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RT Annual Report 2023

Jun 16, 2023

52043_rns_2023-06-16_4e9989f8-946b-444e-8ffe-1bac6111d17b.pdf

Annual Report

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TSE Code: 2379

REALTEK SEMICONDUCTOR CORP. 2022 Annual Report

The annual report is available at:

  • I. Taiwan Stock Exchange Market Observation Post System: https://mops.twse.com.tw II. Realtek website for annual report: https://www.realtek.com

Printed Date: April 28, 2023

Notice to Readers:

This annual report has been prepared originally in Chinese. The English version is a direct translation of the Chinese version .

I. Spokesperson: Name: Huang, Yee-Wei Title: Vice President Deputy Spokesperson: Name: Lin, Han-Chen Title: Special Assistant to President Tel: (03) 578-0211 Email: [email protected]

  • II. Headquarters Address: No. 2, Innovation Road II, Hsinchu Science Park, Hsinchu 300, Taiwan Tel: (03) 578-0211

  • III. Transfer Agent:

Company: CTBC BANK CO., LTD. Transfer Agency Department Address: 5F., No. 83, Sec. 1, Chongqing S. Rd., Taipei City 100, Taiwan. Website: www.ctbcbank.com

Tel: (02) 6636-5566

  • IV. Auditor of the latest financial report: Auditors: Li, Tien-Yi & Cheng, Ya-Huei Company: PricewaterhouseCoopers'

Address: 5F., No. 2, Gongye E. 3rd Rd., Hsinchu Science Park, Hsinchu 300, Taiwan Website: www.pwc.com.tw

Tel: (03) 578-0205

  • V. GDR listed stock exchange and the way to search for information: Name: Luxembourg Stock Exchange

  • Please refer to the Luxembourg Stock Exchange official website for Realtek GDR Price. Website: www.bourse.lu

  • VI. Company website: www.realtek.com

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Table of Contents

Letter to Shareholders ..................................................................................................................................... 1 Company Introduction .................................................................................................................................... 4 Date of Establishment ...................................................................................................................................... 4 Company Milestones ....................................................................................................................................... 4 Corporate Governance Report ..................................................................................................................... 10 Organization .................................................................................................................................................. 10 Information of Directors and Officers ........................................................................................................... 12 Corporate Governance ................................................................................................................................... 23 Audit Fees ...................................................................................................................................................... 62 Share transfer or share pledge of Directors, Officers and major shareholders holding more than 10% shares from last year to the print date of the annual report ....................................................................................... 64 The relationship between any of the Company’s top ten shareholders: ........................................................ 65 Capital Raising ............................................................................................................................................... 67 Source of Capital ........................................................................................................................................... 67 Structure of Shareholders .............................................................................................................................. 67 Distribution of Shareholding ......................................................................................................................... 68 List of Major Shareholders ............................................................................................................................ 68 Market price, net worth, earning, dividends per common share and related information over the last two years ............................................................................................................................................................... 69 Dividend Policy and Status of Execution ...................................................................................................... 70 Status of GDR ................................................................................................................................................ 73 Operations Overview ..................................................................................................................................... 74 Business Overview ........................................................................................................................................ 74 Marketplace and Production Overview ......................................................................................................... 89 Employees ..................................................................................................................................................... 96 Environmental Expenses ............................................................................................................................... 96 Cyber security management .......................................................................................................................... 98 Financial Status, Operating Results and Status of Risk Management ................................................... 103 Financial Status ........................................................................................................................................... 103 Operational Results ..................................................................................................................................... 104 Cash Flow .................................................................................................................................................... 105 Risk Items .................................................................................................................................................... 106 Special Items ................................................................................................................................................. 109 Financial Information .................................................................................................................................. 121

Condensed balance sheet and Statement of Comprehensive Income, independent auditor’s name and audit

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opinion in the recent five years ............................................................................................................ 121
Financial Analysis in the Recent Five Years ............................................................................................... 125
Audit Committee’s Review Report ............................................................................................................. 128
Consolidated Financial Statements .............................................................................................................. 129
Parent Company Only Financial Statements ............................................................................................... 130
205

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Letter to Shareholders

1. 2022 Operating Results

After the semiconductor industry experienced a supply shortage in 2021, the end market demand weakened. In 2022 the supply chain faced inventory problems due to geopolitics, epidemics, inflation, and other major environmental factors. According to Gartner's estimate, global semiconductor industry revenue in 2022 was US$601.7 billion, an increase of a mere 1.1% compared to 2021. Analog (19% year-over-year increase) and discrete (15% year-over-year increase) components were the main growth areas, neither of which were Realtek product areas.

Despite the many challenges, Realtek, working closely with upstream suppliers and downstream customers, took it upon ourselves, with the concerted effort of all employees, to deliver an annual revenue growth. Realtek Group’s annual consolidated revenue in 2022 was NT$111.79 billion, an increase of 6.0% from the previous year; gross operating profit was NT$54.64 billion, up 2.7% from the previous year; net profit after tax was NT$16.20 billion , a drop of 3.8% from the previous year, with earnings per share of NT$31.62.

In addition to the solid operating results, Realtek has been consistently recognized in the industry for its technological innovation and execution. According to Taiwan Intellectual Property Office's 2022 Statistical Rankings for Patent Applications and Grants, Realtek ranked 7th with 332 invention applications. Our patent portfolio has also been recognized in international assessments, and Realtek was selected as one of the ‘Top 100 Global Innovators’ by Clarivate for the first time in 2022. Through continuous technological innovation, Realtek products frequently stand out in major competitions in the industry. At 2022 COMPUTEX Taipei, Realtek AI Super Resolution Fidelity Recovery IC (RTD2892NND) won the 'Golden Award' and 'Best Choice of the Year Award'; our Bluetooth Dual Mode AUDIO Watch Solution (RTL8763E) won the 'IC and Component Best Choice' Category Award. The 2.5 Gigabit Ethernet controller won the 31st Taiwan Excellence Award. Realtek's first Edge AI USB Camera Controller (RTS5863) was awarded a 2022 Innovation Product Award from Hsinchu Science Park Administration. These awards reflect Realtek's efforts and achievements in continuously breaking through technical bottlenecks and optimizing product design.

Sustainable development of the enterprise is the core belief behind Realtek's continuous improvement, with the goal of becoming a sustainable enterprise that meets the expectations of all stakeholders. We continue to pay attention to international initiatives related to corporate sustainability, define material issues, formulate short-, mid-, and long-term goals, and push through various sustainable projects by optimizing management mechanisms and effective performance evaluation. Material issues in 2022 include corporate governance and compliance, environmental sustainability and climate change response, information security, economic performance, innovative R&D and product due diligence, customer relationship management, talent attraction and development, and supplier sustainability management. In order to mitigate the climate change crisis caused by the greenhouse effect, and actively respond to the international Net Zero Initiative, Realtek has committed to achieving the major goal of net zero carbon emissions by 2050. It plans to meet the goal by reducing total carbon emissions through various energy-saving and carbon-reduction measures such as continuous development of low-carbon products, improvement of equipment energy efficiency, construction and certification of office buildings in accordance with green building standards, increased use of renewable energy, and implementation of MBO (Management by Objective) for supply chain carbon reduction.

2. 2023 Business Plan

Although the semiconductor industry is facing short-term headwinds and uncertainties, Realtek continues to optimize its product portfolio to meet the needs of various end markets, provide customers with more competitive products, and achieve the long-term goal of uninterrupted growth and continuous profitability. Looking forward into 2023, each main Business Group of Communications Network, Connected Media, Computer Peripheral, Smart Interconnect and Multimedia will respectively launch a series of new products to drive technical specification upgrades in the mainstream markets, and expand niche market applications.

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For wireless communication, Wi-Fi 6 controllers have replaced Wi-Fi 5 in the personal computer and router markets, and have become the mainstream specification. In 2023, the Wi-Fi 6 specification is expected to penetrate into new end markets, such as AR/VR, printers, and consumer electronics, thereby further boosting the revenue contribution of Wi-Fi 6 and Wi-Fi 6E. Meanwhile, Wi-Fi 7 is becoming a highly contested newgeneration specification for Wi-Fi applications. Realtek plans to launch the first generation Wi-Fi 7 products in 2023, with PCs as the first target market for 2024 mass production by key OEM customers.

With respect to IoT applications, Realtek continues to actively cooperate with IoT-related organizations and standard-setting companies to release the first generation of products in step with major customers. Additional new products will be released in 2023 to facilitate a complete smart home environment. Regarding Bluetooth chips, Realtek's new-generation Bluetooth 5.2 BLE Audio solutions have successfully entered the low-latency gaming headset/smartwatch with Bluetooth calling function markets, thereby gradually expanding its applications in the Bluetooth audio market. The BTNIC and BLE SoC Bluetooth series products also continue to develop the remote controls and wearable market while actively expanding new application markets, aiming at Electronic Shelf Labels (ESL), industrial applications, medical, and automotive markets to provide cross-field and diverse solutions for various customers.

In Ethernet, Realtek's 2.5GbE products have become the standard specification for flagship motherboards. They have also expanded to mid-to-high-end PC models, and have penetrated into the accessory market for switches and network interface extensions. To meet the highly digitalized market demand in the postpandemic era, in 2023 Realtek will launch a higher-speed 5GbE Ethernet solution to provide more flexible choices for customers in different market segments.

For Ethernet switches, Realtek's Layer 3 managed switch products benefited from the substantial increase in demand for network communication equipment, and have been adopted by key customers. At the same time, PSE (Power Sourcing Equipment) products have also successfully entered the supply chain of major customers. With the gradual increase in Wi-Fi 6 penetration and the infrastructure upgrade of telecom operators in various countries in the past few years, Realtek's 5-port Gb Ethernet switch and PON product lines have achieved success. It is expected that 2.5 Gb Ethernet switches will gradually replace existing Gb Ethernet switches in 2023. The future goal is to strengthen the depth and breadth of the product portfolio to provide complete and competitive solutions in all areas of the market.

Automotive Ethernet has become the backbone of the automotive in-vehicle network, and Realtek has become one of the primary suppliers of automotive Ethernet. In order to support the needs of future intelligent networked vehicles, Realtek is investing resources to develop a new generation of physical layer chips that support the new 2.5GBASE-T1 standard, and to incorporating data security protection and support for high bandwidth interfaces into our product planning. It is expected that business revenue and market share will grow steadily.

As for Computer Peripheral and Smart Interconnect products, after the supply problems of relevant components gradually subsided in the first half of 2022, high inventory became a major challenge in the second half of the year due to a sharp fall in end market demand under an adverse overall environment. In the face of a market downturn, Realtek continued to improve and develop new generations of products in anticipation of a market rebound. Building on the AI Audio noise cancellation algorithm that has been well received by the market over the past two years, Realtek's new generation of products comprehensively improve the user experience of PCs, conference devices, and live broadcast devices while extending the application field from meetings to content creators. At the same time, in response to possible future PC audio interface specification changes, Realtek continues to actively participate in specification definition, and plans a complete product portfolio so that customers can switch specifications smoothly.

In terms of image signal processing ICs, Realtek, driven by the trend to high resolution, high image quality, and intelligence, has launched the world's first and only USB camera solution that integrates edge

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computing, and has strategically cooperated with major PC makers to deliver an HPD (Human Presence Detection) solution that supports 5MP with an expected launch date in the first half of 2023. As PC applications are concerned more and more about low power consumption and security, Realtek developed a highly integrated, low power embedded system controller chip with a high-end MCU and more memory than competitors, using an advanced manufacturing process with a built-in full hardware encryption engine. It meets the need for power saving and security at the same time. With the increasing popularity of the USB Type-C specification, this solution can provide customers with more comprehensive and better power control and data transmission solutions.

In terms of multimedia products, to meet the high-quality requirements of high-end 4K/8K TVs, Realtek has developed an AI super-resolution fidelity recovery single chip, which uses a neural network to identify image scenes and objects, dynamically and instantly removes innate noise in the picture, suppresses distortion, and enhances original low-resolution images to 4K/8K high-resolution images. This innovative technology won the 2022 COMPUTEX Taipei 'Golden Award' and ‘Best Choice of the Year Award'. Following the trend to network streaming media, and responding to changes in consumers' viewing habits that demand higher content quality, Realtek has developed a new generation of set-top box solutions that integrate High Dynamic Range, 3D audio, and a new generation of coding technology. These solutions, complete with a cost-competitive, low-power software-hardware reference design, can assist customers in developing high-performance set-top boxes.

In the LCD monitor field, Realtek continues to lead the industry in delivering various high-speed interface specifications, enabling high resolution, high dynamic range, high frame rate, wide color gamut, and true color reproduction, thereby providing customers with the widest product choice.

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

Semiconductor markets in the short term are facing challenges such as end market demand and inventory adjustment, impacted by geopolitics, pandemics, and inflation. Nevertheless, with the continuing advancement in Internet, artificial intelligence, and automotive applications, there are ample opportunities and room for growth in the medium and long term. Realtek actively practices sustainable corporate development, strengthens corporate governance, enhances product core technology competitiveness, builds a sustainable supply chain, and deepens mutual trust and partnership with customers to grow with them hand in hand, thereby continuously heightening shareholder value.

We want to thank all shareholders for your ceaseless care and support. We also wish you health and success in the future.

Chairman: Chiu, Sun-Chien President: Yen, Kuang-Yu Controller: Chang, Jr-Neng

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Company Introduction

I. Date of Establishment

Realtek Semiconductor Corporation (‘the Company’) was incorporated on October 21, 1987, and debuted on the Taiwan Stock Exchange in October 1998. It is headquartered in Taiwan and it has sales or R&D teams in China, Singapore, the United States, Japan, and South Korea.

II. Company Milestones

  • 1987/10 The Company is incorporated. 1988/04 The Company’s Taipei office is established. 1991/12 The Pocket Ethernet Controller receives an Innovative Technology Award from the Hsinchu Science Park Administration.

  • 1993/12 The High-Performance Window Accelerator Chip receives an Innovative Product Award from the Hsinchu Science Park Administration.

  • 1995/02 The Full Duplex Plug-and-Play Ethernet Controller receives a Product Innovation Award from EDN Asia.

  • 1996/12 For its extensive R&D initiatives and achievements, the Company receives an R&D Participation Award from the Hsinchu Science Park Administration.

  • 1997/06 The Single-Chip Fast Ethernet Controller receives a Best Component Award and a Best Product Award at Computex Taipei 1997.

  • 1997/09 The Company is listed in Gre Tai Securities Market (Taipei Exchange). 1997/11 The Single-Chip Fast Ethernet Controller receives a New Product Development Award from the Industrial Development Bureau, Ministry of Economic Affairs.

  • 1998/10 The Company debuts on the Taiwan Stock Exchange.

  • 1998/12 For the fourth consecutive year, the Company receives an R&D Participation Award from the Hsinchu Science Park Administration.

  • 1999/12 The 4-Port Fast Ethernet Transceiver receives an innovative technology R&D grant from the Hsinchu Science Park Administration.

  • 2000/05 For the first time, the Company issues unsecured convertible bonds; the total value is NT$1.4 billion.

  • 2000/08 For its outstanding R&D achievements, the Company receives a Most Outstanding Award at the Ministry of Economic Affairs’ 8[th] Industrial Technology Development Awards.

  • 2001/12 The Multi-mode Single-Chip 10/100M Fast Ethernet Controller SoC receives a Component Design Award from EDA Asia Magazine .

  • 2002/01 For the first time, the Company issues Overseas Depositary Receipts; the total value is US$240,180,375.

  • 2002/06 The ALC650 6-Channel Audio Codec receives a Best Choice Award at Computex Taipei 2002.

  • 2002/11 The Company ranks among the Global Top 10 Electronic Component Providers by Taiwan’s Micro-Electronics Magazine .

  • 2003/10 For the second consecutive year, the Company ranks among the Forbes Global 200 Best Small Companies.

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2003/10 The RTL8169S/RTL8110 Single-Chip Gigabit Ethernet Controller receives an
Innovative Product award from the Hsinchu Science Park Administration.
2004/03 The PCI Express Single-Chip Gigabit Ethernet Controller receives an innovation
R&D grant for NT$3 million from the Hsinchu Science Park Administration.
2004/06 The Dual-Band Triple-Mode WLAN Chipsets RTL8185L and RTL8255 receive a
Best Choice Award at Computex Taipei 2004.
2004/09 The reference designs of the IEEE802.11a/b/g WLAN Chipsets RTL8185L and
RTL8255 pass the Wi-Fi Alliance’s WPA2 (Wi-Fi Protected Access 2) testing and
become the golden test bed.
2004/10 The Dual-Band Triple-Mode WLAN Chipset receives an Outstanding IT
Application/Product Award from the committee for Taiwan Information
Technology Month.
2004/12 The WLAN Chipsets RTL8187L and RTL8255 receive an Innovative Product
Award from the Hsinchu Science Park Administration.
2004/12 The Company receives an R&D Accomplishment Award from the Hsinchu
Science Park Administration.
2005/03 The Company unveils the ALC882 7.1+2 Channel High Definition Audio Codec.
2005/06 The Company celebrates the grand opening of its new building on Innovation Rd.
II in Hsinchu Science Park.
2005/08 The Company releases the RTS5111, the world’s first USB 2.0 All-in-One Card
Reader Controller with Integrated 5V/3.3V Regulator and Power MOSFET.
2005/11 For its substantive R&D achievements, the Company receives another R&D
Accomplishment Award from the Hsinchu Science Park Administration.
2006/03 The Company releases a new generation of High Definition Audio codecs, the
ALC885 and ALC888 Telecom.
2006/03 The ALC888 Telecom receives a Technology Innovation Accelerated Award for
the ‘Digital Office’ platform at the 2006 Intel Developer Forum.
2006/08 The Company passes ISO 14001 Environmental Management Systems
certification.
2006/10 The Company celebrates its 20thanniversary.
2006/12 The ALC888 Telecom receives an Innovative Product Award from the Hsinchu
Science Park Administration.
2006/12 For the third consecutive year, the Company receives an R&D Accomplishment
Award from the Hsinchu Science Park Administration.
2007/01 At an extraordinary shareholders’ meeting, shareholders approved a capital
reduction of NT$4,180,701,000 (each share qualified for a rebate of approximately
NT$5); the reduction ratio is 50%.
2007/06 The RTL8111C PCI Express Single-Chip Gigabit Ethernet Controller receives a
Best Choice Award at Computex Taipei 2007.
2007/07 The Company releases the RTL8366S and RTL8366SR low power, highly
integrated 6-Port Gigabit Ethernet Switch Controller Single-Chip solutions
featuring patented Green Ethernet technology.
2007/10 The Company releases the RTS5161/68/69, the world’s first multi-function card
reader controller to integrate a NAND flash card reader, a smart card reader, a
fingerprint reader, and an IR receiver.

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2007/10 The Company releases the ALC269, which is the first HD Audio Codec to integrate
a 2W Class D Amplifier and the latest low power specifications. The device
represents a breakthrough in reducing the power consumption of laptop computers.
2007/11 The Company releases the ALC889 HD Audio Codec, which features a Signal-to-
Noise Ratio (SNR) of 108dB and is the only HD Audio Codec to have full rate
Blu-Ray DVD playback.
2007/12 The RTL8111C-GR PCI Express Gigabit Ethernet Controller receives an
Innovative Product Award from the Hsinchu Science Park Administration.
2007/12 For the fourth consecutive year, the Company receives an R&D Accomplishment
Award from the Hsinchu Science Park Administration.
2008/05 The Company demonstrates a series of Networked Multimedia SoC solutions at
Computex Taipei 2008.
2008/06 The RTD2485D All-in-One LCD Monitor Controller receives a Best Choice
Award at Computex Taipei 2008.
2008/09 The Company releases the RTL8191S and RTL8192S, the world’s smallest, most
energy efficient 802.11n WLAN IC Single-Chip solutions. They are the first
controllers to integrate MAC/BB/RF with an embedded power amplifier,
EEPROM, and switching regulators.
2008/10 The RTL8366SR 5+1-Port Gigabit Ethernet Switch Controller Single-Chip
receives a 2008 EDN China Innovation Award.
2008/12 The RTD2485D All-in-One LCD Monitor Controller receives an Innovative
Product Award from the Hsinchu Science Park Administration.
2009/08 The Company receives a 2009 National Invention and Creation Award.
2009/10 The Company releases the RTL8111E, the first Gigabit Ethernet Controller SoC to
use the IEEE 802.3az standard.
2009/10 The RTD1073 Full-HD Digital Media Processor receives a 2009 EDN China
Innovation Award.
2009/11 The RTD1073/1283 Full-HD Digital Media Processor receives a 2009 Outstanding
IT Application/Product Award.
2009/11 The RTL8111DP-GR PCI Express Gigabit Ethernet Management Controller
receives a 2009 Innovative Product Award from the Hsinchu Science Park
Administration.
2009/11 The Company receives the International Exchange and Cooperation Award from
the Hsinchu Science Park Administration.
2009/11 The Company receives the 2009 R&D Accomplishment Award from the Hsinchu
Science Park Administration.
2010/01 At the 2010 CES, the Company demonstrates industry-leading Green Ethernet
power-savings technology, including the IEEE 802.3az Ethernet Single-Chip and
Switch Controller, as well as the world’s most energy efficient power-over-USB
2x2 802.11n Wireless Router using the Company's Green WLAN technology.
2010/06 The ALC899-GR High Fidelity PC Audio Codec receives a Best Choice Award at
Computex Taipei 2010.
2010/06 The RTL8111E Single-Chip Gigabit Ethernet Controller receives a Best Choice
Award at Computex Taipei 2010.

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2010/12 The RTL8111E Single-Chip Gigabit Ethernet Controller receives a 2010
Outstanding IT Application and Products Award.
2010/12 The RTL8367M 7-Port Gigabit Ethernet Switch Controller receives a 2010
Innovative Product Award from the Hsinchu Science Park Administration.
2010/12 The Company receives a 2010 Science Park R&D Accomplishment Award.
2011/10 The Company receives the 1stTaiwan Green Classics Award, hosted by the Bureau
of Foreign Trade, Ministry of Economic Affairs.
2011/12 The Company receives an Industrial Sustainable Excellence Award from the
Industrial Development Bureau, Ministry of Economic Affairs.
2011/12 The Company receives a National Industrial Innovation Award – Outstanding
Enterprise Innovation Award from the Department of Industrial Technology,
Ministry of Economic Affairs.
2011/12 The Company receives a 2011 Science Park R&D Accomplishment Award.
2012/12 The ALC5642 Hi-Fi Audio Integrated with Voice/Sound DSP and Codec Single-
Chip receives a 2012 Innovative Product Award from the Hsinchu Science Park
Administration.
2012/12 The Company receives a 2012 Science Park R&D Accomplishment Award.
2013/06 The RTD2995 4K2K UHD Smart TV SoC receives a Best Choice Golden Award
at Computex Taipei 2013.
2013/11 The RTL8153 Low Power USB 3.0-to-Gigabit Ethernet Controller receives a
2013 EDN China Innovation Award.
2013/12 The RTD2995 4K2K UHD Smart TV SoC receives a 2013 Innovative Product
Award from the Hsinchu Science Park Administration.
2014/06 The RTL8118AS Ultra Low Power Gaming NIC receives a Best Choice Green
ICT Award at Computex Taipei 2014.
2014/06 The RTL8881A AP/Router Network Processor SoC (with 11ac Wi-Fi) receives a
Best Choice Award (in Communication) at Computex Taipei 2014.
2015/04 The Company’s subsidiary Realtek Singapore Pte Ltd. acquires 100% equity
interest of Cortina Access, Inc. and its subsidiaries.
2015/06 The RTL8195AM Low Power Wi-Fi IoT SoC receives a Best Choice Golden
Award at Computex Taipei 2015.
2015/12 The RTD2999 4K Ultra-High Picture Quality Smart TV SoC receives a 2015
Innovative Product Award from the Hsinchu Science Park Administration.
2016/06 The RTL8762A Bluetooth Low Energy SoC receives a Best Choice Golden
Award at Computex Taipei 2016.
2016/06 The RTS5421 USB 3.1 Type-C Hub receives a Best Choice Golden Award at
Computex Taipei 2016.
2016/12 The Company receives a 2016 Science Park R&D Accomplishment Award.
2016/12 The RTL9020AA Automotive Camera SoC Integrated with Audio/Video
Processor and Ethernet receives a 2016 Innovative Product Award from the
Hsinchu Science Park Administration.
2017/06 The RTL9047A Automotive Ethernet Switch Controller receives a Best Choice
Award in the Car Electronics category at Computex Taipei 2017.
2017/06 The RTL8771B Low Power Wearable GNSS Receiver receives a Best Choice
Award in the Mobile & Wearables category at Computex Taipei 2017.

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2017/06 The world’s most energy efficient Bluetooth 5 Dual Mode Audio SoC, the
RTL8763B, receives a Best Choice Award in the IC & Components category at
Computex Taipei 2017.
2017/06 The RTL8117 Personal Cloud IC Solution receives a Best Choice Award: the
Jury’s Special at Computex Taipei 2017.
2017/11 The Communications Network Group’s CN3 Wi-Fi R&D team receives a 2017
Outstanding Technology Management Award.
2018/05 The Company releases the world’s first 2.5G Ethernet Controller SoC for
multiple applications, including gaming.
2018/06 The RTL8715A Highly Integrated, Ultra-Low-Power Wi-Fi IP Camera SoC
receives a Best Choice Award in the IoT Applications category at Computex
Taipei 2018.
2018/06 The RTL8762C Bluetooth 5 Low Energy SoC receives a Best Choice Award in
the IC & Components category at Computex Taipei 2018.
2018/06 The ALC5520 Multi-Mic Far-Field Speech Recognition Enhanced SoC solution
receives a Best Choice Golden Award at Computex Taipei 2018.
2018/06 The Company receives an Asia Responsible Entrepreneurship Award.
2018/12 The ALC5520 Multi-Mic Far-Field Speech Recognition Enhanced SoC solution
receives a 2018 Innovative Product Award from the Hsinchu Science Park
Administration.
2019/06 The RTD2893 8K Video Decoder and Processing IC receives the Best Choice of
the Year/Golden Award at Computex Taipei 2019.
2019/06 The RTL8773B Bluetooth 5 ANC Smart Headset SoC receives a Best Choice
Golden Award at Computex Taipei 2019.
2019/06 The RTL8722DM Ameba D: Ultra-Low-Power Versatile IoT Solution wins a
Best Choice IoT Category Award at Computex Taipei 2019.
2019/12 The RTD2893 8K Video Decoder and Processing IC receives a 2019 Innovative
Product Award from the Hsinchu Science Park Administration.
2019/12 The Company receives a 2019 Science Park R&D Accomplishment Award for
overall R&D results.
2020/12 The RTL8156B 2.5G USB Ethernet controller with world’s smallest form factor
& lowest power receives a 2020 Innovative Product Award from the Hsinchu
Science Park Administration.
2020/12 The Company receives a 2020 Hsinchu Science Park R&D Accomplishment
Award for overall R&D results.
2021/5 The New Generation Gaming Network Total Solution 2.5GbE Gaming NIC with
‘Dragon Feature’ + Wi-Fi 6 & Intelligent Switch (RTL8125BG + RTL8852AE &
RTL9313 + RTL8221B) wins a d&i award at Computex Taipei 2021.
2021/7 The Automotive Ethernet Switch IC (RTL9075AAD/RTL9072AAD) receives a
Best Choice Golden Award at Computex Taipei 2021.
2021/7 The RTS3916N Low Power AI IP Camera SoC receives a Best Choice AI, Big
Data & Cloud Computing Category Award at Computex Taipei 2021.
2021/9 The Company wins the 2021 Asia Responsible Enterprise Award.
2022/4 The Company is recognized in the Clarivate Top 100 Global Innovators 2022 list.
2022/5 The RTL8763E Bluetooth Dual Mode Audio Watch Solution receives a Best
Choice IC and Component Category Award at Computex Taipei 2022.

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2022/5 The RTD2892NND AI Super Resolution Fidelity Recovery IC receives the Best
Choice of the Year/Golden Award at Computex Taipei 2022.
2022/11 The Realtek 2.5 Gigabit Dragon Bandwidth-Optimized Ethernet Controller
Solutions (RTL8125BG + RTL8156BG) receive a Taiwan Excellence Award
2022.
2022/12 The RTS5863 Edge AI USB Camera Controller receives a 2022 Innovative
Product Award from the Hsinchu Science Park Administration.

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Corporate Governance Report

I. Organization

  1. Organizational Structure

==> picture [513 x 372] intentionally omitted <==

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2. Responsibilities of Main Departments

Department KeyResponsibilities
Chairman’s Office Reviews the Company’s operations and implementation of resolutions made by shareholders’
meetings and the Board of Directors;Companyaudits.
President’s Office Plans and executes the Company’s operational strategies and analysis; carries out Board of
Directors’ resolutions, investment assessments, PR statements, legal and patent affairs, and
international marketing.
Communications
Network Business
Group		 Manages communications network product R&D, planning and marketing.
Computer Peripheral
Business Group		 Manages computer peripheral product R&D, planning and marketing.
Multimedia Business
Group
Manages multimedia product R&D, planning and marketing.
Connected Media
Business Group		 Manages connected media product R&D, planning and marketing.
Smart Interconnect
Business Group		 Manages smart interconnect product R&D, planning and marketing.
R&D Center Plans new products, develops and designs relevant core technologies, and manages circuit
layouts.
Corporate
TechnologyCenter		 Oversees the planning, research and service of all advanced technologies needed in the
Company’sproduct development.
Intelligent Decision
Research Center		 Oversees big data analytics.
Supply Management
Center
Oversees raw materials, warehousing, materials control, procurement, IC manufacturing and
testing,and testingequipment maintenance.
Quality Management
Division
Oversees product quality control and reliability engineering.
Finance Division Oversees finance,accounting,and stock affairs.
Information
Technology
Division		 Oversees information management and computer systems integration and applications.
Administration
Division		 Oversees general affairs, factory administration, and human resources.
Occupational Safety
& Health Center		 Oversees occupational safety and health.

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April 8, 2023 Managers or Directors who are spouse or
within second-degree relatives to each
other		 Relation - - Brother - Brother - - - - - Note 1: Director Yeh, Nan-Horng did not serve as a director of the company from 2005.05.20 to 2009.06.04.
Note 2: Director Tsai, Tyau-Chang served as a director/supervisor of the company from 2006.06.12 to 2018.06.04, and did not serve as a director of the company from 2018.06.05 to 2021.08.08.
Name - - Yeh, Po-Len - Yeh, Nan-
Horng		 - - - - -
Title - - Director - Director - - - - -
Current Positions at the Company and other companies NA Chief Executive Officer of Realtek Semiconductor Corp.
Chairman/Director of Realtek Semiconductor Corp. affiliates		 Vice Chief Executive Officer & Chief Financial Officer of
Realtek Semiconductor Corp.
Director/Supervisor of Realtek Semiconductor Corp.
affiliates		 NA Director of Yihong Investment Co., Ltd.
Chairman of Zu Yuan Industries Co., Ltd.
Director of Cotek Pharmaceutical Industry Co., Ltd.
Director of Novasiot (Shanghai) Co., Ltd.		 NA Chairman/Director of Realtek Semiconductor Corp.affiliates President of Realtek Semiconductor Corp.
Director of Realtek Semiconductor Corp.affiliates		 Chief Operating Officer of Realtek Semiconductor Corp.
Chairman/Director of Realtek Semiconductor
Corp.affiliates		 None CEO of Creative Education and Management Foundation
Chairman of EZTravel Travel Service Co., Ltd.
Chairman of You Hsin Creative Co., Ltd.
Chairman of Eland Technologies Co., Ltd.
Chairman of Eland Information Co., Ltd.
Chairman of Cyberccn Com Co., Ltd.
Director of Wu Global Holdings Limited (BVI)		 Director of Ming-Der Senior High School
Chairman of Jhang Huei Co., Ltd
Johnson Law office Lawyer		 Investment Vice President of De Jie Investment
Co., Ltd.
Representative of juristic person director of
Biofity Pharmaceuticals Inc.
Selected Education & Experience NA M.S. in Electrical Engineering, National Taiwan
University		 MBA(Master of Business Administration), The City
University of New York, USA.		 NA MBA(Master of Business Administration) ,Washington
University in St. Louis, USA.		 NA MSc. & Ph.D. in Material Engineering,
Loughbourough University of Technology, United Kingdom		 M.S. in Communications Engineering , National Chiao Tung
University		 M.S. in Electrical Engineering, State University of New York,
USA		 Open Junior College M.A. in Journalism, National Chengchi University Bachelor degree in College of Law, National Taiwan
University		 Master Degree in Business Administration, National Taiwan
University
Shareholding
by Nominee
Arrangement		 % - - - - - - - - - - - - -
Share - - - - - - - - - - - - -
Spouse & Minor
Shareholding		 % - 0.00% - - - - 0.04% 0.00% 0.02% 1.28% - - -
Share - 1,384 - - - - 208,398 4,000 79,625 6,569,949 - - -
Current Shareholding % 0.64% 0.17% 0.01% 4.32% - 0.01% 0.45%
0.00%
0.01%		 1.23% - - -
Share 3,265,954 883,831 40,686 22,146,604 - 66,000 2,323,899 23,948 42,205 6,308,389 - - -
Shareholding When Elected % 0.64% 0.17% 0.01% 4.34% - 0.01% 0.43%
0.00%
0.01%		 1.24% - - -
Share 3,265,954 892,831 40,686 22,146,604 - 66,000 2,223,899 23,948 42,205 6,308,389 - - -
Date First
Elected		 2021.08.09 2000.06.09 2006.06.12 2015.06.09 1994.04.02
(Note 1)		 2015.06.09 1991.06.26 2021.08.09 2018.06.05 1991.06.26 2015.06.09 2006.06.12
(Note 2)		 2021.08.09
Term
of
Office		 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years
Date
Elected		 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09 2021.08.09
Gender
Age		 - Male
51~60		 Male
51~60		 - Male
61~70		 - Male
61~70		 Male
51~60		 Male
51~60		 Female
61~70		 Male
61~70		 Male
81~90		 Male
51~60
Name United Glory Co.,
Ltd.		 United Glory Co.,
Ltd.
Representative:
Chiu, Sun-Chien
United Glory Co.,
Ltd.
Representative:
Chern, Kuo-Jong		 Cotek
Pharmaceutical
Industry Co., Ltd.
Cotek
Pharmaceutical
Industry Co., Ltd.
Representative:
Yeh, Nan-Horng		 Sonnen Limited Sonnen Limited
Representative:
Yeh, Po-Len		 Yen, Kuang-Yu Huang, Yung-Fang Ni, Shu-Ching Chen, Fu-Yen Tsai, Tyau-Chang Lo, Chun-Pa
Nationality
/ Country
of Origin		 Belize ROC ROC ROC ROC BVI ROC ROC ROC ROC. ROC ROC ROC
Title Director Chairman Vice
Chairman		 Director Director Director Director Director Director Director Independent
Director		 Independent
Director		 Independent
Director

-12-

April 8, 2023

Table I: The major shareholders of institutional shareholders


April 8, 2023
Institutional Shareholders Major Shareholders of Institutional Shareholders
Cotek Pharmaceutical Industry Co., Ltd. De Tao Venture Capital Corp. (shareholding: 20%)
Hi-Xuan Co., Ltd. (shareholding: 26.672%)
Infinite Global Company (shareholding: 26.664%)
Yihong Investment Co., Ltd. (shareholding: 26.664%)
Sonnen Limited Yeh, Yen-Hsi (shareholding: 100%)
United Glory Co., Ltd. Target Way Co., Ltd. (shareholding: 100%)

Table II: The major shareholders of the major shareholders of institutional shareholders in Table I

April 8, 2023

April 8, 2023
Shareholder Major Shareholders Holding
Target Way Co., Ltd. Chun Mei Chen De Chang (shareholding: 100%)

-13-

-13-

1.1 Disclosure of professional qualifications of directors and independent status of independent directors

Criteria
Name		 Professional qualifications and
experience (Note1)		 Independent Status (Note2) Number of
other public
companies
concurrently
serving as an
independent
director
United Glory Co., Ltd.
Representative:
Chiu, Sun-Chien		 Business management, strategic planning, leadership
and decision-making, international marketing,
technologyresearchand development		 - 0
United Glory Co., Ltd.
Representative:
Chern,Kuo-Jong		 Business management, strategic planning, leadership
and decision-making, accounting and financial
analysis		 - 0
Cotek Pharmaceutical
Industry Co., Ltd
Representative:
Yeh, Nan-Horng		 Business management, strategic planning, leadership
and decision-making		 - 0
Sonnen Limited
Representative:
Yeh,Po-Len		 Business management, strategic planning, leadership
and decision-making		 - 0
Yen, Kuang-Yu Business management, technology research and
development, sales andmarketing		 - 0
Huang, Yung-Fang Business management, technology research and
development, sales andmarketing		 - 0
Ni, Shu-Ching Business management, accounting and financial
analysis		 - 0
Chen, Fu-Yen Business management, strategic planning Please refer to statement of note 2. 0
Tsai, Tyau-Chang Legal profession, crisis management 0
Lo, Chun-Pa Business management, accounting and financial
analysis(Note 3)		 0

Note 1: Directors of the company are not of any conditions defined in Article 30 of the Company Act.

