| Director of Acer European Holdings SA | ||
| Director of Acer Holdings International, Incorporated | ||
| Director of DropZone(Hong Kong) Limited | ||
| Director of DropZone Holding Limited | ||
| Director of Boardwalk Capital Holdings Limited | ||
| Director of Acer Technology And Business Development Pte. Ltd. | ||
| Independent Director | Shih-Lun Tsao | Global Chief Marketing Officer and President of Taiwan, SEMI Director of Ye Slang Enterprise Co., Ltd. |
| Independent Director | Grace Lee | Independent Director of Jianhan Technology Co., Ltd. |
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