Raydium — Audit Report / Information 2023

Nov 9, 2023

Stock Code:3592

Raydium Semiconductor Corporation

Parent-Company-Only Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2023 and 2022

Address: 2F, No. 23, Li-Hsin Rd., Hsinchu Science Park, Hsinchu City 300094, Taiwan Telephone: (03)666-1818

The independent auditors’ report and the accompanying parent-company-only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent-company-only financial statements, the Chinese version shall prevail.

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Table of Contents

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) History and Organization (2) Date and Procedures of Authorization of Financial Statements for Issue (3) Application of Newly Issued or Revised Standards and Interpretations (4) Summary of material accounting policies (5) Significant Accounting Judgments, and Major Sources of Estimation and Assumptions Uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Significant Contingencies and Unrecognized Commitments (10) Significant disaster losses (11) Subsequent events (12) Others (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in Mainland China (d) Information of major shareholders (14) Segment information 9. List of major account titles

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KPMG

新竹市科學園區 300091展業一路 11 號 電 話 Tel + 886 3 579 9955 No. 11, Prosperity Road I, Hsinchu Science Park, 傳 真 Fax + 886 3 563 2277 Hsinchu, 300091, Taiwan (R.O.C.) 網 址 Web kpmg.com/tw

Independent Auditors’ Report

To the Board of Directors of Raydium Semiconductor Corporation:

Opinion

We have audited the parent-company-only financial statements of Raydium Semiconductor Corporation(“the Company”), which comprise the parent-company-only balance sheets as of December 31, 2023 and 2022, the parent-company-only statements of comprehensive income, changes in equity and cash flows for the years then ended, then and notes to the parent-company-only financial statements, including a summary of material accounting policies.

In our opinion, the accompanying parent-company-only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and 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 Account 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 of 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 of the current period. These matters were addressed in the context of our audit of parent-company-only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the these matters. Based on our judgment, the key audit matters that should be disclosed in this audit report are as follows:

1. Valuation of inventories

Please refer to note 4(7) for the accounting policy of inventory valuation, note 5 for the estimation and assumption uncertainty of the valuation of inventory, and note 6(4) for information on estimation of the valuation of inventory to the parent-company-only financial statements.

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KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

Description of key audit matter:

The Company may write down the cost of inventories to net realizable value due to normal wear and tear, obsolescence or no market value. The inventory valuation may result in material changes because of decline in demand and prices. Due to the introduction of new products in the market, the original outdated products no longer meet the market demand, resulting in the cost of inventory to exceed its net realizable value. Therefore, the valuation of inventory is one of our key audit matters.

How the matter was addressed in our audit:

The principal procedures include testing the inventory aging reports and analyzing the aging of inventories for each period; inspecting the production and sales meetings to assess the destocking; assessing whether the valuation of inventories has been carried out in accordance with the established accounting policies; and performing retrospective testing on inventories to verify the appropriateness of the inventory provision.

1. Revenue recognition from contracts with customers

Please refer to note 4(14) “Revenue recognition” for the accounting policy and note 6(20) “Revenues from contracts with customers” for revenue recognition.

Description of key audit matter:

The Company mainly engages in the development, design and sale of display driver, touch control, and power management integrated circuit products. The recognition of operating revenue is determined according to the trade terms agreed with the customers. The Company recognizes revenue depending on the various sales terms in each individual contract with customers to ensure its performance obligation has been satisfied by transferring its control to its customer. It is necessary to determine the performance obligations and the time at which they are satisfied. Therefore, the appropriateness of timing of revenue recognition is one of our key audit matters.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding and testing the Company ' s controls surrounding the revenue process and cash collection transaction process; analyzing the type of principal revenue and trading terms; selecting samples and inspecting contracts with customers or customers' orders to assess the adequacy of the timing of revenue recognition; and randomly selecting sales transactions incurred within a certain period before or after the balance sheet date by reviewing documents to ensure that revenue was recognized in the appropriate period.

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 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 parentcompany-only financial statements that are free from material misstatement, whether due to fraud or error.

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

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Those charged with governance (including the Audit Committee) are responsible for overseeing the 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 auditor’s 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 professional skepticism throughout the audit. We also:

1. 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.

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

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

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

5. Evaluate the overall presentation, structure and content of the 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.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in entities accounted for using equity method 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.

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Chien-Hui Lu and An-Chih Cheng.

KPMG

Taipei, Taiwan (Republic of China) February 26, 2024

Notes to Readers

The accompanying parent-company-only financial statements are intended only to present the parent-company-only statement of financial position, financial performance and its cash flows in accordance with the 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 accepted and applied in the Republic of China.

The auditors’ report and the accompanying parent-company-only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language auditors’ report and parent-company-only financial statements, the Chinese version shall prevail.

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(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) Raydium Semiconductor Corporation

Balance Sheets

December 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(1)) 1110 Financial assets at fair value through profit or loss－current (note 6(2)) 1120 Financial assets at fair value through other comprehensive income - current (note 6(2)) 1170 Accounts receivable, net (note 6(3)) 1180 Accounts receivable－related parties, net (notes 6(3) and 7) 130X Inventories (note 6(4)) 1476 Other financial assets－current (notes 6(1)、(3)、(9)、8 and 9) 1479 Other current assets (note 6(10)) Non-current assets: 1517 Financial assets at fair value through other comprehensive income－non- current (note 6(2)) 1550 Investments accounted for using equity method (note 6(5)) 1600 Property, plant and equipment (notes 6(6) and 9) 1755 Right-of-use assets (note 6(7)) 1780 Intangible assets (notes 6(8) and (7)) 1840 Deferred tax assets (note 6(16)) 1980 Other financial assets－non-current (notes 6(9) and 9) 1990 Other non-current assets (note 6(10)) Total assets	December 31, 2023 Amount % $ 5,166,983 27 633,073 3 11,013 - 1,123,076 6 1,653,203 9 1,858,687 10 5,941,649 31 169,769 1 16,557,453 87 423,377 2 40,683 - 470,174 3 12,792 - 376,453 2 235,509 1 162,140 1 652,299 4 2,373,427 13 $ 18,930,880 100	December 31, 2022 Amount % 8,369,521 39 356,790 2 7,680 - 757,280 4 2,116,155 10 3,693,250 17 3,482,186 16 152,490 1 18,935,352 89 528,008 2 - - 327,994 1 16,629 - 343,189 2 212,252 1 375,853 2 727,360 3 2,531,285 11 21,466,637 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(11)) 2130 Contract liabilities－current (note 6(20)) 2170 Accounts payable 2201 Salaries and bonuses payable 2220 Other payables－related parties (note 7) 2230 Current income tax liabilities 2250 Provision-current (note 6(13)) 2300 Other current liabilities (notes 6(12)、(15)、7 and 9) Non-Current liabilities: 2527 Contract liabilities－non-current (note 6(20)) 2550 Provision－non-current (note 6(13)) 2570 Deferred tax liabilities (note 6(16)) 2580 Lease liabilities－non-current (note 6(12)) 2640 Net defined benefit liability－non-current (note 6(14)) 2650 Credit balance of investments accounted for using equity method (note 6(5)) 2645 Guarantee deposits received (notes 6(15) and 9) Total liabilities Equity(notes 6(17) and (18)): 3110 Common stock 3200 Capital surplus 3300 Retained earnings 3400 Other equity Total equity Total liabilities and equity	December 31, 2023 Amount % $ 445,411 2 430,502 2 2,363,447 13 2,352,793 13 7,518 - 233,875 1 38,704 - 881,968 5 6,754,218 36 97,460 1 77,409 - 6,246 - 9,305 - 144 - - - 767,950 4 958,514 5 7,712,732 41 758,552 4 4,712,933 25 5,780,404 30 (33,741) - 11,218,148 59 $ 18,930,880 100	December 31, 2022
				Amount % - - 316,351 1 1,416,716 7 3,877,800 18 106 - 405,896 2 55,529 - 1,007,881 5 7,080,279 33 364,405 2 111,059 1 22,006 - 13,122 - 118 - 16,251 - 921,960 4 1,448,921 7 8,529,200 40 758,552 3 4,712,933 22 7,436,498 35 29,454 - 12,937,437 60 21,466,637 100

See accompanying notes to parent-company-only financial statements.

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(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) Raydium Semiconductor Corporation

Statements of Comprehensive Income

For the Years Ended December 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

			For the years ended	For the years ended	For the years ended	December 31,	December 31,
			2023			2022
			Amount	%		Amount	%
4000	Operating revenues(notes 6(20) and 7)	$	17,604,607	100		22,611,900	100
5000	Operating costs (notes 6(4)、(8)、(14)、(22) and 12)		12,404,946	70		13,416,122	59
	Gross profit		5,199,661	30		9,195,778	41
	Operating expenses(notes 6(3)、(8)、(14)、(22)、7 and 12):
6100	Selling expenses		413,020	3		861,287	4
6200	General and administrative expenses		397,528	2		527,896	2
6300	Research and development expenses		2,944,489	17		4,060,365	18
6450	Expected credit impairment losses		28,980	-		7,891	-
	Total operating expenses		3,784,017	22		5,457,439	24
	Operating income		1,415,644	8		3,738,339	17
	Non-operating income and expenses(notes 6(21) and 7):
7010	Other income		27,136	-		31,294	-
7020	Other gains and losses		4,300	-		748,825	3
7050	Finance costs		(4,654)	-		(245)	-
7070	Share of profit (loss) of subsidiaries accounted for using equity
	method (note 6(5))		(33,039)	-		(96,281)	-
7100	Interest income		137,354	1		83,116	-
	131,097			1		766,709	3
	Income before income tax		1,546,741		9	4,505,048	20
7950	Less: Income tax expenses (note 6(16))		103,950	1		642,712	3
	Net income		1,442,791	8		3,862,336	17
8300	Other comprehensive income (loss):
8310
	Items that will not be reclassified subsequently to profit or loss
8311	Remeasurements of defined benefit plans (note 6(14))		(26)	-		384	-
8316	Unrealized gains (losses) from investments in equity instruments
	measured at fair value through other comprehensive income
	(note 6(17))		(70,094)	-		(78,418)	-
8349	Less: Income tax related to items that will not be reclassified to profit
	or loss		(19,086)	-		17,024	-
	Total item that will not be reclassified subsequently to profit
	or loss		(51,034)	-		(95,058)	-
8360	Items that may be reclassified subsequently to profit or loss
	(note 6(17))
8361	Exchange differences on translation of foreign operatings		(1,227)	-		1,636	-
8399	Less: Income tax related to items that may be reclassified to profit or
	loss (note 6(16))		(245)	-		327	-
	Total items that may be reclassified subsequently to profit or
	loss		(982)	-		1,309	-
8300	Other comprehensive income (loss), net of tax		(52,016)	-		(93,749)	-
8500	Total comprehensive income (loss)	$	1,390,775	8		3,768,587	17
	Earnings per share (New Taiwan Dollars)(note 6(19))
9750	Basic earnings per share	$		19.02			51.23
9850	Diluted earnings per share	$		18.78			49.38

See accompanying notes to parent-company-only financial statements.

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(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese)

Raydium Semiconductor Corporation Statements of Changes in Equity For the Years Ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars)

Capital Common stock Capital collected in advance Balance as of January 1, 2022 $ 669,368 410,564 Net income for the year - - Other comprehensive income (loss) for the year - - Total comprehensive income (loss) for the year - - Appropriation and distribution of retained earnings: Legal reserve - - Special reserve - - Cash dividends - - Capital increase 89,250 (410,564) Share-based payments transaction (66) - Changes in other capital surplus - - Balance as of December 31, 2022 758,552 - Net income for the year - - Other comprehensive income (loss) for the year - - Total comprehensive income (loss) for the year - - Appropriation and distribution of retained earnings: Legal reserve - - Cash dividends - - Disposal of investments in equity instruments measured at fair value through other comprehensive income - - Balance as of December 31, 2023 $ 758,552 -	Capital surplus 853,315 - - - - - - 3,858,776 624 218 4,712,933 - - - - - - 4,712,933		Retained earnings	Subtotal 6,987,263 3,862,336 384 3,862,720 - - (3,413,485) - - - 7,436,498 1,442,791 (26) 1,442,765 - (3,110,064) 11,205 5,780,404		Other equity	Subtotal 112,872 - (94,133) (94,133) - - - - 10,715 - 29,454 - (51,990) (51,990) - - (11,205) (33,741)	Total equity 9,033,382 3,862,336 (93,749) 3,768,587 - - (3,413,485) 3,537,462 11,273 218 12,937,437 1,442,791 (52,016) 1,390,775 - (3,110,064) - 11,218,148
					Exchange differences on translation of foreign operations (801) - 1,309 1,309 - - - - - - 508 - (982) (982) - - - (474)	Unrealized gains (losses) on financial assets at fair value through other comprehensive income Unearned employee compensation 124,388 (10,715) - - (95,442) - (95,442) - - - - - - - - - - 10,715 - - 28,946 - - - (51,008) - (51,008) - - - - - (11,205) - (33,267) -
		Legal reserve 1,031,235 - - - 429,102 - - - - - 1,460,337 - - - 386,272 - - 1,846,609	Special reserve
			10,616
			- -
			-

See accompanying notes to parent-company-only financial statements.