  • Note 2: (1) Whether the person, the person’s spouse, or relatives within the second degree serve as directors, supervisors, or employees of the company or its affiliated companies: none;

    • (2) The shareholding numbers and proportion by the person, the person’s spouse, or relatives within the second degree: 0;

    • (3) Whether the person serves as a director, a supervisor or an employee of a company with specific relationship to the company: none;

    • (4) The amount of remuneration received for providing business, legal, financial, accounting and other services to the company or its affiliates in recent two years: 0.

  • Note 3: Audit committee members with accounting or financial expertise shall state their accounting or financial background and work experience: Please refer to page 11, information of independent directors, for the selected education & experience, and current positions at the company and other companies.

  • 1.2. Diversity and Independence of the Board

  • (1) Diversity of the board of directors: The diversity policy for the Company’s board members is as follows:

    • The structure of the Company's board of directors shall be determined by choosing an appropriate number of board members in consideration of business scale, the shareholdings of major shareholders, and practical operational needs. The composition of the board of directors shall be determined by taking diversity into consideration. An appropriate policy on diversity based on the company's business operations, operating dynamics, and long-term development needs shall be formulated and include, without being limited to, the following two general standards:

    • Basic requirements and values: gender, age, nationality, and culture.

    • Professional knowledge and skills: a professional background (e.g., law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience.

    • All members of the board shall have the knowledge, skills, and experience necessary to perform their duties. To achieve the ideal goal of corporate governance, the board of directors shall possess the following abilities:

    • Ability to make operational judgments.

    • Ability to perform accounting and financial analysis.

    • Ability to conduct management administration.

    • Ability to conduct crisis management.

    • Knowledge of the industry.

    • International market perspective.

    • Ability to lead.

    • Ability to make policy decisions.

-14-

-14-

There are ten directors, three of them are independent directors, for the Company. Each director has his or her own professional background, including business management, leadership decision, industry knowledge, financial accounting, international marketing, etc.

The specific management objectives of the Company's board member diversity policy are that each of the eight abilities that the board of directors shall possess is at least possessed by five directors, and at least four of the eight abilities are possessed by individual board member. The management objective of diversity policy is reached by the Company's current board of directors and all individual board members.

Please refer to page 11 and page 35 note 1 for the information of individual board member and abilities possessed by individual board member of the Company.

  • (2) Independence of the board of directors: The Company has 3 independent directors, accounting for 3/10 of the board of directors.

The board of directors of the Company meets the following independence criteria:

  1. Each director is not a family member of senior management who is employed by the Company or by a subsidiary of the Company

  2. Each director is not (and is not affiliated with a Company that is) an adviser or consultant to the Company or a member of the Company's senior management.

  3. Each director is not affiliated with a significant supplier of the Company.

  4. Each director does not have any personal services contract with the Company or a member of the Company's senior management.

  5. Each director is not affiliated with a not-for-profit entity that receives significant contributions from the Company.

  6. Each director has not been a partner or employee of the Company's external auditor during the past three years.

  7. Each director does not have any other conflict of interest that the board of directors determines to mean he or she cannot be considered independent.

  8. The board of directors complies with the provisions of Article 26-3, Items 3 and 4 of the Securities and Exchange Act. Only director Ye, Po-Len and director Ye, Nan-Horng are relatives within the second degree.

  9. Each independent director meets the provisions of Article 3, Item 1 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.

-15-

-15-

April 8, 2023 Managers who are spouse or
second-degree relative		 Relation
-
-
-
-
-
-
-
-
-
-		 -16-
Name
-
-
-
-
-
-
-
-
-
-
Title
-
-
-
-
-
-
-
-
-
-
Current Positions at other companies Chairman/Director of Realtek Semiconductor Corp.affiliates
Director/Supervisor of Realtek Semiconductor Corp. affiliates
Director of Realtek Semiconductor Corp.affiliates
Chairman/Director of Realtek Semiconductor Corp.affiliates
Chairman of Realtek Semiconductor Corp.affiliates
Director of Realtek Semiconductor Corp.affiliates
None
Chairman of Realtek Semiconductor Corp.affiliates
Director of Compal Broadband Networks Inc.
Director of C-Media Electronics Inc.
Director/Supervisor of Realtek Semiconductor Corp. affiliates
Director of Greatek Electronics Inc.
None
Selected Education & Experience M.S. in Electrical Engineering, National
Taiwan University
MBA(Master of Business
Administration), The City University of
New York, USA
M.S. in Communications Engineering ,
National Chiao Tung University
M.S. in Electrical Engineering, State
University of New York, USA
Ph.D. in Chemical Engineering,
Kansas State University, USA
M.S. in Electrical Engineering, National
Taiwan University
B.S in Electronics Engineering,
National Chiao Tung University
M.S. in Electrical Engineering, National
Taiwan University
MBA(Master of Business
Administration), National Chengchi
University
M.A. in Accounting, National Taiwan
University
Ph.D. in Communications Engineering,
National Chiao Tung University
Shareholding by
Nominee
Arrangement
%
-
-
-
-
-
-
-
-
-
-
-

Total
-

-

-

-

-

-

-

-

-

-

-
Spouse &
Minor
Shareholding
%
0.00%
0.00%
0.00%
0.02%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

Total
1,384
0
4,000
79,625
0
0
0
0
0
0
0
Shareholding %
0.17%
0.01%
0.00%
0.01%
0.04%
0.01%
0.02%
0.00%
0.00%
0.01%
0.00%
Total
883,831
40,686
23,948
42,205
188,560
33,000
110,267
74
0
35,045
1,234
Date
Appointed
(Note)
1999.07.01
2002.03.28
2017.10.30
2015.04.27
2014.03.24
2017.03.13
2017.03.13
2017.10.30
2020.07.31
2007.03.16
2021.07.23
Gender
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Male
Name
Chiu, Sun-
Chien
Chern, Kuo-
Jong
Yen, Kuang-
Yu
Huang, Yung-
Fang
Huang, Yee-
Wei
Lin, Ying-Hsi
Chang, King-
Hsiung
Tsai, Jon-Jinn
Wang,Po-Chih
Chang, Jr-Neng
Shen, Jia-Ching
Nationality
ROC
ROC
ROC
ROC
ROC
ROC
ROC
ROC
ROC
ROC
ROC
Title
CEO
Vice CEO
& CFO
President
COO
Vice
President
Vice
President
Vice
President
Vice
President
Vice
President
Vice
President
Vice
President

-16-

Managers who are spouse or
second-degree relative		 Relation
-
-		 -
Name
-
-		 -
Title
-
-		 -
Current Positions at other companies None
None		 None
Selected Education & Experience M.E.S. in Computer and
Communication Engineering,
Queensland University of Technology
Ph.D. in Communications Engineering,
National Taiwan University		 M.S. in Electrical and Control
Engineering, National Chiao Tung
University
Shareholding by
Nominee
Arrangement
%
-
-		 -

Total

-

-
-
Spouse &
Minor
Shareholding
%
0.00%
0.00%		 0.00%

Total
292
0		 0
Shareholding %
0.00%
0.00%		 0.00%
Total
5,000
99		 6,776
Date
Appointed
(Note)
2021.07.23
2022.10.28		 2023.02.24
Gender
Male
Male		 Male
Name
Lee, Shang-Ta
Weng, Chi-
Shun		 Su, Chu-Ting
Nationality
ROC
ROC		 ROC
Title
Vice
President
CISO		 Vice
President

-17-

2022 / Unit: NT$K Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 Remuneration
from investee
business other
than
subsidiaries or
from parent
company
None		 None None None Note 1: The relevant compensation of 2,032 thousand dollars for the drivers is not included.
Note 2: In addition to the above remuneration, the remuneration received by the directors of the Company in the recent year for providing services to all companies included in the financial report
(such as serving as a non-employee consultant for the parent company / all companies included in the financial report / investee companies, etc.): 0.
Note 3: The Company's independent directors' remuneration includes directors' remuneration and business expenses. Directors' remuneration is determined by remuneration committee with reference
to the industry's usual level of payment, and considerations of the performance evaluation results of the board of directors, individual board members, and functional committees, the time
spent, and the responsibilities undertaken, etc. After evaluation of the relevance of individual performance and business performance and future risks, a proposal is submitted to the board of
directors for discussion and approval.
Amount of Total
Remuneration
(A+B+C+D+E+F
+G) and
Proportion to Net
Income (%)		 Consolidated
Entities

521,802
3.22%		 6,432
0.04%
REALTEK
521,802
3.22%		 6,432
0.04%
Remuneration from concurrent position as employee Profit distribution for
employee compensation
(G)		 Consolidated
Entities		 Stock
0		 0
Cash
184,330		 0
REALTEK Stock

0		 0
Cash
184,330		 0
Pension
(F)		 Consolidated
Entities
1,594		 0
REALTEK
1,594		 0
Salaries,
bonuses and
special
expenses (E)
(Note 2)		 Consolidated
Entities
220,870		 0
REALTEK
220,870		 0
Amount of Total Remuneration
(A+B+C+D) and
Proportion to Net
Income
(%)		 Consolidated
Entities

115,008
0.71%		 6,432
0.04%
REALTEK
115,008
0.71%		 6,432
0.04%
Director remuneration Business
expenses
(D)		 Consolidated

1,008		 432
REALTEK
~~E titi~~

1,008		 432
Director
Remuneration
(C		 Consolidated
Entities
114,000		 6,000
REALTEK
114,000		 6,000
Pension
(B)		 Consolidated
Entities		 -
REALTEK -
Base
Compensation
(A)		 Consolidated
Entities		 -
REALTEK -
Name
United Glory Co.,
Ltd.
Representative:
Chiu, Sun-Chien		 United Glory Co.,
Ltd.
Representative:
Chern, Kuo-Jong
Cotek
Pharmaceutical
Industry Co., Ltd
Representative:
Yeh, Nan-Horng
Sonnen Limited
Representative:
Yeh, Po-Len		 Yen, Kuang-Yu Huang, Yung-Fang Ni, Shu-Ching
Chen, Fu-Yen		 Tsai, Tyau-Chang Lo, Chun-Pa
Title
Chairman		 Vice Chairman Director Director Director Director Director
Independent
Director		 Independent
Director		 Independent
Director

-18-

Remuneration Range

Remuneration Range Remuneration Range Remuneration Range Remuneration Range
Remuneration Range
Less than $1,000,000
$1,000,000 (incl.) - $2,000,000 (excl.)
$2,000,000 (incl.) - $3,500,000 (excl.)
$3,500,000 (incl.) - $5,000,000 (excl.)
$5,000,000 (incl.) - $10,000,000 (excl.)
$10,000,000 (incl.) - $15,000,000 (excl.)
$15,000,000 (incl.) - $30,000,000 (excl.)
$30,000,000 (incl.) - $50,000,000 (excl.)
$50,000,000 (incl.) - $100,000,000 (excl.)
$100,000,000 and above
Total		 Name of Directors
Total remuneration (A+B+C+D) Total remuneration
(A+B+C+D+E+F+G)
REALTEK
Chiu, Sun-Chien,
Chern, Kuo-Jong,
Yeh, Nan-Horng,
Yeh, Po-Len
Yen, Kuang-Yu,
Huang, Yung-Fang,
Ni, Shu-Ching
Chen, Fu-Yen,
Tsai, Tyau-Chang,
Lo, Chun-Pa
United Glory Co., Ltd.
Cotek Pharmaceutical
Industry Co., Ltd.
Sonnen Limited		 Consolidated
Entities
Chiu, Sun-Chien,
Chern, Kuo-Jong,
Yeh, Nan-Horng,
Yeh, Po-Len
Yen, Kuang-Yu,
Huang, Yung-Fang,
Ni, Shu-Ching
Chen, Fu-Yen,
Tsai, Tyau-Chang,
Lo, Chun-Pa
United Glory Co., Ltd.
Cotek Pharmaceutical
Industry Co., Ltd.
Sonnen Limited		 REALTEK
Ni, Shu-Ching,
Chen, Fu-Yen,
Tsai, Tyau-Chang,
Lo, Chun-Pa
United Glory Co., Ltd.
Cotek Pharmaceutical
Industry Co., Ltd.
Sonnen Limited		 Consolidated
Entities
Ni, Shu-Ching,
Chen, Fu-Yen,
Tsai, Tyau-Chang,
Lo, Chun-Pa
United Glory Co., Ltd.
Cotek Pharmaceutical
Industry Co., Ltd.
Sonnen Limited
Chiu, Sun-Chien,
Chern, Kuo-Jong,
Yeh, Nan-Horng,
Yeh, Po-Len,
Yen, Kuang-Yu,
Huang, Yung-Fang,		 Chiu, Sun-Chien,
Chern, Kuo-Jong,
Yeh, Nan-Horng,
Yeh, Po-Len,
Yen, Kuang-Yu,
Huang, Yung-Fang,
13 13 13 13

-19- -19-

2022 / Unit: NT$K Compensation
from investee
business other
than
subsidiaries or
from parent
company		 Compensation
from investee
business other
than
subsidiaries or
from parent
company		 Compensation
from investee
business other
than
subsidiaries or
from parent
company		 None None None None None None None None None None None Note: The relevant compensation of 1,077 thousand dollars for the driver is not included.
Total Amount of
A+B+C+D and
Proportion to Net
Income (%)		 Consolidated
Entities		 581,178
3.59%
REALTEK 581,178
3.59%
Employee compensation (D) Consolidated
Entities		 Stock 0
Cash 241,284
REALTEK Stock 0
Cash 241,284
Bonuses and special
expenses (C) (Note)		 Consolidated
Entities		 274,592
REALTEK 274,592
Pension (B) Consolidated
Entities		 3,298
REALTEK 3,298
Salary (A) Consolidated
Entities		 62,004
REALTEK 62,004
Name Chiu, Sun-Chien Chern, Kuo-Jong Yen, Kuang-Yu Huang, Yung-Fang Huang, Yee-Wei Lin, Ying-Hsi Chang, King-Hsiung Tsai, Jon-Jinn Wang, Po-Chih Chang, Jr-Neng Shen, Jia-Ching Lee, Shang-Ta Weng, Chi-Shun Su, Chu-Ting
Title CEO Vice CEO &
CFO		 President COO Vice President Vice President Vice President Vice President Vice President Vice President Vice President Vice President CISO Vice President

-20-

Compensation Range

Compensation Range Compensation Range
Compensation Range Name of Officers
REALTEK Consolidated Entities
Less than $1,000,000
$1,000,000(incl.)- $2,000,000(excl.)
$2,000,000(incl.)- $3,500,000(excl.)
$3,500,000(incl.)- $5,000,000(excl.)
$5,000,000 (incl.) - $10,000,000 (excl.)
$10,000,000(incl.)- $15,000,000(excl.)
$15,000,000(incl.)- $30,000,000(excl.) Chang, King-Hsiung, Weng, Chi-Shun Chang, King-Hsiung, Weng, Chi-Shun
$30,000,000 (incl.) - $50,000,000 (excl.) Lin, Ying-His, Huang, Yee-Wei,
Chang, Jr-Neng, Tsai, Jon-Jinn,
Su, Chu-Ting, Wang, Po-Chih,
Shen,Jia-Ching,Lee,Shang-Ta		 Lin, Ying-His, Huang, Yee-Wei,
Chang, Jr-Neng, Tsai, Jon-Jinn,
Su, Chu-Ting, Wang, Po-Chih,
Shen,Jia-Ching,Lee,Shang-Ta
$50,000,000 (incl.) - $100,000,000 (excl.) Chiu, Sun-Chien, Chern, Kuo-Jong,
Yen,Kuang-Yu,Huang,Yung-Fang		 Chiu, Sun-Chien, Chern, Kuo-Jong,
Yen,Kuang-Yu,Huang,Yung-Fang
$100,000,000 and above
Total 14 14

3.3 Employee’s Compensation for Officers

2022 / Unit: NT$K

mpoyees omp nsaon or cers 2022 / Unit: NT$K
Title Name Stock Cash Total Percentage of net
income after taxes
(% )
CEO Chiu,Sun-Chien
Vice CEO &
CFO		 Chern, Kuo-Jong
President Yen,Kuang-Yu
COO Huang,Yung-Fang
Vice President Huang,Yee-Wei 0 241,284 241,284 1.49%
Vice President Lin,Ying-Hsi
Vice President Chang,King-Hsiung
Vice President Tsai,Jon-Jinn
Vice President Wang,Po-Chih
Vice President Chang,Jr-Neng
Vice President Shen,Jia-Ching
Vice President Lee,Shang-Ta
CISO Weng,Chi-Shun
Vice President Su,Chu-Ting
  1. Percentage of remuneration and compensation paid to Directors and Officers by the Company and all companies of the consolidated statements accounts for net income after taxes for the recent two years.
Percentage of remuneration and compensation paid
to Directors and Officers by the Company and all
companies of the consolidated statements accounts
for net income after taxes for 2021		 Percentage of remuneration and compensation paid
to Directors and Officers by the Company and all
companies of the consolidated statements accounts
for net income after taxes for 2022
3.63% 5.11%

The 2022 annual remuneration of directors and compensation of employees was decided in accordance with the Company's articles of incorporation. 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. The decision for directors' remuneration was based on the board performance evaluation results of such aspects as the participation in the operation, the quality of the board of directors’ decision-making, alignment of the goals and missions of the Company, awareness of the duties

-21-

-21-

of a director, management of internal relationship and communication, the director’s professionalism and continuing education, internal control, etc. The decision for officers’ compensation was based on the performance appraisal indicators such as the length of service and position, performance, contribution to the Company's operation, industry benchmark, the Company’s profitability, etc.

The directors’ remuneration and officers’ compensation were proposed to the board of directors after the resolution based on the performance evaluation results, the company’s operational performance, and future risk exposure approved by the remuneration committee, and processed after the approval of the board of directors. The directors’ remuneration and employees’ compensation will also be reported at the shareholders' meeting. The Company's remuneration committee and the board of directors will review the remuneration policies of directors and officers in a timely manner based on the actual operating conditions and relevant laws and regulations, in order to balance the Company's sustainable operation and risk control.

  1. The planning and operation of the succession of board members and senior management: 5.1 Succession planning for board members

    • There are currently 10 directors (including 3 independent directors) for the Company. The nomination and selection of directors take into account the overall capacity and diversity of the board of directors, and adjust the composition of members according to the results of performance evaluation and the need for substantive operations. The succession planning of the board of directors includes the succession of the senior management of the group, and the recruitment of external professionals with background of business management, law, accounting, industry, technology, or marketing.

  2. 5.2 Succession planning for senior management

    • The succession planning for senior management of the Company is mainly constructed as follows:

    • (1) Based on the future development strategy, define the positions and talent needs of the company, and review the succession planning regularly in response to changes in operations and strategies.

    • (2) Develop competent talents with potential and capacities to enter the succession planning talent pool, and establish a comprehensive training mechanism and talent development plan for the talent pool.

    • (3) Timely promote the mid-level managers as deputies for the high-level managers, and understand the development of the middle-level management through performance appraisal and as a reference for succession planning.

-22-

-22-

III. Corporate Governance

1. Operation of Board of Directors

Operation of Board of Directors:

Current member’s term of office: August 9, 2021 to August 8, 2024

The Board of Directors held meetings 5 times in 2022. Attendance status of Directors is as follows:

Title
Chairman
Vice
Chairman
Director
Director
Director
Director
Director
Independent
Director
Independent
Director
Independent
Director		 Name
United Glory Co., Ltd.
Representative:
Chiu, Sun-Chien
United Glory Co., Ltd.
Representative:
Chern, Kuo-Jong
Cotek Pharmaceutical
Industry Co., Ltd.
Representative:
Yeh, Nan-Horng
Sonnen Limited
Representative:
Yeh, Po-Len
Yen, Kuang-Yu
Huang, Yung-Fang
Ni, Shu-Ching
Chen, Fu-Yen
Tsai, Tyau-Chang
Lo, Chun-Pa		 Attendance
in Person
5
5
5
5
5
5
5
5
5
5		 Attendance by
Proxy
0
0
0
0
0
0
0
0
0
0		 Attendance Rate
(%)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%		 Remarks
-
-
-
-
-
-
-
-
-
-

-23-

-23-

Other disclosures:

1.1

  • (1) Securities and Exchange Act §14-3 resolutions: Not applicable.

  • (2) Resolutions of the board of directors with objected or reserved opinions by independent directors and with records or written statements: Not applicable.

  • 1.2 Execution of the directors' interests evasion: The directors have avoided the proposal with personal stake.

  • 1.3 The goals for strengthening the powers of the board of directors and performance evaluation:

  • (1) Set up functions committees: For the purpose of developing supervisory functions and strengthening management mechanisms, the Company has set up audit committee, remuneration committee, and nominating committee.

  • (2) Enhance corporate governance: The Company has established corporate governance best practice principles, risk management policy, and regulations governing the board performance evaluation, and also discloses corporation governance information in accordance with the relevant laws.

-24-

-24-

  1. Board of Directors performance evaluation

  2. 2.1 Evaluation cycles: Conducting an internal board performance evaluation every year

  3. 2.2 Evaluation periods: From Jan. 1, 2022 to Dec. 31, 2022

  4. 2.3 Scope and method of evaluation: The performance evaluation of the board as a whole, individual board members and functional committees, including audit committee, remuneration committee, and nominating committee.

  5. 2.4 Method of evaluation: The internal evaluation of the board, self-evaluation by individual board members, and the internal evaluation of audit committee, remuneration committee, and nominating committee. The units conducting evaluations is nominating committee.

  6. 2.5 Criteria of evaluation:

    • 2.5.1 The board of directors performance evaluation

      • (1) Participation in the operation of the company;

      • (2) Improvement of the quality of the board of directors' decision making;

      • (3) Composition and structure of the board of directors;

      • (4) Election and continuing education of the directors;

      • (5) Internal control.

    • 2.5.2 The board members performance evaluation

      • (1) Alignment of the goals and missions of the company;

      • (2) Awareness of the duties of a director;

      • (3) Participation in the operation of the company;

      • (4) Management of internal relationship and communication;

      • (5) The director's professionalism and continuing education;

      • (6) Internal control.

    • 2.5.3 Functional committee’s performance evaluation

      • (1) Participation in the operation of the company;

      • (2) Awareness of the duties of the functional committee;

      • (3) Improvement of quality of decisions made by the functional committee;

      • (4) Makeup of the functional committee and election of its members;

      • (5) Internal control.

  7. 2.6 Performance evaluation results: The 2022 performance evaluation results of the board, the board members, audit committee, remuneration committee, and nominating committee are all ‘outstanding’, and have been reported to the board of directors on February 24, 2023. The results of the performance evaluation will be used as a reference for the remuneration of individual directors or functional committee members and the nomination of continuation in office.

3. Operation of Audit Committee

The Audit Committee assists the Board of Directors in performing its supervision functions. It is also responsible for tasks defined by the Company Act, Securities and Exchange Act and other relevant regulations. The operation of Audit Committee is based on the Audit Committee Charter. The Audit Committee shall convene at least once quarterly. 5 meetings were held in 2022. It also maintains good communication channels with the Company’s internal audit manager and the CPA.

The major annual review matters of Audit Committee were as follows:

(1) Financial statements.

(2) Internal control system.

  • (3) Material transaction of asset acquisition, intercompany loans, and endorsement and guarantee.

(4) The audit plan and implementation of the internal audit unit.

(5) Appointment, remuneration and independence assessment of the CPA.

(6) Revising principles and regulations related to corporate governance and corporate social responsibility.

.

-25-

-25-

Operation of Audit Committee

Current member’s term of office: August 9, 2021 to August 8, 2024

The Audit Committee held meetings 5 times in 2022. Attendance status of Independent Directors is as follows:


follows:
Title
Independent
Director
Independent
Director		 Name
Chen, Fu-Yen
Tsai, Tyau-Chang		 Attendance
in Person
5
5		 Attendance
by Proxy
0
0		 Attendance
Rate (%)
100%
100%		 Remarks
Independent
Director		 Lo, Chun-Pa 5 0 100%

Other disclosures:

3.1 (1) Securities and Exchange Act §14-5 resolutions

Date Resolutions The Opinions of All
Independent Directors
and the Company’s
Actions to theOpinions
Mar. 16, 2022 1. 2021 Parent company only financial statements and
consolidated financial statements.
2. To increase capital from employees' compensation for
2021.
3. The Company intends to endorse the guarantee for a
subsidiary.
4. Fund loans between subsidiaries of the Company.
5. The Company's Auditor of financial statements and Audit
Fee for 2022.
6.2021Statementof InternalControlSystem.		 All independent
directors approved
Apr. 20, 2022 1. Distribution of 2021 Retained Earnings.
2. 2021 cash dividends distribution from retained earnings.
3. Cash distribution from capital surplus.
4. To revise the Procedures for Acquisition or Disposal of
Assets.
5. 2021 business report and 2022 business plan.
6. The Company intends to loan funds to subsidiaries.
7. Fund loans between subsidiaries of the Company.
Jul. 27, 2022 1. 2022 Q2 consolidated financial statements.
2. The Company intends to loan funds to subsidiaries.
3.Fundloans betweensubsidiaries of the Company.
Aug. 29, 2022 1. To adjust the group's organizational structure.
2. Early termination of fund loans between subsidiaries of
the Company.
Oct. 26, 2022 1. The Company intends to loan funds to subsidiaries.
2. A subsidiary’s cash distribution from capital surplus.
3. Early termination of the Company’s endorsement and
guarantee for a subsidiary. .
4. The Status that the Company regularly evaluates the
independence of auditor.
5. 2023 annual audit plans.
6. To revise the Regulation of Insider Trading.
7. To revise the Procedures for Handling Material Inside
Information.
8. The Company's "Corporate Social Responsibility Best
Practice Principles" was revised to "Sustainable

-26-

-26-

Date Resolutions The Opinions of All
Independent Directors
and the Company’s
Actions to theOpinions
Development Best PracticePrinciples".

  • (2) There was no resolution that was not approved by the Audit Committee but was approved by two thirds or more of all Directors.

  • 3.2 Execution of the independent directors' interests evasion: None.

  • 3.3 The communication between the independent directors and the internal audit manager and the CPA: The Company’s independent directors communicate with the CPA by the way of meetings, discussions, telephone calls or e-mails through the audit committee or separately to discuss the review results of the financial statements and related laws and regulations such as accounting, taxation, and securities management. If major issues occur, a meeting can be convened at any time.

The Company’s independent directors communicate with the internal audit manager by the way of meetings, discussions, telephone calls or e-mails through the audit committee or separately to discuss the company's audit-related works, audit reports, and the condition of discovering problems and tracking improvements. If major issues occur, a meeting can be convened at any time.

-27-

-27-

(1) The major items of communication between the independent directors and the CPA

Date The Major Items of the Communication The suggestions of independent
directors and the Company’s
action tothe suggestions
Mar. 16, 2022
(separate meeting)		 The consolidated financial statement and
independent auditor's report result for
2021 and Important audit events.		 No suggestion from independent
directors
Apr. 20, 2022
(separate meeting)		 The consolidated financial statement and
independent auditor's report result for the
first quarter of 2022 and Important review
events.		 No suggestion from independent
directors
Jul. 27, 2022
(separate meeting)		 The consolidated financial statement and
independent auditor's report result for the
second quarter of 2022 and Important
review events.		 No suggestion from independent
directors
Oct. 26, 2022
(separate meeting)		 The consolidated financial statement and
independent auditor's report result for the
third quarter of 2022 and Important
review events.		 No suggestion from independent
directors

(2) The major items of communication between the independent directors and the internal audit manager

Date The Major Items of the Communication The suggestions of
independent directors and the
Company’s action to the
suggestions
Mar. 16, 2022
(separate meeting)		 Implementation of the audit plan for the
fourthquarterof 2021		 No suggestion from
independent directors
Apr. 20, 2022
(separate meeting)		 Implementation of the audit plan for the
firstquarterof 2022		 No suggestion from
independent directors
Jul. 27, 2022
(separate meeting)		 Implementation of the audit plan for the
second quarterof 2022		 No suggestion from
independent directors
Oct. 26, 2022
(separate meeting)		 Implementation of the audit plan for the
thirdquarter of 2022		 No suggestion from
independent directors

-28-

-28-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 - - - -

Implementation Status		 Summary Description
The Company established and disclosed the corporate
governance best practice principles based on ‘Corporate
Governance Best Practice Principles for TWSE/TPEx
Listed Companies,’ with a dedicated ‘Corporate
Governance’ section on the Company’s website for all
investors to inquire the Company’s corporate governance
regulations.		 The Company has set up an investor relations team and
appointed a professional stock transfer agency to handle
matters such as shareholder suggestions or doubts.		 The Company regularly collects the shareholdings of
directors and officers.		 To ensure sound financial and business interactions
between the Company and its affiliates and to prevent non
arm's-length transactions and improper channeling of
interests with respect to the purchase and sale of goods, the
acquisition and disposal of assets, the provision of
endorsements and guarantees, and loans of funds between
the Company and its affiliates, the Company has
established Rules Governing Financial and Business
Matters Between the Company and its Related Parties and
the Rules have been approved by the Board of Directors.
The Rules not only include the management procedures for
the purchase and sale of goods, the acquisition and disposal
of assets, but also stipulate that all significant transactions
of this nature shall be submitted to the board of directors
for approval before being carried out. The actual
transaction shall be reported in the most recent
shareholders’ meeting after the end of a fiscal year.
No
Yes V V V V

Evaluation Item		 1. Does the Company establish and disclose the Corporate
Governance Best-Practice Principles based on
“Corporate Governance Best-Practice Principles for
TWSE/TPEx Listed Companies”?		 2. Shareholding Structure and Shareholders’ Rights
(1) Does the Company establish an internal operating
procedure to deal with shareholders’ suggestions,
doubts, disputes and litigations, and implement based
on the procedure?
(2) Does the Company possess the list of its major
shareholders as well as the ultimate owners of those
shares?		 (3) Does the Company establish and implement the risk
management and firewall system between it and its
affiliated companies?

-29-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 - - -30-
Implementation Status Summary Description
The Company has established Regulation of Insider
Trading and conducted education & promotion on
Regulation of Insider Trading and related regulations for
current directors, officers and all employees at least once
per year. The education & promotion for newly elected
directors and appointed officers shall be arranged within 3
months of taking office. The education & promotion for
new employees shall be arranged by HR division during
their education training.
In 2022, relevant education & promotion for current
directors, officers and all employees was conducted from
January 4 to December 30. The total education training
hours of regulation of insider trading for 2022 were 57.17
hours with a total of 686 participants in relevant courses .
The training content includes the confidentiality of material
information, and the prohibition of using undisclosed
information to engage in insider trading or disclosing it to
others, so as to prevent others from using such undisclosed
information to engage in insider trading. The course
briefings and audio-visual files are placed in the Company's
internal system to provide new employees with relevant
education training.
On October 28, 2022, the board of directors of the
Company approved the amendment to Regulation of
Insider Trading. Directors shall not trade the Company’s
shares during the blackout period of 30 days prior to the
announcement of the annual financial reports and 15 days
prior to the announcement of the quarterly financial reports.
The Company notified the directors on November 30, 2022
of the meeting dates for 2023 board of directors, and the
blackout period prior to the announcement of the annual
and quarterly financial reports, so as to avoid the directors
from accidentally violating the regulations. Subsequent
notifications about the blackout period prior to the
announcement of the annual and quarterly financial reports
will be provided regularly to the directors.		 The diversity policy for the Company’s board members is
No
Yes V V
Evaluation Item (4) Does the Company establish internal rules against
insiders trading with undisclosed information?		 3. Composition and Responsibilities of the Board of
Directors		 (1) Does the Board formulate diversity policies, specific

-30-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 -31-
Implementation Status Summary Description
as follows:
The structure of the Company's board of directors shall be
determined by choosing an appropriate number of board
members in consideration of business scale, the
shareholdings of major shareholders, and practical
operational needs. The composition of the board of
directors shall be determined by taking diversity into
consideration. An appropriate policy on diversity based on
the company's business operations, operating dynamics,
and long-term development needs shall be formulated and
include, without being limited to, the following two general
standards:
1. Basic requirements and values: gender, age, nationality,
and culture.
2. Professional knowledge and skills: a professional
background (e.g., law, accounting, industry, finance,
marketing, or technology), professional skills, and industry
experience.
All members of the board shall have the knowledge, skills,
and experience necessary to perform their duties. To
achieve the ideal goal of corporate governance, the board of
directors shall possess the following abilities:
1. Ability to make operational judgments.
2. Ability to perform accounting and financial analysis.
3. Ability to conduct management administration.
4. Ability to conduct crisis management.
5. Knowledge of the industry.
6. International market perspective.
7. Ability to lead.
8. Ability to make policy decisions.
There are ten directors, three of them are independent
directors, for the Company. Each director has his or her
own professional background, including business
management, leadership decision, industry knowledge,
financial accounting, international marketing, etc.
The specific management objectives of the Company's
board member diversity policy are that each of the eight
abilities that the board of directors shall possess is at least
possessed by five directors, and at least four of the eight
No
Yes
Evaluation Item management objectives and implement it accordingly?

