RT - AGM Information 2019 | FinancialReports.eu

Realtek Semiconductor Corp. 2019 Annual Shareholders’ Meeting Minutes

Time: 9:00 a.m., June 12, 2019 (Wednesday)

Place: No.1, Industry East 2nd Road, Science-Based Industrial Park, HsinChu Science Park Life Hub, Bach Conference Room

The Number of Shares of Attendance: Attending shareholders and proxy represented

463,756,663 shares (including 384,026,300 shares which attended through electronic voting) accounting for 91.27% of 508,095,464 shares, the Company’s total outstanding shares Directors Present:

Yeh, Nan-Horng, Chiu, Sun-Chien, Chern, Kuo-Jong, Ou Yang, Wen-Han

Chairman: Yeh, Nan-Horng, Chairman

Recorder: Tsai, Shu- Hui

The aggregate shareholding of the shareholders present constituted a quorum.

The Chairman called the meeting to order.

1. Chairman’s Remarks: Omitted.

2. Report Items:

Report 1: Business report of 2018

Explanation: Please refer to Attachment 1 for the business report.

Report 2: Audit Committee’s review report

Explanation: Please refer to Attachment 2 for the Audit Committee’s review report. Report 3: To report 2018 employees’ compensation and directors’ remuneration Explanation:

(1) According to Article 18 of the Articles of Incorporation of the Company, if gained profits within a fiscal year, the Company shall allocate at a maximum of 3% of the profits as directors’ remuneration, and allocate no less than 1% of the profits as employees’ compensation.
(2) 2018 employees’ compensation and directors’ remuneration ：

		Unit: NTdollars
Item	Amount	ProfitRatio
Employees’compensation	1,151,674,037	19.63 %
Directors’ remuneration	76,778,269	1.31 %

Note: Employees' compensation and directors' remuneration amount are consistent with the 2018 annual estimated expenses.

(3) The aforementioned compensation and remuneration are distributed in cash.

3. Ratification Items

Proposal 1

Subject: 2018 business report and financial statements. Approval is respectfully requested. (Proposed by the Board of Directors)

Explanation: The 2018 annual financial statements have been audited by Pricewaterhouse

Coopers' and the business report was approved by the Board of Directors. For the business report, independent auditors’ report and financial statement, please refer to Attachment 1, Attachment 4 and Attachment 5.

Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

Resolution: The result is as follows: Shares represented at the time of voting: 463,756,663
Voting Results	% of the total represented sharepresent
Votes in favor: 378,729,123 votes (includingelectronic voting299,017,760 votes)	81.66%
Votes against: 398,737 votes (includingelectronic voting398,737 votes)	0.08%
Votes invalid: 0 vote	0.00%
Votes abstained: 84,628,803 votes (includingelectronic voting84,609,803votes)	18.24%

It was resolved that the above proposal be approved as proposed.

Proposal 2

Subject: Distribution of 2018 retained earnings. Approval is respectfully requested. (Proposed by the Board of Directors)

Explanation: The distribution of 2018 retained earnings was approved by the Board of Directors.

Please refer to Attachment 3.

Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

Please refer to Attachment 3. Resolution: The result is as follows: Shares represented at the time of voting: 463,756,663
Voting Results	% of the total represented sharepresent
Votes in favor: 380,987,024 votes (includingelectronic voting301,275,661 votes)	82.15%
Votes against: 1,742 votes (includingelectronic voting1,742 votes)	0.00%
Votes invalid: 0 vote	0.00%
Votes abstained: 82,767,897votes (includingelectronic voting82,748,897 votes)	17.84%

It was resolved that the above proposal be approved as proposed.

4. Discussion Items

Proposal 1

Subject: Cash distribution from capital surplus. Approval is respectfully requested. (Proposed by the Board of Directors)

Explanation:

Pursuant to the Article 241 of the Company Act, the cash distribution from the capital surplus in excess of par value is NT$ 508,095,464. According to the shares held by each shareholder in the shareholders’ register on cash distribution record date, the cash distribution to common shareholders is NT$1 per share.
The cash distribution to each shareholder is rounded down to one dollar (under one dollar is rounded down). The rounded down amounts are recognized as the Company’s other income.
The Chairman is authorized to determine the cash distribution record date and payment date upon the proposal of cash distribution from capital surplus approved by shareholders’ meeting.
Due to the changes of outstanding shares caused by the Company’s subsequent events such as shares’ buyback, transfer or cancellation of treasury stocks or others, the cash distribution per share might be affected. The Chairman is authorized to adjust the distribution amount from capital surplus.

Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

capital surplus. Resolution: The result is as follows: Shares represented at the time of voting: 463,756,663
Voting Results	% of the total represented sharepresent
Votes in favor: 380,987,996 votes (includingelectronic voting301,276,633 votes)	82.15%
Votes against: 1,765 votes (includingelectronic voting1,765 votes)	0.00%
Votes invalid: 0 vote	0.00%
Votes abstained: 82,766,902 votes (includingelectronic voting82,747,902 votes)	17.84%

It was resolved that the above proposal be approved as proposed.

Proposal 2

Subject: To revise the Articles of Incorporation. Approval is respectfully requested. (Proposed by the Board of Directors)

Explanation:

According to Article 240 Paragraph 5 and Article 241 Paragraph 2 of the Company Act, and the practice demand, the Company hereby proposes to amend part of the "Articles of Incorporation".
Please refer to Attachment 6 for the comparison table illustrating the original and amended texts of the " Articles of Incorporation".

Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

texts of the " Articles of Incorporation". Resolution: The result is as follows: Shares represented at the time of voting: 463,756,663
Voting Results	% of the total represented sharepresent
Votes in favor: 376,194,978 votes (includingelectronic voting296,483,615 votes)	81.11%
Votes against: 1,865 votes (includingelectronic voting1,865votes)	0.00%
Votes invalid: 0 vote	0.00%
Votes abstained: 87,559,820 votes (includingelectronic voting87,540,820votes)	18.88%

It was resolved that the above proposal be approved as proposed.

Proposal 3

Subject: To revise the "Procedures for Financial Derivatives Transactions". Approval is respectfully requested. (Proposed by the Board of Directors) Explanation:

In order to conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission, the Company hereby proposes to amend the "Procedures for Financial Derivatives Transactions".
Please refer to Attachment 7 for the comparison table illustrating the original and amended texts of the "Procedures for Financial Derivatives Transactions".
Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

Resolution: The result is as follows: Shares represented at the time of voting: 463,756,663
Voting Results	% of the total represented sharepresent
Votes in favor: 376,196,094 votes (includingelectronic voting296,484,731 votes)	81.11%
Votes against: 1,868 votes (includingelectronic voting1,868 votes)	0.00%
Votes invalid: 0 vote	0.00%
Votes abstained: 87,558,701 votes (includingelectronic voting87,539,701 votes)	18.88%

It was resolved that the above proposal be approved as proposed.

Proposal 4

Subject: To revise the "Procedures for Acquisition or Disposal of Assets". Approval is respectfully requested. (Proposed by the Board of Directors)

Explanation:

In order to conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission, the Company hereby proposes to amend the "Procedures for Acquisition or Disposal of Assets".
Please refer to Attachment 8 for the comparison table illustrating the original and amended texts of the "Procedures for Acquisition or Disposal of Assets".

Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

Resolution: The result is as follows: Shares represented at the time of voting: 463,756,663
Voting Results	% of the total represented sharepresent
Votes in favor: 376,196,111 votes (includingelectronic voting296,484,748 votes)	81.11%
Votes against: 1,853 votes (includingelectronic voting1,853 votes)	0.00%
Votes invalid: 0 vote	0.00%
Votes abstained: 87,558,699 votes (includingelectronic voting87,539,699 votes)	18.88%

It was resolved that the above proposal be approved as proposed.

Proposal 5

Subject: Release the Directors from non-competition restrictions. Approval is respectfully requested. (Proposed by the Board of Directors) Explanation:

Pursuant to Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
Since directors of the Company engages in the investment in or operation of another company whose scope of business is the same or similar to that of the Company and serves as a director of that company, the Company hereby in accordance with the Company Act requests the shareholders’ meeting to approve the release from following non-competition restriction.

Title	Name	Concurrent Position of another Company
Director	Cotek Pharmaceutical Industry Co., Ltd. Representative: Yeh,Nan-Horng	Director of Enable Educational Technology Co., Ltd.
Independent Director	Chen, Fu-Yen	Chairman of Eland Technologies Co., Ltd.

Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

Resolution: The result is as follows: Shares represented at the time of voting: 463,756,663
Voting Results	% of the total represented sharepresent
Votes in favor: 353,383,516 votes (includingelectronic voting273,672,153 votes)	76.20%
Votes against: 4,180,890 votes (includingelectronic voting4,180,890 votes)	0.90%
Votes invalid: 0 vote	0.00%
Votes abstained: 106,192,257 votes (includingelectronic voting106,173,257votes)	22.89%

It was resolved that the above proposal be approved as proposed.

6. Extraordinary Motions: None.

7. Adjourment

Attachment 1

Business Report

Dear Shareholders, Ladies and Gentlemen:

1. 2018 Operating Results

Realtek reported another record year in 2018. The full-year consolidated revenues were NTD45.8 billion, a 9.9% growth from the previous year. Gross profit was NTD20.5 billion, up 14.3% from the year before. Net profit after tax was NTD4.35 billion, a 28.3% year-over-year increase. Earnings per share (EPS) was NTD8.57. According to IC Insights, 2018 global semiconductor market revenue exceeded US$500 (US$514 billion), a 16% growth over 2017. In that, memory was the largest segment by product type and grew the strongest. Excluding memory, the 2018 semiconductor market grew a modest 8%. In spite of the uncertainty in the semiconductor industry due to ever-changing international relations and trade disputes, Realtek, with all hands working closely together, delivered a 10.9% year-over-year revenue growth in US dollars in 2018, which was above the 8% growth average of non-memory companies, and above the 7.4% growth average of global fabless IC design companies. Realtek ranks 12th in 2018 among global fabless IC design companies, moving up one place compared with 2017.