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(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) Raydium Semiconductor Corporation Statements of Cash Flows For the Years Ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax Adjustments for: Depreciation Amortization Expected credit impairment loss Net gains on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Dividend income Compensation costs of share-based payments Share of (profit) loss of subsidiaries accounted for using equity method Gain on disposal of property, plant and equipment Inventory valuation and obsolescence losses Other non-cash-related loss Income and expense adjustments Changes in operating assets and liabilities: Financial assets at fair value through profit or loss Accounts receivable and other receivables (including related parties) Inventories Other financial assets Other operation assets Contract liabilities Accounts payable and other payables (including related parties) Other operating liabilities Total changes in operating assets and liabilities Total adjustments Cash flow generated from operations Interests received Dividends received Interests paid Income taxes paid Net cash provided by operating activities Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in intangible assets (Increase) decrease in other non-current assets Increase in other financial assets Net cash used in investing activities Cash flows from financing activities: Increase in short term borrowings Decrease in guarantee deposits received Repayments of the principal portion of lease liabilities Cash dividends paid Capital increase Others Net cash provided by (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year		For the years ended December 31, 2023 2022 1,546,741 4,505,048 203,531 205,843 163,755 160,094 28,980 7,891 (833) (1,303) 4,654 245 (137,354) (83,116) (12,176) (17,900) - 11,273 33,039 96,281 (680) - 48,046 442,830 130,075 189,468 461,037 1,011,606 (275,450) (26,714) 68,176 3,256,734 1,786,517 (2,014,879) (992,031) (495,498) (17,279) 41,390 (152,794) 48,049 954,143 (2,061,412) (1,521,376) 662,026 (150,094) (590,304) 310,943 421,302 1,857,684 4,926,350 135,775 80,144 12,176 17,900 (4,177) (245) (295,657) (1,017,068) 1,705,801 4,007,081 - (239,123) 31,205 - - 35,978 (91,200) - (349,206) (70,454) 762 - (187,117) (164,909) 75,060 (128,883) (1,421,427) (1,889,031) (1,941,923) (2,456,422) 452,183 - (304,872) (111,303) (3,663) (3,365) (3,110,064) (3,413,485) - 3,537,462 - 218 (2,966,416) 9,527 (3,202,538) 1,560,186 8,369,521 6,809,335 $ 5,166,983 8,369,521
		2023 1,546,741 203,531 163,755 28,980 (833) 4,654 (137,354) (12,176) - 33,039 (680) 48,046 130,075 461,037 (275,450) 68,176 1,786,517 (992,031) (17,279) (152,794) 954,143 (1,521,376) (150,094) 310,943 1,857,684 135,775 12,176 (4,177) (295,657) 1,705,801 - 31,205 - (91,200) (349,206) 762 (187,117) 75,060 (1,421,427) (1,941,923) 452,183 (304,872) (3,663) (3,110,064) - - (2,966,416) (3,202,538) 8,369,521 $ 5,166,983
	$

See accompanying notes to parent-company-only financial statements.

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(English Translation of Parent-Company-Only Financial Statements Originally Issued in Chinese) Raydium Semiconductor Corporation

Notes to the Financial Statements

For the years ended December 31, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars, unless otherwise noted.)

1. History and Organization

Raydium Semiconductor Corporation (the “ Company” ) was organized and approved under the ROC Company Act on October 23, 2003.The Company was formally relocated to Hsinchu Science and Industry Park on January 29, 2007 after being approved by Hsinchu Science Park Bureau on December 12, 2006. Its current registered address is 2F, No.23, Li Hsin Rd., Hsinchu Science Park, Hsinchu City 300, Taiwan, R.O.C. The Company merged with Dazzo Technology Corporation (hereinafter referred to as Dazzo) on April 1, 2019 (the merger date). Thereafter, the Company became the sole surviving entity. The principal activities of the Company are the development, design and sale of display driver, sequential control and power management integrated circuit products.

The Company's shares were listed on Taiwan Stock Exchange on January 7, 2022.

2. Date and Procedures of Authorization of Financial Statements for Issue:

The parent-company-only financial statements were authorized for issue by the Board of Directors on February 26, 2024.

3. Application of Newly Issued or Revised Standards and Interpretations:

• (1) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (FSC) which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its parent-company-only financial statements, from January 1, 2023:

• ●Amendments to IAS 1 “Disclosure of Accounting Policies”

• ●Amendments to IAS 8 “Definition of Accounting Estimates”

• ●Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

The Company has initially adopted the new amendment, which do not have a significant impact on its parent-company-only financial statements, from May 23, 2023:

• －

• ●Amendments to IAS 12 “International Tax Reform Pillar Two Model Rules”

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Raydium Semiconductor Corporation Notes to the Financial Statements

• (2) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2024, would not have a significant impact on its parent-companyonly financial statements:

• ●Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

• ●Amendments to IAS 1 “Non-current Liabilities with Covenants”

• ●Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”

• ●Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback”

• (3) The impact of IFRS issued by IASB but not yet endorsed by the FSC

The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its parent-company-only financial statements:

• ●Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”

• ●IFRS 17 “Insurance Contracts” and amendments to IFRS 17 “Insurance Contracts”

• ●Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information”

• ●Amendments to IAS 21 “Lack of Exchangeability”

4. Summary of material accounting policies:

The significant accounting policies applied in the preparation of these parent-company-only financial statements are summarized as follows. Except for those described individually, the significant accounting policies have been applied consistently to all periods presented in these parent-company-only financial statements.

• (1) Statement of compliance

The parent-company-only financial statements have been prepared in accordance with the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” (hereinafter referred to as “the Regulations”).

• (2) Basis of preparation

• A. Basis of measurement

The parent-company-only financial statements have been prepared on the historical cost basis, except for the following material items in the balance sheets:

(a) Financial assets at fair value through profit or loss (FVTPL) are measured at fair value;

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Raydium Semiconductor Corporation Notes to the Financial Statements

• (b) Financial assets at fair value through other comprehensive income (FVOCI) are measured at fair value; and,

• (c) The net defined benefit liabilities are measured as the fair value of the plan assets, less, the present value of the defined benefit obligation.

• B. Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the entity operates. The parent-company-only financial statements are presented in New Taiwan Dollars (NTD), which is the Company’ s functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

• (3) Foreign currencies

• A. Foreign currency transactions

Transaction in foreign currency are translated into the functional currencies at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, (hereinafter referred to as the reporting date), monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date.

Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date when fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss, except for the foreign currency items of financial instruments that applied the accounting policy of IFRS No. 9 "Financial Instruments"

When the profit or loss of non monetary item is recognized in other comprehensive income, then any change in the exchange foreign currency of the above items is recognized in other comprehensive income. When the profit or loss of non monetary item is recognized in profit or loss, then any change in the exchange foreign currency of the above items is recognized in profit or loss.

• B. Foreign operations

The assets and liabilities of foreign operations are translated to NTD using the exchange rates at the reporting date. The income and expenses are translated to NTD at the average rate for the period. Foreign currency differences are recognized in other comprehensive income.

• (4) Classification of current and non-current assets and liabilities

The Company classified an asset as current when any one of the following requirements is met. Assets that are not classified as current are non-current assets.

• A. It expects to realize the asset, or intends to sell or consume it, in its the normal operating cycle;

~10~

Raydium Semiconductor Corporation Notes to the Financial Statements

• B. It holds the asset primarily for the purpose of trading;

• C. It expects to realize the asset within twelve months after the reporting period; or

• D. The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The Company classifies a liability as current when any one of the following requirements is met. Liabilities that are not classified as current are non-current liabilities.

• A. It expects to settle the liability in its normal operating cycle;

• B. It holds the liability primarily for the purpose of trading;

• C. The liability is due to be settled within twelve months after the reporting period; or

• D. It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of counterparty, result in its settlement by issuing equity instruments do not affect its classification.

• (5) Cash and cash equivalents

Cash comprises cash and cash in bank. Cash equivalents are short term, and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and held for the purpose of meeting short term cash commitments rather than for investment or other purposes are classified as cash equivalents.

• (6) Financial instruments

• A. Financial assets

The Company classifies financial assets into the following categories: amortized cost, FVOCI and FVTPL.

The Company shall reclassify all affected financial assets only when it changes its business model for managing its financial assets.

• (a) Financial assets at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

~11~

Raydium Semiconductor Corporation Notes to the Financial Statements

Such financial assets are initially recognized at fair value, plus any directly attributable transaction costs. Subsequently, these assets are measured at amortized cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting.

(b) Financial assets at FVOCI

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• ‧ it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• ‧ its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Some accounts receivable are held within a business model whose objective is achieved by both collecting contractual cash flows and selling by the Company, therefore, those receivables are measured at FVOCI.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent fair value changes in the investments in other comprehensive income. This election is made on an instrument-by-instrument basis.

A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses, impairment losses deriving from debt investments, and dividends income of equity investment (unless the dividend clearly represent a recovery part of the cost of investment) are recognized in profit or loss. Other net gains and losses of financial assets are recognized in other comprehensive income and accumulated in unrealized gains or losses of financial assets measured at FVOCI under equity. On derecognition, gains and losses accumulated in other comprehensive income of debt investments are reclassified to profit or loss. However, gains and losses accumulated in other comprehensive income of equity investments are reclassified to retain earnings instead of profit or loss.

Dividend income is recognized in profit or loss on the date on which the Company’s right to receive payment is established.

(c) Financial assets at FVTPL

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL. On initial recognition, the Company may irrevocably designates a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

~12~

Raydium Semiconductor Corporation Notes to the Financial Statements

Such financial assets are initially recognized at fair value, and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, they are measured at fair value and changes therein are recognized in profit or loss.

(d) Impairment of financial assets

The Company recognizes loss allowances for expected credit loss (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, accounts receivable, and other financial assets), and debt investments measured at FVOCI.

The Company measures the loss allowance at an amount equal to lifetime ECL, except for the financial instrument that is determined to have low credit risk (the risk of default in financial instrument duration) at the reporting date and the credit risk thereof has not increased significantly since initial recognition, which is measured at an amount equal to the 12-month expected credit losses. Loss allowance for accounts receivable are always measured at an amount equal to lifetime ECL.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

ECLs are probability-weighted estimate of credit losses over the expected life of financial assets. Credit losses are measured as the present value of all cash shortfalls, the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive. ECLs are discounted at the effective interest rate of the financial asset.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both qualitative and quantitative information and analysis, based on the Company's historical experience and informed credit assessment, as well as forwardlooking information.

In the circumstance that a financial asset is past due or the borrower is unlikely to pay its credit obligations to the Company in full, the Company considers the credit risk on that financial asset has significantly increased, or further, to be in default.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Company recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

~13~

Raydium Semiconductor Corporation Notes to the Financial Statements

The gross carrying amount of a financial asset is written off either partially or in full to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

(e) Derecognition of financial assets

The Company derecognizes a financial assets when the contractual rights to the cash flows from the financial asset expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets to another entity.

• B. Financial liabilities and equity instruments

• (a) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreements and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences residual interest in the assets after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

(b) Financial liabilities

Financial liabilities that are not classified as held-for-trading or designated as at FVTPL, which comprise loans borrowings and accounts payable, are measured at fair value, plus any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method.

(c) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid is recognized in profit or loss.

• (d) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount is presented in the statement of balance sheet when, and only the Company currently has the legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the assets and settle the liabilities simultaneously.

~14~

Raydium Semiconductor Corporation Notes to the Financial Statements

(7) Inventories

Inventories are measured at the lower of cost or net realizable value. The cost of inventories is based on the weighted average method, and includes expenditures and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(8) Investment in subsidiaries

The Company’s subsidiaries are accounted for using the equity method when preparing their parentcompany-only financial statements. Under the equity method, profit, other comprehensive income and equity in the parent-company-only financial statements are equivalent to those of the profit, other comprehensive income and equity which are contributed to the owners of the parent in the consolidated financial statements.

The changes in the parent’ s interest in its subsidiaries that do not result in a loss of control are accounted as equity transactions.

• (9) Property, plant and equipment

• A. Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

• B. Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that future economic benefits associated with the expenditure will flow to the Company.

• C. Depreciation

Depreciation is calculated on the cost of an asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

• (a) Research equipment: 2~4 years

• (b) Transportation equipment: 6 years

• (c) Office equipment: 3~5 years

• (d) Leasehold improvement: 2 years

~15~

Raydium Semiconductor Corporation Notes to the Financial Statements

Depreciation methods, useful lives, and residual values are reviewed at each reporting date and adjusted if appropriate.

• (10) Leases

• A. Identifying a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract is a lease, the Company assesses whether:

• (a) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and

• (b) the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• (c) the Company has the right to direct the use of an asset if either:

• The Company has the right to direct use of the identified asset when it has the decision-making rights that are most relevant to the changes on how and for what purpose the asset is used throughout the period.

• The relevant decisions about how and for what purpose the asset is used are predetermined and:

  • － the Company has the right to operate the asset without the supplier having the right to change those operating instructions; or

  • － the Company designs the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non-lease components and account for the lease and nonlease components as a single lease component.

• B. As a lessee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

~16~

Raydium Semiconductor Corporation Notes to the Financial Statements

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. Discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• (a) fixed payments, including in-substance fixed payments;

• (b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• (c) amounts expected to be payable under a residual value guarantee; and

• (d) payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

• (a) there is a change in future lease payments arising from the change in an index or rate; or

• (b) there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or

• (c) there is a change in the assessment regarding the purchase option; or

• (d) the estimate of whether to exercise the option to extend or terminate has changed, thereby changing the assessment of the lease period; or

• (e) there is modifications of the subject, scope, or other terms of the lease

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, and the remaining remeasured amount is recognized in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize the profit or loss relating to the partial or full termination of the lease.

The Company presents its right-of-use assets that do not meet the definition of investment properties and lease liabilities as a separate line item respectively in the balance sheets.

~17~

Raydium Semiconductor Corporation Notes to the Financial Statements

The Company has elected not to recognize the right-of-use assets and lease liabilities for its offices, employee dormitory, telecommunication equipment and parking lot, which qualify as short-term leases, as well as its other equipment, which qualify as short-term leases and lowvalue assets leases. The relevant lease payments are recognized in expense on a straight line basis during the lease period.