-31-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 - - - -32-
Implementation Status Summary Description
abilities are possessed by individual board member. The
management objective of diversity policy is reached by the
Company's current board of directors and all individual
board members.
The abilities possessed by individual board members of the
Company is as note1.
The Company has set up nominating committee. Please
refer to the operation of nominating committee section
disclosed in annual report or the Company's website.
The Company has established regulations governing the
board performance evaluation and its evaluation method,
regularly conducts performance evaluation every year, and
submits the results of performance evaluation to the board
of directors. The 2022 performance evaluation results of
the board, the board members, audit committee,
remuneration committee and nominating committee are all
“outstanding”, and have been reported to the board of
directors on February 24, 2023. The results of the
performance evaluation will be used as a reference for the
remuneration of individual directors or functional
committee members and the nomination of continuation in
office. Please refer to Board of Directors performance
evaluation section disclosed in annual report or the
Company's website.
The audit committee and the board of directors of the
Company evaluate the independence and suitability of the
certified public accountants each year. In addition to
requiring certified public accountants to provide "statement
of independence" and "audit quality indicators (AQIs)",
they also they also evaluate according to the five
dimensions and 13 indicators of audit quality indicators. It
is confirmed that the accountant has no other financial
interests and business relationships with the Company
except for the fees for certification and tax cases, and the
family members of the accountant also do not violate the
requirements of independence. In addition, refer to the AQI
indicator information, it is confirmed that the accountant
and the firm meet the standards in terms of audit experience
and training hours. The certified public accountant has no
No
Yes V V V
Evaluation Item (2) Does the Company voluntarily establish other
functional committees in addition to the Remuneration
Committee and the Audit Committee?		 (3) Does the Company establish regulations governing the
board performance evaluation and its evaluation
method, regularly conduct performance evaluation
every year, submit the results of performance
evaluation to the board of directors, and base the
determination of remuneration, the election or
nomination of an individual director on the evaluation
results?		 (4) Does the Company regularly evaluate the
independence of accountants?

-32-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 - -33-
Implementation Status Summary Description
disciplinary records by the CPA Disciplinary Committee in
the past two years. The evaluation results, after approved
by the Audit Committee on February 23, 2023, were
submitted to and approved by the Board of Directors on
February 24, 2023 of the resolution on the evaluation of the
independence and suitability of the accountants.
The Company, approved by the board of directors, has
appointed a chief corporate governance officer to be in
charge of corporate governance affairs. The main duties
include handling of matters relating to board of directors
meetings and shareholders meetings in compliance with
law, preparation of minutes of the board of directors
meetings and shareholders meetings, assistance in
onboarding and continuing education of the directors,
provision of information required for performance of duties
by the directors, assistance in the directors' compliance of
law.
The performance of duties for 2022 was as following:
1. Assisted independent directors and directors in
performing their duties, provided required information, and
arranged directors' further education:
(1) Provided onboard directors revision and development of
the latest laws and regulations regarding company
management field and corporate governance, and updated
them regularly.
(2) Reviewed the confidential level of relevant information
and provided the company information required by the
directors, maintained smooth communication between the
directors and officers.
(3) Assisted in arranging relevant meetings when, in
accordance with the corporate governance best-practice
principles, independent directors needed to meet with the
internal audit supervisor or accountants individually to
understand the company's finance and business.
(4) Assisted independent directors and directors to
formulate annual training plans and arrange courses based
on the company's industrial characteristics and directors'
academic and professional experience background.
2. Assisted that the procedures and resolutions of board of
No
Yes V
Evaluation Item 4. Does the Company have an adequate number of
corporate governance personnel with appropriate
qualifications and appoint a chief corporate governance
officer to be in charge of corporate governance affairs.
(including but not limited to providing data demanded
by directors and supervisors, assisting directors and
supervisors with legal compliance, handling matters
relating to board meetings and shareholders meetings
according to laws, and producing minutes of board
meetings and shareholders meetings)?

-33-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.
Implementation Status Summary Description
directors meetings and shareholders meetings were in
compliance with laws:
(1) Confirmed whether the convening of the company's
shareholders meetings and board of directors meetings
were in compliance with relevant laws and corporate
governance best-practice principles.
(2) Assisted and reminded the directors of the laws and
regulations to be followed when performing duties or
making a formal resolution of the board of directors, and
made suggestions when the board of directors will make a
resolution in violation of the laws.
(3) Checked the release of material information on
important resolutions of the board of directors after the
meetings, and ensured the legality and correctness of the
content of the material information for the transaction
information equality of investors.
3. Informed directors of the agenda for board of directors
seven days before the meeting, convened a meeting and
provided meeting materials, reminded directors to recuse if
there is a conflict of interest in the agenda items in advance,
and completed the minutes of the board of directors
meetings within 20 days after the meetings.
4. Registered the date of the shareholders meeting in
advance in accordance with the law, prepared meeting
notices, handbook, meeting minutes within the statutory
deadlines, and handled registration of change matters in the
revised articles of incorporation or director election.
Training situation: Professional training is arranged in
accordance with the requirements of “Operation directions
for compliance with the establishment of board of directors
by TWSE listed companies and the board's exercise of
powers”. Please refer to note 2.
No
Yes
Evaluation Item

-34-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 - - - - - - -35-
Implementation Status Summary Description
The Company has set up a stakeholder section on our
website with a dedicated email for stakeholder
communication and contact. Any question, suggestion, or
voice regarding issues of corporate social responsibilities
can be channeled through this mailbox for open and
effective communication.		 The Company appoints Chinatrust Commercial Bank
Transfer Agency to deal with shareholder affairs.		 The financial, business and corporate governance
information has been disclosed on the Company's website.
Investors can also access the Company's material
information through the market observation post system.
The Company has set up an English website, and has a
spokesman for external communication and designated
personnel to disclose information about the Company and
the institutional investor conferences at market observation
post system in accordance with the statutory requirements.
The Company announced and reported the 2022 annual
financial statements within two months after the end of the
fiscal year, and announced and reported quarterly financial
statements as well as the operating status of each month
before the prescribed deadline.		 1. The Company provides information on relevant
regulations that directors should pay attention to at any
time.
2. The directors of the Company attended the board of
directors in good condition and all met the requirements
of the laws.
3. If the proposal has a stake in the directors, the director is
required to evade.
4. The Company has purchased the liability insurance for
directors which was approved by the board of directors.
5. The Company protects the legitimate rights and interests
of employees in accordance with the provisions of Labor
Standards Act, and establishes a good relationship of
mutual trust with employees through the welfare system
No
Yes V V V V V V
Evaluation Item 5. Does the Company establish a communication channel
and build a designated section on its website for
stakeholders (including but not limited to shareholders,
employee and suppliers), as well as handle all the issues
they care for in terms of corporate social
responsibilities?
6. Does the Company appoint a professional shareholder
transfer agency to deal with shareholder affairs?		 7. Information Disclosure (1) Does the Company have a corporate website to
disclose the financial, business, and corporate
governance information?		 (2) Does the Company have other information disclosure
channels (e.g. building an English website, appointing
designated people to handle information collection
and disclosure, implementing a spokesman system,
webcasting investor conferences)?
(3) Does the Company publish and report its annual
financial report within two months after the end of a
fiscal year, and publish and report its financial reports
for the first, second and third quarters as well as its
operating status for each month before the specified
deadline?		 8. Is there any other important information to facilitate a
better understanding of the Company’s corporate
governance practices (including but not limited to
employee rights, employee wellness, investor relations,
supplier relations, rights of stakeholders, directors’ and
supervisors’ training records, the implementation of risk
management policies and risk evaluation measures, the
implementation of customer relations policies, and
purchasing liability insurance for directors and
supervisors)?

-35-

Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.		 Deviation from the Corporate
Governance Best-Practice
Principles for TWSE/TPEx
Listed Companies and the
reason for deviation.
9. Please describe the improvement status according to the result of cooperate governance evaluation announced by cooperate governance center of TWSE, and the first
priority improving items and measures on non-improving items.
The evaluation ranking of the Company's 2021 and 2022 corporate governance evaluations are both 6% to 20%. The Company plans to keep strengthening the board
structure, improving information transparency, and implementing corporate social responsibility.
Implementation Status Summary Description
enhancing the stability of employees' lives, and
completed educational trainings.
No
Yes
Evaluation Item

-36-

Ability to
Ability to
Ability to
Ability to
Knowledge of
International
Ability to lead Ability to		 make
perform
conduct
conduct crisis
the industry
market
make policy		 Directors
Gender
operational
accounting
management
management
perspective
decisions		 judgments
and financial
administration		 analysis Chiu, Sun-Chien
Male
v
v
v
v
v
v
v
v		 Chern, Kuo-Jong
Male
v
v
v
v
v
v
v
v		 Yeh, Nan-Horng
Male
v
v
v
v
v
v
v
v		 Yeh, Po-Len
Male
v
v
v
v
v
v
v
v		 Yen, Kuang-Yu
Male
v
v
v
v
v
v
v		 Huang, Yung-Fang
Male
v
v
v
v
v
v		 Ni, Shu-Ching
Female
v
v
v
v
v
v		 Chen, Fu-Yen
Male
v
v
v
v
v
v
v		 Tsai, Tyau-Chang
Male
v
v
v
v
v
v		 Lo, Chun-Pa
Male
v
v
v
v
v
v
v		 Note 2: Professional training of corporate governance officer Organization
Course
Course Date
Training Hours		 Securities & Futures Institute The Future Development of Metaverse and Cryptocurrency Blockchains
2022/07/07
3		 Securities & Futures Institute
2022 Prevention of Insider Trading Promotion Conference
2022/10/14
3		 Securities & Futures Institute
Talking about corporate tax governance and tax technology solutions from the perspective of
ESG trends and the epidemic environment
2022/12/20
3		 Securities & Futures Institute
How should directors and supervisors supervise business risk management and crisis
2022/12/21
3		 management

-37-

Independent
Director
(member)
Lo, Chun-Pa
Business management, accounting and financial analysis
Working experience: 27 years
0
Note : (1) Whether the person, the person’s spouse, or relatives within the second degree serve as directors, supervisors, or employees of the company or its affiliated companies:
none;
(2) The shareholding numbers and proportion by the person, the person’s spouse, or relatives within the second degree: 0;
(3) Whether the person serves as a director, a supervisor or an employee of a company with specific relationship to the company: none;
(4) The amount of remuneration received for providing business, legal, financial, accounting and other services to the company or its affiliates in recent two years: 0.
Number of other
public companies
concurrently
serving as an
independent
director		 0 0 0
Independent Status Please refer to statement of note
Professional qualifications and experience Legal profession, crisis management
Working experience: 44 years		 Business management, strategic planning
Working experience: 40 years		 Business management, accounting and financial analysis
Working experience: 27 years
Criteria
Title / Name		 Tsai, Tyau-Chang Chen, Fu-Yen Lo, Chun-Pa
Independent
Director
(convener)		 Independent
Director
(member)		 Independent
Director
(member)

-38-

5.2. Operation of Remuneration Committee status
1. There are 3 members of the Remuneration Committee.
2. Current member’s term of office: August 9, 2021 to August 8, 2024
The Remuneration Committee held meetings 2 times in 2022. Attendance status of members is as follows:		 Other disclosures:
1. If advice of the Remuneration Committee was not adopted or modified by the Board of Directors, the meeting date, period, content of proposals,
meeting resolution, and the Company’s action to the advices of the Remuneration Committee should be disclosed: None
2. If resolutions of the Remuneration Committee were objected or reserved with records or written statements by any member, the meeting date, period,
content of proposals, opinions of all members, and action to the member’s opinions should be disclosed: None
3. The discussion item and resolution results of the Remuneration Committee, and the Company’s action to the advices of the Remuneration Committee:
Member
Lo, Chun-Pa
2
0
100%

The Company’s action to the advices of the
Remuneration Committee		 Processed as the resolution results of the
remuneration committee.		 Processed as the resolution results of the
remuneration committee.
Remarks
Attendance Rate
(%)		 100% 100% 100%

Resolution results		 Approved by all
members of the
committee.		 Approved by all
members of the
committee.
Attendance
by Proxy		 0 0 0
Content of proposals 1. Distribution of 2021 directors’
remuneration and officers’
compensation.
2. Subsequent ratification of 2021
officers’ salary adjustments.
3. 2022 officers’ salary adjustments.
1. Approve 2022 year-end bonus for
officers.
Attendance
in Person		 2 2 2
Name Tsai, Tyau-Chang Chen, Fu-Yen Lo, Chun-Pa
Title Convener Member Member
Date Mar. 16,
2022		 Oct. 26,
2022

-39-

6.Operation of Nominating Committee
1. The Company established a Nominating Committee in October 2019. The qualifications for the selection of the nomination committee member are
possessing professional capabilities in business management, strategic planning, accounting and financial analysis as a whole, and are capable to
contribute to the operation and decision-making of the committee. The committee is composed of three independent directors. The convener and
chairman of the meeting, Chen, Fu-Yen, has the abilities of business management and strategic planning. The independent director, Tsai, Tyau-Chang,
has the abilities of legal profession and crisis management. The independent director, Lo, Chun-Pa, has the abilities of business management and
accounting and financial analysis. All of which meet the professional abilities required by the committee.
The major duties of the nominating committee are as follows:
(1) Developing the standards of independence and a diversified background covering the expertise, skills, experience, gender, etc. of members of the board,
and finding, reviewing, and nominating candidates for directors based on such standards.
(2) Establishing and developing the organizational structure of the board and each committee, and evaluating the performance of the board, each director,
and each committee.
(3) Establishing and reviewing on a regular basis programs for the succession plans of directors and senior executives.
2. There are 3 members of the Nominating Committee.
3. Current member’s term of office: August 9, 2021 to August 8, 2024
The Nominating Committee held meetings 2 times in 2022. Professional qualifications and experience, and attendance status of members are as follows:

Attendance
Rate (%)
100%
100%
100%

Attendance
by Proxy
0
0
0

Attendance
in Person
2
2
2

Professional qualifications
and experience
Business management,
strategic planning
Legal profession, crisis
management
Business management,
accounting and financial
analysis

Name
Chen, Fu-Yen
Tsai, Tyau-Chang
Lo, Chun-Pa

Title
Convener
Member
Member

-40-

The Company’s action to the
resolutions of the nominating
committee		 Processed as the resolution results of
the nominating committee.
Processed as the resolution result of
the nominating committee.
Resolution results Approved by all members of the
committee.		 Approved by all members of the
committee.
Content of proposals 1.2021 Board and functional committees performance
evaluation results.		 1. Conduct 2022 performance evaluation of the board of
directors and functional committees.
Date Mar. 16, 2022 Oct. 26, 2022

-41-

Deviation from the ‘Sustainable
Development Best Practice
Principles for TWSE/TPEx-Listed
Companies’ and Reasons		 Deviation from the ‘Sustainable
Development Best Practice
Principles for TWSE/TPEx-Listed
Companies’ and Reasons
-
Implementation Status Summary The company has the Board of Directors as the
highest level of governance. The ESG Center is
established under the President's Office with
representatives from each department serving
as the ESG committee members. Since 1997, it
has been promoting various key ESG topics
such as corporate governance, R&D innovation,
environmental responsibility, human resources
and social care, while reporting the progress to
the board at least once a year.
Five topics were reported to the board in
October 2022, including (1) the effectiveness of
corporate social responsibility implementation,
(2) status of stakeholder communication, (3)
status of climate-related financial disclosure
(TCFD) projects, (4) promotion and
implementation of risk management, (5)
promotion and implementation of integrity
management. We will continue to work
diligently towards accomplishing our six main
goals and commitments, and refining the
company's ESG comprehensive development
strategy: (1) adhering to sustainable goals and
the spirit of integrity, (2) implementing Green
Energy Policy and Environmental
No
Yes �
Assessment Item 1. Has the company established a governance structure
to promote sustainable development and set up full-
time (part-time) units to promote sustainable
development, and has the board authorized senior
management to execute under the board's
supervision?

-42-

- -
Responsibility, (3) sustainable talent
development and safe workplace, (4)
partnership, service and quality, (5) innovative
R&D to yield a rich and convenient world, (6)
warming the hearts of people		 The company implements corporate
governance obligations, maintains sustainable
business goals, and controls the internal and
external economic, social and environmental
risks that the company's operations may face.
Among the three risk areas, the environmental
risk disclosure covers only Hsinchu operations,
while the scope of economic and social risk
disclosure also includes our offices in Dazhi,
and Southern Taiwan Science Park. All
departments should clearly identify the relevant
risks that may affect the operation or
sustainable development of the enterprise
according to their authorities and
responsibilities. Further, they are required to
monitor potential risks and do preventive
measures to strengthen risk management,
improve systemic resilience, and achieve the
goal of risk control, thereby safeguarding
shareholders' rights and interests, enhancing
competitiveness, and laying the foundation for
the sustainable operation and development of
the company.		 In 2006, the company passed ISO14001
Environmental Management Systems
verification, and in addition completed the
� �
2. Does the company conduct risk assessments on
environmental, social, and corporate governance
issues related to company operations in accordance
with the principle of materiality, and formulate
relevant risk management policies or strategies?		 3. Environmental Issues
(1) Does the Company establish proper
environmental management systems based on the

-43-

- -
ISO14001:2015 revision verification in October
2020. We continue to march towards
accomplishing both the systemization of
environmental management, and the realization
of environmental sustainability.		 The Company has environmental and energy
policies, including compliance with
environmental laws and regulations, active
resource management to achieve effective
utilization, strengthening pollution prevention,
promotion of education and training, and
continuous improvement plans.
The Company also continuously invests in
R&D to develop a variety of low-power
products to reduce the impact on the
environment.		 The company refers to the four core elements
of governance, strategy, risk management, as
well as indicators and targets in the "Task Force
on Climate-Related Financial Disclosures"
(TCFD) framework to identify the potential
risks and opportunities brought about by
climate change, and comprehensively examine
the possible impact of climate change on
Realtek's business operations to formulate and
implement countermeasures due to climate
change, so that various impacts of climate
change can be effectively monitored, controlled
and quickly responded to. Relevant assessment
results and countermeasures taken will be
published in the current year’s ESG report.
� �
characteristics of its industries? (2) Does the Company endeavor to utilize all
resources more efficiently and use renewable
materials that have a low impact on the
environment?		 (3) Does the Company monitor the impact of
climate change on present and future operations and
evaluate related opportunities? Does it establish
measures to respond to climate change related
impacts?

-44-

- -
The company attaches great importance to the
sustainable development of the environment
and ecology. Self-check and annual disclosure
on greenhouse gas discharge have been done
since 2019. In terms of management policies,
Realtek actively checks the energy
consumption data of the factory area, focusing
on electricity, air conditioning, air compressors,
and the IT room, in order to carry out an
evaluation, and propose relevant optimization
management plans. Various measures have
been taken, such as replacing old electrical
fixtures and fittings with new energy-saving
models, the greater utilization of LED lighting,
and recycling rainwater for reuse.
In 2021 and 2022, 1.848 million kWh and
2.812 million kWh of electricity were saved
respectively.
24,921.21 metric tons and 26,462.88 metric
tons were generated in 2021 and 2022,
respectively, per Greenhouse Gas internal
check.
Water usage was 50.64 and 42.86 liters,
respectively, in 2021 and 2022.
The total industrial waste produced was 37.9
and 31.87 metric tons in 2021 and 2022,
respectively.		 The Company abides by labor-related laws and
regulations in each location, protects the
legitimate rights and interests of employees,
and follows the spirit and basic principles of
-45-
� �
(4) Does the Company take inventories of
greenhouse gas emissions, water use, and waste
volume during the past two years? Does it adopt
guidelines to conserve energy and reduce carbon
and greenhouse gases emissions, water use, and
waste generation?		 4. Social Issues
(1) Does the Company comply with relevant laws
and regulations and the International Bill of Human
Rights? Does it adopt relevant management policies

-45-

- - -
human rights protection announced in the
International Bill of Human Rights, the
International Labor Organization - Declaration
on Fundamental Principles and Rights at Work,
the United Nations Global Compact and other
international human rights conventions to
formulate Realtek’s human rights policies and
related practices so as to enhance human rights
awareness and create an environment that
respects human rights, while promoting it both
in staff training courses, and executive staff
seminars.		 The Company establishes and implements
appropriate employee welfare measures,
including employee compensation, workplace
diversity and equality, vacation system, various
allowances, gifts and subsidies, as well as
appropriate wage and remuneration, so that
employees can share the Company’s
operational achievements.		 The Company provides employees with a safe
and healthy working environment, inspects the
working environment twice a year according to
the law, conducts regular employee health
inspections and emergency response fire drills
every year, and obtained the ISO45001
Occupational Safety and Health System in
2020. There were no occupational accidents in
2022.		 Through the ‘Realtek Enterprise University’,
comprising six college courses (Newcomer
� � �
and processes? (2) Does the Company establish and implement
appropriate remuneration mechanisms (including
wages, vacation, and other benefits) and reflect the
corporate business performance or achievements in
the employee remuneration policy?		 (3) Does the Company provide safe and healthful
work environments for employees, and does it
organize training on safety and health for employees
on a regular basis?		 (4) Does the Company establish effective training
programs to foster employees’ career skills?

-46-

- - -
Speed College, R&D Innovation College,
Management Leadership College, Experiential
Cognition College, Learning Organization
College, Corporate Internship Creativity
College), the Company integrates
organizational competitiveness and sustainable
development goals, and effectively links the
development of employees' functions, assisting
all colleagues in professional learning that takes
into account both breadth and depth according
to career development. The relevant employee
training plans and implementation are also
disclosed in the current-year’s ESG report.		 The Company follows the laws and regulations
of the government and international guidelines
in relation to customer health, safety, and
privacy, as well as sales and labeling of its
products and services, in order to protect the
rights and interests of consumers.		 The Company establishes policies that require
suppliers to adhere to environmental,
occupational health and safety, and labor rights
laws and regulations.		 Realtek publishes Sustainability /Corporate
Social Responsibility reports in accordance
with GRI standards to disclose business
performance, corporate governance,
stakeholder negotiation, social participation,
� � �
(5) Does the Company follow the laws and
regulations of the government and international
guidelines in relation to customer health, safety, and
privacy, as well as sales and labeling of its products
and services? Does the Company establish policies
to protect consumer rights and interests and provide
a clear and effective procedure for accepting
consumer complaints?		 (6) Does the Company establish policies to assess
whether suppliers adhere to environmental,
occupational health and safety, and labor rights laws
and regulations, then follow up on implementation
status?		 5. Does the Company adopt internationally recognized
standards or guidelines when producing corporate
social responsibility reports and other related reports
to disclose the status of implementing non-finance
related policies? Does the Company obtain a third-

-47-

6. If the company has established its Sustainable Development Code of Practice according to ‘Sustainable Development Best Practice Principles for
TWSE/TPEx Listed Companies,’ please describe the operational status and differences:
Realtek establishes its Sustainable Development Code of Practice in accordance with the ‘Sustainable Development Best Practice Principles for TWSE/TPEx
Listed Companies’. Its operations is consistent with the spirit and principles of the Sustainable Development Code of Practice.		 7. Other important information to facilitate better understanding of the company’s implementation of corporate social responsibility:
The Company actively participates in social welfare activities and actions, through sponsorships, donations to educational funds and training, the hiring of people
with disabilities, and other deeds.
environmental protection, friendly workplaces,
and employee care. The 2022 Realtek
Corporate Social Report has passed the external
verification by TUV NORD Taiwan Co., Ltd.,
confirming that it complies with the core
options of GRI Standards and AA1000 AS
(2008) Moderate Assurance (Type I).
party assurance or verification for the reports to
enhance the reliability of the information in the
reports?

-48-

Implementation Status
Realtek's sustainable organizational structure has the Board of Directors as the highest guidance
body, and the President's office as the highest management level, responsible for supervising the
progress of ESG (Environmental, Social, and Governance) for each major theme.
The main financial impacts of climate risks and opportunities are the increase in air-conditioning
costs, the transformation costs of upstream suppliers, the cost of adding solar power generation
facilities, and the management and communication costs of sustainable issues. Regarding the
short-, medium-, and long-term financial impacts caused by various climate issues, they are all
less than 1% of net revenue upon quantitative assessment.
Regarding the short-, medium-, and long-term financial impacts caused by various climate
issues, they are all less than 1% of net revenue upon quantitative assessment.
Realtek's risk management scope includes risks pertaining to strategic planning, operational
management, financial operations, and hazardous events. We also incorporate risks related to
climate change, refer to ERM (Enterprise Risk Management) procedures, and through risk
identification, risk measurement, risk monitoring, risk response, risk reporting and disclosure and
other management procedures to ensure the continuous operation of Realtek and reduce the
possible impact of risks.
According to the sixth scientific assessment report (AR6) of the United Nations
Intergovernmental Panel on Climate Change (IPCC), Realtek uses the Shared Social-Economic
Pathways (SSP) and adopts SSP1-1.9, SSP2-4.5 and SSP5-8.5 to analyze three climate scenarios.
In the short-term, medium-term and long-term time boundaries, under the ideal scenario where
the temperature rise is controlled at 1.5°C, it is estimated that the main financial impact of
climate change on Realtek will be less than 1% of net revenue.
In response to climate-related risks, Realtek has actively planned for energy transformation. It
plans to build a green power project with 10% of the contracted capacity within five years. It will
install solar panels on the roofs of each office in Hsinchu Headquarters, adopting the mechanism
of self-generation and self-use of electricity. The electricity obtained from the solar energy
conversion is for the daily use of the office area. It is expected to create 1,149 kW of green
energy in 2025, which can generate about 1,323,600 kWh of green electricity per year, equivalent
to reducing carbon emissions of about 673.74 tCO2e.
Not applicable.

Item		 1. Describe board and management oversight and
governance of climate-related risks and
opportunities.
2. Describe how the identified climate risks and
opportunities affect the corporate business,
strategy, and finances (short, medium, and long
term).		 3. Describe the financial impact of extreme climate
events and transitional actions.		 4. Describe how climate risk identification,
assessment and management processes are
integrated into the overall risk management
system.		 5. If scenario analysis is used to assess resilience to
climate change risks, the scenarios, parameters,
assumptions, analysis factors adopted, and major
financial impacts should be explained.		 6. If there is a transition plan for managing climate-
related risks, describe the content of the plan, and
the indicators and goals used to identify and
manage physical risks and transition risks.		 7. If internal carbon pricing is used as a planning
tool, the basis for setting the price should be
stated.

-49-

Realtek has committed to achieving the major goal of net zero carbon emissions by 2050. It plans
to meet the goal by reducing total carbon emissions through various energy-saving and carbon-
reduction measures such as the continuous development of low-carbon products, improvement of
equipment energy efficiency, construction and certification of office buildings in accordance with
green building standards, increased use of renewable energy, and implementation of MBO
(Management by Objective) for supply chain carbon reduction.
Net Zero Target and Schedule:
�By 2030, reduce Scope 1 and Scope 2 carbon emissions of greenhouse gases by 50%
compared with the base year of 2021.
�By 2030, achieve 25% renewable energy usage.
�By 2050, achieve net zero emissions.
In addition, Realtek is actively deploying the green power project for energy transformation, and
will install solar panels on the roof of its office building. It is expected to accumulate 1,323 self-
generated Renewable Energy Certificates (RECs) by 2025.
Realtek has been certified by the British Standards Institution (an impartial third-party
organization), who confirmed that the Scope 1 and Scope 2 carbon emission data generated by its
parent company in 2021 are of a reasonable assurance level. Please refer to pages 51-52 of the
annual report for the greenhouse gas inventory and confirmation.
8. If climate-related goals are set, the activities
covered, scope of greenhouse gas emissions,
planing schedule, annual progress and other
information should be stated; if carbon offsets or
renewable energy certificates (RECs) are used to
achieve relevant goals, the source and quantity of
carbon reduction credits to be offset or the
number of renewable energy certificates (RECs)
should be stated.		 9. Greenhouse Gas Inventory and Confirmation
Status

-50-

2.Greenhouse Gas Inventory and Confirmation Status
Basic Company Information
�Companies with over 10 billion NTD in capital, the iron and
steel industry, and the cement industry
�Companies with between 5 billion and 10 billion NTD in
capital
�Companies with less than 5 billion NTD in capital
Minimal disclosure according to the regulations of the
Sustainable Development Roadmap of listed companies
�Parent company individual check
�Parent company individual certified
�Consolidated financial report subsidiaries check
�Consolidated financial report subsidiaries certified		 Certification Statement (Note) The Greenhouse Gas Emissions with Realtek Semiconductor Corporation for the period from 2021-01-01 to 2021-12-31 was verified,
the direct greenhouse gas emissions 662.073 tonnes of CO2 equivalent.
Data quality was considered acceptable in meeting the principles as set
out in ISO 14064-1:2018.		 Certification Statement (Note) The Greenhouse Gas Emissions with Realtek Semiconductor
Corporation for the period from 2021-01-01 to 2021-12-31 was verified,
the indirect greenhouse gas emissions from imported energy 24,259.144
tonnes of CO2 equivalent.
Data quality was considered acceptable in meeting the principles as set
out in ISO 14064-1:2018.		 The Greenhouse Gas Emissions with Realtek Semiconductor
Corporation for the period from 2021-01-01 to 2021-12-31 was verified,
the indirect greenhouse gas emissions from imported energy 24,259.144
tonnes of CO2 equivalent.
Data quality was considered acceptable in meeting the principles as set
out in ISO 14064-1:2018.
Certifying
Institute		 BSI Certifying
Institute		 BSI
Density
(tCO2e/M NTD)
(Note 2)
0.006275		 Density
(tCO2e/M NTD)
(Note 2)
0.229935
Total Emissions
(tCO2e)		 662.073 Total Emissions
(tCO2e)		 24,259.144
Scope 1 Parent Company Scope 2 Parent Company

-51-

==> picture [479 x 680] intentionally omitted <==

-52-

-52-

Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 - - - -53-

Implementation Status		 Summary Description Per approval by the Board of Directors, the Company
has established integrity management policies,
integrity management codes, integrity management
operating procedures and behavior guidelines and
other integrity management related regulations, and
announced them in the corporate governance section
of the Company website for directors, managers and
all employees to follow.		 The Company’s integrity management rules, integrity
management operating procedures and behavior
guidelines, ethical codes of conduct, employee codes
of conduct, regulations for reporting unlawful and
unethical behaviors, and other integrity management
related regulations, have covered a risk assessment
mechanism, and preventive measures against
dishonest behavior.		 The Company clearly specifies operational
procedures, guidelines, and a well-defined
disciplinary and appeal system for handling violations
in the prevention programs against dishonest
No
Yes � � �

Evaluation Item		 1. Establishment of ethical corporate management policies
and programs		 (1) Does the company establish its ethical corporate
management policies approved by the board of
directors, and clearly specify in their rules and external
documents the ethical corporate management policies
and practices, and the commitment by the board of
directors and senior management on rigorous and
thorough implementation of such policies?		 (2) Does the company establish a risk assessment
mechanism against unethical conduct, analyze and
assess on a regular basis business activities within it’s
business scope that are at a higher risk of being
involved in unethical conduct, and establish
prevention programs which at least include preventive
measures against the conducts listed in article 7,
paragraph 2 of Ethical Corporate Management Best
Practice Principles for TWSE/GTSM Listed
Companies?		 (3) Does the company clearly specify operational
procedures, guidelines, and well-defined disciplinary
and appeal systems for handling violations in the
prevention programs against unethical conducts,

-53-

Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 - - - - -54-
Implementation Status Summary Description
behavior. The compliance situation is checked by the
internal audit unit. The company also reviews the
measures when necessary.		 The Company regularly conducts quality and credit
evaluations for suppliers and customers. For those
who have not passed the rating, they will be removed
from the cooperation list.		 The Company's Administration Department is
responsible for promoting the integrity of the
business, the relevant units are responsible for the
implementation, and the Internal Audit unit is
independently responsible for auditing to ensure the
implementation of the Company's integrity
management philosophy, the results of which are
reported to the Board of Directors at least once a year.
(The execution results were reported to the Board of
Directors on October 28, 2022)		 The Company’s code of integrity management,
operating procedures and behavior guidelines for
integrity management, codes of ethical conduct, and
codes of employee conduct have covered policies to
prevent conflicts of interest and communication
channels for directors, managers and all employees to
follow.		 The Company has established accounting systems,
internal control systems, and internal auditing systems
No
Yes � � � �
Evaluation Item implement such programs rigorously, and regularly
review and correct the programs?		 2. Implement ethical corporate management (1) Does the company evaluate business partners’ ethical
records and include ethics-related clauses in business
contracts?		 (2) Does the company establish an exclusively dedicated
unit under the board of directors, which reports to the
board of directors on a regular basis (at least once a
year), on the establishment and supervision of the
implementation of the ethical corporate management
policies and prevention programs?		 (3) Does the company establish policies to prevent
conflicts of interest and provide appropriate
communication channels, and implement the policies?		 (4) Does the company establish effective systems for both
accounting and internal control systems to facilitate

-54-

Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 - -55-
Implementation Status Summary Description
in accordance with various regulations. The auditors,
based on the result of assessment of the risk of
involvement in unethical conduct, devise relevant
audit plans to examine the compliance with the
prevention programs against unethical conducts, and
report to the board of directors on a regular basis.		 The Company has established a code of integrity
management, integrity management operating
procedures and behavior guidelines, a code of ethics
and conduct, a code of conduct for all employees, and
internal (outside) personnel reporting unlawful and
unethical behaviors and other relevant measures,
which are published on the Realtek corporate website
to provide information for directors, employees, and
stakeholders.
In addition, the Company continues to carry out
relevant education and training on integrity
management and ethical behavior for employees and
supervisors. The contents include the Company’s
integrity management policies, employee code of
ethical conduct, and channels for reporting unethical
behaviors, etc., so as to promote the integrity
management philosophy and ensure it is implemented
in daily work. In 2022, the total hours related to
integrity management education were 61.8 hours, and
a total of 1,390 people participated in the courses.
No
Yes �
Evaluation Item ethical corporate management, and does the internal
audit unit, based on the results of assessment of the
risk of involvement in unethical conduct, devise
relevant audit plans and examine accordingly the
compliance with the prevention programs, or engage a
certified public accountant to carry out the audit?		 (5) Does the company regularly hold internal and external
educational trainings of ethical corporate management?		 3. Implementation status of the whistle-blowing system

-55-

Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 - - - - 5. If the Company has established Principles of Ethical Corporate Management based on Ethical Corporate Management Best Practice Principles for TWSE/TPEx
Listed Companies, please describe any deviation between the implementation and the principles.
The Company has established integrity management policy, integrity management code, integrity management operation procedures and behavior guidelines,
codes of ethical conduct, codes of employee conduct, and measures to report illegal or unethical behavior. No deviation is between the operation and the		 -56-
Implementation Status Summary Description
The Company has established measures to report
illegal or unethical behavior, created a way for
reporting, and appointed an appropriate designated
unit for reported cases.		 The Company’s code of integrity management,
operating procedures and behavior guidelines for
integrity management, and measures to report illegal
or unethical behavior have covered standard operating
procedures, follow-up measures to be taken after the
investigation is completed, and related confidentiality
measures for reported cases.		 The Company will take the necessary protective
measures for the whistle-blowers, and promises that
the Company's employees will not be subject to
inappropriate disciplinary actions due to their whistle-
blowing.		 The Company’s integrity management code, integrity
management operating procedures and behavior
guidelines, and other relevant regulations, as well as
the implementation and operation of integrity
management are disclosed on the Company’s website
and MOPS, and are operated scrupulously.
No
Yes � � � �
Evaluation Item (1) Does the company establish a concrete whistle-
blowing system and incentive measures, create a
convenient way for reporting, and appoint appropriate
designated personnel for reported cases?		 (2) Does the company establish standard operating
procedures, follow-up measures to be taken after the
investigation is completed, and related confidentiality
measures for reported cases?		 (3) Does the company adopt measures for protecting
whistle-blowers from inappropriate disciplinary
actions due to their whistle-blowing?		 4. Strengthening information disclosure
Does the company disclose its ethical corporate
management principles and the results of performance
on the company’s website and MOPS?