Realtek always strives for innovation momentum and technology leadership. Among the top 100 domestic corporate patent applications released by the Taiwan Intellectual Property Office in 2018, Realtek ranks 8th with 195 invention patent applications. In terms of product roadmap, Realtek proffers continual updates to current product specifications, and develops products with differentiating features that add value for our customers. The ubiquitous needs of connectivity in a wide spectrum of applications match perfectly the vision of Realtek to enable a connected world. Such synergy feeds the growth momentum of Realtek IC solutions. Throughout 2018 we introduced several highly competitive products that received accolades from the market and press. For example, the Realtek multi-mic far-field speech recognition enhanced single-chip solution (ALC5520) first received the Best Choice Golden Award at Computex Taipei 2018, and then won the Innovative Product Award from the Taiwan Hsinchu Science Park Administration. Additionally, the Bluetooth 5.0 Low Energy System-on-a-Chip (RTL8762C) and the Highly Integrated, Ultra-Low-Power Wi-Fi IP Camera SOC (RTL8715A) received respectively, the IC & Component Category Award and the IoT Applications Category Award at Computex Taipei 2018.

Besides providing the most competitive products to the market, Realtek cares about social issues, contributes corporate technological expertise, and undertakes corporate social responsibility missions. Building on the collaborative work on the AirBox Project with Taipei

City Government involving the industry, government, academia, and city's residents in 2016, Realtek continued to focus on air quality issues and actively pushed forward the Taipei Lungshan Temple Incense Reduction Program. The Program was a success after Realtek joined forces with the Lungshan Temple, Taiwan Lung Foundation, and Institute of Occupational Medicine and Industrial Hygiene at the National Taiwan University College of Public Health. The result was a very impressive contribution to the protection of the environment that was recognized by the Asia Responsible Enterprise Award (AREA) organization, and given the 2018 Health Promotion Award.

2. 2019 Business Plan

After two years of impressive growth, many analysts expect 2019 to be flat for the global semiconductor industry, excluding memory. The forecast appears to be predicated on both the trade dispute between China and US as well as the slowdown of hitherto high growth segments such as smartphones and crypto mining. Nonetheless, the ramping up of 5G deployment and the proliferation of artificial intelligence applications seem to be breathing new life into the semiconductor industry and demanding even more and faster connectivity. To this end, Realtek plans to introduce a series of highly competitive connectivity solutions for connecting machines, as well as connecting machines and humans. In the automotive market, an increasing number of automotive OEMs in Europe, America, Japan, Korea, and China are choosing automotive Ethernet to be the in-vehicle network backbone for their new models of cars. Shipments by Realtek are expected to pick up gradually in 2019 with the expansion of our customer base. At the same time, we are developing a new generation of 100/1000BASE-T1 dual-mode PHY and multiport automotive Ethernet switches. To meet the demands for increasing LAN (Local Area Network) speed for commercial and gaming PC needs, Realtek introduced the world's first 2.5GBASE-T Ethernet single-chip controller in 2018. In wireless LAN (WLAN), while enjoying revenue growth from the ongoing migration of 802.11n to 802.11ac, Realtek is developing a new generation of 802.11ax products to provide customers with a complete portfolio of WLAN solutions. In IoT, Realtek leads the market with the announcement of a highly-Integrated, ultralow-power Wi-Fi IP camera SoC ideal for various portable camera market opportunities.

In Bluetooth, Realtek strives to satisfy various Bluetooth applications with different solutions, including Bluetooth transceivers, low-power Bluetooth single chip, and Bluetooth codec single chip. The latter is becoming the solution of choice for True Wireless Stereo earphones, which have been picking up market momentum since the second half of 2018. Optical networks are enjoying growth in many emerging markets, led by China. Realtek is expanding her optical network solutions in all markets with good results. In response to the market need for greater bandwidth, Realtek is developing a new generation of single-chip 10G PON gateway controllers, which may start contributing to business in 2019. In computer peripherals, Realtek, in addition to deepening its roots in the PC markets, is entering the earphone market and winning projects at several commercial and gaming earphone brands. To address the needs of mobile phone users to

have USB Type-C audio earphones and converters, Realtek is rolling out a series of highperformance, low-power USB2.0 audio codec products. With respect to IP camera SoCs, Realtek is bringing into the market a new generation of highly-integrated IP camera SoCs in 2019 to meet the needs of the surveillance and security industry. In multimedia, the overall market for TVs and monitors remains flat, however new opportunities will come with the demand for higher resolution, higher refresh rate, better picture quality, and richer display connectivity. Realtek will introduce a new generation of high-end 4K smart networked LCD TV SoCs, as well as a new generation of integrated high resolution 4K2K/QHD monitor controllers with USB Type-C interface, thereby fueling business growth.

Strategy for Future Development and Impact by Competitive, Regulatory, and Macro Conditions

Looking to the future, Realtek will continue to cultivate our core competency, strengthen our competitiveness, and energize our product strategy. Through our strength in high-integration and low-power design, we position ourselves to be the best partner to our customers, provide the best solutions to the market, and deliver the most user-friendly, best price-performance connectivity products to end users in tomorrow’s world of Internet of Things, Internet of Vehicles, and Artificial Intelligence. Despite the general conservative view of the semiconductor market in 2019, coupled with uncertainty in the macro economy, Realtek remains cautiously optimistic that it can capture growth opportunities in this highly challenging and competitive environment to continue reaching new heights and creating greater value for our shareholders.

Thank you for your ongoing care and support. We hope that you will continue to stay with us on this exciting journey to a better future.

Chairman: Yeh, Nan-Horng President: Chiu, Sun-Chien Controller: Chang, Jr-Neng

Attachment 2

Audit Committee’s review report

The Company's 2018 business report, financial statements and distribution of retained earnings have been prepared by the Board of Directors. The financial statements also have been audited by Pricewaterhouse Coopers' with the opinion that they present fairly the Company’s financial position, operating performance, and cash flows. The Audit Committee has reviewed the business report, financial statements, and distribution of retained earnings, and found no irregularities. We hereby according to Securities and Exchange Act and Company Act submit this report.

To 2019 Annual Shareholders’ Meeting.

Realtek Semiconductor Corp.

Chairman of the Audit Committee: Ou Yang, Wen-Han

March 21, 2019

Attachment 3

Realtek Semiconductor Corporation Distribution of retained earnings

2018

2018
	Unit: NT dollars
Item	Amount
Unappropriatedretained earnings ofprevious years	6,472,071,452
Add: adjustment of IFRS adoption	103,141,426
Unappropriated retained earnings of previous years after IFRS adjustment	6,575,212,878
Less: loss on re-measurement of defined benefit plans recorded asretained earnings	(75,809,330)
Add:2018netincome aftertax	4,350,768,584
Less: Legal reserve	(435,076,858)
Add: Reversal of Special reserve	600,442,994
Unappropriated retained earnings available for distribution	11,015,538,268

Distribution items:
Dividend to common shareholders (Cashdividendis NT$6 pershare )	(3,048,572,784)
Unappropriated retained earnings after distribution	7,966,965,484

The cash dividend to common shareholders for proposal of distribution of retained earnings is NT$3,048,572,784. According to the shares held by each shareholder in the shareholders’ register on cash dividend record date, the cash dividend to common shareholders is NT$6 per share. The cash dividend to each shareholder is rounded down to one dollar (under one dollar is rounded down). The rounded down amounts are recognized as the Company’s other income.
The Chairman is authorized to determine the cash dividend record date and payment date upon the distribution of 2018 retained earnings approved by shareholders’ meeting.
Due to the changes of outstanding shares caused by the Company’s subsequent events such as shares’ buyback, transfer or cancellation of treasury stocks or others, the cash dividend per share might be affected. The Chairman is authorized to adjust the distribution amount.
According to No. 871941343 official letter issued by Ministry of Finance on April 30, 1998, distribution of retained earnings shall be used in specific identification method. The first priority of distribution of retained earnings is 2018 profit, then the following sequence adopted in last-in first-out method are the previous year’s part before 2018 if insufficiency based on the principles of the Company’s profit distribution.

Chairman: Yeh, Nan-Horng President: Chiu, Sun-Chien Controller: Chang, Jr-Neng

Resolution:

Attachment 4: Independent Auditors’ Report and 2018 Consolidated Financial Statements REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR18000297

To the Board of Directors and Shareholders of Realtek Semiconductor Corporation

Opinion

We have audited the accompanying consolidated balance sheets of Realtek Semiconductor Corporation and its subsidiaries (the “Group”) as at December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants (please refer to the Other matters section of our report), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (“ROC GAAS”). Our responsibilities under those standards are further described in the Independent Accountant’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the report of the other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Evaluation of inventories

Description

Refer to Note 4(14) of the consolidated financial statements for inventory evaluation policies, Note 5(2) for uncertainty of accounting estimates and assumptions of inventory evaluation and Note 6(6) for the details of inventories.

The Group is primarily engaged in researching, developing, manufacturing, selling of various integrated circuits and related application software. Inventories are stated at the lower of cost and net realizable value. Due to the balances of inventories are significant to the financial statements and the rapid technological changes in the industry, there is a higher risk of decline in market value and obsolescence of inventories. Thus, we considered the evaluation of inventories as one of the key audit matters.

How our audit addressed the matter

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

Obtained an understanding of accounting policies on the provision of allowance for inventory valuation losses and assessed the reasonableness and the consistency with comparative period(s).
Validated the accuracy of inventory aging report, as well as sampled and confirmed the consistency of quantities and amounts with detailed inventory listing, verified dates of movements with supporting documents and ensured the proper categorization of inventory aging report.
Evaluated and confirmed the reasonableness of net realizable value for inventories through validating respective supporting documents.

Audit of cash in banks

Description

Refer to Note 4(6) of the consolidated financial statements for accounting policies and Note 6(1) for the details of cash and cash equivalents.

The amount of the Group’s cash and cash equivalents is significant to the consolidated financial statements, and the nature and usage of those cash and cash equivalents varies. The cash in banks are deposited with various domestic and foreign financial institutions and have high inherent risk. It is also subject to judgement as to whether certain deposits fulfill the criteria of short-term, highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Thus, audit of cash in bank was considered as one of the key audit matters.

How our audit addressed the matter

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

Obtained detailed listings of cash in banks. Sent confirmation letters to all financial institutions and reviewed special terms and agreements in order to ensure the existence and rights and obligations of cash in banks.
Obtained an understanding of procedures for preparation and review of bank reconciliations, including validating unusual reconciling items.
Performed physical count of petty cash and time deposits, including validating whether time deposits fulfill the criteria of short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Sampled and validated significant cash transactions from bank accounts frequently used, including obtaining an understanding of the purposes of those bank accounts and vouching related supporting documents.

Other matter – Reference to audits of other independent accountants

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for using the equity method. Those financial statements were audited by other independent accountants, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information on the consolidated subsidiaries and investments accounted for using the equity method were based solely on the reports of other independent accountants. Total assets of those consolidated subsidiaries amounted to NT$6,207,867 thousand and NT$6,689,960 thousand, constituting 10.66% and 12.79% of the consolidated total assets as of December 31, 2018 and 2017, respectively, and total operating revenues of NT$0 thousand and NT$0 thousand, both constituting 0% of the consolidated total operating revenues for the years then ended.