• (11) Intangible assets

• A. Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to, and has sufficient resources to, complete the development, and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including patents, that are acquired by the Company and have finite useful lives are measured at cost, less accumulated amortization and any accumulated impairment losses.

• B. Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

• C. Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for the current and comparative periods are as follows:

• (a) Patents and technology: 2~5 years

• (b) Computer software cost: 0.5~5 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

~18~

Raydium Semiconductor Corporation Notes to the Financial Statements

(12) Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated using impairment test. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or cash generating units (CGUs). Goodwill arising from a business combination is allocated to cashgenerating units (“CGUs”) or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash generating units (CGU) are the greater of its value in use and its fair value, less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

• (13) Provisions

A provision is recognized when the Company has a present obligation arising from a past event, it is probable that the Company will be required to make an outflow of resources embodying economic benefits to settle the obligation, and the amount of the obligation can be estimated reliably. When the time value of currency is significant, the provision for liabilities is discounted at current pre-tax rates that adequately reflect the specific risks of the liabilities. The amount of the liabilities increased by time, is recognized as the borrowing cost when the liabilities are discounted.

A provision for warranties is measured with weighting factors based on historical experience of warranty claims rate and other possible outcomes against their associated probabilities.

• (14) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

~19~

Raydium Semiconductor Corporation Notes to the Financial Statements

A. Sale of goods

Revenue is recognized when the control over a product has been transferred to the customer. Being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer, as well as when the product has been accepted by the customer according to the terms of sales contract, or when the Company has objective evidence that all criteria for acceptance have been satisfied.

When the Company receives an advance payment from a customer, the advance amount of such future performance obligation shall be recognized as a contractual obligation, which shall be derecognized when the performance obligation is satisfied and then recognized as revenue.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

Due to the application of IFRS 15, the sale return and allowance based on historical experience and other known causes were reclassified to provision of liabilities.

• B. Financing components

The Company expects that the length of time when the Company transfers the goods or services to the customer and when the customer pays for those goods or services will be less than one year. Therefore, the amount of consideration is not adjusted for the time value of money.

• (15) Employee benefits

• A. Defined contribution plans

Obligations for contributions to the defined contribution plans are expensed as related services is provided.

• B. Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each of the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

~20~

Raydium Semiconductor Corporation Notes to the Financial Statements

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense on the net defined benefit liability(asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability(asset). Net interest expense and other expenses related to the defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

C. Short-term employee benefits

Short-term employee benefits obligations are expensed as the related service is provided. A liability is recognized for the amounts expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

• (16) Share-based payment transaction

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amounts recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized shall be based on the number of awards that meet the related services and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant-date fair value of the sharebased payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes.

Grant date of a share-based payment award is the date at which the Company and employees reach a consensus in the subscription price and number of shares.

• (17) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

~21~

Raydium Semiconductor Corporation Notes to the Financial Statements

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax basis at the reporting date.

Deferred taxes are not recognized for the following exceptions:

• A. temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

• B. temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

• C. taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and reflect the uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset if the following criteria are met:

• A. the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

• B. the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

• (a) the same taxable entity; or

• (b) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for unused, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date, and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

• (18) Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. The calculation of basic earnings per share is based on the profit attributable to the ordinary shareholders of the Company, divided by the weighted-average number of current ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potential dilutive ordinary shares, such as employee compensation not yet approved by the Board of Directors and can be issued by stock and unvested restricted employee stock awards.

~22~

Raydium Semiconductor Corporation Notes to the Financial Statements

• (19) Operating segments information

The Company has disclosed operating segment information in consolidated financial statements. Hence, this information is not required to be disclosed in these parent-company-only financial statements.

5. Significant Accounting Judgments, and Major Sources of Estimation and Assumptions Uncertainty:

The preparation of the parent-company-only financial statements in conformity with the Regulations requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimations and assumptions. It recognizes any changes in the accounting estimations during the period in which the estimates are revised and in any future periods affected.

Information about critical judgements, estimates and assumptions in applying accounting policies that have the significant effect on the amounts recognized in the parent-company-only financial statements is as follows:

Valuation of inventories

Inventories are stated at the lower of cost or net realizable value, the Company uses judgements and estimates the net realizable value of inventories for obsolescence and unmarketable items at the reporting period. It also writes down the cost of inventories to net realizable value. This inventory valuation may result in material changes in product demand due to the introduction of new products in the market, obsolescence or non-conformity of the original products, which may result in lower demand and prices, resulting in the risk that the cost of inventories may exceed its net realizable value. Please refer Note 6(4) for valuation of Inventory.

The Company’s accounting policies and disclosures include the fair value measurement for financial and non-financial assets and liabilities. The financial management center of the Company is responsible for performing fair value verification and bringing the evaluation results comparable to market price based on independent, reliable, and representative executable price information. The Company also periodically assesses the evaluation model, performs retrospective tests, and updates inputs together with any other necessary fair value adjustment for the evaluation model in order to ensure the reasonableness of the results of the valuation.

The Company evaluates the assets and liabilities using the observable market inputs. The hierarchy of the fair value depends on the valuation techniques used and is categories as follows:

Level 1: quoted prices (unadjusted) in active markets for identifiable assets or liabilities.

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

For any transfer within the fair value hierarchy, the Company recognizes the transfer on the reporting date. For the assumption used in fair value measurement, please refer to note 6(23).

~23~

Raydium Semiconductor Corporation Notes to the Financial Statements

6. Explanation of significant accounts

• (1) Cash and cash equivalents

Demand deposits Time deposits	December 31, 2023 $ 1,172,933 3,994,050 $ 5,166,983	December 31, 2022
		1,175,471 7,194,050
		8,369,521

、 Please refer to note 6(23) for the credit risk interest rate risk and sensitivity analysis of the financial assets of the Company.

As of December 31, 2023 and 2022, the time deposits with original maturities of more than three months amounted to $3,500,000 thousand and $2,000,000 thousand, respectively, which were classified as other financial assets-current; please refer to note 6(9).

• (2) Financial assets at fair value

• －

• A. Financial assets at fair value through profit or loss current

Financial assets at fair value through profit or loss, mandatorily measured at fair value Beneficiary certificate	December 31, 2023 $ 633,073	December 31, 2022
		356,790

• －

• B. Financial assets at fair value through other comprehensive income current

Financial assets at fair value through other comprehensive	income－current
Listed stocks	December 31, 2023 $ 11,013	December 31, 2022
		7,680

• －

• C. Financial assets at fair value through other comprehensive income non-current

Listed stocks Unlisted stocks	December 31, 2023 $ 308,860 114,517 $ 423,377	December 31, 2022 263,692 264,316 528,008

These investments in equity instruments are not held for trading, and therefore, are accounted for as FVOCI.

The Company sold part of its holdings measured at fair value through other comprehensive income in 2023, with the disposal price of $31,205 thousand, resulting in the realized gain of $11,205 thousand to be reclassified from other equity to retained earnings.

~24~

Raydium Semiconductor Corporation Notes to the Financial Statements

For the disclosure of market risk, please refer to Note 6(23).

The financial assets mentioned above were not pledged as collateral.

• (3) Accounts receivable, net (including related parties)

Accounts receivable—measured at amortized cost Accounts receivable measured at fair value through other comprehensive income Less: loss allowance	December 31, 2023 $ 2,717,469 119,505 (60,695) $ 2,776,279	December 31, 2022 2,709,601 195,549 (31,715) 2,873,435

The Company has assessed a portion of its trade receivables that was held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; therefore, such trade receivables were measured at fair value through other comprehensive income.

The Company uses a simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivable. To measure the expected credit losses, accounts receivable have been grouped based on shared credit risk characteristics and the days past due, as well as the incorporated forward-looking information.

The accounts receivable from related parties having significant impact over the Company and other individuals amounted to $1,653,203 thousand and $2,116,155 thousand as of December 31, 2023 and 2022, respectively. The days past due is less than 100 days, so there is no expected credit loss for the duration of the related party's accounts receivable.

The loss allowance provision of customers with relatively low credit risk was determined as follows:

Not pass due Past due less than 30 days Past due 31 ~ 60 days	December 31, 2023	December 31, 2023
	Gross carrying amount of accounts receivable $ 523,664 1,629 3,562 $ 528,855	Weighted- average loss rate 0% 0% 0%	Loss allowance for life time expected credit losses
			- - -
			-

~25~

Raydium Semiconductor Corporation Notes to the Financial Statements

Not pass due Pass due less than 30 days Pass due 31 ~ 60 days	December 31, 2022	December 31, 2022
	Gross carrying amount of accounts receivable $ 347,861 728 2,034 $ 350,623	Weighted- average loss rate 0% 0% 0%	Loss allowance for life time expected credit losses
			- - -
			-

The loss allowance provision of customers with relatively high credit risk was determined as follows:

Not pass due Pass due less than 30 days Not pass due Pass due less than 30 days Pass due 31 ~ 60 days	December 31, 2023	December 31, 2023
	Gross carrying amount of accounts receivable Weighted- average loss rate $ 588,845 7.41% 66,071 25.80% $ 654,916 December 31, 2022		Loss allowance for life time expected credit losses
			43,649 17,046
			60,695
		Weighted- average loss rate 7.07% 29.90% 56.20%	Loss allowance for life time expected credit losses
			30,748 922 45
			31,715

The movement in the allowance for accounts receivables was as follows:

Beginning balance Recognition of Impairment loss Ending balance	For the years ended December 31,	For the years ended December 31,
	2023 $ 31,715 28,980 $ 60,695	2022
		23,824 7,891
		31,715

~26~

Raydium Semiconductor Corporation Notes to the Financial Statements

The Company entered into an agreement with banks to factor certain of its accounts receivable. According to the agreement, within the factoring line, the Company does not have to ensure the ability of debtors to pay when transferring the rights and obligations. As of December 31, 2023 and 2022, the Company reclassified the trade receivables that met the derecognition terms to other receivables (recorded in other financial asset-current) as follows:

(In Thousands of New Taiwan Dollars)

	December 31, 2023	December 31, 2023
Buyer Factoring quota Taipei Fubon Bank **USD 145,000 **	Derecognition amount Advance payment amount USD 69,142 - December 31, 2022		Service fees 0.23%	Transfer terms Guaranteed promissory notes Notes 1 to 3 None
Buyer Factoring quota Taipei Fubon Bank **USD 139,000 **	Derecognition amount USD 36,830	Advance payment amount -	Service fees 0.23%	Transfer terms Guaranteed promissory notes Notes 1 to 3 None

• Note 1: The above-mentioned amounts have been reclassified to other receivables. The terms of the transaction relating to factoring are based on the factoring consent for buyer. Such transaction should be factoring without recourse.

• Note 2: Within the factoring quota, if the original debtor is unable to pay or may be unable to pay due to financial difficulties, the risk of non-payment will be borne by the purchasing agency, not the Company. The original debtor’s credit risk will be borne by the purchasing agency and the credit risk described above is the uncollectable debt risk due to default by the original debtor without reasonable cause.

• Note 3: The Company informed the original debtor pursuant to account receivables to make payment directly to the Company’s restricted account with the purchasing bank.

As of December 31, 2023 and 2022, total outstanding receivables after the above transactions, net of fees charged by purchasing bank, of $2,123,891 thousand and $1,131,859 thousand were recognized as other current financial assets; please refer to note 6(9).

As of December 31, 2023 and 2022, the Company’s unused factoring quota amounted to $2,330,219 thousand and $3,139,889 thousand, respectively.

• (4) Inventories

Inventories
Work in progress Finished goods	December 31, 2023 $ 1,439,802 418,885 $ 1,858,687	December 31, 2022
		3,320,873 372,377
		3,693,250

~27~

Raydium Semiconductor Corporation Notes to the Financial Statements

Cost of goods sold Inventory valuation and obsolescence losses	For the years ended December 31,	For the years ended December 31,
	2023 $ 12,356,900 48,046 $ 12,404,946	2022 12,973,292 442,830 13,416,122

As of December 31, 2023 and 2022, the Company’s inventories were not pledged as collateral.

(5) Investments accounted for using equity method

The Company’s investment in equity method at the reporting date was as follow:

Subsidiaries The Company’s share of the loss of subsidiaries	December 31, 2023 December 31, 2022 $ 40,683 (16,251) For the years ended December 31, 2023 2022 $ (33,039) (96,281)
	2023 $ (33,039)

As of December 31, 2023 and 2022, the Company’ s investments in equity accounted were not pledged as collateral.