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Evaluation Item
Implementation Status
Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.
Yes
No
Summary Description
regulations..
6. Other important information to facilitate a better understanding of the company’s ethical corporate management implementation: (e.g., review and amend the
company’s principles)
The Company complies with related laws and regulations including Company Act, Securities and Exchange Act, Business Entity Accounting Act, etc. to
implement ethical corporate management
10. If the company has established corporate governance best-practice principles or related regulations, disclose the method of finding these:
The Company’s Corporate Governance Best-Practice Principles and relevant regulations can be found on the corporate governance section of the Company’s
website or Market Observations Post System.
11. Other important information to facilitate a better understanding of the state of the company's implementation of corporate governance may also be disclosed:
The company in time discloses material information in accordance with regulations, and regularly holds institutional investor conference to present financial
and business related information.		 Evaluation Item
Implementation Status
Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.
Yes
No
Summary Description
regulations..
6. Other important information to facilitate a better understanding of the company’s ethical corporate management implementation: (e.g., review and amend the
company’s principles)
The Company complies with related laws and regulations including Company Act, Securities and Exchange Act, Business Entity Accounting Act, etc. to
implement ethical corporate management
10. If the company has established corporate governance best-practice principles or related regulations, disclose the method of finding these:
The Company’s Corporate Governance Best-Practice Principles and relevant regulations can be found on the corporate governance section of the Company’s
website or Market Observations Post System.
11. Other important information to facilitate a better understanding of the state of the company's implementation of corporate governance may also be disclosed:
The company in time discloses material information in accordance with regulations, and regularly holds institutional investor conference to present financial
and business related information.		 Evaluation Item
Implementation Status
Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.
Yes
No
Summary Description
regulations..
6. Other important information to facilitate a better understanding of the company’s ethical corporate management implementation: (e.g., review and amend the
company’s principles)
The Company complies with related laws and regulations including Company Act, Securities and Exchange Act, Business Entity Accounting Act, etc. to
implement ethical corporate management
10. If the company has established corporate governance best-practice principles or related regulations, disclose the method of finding these:
The Company’s Corporate Governance Best-Practice Principles and relevant regulations can be found on the corporate governance section of the Company’s
website or Market Observations Post System.
11. Other important information to facilitate a better understanding of the state of the company's implementation of corporate governance may also be disclosed:
The company in time discloses material information in accordance with regulations, and regularly holds institutional investor conference to present financial
and business related information.		 Evaluation Item
Implementation Status
Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.
Yes
No
Summary Description
regulations..
6. Other important information to facilitate a better understanding of the company’s ethical corporate management implementation: (e.g., review and amend the
company’s principles)
The Company complies with related laws and regulations including Company Act, Securities and Exchange Act, Business Entity Accounting Act, etc. to
implement ethical corporate management
10. If the company has established corporate governance best-practice principles or related regulations, disclose the method of finding these:
The Company’s Corporate Governance Best-Practice Principles and relevant regulations can be found on the corporate governance section of the Company’s
website or Market Observations Post System.
11. Other important information to facilitate a better understanding of the state of the company's implementation of corporate governance may also be disclosed:
The company in time discloses material information in accordance with regulations, and regularly holds institutional investor conference to present financial
and business related information.
Deviation from the Ethical
Corporate Management Best-
Practice Principles for
TWSE/TPEx Listed Companies
and the reason for deviation.		 regulations..
6. Other important information to facilitate a better understanding of the company’s ethical corporate management implementation: (e.g., review and amend the
company’s principles)
The Company complies with related laws and regulations including Company Act, Securities and Exchange Act, Business Entity Accounting Act, etc. to
implement ethical corporate management
Implementation Status Summary Description
No
Yes
Evaluation Item

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11. Internal Control Status

11.1. Statement of internal control

Realtek Semiconductor Corporation Statement of Internal Control System

Date: February 24, 2023

Based on the findings of a self-assessment, Realtek Semiconductor Corporation (Realtek) states the following with regard to its internal control system during the year 2022:

  1. Realtek’s board of directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance, and safeguarding of assets), reliability, timeliness, transparency of our reporting, and compliance with applicable rulings, laws and regulations.

  2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and Realtek takes immediate remedial actions in response to any identified deficiencies.

  3. Realtek evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the ‘Regulations’). The Criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities.

  4. Realtek has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations. 5. Based on the findings of such evaluation, Realtek believes that, as of December 31, 2022, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.

  5. This Statement is an integral part of Realtek’s annual report for the year 2022 and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.

  6. This statement was passed by the board of directors in their meeting held on February 24, 2023, with none of the ten attending directors expressing dissenting opinions, and the remainder all affirming the content of this statement.

Realtek Semiconductor Corporation

Chairman: Chiu, Sun-Chien President: Yen, Kuang-Yu

  • 11.2. The Company was not required to commission an independent auditor to audit its internal control system.

  • If there has been any legal penalty against the company or its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder equity or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement.: None

  • Major resolutions of the shareholders’ meeting and the board meetings from last year to the

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date of the annual report printed:

13.1. Major resolutions of 2022 shareholders’ meeting:

Date Proposals Resolution Results And
Implementation
June 8, 2022 Ratification Items
1. 2021 business report and financial
statements
2. Distribution of 2021 retained earnings
Discussion Item
1. To revise the Articles of Incorporation
2. To revise the Procedures for
Acquisition or Disposal of Assets		 Approved
Approved
Dividend record date: 2022/09/12
Payment date: 2022/10/07
Amount: NT$13,847,318,307
Approved
Obtained the approval letter for
registration change: 2022/06/21
Approved
Announced on website and proceeded
as the amended procedures by June 8,
2022.

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13.2. Major Resolutions of Board Meetings

Date Summary of Major Resolutions Resolution
Results
Mar. 18, 2022 1. 2021 parent company only financial statements and consolidated financial
statements.
2. Cause for convening 2022 regular shareholders’ meeting.
3. Adoption of the shareholders' proposals for 2022 shareholders’ meeting.
4. Employees’ compensation and Directors’ remuneration of 2021.
5. The Company intends to endorse the guarantee for a subsidiary.
6. Fund loans between subsidiaries of the Company.
7. To revise the Articles of Incorporation
8. The Company's auditor of financial statements and audit Fee for 2022.
9. 2021 Statement of Internal Control System.		 Approved by
all attending
directors
Apr. 22, 2022 1. Distribution of 2021Retained Earnings.
2. 2021 cash dividends distribution from retained earnings.
3. Cash distribution from capital surplus.
4. To revise the Articles of Incorporation
5. To revise the Procedures for Acquisition or Disposal of Assets
6. 2021 business report and 2022 business plan.
7. The Company intends to loan funds to subsidiaries.
8.Fundloans betweensubsidiaries of the Company.		 Approved by
all attending
directors
Jul. 28, 2022 1. The Company intends to loan funds to subsidiaries.
2. Fund loans between subsidiaries of the Company.		 Approved by
all attending
directors
Aug. 29, 2022 1.To adjust the group's organizational structure.
2.Early termination of fund loans between subsidiaries of the Company.		 Approved by
all attending
directors
Oct. 28, 2022 1. The Company intends to loan funds to subsidiaries.
2. A subsidiary’s cash distribution from capital surplus.
3. Early termination of the Company’s endorsement and guarantee for a
subsidiary. .
4. 2022 year-end bonus principle for officers.
5. The Status that the Company regularly evaluates the independence of auditor.
6. 2023 annual audit plans.
7. To revise the Regulation of Insider Trading.
8. To revise the Procedures for Handling Material Inside Information.
9. The Company's "Corporate Social Responsibility Best Practice Principles" was
revised to "Sustainable Development Best Practice Principles".
10. Appointment of Chief Information SecurityOfficer		 Approved by
all attending
directors
Feb. 24, 2023 1. 2022 parent company only financial statements and consolidated financial
statements.
2. Cause for convening 2023 regular shareholders’ meeting.
3. Adoption of the shareholders' proposals for 2023 shareholders’ meeting.
4. Fund loans between subsidiaries of the Company.
5. The Company's auditor of financial statements and audit Fee for 2023.
6. 2022 Statement of Internal Control System.
7. Organization adjustmentof the Company.		 Approved by
all attending
directors
Apr. 21, 2023 1. 2023 Q1 consolidated financial statements.
2. The Company intends to loan funds to a subsidiary.
3. 2022 business report.
4. Employees’ compensation and Directors’ remuneration of 2022.
5. Distribution of 2022 Retained Earnings.
6. 2022 cash dividends distribution from retained earnings.
7. Cash distribution from capital surplus.
8. Establish the Company's " Rules Governing Financial and Business Matters
Between the Company and its Related Parties".
9. Report of relatedpartytransactions in 2022.		 Approved by
all attending
directors

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Date Summary of Major Resolutions Resolution
Results
10. Approval of related party transactions.
11.Amendthe causeforconvening2023regularshareholders' meeting.

  1. Directors’ objections against the important resolution of board meetings from last year to the date of the annual report printed: None

  2. Information of resignation or dismissal of persons related to the financial reports (including chairman, president, accounting officers, finance officers, internal audit manager, corporate governance officer, and R&D officers) from last year to the date of the annual report printed: None

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IV. Information Regarding Audit Fees

Unit: NT$K Unit: NT$K
Accounting
Firm
Pricewaterhouse
Coopers Taiwan		 Name of CPA
Li, Tien-Yi
Cheng, Ya-Huei		 Period Covered by
CPA’s Audit
2022/01/01~2022/12/31		 Audit
Fee
4,650		 Non-audit Fee
Tax Compliance Audit
980		 Total
5,630		 Remarks

  1. Replaced the audit firm and the audit fee paid to the new audit firm was less than the payment of previous year: Not applicable.

  2. Audit fee reduced not less than 10% compared to previous year: Not applicable.

V. Replacement of Independent Auditors

  1. Regarding the former CPA
Replacement Date March 30, 2023 March 30, 2023 March 30, 2023 March 30, 2023 March 30, 2023
Replacement reasons
and explanations		 The internal regular rotation of PricewaterhouseCoopers Taiwan
Describe whether the
Company terminated or
the CPA rejected
the appointment		 Parties
Status
CPA		 The Company
Appointment
terminated
automatically		 Not
applicable		 Not
applicable
Appointment rejected
(continued)		 Not
applicable		 Not
applicable
The Opinions other
than Unmodified
Opinion Issued in the
Last Two Years and
the Reasons for the
Said Opinions(Note)		 None
Is there any
disagreement in
opinion with the
Company		 YES Accounting principles orpractices
Disclosure of Financial Statements
Audit scope or steps
Others
No �
Explanation
Supplementary
Disclosure		 None

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2. Regarding the Successor CPA

rding the Successor CPA
Name of accounting firm PricewaterhouseCoopers Taiwan
Name of CPA Li, Tien-Yi ; Cheng, Ya-Huei
Date of appointment March 30, 2022
Prior to the Formal Engagement, Any
Inquiry or Consultation on the
Accounting Treatment or Accounting
Principles for Specific Transactions,
and the Type of Audit Opinion that
the CPA might issue on the Financial
Report.		 None
Written Opinions from the Successor
CPA are different from the Former
CPA’s opinions.		 None

VI. If the Company’s Chairman, President, Managers in charge of finance or accounting operations held positions within the auditor’s firm or its affiliates during last year, the name, title, and period of holding positions should be disclosed: None

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VII. Share transfer or share pledge of Directors, Officers and major shareholders holding more than 10% shares from last year to the print date of the annual report

  1. Changes in shareholding of Directors, Officers and major shareholders
Title Name 2022 2022 As of April 8,2023 As of April 8,2023
Shares
increased
(decreased)		 Pledge
shares
increased
(decreased)		 Shares
increased
(decreased)		 Pledge
shares
increased
(decreased)
Chairman United Glory Co., Ltd.
Representative:
Chiu, Sun-Chien		 - - - -
Vice Chairman United Glory Co., Ltd.
Representative:
Chern,Kuo-Jong		 - - - -
Director Cotek Pharmaceutical Industry
Co., Ltd.Representative:
Yeh, Nan-Horng		 7,264,000
Director Sonnen Limited
Representative:Yeh,Po-Len		 - - - -
Director Yen, Kuang-Yu - - - -
Director Huang, Yung-Fang - - - -
Director Ni, Shu-Ching - - - -
Independent Director Chen, Fu-Yen - - - -
Independent Director Tsai, Tyau-Chang - - - -
Independent Director Lo, Chun-Pa - - - -
CEO Chiu, Sun-Chien - - - -
Vice CEO & CFO Chern, Kuo-Jong - - - -
President Yen, Kuang-Yu - - - -
Chief Operating Officer Huang, Yung-Fang - - - -
Vice President Huang, Yee-Wei - - - -
Vice President Lin, Ying-Hsi (9,000) - - -
Vice President Chang, King-Hsiung - - (10,000) -
Vice President Tsai, Jon-Jinn - - - -
Vice President Wang, Po-Chih - - - -
Vice President Chang, Jr-Neng - - - -
Vice President Shen, Jia-Ching - - - -
Vice President Lee, Shang-Ta 5,000 - - -
CISO Weng, Chi-Shun (Note1) - - - -
Vice President Su, Chu-Ting (Note1) - - - -

Note 1: Weng, Chi-Shun was newly appointed officers since 2022.10.28. Su, Chu-Ting was newly appointed officers since 2023.02.24.

2. Information on stock transfer to related parties: None.

  1. Information on pledge of shares to related parties: None.

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VIII. The relationship between any of the Company’s top ten shareholders:

VIII. The relationship between any of the Compan any of the Compan y’s top ten sh y’s top ten sh areholders: areholders:
April 8,2023
Name Shareholding Spouse &
Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Top Ten Shareholders
who are Related
Parties, Spouse, or
Second-Degree
Relatives
Shares % Shares % Shares % Name Relationship
Fubon Life Insurance Co., Ltd.
Representative: Richard M. Tsai		 23,523,000 4.59% - - - - - -
- - - - - - - -
Cotek Pharmaceutical Industry Co., Ltd.
Representative: Yeh,Chia-Wen		 22,146,604 4.32% - - - - - -
- - - - - - - -
Cathay MSCI Taiwan ESG Sustainability
High Dividend Yield ETF		 14,964,000 2.92% - - - - - -
Yuanta/P-shares Taiwan Dividend Plus ETF 12,807,764 2.50% - - - - - -
Cathay Life Insurance Company, Ltd.
Representative: Huang,Tiao-Kuei		 9,588,000 1.87% - - - - - -
- - - - - - - -
Nan Shan Life Insurance Co., Ltd.
Representative: Yin,Chung-Yao		 9,438,000 1.84% - - - - - -
- - - - - - - -
Leicester Worldwide Corporation 9,418,184 1.84% - - - - - -
New Labor Pension Fund 9,339,348 1.82% - - - - - -
China Life Insurance Co., Ltd.
Representative: Saloon Tham		 8,291,000 1.62% - - - - - -
- - - - - - - -
Vanguard Emerging Markets Stock Index
Fund, A Series Of Vanguard International
EquityIndex Funds		 6,713,959 1.31% - - - - - -

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IX. The consolidated shareholdings and percentage of investments held by the Company, Directors, Officers, and the companies controlled directly or indirectly by the Company.

December 31,2022 /Unit: shares:% December 31,2022 /Unit: shares:% December 31,2022 /Unit: shares:% December 31,2022 /Unit: shares:%
Investments Investments of the
Company		 Investments directly or
indirectly held by Directors,
Officers, and the companies
controlled directly or
indirectlybytheCompany		 Consolidated Investments
Shares % Shares % Shares %
Amber Universal Inc. 41,432 100% � � 41,432 100%
Realtek Singapore Private
Limited		 116,059,638 100% � � 116,059,638 100%
Realtek Investment Singapore
Private Limited		 200,000,000 100% � � 200,000,000 100%
Realsun Investments Co., Ltd 28,000,000 100% � � 28,000,000 100%
Hung-wei Venture Capital Co.,
Ltd.		 25,000,000 100% � � 25,000,000 100%
Realking Investments Co., Ltd. 29,392,985 100% � � 29,392,985 100%
Realsun Technology
Corporation		 500,000 100% � � 500,000 100%
AICONNX Technology
Corporation		 2,000,000 100% � � 2,000,000 100%
Bobitag Inc. 1,918,910 66.67% � � 1,918,910 66.67%
EstiNet Technologies Inc. 2,000,000 6.89% � � 2,000,000 6.89%

Note: The aforementioned are long-term investments under the equity method.

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Capital Raising

I. Source of Capital

Year
&
Month
09/2017
04/2018
04/2020
04/2022		 Authorized Authorized Paid-in Paid-in Remarks Remarks
Issuing
Price
10
10		 Shares
(K)
890,000
890,000		 Amount
($K)
8,900,000
8,900,000		 Shares
(K)
506,506
508,095		 Amount
($K)
5,065,062
5,080,955		 Source of Equity
Employees' compensation
Employees' compensation		 Capital
increase
by assets
other than
cash
-
-		 Other
Note 1
Note 2
10 890,000 8,900,000 510,685 5,106,849 Employees' compensation - Note 3
10 890,000 8,900,000 512,864 5,128,636 Employees' compensation - Note 4

Note 1: The capitalization was approved by the Hsinchu Science Park Administration on Sep. 25, 2017 with an approval letter of No. 1060026285.

  • Note 2: The capitalization was approved by the Hsinchu Science Park Administration on Apr 11, 2018 with an approval letter of No. 1070010727.

  • Note 3: The capitalization was approved by the Hsinchu Science Park Administration on Apr 20, 2020 with an approval letter of No. 1090010606.

  • Note 4: The capitalization was approved by the Hsinchu Science Park Administration on Apr 13, 2022 with an approval letter of No. 1110011158.

Type of share Authorized Capital Authorized Capital Authorized Capital Rk
Outstanding Shares Un-issued Shares Total emars
Common stock 512,863,641 377,136,359 890,000,000 Note

Note: The authorized capital retains 80,000,000 shares for the issue of employee warrant shares. Shelf Registration: Not Applicable.

II. Structure of Shareholders

April 8,2023 April 8,2023
Structure of
Shareholders		 Government
Institutions		 Financial
Institutions		 Other
Institutional
Investors		 Foreign
Institutional
& Individual
Investors		 Individual
Investors		 Total
Number of Shareholders 0 41 475 1,156 60,302 61,974
Shareholdings 0 87,587,158 104,579,601 241,028,638 79,668,244 512,863,641
Shareholding Percentage 0.00% 17.08% 20.39% 47.00% 15.53% 100.00%

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III. Distribution of Shareholding

I. Distribution of Shareholding
April 8,2023
Category Number of
Shareholders		 Shareholdings Shareholding
Percentage
1
to
999		 45,193 3,849,237 0.75%
1,000
to
5,000		 14,056 24,267,179 4.73%
5,001
to
10,000		 1,125 8,208,161 1.60%
10,001
to
15,000		 348 4,289,106 0.84%
15,001
to
20,000		 174 3,101,550 0.60%
20,001
to
30,000		 191 4,702,015 0.92%
30,001
to
40,000		 102 3,542,330 0.69%
40,001
to
50,000		 87 3,905,275 0.76%
50,001
to
100,000		 238 16,998,399 3.31%
100,001
to
200,000		 159 22,897,833 4.46%
200,001
to
400,000		 122 35,097,390 6.85%
400,001
to
600,000		 36 17,300,633 3.37%
600,001
to
800,000		 35 24,880,866 4.85%
800,001
to
1,000,000		 15 13,315,893 2.60%
1,000,001 and above 93 326,507,774 63.67%
Total 61,974 512,863,641 100.00%

IV. List of Major Shareholders

. List of Major Shareholders
April 8, 2023
Shareholding
Shareholder		 Shareholdings Percentage of
Shareholding
Fubon Life Insurance Co., Ltd. 23,523,000 4.59%
Cotek Pharmaceutical Industry Co., Ltd. 22,146,604 4.32%
Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF 14,964,000 2.92%
Yuanta/P-shares Taiwan Dividend Plus ETF 12,807,764 2.50%
Cathay Life Insurance Company, Ltd. 9,588,000 1.87%
Nan Shan Life Insurance Co., Ltd. 9,438,000 1.84%
Leicester Worldwide Corporation 9,418,184 1.84%
New Labor Pension Fund 9,339,348 1.82%
China Life Insurance Co., Ltd. 8,291,000 1.62%
Vanguard Emerging Markets Stock Index Fund, A Series Of Vanguard
International EquityIndex Funds		 6,713,959 1.31%

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V. Market price, net worth, earning, dividends per common share and related information over the last two years

Item Year Year 2021 2022 As of March 31, 2023
Market price
per share		 Highest 621 594 405
Lowest 383 232.5 280
Average 508.23 377.37 358.18
Net worth
per share		 Before distribution 76.26 91.16 -
After distribution 51.08 - -
Earnings
per share		 Weighted average shares 510,684
(thousand shares)		 512,410
(thousand shares)		 512,863
(thousand shares)
Earnings per share 33.00 31.62 -
Dividends
per share
(Note4)		 Cash dividends 25 26 -
Stock
dividends		 Earning
Distribution		 - - -
Capital
Distribution		 - - -
Accumulated
unappropriated dividends		 - - -
Return on
investment		 Price/earnings ratio
(Note1)		 15.40 11.93 -
Price/dividend ratio
(Note2)		 20.33 14.51 -
Cash dividends yield
(Note3)		 4.92% 6.89% -

Note 1: Price/Earnings Ratio = Average Market Price / Earnings Per Share

Note 2: Price/Dividend Ratio = Average Market Price / Cash Dividends Per Share

Note 3: Cash Dividend Yield = Cash Dividends / Average Market Price Per Share

Note 4: Cash dividends filled in 2022 and 2021 represent the distribution of 2021 and 2020 retained earnings, respectively and exclude cash dividends from capital surplus.

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VI. Dividend Policy and Status of Execution

  1. Dividend Policy under the Articles of Incorporation

  2. 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 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 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. The dividend distributed to shareholders shall not be less than 50% of the increased distributable retained earnings for the current year.

  3. 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.

  4. 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.

  5. 2023 Annual Shareholders' Meeting report on the distribution of dividends for 2022: The Company’s dividend distribution from retained earnings for 2022, approved by the board of directors, was NTD 26 per share in cash.

  6. VII. Impact to business performance and EPS resulting from stock dividend distribution: None.

VIII. Employees’ Compensation and Remuneration to Directors

  • 1.Employees’ Compensation and Remuneration to Directors as Stated in the Articles of Incorporation:

  • 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

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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.

  1. Accounting for Employee Compensation and Remuneration to Directors

  2. The Company accrued employees’ compensation and remuneration to directors based on a percentage of profit as stated in the Articles of Incorporation Article. If the accrued amounts differ from the actual amounts approved by stockholders’ meeting, the Company will recognize the change as an adjustment to income of next year.

  3. Employee compensation and Remuneration to Directors resolved by the Board of Directors

  4. 3.1. The Proposal of 2022 Employees’ Compensation and Remuneration to Directors resolved at the Board of Directors held on April 21, 2023:

Unit: New Taiwan Dollars; shares

Cash
compensation
4,765,897,688		 Employees’ Compensation
Stock
compensation
Common
Shares
0
0		 Total
4,765,897,688		 Remuneration
to Directors
Cash
120,000,000		 Difference
Difference
Amount
Treatment
none
Not applicable

Note: the 2022 Employees’ compensation and directors’ remuneration resolved at the Board of Directors are the same as the accrued amounts in 2022.

  • 3.2. The ratio of employees’ stock compensation divided by the total of income after tax and employees’ compensation: The 2022 employees’ compensation is in cash so that it is not applicable.

  • The actual distribution of employees’ compensation and directors’ remuneration for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee’s compensation and directors’ remuneration, additionally the discrepancy, cause, and how it is treated.

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Unit: New Taiwan Dollars; shares

Cash
compensation
3,965,355,284		 Employees’ Compensation
Stock
compensation
Common
Shares
991,338,530
2,178,766		 Total
4,956,693,814		 Remuneration
to Directors
Cash
130,000,000		 Difference
Difference
Amount
Treatment
none
Not applicable

Note: The actual distribution of employees’ compensation and directors’ remuneration is the same as accrued amounts in 2021.

IX. Status of Treasury Stocks: None

X. Status of Corporate Bonds: None

XI. Status of Preferred Stocks: None

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XII. Status of GDR

March 31, 2023

March 31,2023
Issuing Date
Item		 Jan 24, 2002
IssuingDate Jan 24,2002
Issuance &Listing Luxembourg Stock Exchange.
Total Amount�US$� 240,180,375
OfferingPriceper Unit�US$� 17.25
Issued Units 13,923,500 units
Underlying Securities New shares issued for capital increase of
cash and issued common shares held by
shareholders of the Company
Common Shares Represented 55,694,400 Common Shares
Rights and Obligations of GDR holders According to the relevant instructions of
thepublished manual
Trustee N/A
DepositaryBank Bankof NewYork Mellon
Custodian Bank Mega International Commercial Bank
GDRs Outstanding 313,463 units
Apportionment of the expenses for the
issuance and maintenance		 In accordance with the contract of the
underwriting syndicate and depositary
bank
Terms and Conditions in the Deposit
Agreement and Custody Agreement		 The company will provide necessary
public information in accordance with the
contract for the depositary bank to notify
the depositarycertificate holder
Closing
price per
GDRs
�US$)		 2022 Highest 79.59
Lowest 31.15
Average 50.57
As of March 31 of 2023 Highest 53.01
Lowest 36.65
Average 46.88

XIII. Status of Employee Stock Warrants: None

XIV. Status of Employee Restricted Stocks: None

  • XV. Status of Mergers or Acquisitions, or as assignee of new shares issued by other companies: None

XVI. Status of Implementation of Fund Utilization Plan: Not Applicable

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Operations Overview

I. Business Overview

1. Business Scope

(1) Realtek’s Main Business Areas

  • i. Research, development, production, manufacturing, and sales of various types of integrated circuits.

  • ii. Provide software and hardware application design, testing, maintenance, and technical consulting services for various integrated circuit products.

  • iii. Research, development, and the sale of various types of silicon intellectual property

  • iv. Adjunct trade and sales that relate to Realtek’s core businesses

  • (2) Percentage of Operating Revenue

ercentage of Operating Revenue
Unit: NT$thousands
2022 IC Products Other Total
Net OperatingRevenue 111,560,194 229,597 111,789,791
Percentage of OperatingRevenue 99.79% 0.21% 100%
  • (3) Current Products

Communications Network and Connected Media Products:

Ethernet Controller Series Ethernet PHY Transeiver Series USB Storage Bridge Controller Series UHD HDR Multimedia STB SoC Series Automotive Ethernet PHY Series Automotive Ethernet Highly-Integrated Switch Controller Series Integrated Wireless LAN (WLAN) and Bluetooth Network Controllers Series WLAN 802.11ax Dual Band AP/Router SoC Series Multifunction IoT SOC Series IoT SoC with Bluetooth Series IoT AI Wireless Network Camera SoC Series Bluetooth 5.2 LE SoC and Bluetooth 5.2 Audio SoC Series GNSS (Global Navigation Satellite System) IC Series Multi-Port Ethernet PHY Chipset Series Multi-Port Ethernet Switch Controller Chipset Series Multi-Port Ethernet Managed Switch Controller Chipset Series Highly-Integrated PON SOC Series Multi-Port PSE Controller Series VDSL 35B Network Router Controller Series

Computer Peripheral and Smart Interconnect Products:

HD-A Audio Codec Series High Voltage Audio Amplifier with Speaker Protection Series SoundWire Audio Codec Series USB 2.0 Audio Codec Series

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USB 2.0 to I2S Bridge Controller Series Hi-Fi Audio Codec Series for Mobile Devices Hi-Fi Audio DSP Series for Mobile Devices Boost Audio Amplifier with Speaker Protection Series for Mobile Devices Embedded USB Interface Image Signal Processor Chip Series with Edge AI Engine USB 2.0 Fingerprint Controller Series Highly-Integrated 5MP Edge AI IP Camera SoC Series PCIe/USB 3.2/USB 2.0 Card Reader Controller Series USB 3.0 Gen 1/USB 3.2 Gen 2 4-Port Hub Controller Series USB Type-C PD Controller Series USB 3.2 Gen2 Redriver Controller Series

Multimedia Products:

Integrated LCD Controller Series Integrated High Resolution Gaming LCD Controller Series DisplayPort Video Translator Series DisplayPort MST Hub Controller Series High-End Smart Connected LCD TV SoC Series Intelligent Display SoC Series 8K LCD TV Video Decoder and Processing Chip Series Super Resolution Image Enhancement SoC Series

  • (4) Products Under Development

Communications Network and Connected Media Products:

Higher Specification Ethernet Controller Series Higher Specification Ethernet PHY Transeiver Series Higher Specification Storage Bridge Controller Series Higher Specification UHD HDR Multimedia STB SoC Series Automotive Ethernet High-Speed Cyber-Security PHY Series

High-Port Count Integrated Automotive Ethernet Cyber-Security Switch Controller Series Higher Specification Multi-Port Ethernet PHY Chipset Series

Higher Specification Multi-Port Ethernet Switch Controller Chipset Series Higher Specification Multi-Port Ethernet Managed Switch Controller Chipset Series Higher Specification Multi-Port Ethernet PSE Controller Chipset Series

Higher Specification Fiber Uplink High Bandwidth Managed Ethernet Switch Controller Series Higher Specification Highly-Integrated PON SOC Series

Higher Specification PON Laser Driver Series

New Generation Integrated Multi-Link Wireless LAN (WLAN) and Bluetooth Network Controller Series

Higher Specfication IoT SoC Integrating Wi-Fi, Bluetooth, and Smart Sensing Series Higher Specification IoT SoC Integrating Wi-Fi, Bluetooth, and Smart Voice Series Higher Specification, Highly-Integrated IoT AI Wi-Fi Camera SoC Series

Higher Specification, Highly-Integrated WLAN Dual Band AP/Router SoC Series

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Higher Specfication Bluetooth 5.3 Audio SoC Series Higher Specification Bluetooth 5.3 LE IoT SoC Series

Computer Peripheral and Smart Interconnect Products:

Higher Specification SoundWire Audio Codec Series USB 2.0 Audio Codec with DSP Series

Audio DSP Supporting Neural Network Computing Series High Voltage Audio Amplifier with Speaker Protection Series

Hi-Fi Audio Codec Series for Mobile Devices

Hi-Fi Audio Codec Series for Gaming Devices

Hi-Fi Audio Codec with Class-D Amplifier and SoundWire Interface Series for Mobile Devices Boost Audio Amplifier with Speaker Protection Series for Mobile Devices

Higher Specification Embedded USB Interface High Resolution Camera Controller with Edge AI Engine Series

Higher Specification USB 2.0 Fingerprint Controller Series

Higher Specfication High Resolution IP Camera Edge AI SoC Series PCIe SD 8.0 Card Reader Controller Series for Notebook Computer USB 3.2 Gen 2 7-Port Hub Controller Series

USB 4.0 Multi-Port Hub Controller Series

Type-C PD Controller Series Supporting EPR (Enhanced Power Rate) Highly-Integrated Low-Power Embedded Controller Series

Multimedia Products:

Higher Specification Integrated LCD Controller Series Higher Specification DisplayPort Video Translator Series Higher Specification DisplayPort MST HUB Controller Series

LCD TV SoC Series Supporting New Generation Video Decode Higher Specification SoC Series Supporting Streaming Video Decode and Display

2. Industry Overview

(1) Industry Status & Trends and Product Development & Competition

After the semiconductor industry experienced a supply shortage in 2021, the end market demand weakened. In 2022, the supply chain faced an inventory problem due to geopolitics, an epidemic, inflation, and other major environmental factors. According to Gartner's estimate, global semiconductor industry revenue in 2022 was US$601.7 billion, an increase of a mere 1.1% when compared to 2021. Analog (19% year-over-year increase) and discrete (15% year-over-year increase) components were the main growth areas, neither of which relate to Realtek's products lines. Realtek, working closely with upstream suppliers and downstream customers, and with the concerted efforts of all employees, once again delivered an annual revenue growth despite the many challenges presented over the course of the year. According to DigiTimes research, Realtek ranked seventh among the world's top ten IC design companies in 2022.

Communications Network and Connected Media Products:

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In terms of Ethernet, the wafer supply shortage in 2022 has been resolved, and Realtek can receive sufficient supply for the notebook computer, motherboard, Network Storage Device (NAS), game console, docking station, and USB-to-Ethernet adapter markets. In recent years, the Ethernet specifications in the computer and communication network market has gradually progressed from 1GBASE-T to 2.5GBASE-T. Realtek's second-generation 2.5GBASE-T controller is currently the standard configuration for flagship motherboards, and is expanding to include mid-to-highend models, switches, and accessories for network extension markets. In response to the highly digitalized post-pandemic market demand in 2023, Realtek will launch a higher-speed 5GBASET Ethernet solution, Users can use existing Cat 5e network cables to reduce the time and cost of re-cabling, and immediately enjoy the upgraded bandwidth of 5Gbps for highly effective living.

Due to the fact that huge amount of data is rapidly accumulated in the hands of every end user, the built-in storage capacity of the majority of computers and mobile phones is no longer sufficient, leading to the need for expansion accessories. Portable/external storage devices have higher security than cloud space and do not rely on networks. Traditional mechanical hard drives (HDD) have gradually been replaced by solid-state drives (SSD) that have faster transfer speeds and are both silent and shock-resistant. SSDs have many other advantages over HDDs, such as high-speed read and write, their small size, light weight and portability. Their price has become affordable for consumers and they are quickly taking over the hard drive market. External SSD interfaces are divided into the traditional SATA, and the new, higher-speed PCIe interfaces. Currently, SSD market suppliers can only provide bridge controller solutions with either a single USB-to-SATA, or USB-to-PCIe interface. Thus, Realtek launched the only solution in the global market that supports USB 10Gbps interface with auto-detection of PCIe/NVMe and SATA/AHCI dual protocols to enter the high-end SSD storage market. In 2022, Realtek also launched a USB 5Gbps to SATA/AHCI solution to serve the low-end traditional hard drive market. In 2023, Realtek will target the high-end market and launch the next-generation solution with USB 20Gbps to SATA/AHCI or PCIe/NVMe protocol, thereby providing a more comprehensive product portfolio to meet the diversified needs of the storage market.