Furthermore, according to the reports of other independent accountants, comprehensive losses of those investments accounted for under the equity method amounted to NT$41,330 thousand and NT$41,729 thousand, respectively, and balances of these investments as of December 31, 2018 and 2017 amounted to NT$261,628 thousand and NT$281,002 thousand, respectively.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Realtek Semiconductor Corporation as at and for the years ended December 31, 2018 and 2017.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Independent accountant’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6.Obtain sufficient appropriate audit evidence regarding the financial information of the entities

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our 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.

Hsueh, Seou-Hung Li, Tien-Yi For and on behalf PricewaterhouseCoopers, Taiwan March 21, 2019

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2018 AMOUNT % $ 4,309,651 7 1,321,103 2 31,286,209 54 - - 5,647,722 10 1,772,071 3 657,190 1 5,862,005 10 297,327 1 - - 51,153,278 88 1,651,072 3 - - - - 261,628 - 3,316,578 6 54,868 - 1,686,249 3 78,472 - 50,169 - 7,099,036 12 $ 58,252,314 100	December 31, 2017	December 31, 2017
	AMOUNT $ 4,309,651 1,321,103 31,286,209 - 5,647,722 1,772,071 657,190 5,862,005 297,327 - 51,153,278 1,651,072 - - 261,628 3,316,578 54,868 1,686,249 78,472 50,169 7,099,036 $ 58,252,314	AMOUNT $ 9,594,356 675,891 - 24,370,143 3,087,958 1,094,853 435,109 5,468,167 269,909 96,154 45,092,540 - 717,745 811,496 281,002 3,162,949 60,254 2,078,355 65,551 41,021 7,218,373 $ 52,310,913	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortised cost - current 1147 Investment in debt instruments without active market - current 1170 Accounts receivable, net 1180 Accounts receivable, net - related parties 1200 Other receivables 130X Inventories, net 1410 Prepayments 1470 Other current assets 11XX Total current assets Non-current assets 1517 Financial assets at fair value through other comprehensive income - non-current 1523 Available-for-sale financial assets - non-current 1543 Financial assets carried at cost - non-current 1550 Investments accounted for under the equity method 1600 Property, plant and equipment, net 1760 Real estate investment, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets			18 1 - 47 6 2 1 10 1 -
			86
			- 1 2 1 6 - 4 - -
			14
			100

(Continued)

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes 6(12) 6(20) 7 6(13) 7 6(20) 6(15) 6(14) 6(16) 6(17) 6(18) 6(19)	December31,2018 December31,2017 AMOUNT % AMOUNT % $ 14,526,311 25 $ 18,052,624 34 148,696 - - - 8,657 - 8,631 - 5,635,986 10 4,577,341 9 249,869 1 291,755 - 7,542,208 13 6,094,786 12 69,047 - 39,924 - 601,614 1 342,557 1 3,719,866 6 113,043 - 32,502,254 56 29,520,661 56 999,868 2 901,430 2 22,310 - 21,749 - 80,983 - 7,961 - 1,103,161 2 931,140 2 33,605,415 58 30,451,801 58 5,080,955 9 5,065,062 10 3,236,659 5 3,558,856 7 4,467,099 8 4,127,884 8 600,443 1 - - 10,850,172 19 9,698,159 19 401,964 - ( 600,443) ( 2) 24,637,292 42 21,849,518 42 9,607 - 9,594 - 24,646,899 42 21,859,112 42 $ 58,252,314 100 $ 52,310,913 100
		AMOUNT $ 14,526,311 148,696 8,657 5,635,986 249,869 7,542,208 69,047 601,614 3,719,866 32,502,254 999,868 22,310 80,983 1,103,161 33,605,415 5,080,955 3,236,659 4,467,099 600,443 10,850,172 401,964 24,637,292 9,607 24,646,899 $ 58,252,314
Current liabilities 2100 Short-term borrowings 2130 Contract liabilities - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2550 Provisions - non-current 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common shares Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Undistributed earnings Other equity 3400 Other equity interest 31XX Equity attributable to owners of the parent company 36XX Non-controlling interest 3XXX Total equity 3X2X Total liabilities and equity

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

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

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

Items	2018 2017 Notes AMOUNT % AMOUNT % 6(20) and 7 $ 45,805,746 100 $ 41,688,021 100 6(6) and 7 ( 25,344,876 ) ( 55) ( 23,784,599) ( 57 ) 20,460,870 45 17,903,422 43 6(24)(25) and 7 ( 2,464,470 ) ( 6) ( 2,142,029) ( 5 ) ( 1,263,689 ) ( 3) ( 1,118,403) ( 3 ) ( 12,969,972 ) ( 28) ( 11,444,977) ( 27 ) 12(2) 1,721 - - - ( 16,696,410 ) ( 37) ( 14,705,409) ( 35 ) 6(9) 6,298 - 6,224 - 3,770,758 8 3,204,237 8 6(21) 1,128,673 2 869,141 2 6(22) ( 58,536 ) - ( 251,337) ( 1 ) 6(23) ( 140,387 ) - ( 154,769) - 6(7) ( 43,307 ) - ( 40,919) - 886,443 2 422,116 1 4,657,201 10 3,626,353 9 6(26) ( 306,420 ) ( 1) ( 234,193) ( 1 ) $ 4,350,781 9 $ 3,392,160 8
4000 Operating revenue 5000 Operating costs 5950 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit gains 6000 Total operating expenses 6500 Other income and expenses - net 6900 Operating income Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax, net 7950 Income tax expense 8200 Net income for the year

Items

2018
2017
Notes
AMOUNT
%
AMOUNT
%
6(20) and 7
$ 45,805,746
100
$ 41,688,021
100
6(6) and 7
(
25,344,876 ) (
55) (
23,784,599) (
57 )
20,460,870
45
17,903,422
43
6(24)(25) and 7
(
2,464,470 ) (
6) (
2,142,029) (
5 )
(
1,263,689 ) (
3) (
1,118,403) (
3 )
(
12,969,972 ) (
28) (
11,444,977) (
27 )
12(2)
1,721
-
-
-
(
16,696,410 ) (
37) (
14,705,409) (
35 )
6(9)
6,298
-
6,224
-
3,770,758
8
3,204,237
8
6(21)
1,128,673
2
869,141
2
6(22)
(
58,536 )
-
(
251,337) (
1 )
6(23)
(
140,387 )
-
(
154,769)
-
6(7)
(
43,307 )
-
(
40,919)
-
886,443
2
422,116
1
4,657,201
10
3,626,353
9
6(26)
(
306,420 ) (
1) (
234,193) (
1 )
$ 4,350,781
9
$ 3,392,160
8

4000
Operating revenue
5000
Operating costs
5950
Gross profit
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit gains
6000
Total operating expenses
6500
Other income and expenses - net
6900
Operating income
Non-operating income and expenses
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit of associates and joint
ventures accounted for under equity
method
7000
Total non-operating income and
expenses
7900
Profit before income tax, net
7950
Income tax expense
8200
Net income for the year

(Continued)

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

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

Items	Notes 6(19) 6(27) 6(27)	2018	2017 % AMOUNT % - $ - - - - - - - - - - - 2 ( 2,111,302) ( 5 ) - 110,120 - - ( 810) - 2 ( 2,001,992)( 5 ) 2 ($ 2,001,992)( 5 ) 11 $ 1,390,168 3 9 $ 3,392,153 8 - 7 - 9 $ 3,392,160 8 11 $ 1,390,161 3 - 7 - 11 $ 1,390,168 3 8.57 $ 6.71 8.40 $ 6.57
		AMOUNT ($ 75,809 ) ( 165,659 ) 1,977 ( 239,491 ) 942,974 - - 942,974 $ 703,483 $ 5,054,264 $ 4,350,768 13 $ 4,350,781 $ 5,054,251 13 $ 5,054,264 $
Other comprehensive income, net Components of other comprehensive income that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealised losses from investments in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Cumulative translation differences of foreign operation 8362 Unrealised gain on valuation of available-for-sale financial assets 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8360 Total components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income (loss), net 8500 Total comprehensive income for the year Profit attributable to: 8610 Equity holders of the parent company 8620 Non-controlling interest Profit for the year Total comprehensive income: 8710 Equity holders of the parent company 8720 Non-controlling interest Total comprehensive income for the year Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share
		$

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

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Notes						Equityattributable t	owners of theparent									Non-controlling interest
	Share capital - common stock $ 5,049,513 - - - - - 15,549 - - $ 5,065,062 $ 5,065,062 - 5,065,062 - - - - - - 15,893 - - - $ 5,080,955			Capital surplus		Retained earnings					Other equityinterest				Total
					Legal reserve	Special reserve	Undistributed earnings	d	Financial statements translation ifferences of foreign operations		Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income	l	Unrealised gain or oss on available-for- sale financial assets
6(19) 6(18) 6(17) 6(17) 6(17) 6(19) 6(19) 6(18) 6(17) 6(17) 6(17) 6(17)		( $ $ ( $		$ 3,910,428 - - - - - 145,386 504,951 ) 7,993 3,558,856 3,558,856 - 3,558,856 - - - - - - 163,692 508,095 ) 22,005 201 3,236,659	$ 3,823,896 - - - 303,988 - - - - $ 4,127,884 $ 4,127,884 - 4,127,884 - - - 339,215 - - - - - - $ 4,467,099	$ - - - - - - - - - $ - $ - - - - - - - 600,443 - - - - - $ 600,443			$ 1,298,139 - ( 2,111,302 ) ( 2,111,302 ) - - - - - ($ 813,163 ) ($ 813,163 ) - ( 813,163 ) - 942,974 942,974 - - - - - - - $ 129,811	$ - - - - - - - - - $ - $ - 435,835 435,835 - ( 163,682 ) ( 163,682 ) - - - - - - - $ 272,153		$ 103,410 - 109,310 109,310 - - - - - $ 212,720 $ 212,720 ( 212,720 ) - - - - - - - - - - - $ -		$ 22,815,185 3,392,153 ( 2,001,992 ) 1,390,161 - ( 2,019,805 ) 160,935 ( 504,951 ) 7,993 $ 21,849,518 $ 21,849,518 326,257 22,175,775 4,350,768 703,483 5,054,251 - - ( 2,286,430 ) 179,585 ( 508,095 ) 22,005 201 $ 24,637,292		$ 9,587 7 - 7 - - - - - $ 9,594 $ 9,594 - 9,594 13 - 13 - - - - - - - $ 9,607	$ 22,824,772 3,392,160 ( 2,001,992 ) 1,390,168 - ( 2,019,805 ) 160,935 ( 504,951 ) 7,993 $ 21,859,112 $ 21,859,112 326,257 22,185,369 4,350,781 703,483 5,054,264 - - ( 2,286,430 ) 179,585 ( 508,095 ) 22,005 201 $ 24,646,899