(6) Property, plant and equipment

The cost and accumulated depreciation of the property, plant and equipment for the years ended December 31, 2023 and 2022 were as follows:

							Equipment
		Research	Transportation	Office	Leasehold	Construction	under
		equipment	equipment	equipment	improvements	in progress	inspection	Total
Costs:
Balance as of January 1, 2023	$	923,625	11,410	127,206	29,287	-	9,101	1,100,629
Additions		23,472	-	14,038	7,666	228,429	68,351	341,956
Disposals		(1,850)	(1,472)	(210)	(209)	-	-	(3,741)
Reclassification		25,205	-	32,925	11,233	-	(69,363)	-
Balance as of December 31, 2023	$	970,452	9,938	173,959	47,977	228,429	8,089	1,438,844
Balance as of January 1, 2022	$	877,848	7,410	103,355	23,482	-	734	1,012,829
Additions		21,085	-	11,413	5,524	-	51,488	89,510
Disposals		(1,400)	-	(310)	-	-	-	(1,710)
Reclassification		26,092	4,000	12,748	281	-	(43,121)	-
Balance as of December 31, 2022	$	923,625	11,410	127,206	29,287	-	9,101	1,100,629
Accumulated depreciation:
Balance as of January 1, 2023	$	654,106	5,209	89,719	23,601	-	-	772,635
Depreciation		163,695	1,779	25,107	9,113	-	-	199,694
Disposals		(1,850)	(1,390)	(210)	(209)	-	-	(3,659)
Balance as of December 31, 2023	$	815,951	5,598	114,616	32,505	-	-	968,670

~28~

Raydium Semiconductor Corporation Notes to the Financial Statements

							Equipment
		Research	Transportation	Office	Leasehold	Construction	under
		equipment	equipment	equipment	improvements	in progress	inspection	Total
Balance as of January 1, 2022	$	480,685	3,946	66,026	21,494	-	-	572,151
Depreciation		174,821	1,263	24,003	2,107	-	-	202,194
Disposals		(1,400)	-	(310)	-	-	-	(1,710)
Balance as of December 31, 2022	$	654,106	5,209	89,719	23,601	-	-	772,635
Carrying amounts:
Balance as of December 31, 2023	$	154,501	4,340	59,343	15,472	228,429	8,089	470,174
Balance as of December 31, 2022	$	269,519	6,201	37,487	5,686	-	9,101	327,994
Balance as of January 1, 2022	$	397,163	3,464	37,329	1,988	-	734	440,678

As of December 31, 2023 and 2022, none of the Company’s property, plant and equipment were pledged as collateral.

(7) Right-of-use assets

The Company leases buildings. Information about leases for which the Company as a lessee were presented below:

Cost of right-of-use assets: Balance as of December 31, 2023 (Balance as of January 1, 2023) Balance as of January 1, 2022 Increase Decrease Balance as of December 31, 2022 Accumulated depreciation of right-of-use assets: Balance as of January 1, 2023 Depreciation Balance as of December 31, 2023 Balance as of January 1, 2022 Depreciation Decrease Balance as of December 31, 2022 Carrying amounts: Balance as of December 31, 2023 Balance as of December 31, 2022 Balance as of January 1, 2022

Buildings $ 19,187 $ 10,907 19,187 (10,907) $ 19,187 $ 2,558 3,837 $ 6,395 $ 9,816 3,649 (10,907) $ 2,558 $ 12,792 $ 16,629 $ 1,091

~29~

Raydium Semiconductor Corporation Notes to the Financial Statements

(8) Intangible assets

The cost and amortization of the intangible assets of the Company for the years ended December 31, 2023 and 2022 were as follows:

Cost: Balance as of January 1, 2023 Additions Write-off Balance as of December 31, 2023 Balance as of January 1, 2022 Additions Write-off Balance as of December 31, 2022 Amortization: Balance as of January 1, 2023 Amortization Write-off Balance as of December 31, 2023 Balance as of January 1, 2022 Amortization Write-off Balance as of December 31, 2022 Carrying amounts: Balance as of December 31, 2023 Balance as of December 31, 2022 Balance as of January 1, 2022	Goodwill $ 237,800 - - $ 237,800 $ 237,800 - - $ 237,800 $ - - - $ - $ - - - $ - $ 237,800 $ 237,800 $ 237,800	Patents and technology 106,973 - - 106,973 106,973 - - 106,973 102,352 4,621 - 106,973 83,865 18,487 - 102,352 - 4,621 23,108	Software costs 309,894 197,019 (74,939) 431,974 208,480 167,455 (66,041) 309,894 209,126 159,134 (74,939) 293,321 133,560 141,607 (66,041) 209,126 138,653 100,768 74,920	Total 654,667 197,019 (74,939) 776,747 553,253 167,455 (66,041) 654,667 311,478 163,755 (74,939) 400,294 217,425 160,094 (66,041) 311,478 376,453 343,189 335,828

A. Amortization

The amortization of intangible assets for the years ended December 31, 2023 and 2022 were included in the statements of comprehensive income:

Operating costs Operating expenses	For the years ended December 31,	For the years ended December 31,
	2023 $ 225 163,530 $ 163,755	2022
		284 159,810
		160,094

As of December 31, 2023 and 2022, the Company’ s intangible assets were not pledged as collateral.

~30~

Raydium Semiconductor Corporation Notes to the Financial Statements

• B. Impairment test on goodwill and other intangible assets (patents and technologies)

The Company conducts impairment tests on goodwill and intangible assets. As of December 31, 2023 and 2022, it was determined that the recoverable amount of the cash-generating unit to be greater than its carrying amount based on their value in use; hence, no impairment loss were recognized.

The key assumptions used in the estimation of value in use were as follows:

Discount Rate Revenue growth rate Sustainable growth rate	December 31, 2023 December 31, 2022 12% 15% 5%~14% -6%~5% 3% 2%

The discount rate was based on the industry-weighted average cost of capital and adjusted for a risk premium to reflect both the increased risk of generally investing in equities and the systemic risk of the specific cash-generating unit.

Revenue growth rate was projected by taking into account the average growth levels experienced over the past few years and by projecting sales growth over the next five years.

The cash flow projection was based on the five-year financial budget as assessed by management, and for cash flows projections over five years, it was extrapolated in reference to the economic growth rate where the unit operates.

When the recoverable amount of a cash generating unit is greater than the carrying amount, the management identifies the discount rate and the sustainable growth rate as key assumptions. The reasonable likelihood of a change in the above two key assumptions would expose the carrying amount to the risk of exceeding its recoverable amount. However, the management analyzed that the above key assumptions would not have resulted in a loss of impairment if they are at a negative status of 0.5%.

• －

• (9) Other financial assets current and non-current

Accounts receivable factoring Restricted time deposits Guaranty paid for product capacity and others The time deposits with original maturities of more than three months Others Other financial assets－current Other financial assets－non-current	December 31, 2023 $ 2,123,891 254,516 220,682 3,500,000 4,700 $ 6,103,789 $ 5,941,649 162,140 $ 6,103,789	December 31, 2022
		1,131,859 254,459 468,600 2,000,000 3,121
		3,858,039
		3,482,186 375,853
		3,858,039

~31~

Raydium Semiconductor Corporation Notes to the Financial Statements

The Company entered into capital guarantee contracts with several suppliers and paid deposits as agreed. Considering the future market demand and corresponding to production capacity adjustment, the Group recognized the losses recorded in operating costs.

(10) Other current and non-current assets

Prepayments to suppliers Sales tax receivable and overpaid VAT Prepayments for mask and mold Others Other current assets Other non-current assets Short-term borrowings Unsecured bank loans Unused credit lines Range of interest rates	December 31, 2023 $ 419,550 114,883 256,630 31,005 $ 822,068 $ 169,769 652,299 $ 822,068 December 31, 2023 $ 445,411 $ 1,154,589 5.98%~6.45%	December 31, 2022
		419,550 97,121 342,772 20,407
		879,850
		152,490 727,360
		879,850
		December 31, 2022
		-
		1,400,000
		-

• (11) Short-term borrowings

• (12) Lease liabilities

The carrying amounts of lease liabilities were as follows:

Current (recorded under other current liabilities) Non-current	December 31, 2023 $ 3,817 $ 9,305	December 31, 2022
		3,663
		13,122

For the liquidity risk analysis, please refer to note 6(23) Financial Instruments.

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2023 $ 302 $ 34,123	2022
		245
		32,419

~32~

Raydium Semiconductor Corporation Notes to the Financial Statements

The amounts recognized in the statement of cash flows were as follows:

Total cash outflow for leases Buildings leases	For the years ended December 31,	For the years ended December 31,
	2023 $ 38,088	2022
		36,029

The Company leases buildings and improvements for its office, with lease terms that typically run for 5 years, and some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

The Company has elected not to recognize the right-of-use assets and lease liabilities for its offices, which qualify as short-term leases and low-value asset leases.

• (13) Provisions

Balance as of January 1, 2023 Provisions reversed during the year Balance as of December 31, 2023 Provisions－current Provisions－non-current Balance as of January 1, 2022 Provisions made during the year Balance as of December 31, 2022 Provisions－current Provisions－non-current	Warranties $ 166,588 (50,475) $ 116,113 $ 38,704 77,409 $ 116,113 $ - 166,588 $ 166,588 $ 55,529 111,059 $ 166,588

The provision for warranties is estimated based on historical warranty data associated with similar products and services. The Company expects to settle majority of its provision within three years from the date of the sale of the product.

• (14) Employee benefits

• A. Defined benefit plans

The present value of the defined benefit obligation and the fair value adjustments of the plan assets for the Company were as follows:

Present value of the defined benefit obligations Fair value of plan assets Net defined benefit liabilities	December 31, 2023 $ 2,113 (1,969) $ 144	December 31, 2022 2,052 (1,934) 118

~33~

Raydium Semiconductor Corporation Notes to the Financial Statements

The Company makes defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pension for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average salary for the six months prior to retirement.

(a) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labor (hereinafter referred to as the Bureau of Labor Funds). With regard to the utilization of the fund, minimum earnings shall be no less than the earnings attainable from two year time deposits, with interest rates offered by local banks.

The Company’ s Bank of Taiwan labor pension reserve account balance amounted to $1,969 thousand as of December 31, 2023. For information on the utilization of the labor pension fund assets, including the asset allocation and yield rate of the fund, please refer to the website of the Bureau of Labor Funds.

(b) Movements in present value of defined benefit obligations

The movements in present value of the defined benefit obligations of the Company for the years ended December 31, 2023 and 2022 were as follows:

Defined benefit obligations as of January 1 Interest cost Remeasurement of the net defined benefit liabilities －Actuarial loss (gain) arising from changes in financial assumptions Defined benefit obligations as of December 31	For the years ended December 31, 2023 2022 $ 2,052 2,286 34 14 27 (248) $ 2,113 2,052
	2023 $ 2,052 34 27 $ 2,113

• (c) Movements in fair value of the defined benefit plan assets

The movements in the fair value of the defined benefit plan assets of the Company for the years ended December 31, 2023 and 2022 were as follows:

Fair value of plan assets as of January 1 Interest income Contributions made Remeasurement on the net defined benefit liabilities Fair value of plan assets as of December 31	For the years ended December 31,	For the years ended December 31,
	2023 $ 1,934 32 2 1 $ 1,969	2022
		1,784 11 3 136
		1,934

~34~

Raydium Semiconductor Corporation Notes to the Financial Statements

(d) Expenses recognized in profit or loss

The Company’s expenses recognized in profit or loss for the years ended December 31, 2023 and 2022 were as follows:

2023 and 2022 were as follows:
Operating expenses - Net interest on the net defined benefit	For the years ended December 31,
	2023 $ 2	2022
		3

• (e) Remeasurement of the net defined benefit liabilities recognized in other comprehensive income

The Company ' s remeasurements of the net defined benefit liabilities recognized as accumulated in other comprehensive income for the years ended December 31, 2023 and 2022 were as follows:

Accumulated amount as of January 1 Recognized for the period Accumulated amount as of December 31	For the years ended December 31,	For the years ended December 31,
	2023 $ 939 (26) $ 913	2022
		555 384
		939

• (f) Actuarial assumptions

The following are the Company’s significant principal actuarial assumptions of the present value of the defined benefit obligation at the reporting date:

Discount rate Future salary increases rate	December 31, 2023 December 31, 2022 % 1.32 % 1.64 % 5.00 % 5.00

The Company expects to make a contribution of $2 thousand to its defined benefit plans in the following year, beginning December 31, 2023.

The weighted-average duration of the defined benefits obligation is 13 years.

(g) Sensitivity analysis

If there is a change in the actuarial assumptions as of the December 31, 2023 and 2022, the impact on the defined benefit obligation would be as follows:

Actuarial assumptions December 31, 2023 Discount rate Future salary increase rate	Impact on the defined benefit obligations Increased 0.5% Decreased 0.5% $ (128) 137 $ 131 (125)
	Increased 0.5% $ (128) $ 131

~35~

Raydium Semiconductor Corporation Notes to the Financial Statements

Actuarial assumptions December 31, 2022 Discount rate Future salary increase rate	Impact on the defined benefit obligations Increased 0.5% Decreased 0.5% $ (132) (144) $ 138 (129)
	Increased 0.5% $ (132) $ 138

Reasonably possible changes to one of the relevant actuarial assumptions on the reporting date, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. In practice, the relevant actuarial assumptions are correlated to each other.

The approach used in recognizing the net defined liability in the balance sheets is the same as that used in developing the sensitivity analysis and the relevant actuarial assumptions in the current and previous years.

B. Defined contribution plans

In accordance with the provisions of the Labor Pension Act, the Company should contribute 6% of its employees’ monthly wages to their labor pension personal accounts with the Bureau of Labor Insurance, Ministry of Labor (hereinafter referred to as the Bureau of Labor Insurance). Under this defined contribution plan, the Company contributes a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

The Company’s pension costs under the defined contribution plan were $61,333 thousand and $55,467 for the years ended December 31, 2023 and 2022, respectively.

(15) Guarantee deposits received

Capacity guaranty Current (recorded in other current liabilities) Non-current	December 31, 2023 $ 1,075,130 $ 307,180 767,950 $ 1,075,130	December 31, 2022
		1,412,443
		490,483 921,960
		1,412,443

The Company entered into production capacity guarantee agreement with its customers and reserved specific production capacity to such customers by collecting deposits, which would be returned upon the fulfillment of the contract.