In this era of rapid digital expansion, users have extremely high requirements for the read and write speed of memory cards. At the end of 2021, the SD Express memory card SD 7.0 was launched, which integrated the PCIe NVMe 1.3 protocol to achieve a maximum transmission speed of up to 985MB/s (three times faster than traditional UHS-II SD memory cards), driving demand for card readers that support this specification. In 2022, customers rapidly adopted Realtek's USB 10Gbps to SD Express bridge controller solution, leading to the world's first massproduced USB external SD Express card reader. The solution uses exclusive power-saving technology to effectively reduce the heat generated during high-speed transmission, providing a more stable and reliable storage environment for systems. It can be applied to high-end audio and video systems, medical equipment, edge computing devices, and the booming market of video creators, facilitating real-time browsing and editing of content through an external card reader after shooting.

In recent years, there has been a proliferation of OTT (over-the-top) services, and the pandemic

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has further driven consumer demand, leading to a continuous increase in the demand for OTT set-top boxes. This has also accelerated the networked IP transformation of the pay TV industry. Large telecom operators are fully transitioning to the IP network and launching their own OTT services or set-top boxes. For example, the largest operator in the United States integrated its OTT video services and introduced a global IP video platform in 2021 to support its services in all carrier countries, both in Europe and the US via a single IP platform. Other major telecom operators have also integrated their existing traditional linear TV or video on demand services with OTT, and launched their own set-top boxes.

In addition to the shift towards IP-based and OTT, open platforms rely on the support of App stores and better integrated architecture for premium apps to encourage operators to abandon the old closed systems and embrace open platforms. Google has launched Android TV, and the RDK Alliance has launched the RDK-V platform. Both have successfully attracted major operators to adopt them. Meanwhile, Netflix has launched the Netflix Scaling Program for the operator market (Hailstorm project based on Android TV, and the DaVinci project based on RDK) to accelerate its operators' launch of Hybrid OTT and IPTV set-top boxes that combine a network video to support Netflix.

The change in consumer viewing habits and the continuous demand for higher content quality have greatly increased security challenges for operators. To respond to the rapidly maturing market that provides products offering greater capabilities at lower prices, Realtek continues to develop set-top box solutions with new generations of UHD Multimedia Controllers, integrating the Multi-CAS security solutions to meet each operator’s requirements. In addition to integrating new-generation HDR and 3D audio technology, Realtek continues to develop new-generation video and audio codec technology to cope with the increasing resolution, providing complete and cost-competitive hardware and software reference designs with low power consumption to help customers develop high-performance set-top box products and seize business opportunities. Furthermore, by combining their own complete multimedia and network solutions, customers can gain an edge that competitors will find difficult to replicate.

Regarding the Ethernet switch market, Realtek has gained a market-leading position in embedded applications, such as Wi-Fi routers, IP phones, unmanaged switches, and smart switches. In recent years, the company's market share in managed switches has been steadily rising. In 2022, driven by the demand for communication network equipment during the pandemic, customer demand has increased significantly. Realtek's Layer 3 managed switch products have also been adopted by important customers. The company is leveraging this advantage to launch more cost-effective products.

Realtek started producing Ethernet Power Sourcing Equipment (PSE) in 2021, and along with its managed switch products successfully entered the supply chains of major customers. Both enjoyed significant revenue growth in 2022. Furthermore, the market for communication network products has grown against the market trend because of the pandemic. In the third quarter of 2022, Realtek launched a single-chip 5-port 2.5GBASE-T switch controller (supports 4-port

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2.5GBASE-T PHY and a single-port 10GBASE-T PHY), thereby further enhancing the depth and breadth of its product portfolio, along with expanding the growth momentum of the product line in order to penetrate a broader and higher-speed switch market in the future. Realtek's midto-high-end managed switch products have accumulated many important customers. In addition to the targeted major GbE (Gigabit Ethernet) market segment (241GBASE-T+410GBASE-T, 481GBASE-T+610GBASE-T), the Multi-GbE (Multi-Gigabit) market segment (242.5GBASE-T+410GBASE-T, 321GBASE-T+162.5GBASE-T+410GBASE-T) is also opening up with a focus on the Campus Network market. Important strategic customers have successfully entered mass production, and the business performance of managed switches has therefore grown significantly. Furthermore, in the second half of 2022, in order to respond to customer needs and market competition, Realtek launched new products by adopting a new process, built-in dual-core CPU, supporting 24/481GBASE-T+4*10GBASE-T interfaces to deliver a more competitive cost structure and power performance.

In 2022, as the COVID-19 pandemic continued to induce the demand for more bandwidth among end users, global operators accelerated the deployment and upgrading of fiber optical networks. Realtek has a relatively complete product roadmap for 10G-PON (including XG-PON and XGSPON), 2.5G PON, and 1G EPON. The product solutions include Home Gateway Units (HGU) and Single Family Units (SFU) with 4-port 1GBASE-T, 1-port 1GBASE-T+3-port 100BASE-T, and 1-port 1GBASE-T Ethernet ports that can meet the needs of the new global tender project.

China is still the region with the highest demand for optical fiber globally. Realtek has gained considerable market share in the Chinese market in recent years. With the impact of the pandemic, working from home (WFH) and remote learning have become new social needs, and XPON's broadband access technology is right there to provide a stable, high-bandwidth, and affordable home Internet environment. The next new market specification requires even greater bandwidth, and XG-PON products will become the mainstream broadband access equipment for homes. Since 2022, the number of tender projects by Chinese operators for XG-PON home gateway units has gradually increased. It is expected that the shipping volume of XG-PON in 2025 will surpass that of 2.5G PON products.

Carmakers in Europe, the United States, China, Japan, and Korea have already adopted Automotive Ethernet as the backbone of in-vehicle networks and have applied it to connect safety sensors, 360-degree camera systems, in-vehicle infotainment head units, and instrument panels. Realtek's automotive Ethernet products have been designated as golden samples for interoperability testing by IOP certification laboratories. This series of products has obtained certification from many automakers, adopted by Tier 1 suppliers, and entered mass production. Realtek continues to lead the world with its technological advantages and has launched secondgeneration automotive Ethernet products, including a high-port switch chip (Switch) supporting 100/1000BASE-T1 dual-mode and a PHY supporting 100/1000BASE-T1 dual-mode. It has been successfully adopted by European and US automakers and Tier 1 suppliers, and has become standard for the new generation of in-vehicle backbone networks in 2022~2023. Additionally, Realtek is cooperating with automotive manufacturers to integrate 10BASE-T1 technology into

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the next generation of Multiport Switches. A PHY controller that supports the new 2.5GBASET1 standard is also under development. In addition, the product roadmap includes the integration of MACsec to protect information security, as well as the XFI/BASE-KR interface that supports data bandwidth of up to 10Gbps for Ethernet to pair with the higher computing power in the main chips. These developments aim at meeting the demands of the intelligent networked automotive market in the next 3 to 5 years.

Regarding Wi-Fi products, in 2022 Wi-Fi 6 replaced Wi-Fi 5 as the mainstream Wi-Fi for the PC market. Concurrently, related manufacturers have started to plan for the release of Wi-Fi 7. The upgraded performance and new applications emphasized by this standard are expected to go into high-end products designed by ODM in 2023. After releasing the second generation Wi-Fi 6 in 2022, Realtek has successfully introduced it to PC customers for mass production to meet the current market trend. Wi-Fi 6E has also been adopted by various OEM customer projects in 2022, and is expected to contribute to revenue in 2023. Realtek plans to launch Wi-Fi 7 (802.11be) in 2023, introducing it step-by-step to PC OEM key customers, while entering mass production in 2024.

Compared to previous Wi-Fi, the low latency characteristics of Wi-Fi 6 enable new applications, such as AR/VR, to better demonstrate the fluent video transmission required by many of these product applications. European and American companies are the leaders in this field, and Realtek has been consistently strengthening the customer cooperation, along with placing huge emphasis on technical development to ensure that high quality products can be introduced smoothly into mass production.

The printer is another important application for Wi-Fi in the IT market, and even though this application does not emphasize high transmission rates, customers have begun considering highspec Wi-Fi for their future products due to the gradual increase in the overall penetration rate of Wi-Fi 6. In addition to hardware upgrades to Wi-Fi 6, customers also require additional features in order to provide end customers with greater convenience of use.

In the high-end TV segment post pandemic, customers seek high-spec Wi-Fi with competitive prices to support end products with good cost-performance ratios to stimulate the demand. WiFi specification for low-end TV is also influenced by the market and require upgrading. Customers can optimize their product portfolios and improve end product pricing by following Realtek's strategy of continually guiding customers toward higher specifications yielding a good cost-performance ratio, while simultaneously building technological barriers against market competition. In 2021, some set-top boxes in the Chinese market were downgraded to models without Wi-Fi or that required the use of Bluetooth due to insufficient Wi-Fi 5 supply. However, starting in the third quarter of 2022, major Chinese telecom operators began adding Wi-Fi 6 models to their set-top boxes to gradually upgrade the specifications of existing projects. New set-top box projects in both Europe and America use mainly Wi-Fi 6 to push for higher Wi-Fi revenue.

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Wireless surveillance devices (IP CAM), incorporating AI technology and IoT related applications, still maintain a long-term steady growth trend. Despite fierce competition from Chinese competitors, Realtek Wi-Fi has advantages in product performance, portfolio completeness, and brand trust, and will defend its position through appropriate pricing. Realtek will also seek to advance dual band IoT solutions and improve Wi-Fi specifications, targeting mid-to-high-end products and differentiating itself from competitors using unique features to capture different market segments. Outside of China, Realtek aims to gradually replace the mainstream Wi-Fi 5 2x2 dual band with the timely launch of the new generation Wi-Fi 6 2x2 solution.

For Wi-Fi access point/router integrated products, Realtek's Dual Band Mesh Router solution has stimulated new market demand through its excellent cost-performance, and in turn created new growth momentum. With the majority of work shifting to work-from-home (WFH), consumers are demanding routers with better performance to improve work efficiency at home. This has driven the strong demand for Wi-Fi 6 routers with superior performance advantages. In 2022, besides promoting AX1500/AX1800 in more regions, in Q2 Realtek launched high-end solutions such as AX3000 and tri-band AX5400, and actively developed Wi-Fi 7 to provide customers with more complete and comprehensive router product solutions.

Realtek has been working on its IoT product line for many years, offering customers a solution that combines smart control, voice, real-time video, and more. In 2022, the IoT market was first impacted by Amazon's selling privilege ban, followed by the large-scale lockdown in China, causing the Chinese market to focus on reducing inventory in the first three quarters. Additionally, the overall consumer market in Europe and the US experienced a significant slowdown due to both the war in Ukraine, and inflation, forcing customers to pause the transition towards new specifications. However, according to third-party market research reports, the overall IoT market will continue to grow steadily, with smart home devices still accounting for the majority of WiFi-enabled IoT devices. The smart home is the primary market for Realtek's IoT, and we have a complete series of IoT products with high integration, ultra-low power consumption, and high security. Every year, Realtek actively invests in R&D resources to develop new generations of Wi-Fi and Bluetooth technologies that support the latest IoT alliance standards and enable more AI applications. In addition to being recognized by top global brand customers in the smart home market, Realtek is also actively expanding IoT in industrial applications and medical fields, hoping to bring intelligence to various applications and provide better experiences for end users. Moreover, Realtek continues to collaborate with IoT-related organizations and leaders, and is a major partner in the latest IoT standard 'Matter' where Realtek has already released the firstgeneration product with major customers. We plan to release more products in 2023, creating a more complete smart home environment.

Bluetooth is widely built into products such as smartphones, TVs, set-top boxes, and smart speakers to help individuals and family members connect wirelessly via Bluetooth, so as to enjoy the convenience and user-friendly experience brought by Bluetooth earphones, sports wristbands, Bluetooth voice remote controls, and Bluetooth Mesh peripherals. These devices bring more

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convenient entertainment experiences, more user-friendly human-machine interactions, and faster and more responsive operation feedback.

True Wireless Stereo (TWS) earphones experienced slow growth from 2020 to 2022 due to the impact caused by the pandemic. Besides the trend of active noise-cancelling (ANC) earphones that can reduce external noise interference, emerging applications such as Bluetooth wireless microphones, Bluetooth gaming earphones, and spatial audio headsets provide additional options for different user groups. Thus, the continuing expansion of the Bluetooth audio application market is still within our expectation. Capitalizing on the good reputation of the first-generation Bluetooth solution, Realtek offered a convenient ANC mass production tool to help customers improve production efficiency, reduce costs, and ensure performance consistency, thereby gaining recognition from the market and being adopted by multiple well-known international brands. In 2022, Realtek launched a low-latency Bluetooth gaming earphone solution, and a Bluetooth calling watch, receiving positive feedback from the market. Realtek continues to play an important role in promoting Bluetooth audio solutions, working with supply chains and brand customers to provide consumers with better voice experiences, meet the market's expectations for the evolution of new features in Bluetooth earphones, and promote market growth, creating a win-win situation.

Realtek's BLE (Bluetooth Low Energy) series has received recognition among major international brands for voice-assist remote controllers, assisting the transition of remote controllers from infrared to Bluetooth, and providing a new generation of smart wristbands with large color display upgrade in Bluetooth wearable applications, thereby increasing the value and attractiveness of wearables. In addition, commercial applications of Bluetooth Mesh networks that support smart voice ecosystems are maturing and supporting the growth of Bluetooth peripheral products. In the future, with the low power consumption feature of Bluetooth and its online cloud services, Realtek's Bluetooth solutions will not only be used for personal entertainment and smart home applications, but will also enter industrial applications such as smart factories, property management, B2B transportation management, medical, and automotive. Realtek has also successfully entered the Electronic Shelf Label (ESL) market, providing customers with a diverse range of cross-domain applications.

Computer Peripheral and Smart Interconnected Products:

At the beginning of 2022, the market generally believed that the overall demand for PCs in 2022 would be similar to that of 2021 and would be supported by the commercial market. However, the outbreak of the Ukraine-Russia war and China’s Zero-COVID policy in the first half of the year had a negative impact on the overall economy. The subsequent substantial increase in interest rates once again hit the consumer market, causing a decline in consumer PC demand, and inventory levels in sales channels continued to rise. In the second half of the year, companies also reduced their spending, causing the commercial PC market to further depress, resulting in a 15% to 20% year-on-year decrease in PC shipments in 2022. Furthermore, geopolitical events have changed the semiconductor landscape, and the restructuring of the supply chain poses a major challenge to the entire industry. However, even during this economic downturn and period of

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extreme volatility, Realtek continues to improve and develop new products in preparation for a market rebound. Building on the success of the neural network AI Audio noise reduction algorithm that received market recognition in the past two years, Realtek launched AI beamforming, AI echo cancellation, and AI residual echo cancellation in 2022, comprehensively improving the user experience of PCs, conference devices, and live broadcast equipment, while expanding the application field of AI algorithms from conferences to content creators. In response to the possible specification changes in PC audio interfaces three years from now, Realtek continues to participate actively in specification definition and plans to create a complete product portfolio to help the industry and customers smoothly transition to the new specifications.

The pandemic has led to the need for not only quality voice calls, but also more convenient and clearer video for remote work and distance learning. In response to this, PC brands have upgraded their commercial models for frequent video conferencing from original HD resolution, to FHD, or 5MP resolution. In addition to improving the resolution of color video devices, many commercial, and flagship models of PC brands have also upgraded from the original hybrid HD RGBIR single lens, to the dual sensor dual-lens to support Microsoft Windows 10's built-in face recognition technology (Windows Hello face authentication). This not only improves the color visible light image to FHD or 5MP resolution, but also supports the 940nm wavelength band that is less affected by natural IR signal interference, providing users with a better biometric recognition experience.

In addition to the improvement in pixel quality, Realtek is leading the industry to launch the Video HDR (VHDR) solution, which eliminates facial shadows generated by backlighting when using a camera, and overcomes environmental limitations during video use. In the meantime, Microsoft has also proposed the HPD (Human Presence Detection) whitepaper to provide specifications for USB cameras for intelligent human-computer interaction and operating system collaboration, while simultaneously integrating Microsoft's facial recognition technology to provide users with increased power-saving and intelligent booting. In 2022, Realtek launched a series of ISP models with HD/FHD/5M resolutions that support dual-lens and Temporal Noise Reduction (TNR) specifications. In the second half of 2022, Realtek also introduced a USB camera integrated with edge computing solutions. Through strategic cooperation with major PC brand customers, Realtek plans to release the HPD solution, which supports 5MP, in April 2023. Driven by our passion to improve pixel/image quality, and intelligent features, we continue to provide PC camera application solutions that meet customer needs. We not only set the highest standards for video quality in the PC industry, but also provide consumers with the best user experience.

In terms of fingerprint recognition MoC (Match on Chip) hardware encryption MCU products, Realtek's third-generation encryption MCU meets MoC specifications to enter the high-end consumer fingerprint recognition PC market. In 2022, Realtek obtained approval as a supplier of Microsoft's fingerprint MCU and was put on the Approved Vendor List. In 2023, in collaboration with Microsoft's promotion program, Realtek will launch the fourth-generation encryption MCU, offering greater power efficiency, and providing a built-in hardware algorithm accelerator for

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faster computing. It also supports anti-spoofing and will enter the PC consumer and commercial models through the differentiating algorithm specifications.

In the field of IP camera single-chip solutions, in 2023, Realtek’s highly integrated AI surveillance camera single-chip has an exceedingly flexible Image Signal Processor (ISP), along with a high resolution of 2K/4K. Its high-performance dual-lens video stitching technology, combined with crystal clear night vision provides full-color noise reduction (3DNR) processing, meeting the mainstream market's demand trend for clear, far, and wide viewing surveillance cameras. Realtek’s highly integrated AI surveillance camera single-chip can support various CMOS image sensors from a host of brands on the market, thus satisfying customers' broad range of video preferences. This gilt-edged solution is also integrated with AV1 compression technology, providing high compression performance, low bandwidth video transmission, while simultaneously integrating NPU to support diverse, self-developed intelligent algorithms (face/human/vehicle detection, face capture, etc.) and open platforms with the flexibility to access third-party, or customer-developed algorithms. It also integrates audio and network functions with diverse peripheral interfaces, providing customers with unique, cost-effective, and highly integrated solutions for different product applications.

In the consumer electronics audio chip market, Realtek's unique low-power design and softwarehardware combined power-saving solution can effectively extend battery life. Combined with high-performance audio codec, built-in adaptive boost circuits, high-integration solutions such as D-class power amplifiers with speaker protection functions and equalizers, it can save external components for customers and effectively reduce the motherboard's size. In addition to the smartphone and game console markets, Realtek's low-power audio codec, smart audio power amplifier, and programmable audio DSP have been introduced to major brands and received high ratings. In recent years, Realtek has also collaborated with strategic partners to tap into the virtual reality (VR) and automotive voice market and has achieved results progressively.

Regarding card reader controllers, Realtek launched PCI Express and USB 3.0 multifunctional integrated card reader products to meet the needs of notebook and desktop computers. The product integrates both a memory card reader and smart card reader. Realtek is a pioneer in releasing devices that support the latest SD7.0 memory cards and Intel’s newest energy-saving products. Besides maintaining a leading market share, Realtek also expects to create new product applications, while providing greater value for customers.

Products supporting USB 3.0 are gaining popularity, and the demand continues to grow. Realtek's 4-Port USB 3.0 hub products have been adopted by many system manufacturers, and the shipment of these products is increasing. Realtek is leading the industry in the release of USB 3.1 GEN 2 hubs, many of which are already used by manufacturers on new platforms. Besides faster transmission and lower power consumption, Such hubs integrate USB Type-C functions to provide customers with the option of designing more refined products with higher specifications. Realtek has invested considerable resources in developing 7-port USB 3.2 hubs and new USB4 router products since the beginning of 2022 to expand its application market. The goal is to

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integrate existing technologies and products, to launch updated multifunctional hub products, and to provide customers with more diverse products.

With the introduction of USB Type-C, Realtek simultaneously released a series of highly integrated products that reduces overall design costs and refines product features. Manufacturers have already begun using them in a wide range of applications. Realtek will continue to develop products with improved specifications. In 2022, our solutions have successfully entered various PC manufacturers' markets, benefiting from the pandemic. In the future, Realtek will develop products based on customers' latest requirements to further expand our market share.

As PC applications increasingly focus on low power and security, Realtek is developing a highintegration low-power embedded controller (EC) chip. This chip will use advanced 32-bit MCUs and will have ample memory space, providing substantial system resources. Customers can innovate and develop with more flexibility, and use advanced processes and built-in hardware encryption engines to achieve power saving and security. With the popularity of the USB TypeC specification, Realtek's EC combined with USB Type-C chips can provide customers with more complete power control and data transmission solutions, and are expected to enter mass production and shipped out in the second half of 2023.

Multimedia Products:

New opportunities for LCD displays mainly come from the demand for high resolution, high refresh rate, superior color performance, and the latest external display interfaces. Professional displays with ultra-high resolutions and image quality are focal points of this competitive market. These include WFHD/QHD/WQHD/UHD, high image quality displays that support high dynamic range (HDR) or wide color gamut (WCG), and gaming displays that improve fast response experiences through higher refresh rates. For applications such as notebooks or desktop computers, Realtek provides DisplayPort to VGA video translator, and DisplayPort to HDMI video translator, which are widely used by tier-one and tier-two brand customers. Due to the widespread adoption of USB Type-C as the interface for video, data, and power transmission on notebooks, phones, and even Apple iPad Pro, the market demand for USB Type-C peripheral products rose significantly. In 2022, Realtek launched the latest low-power DP 1.4 to HDMI 2.1 video translator, DP 2.1/HDMI 2.1 video hub, and DP 2.1/HDMI 2.1 high-end LCD display monitor controller to the market, and became the first in the world to obtain VESA DP2.x certification, once again displaying our commitment towards continuously strengthening market competitiveness and injecting momentum into the next wave of growth.

With respect to LCD TVs, in addition to meeting the customer needs for mass production, Realtek continues to develop 8K (7680 x 4320) Smart Connected LCD TV SoCs, supporting UHD 60Hz/120Hz, as well as a new generation of 4K LCD Smart Connected TV SoC integrating various high dynamic range (HDR) functions. Realtek's TV decoder chip for 8K TV is equipped with all the necessary related technologies, providing customers with seamless solutions to upgrade to 8K TVs and giving LCD TV manufacturers more competitive products.

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To meet the high-quality requirements of high-end 4K/8K TVs, Realtek has developed an AI super-resolution fidelity recovery single chip, which uses a neural network to identify image scenes and objects, while dynamically and instantly removes the innate noise of the picture, suppresses distortion, and enhances the original low-resolution images to 4K/8K high-resolution images. This innovative technology won the 2022 COMPUTEX Taipei 'Golden Award' and ‘Best Choice of the Year Award'. Due to the pandemic, working from home has become a new trend over the past two years, and LCD screens not only need to meet office requirements, but also consumers' demands for multi-functional purposes, such as entertainment. Realtek will provide SoCs for these emerging intelligent displays to fulfill both consumer needs and demand trends.

  • (2) The upstream, midstream, and downstream relationships in the industry.

    • The IC manufacturing industry can be divided into upstream IC design and design services companies, midstream IC chip manufacturers, and downstream IC packaging and testing suppliers. IC design firms typically engage in design and sale of their own products or commissioned designs for other firms. Within the supply chain, they are knowledge intensive. Before the final product is completed, however, photo mask tooling, wafer fabrication, and product packaging and testing are needed. Generally, design firms contract external manufacturers to support these production and manufacturing processes.

  • R&D Development

  • (1) R&D Expenditure for the Past Two Years

Unit: NT$ thousands Unit: NT$ thousands
Year
2021
2022		 Revenues
105,504,286
111,789,791		 R&D
Expenditures
27,949,765
30,081,533		 Ratio (%)
26.49
26.91
  • (2) Products Successfully Developed in the Past Year

Communications Network and Connected Media Products:

Ethernet Controller Series Ethernet PHY Transeiver Series

USB Storage Bridge Controller Series UHD STB SoC Series Automotive Ethernet PHY Series Automotive Ethernet Highly-Integrated Switch Controller Series Integrated OFDMA Wireless LAN (WLAN) and Bluetooth Network Controller Series WLAN 802.11ax Dual-Band Access Point/Router SoC Series

Low-Power and Multifunction IoT SoC Series IoT AI Wireless Network Camera SoC Series Bluetooth 5.2 LE SoC and Bluetooth 5.2 Audio SoC Series GNSS (Global Navigation Satellite System) IC Series

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Multi-Port Ethernet PHY Chipset Series Multi-Port Ethernet Switch Controller Chipset Series Multi-Port Ethernet Managed Switch Controller Chipset Series Highly-Integrated PON SOC Series Multi-Port PSE Controller Series

Computer Peripheral and Smart Interconnect Products:

HD-A Audio Codec Series USB 2.0 Low-Power Audio Codec Series Mini DSP (Digital Signal Processor) Series for Voice Input Processing SoundWire Audio Codec Series Single-Chip Audio Codec with Power Amplifier Series for Mobile Device Hi-Fi Audio Codec with DSP Series for Mobile Devices

Mobile Devices High Definition, High Efficiency Class-D Audio Amplifier with Equalizer and Speaker Protection Series

I2S Class-D Amplifier Series High Voltage Class-D Audio Amplifier Series SoundWire Class-D Audio Amplifier Series Embedded USB Interface Image Signal Processor Chip with Edge AI Engine Series USB2.0 Fingerprint Controller Series Highly-Integrated 5MP Edge AI IP Camera SoC Series

USB 3.0 Card Reader Controller Supporting Intel NB Power Saving Specification Series PCIe Card Reader IC Supporting SD 8.0 for Series Notebook Computers

4-Port USB 3.2 Gen 2 Hub Controller Series

  • 7-Port USB 3.2 Gen 2 Hub Controller Series

Multimedia Products:

Integrated High Resolution Gaming LCD Controller Series Integrated LCD Controller Series DisplayPort Video Translator Series DisplayPort MST Hub Controller Series High-End Smart Connected LCD TV SoC Series Intelligent Display SoC Series 8K LCD TV Video Decoder and Processing Chip Series Super Resolution Image Enhancement SoC Series

4 � Long-Term and Short-Term Business Development Plan

(1) Short-term Business Development Plan:

  • i. Continue to use the Company’s innovation framework to lower chip capital costs, in order to ensure competitive prices and raise profit margins.

  • ii. In addition to maintaining current market share, expand overall market share through new product launches and providing various sales combinations and distribution strategies.

  • iii. In accordance with the needs of major customers, assist in integrating product logistics support systems and provide the best marketing services to win customer trust and meet

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customer needs.

  • iv. Participate in international exhibitions and product evaluation conferences to increase the exposure of new products and show off product quality.

(2) Long-term Business Development Plan

  • i. Participate in formulating and promoting international standards to acquire related product and technical information in advance, thus accelerating Time-to-Market. Participating in the evaluation and selection of the test platforms for the standard organizations to make Realtek an industry benchmark in interoperability testing.

  • ii. For high market share products, in addition to stabilizing market share and ensuring good quality, establish a global service and technology network. For products with lower market share, actively develop new customers and expand new markets and marketing channels to meet the goal of increasing overall market share.

  • iii. Hold product launch events and technical seminars regularly in response to regional market needs, or establish relationships directly with brand owners and discuss their future product needs to strengthen customer relationships.

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II. Marketplace and Production Overview

1. Market Analysis

(1) Major Product Sales Regions

Unit: NT$ thousands

Unit: NT$thousands Unit: NT$thousands
Sales Region 2021 2022

Sales Amount		 Percentage
Sales Amount		 Percentage
Taiwan 48,015,150 45.51% 48,934,459 43.77%
Asia 56,984,374 54.01% 61,794,824 55.28%
Other 504,762 0.48% 1,060,508 0.95%
Total 105,504,286 100.00% 111,789,791 100.00%

(2) Market Share

Realtek is one of the world's leading IC suppliers, designing and developing a variety of IC products in wired and wireless communication networks, computer peripheral IC products, and multimedia applications. According to Digitimes, Realtek ranked 7th worldwide in terms of revenue among global IC design companies in 2022.

(3) Future Market Supply and Demand and Growth Characteristics

In the post-pandemic era, people rely more on the Internet of Things (IoT) and cloud services due to changes in lifestyle and work patterns. Many electronic products, home appliances, and even vehicles have a strong demand for both wired and wireless network solutions, including broadband products such as IP-STB, Cable Modem, and PON, as well as consumer electronics such as game consoles, smart TVs, printers, refrigerators, air conditioners, voice-controlled smart speakers, IP cameras, cleaning robots, drones, projectors, consumer or industrial robots, industrial control, and even cars with built-in Ethernet, Wi-Fi, or Bluetooth. With more and more devices connected wirelessly, combined with the popularity of smartphones and cloud services, mixed applications such as IoT and artificial intelligence will be an important driving force for the next wave of Wi-Fi and Bluetooth growth. At the same time, the improvement in wireless connection speed is driving the upgrade of wired networks and broadband. The era of Multi-GbE networks has arrived. Wi-Fi 6 wireless access point/router equipped with WAN and LAN ports, PON optical network, TV cable modem network user, telephone DSL subscriber, 5G CPE, network storage devices (NAS), gaming and commercial PCs, expansion network cards, and USB-to-Ethernet accessories have all been upgraded to 2.5Gbps Ethernet networks or higher speed Ethernet. Another growth driver for the Ethernet market comes from the internet of vehicles, where trends in autonomous vehicles and electric cars have led to a significant increase in vehicle data streams, and environmentally friendly initiatives that emphasize weight reduction and energy savings, making Ethernet the backbone network inside the cars.

The demand for OTT set-top boxes and network operator set-top boxes is expected to continue to rise in the future. At the same time, with the growth of UHD TV and the popularization of new generation UHD HDR audio and video content, and the rapid growth in demand for high-speed

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networking such as Wi-Fi 5, Wi-Fi 6, and even Wi-Fi 7, coupled with the integration of smart homes and the demand for voice-controlled intelligence, the market demand for high-speed wireless connectivity and edge computing intelligence is growing rapidly. In addition, the operator market is shifting towards an open streaming media ecosystem, driving the growth of IP set-top box chip demand. Realtek will develop highly integrated and cost-effective multimedia controllers with new functions, combined with Realtek's network communication chips, to provide customers with total solutions that combine software and hardware advantages, helping customers seize business opportunities.

IP cameras are an important part of the IoT. When combined with remote or mobile access, artificial intelligence (AI) such as facial and gesture recognition, AI edge computing, voice and speech recognition, as well as new generation H.265 codec, 360-degree camera, and 3D video techniques, the products are becoming more versatile in applications. In addition to traditional security surveillance, emerging applications such as AI optical recognition, unmanned stores, delivery, and warehousing systems required by Industry 4.0 are all extremely promising.

In recent years, the requirements for voice in PC products have shifted from acoustic frameworks to utilizing voice to achieve various humane-friendly applications. In addition to continuously developing existing voice recognition, voice wake-up, and noise reduction technologies, Realtek has also incorporated deep learning techniques to create a good user experience in voice applications, enabling users to enjoy convenient voice control whether at work or in daily life, while simultaneously creating the best integrated solution for voice and sound quality in the new generation of computer products. Realtek has also developed an audio codec that integrates a power amplifier. In addition to integrating a built-in adaptive boost circuit with a low-power design, the power amplifier also includes related designs that help customers save external components, allowing the new generation of ICs to support a high-voltage (+9V) Class D power amplifier with a protection function. In response to the development of gaming PCs and the pursuit of exceptional sound quality such as Hi-Fi Audio (32bits/384KHz Sample Rate), audio technology development will continue to integrate existing software and hardware advantages to provide customers with the best options for lightweight PC and Hi-Fi audio applications.

The growth opportunities in the LCD monitor market come from new specifications and interface technologies, such as 4K2K, USB Type-C, HDMI 2.1, DP 2.1, HDR, WCG, high frame rate gaming models, etc. Reducing the overall cost and minimizing power consumption are also key development directions. For the 2023 notebook/desktop computer market, the trend of using digital interfaces for video interface connectors remains unchanged, driving the market demand for DisplayPort to HDMI 2.0 interface controllers, high-end DisplayPort to HDMI 2.1 interface controllers, external USB Type-C video converters, and DisplayPort MST hub controllers.

According to market research stastistics by Omdia, the global shipment of LCD TVs in 2022 was estimated to be only 202 million units, a year-over-year decrease of 4.8%. In 2023, due to overall macroeconomic uncertainty, the outlook is conservative. UHD/HDR TVs and smart TVs have become the mainstream products in the market, and the demand for the new 8K TV

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standard is expected to gradually grow as panel component costs decline. Google, which dominates the Android TV version of end-point devices, is now more actively promoting new Google TV devices in order to attract more OEMs. Over the long-term, growth in the global LCD television market will continue, and Realtek will continue to actively promote the main markets and provide customers with comprehensive solutions.

(4) Competitive Strengths

  • i. Advanced core technology: Realtek has excellent radio frequency (RF), analog and mixedsignal circuit design capabilities, IC manufacturing knowledge, system technology, and the mix and match of intellectual property rights to enhance product performance and production yield, thus reducing costs and enhancing product value.

  • ii. Strong customer base: Realtek's customer base includes leading manufacturers of PCs, motherboard, network system, consumer electronics, and multimedia products. By providing customers with high-value, high-performance, and excellent economic benefits solutions, Realtek endeavors to establish long-term cooperative relationships with customers.

  • iii. Excellent cost-benefit returns and customer-oriented products: Realtek also specializes at developing cost-effective products and combines chip and system design to provide customers with high-value system integration solutions, and assist customers in quickly launching new products to market.

  • iv. Experienced R&D and management teams: Realtek's R&D and management teams have extensive experience in the semiconductor industry, and attract excellent technical and management talents to join with an excellent workplace environment and corporate culture.

  • (5) Future Advantageous and Disadvantageous Factors:

  • i. Advantageous Factors:

    • (a) Leading its domestic industry, Realtek has launched a range of communication network, computer peripherals, and multimedia IC products that are competitively priced. Realtek continues to establish advanced core technologies that improve product yield, reduce production costs, and enhance product value.

    • (b) Realtek maintains good partnerships with wafer foundries, which ensures stable supply of raw materials and cost control.

    • (c) Realtek actively collaborates with customers to provide the best marketing services, thus establishing a solid customer base.

    • (d) Experienced R&D and management teams with decision-making authority combined with a corporate culture of mutual support attract talented technical staff.

  • ii. Disadvantages:

  • Due to fierce market competition and short product life-cycle, failing to timely introduce new products could cause the company to lose market share, thereby affecting profits

  • iii. Countermeasures:

    • (a) Proactively invest in new product development and timely introduce new products to

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seize market opportunities. 