			$

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

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Amortization

Expected credit gains

Provision for doubtful accounts
Interest expense

Interest income

Dividend income

Loss (gain) on financial assets at fair value through
profit or loss

Share of loss of associates and joint ventures accounted
for using equity method

Gain on disposal of property, plant and equipment

Gain on disposal of available-for-sale financial assets

Other intangible assets transferred expenses
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss -
current
Accounts receivable, net
Accounts receivable, net - related parties
Other receivables, net
Inventories
Prepayments
Changes in operating liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Contract liabilities - current
Provisions - non-current

Advance receipts
Other current liabilities
Accrued pension obligations

Notes
2018
2017
$ 4,657,201 $ 3,626,353
6(24)
544,084
493,822
6(24)
994,852
1,060,853
12(2)
(
1,721 )
-
-
19,424
6(23)
140,387
154,769
6(21)
(
989,290 ) (
722,436 )
6(21)
(
32,942 ) (
20,571 )
6(22)
19,240 (
18,142 )
6(7)
43,307
40,919
6(22)
(
133 ) (
12,633 )
6(22)
- (
15,879 )
7,698
18,203
(
583,466 ) (
141,600 )
23,602 (
41,266 )
(
495,111 ) (
466,189 )
(
25,846 ) (
28,412 )
(
349,516 ) (
1,015,543 )
(
27,418 ) (
171,634 )
26
3,862
1,058,645
1,397
(
41,886 )
22,381
1,514,253
511,416
29,123 (
7,622 )
45,527
-
6(15)
98,438
56,025
6,203
29,833
939,774 (
653 )
(
2,507 ) (
3,427 )

(Continued)

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Cash inflow generated from operations
Receipt of interest
Interest paid
Income taxes paid
Receipt of dividend
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale financial
assets
Acquisition of investments in debt instrument without
active market
Acquisition of amortised cost of a financial asset
Proceeds from disposal of amortised cost of a financial
asset
Proceeds from disposal of held-to-maturity financial
assets
Acquisition of financial assets at fair value through
comprehensive income
Acquisition of investments accounted for using equity
method
Proceeds from capital reduction of financial assets at cost
Proceeds from capital reduction of investee accounted
for using the equity method

Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets

Increase in refundable deposits
Decrease in other current assets
Decrease in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term borrowings

Guarantee deposits received

Cash dividends paid
Cash dividends returned
Net cash flows used in financing activities
Effect of exchange rate
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2018
2017
$ 7,572,524 $ 3,373,250
793,055
725,848
(
138,521 ) (
152,595 )
(
66,250 ) (
208,619 )
32,942
20,571
8,193,750
3,758,455
-
27,188
- (
24,348,243 )
(
6,946,509 )
-
30,254
-
-
261,301
(
28,000 ) (
221,000 )
- (
6,699 )

-
6,622
6(7)
-
14,923
6(28)
(
629,854 ) (
476,144 )

276
14,440
6(28)
(
592,220 ) (
937,494 )
(
11,072 ) (
281 )
-
687,435
1,924
-
(
8,175,201) (
24,977,952)
6(29)
(
3,526,313 ) (
2,398,609 )
6(29)
(
278 ) (
851 )
(
2,794,525 ) (
2,524,756 )
201
-
(
6,320,915) (
4,924,216)
1,017,661(
2,136,176)
(
5,284,705 ) (
28,279,889 )
9,594,356
37,874,245
$ 4,309,651$ 9,594,356

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

Attachment 5: Independent Auditors’ Report and 2018 Parent Company Only Financial Statements

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Realtek Semiconductor Corporation

Opinion

We have audited the accompanying parent company only balance sheets of Realtek Semiconductor Corporation (the “Company”) as at December 31, 2018 and 2017, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other independent accountants (please refer to the Other matters section of our report), the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2018 and 2017, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgement, 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 the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Evaluation of inventories

Description

Refer to Note 4(13) of the parent company only financial statements for inventory evaluation policies, Note 5(2) for uncertainty of accounting estimates and assumptions of inventory evaluation and Note 6(3) for the details of inventories.

The Company is primarily engaged in researching, developing, manufacturing, selling of various integrated circuits and related application software. Inventories are stated at the lower of cost and net realizable value. Due to the balances of inventories are significant to the financial statements and the rapid technological changes in the industry, there is a higher risk of decline in market value and obsolescence of inventories. Thus, we considered the evaluation of inventories as one of the key audit matters.

How our audit addressed the matter

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

Obtained an understanding of accounting policies on the provision of allowance for inventory valuation losses and assessed the reasonableness and the consistency with comparative period(s).
Validated the accuracy of inventory aging report, as well as sampled and confirmed the consistency of quantities and amounts with detailed inventory listing, verified dates of movements with supporting documents and ensured the proper categorization of inventory aging report.
Evaluated and confirmed the reasonableness of net realizable value for inventories through validating respective supporting documents.

Audit of cash in banks

Description

Refer to Note 4(5) of the parent company only financial statements for accounting policies and Note 6(1) for the details of cash and cash equivalents.

The amount of the Company’s cash and cash equivalents is significant to the parent company only financial statements, and the nature and usage of those cash and cash equivalents varies. The cash in banks are deposited with various domestic and financial institutions and have high inherent risk. It is also subject to judgement as to whether certain deposits fulfill the criteria of short-term, highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Thus, audit of cash in bank was considered as one of the key audit matters.

How our audit addressed the matter

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

Obtained detailed listings of cash in banks. Sent confirmation letters to all financial institutions and reviewed special terms and agreements in order to ensure the existence and rights and obligations of cash in banks.
Obtained an understanding of procedures for preparation and review of bank reconciliations, including validating unusual reconciling items.
Performed physical count of petty cash and time deposits, including validating whether time deposits fulfill the criteria of short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Sampled and validated significant cash transactions from bank accounts frequently used, including obtaining an understanding of the purposes of those bank accounts and vouching related supporting documents.

Other matter – Reference to audits of other independent accountants

We did not audit the financial statements of certain investments accounted for using the equity method. Those financial statements were audited by other independent accountants whose report thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants. Investments accounted for using equity method amounted to NT$6,900,458 thousand and NT$6,619,491 thousand as of December 31, 2018 and 2017, constituting 12.78% and 13.10% of total assets, respectively. Comprehensive income amounted to NT$108,408 thousand and NT$79,436 thousand, for the years ended December 31, 2018 and 2017, respectively.

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including the Audit Committee, are responsible for overseeing the Company’s financial reporting process.

Independent accountant’s 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 a report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher

than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion.

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 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.

Hsueh, Seou-Hung[Li, Tien-Yi ] For and on behalf of PricewaterhouseCoopers, Taiwan March 21, 2019

REALTEK SEMICONDUCTOR CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

				December31,2018			December31,2017
	Assets	Notes		AMOUNT	%		AMOUNT	%
	Current assets
1100	Cash and cash equivalents	6(1)	$	1,553,365	3	$	735,254	1
1110	Financial assets at fair value
	through profit or loss - current			29,061	-		-	-
1136	Financial assets at amortised cost	8
	- current			61,401	-		-	-
1170	Accounts receivable, net	6(2)		4,307,547	8		2,789,923	6
1180	Accounts receivable - related	6(2) and 7(3)
	parties			1,033,782	2		941,236	2
1200	Other receivables			42,641	-		18,735	-
1210	Other receivables - related parties	7		2,688,329	5		3,439,082	7
130X	Inventories, net	6(3)		4,096,647	8		4,324,420	9
1410	Prepayments			149,935	-		247,142	-
1470	Other current assets	8		-	-		91,655	-
11XX	Current Assets			13,962,708	26		12,587,447	25
	Non-current assets
1517	Financial assets at fair value
	through other comprehensive
	income – non-current			936	-		-	-
1523	Available-for-sale financial assets
	- non-current			-	-		40,344	-
1543	Financial assets carried at cost
	- non-current			-	-		6,575	-
1550	Investments accounted for under	6(4)
	equity method			35,911,991	67		33,631,364	67
1600	Property, plant and equipment	6(5)		2,863,756	5		2,679,455	5
1780	Intangible assets	6(6)		1,160,549	2		1,495,547	3
1840	Deferred income tax assets	6(21)		78,472	-		65,551	-
1900	Other non-current assets			14,444	-		6,456	-
15XX	Non-current assets			40,030,148	74		37,925,292	75
1XXX	Total assets		$	53,992,856	100	$	50,512,739	100

(Continued)

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes 6(7) 6(15) 7 6(8) 7 6(15) 6(10) 6(21) 6(9) 6(11) 6(12) 6(13) 6(14)	December31,2018 December31,2017 AMOUNT % AMOUNT % $ 14,526,311 27 $ 18,052,624 36 110,764 - - - 8,657 - 8,631 - 3,793,276 7 3,783,139 7 228,279 - 282,667 1 6,867,842 13 5,624,505 11 38,283 - 32,156 - 578,088 1 326,648 1 2,581,910 5 88,847 - 28,733,410 53 28,199,217 56 519,016 1 434,425 1 22,310 - 21,749 - 80,828 - 7,830 - 622,154 1 464,004 1 29,355,564 54 28,663,221 57 5,080,955 10 5,065,062 10 3,236,659 6 3,558,856 7 4,467,099 8 4,127,884 8 600,443 1 - - 10,850,172 20 9,698,159 19 401,964 1 ( 600,443) ( 1) 24,637,292 46 21,849,518 43 $ 53,992,856 100 $ 50,512,739 100
		AMOUNT $ 14,526,311 110,764 8,657 3,793,276 228,279 6,867,842 38,283 578,088 2,581,910 28,733,410 519,016 22,310 80,828 622,154 29,355,564 5,080,955 3,236,659 4,467,099 600,443 10,850,172 401,964 24,637,292 $ 53,992,856
Current liabilities 2100 Short-term borrowings 2130 Contract liabilities - current 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2300 Other current liabilities 21XX Current Liabilities Non-current liabilities 2550 Provisions for liabilities - non-current 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Non-current liabilities 2XXX Total Liabilities Equity Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Undistributed earnings Other equity 3400 Other equity interest 3XXX Total equity 3X2X Total liabilities and equity