~36~

Raydium Semiconductor Corporation Notes to the Financial Statements

(16) Income tax

• A. Income tax expenses

The amounts of income tax expense (benefit) were as follows:

Current income tax expense (benefit) Current period Adjustment for prior period Deferred income tax expense (benefit) Origination and reversal of temporary differences Income tax expense	For the years ended December 31, 2023 2022 $ 239,559 831,483 (115,923) (74,945) 123,636 756,538 (19,686) (113,826) $ 103,950 642,712
	2023 $ 239,559 (115,923) 123,636 (19,686) $ 103,950

• B. The amounts of income tax expense (benefit) recognized in other comprehensive income were as follows:

Items that will not be reclassified subsequently to profit or loss: Unrealized gains or losses from investments in equity instruments measured at FVOCI Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations	For the years ended December 31,	For the years ended December 31,
	2023 $ (19,086) $ (245)	2022
		17,024
		327

• C. The reconciliation of income tax expense and income before income tax were as follows:

Income before income tax Income tax at the Company’s domestic tax rate Adjustment for prior period and others Income tax effect of investment tax credit Additional surtax on undistributed retained earning Change in unrecognized temporary differences and others	For the years ended December 31, 2023 2022 $ 1,546,741 4,505,048 $ 309,348 901,010 (115,923) (74,945) (106,145) (200,655) 2,675 11,681 13,995 5,621 $ 103,950 642,712
	2023 $ 1,546,741 $ 309,348 (115,923) (106,145) 2,675 13,995 $ 103,950

~37~

Raydium Semiconductor Corporation Notes to the Financial Statements

For investment credit applicable in accordance with the Statute for Industrial Innovation, a maximum of 15% of the expenses may be credited against the profit seeking enterprise income tax payable in the current year; and a maximum of 10% of the expenses may be credited against the profit seeking enterprise income tax payable in each of the three years following the current year; also, the creditable amount shall not exceed 30% of the profit seeking enterprise income tax payable in the current year. The Group’s investment credit for the year 2023 is in the process of application and the investment credit for the year 2022 is yet to be approved.

• D. Deferred income tax assets and liabilities

• (a) The amounts which the Company has not recognized deductible temporary differences in deferred tax assets were as follows:

deferred tax assets were as follows:
Loss associated with investments in subsidiaries	December 31, 2023 $ 41,401	December 31, 2022
		34,793

• (b) Changes in the amount of recognized deferred tax assets and liabilities were as follows:

January 1, 2023 Recognized in profit or loss Temporary differences: Unrealized Inventory valuation and obsolescence losses $ 150,758 (4,437) Unrealized foreign exchange gain or loss 19,846 15,123 Unrealized loss 38,831 (3,355) Sales transaction fiscal and tax differences 2,817 7,280 Exchange difference on translation of foreign operations (126) - Goodwill and valuation of financial assets (4,856) (1,390) Others (17,024) 6,465 Deferred tax income (expense) $ 19,686 Net deferred tax assets $ 190,246 Reflected in balance sheet as follows: Deferred tax assets $ 212,252 Deferred tax liabilities $ (22,006)	Recognized in other comprehensive income December 31, 2023	Recognized in other comprehensive income December 31, 2023
	- - - - 245 - 19,086 19,331	146,321 34,969 35,476 10,097 119 (6,246) 8,527 229,263 235,509 (6,246)

~38~

Raydium Semiconductor Corporation Notes to the Financial Statements

January 1, 2022 Recognized in profit and loss Temporary differences: Unrealized Inventory valuation and obsolescence losses $ 89,148 61,610 Unrealized foreign exchange gain or loss 3,443 16,403 Unrealized loss - 38,831 Sales transaction fiscal and tax differences 4,350 (1,533) Exchange difference on translation of foreign operations 201 - Goodwill and valuation of financial assets (3,371) (1,485) Others - - Deferred tax income (expense) $ 113,826 Net deferred tax assets $ 93,771 Reflected in balance sheet as follows: Deferred tax assets $ 97,142 Deferred tax liabilities $ (3,371)	Recognize in other comprehensive income	December 31, 2022 150,758 19,846 38,831 2,817 (126) (4,856) (17,024) 190,246 212,252 (22,006)
	- - - - (327) - (17,024) (17,351)

E. The Company’s tax returns have been examined and approved by the tax authorities through 2021.

(17) Equity

A. Common stock

As of December 31, 2023 and 2022, the authorized capital of the Company amounted to $1,000,000 thousand (including the amount of $50,000 thousand authorized for the issuance of the employee stock options), and the Company’s issued capital amounted to $758,552 thousand, respectively, with a par value of $10 (dollars) per share.

Reconciliation of shares outstanding for 2023 and 2022 was as follows (in thousands of shares):

Balance as of January 1 Vested of restricted stock awards Cash capital increase Balance as of December 31	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2023 75,855 - - 75,855	2022
			66,300 630 8,925
			75,855

~39~

Raydium Semiconductor Corporation Notes to the Financial Statements

For the year ended December 31, 2022, due to the resignation of its employees, the Company has withdrawn and canceled shares of restricted employee rights. The statutory registration procedures had been completed.

After the resolution of the Board of Director on October 26, 2021, the Company issued 8,925 thousand shares through cash capital increase for its initial public offering. The Company’ s shares have a par value of NT$10 per share, and are issued at the premium of NT$308 per share, besides the weighted average price of NT$505.55 per share for auction. As of December 31, 2021, the amount of NT$410,564 thousand was collected and recognized as capital collected in advance. The purpose of cash capital increase is mainly to increase the working capital, in which the rights and obligations of the ordinary shares are the same as those of the ordinary shares of the Company issued then.

The above cash capital increase was approved by the Taiwan Stock Exchange on November 8, 2021, with letter No. 1101805900. The Company received the full amount of $3,948,026 thousand on January 5, 2022 (the record date), and completed the change of registration on January 20, 2022.

B. Capital surplus

Capital surplus Employee remuneration paid in the form of stocks Others	December 31, 2023 $ 4,647,881 64,592 460 $ 4,712,933	December 31, 2022
		4,647,881 64,592 460
		4,712,933

In accordance with the R.O.C Company Act, the capital surplus generated from the premium of stock issuance and donation may only be used to offset accumulated deficits. In addition, when the Company incurred no deficit, such capital surplus may be distributed as cash or stock dividends. Pursuant to the R.O.C. Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the total sum of the capital surplus capitalized per annum shall not exceed 10 percent of the paid-in capital.

C. Retained earnings

If the Company makes a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, and setting aside 10% of the remaining profit as legal reserve, unless the amount in the legal reserve is already equal to or greater than the total paid in capital. Thereafter, the amount shall be set aside or reversed as special reserve in accordance with related laws, regulations, or provisions of the competent authorities. Then, any remaining profit, together with any undistributed retained earnings, shall be distributed according to the distribution plan proposed by the Board of Directors. The distribution of dividends and bonuses, in whole or in part, by issuing new shares, shall be resolved during the shareholders' general meeting. As for the cash payment, it shall be reported in the shareholders' general meeting.

~40~

Raydium Semiconductor Corporation Notes to the Financial Statements

The Company’s dividend policy is to pay dividends from surplus considering factors such as the Company’ s current and future investment environment, cash requirements, domestic and overseas competitive conditions and capital budget requirements, while taking into account shareholders’ interest, maintenance of balanced dividend and the Company’ s long-term financial plan. An annual dividend of not less than 10 percent of the distributable surplus is provided for the shareholders, wherein the cash portion of the dividend, which may be in the form of cash and stock, shall not be less than 10% of the total dividend distributed during the year.

(a) Legal reserve

In accordance with the ROC Company Act, 10 percent of the net profit shall be allocated as legal reserve until the accumulated legal reserve equals the paid-in capital. If the Company incurs no loss, the reserve may be distributed as cash or stock dividends for the portion in excess of 25% of the paid-in capital.

(b) Special reserve

In accordance with Rule No. 1090150022 issued by the FSC on March 31, 2021, a portion of current earnings and previous unappropriated earnings shall be set aside as a special reserve during earnings distribution. The amount to be set aside should equal the total amount of contra accounts that are accounted for as deductions to other equity interests. A portion of the previous unappropriated earnings shall be set aside as a special reserve, which should not be distributed, to account for cumulative changes to other equity interests pertaining to prior periods. The subsequent reversals of the contra accounts in shareholders' equity shall qualify for additional distributions.

(c) Earnings distribution

The appropriations of earnings for 2022 and 2021 by way of cash dividends had been approved in the Board of Directors' meeting held on February 23, 2023 and February 24, 2022. In addition, the appropriations of earning for 2022 and 2021 by others ways have been approved in the annual shareholders' meeting held on May 29, 2023 and May 30, 2022, respectively. Details of distribution were as follows:

Legal reserve Special reserve Cash dividends	2022 Amounts Dividends per share (NT$) $ 386,272 - 3,110,064 41 $ 3,496,336	2021
	Amounts $ 386,272 - 3,110,064 $ 3,496,336	Amounts Dividends per share (NT$) 429,102 (10,616) 3,413,485 45 3,831,971

The aforementioned appropriations of earnings were consistent with the resolutions of the Board of Directors' meeting.

~41~

Raydium Semiconductor Corporation Notes to the Financial Statements

On February 26, 2024, the amount of cash dividends distributed to ordinary shareholders, at NT$15.2 per share, totaled $1,152,999 thousand; and the appropriation of the earnings for 2023 was approved by the Board of Meeting. The related information is available on the Market Observation Post System website.

D. Other equity

Change in the amount of other equity were as follows:

Balance as of January 1, 2023 Differences on translation of foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Disposal of investments in equity instruments measured at fair value through other comprehensive income Income tax effect Balance as of December 31, 2023 Balance as of January 1, 2022 Differences on translation of foreign operations Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Share-based payment Income tax effect Balance as of December 31, 2022	Exchange differences on translation of foreign operations $ 508 (1,227) - - 245 $ (474) $ (801) 1,636 - - (327) $ 508	Unrealized gain (losses) on financial assets at fair value through other comprehensive income 28,946 - (70,094) (11,205) 19,086 (33,267) 124,388 - (78,418) - (17,024) 28,946	Deferred compensation cost arising from issuance of restricted stock awards - - - - - - (10,715) - - 10,715 - -	Total 29,454 (1,227) (70,094) (11,205) 19,331 (33,741) 112,872 1,636 (78,418) 10,715 (17,351) 29,454

~42~

Raydium Semiconductor Corporation Notes to the Financial Statements

• (18) Share-based payment

Information about the Company’s equity settled share-based payment transactions for the year ended December 31, 2022 was as follows:

Grant date Granted units (thousands of shares) Contractual life Recipients Vesting conditions	Restricted employee shares awards issued in 2019
	2019.7.26 2,000 1~3 years Employee Note

Note: Employees are entitled to receive restricted stock in the first, second and third year (from the grant date) of their service. The restricted stock awards will be granted only if the overall performance target and the personal performance target are reached.

The shareholders’ meeting resolved on June 12, 2019 to issue 2,000 thousand shares of restricted stock to full-time employees who conformed to certain requirements. The Company has filed an effective registration with the Securities and Futures Bureau of the FSC for the issuance. The closing price of NT$90.89 per share on the grant date was designated as the fair value.

For an employee who qualifies for the said restricted employee shares and who has remained in service at the Company for one, two and three years after the allotment period, without breaching any contractual agreement, and has achieved individual performance assessment targets set by the Company’s and overall performance of the Company, the maximum proportion of shares that may be awarded is 34% for the first year, 33% for the second year and 33% for the third year, during the allotment period. No restricted employee shares shall be sold, pledged, transferred, designated, gifted or dispose in other ways, unless the vesting conditions have been met after the allotment of shares, except in the event of inheritance. The attendance, proposal, speaking, voting and election rights of a shareholders’ meeting shall be governed by the Custodial trust agreement.

The information of the Company’s restricted employee shares was as follows:

	Unit: Thousand shares	Unit: Thousand shares
	For the years
	ended
	December	31,
	2022
Outstanding at January 1		637
Vested during the year		(630)
Collection during the year		(7)
Outstanding at December 31	-

The expense recognized by the Company for share-based payments in 2022 was $11,273 thousand. As of December 31, 2022, the deferred compensation costs was $0 thousand.

~43~

Raydium Semiconductor Corporation Notes to the Financial Statements

(19) Earnings per share

Basic earnings per share: Net income attributable to ordinary shareholders of the Company Weighted-average number of ordinary shares outstanding during the year (in thousands of shares) Basic earnings per share (NT dollars) Diluted earnings per share: Net income attributable to ordinary shareholders of Company Weighted-average number of ordinary shares outstanding during the year (in thousands of shares) Effect of employee stock remuneration Weighted-average number of ordinary shares outstanding (in thousands of shares)(diluted) Diluted earnings per share (NT dollars)	For the years ended December 31,	For the years ended December 31,
	2023 $ 1,442,791 75,855 $ 19.02 $ 1,442,791 75,855 971 76,826 $ 18.78	2022
		3,862,336
		75,388
		51.23
		3,862,336
		75,388 2,821
		78,209
		49.38

(20) Revenue from contracts with customers

A. Detail of revenue

Revenues from major regional markets: China (including Hong Kong) Taiwan Others Revenue from major products: Display Driver IC Others B. Contract balances December 31, 2023 Contract liabilities $ 527,962	Revenues from major regional markets: China (including Hong Kong) Taiwan Others Revenue from major products: Display Driver IC Others B. Contract balances December 31, 2023 Contract liabilities $ 527,962	For the years ended December 31,	For the years ended December 31,
		2023 $ 12,312,166 4,782,992 509,449 $ 17,604,607 $ 16,922,157 682,450 $ 17,604,607 December 31, 2022 680,756	2022
			14,743,152 7,717,095 151,653
			22,611,900
			21,849,552 762,348
			22,611,900
			January 1, 2022
	$ 527,962		632,707

For details on accounts receivable and loss allowance, please refer to note 6(3).