     - (b) Proactively improve existing products by increasing yield and performance to reduce costs or enhance product value.

     - (c) Achieve win-win through comprehensive product services or joint development of new products with customers.

  1. Main Applications for Major Products and Production Process

  2. (1) Main Applications

    • i. Communication network products: routers, switches, home gateways, OTT boxes, wireless network application products, smart-home appliances, game consoles, security surveillance cameras, etc.

    • ii. Computer peripheral products: desktop computers, notebook computers, card readers, etc.

    • iii. Consumer electronics products: GPS, mobile electronic devices, mobile phones, tablet computers, etc.

    • iv. Multimedia products: LCD monitors, multimedia video translators, smart HD TVs, etc.

    • v. Automotive products: automotive Ethernet, etc.

  3. (2) Production Process

    • Realtek's main products are designed and commissioned to wafer foundries for production. After the completed wafers are tested, they are sent to an assembly house for packaging. Packaged products then go through final testing.

3. Supply Status of Key Raw Materials

The main raw material of the company is wafers, and the main suppliers include Taiwan Semiconductor Manufacturing Company, United Microelectronics Corporation, and other professional wafer foundries and Outsourced Semiconductor Assembly and Test (OSAT) companies with a high level of quality as well as process, assembly, and test capabilities. In 2022, the semiconductor industry faced inventory adjustment challenges due to the impact of the pandemic, war, and macroeconomic factors. To ensure long-term supply stability, Realtek actively deepens its partnerships with wafer foundries and OSAT while securing a stable mid- and long-term supply plan.

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Major suppliers in the last two years
Unit: NT$ thousands		 2023 first Quarter Relation to
the Company
% of Total
Purchase

15

28

13

44
100
Amount
961,040
1,824,484
863,261
2,828,150
6,476,935
Name
A
C
B
Other
Total
2022 Relation to
the Company
% of Total
Purchase
36
19
18
27
100
Amount
22,664,980
11,622,537
11,205,891
17,175,882
62,669,290
Name
A
C
B
Other
Total
2021 Relation to
the Company
% of Total
Purchase
27
21
12
40
100
Amount
15,541,105
11,887,976
7,091,591
23,061,955
57,582,627
Name
A
C
B
Other
Total
Item
1
2
3

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2023 first Quarter Relation to the
Company
(note)		 -94-
There have been few changes in the Company's major customers in the last two years.
Note: Other related party.
% of Total
Operating
revenue
20
15
13
52
100
Amount
3,973,031
3,010,517
2,510,449
10,130,906
19,624,903
Name
B
D
A
Other
Total
Operating
revenue
2022 Relation to
the Company
(note)
% of Total
Operating
revenue
23

21
15
41
100
Amount
25,425,420
23,180,512
16,520,851
46,663,007
111,789,791

Name
B
D
A
Other
Total
Operating
revenue
2021 Relation to the
Company
(note)
% of Total
Operating
revenue
23
22
15
40
100
Amount
24,336,918
22,895,750
16,083,737
42,157,881
105,504,286
Name
B
D
A
Other
Total
Operating
revenue
Item
1
2
3

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5. Production Volume and Value in the Past Two Years

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Quantity
&
Vl		 2021 2022
aue
Major Product		 Capacity Output Value Capacity Output Value
IC
(thousandpieces)		 � 3,288,848 56,806,629
�		 2,387,388
57,609,463
Total � 3,288,848 56,806,629
�		 2,387,388
57,609,463

6. Sales Volume and Value in the Past Two Years

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Quantity
&
Value
Major Product
IC
(thousand pieces)		 2021 2022
Domestic
Quantity
Sales
1,529,042 49,438,669		 Export
Quantity
Sales
1,699,054
60,983,436		 Domestic
Quantity
Sales
1,116,705 50,326,482		 Export
Quantity
Sales
1,258,140
65,925,225
�
233,056
1,258,140
66,158,281

Others		 � 161,309 � 180,181 � 154,355 �
Total 1,529,042 49,599,978 1,699,054 61,163,617 1,116,705 50,480,837 1,258,140

Note: Sales volume and value as shown above has not deducted sales returns and allowances.

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III. Employees

Employee breakdown over the past two calendar years and up until the date of the Report’s publication

ort’spublication publication
Year
Num
ber
Research and
Development
Administration and
Sales
Production and Testing
Total
Average Age		 Year
Research and
Development		 2020
5,655		 2021
6,025		 As of March 31,
2022
6,096
Administration and
Sales		 575 592 592
Production and Testing 212 211 207
6,442
35.49		 6,828
35.73		 6,895
35.98
Average Years of Service
Educ
ation
Ph.D./Master’s
University/College
Degree
High School/Vocational
High School Degree		 6.42
71.02%		 6.70
72.02%		 6.81
72.35%
University/College
Degree		 26.73% 26.00% 25.66%
High School/Vocational
High School Degree		 2.25% 1.98% 1.99%

Note: Data are based on the Company’s consolidated statements, including employees of the Company and its subsidiaries.

IV. Environmental Expenses

  1. The Company did not incur any losses, penalties or liabilities due to environmental pollution during the previous calendar year or up until the date of the Report’s publication.

  2. The Company passed ISO 14001 Environmental Management Systems certification on September 22, 2006. The ISO 14001 certificate is valid (2020/10/12-2023/10/12).

V. Labor Relations

  1. Summary of the Company’s employee benefits, continuing education, training, pension plan and implementation results, as well as labor agreements and measures to uphold employee rights.

  2. (1) Wages and Benefits

    • i. Performance appraisal twice a year for promotion/salary adjustment/bonus.

    • ii. R&D and patent application training and patent bonuses.

    • iii. Library of renowned domestic and foreign journals, papers and books, and guidance and incentive bonus system for publication.

    • iv. R&D project participation based on professional suitability and personal choices.

    • v. Incentive system for the ‘Stimulus for Employee Brain Power Sharing Program’.

    • vi. Dual track career development to decide on going for R&D management based on ability

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and interest.

  • vii. Bonus and dividend system based on performance appraisal and comprehensive evaluation of R&D investment.

  • viii. Highly competitive salary and fringe benefit system.

  • ix. Profit sharing with the Company through salary adjustment, year-end bonus, and employee dividends based on personal performance.

  • x. New Year's Day and birthday gift vouchers, as well as a cafeteria benefit plan by the Welfare Committee.

  • xi. Paid annual health check-up to assist employees in implementing self-health care management.

  • xii. Major holiday bonuses, as well as wedding and funeral subsidies.

  • xiii. Professional and diverse intellectual lectures, club activities, ball games, and competition interactions held by the Employee Welfare Committee.

  • xiv. Employee Assistance Program providing psychological counseling, legal counseling, and stress relief massage services.

  • xv. Employee restaurants, cafes, and convenience stores for diversified dining services at a discount.

  • xvi. Employee group insurance to strengthen the work and life protection in addition to labor insurance and national health insurance.

  • xvii. Realtek gymnasium for exercise, reading, games, and health management.

(2) Realtek Educational Training, and Development

Talent is a key requirement for building intellectual power, blazing competitive new trails, and fostering sustainable operations. The Company’s greatest assets in these pursuits are the professionals of various fields who compose its workforce. In order to sustain competitiveness and develop new talent, the Company founded the Realtek Corporate University, which offers classes covering topics such as professional R&D, leadership development, organizational operations, and spontaneous learning. This initiative is part of the comprehensive education and training plans the Company offers to help all employees raise their capabilities to new heights.

  • i. New Employee Training Camps

  • Orientation for new employees focuses on teamwork, innovation and vitality to help new team members quickly adapt to the Company’s corporate lifestyle and culture.

  • ii. Professional R&D Training

  • Each year the Company holds more than 260 education and training courses for new R&D staff to quickly raise their professional capabilities. It invites R&D experts from Taiwan and overseas to share their knowledge and techniques. Employees can also join fully subsidized external training courses.

  • iii. Management and Leadership Training

  • Besides providing management training to employees based on their rank and role, the Company fully subsidizes training classes for employees at external institutions.

  • iv. Self-Study and Development

  • The Company offers open, diverse study environments and contents. It maintains awareness

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of employees’ learning and development while taking into account their professional needs and lifestyle aspirations. Diversity, timeliness, and convenience are distinguishing features of our planning.

  • v. Tailored Professional Development Plans

  • A combination of traditional and on-line classes offers flexible professional development plans tailored to the specific needs of every employee. Raising the R&D capabilities of each individual and team gives the Company a workforce with diverse professional knowledge.

(3) Pension System

The Company established pension plans and created a Supervisory Committee of Labor Retirement Reserve to manage pension payments for regular employees in accordance with the ‘Labor Standards Act’. From 1995, it appropriated labor pension reserve funds each month based on pension actuarial evaluations. From July 1, 2005, it utilized a defined contribution system for employees who are ROC nationals in accordance with the ‘Labor Pension Act’. At least 6% of the worker’s monthly wages are paid into his or her Individual Account of Labor Pension at the Bureau of Labor Insurance. Employees receive monthly retirement payments calculated based upon their individual account balance and other factors, or claim their pension in a lump-sum payment.

(4) Labor Agreements and Upholding Worker Rights

  • i. The Company’s intranet offers a forum that gives employees immediate access to management.

  • ii. The Company holds worker-employer meetings as a positive mechanism for communication.

  • iii. The Company set up two-way communication channel (CEO mailbox) for employees to offer their opinions to management.

  • iv. At regular departmental/unit meetings, employees can voice their opinions on problems. v. The Company has a sexual harassment prevention hotline and a prevention plan against unlawful violation to provide a safe work environment that puts employees’ minds at ease.

  • vi. The Company has an Employee Care and Consultation Center to provide individual or team consultation services.

  • vii. The Occupational Safety and Health Center is responsible for matters related to safe workplaces and health promotion.

  • The Company did not incur any losses due to labor disputes during the past calendar year and up until the date of publication of this Report.

VI. Cyber security management

(I) Cyber security risk management framework, cyber security policies, concrete

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management programs, and investments in resources for cyber security management.

‘Information security is everyone's responsibility’. In order to protect the security of information assets, including personnel, equipment, systems, information, raw data, and networks, etc., from disclosure, destruction, or loss by external threats or internal personnel abnormal operations, we ensure continuous improvement of risk management, continuous strengthening of governance strategies, personnel training, assessment and review, and information security. Our vision is to create a solid, secure, and reliable enterprise digital environment, and provide a solid foundation for the sustainable operation of said enterprise. The following describes the specific requirements:

Governance Strategy

In order to implement and improve information security, the company formed an Information Security Steering Committee (hereafter referred to as the ISSC). The chairman of the ISSC is the Chief Information Security Officer (CISO) of company. The first-level supervisors of each unit are ex-officio members. A regular ISSC meeting is held every year, and report to board of directors regularly. The mission of the ISSC is to formulate security policies, comprehensively review and supervise the execution of security policies, continuously improve the capabilities of information security protection, and reduce information security risks. The meeting minutes are required to be submitted to the board of directors, and the main items are listed in the company's annual report.

Information Security Organization

The Company has set up a Cyber Security Center (CSC), with the chief information security officer (CISO) as the supervisor. There are four teams under the CISO’s jurisdiction: the product development information security division, the industrial network security division, the IT/OT information security division, and the information security education and training team. The responsibilities of CSC includes to formulate policies of the Realtek group’s information security, to promote security policies and review of effectiveness of information security objectives, to coordinate cross-functional information security issues, to audit information security of primary and secondary information security units/departments/product lines, to manage various information security certification projects, to coordinate the response to large-scale emergencies, and to audit information security of supply chains and other work.

The ISSC refers to the product development security and network security committee, industrial network data security review committee, IT security resources and technology committee, audits committee, and the defect review and improvement committee. It provides cross-function information security notices, is responsible for security policy review, and promotes information security management.

Employee Training

The information security awareness of enterprise members is the cornerstone of company information security. Over the years, through internal training, members of all functions have become familiar with security related courses. In order to improve the information security DNA, Realtek encourages employees to take the necessary security certification exams, and gives priority to recruiting new personnel who pass the certification exams. An online education system has also been introduced to enable corporate members to more efficiently learn the required security courses. The system also provides unit testing to aid learning. The visibility of high-level managers to the training results is greatly improved by quantifying the learning

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results, and integrated reports are automatically generated by the system. This enables easy integration of the learning achievements into the KPI assessment standards.

Assessment & Review

The core of information security management is risk management. In order to construct an intelligent, realtime information security management system, Realtek collects and examines network data flow for anomaly detection and pattern analysis, software updates, and other information gathered by the hardware and software systems of network equipment. Through automation, visualization, and quantifiable control systems, it lays a solid foundation for standard operating procedures for early warning, continuous monitoring, notification of contingency, and assistance with improvement. This system can fully provide required information for event analysis before, during, and after the event.

For accurate quantification, all incidents are marked with severity levels and corresponding scores, and event points will trigger the intelligent system to take action. Relevant personnel are notified in real time and automatically log in to the incident management system. The managers can handle the system from multiple angles through the security management system, which can be used as the basis for future evaluation and assessment of security risks.

Information Security Policy

Security threats are ubiquitous, with countless Internet viruses, Trojan horses, spyware, ransomware, blocking attacks, social engineering, and more. In recent years, due to the rapid development of network connections and bandwidth, coupled with the explosive amount of encrypted data transmission, the huge information flow has prompted the information security system to combine the security framework and corresponding measures to be more effective in providing complete and comprehensive security protection.

  • a. Front-end users: Front-end users must comply with the security policy, operating system regulations, and domain policy defined by company. Front-end users also need to execute computer system updates to effectively block computer viruses, Trojan horses, and malicious programs, providing the first line of Security protection.

  • b. Enterprise data center: Enterprise data centers must adopt new generation firewalls to filter encrypted data effectively and instantly, and manage traffic by application type. The firewalls also have to provide the necessary information for the security management system to facilitate automated analysis.

  • c. Centralization of confidential information: Important confidential information of the company should be stored centralized in specific areas. The latest information security technology should be integrated to manage and monitor access to confidential information. In cases where the confidential information has to be stored out of the specific area, attention should be paid to the protection and management of the access and delivery of the data.

  • d. Data backup management: Adopt advanced backup system to carry out full backup, incremental backup, off-site, and offline backup for important data according to various timing and management plans. All off-line and off-site backups should be encrypted, and regularly restored to ensure their recoverability.

  • e. Information Security Management System: Information Security Management System (ISMS) integrates the massive network traffic information of the enterprise, various antivirus systems, antihacking systems, and other system logs. The system logs of irregular health check scanning and

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penetration testing are processed by big data analysis system. The results are classified and presented to different management members according to different aspects to achieve the goals of information classification, risk classification, and management stratification. Therefore, Realtek can reduce the impact of security threats on corporate operations.

Information Security Risks & Countermeasures

In order to improve the protection capability of information security, Realtek identified information security risks, individually proposed countermeasures, and regularly reviewed their effectiveness.

Identified
Information Security
Risks		 Explanation of
Impact Assessment		 Response Measure Performance
Management
Personal computer
account and password
security		 Prevent the deliberate
theft of trade secrets		 Changing the personal
computer boot (and e-
mail) password regularly.		 Regular changing of the
password and requiring
password of a certain
strength.
Information security Requests to access
information systems must
go through a formal
application process and
are logged.		 An authorization
application access was
established for work-
related information.		 Electronic application for
permission by the
applicant’s supervisor and
the competent unit.
Computer virus protection Computer viruses are
constantly evolving and
ransom-ware is difficult
to guard against.		 The Virus definition files
are regularly updated and
pushed out to personal
computers by the system
automatically.		 Improve the security of
information on personal
computers.
Network administration
safety		 Maintain the firewall to
protect against malicious
attacks.		 Update firmware and
backup configuration
regularly.		 Improve the quality of
data transmission through
the network.
Safety of external
network access		 Prevent and redirect
access to malicious
domains and IP addresses,
restrict improper data
transfers by malware,
network phishing, and
Command & Control
(C&C) of zombie
networks.		 Adopt Enterprise Threat
Protector (ETP)
mechanism.		 Strengthen access security
for external networks.

(II) Losses suffered by the company in the most recent fiscal year and up to the annual report publication date due

to significant cyber security incidents, the possible impacts therefrom, and measures being or to be taken: None

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VII. Significant Agreements

Agreement
Type		 Signatory Contract Validity Summary Limitations
Rental
Agreements
4 Items		 Hsinchu
Science Park
Bureau
Sep, 2003~Dec, 2022
Mar, 2014~Dec, 2027
Sep, 2019~Dec, 2038
Feb, 2020~Dec, 2039
The lessee shall
build a factory,
warehouse, or
laboratory or use
the site for storage
and delivery,
loading and
unloading,
packaging, or
repairs and
maintenance.
The site must be used to
build a factory,
warehouse, or laboratory,
or to conduct business-
related tasks such as
storage and delivery,
loading and unloading,
packaging, or repairs and
maintenance.

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Financial Status, Operating Results and Status of Risk Management

I. Financial Status

Financial Status,
Management
I. Financial Status		 Operating Results and Status of Risk Operating Results and Status of Risk Operating Results and Status of Risk Operating Results and Status of Risk
Unit: NT$ thousands
2022
2021
Changes
% of Changes
95,491,681
86,245,402
9,246,279
10.72%
18,208,846
14,986,511
3,222,335
21.50%
113,700,527
101,231,913
12,468,614
12.32%
62,544,727
58,820,923
3,723,804
6.33%
4,392,850
3,458,666
934,184
27.01%
66,937,577
62,279,589
4,657,988
7.48%
5,128,636
5,106,849
21,787
0.43%
1,045,147
1,101,079
(55,932)
-5.08%
37,893,274
34,510,813
3,382,461
9.80%
2,686,175
(1,776,090)
4,462,265
251.24%
9,718
9,673
45
0.47%
46,762,950
38,952,324
7,810,626
20.05%
Year
Item		 2022 2021 Changes % of Changes
Current Assets 95,491,681 86,245,402 9,246,279 10.72%
Non-current assets 18,208,846 14,986,511 3,222,335
21.50%
Total assets 113,700,527 101,231,913 12,468,614
12.32%
Current liabilities 62,544,727 58,820,923 3,723,804
6.33%
Non-current liabilities 4,392,850 3,458,666 934,184
27.01%
Total Liabilities 66,937,577 62,279,589 4,657,988 7.48%
Share capital 5,128,636 5,106,849 21,787 0.43%
Capital surplus 1,045,147 1,101,079 (55,932) -5.08%
Retained earnings 37,893,274 34,510,813 3,382,461
9.80%
Other equity 2,686,175 (1,776,090) 4,462,265 251.24%
Non-controlling interest 9,718 9,673 45
0.47%
Total Equity 46,762,950 38,952,324 7,810,626
20.05%

Analysis of Changes equal to or over 20%

  1. Increase in Non-current assets: Mainly due to increase in other non-current assets and acquisition of property, plant and equipment.

  2. Increase in Non-current liabilities: Mainly due to increase in long-term loans.

  3. Increase in other equity: Mainly due to increase in financial statements translation differences of foreign operations.

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II. Operational Results

Unit: NT$ thousands

Year
Item		 2022 2021 Changes % of Changes
Operating revenue 111,789,791
105,504,286		 6,285,505
5.96%
Operating costs (57,154,955) ( 52,315,883) (4,839,072) 9.25%
Gross profit 54,634,836
53,188,403
1,446,433
2.72%
Operating expenses (38,910,838) ( 35,863,507) (3,047,331) 8.50%
Operating income 15,723,998
17,324,896		 (1,600,898) -9.24%
Non-operating income and
expenses		 1,197,861
249,826
948,035
379.48%
Profit before income tax, net 16,921,859
17,574,722
(652,863)		 -3.71%
Income tax expense (717,715) ( 721,911) 4,196
-0.58%
Net income for the year 16,204,144
16,852,811
(648,667)		 -3.85%

Analysis of Changes equal to or over 20%

  1. Increase in non-operating income and expenses: Mainly due to increase in interest income and foreign currency exchange gain.

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III. Cash Flow

1. Analysis of the Change in Cash Flow in 2022

Analysis of the Change in Cash Flow in 2022 Analysis of the Change in Cash Flow in 2022 Analysis of the Change in Cash Flow in 2022 Analysis of the Change in Cash Flow in 2022
Unit: NT$ thousands
The
beginning
of Cash
Balance (1)
7,197,351
Net Cash
Provided by
Operating
Activities (2)
19,058,169		 Net Cash Used
in Investing and
Financing
Activities (3)
12,501,485		 The end of Cash
Balance (1)+(2)-(3)
13,754,035		 Remedyfor Cash Shortage

Investment
plan
�		 Financial
leverage plan
�

Analysis of the Change in Cash Flow:

  • (1) Operating activities: Net cash inflow is mainly due to increase in operating profit.

  • (2) Investing activities: Net cash outflow is mainly due to acquisition of property, plant and equipment and intangible assets

  • (3) Financing activities: Net cash outflow is mainly due to distribution of cash dividends.

2. Cash Flow Projection for Next Year: Not applicable.

  • IV. Impact on Financial and Business associated with Major Capital Expenditures in recent years: None.

  • V. Investment Policies in recent years, the reasons for losses and plans to improve for next year:

Our investment policies are based on strategic investments. The investment losses accounted for under the equity method in 2022 was approximately NT$20,723 thousand. We will continuously focus on strategic investment and prudently evaluate investment plans in the future.

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VI. Risk Items

  1. The effect upon the profits (or losses) of interest and exchange rate fluctuations and changes in the inflation rate, and response measures to be taken in the future.

  2. Our exposure to interest rate risks arises from time deposits, short-term loans and long-term loans with floating rates, which are not significant and are normally incurred to support our operating activities. The Realtek Group is a multinational group in the Electronics industry. Currently, the majority of our revenues are denominated in USD. Our operating expenses are incurred in several currencies, primarily in USD, NTD, and RMB. After offsetting assets and liabilities between the currencies, the natural hedge is used to reduce the foreign exchange risk. Inflation risk does not have a significant impact on the results of our operating activities.

  3. The policy regarding high-risk investments, highly leveraged investments, loans to other parties, endorsements and guarantees, and derivatives transactions, the main reasons for the profits/losses generated thereby, and response measures to be taken in the future:

  4. The Realtek Group adopts a conservative investment policy and does not engage in high-risk investments or highly leveraged investments.

  5. The Realtek Group has formulated its procedures for Loaning Funds to Others, Procedures for Endorsements and Guarantees, and Procedures for Financial Derivatives Transactions in compliance with these Regulations. These procedures are aimed at improving operational performance and reducing financial risk.

  6. Future R&D plans and expected R&D spending:

  7. We will continuously research in chips regarding the area of communication networks, computer peripherals, multimedia, connected media and smart interconnect. In addition, we will actively recruit outstanding R&D talents and invest in the best R&D resources and develop key technologies or obtain necessary licensed technology. The expected R&D spending for next year will be approximately NT$295 billion.

  8. Impact on finance and business associated with changes in domestic and foreign regulations and laws, and corresponding reactions: None.

  9. Impact on finance and business associated with new technology and industry changes, and corresponding reactions:

  10. We pay attention to the trend of future technology at all times. We not only focus on the timely launch new products, but also continuously enhance product functions and technical specifications in line with market trends and customer needs in order to strength our competitiveness and increase our market share.

  11. Impact on Company’s crisis management associated with changes in corporate image, and corresponding reactions:

  12. Our corporate culture is ‘self-confidence and trust in people’. Integrity is the central core of our corporate culture. We will maintain our good standing according to our corporate culture.

    • -106-

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  1. Risks and expected benefits associated with mergers and acquisitions, and corresponding reactions: None.

  2. Risks and expected benefits associated with facility expansion, and corresponding reactions:

  3. In order to meet the needs of future growth and operating development, we will assess the demand of plant expansion with its associated benefits and risks, then take necessary actions to achieve the company's operational goals.

  4. Risks associated with Purchase and sales Concentration and corresponding reactions:

  5. The Company’s raw material is wafer. We have maintained a good cooperative relationship with foundries. For wafer purchases, we have not concentrated on a single foundry. Moreover, we also have not concentrated on a single customer and the collection period is implemented in accordance with company policies and there is no abnormal situation.

  6. Impact and risks to the Company associated with significant transfer of shares by the Company’s Directors and major Shareholders who own 10% or more of the Company’s outstanding shares, and corresponding reactions: None.

  7. Impact to the Company associated with change in management, and corresponding reactions: None.

  8. Litigious and non-litigious matters:

The company is currently in major litigation, non-litigation, or administrative disputes �

  • (1) In 2020, Divx, LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court of Delaware against the Company’s IC products. On July 4, 2021, DivX terminated the investigation against the Company in ITC.

  • (2) In 2020, KONINKLIJKE PHILIPS N.V. and PHILIPS NORTH AMERICA LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court of Delaware against the Company’s IC products. On March 23, 2022, ITC issued the final determination finding non-infringement for the accused Company’s IC products and nonexistence of the required domestic industry.

(3) Future Link Systems, LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court for the Western District of Texas against the Company’s IC products. Due to the Plaintiff/ Complainant’s withdrawal of its patent infringement complaints, the patent infringement cases have been terminated.

(4) BANDSPEED, LLC brought an action for patent infringement in United States District Court for the Western District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

(5) Advanced Micro Devices, Inc./ ATI Technologies ULC brought an action for patent infringement in United States International Trade Commission (“ITC”) and United States District Court for the Eastern District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

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(6) American Patent LLC brought an action for patent infringement in United States District Court for the Eastern District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

13. Other important risks and measures: None

VII. Other Material Events: None.

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==> picture [305 x 696] intentionally omitted <==

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

100% 100%
Wise Elite Global Limited Realtek Semiconductor (Hong Kong) Limited
100% 100% 20%
80%
Amber Universal Inc. Realtek Semiconductor (ShenZhen) Corp. Suzhou PanKore Integrated Circuit Technology Co. Ltd.
100.00%
100% 100% 80.95%
Realtek Singapore Private Limited Empsonic Enterprises Inc. Realsil Microelectronics (SuZhou) Co., Ltd. RayMX Microelectronics Corp.
19.05%
100% 100%
Realtek Investment Singapore Private Limited Realtek Viet Nam Co., Ltd.
100% 100%
AICONNX Technology Corporation Cortina Access, Inc.
100% 100%
Realtek Semiconductor Corp.
Realsun Technology Corporation Cortina Network Systems (Shanghai) Co., Ltd.
100% 100% 100%
Realking Investments Co., Ltd Cortina Systems Taiwan Limited. Realtek Semiconductor (Malaysia) SDN. BHD.
100% 100% 100%
Realsun Investments Co., Ltd Bluocean Inc. Realtek Korea Inc.
100% 100% 100%
Hung-wei Venture Capital Co., Ltd Talent Eagle Enterprise Inc. Ubilinx Technology Inc.
66.67% 100% 100%
Bobitag Inc. Leading Enterprises Limited Realtek Semiconductor (Japan) Corp.
----- End of picture text -----

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Unit: dollars / Dec. 31, 2022
Main Business Activities		 Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Design of integrated circuits, manufacturing of information software and electronic
materials, sale and wholesale		 Manufacture and installation of computer equipment and wholesale, retail and related
service of electronic materials and information/software		 R&D and technical support Design of integrated circuits, manufacturing of information software and electronic
materials, sale and wholesale		 Information collection and technical support Information services and technical support R&D and technical support R&D and technical support R&D and technical support Design of integrated circuits, manufacturing of information software and electronic
materials, sale and wholesale		 Design of integrated circuits, manufacturing of information software and electronic
materials, sale and wholesale		 Investment holdings Design of integrated circuits, manufacturing of information software and electronic
materials, sale and wholesale		 R&D and technical support R&D and technical support R&D and technical support R&D and technical support R&D and technical support
Paid-in Capital US$34,630,000 US$41,432,000 US$1,000,000 US$28,250,000 US$110,050,000 US$114,100,000 NT$280,000,000 NT$250,000,000 NT$293,929,850 NT$5,000,000 NT$28,783,650 NT$211,300,000 NT$20,000,000 JPY$20,000,000 HK$1,500,000 US$5,000,000 US$1,650,000 US$28,000,000 CNY26,250,000 CNY10,000,000 US$200,000,000 US$116,059,638 US$16,892 US$60,000,000 US$4,000,000 US$2,500,000 KRW2,000,000,000
Place of
Registration		 British Virgin
Islands		 British Virgin
Islands		 British Virgin
Islands		 Mauritius Cayman Islands Cayman Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Japan Hong Kong China China China China China Singapore Singapore United States United States Vietnam Malaysia South Korea
Date of
Incorporation		 1998.04 1998.10 2023.02 2002.06 2016.02 2016.02 1998.06 1999.12 2000.04 2004.12 2012.12 2015.04 2021.12 2001.12 1996.01
2004.07
2015.04		 2001.12 2018.12 2020.07 2016.08 2013.10 2015.04 2016.08 2018.09
2020.06		 2022.01
Company Name Leading Enterprises Limited Amber Universal Inc. Wise Elite Global Limited Empsonic Enterprises Inc. Bluocean Inc. Talent Eagle Enterprise Inc. Realsun Investments Co., Ltd Hung-wei Venture Capital Co., Ltd Realking Investments Co., Ltd. Realsun Technology Corporation Bobitag Inc. Cortina Systems Taiwan Limited. AICONNX Technology Corporation Realtek Semiconductor (Japan) Corp.
Realtek Semiconductor (Hong Kong)
Limited		 Realtek Semiconductor (ShenZhen) Corp.
Cortina Network Systems (Shanghai)
Co., Ltd.		 Realsil Microelectronics (SuZhou) Co.,
Ltd.		 RayMX Microelectronics Corporation Suzhou PanKore Integrated Circuit
Technology Co., Ltd.
Realtek Investment Singapore Private
Limited		 Realtek Singapore Private Limited Cortina Access, Inc. Ubilinx Technology Inc. Realtek Viet Nam Co., Ltd Realtek Semiconductor (Malaysia) SDN.
BHD.		 Realtek Korea Inc.

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Division of Work
Among the Affiliates		 Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Provide R&D and technical
services		 Not applicable Provide information collection and
technical services		 Not applicable Provide R&D and technical
services		 Provide R&D and technical
services		 Provide R&D and technical
services		 Not applicable Not applicable Not applicable Not applicable Provide R&D and technical
services

Main Business Activities		 Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings
ICs manufacturing, design, research, development, sales, and
marketing
Manufacture and installation of computer equipment and wholesale,
retail and related service of electronic materials and
information/software		 R&D and technical support ICs manufacturing, design, research, development, sales, and
marketing		 Information collection and technical support Information services and technical support R&D and technical support R&D and technical support R&D and technical support ICs manufacturing, design, research, development, sales, and
marketing
ICs manufacturing, design, research, development, sales, and
marketing		 Investment holdings
ICs manufacturing, design, research, development, sales, and
marketing		 R&D and technical support

Company Name		 Leading Enterprises Limited Amber Universal Inc. Wise Elite Global Limited Empsonic Enterprises Inc. Bluocean Inc. Talent Eagle Enterprise Inc. Realsun Investments Co., Ltd Hung-wei Venture Capital Co., Ltd Realking Investments Limited
Realsun Technology Corporation		 Bobitag Inc. Cortina Systems Taiwan Limited. AICONNX Technology Corporation Realtek Semiconductor (Japan) Corp. Realtek Semiconductor (Hong Kong) Limited Realtek Semiconductor (ShenZhen) Corp. Cortina Network Systems (Shanghai) Co., Ltd. Realsil Microelectronics (SuZhou) Co., Ltd. RayMX Microelectronics Corporation Suzhou Pankore Integrated Circuit Technology Co.
Ltd.		 Realtek Investment Singapore Private Limited
Realtek Singapore Private Limited		 Cortina Access, Inc.

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Division of Work
Among the Affiliates		 Provide R&D and technical
services		 Provide R&D and technical
services		 Provide R&D and technical
services		 Provide R&D and technical
services
Main Business Activities R&D and technical support R&D and technical support R&D and technical support R&D and technical support
Company Name Ubilinx Technology Inc. Realtek Viet Nam Co., Ltd. Realtek Semiconductor (Malaysia) SDN. BHD. Realtek Korea Inc.

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Unit: shares/NT$ thousands; %
Shareholding (note 2)
% of Investment
Holding

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Shares/ Investment
Amount		 34,630 41,432 1,000 2,825,000 2,825,000 2,825,000 110,050,000 114,100,000 28,000,000 28,000,000 28,000,000 28,000,000 25,000,000 25,000,000 25,000,000 25,000,000 29,392,985
Name Realtek Semiconductor Corp.
(Representative: Yeh, Po-Len)		 Realtek Semiconductor Corp.
(Representative: Yeh, Po-Len)		 Realtek Semiconductor Corp.
(Representative: Chiu, Sun-Chien)		 Realtek Singapore Private Limited
(Representative: Huang, Yung-Fang)		 Realtek Singapore Private Limited
(Representative: Yen, Kuang-Yu)		 Realtek Singapore Private Limited
(Representative: Lin, Tsung-Ming)		 Realtek Semiconductor Corp.
(Representative: Chiu, Sun-Chien)		 Realtek Semiconductor Corp.
(Representative: Chiu, Sun-Chien)		 Realtek Semiconductor Corp.
(Representative: Huang, Yee-Wei)		 Realtek Semiconductor Corp.
(Representative: Huang, Yung-Fang)		 Realtek Semiconductor Corp.
(Representative: Chern, Kuo-Jong)		 Realtek Semiconductor Corp.
(Representative: Chiang, Ting-Chi)		 Realtek Semiconductor Corp.
(Representative: Yeh, Po-Len)		 Realtek Semiconductor Corp.
(Representative: Chiu, Sun-Chien)		 Realtek Semiconductor Corp.
(Representative: Huang, Yung-Fang)		 Realtek Semiconductor Corp.
(Representative: Chiang, Ting-Chi )		 Realtek Semiconductor Corp.
(Representative: Yeh, Po-Len)
Title (note 1) Director Director Director Chairman Director Director Director Director Chairman
and President		 Director Director Supervisor Chairman Director and President Director Supervisor Chairman
Company Name Leading Enterprises Limited Amber Universal Inc. Wise Elite Global Limited Empsonic Enterprises Inc. Bluocean Inc. Talent Eagle Enterprise Inc. Realsun Investments Co., Ltd Hung-wei Venture Capital Co., Ltd Realking Investments Co., Ltd.