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

REALTEK SEMICONDUCTOR CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

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

Items	Notes 6(15) and 7 6(3) 6(19)(20) and 7 12(2) 6(16) and 7 6(17) 6(18) 6(4) 6(21) 6(14) 6(22)	2018
4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Expected credit gains 6000 Total operating expenses 6900 Operating income Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit of associates and joint ventures accounted for using equity method, net 7000 Total non-operating income and expenses 7900 Profit before income tax, net 7950 Income tax expense 8200 Net income for the year Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealised losses from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8362 Other comprehensive income, before tax, available-for-sale financial assets 8380 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8360 Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income (loss) for the year 8500 Total comprehensive income for the year Earnings Per Share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share
		$

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

Realtek Semiconductor Corporation

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

2017 Balance at January 1, 2017 Net income for the year Other comprehensive income (loss) Total comprehensive income Distribution of 2016 earnings Legal reserve Cash dividends Employees' compensation transferred to common stock Cash dividends from capital surplus Changes in equity of associates accounted for using equity method Balance at December 31, 2017 2018 Balance at January 1, 2018 Modified retrospective approach adjustment Balance at January 1, after adjustments Net income for the year Other comprehensive income (loss) Total comprehensive income Distribution of 2017 earnings Legal reserve Special reserve Cash dividends Employees' compensation transferred to common stock Cash dividends from capital surplus Changes in equity of associates accounted for using equity method Cash dividends returned Balance at December 31, 2018	Notes		Share capital - common stock		Capital surplus				Retained earnings					O	ther equityinterest				Total equity
							Legal reserve		Special reserve $ - - - - - - - - - $ - $ - - - - - - - 600,443 - - - - - $ 600,443		Undistributed earnings	Financial statements translation differences of foreign operations			Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income		Unrealised gain or loss on available- for-sale financial assets
	6(14) 6(13) 6(12) 6(12) 6(14) 6(14) 6(13) 6(12) 6(12)		$ 5,049,513 - - - - - 15,549 - - $ 5,065,062 $ 5,065,062 - 5,065,062 - - - - - - 15,893 - - - $ 5,080,955	$ 3,910,428 - - - - - 145,386 ( 504,951 ) 7,993 $ 3,558,856 $ 3,558,856 - 3,558,856 - - - - - - 163,692 ( 508,095 ) 22,005 201 $ 3,236,659			$ 3,823,896 - - - 303,988 - - - - $ 4,127,884 $ 4,127,884 - 4,127,884 - - - 339,215 - - - - - - $ 4,467,099			$ 8,629,799 3,392,153 - 3,392,153 ( 303,988 ) ( 2,019,805 ) - - - $ 9,698,159 $ 9,698,159 103,142 9,801,301 4,350,768 ( 75,809 ) 4,274,959 ( 339,215 ) ( 600,443 ) ( 2,286,430 ) - - - - $ 10,850,172			$ 1,298,139 - ( 2,111,302 ) ( 2,111,302 ) - - - - - ($ 813,163 ) ($ 813,163 ) - ( 813,163 ) - 942,974 942,974 - - - - - - - $ 129,811	$ - - - - - - - - - $ - $ - 435,835 435,835 - ( 163,682 ) ( 163,682 ) - - - - - - - $ 272,153		$ 103,410 - 109,310 109,310 - - - - - $ 212,720 $ 212,720 ( 212,720 ) - - - - - - - - - - - $ -			$ 22,815,185 3,392,153 ( 2,001,992 ) 1,390,161 - ( 2,019,805 ) 160,935 ( 504,951 ) 7,993 $ 21,849,518 $ 21,849,518 326,257 22,175,775 4,350,768 703,483 5,054,251 - - ( 2,286,430 ) 179,585 ( 508,095 ) 22,005 201 $ 24,637,292

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

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Amortization

Expected credit gains

Provision for doubtful accounts
Interest expense

Interest income

Dividend income

Loss on financial assets at fair value through profit
or loss

Share of loss of associates and joint ventures
accounted for using equity method

Gain on disposal of property, plant and equipment

Other intangible assets transferred to expenses
Changes in operating assets and liabilities
Changes in operating assets
Accounts receivable, net
Accounts receivable, net - related parties
Other receivables, net
Other receivables, net - related parties
Inventories
Prepayments
Changes in operating liabilities
Contract liabilities-current
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Provisions - non-current

Other current liabilities
Accrued pension obligations

Notes
2018
2017
$ 4,638,768 $ 3,602,153
6(19)
470,049
422,595
6(19)
943,734
1,007,187
12(2)
(
5,803 )
-
-
19,424
6(18)
140,170
147,941
6(16)
(
66,668 ) (
44,065 )
6(16)
(
812 ) (
406 )
6(17)
11,283
-
6(4)
(
3,968,591 ) (
3,174,944 )
6(17)
- (
14,269 )
7,698
18,203
527,028 (
906,911 )
53,312 (
673,854 )
(
23,639 ) (
12,170 )
(
67,713 )
1,957,128
227,773 (
1,120,140 )
97,207 (
40,855 )
21,541
-
26
3,862
10,137
504,642
(
54,388 )
109,405
1,310,009
324,700
6,126
11,724
6(10)
84,591
94,060
397,579
30,688
(
2,507 ) (
3,427 )

(Continued)

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Cash inflow generated from operations
Receipt of interest
Interest paid
Income taxes paid
Receipt of dividend
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of amortised cost of a
financial asset
Acquisition of investments accounted for using
equity method
Proceeds from capital reduction of financial assets
at cost
Proceeds from capital reduction of investee
accounted for using the equity method

Acquisition of cash dividends from investments
accounted for using equity method

Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets

(Increase) decrease in other receivables, net -
related parties
Increase in refundable deposits
Increase in other current assets
Net cash flows from (used in) investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings

Guarantee deposits received

Cash dividends paid

Cash dividends returned
Net cash flows (used in) from financing
activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Notes
2018
2017
$ 4,756,910 $ 2,262,671
66,401
47,477
(
138,304 ) (
145,767 )
(
48,920 ) (
193,046 )
812
406
4,636,899
1,971,741
30,254
-
- (
8,427,063 )
-
6,622
6(4)
-
14,923
7
5,436,741
15,165
6(23)
(
578,076 ) (
406,706 )
-
14,269
6(23)
(
581,659 ) (
879,239 )
(
1,797,119 )
3,265,621
(
7,988 ) (
100 )
- (
36,240 )
2,502,153 (
6,432,748 )
6(24)
(
3,526,313 )
2,857,624
6(24)
(
304 ) (
862 )
6(13)
(
2,794,525 ) (
2,524,756 )
201
-
(
6,320,941 )
332,006
818,111 (
4,129,001 )
735,254
4,864,255
$ 1,553,365 $ 735,254

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

Attachment 6: Comparison table illustrating the original and amended texts of the Articles of

Incorporation

Incorporation
Amended Version	Original Version	Reason
Article 18 If gained profits within a fiscal year, the Company shall allocate at a maximum of 3% of the profits as directors’ remuneration, and allocate no less than 1% of the profits as employees’ compensation. However, in case of the accumulated losses, certain profits shall first be reserved to cover the accumulated losses, and then allocate employees’ compensation and directors’ remuneration according to the proportion in the preceding paragraph. The distribution of employees' compensation in the preceding paragraph shall be in cash or in stock, and shall be resolved with a consent of a majority of the directors present at a meeting attended by over two-thirds of the total directors. The distribution of director's remuneration and employee’ compensation shall be reported to the shareholders meeting. The employees entitled to receive employees’ compensation may include the employees of subsidiaries of the Company meeting certain specific requirements. The requirements are determined by the board of directors or its authorized person. The Company belongs to the integrated circuit design industry and is in the growth phase of the enterprise life cycle. After considering the long-term business development of the Company, matching future investment fund requirements, and the long-term financial planning of the Company, if there are profits at the end of fiscal year, the Company shall first offset the accumulated losses with profits after tax, and then shall contribute 10% of profit as legal reserve, unless the accumulated legal reserve has reached the amount of the Company’s total capital, and contribute or reverse special reserve in accordance with relevant laws	Article 18 If gained profits within a fiscal year, the Company shall allocate at a maximum of 3% of the profits as directors’ remuneration, and allocate no less than 1% of the profits as employees’ compensation. However, in case of the accumulated losses, certain profits shall first be reserved to cover the accumulated losses, and then allocate employees’ compensation and directors’ remuneration according to the proportion in the preceding paragraph. The distribution of employees' compensation in the preceding paragraph shall be in cash or in stock, and shall be resolved with a consent of a majority of the directors present at a meeting attended by over two-thirds of the total directors. The distribution of director's remuneration and employee’ compensation shall be reported to the shareholders meeting. The employees entitled to receive employees’ compensation may include the employees of subsidiaries of the Company meeting certain specific requirements. The requirements are determined by the board of directors or its authorized person. The Company belongs to the integrated circuit design industry and is in the growth phase of the enterprise life cycle. After considering the long-term business development of the Company, matching future investment fund requirements, and the long-term financial planning of the Company, if there are profits at the end of fiscal year, the Company shall first offset the accumulated losses with profits after tax, and then shall contribute 10% of profit as legal reserve, unless the accumulated legal reserve has reached the amount of the Company’s total capital, and contribute or reverse special reserve in accordance with relevant laws	According to Article 240 and 241 of the Company Act, the Company authorizes the distributable dividends, legal reserve, and capital reserve may be paid in cash after a resolution by the board of directors.