~44~

Raydium Semiconductor Corporation Notes to the Financial Statements

The revenues recognized for the years ended December 31, 2023 and 2022, which were included in the contract liability balance at the beginning of the period, amounted to $292,589 thousand and $201,112 thousand, respectively.

The contract liabilities primarily relate to the advance consideration received from contracts with goods sold, for which revenue is recognized when products are delivered to customers.

• (21) Non-operating income and expenses

• A. Other income

Dividend income Others	For the years ended December 31,	For the years ended December 31,
	2023 $ 12,176 14,960 $ 27,136	2022
		17,900 13,394
		31,294

• B. Other gains and losses

Foreign exchange gains (losses), net Gains on financial instruments measured at fair value through profit or loss Others	For the years ended December 31, 2023 2022 $ (2,922) 745,810 6,542 3,017 680 (2) $ 4,300 748,825
	2023 $ (2,922) 6,542 680 $ 4,300

	$ 4,300 748,825
C. Finance costs Interest expense－bank borrowings Lease liabilities	For the years ended December 31, 2023 2022 $ (4,352) - (302) (245) $ (4,654) (245)
	2023 $ (4,352) (302) $ (4,654)

• D. Interest income

Interest income
Interest income from bank deposits	For the years ended December 31,
	2023 $ 137,354	2022
		83,116

~45~

Raydium Semiconductor Corporation Notes to the Financial Statements

(22) Remuneration to employees, and directors

In accordance with the articles of incorporation, when the Company incurred profit for the year, the profit should first be used to offset against any deficit (including unappropriated retained earnings); then, no less than 1% of the profit (income before tax, excluding remuneration to employees and directors) shall be distributed as employee remuneration, and no more than 1% as directors’ and supervisors’ remuneration.

The aforementioned shall be resolved by the board of directors and reported to the shareholders' meeting:

Employees, including those belonging to affiliate companies that meet certain conditions, are entitled to the abovementioned remuneration, which to be distributed in stock or cash, employee stock option certificates, restricted employee shares, treasury stock purchased and transferred to employees, as well as employee stocks when issuing new shares. The said conditions and distribution method are decided by Board of Directors or the personnel authorized by Board of Directors.

For the years ended December 31, 2023 and 2022, the amounts of remuneration to employees were estimated at $270,959 thousand and $789,985 thousand, respectively; and those to the directors were estimated at $12,747 thousand and $42,702 thousand, respectively. The estimation basis shall be calculated as the amounts of net income before tax, excluding the remuneration to employees and directors, multiplied by the percentage remuneration to employees and directors, as specified in the Company’s articles of incorporation. These remuneration were expensed under operating costs or expenses for the years ended December 31, 2023 and 2022. If there are changes in the proposed amounts after the annual parent-company-only financial statements have been authorized for issuance, the differences are accounted for as changes in accounting estimates and adjusted prospectively in profit or loss in the following year. However, if the Board of Directors resolved that the employee remuneration is to be paid in the form of stocks, the closing price of the ordinary share on the day before the Board of Directors’ meeting will be used to calculate the number of stock shares.

There were no differences between the aforesaid amounts of employee and directors’ remuneration approved by the Board of Directors and the amounts in the 2022 consolidated financial statements. Related information is available on the Market Observation Post System website of the Taiwan Stock Exchange.

• (23) Financial instruments

A. Credit risk

• (a) Credit risk exposure

The carrying amount of financial assets represent the maximum amounts exposed to credit risk.

~46~

Raydium Semiconductor Corporation Notes to the Financial Statements

(b) Credit risk concentration

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. As of the financial reporting date, the maximum credit risk exposure of the Company due to non-performance of the counterparty mainly derived from the carrying amount of the financial assets recognized in the balance sheet of the Company.

The Company’s potential credit risk is derived primarily from cash and cash equivalents and trade receivables. The cash is deposited in different financial institutions. The Company manages the credit risk exposure with each of these financial institutions and believes that cash and cash equivalents do not have a significant credit risk concentration.

Prior to granting credit facilities to customers in accordance with the credit procedures, the Company will require insurance for accounts receivable from certain customer groups in order to reduce the credit risk of accounts receivable, and use historical trading experience to continuously assess the financial condition, credit condition and current economic environment of the customers.

As of December 31, 2023 and 2022, the Company’s five largest customers accounted for approximately 58% and 72% of the balance of accounts receivable (including related persons), respectively. After an assessment has been made on the lifetime expected credit losses of the accounts receivable, the management expects no significant losses in the future.

(c) Credit risk of receivables

For credit risk exposure on accounts receivable, please refer to note 6(3).

Other financial assets at amortized cost include other receivables, guarantee deposit and restricted bank deposits.

All financial assets, excluding the abovementioned accounts receivable, are considered to be low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. (Please refer to Note 4(6) for further details).

~47~

Raydium Semiconductor Corporation Notes to the Financial Statements

B. Liquidity risk

The contractual maturities of financial liabilities were as follows.

December 31, 2023 Non-derivative financial liabilities Short-term borrowings Accounts payable Salaries and bonuses payable Other payables-related parties Lease liabilities (current and non-current) Guarantee deposits received (current and non-current) December 31, 2022 Non-derivative financial liabilities Accounts payable Salaries and bonuses payable Other payables-related parties Lease liabilities (current and non-current) Guarantee deposits received (current and non-current)	Carrying amounts $ 445,411 2,363,447 2,352,793 7,518 13,122 1,075,130 $ 6,257,421 $ 1,416,716 3,877,800 106 16,785 1,412,443 $ 6,723,850	Contractual cash flows (445,888) (2,363,447) (2,352,793) (7,518) (13,576) (1,075,130) (6,258,352) (1,416,716) (3,877,800) (106) (17,542) (1,412,443) (6,724,607)	Within a year (445,888) (2,363,447) (2,352,793) (7,518) (4,045) (307,180) (5,480,871) (1,416,716) (3,877,800) (106) (3,966) (490,483) (5,789,071)	Over 1 years - - - - (9,531) (767,950) (777,481) - - - (13,576) (921,960) (935,536)

The Company does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

C. Foreign currency risk

(a) Exposure of foreign currency risk

The Company’s financial assets and liabilities exposed to foreign currency risk were as follows:

Financial assets Monetary items USD JPY CNY Non-Monetary items USD	December 31, 2023 Foreign currency Exchange rate TWD $ 182,898 30.718 5,618,261 24,856 0.2173 5,401 846 4.3152 3,651 1,324 30.718 40,683	December 31, 2023 Foreign currency Exchange rate TWD $ 182,898 30.718 5,618,261 24,856 0.2173 5,401 846 4.3152 3,651 1,324 30.718 40,683	December 31, 2022	December 31, 2022
	Foreign currency $ 182,898 24,856 846 1,324	Exchange rate 30.718 0.2173 4.3152 30.718	Foreign currency 163,766 25,256 1,629 -	Exchange rate TWD 30.732 5,032,857 0.2311 5,837 4.4076 7,180 - -

~48~

Raydium Semiconductor Corporation Notes to the Financial Statements

Financial liabilities Monetary items USD CNY Non-Monetary items USD	December 31, 2023 Foreign currency Exchange rate TWD $ 133,899 30.718 4,113,109 85 4.3152 367 - - -	December 31, 2023 Foreign currency Exchange rate TWD $ 133,899 30.718 4,113,109 85 4.3152 367 - - -	December 31, 2022	December 31, 2022
	Foreign currency $ 133,899 85 -	Exchange rate 30.718 4.3152 -	Foreign currency 95,970 84 529	Exchange rate TWD 30.732 2,949,350 4.4076 370 30.732 16,251

(b) Sensitivity analysis

The Company’s exposure to foreign currency risk arises mainly from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivable, other financial assets, short-term borrowings, accounts payable and deposits received that are denominated in foreign currency. A strengthening (weakening) of 1% of the NTD against the USD, CNY, and JPY as of December 31, 2023 and 2022, assuming that all other variables remain constant, would have increased or decreased the profit after tax by $12,111 thousand and $16,769 thousand, respectively.

(c) Foreign exchange gains (losses) on monetary items

As the Company deals with diverse foreign currencies, gains and losses on foreign exchange were summarized as a single amount. The aggregate of realized and unrealized foreign exchange gains (losses) for the years ended December 31, 2023 and 2022 were $(2,922) thousand and $745,810 thousand, respectively.

D. Interest rate analysis

An increase or decrease of 0.25% in interest rates, mainly from cash and cash equivalents, restricted bank deposits and short-term borrowings, with floating interest rates at the reporting date, assuming all other variables remain constant, would have increased or decreased net income by $2,896 thousand and $4,178 thousand for the years ended December 31, 2023 and 2022, respectively.

E. Other market price risk

The impact of the changes in equity price on other comprehensive income was as follows, assuming the analysis use the same basis for both years, with other factors remaining constant:

Prices of securities at the reporting date Increasing 10% Decreasing 10%	For the years ended December 31,	For the years ended December 31,
	2023 Other comprehensive income before tax $ 43,439 $ (43,439)	2022 Other comprehensive income before tax 53,569 (53,569)

~49~

Raydium Semiconductor Corporation Notes to the Financial Statements

• F. Fair value of financial instruments

• (a) Fair value and carrying amount

The fair value of financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income is measured on a recurring basis. The Company’s carrying amounts and the fair value of financial assets and liabilities (including the information for fair value hierarchy; but excluding financial instruments, whose fair values approximate the carrying amount, and lease liabilities, since the disclosure of fair value are not equired) which need not be disclosed were as follows:

Financial assets at FVTPL－ current Financial assets at FVOCI Listed stocks Unlisted stocks Accounts receivable Financial assets measured at amortized cost Cash and cash equivalents Accounts receivable (including related parties) Other financial assets (current and non-current) Financial liabilities measured at amortized cost Short-term borrowings Accounts payable Salaries and bonuses payable Other payables－related parties Lease liabilities (current and non-current) Guarantee deposits received (current and non-current)	Carrying amounts $ 633,073 319,873 114,517 119,505 5,166,983 2,656,774 6,103,789 $ 15,114,514 $ 445,411 2,363,447 2,352,793 7,518 13,122 1,075,130 $ 6,257,421		December 31, 2023	December 31, 2023
			Fair value
		Level 1 633,073 319,873 - - - - - 952,946 - - - - - - -	Level 2 - - 119,505 - - - 119,505 - - - - - - -	Level 3 - 114,517 - - - - 114,517 - - - - - - -	Total
					633,073 319,873 114,517 119,505 - - -
					1,186,968
					- - - - - -
					-

~50~

Raydium Semiconductor Corporation Notes to the Financial Statements

Financial assets at FVTPL－ current Financial assets at FVOCI Listed stocks Unlisted stocks Accounts receivable Financial assets measured at amortized cost Cash and cash equivalents Accounts receivable (including related parties) Other financial assets (current and non-current) Financial liabilities measured at amortized cost Accounts payable Salaries and bonuses payable Other payables－related parties Lease liabilities (current and non-current) Guarantee deposits received (current and non-current)	Carrying amounts $ 356,790 271,372 264,316 195,549 8,369,521 2,677,886 3,858,039 $ 15,993,473 1,416,716 3,877,800 106 16,785 1,412,443 $ 6,723,850		December 31, 2022	December 31, 2022
			Fair value
		Level 1 356,790 271,372 - - - - - 628,162 - - - - - -	Level 2 - - - 195,549 - - - 195,549 - - - - - -	Level 3 - - 264,316 - - - - 264,316 - - - - - -	Total
					356,790 271,372 264,316 195,549 - - -
					1,088,027
					- - - - -
					-

(b) Fair value valuation technique of financial instruments measured at fair value

Non-derivative financial instruments

The listed shares and beneficiary certificates held by the Company are measured at fair value according to standard provision and conditions, and are traded in active markets, with the fair value being measured using the quoted price in an active market. Except for the above mentioned financial assets with active market transactions, the fair value of unlisted shares held by the Company is estimated using the market-comparable company method, which is measured by using price-book ratio of the peers.

• (c) There was no transfer between the different levels of fair value hierarchy for the years ended December 31, 2023 and 2022.

~51~

Raydium Semiconductor Corporation Notes to the Financial Statements

• (d) Quantified information for significant unobservable inputs used in fair value measurement (Level 3)

The Company’s financial instruments measured at fair value which are categorized within Level 3 include financial assets at FVOCI – equity investments.

The Company classified the equity investments without an active market as recurring level 3 fair values in the fair value hierarchy due to the use of significant unobservable inputs. The significant unobservable inputs of equity investments without an active market are individually independent, and there is no correlation between them.

Quantified information regarding significant unobservable inputs were as follows:

Item Financial assets at FVOCI – equity investments without an active market	Valuation technique Market approach (comparable with price-book ratio of the peers)	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement ●P/B ratio multiplier (2.63~3.94 and 2.73~4.61 as of December 31, 2023 and 2022, respectively) ●Discount for lack of market liquidity ( 30%~60% and 30% as of December 31, 2023 and 2022, respectively) ●The higher the P/B ratio, the higher the fair value ●The higher the market liquidity discount rate, the lower the fair value

• (e) Reconciliation for fair value measurements categorized within level 3:

Balance as of January 1 Addition in investments Deposal of investments Total gain/loss Recognized in other comprehensive income Balance as of December 31	Financial assets at FVOCI – equity investments without an active market	Financial assets at FVOCI – equity investments without an active market
	For the years ended December 31,
	2023 $ 264,316 - (31,205) (118,594) $ 114,517	2022
		56,014 137,205 - 71,097
		264,316

The total gains and losses above were recognized in “ unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income”.