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Shareholding (note 2)
% of Investment
Holding

100%
100%
100%
100%
100%
100%
100%
66.67%
66.67%
66.67%
-
100%
100%
100%
100%
100%
100%
100%
100%

Shares/ Investment
Amount		 29,392,985 29,392,985 29,392,985 500,000 500,000 500,000 500,000 1,918,910 1,918,910 1,918,910 - 21,130,000 21,130,000 21,130,000 21,130,000 2,000,000 2,000,000 2,000,000 2,000,000
Name Realtek Semiconductor Corp.
(Representative: Chiu, Sun-Chien)		 Realtek Semiconductor Corp.
(Representative: Huang, Yung-Fang)		 Realtek Semiconductor Corp.
(Representative: Chiang, Ting-Chi�		 Realtek Semiconductor Corp.
(Representative: Yeh, Po-Len)		 Realtek Semiconductor Corp.
(Representative: Chiu, Sun-Chien)		 Realtek Semiconductor Corp.
(Representative: Huang, Yung-Fang�		 Realtek Semiconductor Corp.
(Representative: Chern, Kuo-Jong�		 Realtek Semiconductor Corp.
(Representative: Chiang, Ting-Chi)
Realtek Semiconductor Corp.
(Representative: Lu, Shiu-Hung)
Realtek Semiconductor Corp.
(Representative: Chan, Te-Chuan)
Guo, Yu-zhi		 Realtek Singapore Private Limited
(Representative: Huang, Yung-Fang)
Realtek Singapore Private Limited
(Representative: Yen, Kuang-Yu)
Realtek Singapore Private Limited
(Representative: Hsiao, Wang-Mien )
Realtek Singapore Private Limited
(Representative: Fu, Ying-Chi )
Realtek Semiconductor Corp.
(Representative: Chiu, Sun-Chien)
Realtek Semiconductor Corp.
(Representative: Chern, Kuo-Jong)
Realtek Semiconductor Corp.
(Representative: Chang Yi-Shu�		 Realtek Semiconductor Corp.
(Representative: Chang, Jr-Neng�
Title (note 1) Director and President Director Supervisor Chairman Director Director Supervisor Chairman Director Director Supervisor Chairman Director Director Supervisor Chairman Director Director Supervisor
Company Name Realking Investments Co., Ltd. Realsun Technology Corporation Bobitag Inc. Cortina Systems Taiwan Limited. AICONNX Technology Corporation

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Shareholding (note 2)
% of Investment
Holding

-
-
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-		 -115-

Shares/ Investment
Amount		 - - - - HK$1,500,000 - - - - - - - - - - - - - -
Name Cheng, Shu-Chien Chiu, Sun-Chien Huang, Yung-Fang Chiang, Ting-Chi Amber Universal Inc.
(Representative: Yeh, Po-Len)
Lin, Ying-Hsi		 Chern, Kuo-Jong Zeineddine Chair Ke, Chieh-Yuan Yeh, Ta-Hsun Lin, Ying-Hsi Chiou, Mhu-Hsiu Lu, Shiu-Hung Tsai, Jon-Jinn Zhu, Ying-hui Su, Chu-Ting Chen, Chih-tung Chien, Chih-Ching Chang, Jr-Neng
Title (note 1) Director and President Director Director Supervisor Director Director Director and President Director Supervisor Chairman and
President		 Director Director Supervisor Chairman Director and President Director Director Director Supervisor
Company Name Realtek Semiconductor (Japan) Corp. Realtek Semiconductor (Hong Kong)
Limited		 Realtek Semiconductor (ShenZhen) Corp. Cortina Network Systems (Shanghai) Co.,
Ltd.		 Realsil Microelectronics (SuZhou) Co., Ltd. RayMX Microelectronics Corporation

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Shareholding (note 2)
% of Investment
Holding

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-		 -116-

Shares/ Investment
Amount		 - - - - - - - - - - - - - - - - - - - -
Name Liu, Shuan-Ta Wu, Wen-Bin Huang, Yung-Fang Peng, Zuo-Hui Yen, Kuang-Yu Shen, Jia-Qing Liu Yong Lin, Hou-Wei Li, Chao-Ming Lu, Shiu-Hung Huang, Yung-Fang Yen, Kuang-Yu Chang, Jr-Neng Huang, Yung-Fang Yen, Kuang-Yu Lin, Tsung-Ming Huang, Yung-Fang Yen, Kuang-Yu Zeineddine Chair Chiang, Ting-Chi
Title (note 1) Supervisor Supervisor Chairman Director and President Director Director Director Supervisor Supervisor Supervisor Chairman Director and President Director Chairman Director and President Director Director Director Director Chairman
Company Name RayMX Microelectronics Corporation Suzhou PanKore Integrated Circuit
Technology Co., Ltd.		 Realtek Investment Singapore Private
Limited		 Realtek Singapore Private Limited Cortina Access, Inc. Ubilinx Technology Inc.

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Supervisor
Fu, Ying-Chi
-
-
Note 1: If the affiliates are foreign companies, list the same positions as domestic.
Note 2: The shares are the total of shareholdings directly or indirectly held; if the affiliates do not issue shares, the shareholdings are presented by the investment
amount.
Note 3: The above information up to March 31, 2023
Shareholding (note 2)
% of Investment
Holding

-
-
-
-
-
-
-
-
-
-
-
-

Shares/ Investment
Amount		 - - - - - - - - - - - -
Name Fu, Ying-Chi Lin, Chia-Liang Soh Wei Kwek Kao Shu-yi Nguyen Phuoc Vinh Thang Chang Yi-Shu Fu, Ying-Chi Lau Lai Li Chang Yi-Shu Chiang, Ting-Chi Byung-gi Park Fu, Ying-Chi
Title (note 1) Director Director Director Director Director Director Director Director Director and President Director Director Supervisor
Company Name Ubilinx Technology Inc. Realtek Viet Nam Co., Ltd. Realtek Semiconductor (Malaysia) SDN.
BHD.		 Realtek Korea Inc.

-117-

EPS (After
Taxes)
-
-
-
-
-
-
0.58
(3.40)
(0.19)
(0.07)
0.10
1.13
(11.04)
-
-
-
-
-
-
-
-
-
-
-
Net Income for
the year (After
Taxes)
(76,336)
69,393
45
138,531
(33,218)
(27,379)
16,284
(85,095)
(5,547)
(37)
276
23,963
(22,073)
(176)
(23)
21,793
10,346
146,081
(21,114)
(83,656)
117,565
15,285,229
17,389
14,021
Operation
Income
(214,654)
(13,316)
(100)
(87)
(21,380)
(6,214)
(102)
(542)
(46)
(49)
(76)
10,496
(20,854)
(712)
(24)
33,810
7,260
153,976
(64,749)
(79,140)
(273)
14,668,166
16,055
42,682
Operating
revenue
0
0
0
0
0
0
0
0
0
0
0
185,423
80,878
63,072
0
633,616
152,327
2,800,869
702,983
44,714
0		 43,227,317
245,414
614,035
Equity
14,287,695
3,735,840
7,950
2,138,374
3,506,802
2,377,010
691,262
422,217
259,432
5,030
29,154
106,073
(2,093)
1,971
1,121
311,475
181,708
2,133,820
382,720
(141,859)
6,925,958
47,112,032
821,035
296,291
Liabilities
3,867,825
2,533,864
0
0
0
1,990,525
79
72,494
131
0
41
46,784
37,130
3,405
0
164,432
39,619
749,359
217,796
157,178
232
13,521,443
57,253
112,484
Assets
18,155,520
6,269,704
7,950
2,138,374
3,506,802
4,367,535
691,341
494,711
259,563
5,030
29,196
152,857
35,037
5,376
1,121
475,907
221,327
2,883,179
600,516
15,319
6,926,190
60,633,475
878,288
408,776
Paid in Capital 1,063,418 1,272,294 9,212 867,501 3,379,415 3,503,783 280,000 250,000 293,930 5,000 28,784 211,300 20,000 4,627 5,901 153,540 50,668 859,824 115,838
44,129		 6,141,600 3,563,959 519 1,842,480
Company Leading Enterprises Limited Amber Universal Inc. Circon Universial Inc. Empsonic Enterprises Inc. Bluocean Inc. Talent Eagle Enterprise Inc. Realsun Investments Co., Ltd Hung-wei Venture Capital Co., Ltd Realking Investments Co., Ltd. Realsun Technology Corporation Bobitag Inc. Cortina Systems Taiwan Limited. AICONNX Technology Corporation Realtek Semiconductor (Japan) Corp. Realtek Semiconductor (Hong Kong) Limited Realtek Semiconductor (ShenZhen) Corp. Cortina Network Systems (Shanghai) Co., Ltd. Realsil Microelectronics (SuZhou) Co., Ltd. RayMX Microelectronics Corporation Suzhou PanKore Integrated Circuit Technology Co.,
Ltd.		 Realtek Investment Singapore Private Limited Realtek Singapore Private Limited Cortina Access, Inc. Ubilinx Technology, Inc

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EPS (After
Taxes)
-
-
-
Net Income for
the year (After
Taxes)
2,421
2,327
5,624
Operation
Income
1,721
1,010
8,647
Operating
revenue
36,138
15,433
132,936
Equity
85,185
67,368
54,047
Liabilities
9,576
1,108
27,154
Assets
94,761
68,476
81,201
Paid in Capital 122,832 76,770 48,177
Company Realtek Viet Nam Co., Ltd Realtek Semiconductor (Malaysia) SDN. BHD. Realtek Korea Inc.

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  1. Affiliated Entities Consolidated Financial Statements:

  2. The entities included in the consolidated financial statements are the same as the entities pursuant to the financial accounting standards to be included in the consolidated financial statements of the Parent Company. Therefore, please refer to consolidated financial reports for consolidated financial statement of affiliated entities.

  3. II. Significant events with impact on shareholders’ rights or stock price regulated in Article 36-3-2 of the Securities and Exchange Act happened during last year to the date of the annual report printed: None

  4. III. Acquisition or disposal of Realtek shares by subsidiaries during last year to the date of the annual report printed: None

  5. IV. Issuance of private placement securities: None

V. Other Necessary Supplements: None

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Financial Information

  • I. Condensed balance sheet and Statement of Comprehensive Income, independent auditor’s name and audit opinion in the recent five years

  • Condensed Balance Sheet

  • 1.1. Condensed Consolidated Balance Sheet (Note1)

Unit: NT$ thousands

Item Year
2018		 2019 2020 2021 2022
Current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other non-current assets
Total assets
Current liabilities
Before distribution
After distribution
Non-current liabilities
Total liabilities
Before distribution
After distribution
Equity attributable to owners of the parent
company
Share capital
Capital surplus
Retained earnings
Before distribution
After distribution
Other equity interest
Treasury shares
Non-controlling interest

Before distribution		 51,153,278
3,316,578
-
1,686,249
50,169
58,252,314
32,502,254
36,058,922
1,103,161
33,605,415
37,162,083
24,637,292
5,080,955
3,236,659
15,917,714
12,869,141
401,964
�
9,607
24,646,899		 64,289,591

3,446,162

1,403,245

1,952,960

61,646
73,431,830
43,970,187
49,168,236

2,232,959
46,203,146
51,401,195
27,218,985

5,080,955

2,736,854
19,618,212
15,022,048

(217,036)
�

9,699
27,228,684		 66,811,913

4,448,532

1,647,241

2,067,324

49,319
78,095,917
46,128,894
53,278,483

2,498,277
48,627,171
55,776,760
29,459,081

5,106,849

2,122,008
23,786,273
17,658,054
(1,556,049)
�

9,665
29,468,746		 86,245,402

6,302,938

1,587,910

2,231,694

734,651
101,231,913
58,820,923
71,676,903

3,458,666
62,279,589
75,135,569
38,942,651

5,106,849

1,101,079
34,510,813
21,689,222
( 1,776,090)
�

9,673
38,952,324
26,096,344		 95,491,681

7,556,636

1,537,328

2,413,195

2,283,237
113,700,527
62,544,727

(Note)

4,392,850
66,937,577

(Note)
46,753,232

5,128,636

1,045,147
37,893,274

(Note)

2,686,175
�

9,718
46,762,950

(Note)
Total Equity
After distribution		 21,090,457 22,030,635 22,319,157

Note � Pending on approval of shareholders at Annual General Shareholders’ Meeting.

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-121-

1.2. Condensed Balance Sheet – Parent Company

Unit: NT$ thousands

Item Year
2018		 2019 2020 2021 2022
Current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other non-current assets
Total assets
Current abilities
Before distribution
After distribution
Non-current liabilities
Total liabilities
Before distribution
After distribution
Share capital
Capital surplus
Retained earnings
Before distribution
After distribution
Other equity interest
Treasury shares
Total Equity
Before distribution		 13,962,708
2,863,756
-
1,160,549
14,444
53,992,856
28,733,410
32,290,078
622,154
29,355,564
32,912,232
5,080,955
3,236,659
15,917,714
12,869,141
401,964
�
24,637,292		 22,953,769

3,019,258

1,091,607

1,652,722

46,151
67,445,996
39,316,733
44,514,782

910,278
40,227,011
45,425,060

5,080,955

2,736,854
19,618,212
15,022,048

(217,036)
�
27,218,985		 21,247,908

4,027,004

1,390,104

1,955,629

34,805
70,040,894
39,289,791
46 439,380

1,292,022
40,581,813
47,731,402

5,106,849

2,122,008
23,786,273
17,658,054
(1,556,049)
�
29,459,081		 32,551,097

5,891,478

1,357,716

2,143,811

719,802
91,738,180
50,500,155
63,356,135

2,295,374
52,795,529
65,651,509

5,106,849

1,101,079
34,510,813
21,689,222
( 1,776,090)
�
38,942,651
26,086,671		 28,362,371

7,133,169

1,331,689

2,353,616

2,262,850
100,934,029
51,232,219

(Note)

2,948,578
54,180,797

(Note)

5,128,636

1,045,147
37,893,274

(Note)

2,686,175
�
46,753,232

(Note)

After distribution		 21,080,850 22,020,936 22,309,492

Note: Pending on approval of shareholders at Annual General Shareholders’ Meeting.

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2. Condensed Statement of Comprehensive Income

2.1. Condensed Consolidated Statement of Comprehensive Income

Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Comprehensive Income
Unit: NT$thousands
Year
Item
2018		 2019 2020 2021 2022
Operating revenue
Gross Profit
Operating income
Non-operating income(expenses)
Net income before income tax, net
Income From Operations of
Continued Segments
Income (Loss) From Operations of
Discontinued Segments
Net income for the year
Total Comprehensive income for the
year
Net Profit Attributable to: Owner of
the Company
Net Profit(loss) Attributable to: Non-
controlling interests
Total Comprehensive Income
Attributable to: Owner of the
Company
Total Comprehensive Income (Loss)
Attributable to: Non-controlling
interests		 45,805,746
20,460,870
3,764,460
892,741
4,657,201
4,350,781
�
4,350,781
5,054,264
4,350,768
13
5,054,251
13		 60,744,006
26,583,316

6,330,865

905,007

7,235,872

6,790,375
�

6,790,375

6,130,163

6,790,283

92

6,130,071

92		 77,759,470
33,248,739

8,639,563

716,582

9,356,145

8,793,526
�

8,793,526

7,425,261

8,793,477

49

7,425,212

49		 105,504,286
53,188,403
17,324,896

249,826
17,574,722
16,852,811
�
16,852,811
16,632,770
16,852,759

52
16,632,718

52

33.00		 111,789,791
54,634,836
15,723,998

1,197,861
16,921,859
16,204,144
�
16,204,144
20,666,409
16,204,052

92
20,666,317

92

31.62
Earningsper share 8.57
13.36
17.24

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2.2. Condensed Statement of Comprehensive Income – Parent Company

2.2. Condensed Statement of Comprehensive Income – Parent Company 2.2. Condensed Statement of Comprehensive Income – Parent Company 2.2. Condensed Statement of Comprehensive Income – Parent Company 2.2. Condensed Statement of Comprehensive Income – Parent Company 2.2. Condensed Statement of Comprehensive Income – Parent Company 2.2. Condensed Statement of Comprehensive Income – Parent Company
Unit: NT$thousands
Year
Item
2018		 2019 2020 2021 2022
Operating revenue
Gross Profit
Operating income
Non-operating income
Net income before income tax, net
Income From Operations of
Continued Segments
Net Income for the year
Other comprehensive income (Loss),
net
Total Comprehensive income for
the year		 32,194,291
13,288,095
699,986
3,938,782
4,638,768
4,350,768
4,350,768
703,483
5,054,251
40,845,708

16,202,655

1,316,005

5,912,278

7,228,283

6,790,283

6,790,283

(660,212)

6,130,071
56,426,751

22,535,979

3,282,942

6,070,535

9,353,477

8,793,477

8,793,477
(1,368,265)

7,425,212
68,352,652

32,982,757

4,199,739

13,358,020

17,557,759

16,852,759

16,852,759

(220,041)

16,632,718

33.00
67,491,952

31,791,493

1,219,484

15,662,568

16,882,052

16,204,052

16,204,052

4,462,265

20,666,317

31.62
Earningsper share 8.57
13.36
17.24

3. Name of Auditors and Issued Opinions in the recent five years

Year Name of Auditors(CPA) Auditor Opinion
2018 Hsueh,Seou-Hung,Li,Tien-Yi Unqualified Opinions
2019 Lin,Yu-Kuan,Tsang,Kwok-Wah Unqualified Opinions
2020 Lin,Yu-Kuan,Cheng,Ya-Huei Unqualified Opinions
2021 Cheng,Ya-Huei,Lin,Yu-Kuan Unqualified Opinions
2022 Li,Tien-Yi,Cheng,Ya-Huei Unqualified Opinions

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II. Financial Analysis in the Recent Five Years

1. Consolidated Financial Analysis

1. Consolidated Financial Analysis 1. Consolidated Financial Analysis
Year
Item		 2018 2019 2020 2021 2022
Debt ratio (%) 57.68 62.91 62.26 61.52 58.87
Capital Structure
Long-term fund to Property, plant and equipment
776.40		 854.91 718.59
672.87		 676.96
(%)
Current ratio (%) 157.38 146.21 144.83
146.62		 152.67
Liquidity Quick ratio (%) 138.43 128.67 125 117.36 110.98
Times interest earned (times) 34.63 45.46 59.47 171.22 79.82
Average collection turnover (times) 6.32 6.74 6.4 7.07 7.93
Average collection days 58 54 57 52 46
Operating
Performance		 Inventory turnover (times)
Payment turnover (times)		 3.98
4.64		 4.57
4.95		 4.88
4.69		 3.78
4.63		 2.36
5
Average inventory turnover days 92 80 75 97 154
Fixed assets turnover (times) 14.13 17.96 19.69 19.62 16.13
Property, plant and equipment turnover (times) 0.82 0.92 1.02 1.17 1.04
Return on total assets (%) 8.1 10.54 11.79 18.90 15.27
Return on stockholders’ equity (%) 18.71 26.17 31.01 49.26 37.80
Profitability Profit before tax to paid-in capital (%) 91.65 142.41 183.2 344.14 329.94
Profit after tax to net sales (%) 9.49 11.17 11.30 15.97 14.49
Earnings per share (NT$) 8.57 13.36 17.24 33.00 31.62
Cash flow ratio (%) 25.20 27.86 33.47 31.19 30.47
Cash Flow Cash flow adequacy ratio (%) 109.92 124.89 143.56
128.26		 108.18
Cash flow reinvestment ratio (%) 17.53 26.05 27.31 23.78 10.16
Leverage Operating leverage
Financial leverage		 5.31
1.03		 4.11
1.02		 3.79
1.01		 3.02
1.00		 3.56
1.01
Analysis of Changes equal to or over 20% in the recent two years:
Decrease in times interest earned: Mainly due to increase in interest expense.
Decrease inInventory turnover (times) and increase in Average inventory turnover days: Mainly due to increase in inventories.
Decrease in return on stockholders’ equity: Mainly due to increase in stockholders’ equity.
Decrease in cash flow reinvestment ratio: Mainlydue to increase in cash dividends.

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2. Financial Analysis-Parent Company

Item Year 2018 2019 2020 2021 2022
Capital
Structure		 Debt ratio (%)
Long-term fund to Property, plant and
equipment (%)		 54.36
882.03		 59.64
931.66		 57.94
763.62		 57.55
699.96		 53.67
696.77
Liquidity Current ratio (%)
Quick ratio (%)		 48.59
33.81		 58.38
43.05		 54.07
37.77		 64.45
40.12		 55.36
31.17
Times interest earned (Times) 34.55 50.31 66.31 192.93 86.09
Average collection turnover (Times) 5.66 6.14 6.49 7.07 8.25
Average collection days 64 59 56 52 44
Operating Inventory turnover (times) 3.92 4.34 4.91 3.58 2.53
Performance Payment turnover (times) 4.60 4.87 4.82 4.56 5.63
Average inventory turnover days 93 84 74 102 144
Fixed assets turnover (times) 11.61 13.88 16.01 13.78 10.36
Property, plant and equipment turnover (times) 0.61 0.67 0.82 0.84 0.7
Return on total assets (%) 8.57 11.40 12.97 20.94 17.02
Profitability Return on stockholders’ equity (%) 18.71 26.18 31.02 49.27 37.81
Profit before tax to paid-in capital (%) 91.29 142.26 183.15 343.8 329.17
Profit after tax to net sales (%) 13.51 16.62 15.58 24.65 24
Earnings per share (NT$) 8.57 13.36 17.24 33.00 31.62
Cash Flow Cash flow ratio (%)
Cash flow adequacy ratio (%)		 16.13
74.81		 10.06
59.46		 38.88
102.41		 27.02
95.03		 28.61
94.87
Cash flow reinvestment ratio (%) 6.10 1.26 28.10 14.30 1.65
Leverage Operating leverage 19.19 12.50 6.97 7.88 27.81
Financial leverage 1.25 1.12 1.04 1.02 1.19
Analysis of Changes equal to or over 20% in the recent two years:
Decrease in quick ratio: Mainly due to decrease in accounts receivable.
Decrease in times interest earned (times): Mainly due to increase in interest expense.
Decrease inInventory turnover (times) and increase in average inventory turnover days: Mainly due to increase in
inventories.
Increase in payment turnover (times): Mainly due to decrease in accounts payable.
Decrease in property, plant and equipment turnover (times): Mainly due to acquisition of property, plant and
equipment.
Decrease in return on stockholders’ equity: Mainly due to increase in stockholders’ equity.
Decrease in cash flow reinvestment ratio: Mainly due to increase in cash dividends.
Increase in operatingleverage: Mainlydue to decrease in operatingincome.

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Glossary:

  1. Capital Structure Analysis:

(1). Debt ratio = Total liabilities / Total assets

  • (2). Long-term fund to property, plant and equipment ratio = (Shareholders’ equity + non-current liabilities) / Net property, plant and equipment

  • Liquidity Analysis:

  • (1). Current ratio = Current assets / Current liabilities

  • (2). Quick ratio = (Current assets – inventories – prepaid expenses) / Current liabilities

  • (3). Times interest earned = Earnings before interest and taxes / Interest expenses

  • Operating Performance Analysis:

  • (1). Average collection turnover = Net sales / Average trade receivables

  • (2). Days sales outstanding = 365 / Average collection turnover

  • (3). Average inventory turnover = Operating costs / Average inventory

  • (4). Average payment turnover = operating costs / Average trade payables

  • (5). Average inventory turnover days = 365 / Average inventory turnover

  • (6). Property, plant and equipment turnover = Net sales / Average property, plant and equipment

  • (7). Total assets turnover = Net sales / total assets

  • Profitability Analysis:

  • (1). Return on total assets = [Net income + Interest expenses x (1 – tax rate)] / Average total assets

  • (2). Return on equity attributable to shareholders of the parent = Net income attributable to shareholders of the parent / Average equity attributable to shareholders of the parent

  • (3). Net margin = Net income / Net sales

  • (4). Earnings per share = (Net income attributable to shareholders of the parent – preferred stock dividend) / Weighted average number of shares outstanding

  • Cash Flow:

  • (1). Cash flow ratio = Net cash provided by operating activities / Current Liabilities

  • (2). Cash flow adequacy ratio = Five-year sum of cash from operations / Five-year sum of capital expenditures, inventory additions, and cash dividend

  • (3). Cash flow reinvestment ratio = (Cash provided by operating activities – cash dividends) / (Gross property, plant and equipment + long-term investments + other noncurrent assets + working capital) 6. Leverage:

  • (1). Operating leverage = (Net sales – variable cost) / Operating income

(2). Financial leverage = Operating income / (Operating income – interest expenses)

III. Has the company or its affiliates experienced financial difficulties in the most recent years up to the date of publication of the 2022 annual report: None.

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IV. Audit Committee’s Review Report

Audit Committee’s Review Report

The Company's 2022 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 2023 Annual Shareholders’ Meeting.

Realtek Semiconductor Corp.

Chairman of the Audit Committee: Chen, Fu-Yen

Feb. 24, 2023

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V. Consolidated Financial Statements

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR22000267

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 subsidiaries (the “Group”) as at December 31, 2022 and 2021, 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 auditors (please refer to the Other matter section), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2022 and 2021, 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 that came into effect 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 Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our audits and the report of other auditors, 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 Group’s 2022 consolidated financial statements. These matters were addressed in the context

~2~

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of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s 2022 consolidated financial statements are stated as follows:

Evaluation of inventories

Description

Refer to Note 4(13) 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 audit procedures in respect of the above key audit matter:

  1. Obtained an understanding of accounting policies on the provision of allowance for inventory valuation losses and assessed the reasonableness.

  2. 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.

  3. Evaluated and confirmed the reasonableness of net realizable value for inventories through validating respective supporting documents.

Other matter – Reference to the audits of other auditors

We did not audit the financial statements of certain consolidated subsidiaries and investments accounted for under equity method. Those financial statements were audited by other auditors, 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 under equity method were based solely on the reports of other auditors. Total assets

~3~

-130-

(including investments accounted for under equity method amounting to NT$170,671 thousand and NT$191,377 thousand) of those companies amounted to NT$845,913 thousand and NT$1,220,840 thousand, constituting 0.74% and 1.21% of the consolidated total assets as at December 31, 2022 and 2021, respectively, and total operating revenues both NT$0 thousand, both constituting 0% of the consolidated total operating revenues for the years then ended. Furthermore, according to the reports of other auditors, comprehensive losses of those investments accounted for under equity method amounted to NT$20,723 thousand and NT$12,113 thousand, constituting (0.10%) and (0.07%) of comprehensive incomes for the years then ended, respectively.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion with other matter section on the parent company only financial statements of Realtek Semiconductor Corporation as at and for the years ended December 31, 2022 and 2021.

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 that came into effect 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.

~4~

-131-

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgement and professional skepticism throughout the audit. We also:

  1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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.

  5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying

~5~

-132-

transactions and events in a manner that achieves fair presentation.

  1. 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 auditor’s 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.

Li, Tien-Yi Cheng, Ya-Huei For and on behalf PricewaterhouseCoopers, Taiwan February 24, 2023

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

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

~6~

-133-

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(4)
6(5)
6(5) and 7
6(6)
6(2)
6(3)
6(4) and 8
6(7)
6(8)
6(9)
6(10)
6(11)
6(28)		 December 31, 2022
December 31, 2021
AMOUNT
%
AMOUNT
%

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%
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

1170
Accounts receivable, net

1180
Accounts receivable, net - related
parties

1200
Other receivables
130X
Inventories, net

1410
Prepayments
11XX
Total current assets
Non-current assets
1510
Financial assets at fair value through
profit or loss - non-current

1517
Financial assets at fair value through
other comprehensive income - non-
current

1535
Financial assets at amortised cost -
non-current

1550
Investments accounted for under
equity method

1600
Property, plant and equipment

1755
Right-of-use assets

1760
Investment property

1780
Intangible assets

1840
Deferred income tax assets

1900
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets
���

(Continued)

~7~

-134-

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes
6(12)
6(21)
7
6(13)
7
6(21)
6(14)
6(16)
6(28)
6(15)
6(17)
6(18)
6(19)
6(20)
9		 December 31, 2022

December 31, 2021
AMOUNT
%
AMOUNT
%
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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
2280
Lease liabilities - current
2300
Other current liabilities

21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings

2550
Provisions - non-current

2570
Deferred income tax liabilities

2580
Lease liabilities - non-current
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 holders of
the parent company
36XX
Non-controlling interest
3XXX
Total equity
Significant contingent liabilities and
unrecognized contract commitments

3X2X
Total liabilities and equity

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

~8~

-135-

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Year ended December 31 ended December 31 ended December 31
2022 2021
Items Notes AMOUNT % AMOUNT %
4000 Operating revenue
 6(21) and 7 � ����������� ��� � ����������� ���
5000 Operating costs
 6(6) and 7 �
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5950 Gross profit ���������� �� ���������� ��
Operating expenses
6(26)(27) and 7
6100
Selling expenses
�
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6200 General and administrative expenses �
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6300 Research and development expenses �
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6450 Expected credit gains (losses)
 12(2) ������ ��
������		 �
6000 Total operating expenses �
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6900 Operating income ���������� �� ���������� ��
Non-operating income and expenses
7100
Interest income
6(22)
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7010 Other income
 6(23) ������� � ������� �
7020 Other gains and losses
 6(24) ������ ��
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7050 Finance costs
 6(25) �
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7060 Share of loss of associates and joint
 6(7)
ventures accounted for under equity
method �
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7000 Total non-operating income and
expenses ��������� � ������� �
7900 Profit before income tax, net ���������� �� ���������� ��
7950 Income tax expense
 6(28) �
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8200 Net income for the year � ���������� �� � ���������� ��
Other comprehensive income
 6(20)
(losses), net
Components of other comprehensive
income (losses) that will not be
reclassified to profit or loss
8316
Unrealised (losses) income from
6(3)
investments in equity instruments
measured at fair value through other
comprehensive income �� ��������� ��� ������� �
Components of other comprehensive
income (losses) that will be
reclassified to profit or loss
8361
Financial statements translation
differences of foreign operations ��������� ��
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8300 Other comprehensive income(losses),
net � ��������� ��� �������� �
8500 Total comprehensive income for the
year � ���������� �� � ���������� ��
Net income attributable to:
8610
Equity holders of the parent
company � ���������� �� � ���������� ��
8620 Non-controlling interest �� � �� �
Net income for the year � ���������� �� � ���������� ��
Comprehensive income attributable to:
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
6(29)
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9850 Diluted earnings per share
 6(29) � ����� � �����

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

~9~

-136-

Total equity ����������� ���������� ������� � ���������� � ��������� � ��������� � ��� ��� �� � ����������� ����������� ���������� ��������� ���������� � � ���������� � ������� ��������� � ��� �� � �����������
REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021 (Expressed in thousands of New Taiwan dollars) Equity attributable to owners of the parent company Retained earnings
Other equity interest		 Unrealised income (losses) from financial assets Financial
measured at fair		 statements
value through		 translation
other		 Undistributed
differences of
comprehensive
Non-controlling		 Common shares
Capital surplus
Legal reserve
Special reserve
earnings
foreign operations
income
Total
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�����		 The accompanying notes are an integral part of these consolidated financial statements. ~10~
Notes 6(20) 6(19) 6(19) 6(19) 6(18) 6(18) 6(20) 6(19) 6(19) 6(19) 6(17)(18) 6(19) 6(18)
2021 Balance at January 1, 2021 Net income for the year Other comprehensive income (loss) for the year Total comprehensive income (loss) Distribution of 2020 earnings Special reserve Cash dividends Cash from capital surplus Changes in equity of associates accounted for under equity method Cash dividends returned Changes in non-controlling interest Balance at December 31, 2021 2022 Balance at January 1, 2022 Net income for the period Other comprehensive income (loss) for the year Total comprehensive income (loss) Distribution of 2021 earnings Legal reserve Special reserve Cash dividends Employees’ compensation transferred to common shares Cash from capital surplus Cash dividends returned Changes in non-controlling interest Balance at December 31, 2022

-137-

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2022 AND 2021

(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) losses

Interest expense

Interest income

Dividend income

Losses(gains) on financial assets at fair value
through profit or loss

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

(Gains)losses on disposal of property, plant and
equipment

Loss on disposal of investments

Gains arising from lease modifications

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
Inventories
Prepayments
Changes in operating liabilities
Contract liabilities - current
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Other current liabilities
Provisions - non-current
Accrued pension obligations		 Year ended December 31
Notes
2022
2021
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(Continued)

~11~

-138-

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value
through profit or loss - non-current
Acquisition of financial assets at fair value
through other comprehensive income
Acquisition of financial assets at amortised cost
Proceeds from disposal of financial assets at
amortised cost
Acquisition of investments accounted for under
equity method
Proceeds from disposal of investments accounted
for under equity method
Acquisition of property, plant and equipment

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

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

Decrease in short-term borrowings

Increase in long-term borrowings

Repayment of principal portion of lease liabilities

(Decrease)increase in guarantee deposits
Cash from capital surplus and cash dividends
Cash dividends returned
Net cash flows used in financing activities
Effect of exchange rate
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Year ended December 31
Notes
2022
2021
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The accompanying notes are an integral part of these consolidated financial statements.

~12~

-139-

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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

1. HISTORY AND ORGANISATION

Realtek Semiconductor Corporation (the “Company”) was incorporated as a company limited by shares on October 21, 1987 and commenced commercial operations in March 1988. The Company was based in Hsinchu Science Park since October 28, 1989. The Company and its subsidiaries (collectively referred herein as the “Group”) are engaged in the research, development, design, testing, and sales of ICs and application software for these products.

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

  2. STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on February 24, 2023.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

  • (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments that came into effect as endorsed by FSC and became effective from 2022 are as follows:

New standards, interpretations and amendments that came into effect as endo
effective from 2022 are as follows:		 rsed by FSC and became
NewStandards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds before
intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract’
Annual improvements to IFRS Standards 2018–2020		 January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2022

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

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

New standards, interpretations and amendments that came into effect as endorsed by the FSC effective from 2023 are as follows:

effective from 2023 are as follows:
NewStandards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IAS 1, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
Amendments to IAS 12, ‘Deferred tax related to assets and liabilities
arising from a single transaction’		 January 1, 2023
January 1, 2023
January 1, 2023

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

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

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

IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but
IFRSs as endorsed by the FSC are as follows:		 not yet included in the
New Standards,InterpretationsandAmendments Effective date by
International Accounting
StandardsBoard
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, 'Insurance contracts'
Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 –
comparative information'
Amendments to IAS 1, ‘Classification of liabilities as current or
non-current’
Amendments to IAS 1, ‘Non-current liabilities with covenants’		 To be determined by
International Accounting
Standards Board
January 1, 2024
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International

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Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC (collectively referred herein as the “IFRSs”).

  • (2) Basis of preparation

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

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

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

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

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

  • (3) Basis of consolidation

  • A. Basis for preparation of consolidated financial statements:

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

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

    • (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

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

    • (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture.