Amended Version	Original Version	Reason
or regulation by the competent authority. If there are net profits remained, the remaining net profits and the retained earnings from previous years shall be distributed as shareholders’ dividendafter the distribution proposal is prepared by the board of directors. In case the distribution is in the form of issuing new shares, the distribution proposal shall be approved at a shareholders meeting. In case the distribution is in the form of cash, the distribution proposal is authorized to be approved by the board of directors.After considering financial, business and operational factors, the Company may distribute the whole of distributable earnings of the current year, and may also distribute whole or part of the reserves in accordance with the law or the regulation by the competent authority. When distributing dividends, the main consideration is the Company's future expansion of operating scale and requirement of cash flow. The cash dividends shall not be less than 10% of the total dividends distributed to shareholders in the current year. According to Article 240, Paragraph 5, and Article 241, Paragraph 2 of the Company Act, the Company authorizes the distributable dividends, legal reserve, and capital reserve in whole or in part may be paid in cash after a resolution has been adopted by a majority vote at a meeting of the board of directors attended by two-thirds of the total number of directors, and in addition thereto a report of such distribution shall be submitted to the shareholders meeting.	or regulation by the competent authority. If there are net profits remained, the remaining net profits and the retained earnings from previous years shall be distributed as shareholders’ dividend after the distribution proposal prepared by the board of directors is approved at a shareholders meeting. After considering financial, business and operational factors, the Company may distribute the whole of distributable earnings of the current year, and may also distribute whole or part of the reserves in accordance with the law or the regulation by the competent authority. When distributing dividends, the main consideration is the Company's future expansion of operating scale and requirement of cash flow. The cash dividends shall not be less than 10% of the total dividends distributed to shareholders in the current year.
Article 20 The Articles of Incorporation hereof were established on Oct. 16, 1987; 1st amended on Sep. 25, 1989; (omitted) 31st amended on Jun. 5, 2018;32nd amended on Jun. 12, 2019.	Article 20 The Articles of Incorporation hereof were established on Oct. 16, 1987; 1st amended on Sep. 25, 1989; (omitted) 31st amended on Jun. 5, 2018.	To add amendment date.

Attachment 7: Comparison table illustrating the original and amended texts of the "Procedures for Financial Derivatives Transactions"

Amended Version	Amended Version	Original Version	Reason
Article 1. Trading principles and strategies (1) Trading types 1.“Derivative products” are defined as follows: forward contracts, options contracts, swap contracts, futures contracts, leverage contracts, and compound contracts combining the above products, whose value is derived from a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives.The term "forward contracts" does not include insurance contracts, performance contracts, after- sales service contracts, long- term leasing contracts, or long- term purchase (sales) agreements.		Article 1. Trading principles and strategies (1) Trading types 1.“Derivative products” are defined as follows: forward contracts, options contracts, swap contracts, futures contracts, leverage contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term "forward contracts" does not include insurance contracts, performance contracts, after- sales service contracts, long- term leasing contracts, or long- term purchase (sales) agreements.	To conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission
	instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts;
	or hybrid contracts or structured products containing embedded derivatives.The term "forward contracts" does not include insurance contracts, performance contracts, after- sales service contracts, long- term leasing contracts, or long- term purchase (sales) agreements.

Attachment 8: Comparison table illustrating the original and amended texts of the "Procedures for Acquisition or Disposal of Assets"

Amended Version	Original Version	Reason
Article 2: The scope of the assets 1. Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset- backed securities. 2. Real property (including land, houses and buildings, investment property, and construction enterprise inventory)and equipment. 3. Memberships. 4. Patents, copyrights, trademarks, franchise rights, and other intangible assets. 5. Right-of-use assets. 6. Derivatives. 7. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law. 8. Other major assets.	Article 2: The scope of the assets 1. Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset- backed securities. 2. Real property (including land, houses and buildings, investment property, right-of- use land, and construction enterprise inventory) and equipment. 3. Memberships. 4. Patents, copyrights, trademarks, franchise rights, and other intangible assets. 5. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables). 6. Derivatives. 7. Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law. 8. Other majorassets.	To conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission, and delete the claims of financial institutions
6. 7. 8.
Article 3: Appraisal procedures The means of price determination and supporting reference materials: 1. For acquisition or disposal of the derivatives or the securities through the Centralized Trading Market or GreTai Securities Market ("GTSM") of the Republic of China shall be priced based on the trading price at that time. 2. For the securities not obtained or disposed through the Centralized Trading Market or GTSM, the prices shall be determined after taking into account the net worth per share, profitability, potential of future development and with reference to the trading prices at that time; or to be determined after taking account the interest rate prevalent in the market, interest rate on face of the bonds as well as the debtors’ creditability. 3. For acquisition or disposal of real estate or right-of-use assets thereof, the transactionprice shall reference the	Article 3: Appraisal procedures The means of price determination and supporting reference materials: 1. For acquisition or disposal of the derivatives or the securities through the Centralized Trading Market or GreTai Securities Market ("GTSM") of the Republic of China shall be priced based on the trading price at that time. 2. For the securities not obtained or disposed through the Centralized Trading Market or GTSM, the prices shall be determined after taking into account the net worth per share, profitability, potential of future development and with reference to the trading prices at that time; or to be determined after taking account the interest rate prevalent in the market, interest rate on face of the bonds as well as the debtors’ creditability. 3. For acquisition or disposal of real estate, the transaction price shall reference the publiclyannounced value,appraised	To conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission and add the appraisal procedures of the quipment, intangible assets, use rights assets, memberships, derivatives.

	Amended Version	Original Version	Reason
4.	publicly announced value, appraised price, and actual transaction price in neighboring areas to determine conditions and price. The prices of equipment or right-of-use assets thereof, intangible assets or right- of-use assets thereof and memberships acquired or disposed shall be determined through any manner among price competition, price negotiation or market price.	price, and actual transaction price in neighboring areas to determine conditions and price.

Article 4: Operating procedures for handling acquisition and disposal of assets 1. The executive unit shall evaluate the reasons for acquisition and disposal of assets, the subjects, the counterpart of the transaction, the transfer pricing, the conditions of payment and the reference basis for the price, and submit it to the related responsible department for the ruling. The relevant matters are subject to the internal control system of the company. 2. The Company’s investment in the long and short-term securities shall be executed by General Manager's Office and Finance Department. Investment in real property, equipment,memberships, intangible assets and right-of-use assetsshall be executed by the user department and related responsible department. The acquisition or disposal of derivatives is assessed and executed by the Finance Department. The responsible person of the assets acquired or disposed mentioned in Article 2 is Task Force appointed by the General Manager. 3. The Company and its subsidiaries may further invest in acquirement of real property or right-of-use assets thereofor securities not for business operation needs within The investment of the Company and the subsidiaries for non-business real estate and right-of-use assets or securities shall be no more than 100% of the Company’s total assets as audited and certified by certified public accountant. 4. The Company shall acquire or dispose the assets mentioned in Article 2, and shall execute the verification according to the approval form established bythe Company.		Article 4: Operating procedures for handling acquisition and disposal of assets 1. The executive unit shall evaluate the reasons for acquisition and disposal of assets, the subjects, the counterpart of the transaction, the transfer pricing, the conditions of payment and the reference basis for the price, and submit it to the related responsible department for the ruling. The relevant matters are subject to the internal control system of the company. 2. The Company’s investment in the long and short-term securities shall be executed by General Manager's Office and Finance Department. Investment in real property and other fixed assets, memberships, intangible assets shall be executed by the user department and related responsible department. The acquisition or disposal of derivatives is assessed and executed by the Finance Department. The responsible person of the assets acquired or disposed mentioned in Article 2 is Task Force appointed by the General Manager. 3. The Company and its subsidiaries may further invest in acquirement of real property or securities not for business operation needs within The investment of the Company and the subsidiaries for non-business real estate and right-of-use assets or securities shall be no more than 100% of the Company’s total assets as audited and certified by certified public accountant. 4. The Company shall acquire or dispose the assets mentioned in Article 2, and shall execute the verification according to the approval form established bythe Company.	To conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission and delete the claims of financial institutions

Amended Version	Original Version	Reason
The Procedures shall be approved by the Audit Committee, the Board of Directors. If it is necessary to report to the Board of Directors, the Procedures shall be approved by the Audit Committee and then report to theBoard of Directors.	The Procedures shall be approved by the Audit Committee, the Board of Directors. If it is necessary to report to the Board of Directors, the Procedures shall be approved by the Audit Committee and then report to theBoard of Directors.
Article 5: Standards of public announcement and declaration Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in the appropriate format as prescribed by regulations within 2 days counting inclusively from the date of occurrence of the event: 1. Acquisition or disposal of real propertyor right-of-use assets thereoffrom or to a related party, or acquisition or disposal of assets other than real property or right-of- use assets thereoffrom or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading ofdomesticgovernment bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises. 2. Merger, demerger, acquisition, or transfer of shares. 3. Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company. 4. Where equipmentor right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party,and the transaction amount reaches NT$500 million or more. 5. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing	Article 5: Standards of public announcement and declaration Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in the appropriate format as prescribed by regulations within 2 days counting inclusively from the date of occurrence of the event: 1. Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises. 2. Merger, demerger, acquisition, or transfer of shares. 3. Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company. 4. Where equipment for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria: A. For a public company whose paid-in capital is less than NT$10 billion, the transaction amount reaches NT$500 million or more. B. For a public company whose paid-in capital is NT$10 billion or more, the transaction amount reaches NT$1 billion or more.	To conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission

	Amended Version	Original Version	Reason
units, joint construction and allocation of ownership percentages, or joint construction and separate sale,and furthermore the transaction counterparty is not a related party,and the amount the company expects to invest in the transaction reaches NT$500 million. 6. Where an asset transaction other than any of those referred to in the preceding six subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances: A. Trading ofdomesticgovernment bonds. B. Trading of bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises. The amount of transactions above shall be calculated as follows: 1. The amount of any individual transaction. 2. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same transaction counterparty within the preceding year. 3. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real propertyor right-of-use assets thereofwithin the same development project within the preceding year. 4. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year. "Within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount. A public company shall compile monthly reports on the status of derivatives trading		5. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction reaches NT$500 million. 6. Where an asset transaction other than any of those referred to in the preceding six subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances: A. Trading of government bonds. B. Trading of bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises. The amount of transactions above shall be calculated as follows: 1. The amount of any individual transaction. 2. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same transaction counterparty within the preceding year. 3. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real property within the same development project within the preceding year. 4. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year. "Within the preceding year" as used in the preceding paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.

Amended Version	Original Version	Reason
engaged in up to the end of the preceding month by the company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month. When a public company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission. A public company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company, where they shall be retained for 5 years except where another act provides otherwise.	A public company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by the company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month. When a public company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission. A public company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company, where they shall be retained for 5 years except where another actprovides otherwise.
Article 7: In acquiring or disposing of real property, equipment,or right-of-use assets thereofwhere the transaction amount reaches 20 percent of the Company's paid-in capital or NT$300 million or more, the company, unless transacting with adomestic government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipmentor right-of-use assets thereofheld for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions: 1. Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors; the same procedure shall also be followed whenever there is any subsequent change to the terms and conditions of the	Article 7: In acquiring or disposing of real property, equipment, where the transaction amount reaches 20 percent of the Company's paid-in capital or NT$300 million or more, the company, unless transacting with a government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment held for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions: 1. Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors; the same procedure shall also be followed whenever there is any subsequent change to the terms and conditions of the transaction. 2. Where the transaction amount is NT$1	To conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission

Amended Version
transaction.
1. Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.
Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:
A. The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.
B. The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.
No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

Article 8: The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price. Where the Company acquires or disposes of securities or memberships or intangible

Original Version Reason billion or more, appraisals from two or more professional appraisers shall be obtained.

Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:
A. The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.
B. The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.
No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

Article 8: The Company acquiring or To conform to disposing of securities shall, prior to the date the letter (No. of occurrence of the event, obtain financial 1070341072) statements of the issuing company for the dated most recent period, certified or reviewed by November 26, a certified public accountant, for reference 2018 issued in appraising the transaction price. by Financial Where the Company acquires or disposes of Supervisory securities or memberships or intangible Commission

		Original Version	Reason
assetsor right-of-use assets thereof and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with adomestic government agency, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission(FSC).		assets and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a government agency, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission(FSC).	and make textual amendment
Article 9:The calculation of the transaction amounts referred to in the preceding two articles shall be done in accordance with Article 5, paragraph 2 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transactionamount.		Article 8-1: The calculation of the transaction amounts referred to in the preceding two articles shall be done in accordance with Article 5, paragraph 2 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transactionamount.	To change the serial number of the article
Article 10:Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.		Article 9: Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.	To change the serial number of the article and make textual amendment
Article 11:Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Companies with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinionsshall meet the following requirements: 1.May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity		Article 10: Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Companies with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of this Company or the other party of the transaction.	To change the serial number of the article, make textual amendment, and conform to the letter (No. 1070341072) dated November 26, 2018 issued by

	Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity

	Amended Version	Original Version	Reason
Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received. 2.May not be a related party or de facto related party of any party to the transaction. 3.If the company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other. When issuing an appraisal report or opinion,	Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was		Financial Supervisory Commission
the personnel referred to in the preceding paragraph shall comply with the following: 1. Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence. 2.When examining a case, they shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case working papers. 3.They shall undertake an item-by-item evaluation of the comprehensiveness, accuracy, and reasonableness of the sources of data used, the parameters, and the information, as the basis for issuance of the appraisal report or the opinion. 4.They shall issue a statement attesting to the professional competence and independence of the personnel who prepared the report or opinion, and that they have evaluated and found that the information used is reasonable and accurate, and that they have complied with applicable laws and regulations.

Article 12:When the Companyengages in		Article 11: When the Companyengages in	To change

Amended Version	Original Version	Reason
any acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of the preceding Section and this Section. The calculation of the transaction amount referred to in the preceding paragraph shall be made in accordance with Article9herein. When judging whether a transaction counterparty is a related party, in addition to legal formalities, the substance of the relationship shall also be considered.	any acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of the preceding Section and this Section. The calculation of the transaction amount referred to in the preceding paragraph shall be made in accordance with Article 8-1 herein. When judging whether a transaction counterparty is a related party, in addition to legal formalities, the substance of the relationshipshall also be considered.	the serial number of the article and adjust the citation of the second paragraph
Article 13:When the Company intends to acquire or dispose of real propertyor right- of-use assets thereoffrom or to a related party, or when it intends to acquire or dispose of assets other than real propertyor right-of-use assets thereoffrom or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading ofdomesticgovernment bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors: 1. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2. The reason for choosing the related party as a transaction counterparty. 3. With respect to the acquisition of real propertyor right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of thepreliminarytransaction terms in	Article 12: When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board of directors and recognized by the supervisors: 1. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2. The reason for choosing the related party as a transaction counterparty. 3. With respect to the acquisition of real property from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 16 and Article 17. 4. The date andprice at which the related	To change the serial number of the article and conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission

Amended Version Original Version Reason accordance with Article 16 and Article 17. party originally acquired the real property, 4. The date and price at which the related the original transaction counterparty, and party originally acquired the real property, that transaction counterparty's relationship the original transaction counterparty, and to the company and the related party. that transaction counterparty's relationship 5. Monthly cash flow forecasts for the year to the company and the related party. commencing from the anticipated month 5. Monthly cash flow forecasts for the year of signing of the contract, and evaluation commencing from the anticipated month of the necessity of the transaction, and of signing of the contract, and evaluation reasonableness of the funds utilization. of the necessity of the transaction, and 6. An appraisal report from a professional reasonableness of the funds utilization. appraiser or a CPA's opinion obtained in 6. An appraisal report from a professional compliance with the preceding article. appraiser or a CPA's opinion obtained in 7. Restrictive covenants and other important compliance with the preceding article. stipulations associated with the 7. Restrictive covenants and other important transaction. stipulations associated with the The calculation of the transaction amounts transaction. referred to in the preceding paragraph shall The calculation of the transaction amounts be made in accordance with Article 31, referred to in the preceding paragraph shall paragraph 2 herein, and "within the be made in accordance with Article 31, preceding year" as used herein refers to the paragraph 2 herein, and "within the year preceding the date of occurrence of the preceding year" as used herein refers to the current transaction. Items that have been year preceding the date of occurrence of the approved by the board of directors and current transaction. Items that have been recognized by the supervisors need not be approved by the board of directors and counted toward the transaction amount. recognized by the supervisors need not be With respect to the types of transactions counted toward the transaction amount. listed below, when to be conducted between With respect to the types of transactions the Company and the subsidiaries, the listed below, when to be conducted between Company's board of directors authorized the the Company and the subsidiaries, or chairman to have the decisions within between the subsidiaries in which it directly NT$500 million subsequently submitted to or indirectly holds 100 percent of the issued and ratified by the next board of directors shares or authorized capital, the Company's meeting. board of directors authorized the chairman to have the decisions within NT$500 million subsequently submitted to and ratified by the next board of directors meeting: 1.Acquisition or disposal of equipment or right-of-use assets thereof held for business use. 2.Acquisition or disposal of real property right-of-use assets held for business use. Article 14: The Company that acquires real Article 13: The Company that acquires real To change property or right-of-use assets thereof from a property from a related party shall evaluate the serial related party shall evaluate the the reasonableness of the transaction costs in number of the reasonableness of the transaction costs in accordance with the provisions of Article 15 article and accordance with the provisions of Article 16 of Regulations Governing the Acquisition conform to of Regulations Governing the Acquisition and Disposal of Assets by Public the letter (No. and Disposal of Assets by Public Companies. 1070341072)

Amended Version	Amended Version	Original Version	Reason
Companies. Where the Company acquires real property or right-of-use assets thereoffrom a related party and one of the following circumstances exists, the acquisition shall also engage a CPA to check the appraisal and render a specific opinion: 1. The related party acquired the real propertyor right-of-use assets thereof through inheritance or as a gift. 2. More than 5 years will have elapsed from the time the related party signed the contract to obtain the real propertyor right-of-use assets thereofto the signing date for the current transaction. 3. The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land. 4.The real property right-of-use assets for business use are acquired by the Company with the subsidiaries, or by the subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.		Where the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall also engage a CPA to check the appraisal and render a specific opinion: 1. The related party acquired the real property through inheritance or as a gift. 2. More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction. 3. The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.	dated November 26, 2018 issued by Financial Supervisory Commission

	with the subsidiaries, or by the subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.
Article 15:Where the Company acquires real propertyor right-of-use assets thereof from a related party and the results of appraisals are uniformly lower than the transaction price, the following steps shall be taken: 1. A special reserve shall be set aside in accordance with the Act against the difference between the real property transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. Where the Company uses the equity method to account for its investment in another company, then the special reserve called for under the Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company. 2. Independent directors of the audit committee shall complywith Article 218		Article 14: Where the Company acquires real property from a related party and the results of appraisals are uniformly lower than the transaction price, the following steps shall be taken: 1. A special reserve shall be set aside in accordance with the Act against the difference between the real property transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. Where the Company uses the equity method to account for its investment in another company, then the special reserve called for under the Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company. 2. Independent directors of the audit committee shall comply with Article 218 of the CompanyAct.	To change the serial number of the article and conform to the letter (No. 1070341072) dated November 26, 2018 issued by Financial Supervisory Commission

Amended Version Original Version Reason of the Company Act. 3. Actions taken pursuant to the preceding 3. Actions taken pursuant to the preceding two subparagraphs shall be reported to a two subparagraphs shall be reported to a shareholders meeting, and the details of shareholders meeting, and the details of the transaction shall be disclosed in the the transaction shall be disclosed in the annual report and any investment annual report and any investment prospectus. prospectus. The Company that has set aside a special The Company that has set aside a special reserve under the preceding paragraph may reserve under the preceding paragraph may not utilize the special reserve until it has not utilize the special reserve until it has recognized a loss on decline in market value recognized a loss on decline in market value of the assets it purchased at a premium, or of the assets it purchased or leased at a they have been disposed of, or adequate premium, or they have been disposed of, or compensation has been made, or the status the leasing contract has been terminated, or quo ante has been restored, or there is other adequate compensation has been made, or evidence confirming that there was nothing the status quo ante has been restored, or unreasonable about the transaction, and the there is other evidence confirming that there FSC has given its consent. was nothing unreasonable about the When the Company obtains real property transaction, and the FSC has given its from a related party, it shall also comply consent. with the preceding two paragraphs if there is When the Company obtains real property or other evidence indicating that the acquisition right-of-use assets thereof from a related was not an arms length transaction. party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arms length transaction. Article 16: The Company’s financial Article 15: The Company’s financial To change derivatives transactions shall be in derivatives transactions shall be in the serial compliance with the Company’s “Policies compliance with the Company’s “Policies number of the and Procedures for Financial Derivatives and Procedures for Financial Derivatives article Transactions” and shall pay attention to the Transactions” and shall pay attention to the matters of risk management and auditing to matters of risk management and auditing to implement the internal control system. implement the internal control system. Article 17: The Company that conducts a Article 16: The Company that conducts a To change merger, demerger, acquisition, or transfer of merger, demerger, acquisition, or transfer of the serial shares, prior to convening the board of shares, prior to convening the board of number of the directors to resolve on the matter, shall directors to resolve on the matter, shall article engage a CPA, attorney, or securities engage a CPA, attorney, or securities underwriter to give an opinion on the underwriter to give an opinion on the reasonableness of the share exchange ratio, reasonableness of the share exchange ratio, acquisition price, or distribution of cash or acquisition price, or distribution of cash or other property to shareholders, and submit it other property to shareholders, and submit it to the board of directors for deliberation and to the board of directors for deliberation and passage. However, the requirement of passage. However, the requirement of obtaining an aforesaid opinion on obtaining an aforesaid opinion on reasonableness issued by an expert may be reasonableness issued by an expert may be exempted in the case of a merger by a public exempted in the case of a merger by a public company of a subsidiary in which it directly company of a subsidiary in which it directly or indirectly holds 100 percent of the issued or indirectly holds 100 percent of the issued