~52~

Raydium Semiconductor Corporation Notes to the Financial Statements

(24) Financial risk management

• A. Overview

The Company have exposure to the following risks from its financial instruments:

• (a) Credit risk

• (b) Liquidity risk

• (c) Market risk

The following likewise discusses the Company’ s objectives, policies and processes for measuring and managing the above mentioned risks. For more disclosures about the quantitative effects of these risks exposures, please refer to the respective notes in the accompanying consolidated financial statements.

• B. Structure of risk management

The significant financial activities of the Company have been reviewed by the Board of Directors and the Audit Committee in accordance with the relevant standards and internal control system. During the financial plan implementation, the Company must comply with the relevant financial operating procedures relating to the overall financial risk management and segregation of duties. The Company, through internal controls such as training, management standards, and operational procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

C. Credit risk

The credit risk of the Company is mainly due to receivables and cash and cash equivalents arising from operating activities; please refer to note 6(23).

D. Liquidity risk

There is no liquidity risk of being unable to raise capital to settle contract obligations since the Company has sufficient capital and working capital to fulfill its contract obligations; please refer to note 6(23).

E. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, that will affect the Company’s income or the value of its financial instruments; please refer to note 6(23). The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimizing the return.

• (a) Currency risk: The Company is exposed to currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of the Group entities, primarily the NTD, USD, JPY and CNY.

• (b) Market price risk of interest rate change: All of the Company’s assets and liabilities bear floating interest rates, and thus, cash flow is exposed to the risk of interest rate change.

~53~

Raydium Semiconductor Corporation Notes to the Financial Statements

(25) Capital management

In consideration of the industry dynamics and future developments, as well as external environment factors, the Company maintains an optimal capital structure to enhance long-term shareholder value by managing its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, research and development activities, dividend payments, and other business requirements for continuing operations and to reward its shareholders and take into consideration the interests of other stakeholders.

The Company’s debt-to-equity ratio at the reporting date was as follows:

Total liabilities Less: Cash and cash equivalents Net debt Total equity Debt-to-equity ratio	December 31, 2023 $ 7,712,732 (5,166,983) $ 2,545,749 $ 11,218,148 % 23	December 31, 2022 8,529,200 (8,369,521) 159,679 12,937,437 % 1

The increase in debt-to-equity ratio as of December 31, 2023 was mainly due to the decrease in cash flows incurred from operating activities in the current period, resulting in an increase in net debt.

(26) Financing activities of non-cash transactions

Reconciliation of liabilities arising from financing activities was as follows:

Short-term borrowings Lease liabilities Guarantee deposits received Total liabilities from financing activities Lease liabilities Guarantee deposits received Total liabilities from financing activities	January 1, 2023 $ - 16,785 1,412,443 $ 1,429,228 January 1, 2022 $ 963 1,384,400 $ 1,385,363	Cash flows 452,183 (3,663) (304,872) 143,648 Cash flows (3,365) (111,303) (114,668)	Changes in foreign Exchange and other (6,772) - (32,441) (39,213) Changes in foreign Exchange and other 19,187 139,346 158,533	December 31, 2023
				445,411 13,122 1,075,130
				1,533,663
				December 31, 2022
				16,785 1,412,443
				1,429,228

~54~

Raydium Semiconductor Corporation Notes to the Financial Statements

7. Related-party transactions

• (1) Names and relationship of related parties

The following is a summary of related parties that have had transactions with the Company during the periods presented in the parent-company-only financial statements.

Name of related parties	Relationship with the Company
Raydium Semiconductor (SAMOA) Corp. (RSA)	The subsidiaries of the Company
Raydium Semiconductor (Kunshan) Co., Ltd. (RKS)	The subsidiaries of the Company
AUO Corporation (AUO)	AUO accounted for is investments in the
	Company using the equity method
AUO (Suzhou) Co., Ltd. (AUOSZ)	Subsidiary of AUO
AUO (Xiamen) Co., Ltd. (AUOXM)	Subsidiary of AUO
AUO (Kunshan) Co., Ltd. (AUOKS)	Subsidiary of AUO
AUO Education Service Corp. (AUES)	Subsidiary of AUO
AUO Display Plus Corporation (ADP)	Subsidiary of AUO
AUO Envirotech Inc.	Subsidiary of AUO
Maxeda Technology Inc. (Maxeda)	The Company act as the director for Maxeda
	(Note)

Note: On October 13, 2023, the Company sold the entire equity of Maxeda Technology Inc., who became a non-related party thereafter.

• (2) Additional to those disclosed in the notes of the parent-company-only financial statements, the Company’s significant related party transactions and balances were as follows:

A. Sales

The amounts of significant sales transactions between the Company and related parties were as follows:

Relationship AUOSZ AUOXM AUO Subsidiaries Other related parties	For the years ended December 31,	For the years ended December 31,
	2023 $ 1,909,645 1,754,596 937,560 34,064 180,609 $ 4,816,474	2022
		2,393,292 2,182,308 1,050,371 21,306 426,031
		6,073,308

For the years ended December 31, 2023 and 2022, the collection terms for sales to related parties were 30 to 120 days from the end of the month during which the invoice is issued. The collection terms for sales to non related parties were 30 to 120 days from the end of the month during which the invoice is issued or the products have been delivered after the advance receipt. The pricing for sales to related parties were not materially different from those with third parties.

~55~

Raydium Semiconductor Corporation Notes to the Financial Statements

B. Receivables from related parties

The receivables from related parties were as follows:

Account Receivables from related parties Receivables from related parties Receivables from related parties Receivables from related parties Receivables from related parties	Relationship AUOSZ AUOXM AUO Subsidiaries Other related parties	December 31, 2023 $ 690,595 549,176 301,599 33,553 78,280 $ 1,653,203	December 31, 2022
			822,048 849,818 300,611 4,795 138,883
			2,116,155

• C. Other payables to related parties

The payables to related parties were as follows ：

Account Other accounts payable from related parties Other accounts payable from related parties Refund liability	Relationship AUO Other related parties Other related parties	December 31, 2023 $ 7,470 48 $ 7,518 $ 2,025	December 31, 2022
			5 101
			106
			-

D. Other

• (a) The other income of the Company from its related parties were as follows:

AUO	For the years ended December 31,	For the years ended December 31,
	2023 $ 11,567	2022
		17,290

• (b) The rental expenses and other expenses paid by the related parties under lessee contracts were as follows:

AUO Other related parties	For the years ended December 31,	For the years ended December 31,
	2023 $ 28,133 263 $ 28,396	2022
		27,054 135
		27,189

• (c) The costs of acquiring computer software from related parties were as follows:

Other related parties	For the years ended December 31,	For the years ended December 31,
	2023 $ 5,390	2022
		5,390

~56~

Raydium Semiconductor Corporation Notes to the Financial Statements

• (d) The costs of acquiring leasehold improvements from related parties were as follows:

Other related parties (e) Refund of capital reduction AUO	December 31, 2023 $ 1,000 December 31, 2023 $ -	December 31, 2022
		-
		December 31, 2022
		35,978

• (3) Key management personnel compensation

Key management personnel compensation were as follows:

Short-term employee benefits Post-employment benefits Share-based payments Pledged assets: Asset Name Pledged to secure Restricted cash in bank (recognized in other financial assets－current) Import guarantee for customs Restricted cash in bank (recognized in other financial assets－current) Import Guarantee	For the years ended December 31,	For the years ended December 31,
	2023 $ 156,523 756 - $ 157,279 December 31, 2023 $ 34,386 220,130 $ 254,516	2022
		259,654 756 4,545
		264,955
		December 31, 2022
		34,329 220,130
		254,459

8. Pledged assets:

9. Significant Contingencies and Unrecognized Commitments:

• (1) The Company signed a contract to purchase a real estate located in Tai Yuen Hi-Tech Industrial Park on November 2, 2023, with a total contract price of $1,845,000 thousand (tax included), of which, the amount of $239,850 thousand (tax included) had been paid as of December 31, 2023.

• (2) The Company has signed capacity guarantee contracts with several suppliers, paid the deposit and prepaid the goods in accordance with the agreement, and agreed on the relevant years and minimum quantity that the Company needs to purchase.

• (3) The Company has entered into capacity guarantee contracts with several customers, and collects deposits and advance receipts as agreed to reserve specific production capacity to such customers.

~57~

Raydium Semiconductor Corporation Notes to the Financial Statements

10. Significant disaster losses: None

11. Subsequent events: None

12. Others:

The following is the summary statement of the current period employee benefits, depreciation, and amortization expenses, by function:

By function By item	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
	2023			2022
	Operating Costs	Operating Expenses	Total	Operating Costs	Operating Expenses	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others employee benefits Depreciation Amortization	116,519 6,692 3,556 - 6,169 83 225	1,984,548 105,158 57,779 23,448 86,000 203,448 163,530	2,101,067 111,850 61,335 23,448 92,169 203,531 163,755	204,436 8,522 3,398 - 6,442 169 284	3,521,115 130,818 52,072 51,844 82,930 205,674 159,810	3,725,551 139,340 55,470 51,844 89,372 205,843 160,094

The amount of employees and employee benefits for the years ended December 31, 2023 and 2022, were as follows:

The number of employees The number of directors who were not holding as a position of employee The average of employee benefits The average of Salaries The average of salary adjust rate The remuneration to supervisors	For the years ended December 31,	For the years ended December 31,
	2023 812 6 $ 2,936 $ 2,607 -47.87% $ -	2022
		751
		6
		5,382
		5,001
		-

The information of the Company’ s salaries and remunerations policy (including director, supervisor’ s, executive officers and employees) is as follow:

Directors and managers are determined in accordance with “ Directors, Independent Directors and Manager’ Salary and Remuneration Method” and taking into account the usual standards of the industry.

Employee salary is base on Company’s appointment work, salary work and assessment work.

The Company set up audit committee to replace the operation of supervisors, and no remuneration for supervisors.

~58~

RAYDIUM SEMICONDUCTOR CORPORATION

Notes to the Financial Statements

13. Other disclosures:

• (1) Information on significant transactions:

The followings is a summary of the information on significant transactions required by the Regulations Governing the Preparation of Financial Reports by Securities Issuers for the Company:

• A. Loans to other parties: None.

• B. Guarantees and endorsements for other parties:

(In Thousands of New Taiwan Dollars)

No.	Endorsement / Guarantee Provider	Guarantee Party	Guarantee Party	Limitation on Endorsement/ Guarantees Amount Provided to Each Guarantee Party	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantees to Net Equity per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowable	Guarantee Provided by Parent Company	Guarantee Provided by A Subsidiary	Guarantee Provided to Subsidiaries in Mainland China
		Name	Nature of Relationship
0	The Company R S ( L	aydium emiconductor Kunshan) Co., td.	Subsidiaries	2,243,630	614,360	614,360	375,640	-	% 5.48	5,609,074	Y	N	Y

• Note 1: The maximum amount of the Company's endorsement/guarantee for a single enterprise is 20% of the net value of the latest financial statements audited or reviewed by accountants.

• Note 2: The total amount of the Company’s endorsement/guarantee shall not exceed the 50% of the net value of the Company’s financial statements audited or reviewed by accountants.

C. Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures):

(Thousand of shares and Thousands of New Taiwan Dollars)

Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		Ending Balance	Ending Balance		Note
				Shares/Units	Carrying Value	Percentage of Ownership	Fair Value
The Company The Company The Company The Company The Company The Company The Company	Yuanta Wan Tai Money Market Fund Yuanta De Bao Money Market Fund Shares of Darfon Electronics Corp. Shares of AUO Corporation Shares of SiCEV Electronic Co., Ltd. Shares of PlayNitride Inc. Shares of Neuchips Inc.	- - - AUO accounted for its investments in the Company using the equity method The Company represented as a director of SiCEV - -	Financial assets at FVTPL －current " Financial assets at FVOCI －current Financial assets at FVOCI －non current " " "	13,164 34,691 203 14,459 8,943 470 2,000	204,740 428,333 11,013 262,424 50,223 46,436 64,294	- - % 0.07 % 0.19 % 18.73 % 0.44 % 2.18	204,740 428,333 11,013 262,424 50,223 46,436 64,294

~59~

RAYDIUM SEMICONDUCTOR CORPORATION Notes to the Financial Statements

• D. Individual securities acquired or disposed at costs or prices with accumulated amount exceeding the lower of NT$300 million or 20% of the stock capital:

(In Thousand of shares and Thousands of New Taiwan Dollars)

Securities Held by	Marketable Securities Type and Name	Financial Statement Account	Counter- Party	Relationship in the company	BeginningBalance	BeginningBalance	Ad	dition		Disposal	Disposal		EndingBalance	EndingBalance
					Shares	Amount	Shares	Amount	Shares	Price	Book Value	Gain (loss) on disposal	Shares	Amount
The Company The Company	Yuanta Wan Tai Money Market Fund Yuanta De Bao Money Market Fund	Financial assets at FVTPL－current "	- -	- -	13,144 12,664	201,156 154,050	47,844 77,372	740,000 950,000	47,824 55,345	740,000 680,000	736,918 677,381	3,082 2,619	13,164 34,691	204,238 (Note 1) 426,669 (Note 1)

• Note1: The opening and closing balances are measured acquisition costs. For the carrying amount valuated against the market price, please refer to C item.

• E. Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the stock capital:

(In Thousands of New Taiwan Dollars)

Name of company The Company	Name of property	Transaction date	Transaction amount	Status of payment	Counter-party	Relationship with the Company	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Prior Transaction of Related Counter-party	Price Reference	Purpose and Usage of Acquisition	Other Commitments
							Owner	Relationship with the Issuer	Date of transfer	Amount
	Construction in progress	2023.11.2	1,845,000	239,850	Winsome Development Company Limited	NA	-	-	-	-	Real estate assessment report and approval from board of directors	Office building for own-use	NA

• F. Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the stock capital: None.

• G. Related-party transactions for purchases and sales with amount exceeding the lower of NT$100 million or 20% of the stock capital:

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details	Transaction Details	Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchase/ Sales	Amount	Percentage of Total Purchases/ Sales	Payment Terms	Unit Price	Payment Terms	Ending Balance	Percentage of Total Notes/ Accounts Receivable (Payable)
The Company The Company The Company The Company	AUOSZ AUOXM AUOKS AUO	Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO AUO accounted for its investment in the Company using the equity method	Sales Sales Sales Sales	1,909,645 1,754,596 179,262 937,560	% 10 % 10 % 1 % 5	EOM 120 days EOM 120 days EOM 120 days EOM 120 days	Please refer to note 7 Please refer to note 7 Please refer to note 7 Please refer to note 7	Please refer to note 7 Please refer to note 7 Please refer to note 7 Please refer to note 7	690,595 549,176 78,201 301,599	24% 19% 3% 11%

~60~

RAYDIUM SEMICONDUCTOR CORPORATION Notes to the Financial Statements

• H. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the stock capital:

(In Thousands of shares and Thousands of New Taiwan Dollars)

Company Name	Related Party	Nature of Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period (Note)	Allowance for Bad Debts
					Amount	Action Taken
The Company The Company The Company	AUOSZ AUOXM AUO	Subsidiary of AUO Subsidiary of AUO AUO accounted for its investment in the Company using the equity method	690,595 549,176 301,599	2.52 2.51 3.11	6,633 3 17	On the spot collection On the spot collection On the spot collection	166,372 138,638 81,332	- - -

Note: Amounts collected in subsequent period as of February 7, 2024.

• I. Trading the derivative instruments: None.

• (2) Information on investees (excluding information on investees in Mainland China):

						(In Thousand of shares and Thousands of New Taiwan Dollars)	(In Thousand of shares and Thousands of New Taiwan Dollars)	(In Thousand of shares and Thousands of New Taiwan Dollars)	(In Thousand of shares and Thousands of New Taiwan Dollars)	(In Thousand of shares and Thousands of New Taiwan Dollars)	(In Thousand of shares and Thousands of New Taiwan Dollars)
Investor Company	Investee Company	Location	Main businesses and products	Original investment amount		Balance as	of December 31, 2023		Net income (losses) of investee	Share of Profits/ Losses of Investee	Note
				December 31, 2023	December 31, 2022	Shares	Percentage of ownership	Carrying value
The Company	RSA	SAMOA	Investment Holding	248,280	157,080	8,100	% 100.00	40,683	(33,039)	(33,039	) Subsidiary of the Company

• (3) Information on investment in Mainland China:

• A. The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousand of shares and Thousands of New Taiwan Dollars)

Investee Company	Main businesses and products p	Total amount aid-in capital	Method of investment	Accumulated outflow of investment from Taiwan as of January 1, 2023	Investment flows	Investment flows	Accumulated outflow of investment from Taiwan as of December 31, 2023	Net income (losses) of the investee (Note 3)	Percentage of ownership	Investment income (Note 3 and 5)	Carrying amounts (Note 2)	Accumulated remittance of earnings in current period
					Outflow	Inflow
Raydium Semiconductor (Kunshan) Co., Ltd.	Development, design and sale of the IC	245,200 (USD8000 thousand)	(Note 1)	154,000	91,200	-	245,200	(33,032)	100.00%	(33,032)	37,604	-

• B. Limitation on investment in Mainland China:

Limitation on investment in Mainland China:
Accumulated Investment in Mainland China as of December 31, 2023	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment (Note 4)
245,200 (USD8,000 thousand)	245,200 (USD8,000 thousand)	6,730,889

Note 1: Investment in companies in Mainland China through the existing companies in SAMOA.

Note 2: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the spot rate on the balance sheet date. Note 3: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rate. Note 4: Pursuant to the Regulations Governing Permission for Investment and Technical Cooperation in the Mainland Area, the Group’s accumulated investments in Mainland China did not exceed the upper limit on investment amount or ratio stipulated by the Investment Commission, Ministry of Economic Affairs (“MOEA”).

Note 5: The financial statements were audited by the parent’s external accountants.

~61~

Raydium Semiconductor Corporation Notes to the Financial Statements

• C. Significant transactions with the investees in Mainland China:

The significant inter-company transactions with the subsidiaries in Mainland China for the year ended December 31, 2023, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.

• (4) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
KonlyVenture Corp.	11,454,429	% 15.10
Capital TipCustomized Taiwan Select High Dividend ETF	6,920,000	% 9.12

Note: The information on major shareholders summarized the shareholders who held over 5% of the Company’s ordinary shares.

14. Segment information:

Please refer to the consolidated financial statements for the year ended December 31, 2023.

~62~

Raydium Semiconductor Corporation

Statement of Cash and Cash Equivalents

December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

Item	Description		Amount
Bank deposits	Demand deposits－NTD	$	787,282
	Demand deposits－USD12,260 thousand; CNY846 thousand;
	JPY24,856 thousand		385,651
	Time deposits–NTD		3,994,050
		$	5,166,983
Note: Foreign	exchange rates at the balance sheet date are as follows:
USD：	30.718
CNY：4.3152
JPY：	0.2173

Statement of Financial Assets at Fair Value through

Profit or Loss - Current

Name of financial instrument	Description Yuanta Wan Tai Money Market Fund Yuanta De Bao Money Market Fund	Shares/ Stocks in thousand Acquisition Cost 13,164 $ 204,238 34,691 426,669 $ 630,907	Fair Value Units Price Amount Collateral 15.55 204,740 None 12.35 428,333 None 633,073
			Units Price 15.55 12.35
Financial assets at fair value through profit or loss, mandatorily measured at fair value – Beneficiary certificate

~63~

Raydium Semiconductor Corporation

Statement of Financial Assets at Fair Value through Other Comprehensive Income - Current

December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

Name of financial instrument Listed stocks	Description Stocks of Darfon Electronics Corp.	Shares in thousand 203	Acquisition Cost $ 16,754	Fair Value Units Price Amount Collateral 54.20 11,013 None
				Units Price 54.20

Statement of Accounts Receivable, Net

(Expressed in thousands of New Taiwan Dollars)

Client name Z Company AC Company H Company AD Company AE Company Other Less：loss allowance	Description Amount Operation $ 316,121 Operation 149,231 Operation 129,725 Operation 86,890 Operation 54,065 Operation 447,739 Operation (60,695) $ 1,123,076

Note1: Accounts receivable from related parties were not included in the above payment; for details, please refer to note 7 of the parent-company-only financial statements.

Note2: Individual customer whose balances are less than 5% of the amount of account balance will not be listed separately.

~64~

Raydium Semiconductor Corporation

Statement of Inventories

December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

Amount

Item Finished goods Less: provision for inventory devaluation loss Subtotal Work in progress cost Less: provision for inventory devaluation loss Subtotal	Cost $ 561,066 (142,181) 418,885 2,029,230 (589,428) 1,439,802 $ 1,858,687	Net Realizable Value Notes 633,569 Please refer to Note 4 (7) of the parent-company- only financial statements for the net realizable value of inventory. 3,026,902 3,660,471

Statement of Other Financial Asset – Current and

Non-Current

For related information, please refer to note 6 (9) “Other Financial Asset – Current and Non-Current” of the parent-company-only financial statements.

~65~

Raydium Semiconductor Corporation

Statement of Movement in Financial Assets at Fair Value through Other

Comprehensive Income – Non-Current

December 31, 2023

(Expressed in thousands of New Taiwan Dollars, in thousands shares or units)

Name of Financial Instrument AUO Maxeda SiCEV Electronics Co., Ltd PlayNitride Inc Neuchips Inc	Beginning Balance Shares Fair Value 14,459 $ 216,880 600 45,783 8,943 58,810 470 46,812 2,000 159,723 $ 528,008	Increase in Current Period Shares Amount - - - - - - - - - - -	Decrease in Current Period Shares Amount - - 600 31,205 - - - - - - 31,205		Evaluation of Profit and Loss Amount 45,544 (14,578) (8,587) (376) (95,429) (73,426)	Ending Balance Shares Fair Value 14,459 262,424 - - 8,943 50,223 470 46,436 2,000 64,294 423,377	Collateral Notes None None None None None
		Shares - - - - -	Shares - 600 - - -			Shares 14,459 - 8,943 470 2,000

~66~

Raydium Semiconductor Corporation

Statement of Other Asset – Current and Non-

Current

December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

For related information, please refer to note 6 (10) “Other Asset – Current and Non-Current” of the parent-company-only financial statements.

~67~

Raydium Semiconductor Corporation

Statement of Movement in Investments Accounted for Using the Equity Method

For the year ended December 31, 2023

(Expressed in thousands of New Taiwan Dollars, in thousands shares)

Name of investee Raydium Semiconductor (SAMOA) Corp.	Beginning Balance Shares Amount 5,100 $ (16,251)	Addition Shares Amount 3,000 91,200	Investment Profit or Loss (33,039)	Cumulative translation differences (1,227)	Ending Balance Shares Percentage of Ownership Amount 8,100 % 100.00 40,683	Ending Balance Shares Percentage of Ownership Amount 8,100 % 100.00 40,683	Market Value or Net Assets Value Unit Price Total Amount Collateral - 40,683 None
	Shares	Shares 3,000			Shares	Percentage of Ownership % 100.00	Unit Price -
	**5,100 **				8,100

~68~

Raydium Semiconductor Corporation

Statement of Movement in Property, Plant and Equipment

For the year ended December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

For related information, please refer to note 6 (6) “Property, Plant and Equipment” of the parent-company-only financial statements.

Statement of Movement in Intangible Assets

For related information, please refer to note 6 (8) “Intangible Assets” of the parent-company-only financial statements.

Statement of Movement in Right-of-Use Assets

For related information, please refer to note 6 (7) “Right-of-Use Assets” of the parent-company-only financial statements.

~69~

Raydium Semiconductor Corporation

Statement of Movement in Deferred Tax Assets

For related information, please refer to note 6 (16) “Deferred Tax Assets”

of the parent-company-only financial statements.

Statement of Accounts Payable

December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

	Vendor name		Amount
Vendor A		$	546,267
Vendor L			539,811
Vendor G			275,578
Vendor B			209,094
Vendor D			141,745
Other (Note)			650,952
		$	2,363,447

Note : Individual vendor who has less than 5% of the account balance will not be listed separately.

~70~

Raydium Semiconductor Corporation

Statement of Other Current Liabilities

December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

Item Guarantee deposits received Provision for sales return and allowance Labor/Health Insurance and Pension payable Other (Note)	Description Amount Operation $ 307,180 Operation 120,746 Operation 81,595 372,447 $ 881,968

Note: Individual amount which was less than 5% of the account balance will not be listed separately.

Statement of Deferred Tax Liabilities

For related information, please refer to note 6 (16) “Deferred Tax Liabilities” of the parent-company-only financial statements.

~71~

Raydium Semiconductor Corporation

Statement of Operating Revenue

For the year ended December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

Item Display driver IC Others	Quantity (thousand) Amount 411,422 $ 16,922,157 62,752 682,450 $ 17,604,607

Note: Individual amount which was less than 10% of the account balance will not be listed separately.

~72~

Raydium Semiconductor Corporation Statement of Operating Costs December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

Item		Amount
Raw materials
Beginning balance of raw materials	$	-
Add: Purchase		7,722,777
Less: Department’s transfer to expense and others		(280,137)
Sale of raw materials		(4,658)
Raw materials used		7,437,982
Manufacturing overhead		3,077,970
Manufacturing cost		10,515,952
Add: Beginning balance of work in process		3,901,667
Purchase		1,469
Less: Ending balance of work in process		(2,029,230)
Department’s transfer to expense and others		(90,980)
Write-off of inventories		(50,021)
Cost of finished goods		12,248,857
Add: Beginning balance of Finished goods		545,375
Less: Ending balance of Finished goods		(561,066)
Department’s transfer to expense and others		(12,926)
Write-off of inventories		(20,207)
Cost of goods sold		12,200,033
Add: Cost of raw materials sold		2,662
Add: Other operating cost		154,205
Add: Inventory devaluation loss		48,046
Cost of sales	$	12,404,946

~73~

Raydium Semiconductor Corporation

Statement of Selling Expenses

For the year ended December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

	Item		Amount
Salary		$	208,036
Commission expense			130,933
Freight expense			48,239
Others (Note)			25,812
		$	413,020

Note: Individual amount which was less than 5% of the account balance will not be listed separately.

Statement of Administrative Expenses

	Item		Amount
Salary		$	118,992
Depreciation expense			39,627
Rent			34,040
Stock operation expense			33,359
Park management fee			31,211
Remuneration to directors			23,448
Others (Note)			116,851
		$	397,528

Note: Individual amount which was less than 5% of the account balance will not be listed separately.

~74~

Raydium Semiconductor Corporation

Statement of Research and Development Expenses

For the year ended December 31, 2023

(Expressed in thousands of New Taiwan Dollars)

	Item		Amount
Salary		$	1,657,520
Miscellaneous purchases			423,834
Depreciation			163,515
Others (Note)			699,620
		$	2,944,489

Note: Individual amount which was less than 5% of the account balance will not be listed separately.

Statement of Other Gains and Losses

For related information, please refer to note 6 (21) “Other gains and losses” of the parent-company-only financial statements.

~75~