Amended Version Original Version Reason shares or authorized capital, and in the case shares or authorized capital, and in the case of a merger between subsidiaries in which of a merger between subsidiaries in which the public company directly or indirectly the public company directly or indirectly holds 100 percent of the respective holds 100 percent of the respective subsidiaries’ issued shares or authorized subsidiaries’ issued shares or authorized capital. capital. The Company participating in a merger, The Company participating in a merger, demerger, acquisition, or transfer of shares demerger, acquisition, or transfer of shares shall prepare a public report to shareholders shall prepare a public report to shareholders detailing important contractual content and detailing important contractual content and matters relevant to the merger, demerger, or matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting acquisition prior to the shareholders meeting and include it along with the expert opinion and include it along with the expert opinion referred to in paragraph 1 of the preceding referred to in paragraph 1 of the preceding Article when sending shareholders Article when sending shareholders notification of the shareholders meeting for notification of the shareholders meeting for reference in deciding whether to approve the reference in deciding whether to approve the merger, demerger, or acquisition. Provided, merger, demerger, or acquisition. Provided, where a provision of another act exempts a where a provision of another act exempts a company from convening a shareholders company from convening a shareholders meeting to approve the merger, demerger, or meeting to approve the merger, demerger, or acquisition, this restriction shall not apply. acquisition, this restriction shall not apply. Where the shareholders meeting of any one Where the shareholders meeting of any one of the companies participating in a merger, of the companies participating in a merger, demerger, or acquisition fails to convene or demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, insufficient votes, or other legal restriction, or the proposal is rejected by the or the proposal is rejected by the shareholders meeting, the companies shareholders meeting, the companies participating in the merger, demerger or participating in the merger, demerger or acquisition shall immediately publicly acquisition shall immediately publicly explain the reason, the follow-up measures, explain the reason, the follow-up measures, and the preliminary date of the next and the preliminary date of the next shareholders meeting. shareholders meeting. Article 18: The Company participating in a Article 17: The Company participating in a To change merger, demerger, or acquisition shall merger, demerger, or acquisition shall the serial convene a board of directors meeting and convene a board of directors meeting and number of the shareholders meeting on the day of the shareholders meeting on the day of the article and transaction to resolve matters relevant to the transaction to resolve matters relevant to the conform to merger, demerger, or acquisition, unless merger, demerger, or acquisition, unless the letter (No. another act provides otherwise or the FSC is another act provides otherwise or the FSC is 1070341072) notified in advance of extraordinary notified in advance of extraordinary dated circumstances and grants consent. circumstances and grants consent. November The Company participating in a transfer of The Company participating in a transfer of 26, 2018 shares shall call a board of directors meeting shares shall call a board of directors meeting issued by on the day of the transaction, unless another on the day of the transaction, unless another Financial act provides otherwise or the FSC is notified act provides otherwise or the FSC is notified Supervisory in advance of extraordinary circumstances in advance of extraordinary circumstances Commission and grants consent. and grants consent.

Amended Version	Original Version	Reason
When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall prepare a full written record of the following information and retain it for 5 years for reference: Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or transfer of another company's shares prior to disclosure of the information. Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting. Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings. When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall, within 2 days counting inclusively from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out in subparagraphs 1 and 2 of the preceding paragraph to the FSC for recordation. Where any of the companies participating in a merger, demerger, acquisition, or transfer of another company's shares is neither listed on an exchange nor has its shares traded on an OTC market, the company(s) so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions ofthe preceding two paragraphs.	When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall prepare a full written record of the following information and retain it for 5 years for reference: Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or transfer of another company's shares prior to disclosure of the information. Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting. Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings. When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall, within 2 days counting inclusively from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out in subparagraphs 1 and 2 of the preceding paragraph to the FSC for recordation. Where any of the companies participating in a merger, demerger, acquisition, or transfer of another company's shares is neither listed on an exchange nor has its shares traded on an OTC market, the company(s) so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions of per paragraph 3 and 4 hereof.

Article 19:The Companiesparticipatingin a	Article 18: The Companiesparticipatingin a	To change

Amended Version	Original Version	Reason
merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares: 1. Cash capital increase, issuance of convertible corporate bonds, or the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities. 2. An action, such as a disposal of major assets, that affects the company's financial operations. 3. An event, such as a major disaster or major change in technology, that affects shareholder equity or share price. 4. An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stock. 5. An increase or decrease in the number of entities or companies participating in the merger, demerger, acquisition, or transfer of shares. 6. Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed. The contract for participation by The Company in a merger, demerger, acquisition, or of shares shall specify the relevant matters in accordance with the provisions to safeguard the rights and interests of the participatingcompanies.	merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares: 1. Cash capital increase, issuance of convertible corporate bonds, or the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities. 2. An action, such as a disposal of major assets, that affects the company's financial operations. 3. An event, such as a major disaster or major change in technology, that affects shareholder equity or share price. 4. An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stock. 5. An increase or decrease in the number of entities or companies participating in the merger, demerger, acquisition, or transfer of shares. 6. Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed. The contract for participation by The Company in a merger, demerger, acquisition, or of shares shall specify the relevant matters in accordance with the provisions to safeguard the rights and interests of the participatingcompanies.	the serial number of the article
Article 20:The subsidiaries’ procedures for handling acquisition or disposal of assets: 1. The Company’s subsidiaries shall implement their acquisition and disposal of assets in accordance withtheir respective“Procedures for Acquisition or Disposal of Assets”. 2. When a subsidiary of the Company acquires or disposes of assets that require public announcement as the standards of this procedure and said subsidiary is not a domesticpublic company,the Company	Article 19: The subsidiaries’ procedures for handling acquisition or disposal of assets: 1. The Company’s subsidiaries shall implement their acquisition and disposal of assets in accordance with “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”. 2. When a subsidiary of the Company acquires or disposes of assets that require public announcement as the standards of this procedure and said subsidiary is not a domesticpublic company,the Company	To change the serial number of the article, amend the instructions of procedures, and conform to the letter (No. 1070341072)

Amended Version Original Version Reason shall proceed with the relevant public shall proceed with the relevant public dated announcement and report for the announcement and report for the November subsidiary. subsidiary. 26, 2018 The criteria of the announcement and The criteria of the announcement and issued by report applied to a subsidiary of the report applied to a subsidiary of the Financial Company, such as “paid-in capital” or Company, such as “20% of paid-in Supervisory “the total assets”, is based on the paid-in capital” or “10 % of the total assets”, is Commission capital or total assets of the Company. based on the paid-in capital or total assets 3. If the subsidiary is not a domestic public of the Company. company, such procedures shall be 3. If the subsidiary is not a domestic public approved by the subsidiaries’ Boards of company, such procedures shall be Directors the same applies when the approved by the subsidiaries’ Boards of procedures are amended. Directors; the same applies when the procedures are amended. Article 21: The relevant personnel of the Article 20: The relevant personnel of the To change Company shall follow the provisions of this Company shall follow the provisions of this the serial procedure in handling matters related to the procedure in handling matters related to the number of the acquisition or disposal of assets. In case of a acquisition or disposal of assets. In case of a article breach of the fore-mentioned Guidelines or breach of the fore-mentioned Guidelines or Procedures, the Company’s personnel in Procedures, the Company’s personnel in execution unit will be subject to penalty execution unit will be subject to penalty depending on the circumstances. depending on the circumstances. Article 22: The Procedures shall be Article 21: The Procedures shall be To change approved by the Audit Committee, the Board approved by the Audit Committee, the the serial of Directors, and the Shareholders’ Meeting; Board of Directors, and the Shareholders’ number of the the same applies when the procedures are Meeting; the same applies when the article amended. procedures are amended. When the procedures for the acquisition and When the procedures for the acquisition and disposal of assets are adopted or amended disposal of assets are adopted or amended they shall be approved by more than half of they shall be approved by more than half of all audit committee members and submitted all audit committee members and submitted to the board of directors for a resolution. to the board of directors for a resolution. If approval of more than half of all audit If approval of more than half of all audit committee members as required in the committee members as required in the preceding paragraph is not obtained, the preceding paragraph is not obtained, the procedures may be implemented if approved procedures may be implemented if approved by more than two-thirds of all directors, and by more than two-thirds of all directors, and the resolution of the audit committee shall the resolution of the audit committee shall be recorded in the minutes of the board of be recorded in the minutes of the board of directors meeting. directors meeting. The terms "all audit committee members" The terms "all audit committee members" and "all directors" in the preceding and "all directors" in the preceding paragraph shall be counted as the actual paragraph shall be counted as the actual number of persons currently holding those number of persons currently holding those positions. positions.

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RT — AGM Information 2019

52043_rns_2019-09-03_a566504f-f26d-4bcc-9f18-5c0751c6d1f3.pdf

Realtek Semiconductor Corp. 2019 Annual Shareholders’ Meeting Minutes

1. Chairman’s Remarks: Omitted.

2. Report Items:

3. Ratification Items

Resolution: The result is as follows:

Shares represented at the time of voting: 463,756,663

Proposal 2

4. Discussion Items

6. Extraordinary Motions: None.

7. Adjourment

Attachment 1

Business Report

1. 2018 Operating Results

2. 2019 Business Plan

Attachment 2

Audit Committee’s review report

Realtek Semiconductor Corporation Distribution of retained earnings

Opinion

Basis for opinion

Key audit matters

Evaluation of inventories

Description

How our audit addressed the matter

Audit of cash in banks

Description

How our audit addressed the matter

Other matter – Reference to audits of other independent accountants

Other matter – Parent company only financial reports

Responsibilities of management and those charged with governance for the consolidated financial statements

Independent accountant’s responsibilities for the audit of the consolidated financial statements

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Opinion

Basis for opinion

Key audit matters

Evaluation of inventories

Description

How our audit addressed the matter

Audit of cash in banks

Description

How our audit addressed the matter

Other matter – Reference to audits of other independent accountants

Responsibilities of management and those charged with governance for the parent company only financial statements

Independent accountant’s responsibilities for the audit of the parent company only financial statements

REALTEK SEMICONDUCTOR CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Realtek Semiconductor Corporation

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

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RT AGM Information 2019