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Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. Subsidiaries included in the consolidated financial statements:

Name of investor Name ofsubsidiary Main business
activities		 Ownership (%) Ownership (%) Description
Note 1
Note 1
Note 1
December
31,2022		 December
31,2021
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation		 Leading
Enterprises Limited
Amber Universal
Inc.
Realtek Singapore
Private Limited
Bluocean Inc.
Talent Eagle
Enterprise Inc.
Realtek Investment
Singapore Private
Limited
Realsun Investment
Co., Ltd.
Hung-wei Venture
Capital Co., Ltd.
Realking
Investments Co.,
Ltd.		 Investment holdings
�
ICs manufacturing,
design, research,
development, sales,
and marketing
Investment holdings
�
�
�
�
�		 -
100%
100%
-
-
100%
100%
100%
100%		 100%
100%
100%
100%
100%
100%
100%
100%
100%

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Name of investor Name ofsubsidiary Main business
activities		 Ownership (%) Ownership (%) Description
December
31,2022		 December
31,2021
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Leading
Enterprises
Limited
Leading
Enterprises
Limited
Amber Universal
Inc.
Amber Universal
Inc.
Empsonic
Enterprises Inc.
Talent Eagle
Enterprise Inc.
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited		 Realsun
Technology
Corporation
Bobitag Inc.
AICONNX
Technology
Corporation
Realtek
Semiconductor
(Japan) Corp.
Circon Universal
Inc.
Realtek
Semiconductor
(Hong Kong)
Limited
Realtek
Semiconductor
(Shen Zhen) Corp.
Realsil
Microelectronics
Corp.
Ubilinx
Technology Inc.
Cortina Access
Inc.
Cortina Systems
Taiwan Limited		 ICs manufacturing,
design, research,
development, sales,
and marketing
Manufacture and
installation of
computer equipment
and wholesale, retail
and related service of
electronic materials
and information /
software
ICs manufacturing,
design, research,
development, sales,
and marketing
Information
collection and
technical support
Investment holdings
Information services
and technical support
R&D and technical
support
�
�
�
�		 100%
67%
100%
100%
100%
100%
100%
100%
100%
100%
100%		 100%
67%
100%
100%
100%
100%
100%
100%
100%
100%
100%

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Name of investor Name ofsubsidiary Main business
activities		 Ownership (%) Ownership (%) Description
Note 1
Note 1
Note 1
Note 2
December
31,2022		 December
31,2021
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realsil
Microelectronics
Corp.
Realsil
Microelectronics
Corp.
Realtek
Semiconductor
(Shen Zhen)
Corp.
Bluocean Inc.
Bluocean Inc.		 Cortina Network
Systems Shanghai
Co., Ltd.
Empsonic
Enterprises Inc.
Realtek Viet Nam
Co., Ltd.
RayMX
Microelectronics
Corp.
Leading
Enterprises Limited
Bluocean Inc.
Talent Eagle
Enterprise Inc.
RayMX
Microelectronics
Corp.
Suzhou PanKore
Integrated Circuit
Technology Co.
Ltd.
Suzhou PanKore
Integrated Circuit
Technology Co.
Ltd.
Realtek
Semiconductor
(Malaysia) Sdn.
Bhd.
Realtek Korea Inc.		 R&D and technical
support
Investment holdings
R&D and technical
support
ICs manufacturing,
design, research,
development, sales,
and marketing
Investment holdings
�
�
ICs manufacturing,
design, research,
development, sales,
and marketing
�
�
R&D and technical
support
�		 100%
100%
100%
19%
100%
100%
100%
81%
80%
20%
100%
100%		 100%
100%
100%
19%
-
-
-
81%
80%
20%
100%
-

~18~

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  - Note 1: Due to reorganisation, the Company sold all equity interests in its three wholly-owned subsidiaries, Leading Enterprises Limited, Bluocean Inc. and Talent Eagle Enterpriese Inc., to Realtek Singapore Private Limited through share exchanges.

  - Note 2: Realtek Korea Inc. was established on January 17, 2022.

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

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

  • E. Significant restrictions: None.

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

  • (4) Foreign currency translation

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

  • A. Foreign currency transactions and balances

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

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

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

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

  • B. Translation of foreign operations

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

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

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

     - iii. All resulting exchange differences are recognized in other comprehensive income.

  - (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

  - (c) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

  • (5) Classification of current and non-current items

  • A. Assets that meet one of the following criteria are classified as current assets:

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

    • (b) Assets held mainly for trading purposes;

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

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

Otherwise, they are classified as non-current assets.

  • B. Liabilities that meet one of the following criteria are classified as current liabilities:

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

  • (b) Liabilities held mainly for trading purposes;

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

  • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Otherwise, they are classified as non-current liabilities.

(6) Cash equivalents

Cash equivalents refer to 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. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

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

  • A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income. Financial assets at amortized cost or fair value through other comprehensive income are designated as at fair value through profit or loss at initial recognition when they eliminate or significantly reduce a measurement or recognition inconsistency.

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

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

  • D. The Group recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

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

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

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

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

The Group subsequently measures the financial assets at fair value:

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

(9) Financial assets at amortized cost

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

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

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

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

  • C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.

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

  • (10) Accounts receivable

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

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

  • (11) Impairment of financial assets

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

  • (12) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

  • (13) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item-by-item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

  • (14) Investments accounted for under equity method / associates

  • A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for under equity method and are initially recognized at cost.

  • B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

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  • C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.

  • D. Unrealized gains or losses on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

  • E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and � investments accounted for under equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

  • F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.

  • G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

  • (15) Property, plant and equipment

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

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

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  • C. Other property, plant and equipment apply cost model and are depreciated using the straightline method to allocate their cost over their estimated useful lives. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

  • D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of the fixed assets are as follows: buildings - 10~55 years and other fixed assets - 3~5 years.

  • (16) Leasing arrangements (lessee) � right-of-use assets/ lease liabilities

  • A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group.

  • B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Fixed payments, less any lease incentives receivable.

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

  • C. At the commencement date, the right-of-use asset is stated at cost comprising the following: (a) The amount of the initial measurement of lease liability; and

    • (b) Any lease payments made at or before the commencement date.

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

  • (17) Investment property

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

(18) Intangible assets

  • A. Computer software

Computer software is stated at cost and amortized on a straight-line basis over its estimated useful life of 1 to 5 years.

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  • B. Goodwill

    • Goodwill arises in a business combination accounted for by applying the acquisition method.

  • C. Other intangible assets

    • Separately acquired intangible assets with a finite useful life are stated at cost. Intangible assets acquired in a business combination are recognized at fair value at acquisition date. The amortization amounts of separately and consolidated acquired intangible assets were amortized on a straight-line basis over their estimated useful lives of 2-5 years.

  • (19) Impairment of non-financial assets

  • A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

  • B. The recoverable amounts of goodwill are evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.

  • (20) Borrowings

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

  • (21) Notes and accounts payable

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

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

(22) Derecognition of financial liabilities

  • A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

  • (23) Provisions

  • Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation

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on the balance sheet date.

(24) Employee benefits

  • A. Short-term employee benefits

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

  • B. Pensions

  • (a) Defined contribution plan

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

  • (b) Defined benefit plan

    • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of highquality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.

    • ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

  • C. Employees’ compensation and directors’ remuneration

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

(25) Income tax

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

~26~

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

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

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

  • E. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from research and development expenditures to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

  • (26) Share capital

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

  • (27) Dividends

Cash dividends are recorded as liabilities in the Company’s financial statements in the period in which they are resolved by the Board of Directors. Stock dividends are recorded as stock dividends to be distributed in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders and are reclassified to ordinary shares on the effective date of new shares issuance.

  • (28) Revenue recognition

  • A. Sales of goods

    • (a) The Group manufactures and sells various integrated circuit related products. Sales are recognized when control of the products has transferred, being when the products are

~27~

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

  • (b) Revenue from these sales is recognized based on the price specified in the contract. A refund liability is recognized for expected sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.

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

  • B. Services revenue

Revenue from design, royalty and technical services is recognized after completing the services in which the services are rendered.

(29) Government grants

Government grants are recognized at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes expenses for the related costs for which the grants are intended to compensate.

(30) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Group’s Chief Operating Decision-Maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

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

None.

~28~

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(2) Critical accounting estimates and assumptions

Evaluation of inventories

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

As at December 31, 2022, the carrying amount of inventories was $25,552,543.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS
Cash and cash equivalents
Cash on hand and revolving funds
Checking accounts and demand
deposits
Time deposits		 December 31,2022
837
$ 10,001,264
3,751,934
13,754,035
$		 December 31,2021
910
$ 7,113,048
83,393
7,197,351
$

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

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

Financial assets at fair value through profit or loss
Current items:
Financial assets mandatorily measured
at fair value through profit or loss
Listed stocks
Beneficiary certificates
Non-current items:
Financial assets mandatorily measured
at fair value through profit or loss
Beneficiary certificates
Hybrid instruments		 December 31,2022
159,902
$ 1,403,385
1,563,287
305,145
$ 53,000
358,145
1,921,432
$		 December 31,2021
358,892
$ 1,593,755
1,952,647
-
$ -
-
1,952,647
$

~29~

-156-

  • A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:
loss are listed below:
Year ended
December 31,2022
Financial assets mandatorily measured at fair
value through profit or loss
Equity instruments
198,989)
($ Beneficiary certificates
18,006
180,983)
($		 Year ended
December 31,2021
102,751
$ 11,613
114,364
$

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

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

Items
Non-current items:
Equity instruments
Listed stocks
Emerging stocks
Unlisted stocks		 December 31,2022
718,427
$ 28,771
2,352,561
3,099,759
$		 December 31,2021
788,460
$ 36,046
2,820,372
3,644,878
$

  • A. The Group has elected to classify equity instruments investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $3,099,759 and $3,644,878 on December 31, 2022 and 2021, respectively.

  • B. Amounts recognized in other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through other
comprehensive income
Fair value change recognised in other
comprehensive income
(		 Year ended
December 31,2022
988,964)
$		 Year ended
December 31,2021
995,872
$
  • C. The Group has no financial assets at fair value through other comprehensive income pledged to others.

~30~

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(4) Financial assets at amortized cost

Financial assets at amortized cost
Items
Current items:
Time deposits
Non-current items:
Corporate bonds
Time deposits		 December 31,2022
41,595,837
$ 532,574
$ 85,907
618,481
$		 December 31,2021
43,740,876
$
-
$ 80,101
80,101
$

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

  • B. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2). The counterparties of the Group’s investments in time deposits were financial institutions who have good credit quality, so it expects that the probability of counterparty default is remote.

(5) Accounts receivable

Accounts receivable
A. The aging analysis of accounts receivable is as follows:
December 31,2022
Accounts receivable
9,472,662
$ Accounts receivable - related parties
2,605,318
Less: Allowance for bad debts
65,295)
(

12,012,685
$ December 31,2022
Not past due
12,034,050
$ Up to 30 days
43,893
31 to 90 days
-
Over 90 days
37
12,077,980
$		 December 31,2021
12,877,169
$ 3,210,546
98,710)
(
15,989,005
$
December 31,2021
15,874,298
$ 210,889
2,067
461
16,087,715
$

The above aging analysis is based on past due date.

  • B. As at December 31, 2022 and 2021, accounts receivable were all from contracts with customers.

  • And as at January 1, 2021, the balance of receivables from contracts with customers amounted to $13,748,428.

  • C. The Group has no accounts receivable pledged to others.

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

~31~

-158-

(6) Inventories

Inventories
Raw materials
Work in process
Finished goods
Raw materials
Work in process
Finished goods		 December31,2022
Allowance for
obsolescence and
Cost
marketvalue decline
9,483,560
$ 1,024,725)
($ 8,905,516
948,334)
(
10,319,326
1,182,800)
(
28,708,402
$ 3,155,859)
($ December31,2021		 Bookvalue
8,458,835
$ 7,957,182
9,136,526
25,552,543
$
Allowance for
obsolescence and
Cost
marketvalue decline
4,585,329
$ 364,729)
($ 4,946,701
265,853)
(
8,131,233
483,969)
(
17,663,263
$ 1,114,551)
($		 Bookvalue
4,220,600
$ 4,680,848
7,647,264
16,548,712
$

Operating costs incurred on inventories for the years ended December 31, 2022 and 2021 were as follows:

(7) Investments accounted for under equity method
Cost of inventories sold and others
Inventory loss on decline in (gain on reversal of)
market value, obsolete and slow-moving
inventories
Loss on scrap inventory
Estinet Technologies Incorporation
Innorich Venture Capital Corp.
Starmems Semiconductor Corp.		 Year ended
Year ended
December 31,2022
December 31,2021
54,942,909
$ 51,952,047
$ 1,986,470
30,051)
(
225,576
393,887
57,154,955
$ 52,315,883
$ December 31,2022
December 31,2021
2,276
$ 5,081
$ 135,808
142,619
32,587
43,677
170,671
$ 191,377
$

  • A. The loss on investments accounted for under equity method amounted to $20,723 and $12,113 for the years ended December 31, 2022 and 2021, respectively.

  • B. Starmems Semiconductor Corp. was incorporated in April 2021. The Group’s investment in the investee amounted to $45,000.

~32~

-159-

(8) Property, plant and equipment

Property, plant and equipment
At January 1, 2022
Cost
Accumulated
depreciation and
impairment
2022
At January 1
Additions
Disposals
Reclassifications
Depreciation
Net exchange difference
At December 31
At December 31, 2022
Cost
Accumulated
depreciation and
impairment
At January 1, 2021
Cost
Accumulated
depreciation and
impairment
2021
At January 1
Additions
Disposals
Reclassifications
Depreciation
Net exchange difference
At December 31
At December 31, 2021
Cost
Accumulated
depreciation and
impairment		 Land
Buildings
Machinery
Test equipment
Office equipment
Others
Total
489,370
$ 3,466,696
$ 4,185,792
$ 3,926,851
$ 492,603
$ 2,477,232
$ 15,038,544
$ -
1,517,259)
(
3,546,371)
(
2,638,725)
(
255,610)
(
777,641)
(
8,735,606)
(
489,370
$ 1,949,437
$ 639,421
$ 1,288,126
$ 236,993
$ 1,699,591
$ 6,302,938
$ 489,370
$ 1,949,437
$ 639,421
$ 1,288,126
$ 236,993
$ 1,699,591
$ 6,302,938
$ -
47,562
125,763
729,752
45,270
1,333,812
2,282,159
-
57)
(
-
41)
(
123)
(
-
221)
(
-
-
172,492
2,891
-
175,577)
(
194)
(
-
130,636)
(
169,607)
(
580,087)
(
63,891)
(
122,385)
(
1,066,606)
(
-
28,822
8,401)
(
12,889
805
4,445
38,560
489,370
$ 1,895,128
$ 759,668
$ 1,453,530
$ 219,054
$ 2,739,886
$ 7,556,636
$ 489,370
$ 3,083,025
$ 1,292,529
$ 3,414,364
$ 434,731
$ 3,085,480
$ 11,799,499
$ -
1,187,897)
(
532,861)
(
1,960,834)
(
215,677)
(
345,594)
(
4,242,863)
(
489,370
$ 1,895,128
$ 759,668
$ 1,453,530
$ 219,054
$ 2,739,886
$ 7,556,636
$ Land
Buildings
Machinery
Test equipment
Office equipment
Others
Total
387,280
$ 3,414,624
$ 3,838,068
$ 3,290,307
$ 333,113
$ 1,111,004
$ 12,374,396
$ -
1,413,842)
(
3,429,011)
(
2,195,086)
(
207,520)
(
680,405)
(
7,925,864)
(
387,280
$ 2,000,782
$ 409,057
$ 1,095,221
$ 125,593
$ 430,599
$ 4,448,532
$ 387,280
$ 2,000,782
$ 409,057
$ 1,095,221
$ 125,593
$ 430,599
$ 4,448,532
$ -
16,140
356,412
686,676
161,590
1,514,187
2,735,005
-
146)
(
-
10)
(
167)
(
73)
(
396)
(
102,090
42,767
-
-
-
144,857)
(
-
-
114,392)
(
126,350)
(
493,922)
(
50,054)
(
99,321)
(
884,039)
(
-
4,286
302
161
31
944)
(
3,836
489,370
$ 1,949,437
$ 639,421
$ 1,288,126
$ 236,993
$ 1,699,591
$ 6,302,938
$ 489,370
$ 3,466,696
$ 4,185,792
$ 3,926,851
$ 492,603
$ 2,477,232
$ 15,038,544
$ -
1,517,259)
(
3,546,371)
(
2,638,725)
(
255,610)
(
777,641)
(
8,735,606)
(
489,370
$ 1,949,437
$ 639,421
$ 1,288,126
$ 236,993
$ 1,699,591
$ 6,302,938
$		 Total
15,038,544
$ 8,735,606)
(
6,302,938
$
6,302,938
$
15,038,544
$ 8,735,606)
(
6,302,938
$

A. There was no capitalization of borrowing costs attributable to the property, plant and equipment.

B. The Group has no property, plant and equipment pledged to others.

� (9) Leasing arrangements lessee

A. The Group leases various assets including land, buildings and transportation equipment. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

~33~

-160-

  • B. The carrying amount of right-of-use assets and the depreciation are as follows:
Land
Buildings
Transportation equipment
Land
Buildings
Transportation equipment		 December 31,2022
December 31,2021
1,354,240
$ 1,370,790
$ 182,939
215,177
149
1,943
1,537,328
$ 1,587,910
$ Carryingamount
Year ended
Year ended
December 31,2022
December 31,2021
28,153
$ 27,376
$ 76,443
81,295
1,794
1,644
106,390
$ 110,315
$ Depreciation		 amount
December 31,2021
1,370,790
$ 215,177
1,943
1,587,910
$
Year ended
December 31,2021
27,376
$ 81,295
1,644
110,315
$

  • C. For the years ended December 31, 2022 and 2021, the additions to right-of-use assets were $69,238 and $57,016, respectively.

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

Items affecting profit or loss
Interest expense on lease liabilities		 Year ended
December 31,2022
27,680
$		 Year ended
December 31,2021
28,590
$
  • E. For the years ended December 31, 2022 and 2021, the Group’s total cash outflow for leases were $124,830 and $119,369, respectively.

(10) Investment property

$124,830 and $119,369, respectively.
Investment property
Buildings
2022 2021
At January 1
Cost $ 81,152
 $ 81,499
Accumulated depreciation and impairment ( 39,511)
 ( 35,809)
$ 41,641 $ 45,690
At January 1 $ 41,641
 $ 45,690
Depreciation ( 3,924)
 ( 3,858)
Net exchange difference 699 ( 191)
At December 31 $ 38,416 $ 41,641
At December 31
Cost $ 82,504
 $ 81,152
Accumulated depreciation and impairment ( 44,088)
 ( 39,511)
$ 38,416 $ 41,641

~34~

-161-

  • A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:
from the investment property are shown below:
Rental income from the lease of the investment
property
Operating expenses arising from the
investment property that generated rental
income during the year		 Year ended
December 31,2022
2,274
$ 3,924
$		 Year ended
December 31,2021
2,231
$
3,858
$
  • B. The Group’s investment property is located in Mainland China. The fair value is based on valuation information from Information Centre of Real Estate in local governments in Mainland China and is adjusted and classified as level 3 accordingly. As at December 31, 2022 and 2021, the fair values were $133,060 and $130,525, respectively.

(11) Intangible assets

Intangible assets
Computer
Intellectual
software
property
At January 1, 2022
Cost
5,639,381
$ 5,805,930
$ Accumulated amortisation
and impairment
4,737,026)
(
4,517,428)
(

902,355
$ 1,288,502
$ 2022
At January 1
902,355
$ 1,288,502
$ Additions
1,459,084
308,554
Amortisation
962,714)
(
642,764)
(
Net exchange difference
252
645
At December 31
1,398,977
$ 954,937
$ At December 31, 2022
Cost
7,099,807
$ 6,117,679
$ Accumulated amortisation
and impairment
5,700,830)
(
5,162,742)
(

1,398,977
$ 954,937
$		 Goodwill
Others
Total
639,561
$ 281,520
$ 12,366,392
$ 639,561)
(
240,683)
(
10,134,698)
(
-
$ 40,837
$ 2,231,694
$ -
$ 40,837
$ 2,231,694
$ -
38,240
1,805,878
-
21,931)
(
1,627,409)
(
-
2,135
3,032
-
$ 59,281
$ 2,413,195
$ 639,561
$ 348,766
$ 14,205,813
$ 639,561)
(
289,485)
(
11,792,618)
(
-
$ 59,281
$ 2,413,195
$		 Total
12,366,392
$ 10,134,698)
(
2,231,694
$
2,413,195
$
14,205,813
$ 11,792,618)
(
2,413,195
$

~35~

-162-

Computer
Intellectual
software
property
At January 1, 2021
Cost
5,088,065
$ 4,900,421
$ Accumulated amortisation
and impairment
3,987,796)
(
3,981,733)
(

1,100,269
$ 918,688
$ 2021
At January 1
1,100,269
$ 918,688
$ Additions
551,638
906,330
Amortisation
749,514)
(
532,557)
(
Net exchange difference
38)
(
3,959)
(
At December 31
902,355
$ 1,288,502
$ At December 31, 2021
Cost
5,639,381
$ 5,805,930
$ Accumulated amortisation
and impairment
4,737,026)
(
4,517,428)
(

902,355
$ 1,288,502
$		 Goodwill
Others
Total
639,561
$ 275,206
$ 10,903,253
$ 639,561)
(
226,839)
(
8,835,929
(
-
$ 48,367
$ 2,067,324
$ -
$ 48,367
$ 2,067,324
$ -
14,176
1,472,144
-
20,588)
(
1,302,659
(
-
1,118)
(
5,115
(
-
$ 40,837
$ 2,231,694
$ 639,561
$ 281,520
$ 12,366,392
$ 639,561)
(
240,683)
(
10,134,698
(
-
$ 40,837
$ 2,231,694
$		 Total
10,903,253
$ 8,835,929
(
2,067,324
$
2,231,694
$
12,366,392
$ 10,134,698
(
2,231,694
$

Details of amortization on intangible assets are as follows:

Operating costs
Operating expenses		 Year ended
December 31,2022
2,615
$ 1,624,794
1,627,409
$		 Year ended
December 31,2021
1,374
$ 1,301,285
1,302,659
$

(12) Short-term borrowings

Short-term borrowings
Operating costs
Operating expenses		 December 31,2022
2,615
$ 1,624,794
1,627,409
$		 December 31,2021
1,374
$ 1,301,285
1,302,659
$
Type of borrowings
Bank borrowings
Unsecured borrowings
Type of borrowings
Bank borrowings
Unsecured borrowings		 December 31,2022
13,737,994
$ December 31,2021
13,342,100
$		 Interest rate range
1.18%~2.3%
Interest rate range
0.42%~0.57%		 Collateral
None
Collateral
None

Interest expense of bank borrowings recognized in profit or loss amounted to $190,063 and $78,050 for the years ended December 31, 2022 and 2021, respectively.

(13) Other payables

Other payables
Accrued salaries and bonus
Payable for employees’ compensation
Other accrued expenses
Payables on equipment
Payables on software and intellectual property
Others		 December 31,2022
11,366,632
$ 12,002,603
2,531,844
114,514
1,292,307
376,595
27,684,495
$		 December 31,2021
9,641,868
$ 11,117,412
1,927,958
283,796
1,445,930
228,177
24,645,141
$

~36~

-163-

- (14) Long term borrowings

Long-term borrowings
Type of borrowings Borrowing period Repayment term Interest rate range Collateral
None
Collateral
None		 December 31,2022
Loan for Accelerated
Investment by Domestic
Corporations (Note)
Type of borrowings		 2021/11/8
~2027/12/15
Borrowing period		 Repayable in
instalment over
the agreed period
Repayment term		 0.925%�
1.125%
Interest rate range		 1,713,316
$
December 31,2021
Loan for Accelerated
Investment by Domestic
Corporations (Note)		 2021/11/8
~2026/12/15		 Repayable in
instalment over
the agreed period		 0.30% 1,002,799
$
  • Note: The Ministry of Economic Affairs implemented the “Action Plan for Accelerated Investment by Domestic Corporations” on July 1, 2019. An entity can apply for a subsidized loan for an eligible investment project from financial institutions at a preferential interest rate. The Group is qualified for the loan as approved by the Ministry of Economic Affairs and entered into a loan contract with a financial institution with a credit period of 5 years. The loan is used for construction of plant and related facilities.

(15) Pension

  • A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

  • (b) The amounts recognized in the balance sheet are determined as follows:

December 31,2022 December 31,2021
Present value of defined benefit obligations ($ 624,489)
 ($ 628,846)
Fair value of plan assets 533,997 534,371
Net defined benefit liability ($ 90,492) ($ 94,475)

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

2022
Present value of
defined benefit Fair value of Net defined
obligations plan assets benefit liability
At January 1 ( 628,846)
 534,371 ( 94,475)
Current service cost ( 1,136)
 - ( 1,136)
Interest (expense) income ( 4,641) 3,760 ( 881)
( 634,623) 538,131 ( 96,492)
Remeasurements:
Return on plan assets
(excluding amounts included in
interest income or expense) - ( 1,418)
 ( 1,418)
Change in financial assumptions 38,312 - 38,312
Experience adjustments ( 36,894) - ( 36,894)
1,418 ( 1,418) -
Pension fund contribution - 6,000 6,000
Paid pension 8,716 ( 8,716) -
At December 31 ($ 624,489) $ 533,997 ($ 90,492)
2021
Present value of
defined benefit Fair value of Net defined
obligations plan assets benefit liability
At January 1 ( 600,923)
 501,842 ( 99,081)
Current service cost ( 1,079)
 - ( 1,079)
Interest (expense) income ( 2,056) 1,741 ( 315)
( 604,058) 503,583 ( 100,475)
Remeasurements:
Return on plan assets
(excluding amounts included in
interest income or expense) - 35,943 35,943
Change in demographic assumptions ( 34,449)
 - ( 34,449)
Change in financial assumptions 29,040 - 29,040
Experience adjustments ( 30,534) - ( 30,534)
( 35,943) 35,943 -
Pension fund contribution - 6,000 6,000
Paid pension 11,155 ( 11,155) -
At December 31 ($ 628,846) $ 534,371 ($ 94,475)

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the � Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in

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domestic or foreign financial institutions, investment in domestic or foreign listed, overthe-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

  • (e) The principal actuarial assumptions used were as follows:
Discount rate
Future salary increases		 Year ended
December 31,2022
1.40%
4.75%		 Year ended
December 31,2021
0.75%
4.75%

Future mortality rate was estimated based on the 6th Taiwan Standard Ordinary Experience Mortality Table for the years ended December 31, 2022 and 2021.

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

December 31, 2022
Effect on present value of
defined benefit obligation
December 31, 2021
Effect on present value of
defined benefit obligation		 Increase by
Decrease by
0.25%
0.25%
14,986
$ 15,511)
($
16,290
$ 16,894)
($
Discount rate		 Future salaryincreases Future salaryincreases
Increase by
0.25%
14,986
$
16,290
$		 Increase by
0.25%
14,672)
($ 15,888)
($		 Decrease by
0.25%
14,260
$
15,415
$

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

  • (f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2023 amount to $6,000.

  • (g) As at December 31, 2022, the weighted average duration of the retirement plan is 11 years. The analysis of timing of the future pension payment was as follows:

The analysis of timing of the future pension payment was as follows:
Within 1 year
2-5 year(s)
5-10 years		 340,419
$ 147,204
162,984
650,607
$
  • B. (a) Effective July 1, 2005, the Company and domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”),

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covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. Employees may receive the payment of the pension every month or on a lump-sum basis depending on the accumulated earnings in the personal pension account.

  • (b) The Company’s mainland China subsidiaries, Realsil Microelectronics Corp., Realtek Semiconductor (Shen Zhen) Corp., Cortina Network Systems (Shanghai) Co., Ltd., RayMX Microelectronics Corp. and Suzhou PanKore Integrated Circuit Technology Co. Ltd. have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. Monthly contributions to an independent fund are administered by the government. Other than the monthly contributions, the Group has no further obligations.

  • (c) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2022 and 2021 were $393,147 and $330,437, respectively.

  • (16) Provision

At January 1
Increase in provision
Effect of exchange rate
At December 31		 2022
989,475
$ 185,080
113,155

1,287,710
$		 2021
1,018,706
$ -
29,231)
(
989,475
$

As at December 31, 2022, provisions were estimated for potential infringement litigations.

  • (17) Share capital

  • A. As at December 31, 2022, the Company’s authority capital was $8,900,000, consisting of 890 million shares of common stock (including 80 million shares reserved for employee stock options), and the paid-in capital was $5,128,636 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number (thousands of shares) of the Company's common shares outstanding are as follows:

outstanding are as follows:
At January 1
Employees’ compensation transferred to
common shares
At December 31		 2022
510,684
2,179
512,863		 2021
510,684
-
510,684
  • B. On March 18, 2022, the Company’s Board of Directors resolved to distribute employees’ compensation in the form of stocks amounting to $991,338. The Company issued 2,179 thousand shares based on the closing price of the Company’s share at the previous day of the Board

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meeting resolution at 455 NT dollar, which was approved by the competent authority, and the record date of issuance of new shares was March 30, 2022. The registration for the distribution of employees’ compensation was completed on April 13, 2022.

  • C. On January 24, 2002, the Company increased its new common stock and sold its old common stock by issuing 13,924 thousand units of GDRs for cash. Each GDR unit represents 4 common stocks, so the total common stocks issued were 55,694 thousand shares. The Company’s GDRs are traded in the Luxembourg Stock Exchange. As at December 31, 2022, the outstanding GDRs were 311 thousand units, or 1,244 thousand shares of common stock, representing 0.24% of the Company’s total common stocks.

  • (18) Capital surplus

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

Change in equity
of associates
accounted for under
Sharepremium
equitymethod
At January 1
1,039,006
$ 61,261
$ Employees’ compensation
transferred to common shares
969,551
-
Cash from capital surplus
1,025,727)
(
-
Cash dividends returned
-
-
At December 31
982,830
$ 61,261
$ 2022
Change in equity
of associates
accounted for under
Sharepremium
equitymethod
At January 1
2,060,376
$ 61,035
$ Cash from capital surplus
1,021,370)
(
-
Changes in equity of associates
accounted for under equity method
-
226
Cash dividends returned
-
-
At December 31
1,039,006
$ 61,261
$ 2021		 2022

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(19) Retained earnings

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve, if legal reserve has accumulated to an amount equal to the paid-in capital, then legal reserve is not required to be set aside any more. After that, special reserve shall be set aside or reversed in accordance with the related laws or the regulations made by the Competent Authority. The remainder, if any, along with prior year’s accumulated undistributed earnings shall be proposed by the Board of Directors. However, the appropriation of earnings shall be resolved by the shareholders if earnings are distributed by issuing new shares, or the appropriation of earnings shall be resolved by the Board of Directors, if earnings are distributed in the form of cash. The Company should consider factors affecting finance, business and operations to appropriate distributable earnings for the period, and appropriate all or partial reserve in accordance with regulations of the Competent Authority. Cash dividends shall account for at least 50% of the distributable earnings added in the current year.

The Company’s dividend policy takes into consideration the Company’s future expansion plans and future cash flows. In accordance with the Company’s dividend policy, cash dividends shall account for at least 10% of the total dividends distributed.

  • In accordance with Company Act Article 240, Item 5 and Article 241, Item 2, the resolution, for all or partial of distributable dividends, legal reserve and capital surplus are distributed in the form of cash, will be adopted by a majority vote at a meeting of the Board of Directors attended by at least two-thirds of the total number of directors, and will be reported to the shareholders.

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

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

  • D. The appropriation of 2021 and 2020 earnings had been resolved at the shareholders’ meeting on June 8, 2022 and August 9, 2021. Details are summarized below:

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Legal reserve
Special reserve
Cash dividends
Total		 Dividends
per share
Amount
(indollars)
1,685,276
$ -
$ 220,040
-
12,821,591
25.00
14,726,907
$ 25.00
$ 2021		 2020 2020
Amount
1,685,276
$ 220,040
12,821,591
14,726,907
$		 Amount
-
$ 1,339,013
6,128,219
7,467,232
$		 Dividends
per share
(indollars)
-
$ -
12.00
12.00
$

  • E. On April 22, 2022, the Board of Directors of the Company proposed to distribute cash dividends from capital surplus to shareholders in the amount of $1,025,727 (2 NT dollar per share).

  • F. On April 23, 2021, the Board of Directors of the Company proposed to distribute cash dividends from capital surplus to shareholders in the amount of $1,021,370 (2 NT dollar per share).

(20) Other equity items

share).
Other equity items
2022
Unrealised gains Currency
(losses)on valuation translation difference Total
At January 1 $ 2,380,781
 ($ 4,156,871)
 ($ 1,776,090)
Revaluation:
–Group ( 988,964)
 - ( 988,964)
Currency translation differences:
–Group - 5,451,229 5,451,229
At December 31 $ 1,391,817 $ 1,294,358 $ 2,686,175
2021
Unrealised Currency
gains on valuation translation difference Total
At January 1 $ 1,384,909
 ($ 2,940,958)
 ($ 1,556,049)
Revaluation:
–Group 995,872 - 995,872
Currency translation differences:
–Group - ( 1,215,913) ( 1,215,913)
At December 31 $ 2,380,781 ($ 4,156,871) ($ 1,776,090)
Operating revenue
Year ended Year ended
December 31, 2022
December 31,2021
Revenue from contracts with customers $ 111,789,791
$		 105,504,286

(21) Operating revenue

  • A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services at a point in time in the following major product lines:

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Contract liabilities
The Group has recognized the following revenue-related contract liabilities:
Integrated
Year ended December 31, 2022
circuitproducts
Others
Revenue from external customer contracts
111,560,194
$ 229,597
$ Timing of revenue recognition
At a point in time
111,560,194
$ 229,597
$ Integrated
Year ended December 31, 2021
circuitproducts
Others
Revenue from external customer contracts
105,374,969
$ 129,317
$ Timing of revenue recognition
At a point in time
105,374,969
$ 129,317
$ December 31,2022
December 31,2021
Contract liabilities -advance
sales receipts
117,752
$ 211,100
$		 Total
111,789,791
$ 111,789,791
$ Total
105,504,286
$ 105,504,286
$ January1,2021
336,254
$

B. Contract liabilities

Revenue recognized that was included in the contract liability balance at the beginning of the period:

Year ended Year ended December 31, 2022 December 31, 2021 Contract liabilities – advance sales receipts $ 191,160 $ 269,069

C. Refund liabilities (shown in other current liabilities)

The Group estimates the discounts based on accumulated experience. The estimation is subject to an assessment at each reporting date.

The following refund liabilities:

to an assessment at each reporting date.
The following refund liabilities:
Interest income
Refund liabilities – current
Interest income from bank deposits		 December 31,2022
8,932,366
$ Year ended
December 31,2022
950,676
$		 December 31,2021
7,521,493
$
Year ended
December 31,2021
326,399
$

(22) Interest income

(23) Other income

Interest income
Other income
Interest income from bank deposits		 Year ended
December 31,2022
950,676
$		 Year ended
December 31,2021
326,399
$
Dividend income
Grant income
Other income		 Year ended
December 31,2022
60,741
$ 97,243
230,935
388,919
$		 Year ended
December 31,2021
43,713
$ 53,621
116,093
213,427
$

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(24) Other gains and losses

Other gains and losses
Year ended Year ended
December31,2022 December31,2021
Gains (losses) on disposal of property, plant and $ 1,132
 ($ 196)
equipment
Losses on disposal of investments - ( 145)
Gains arising from lease modifications 24 236
Net currency exchange gains (losses) 304,092 ( 109,466)
(Losses) gains on financial assets at fair value
through profit or loss ( 180,983)
 114,364
Other losses ( 27,533)
 ( 176,040)
$ 96,732 ($ 171,247)
Finance costs
Year ended Year ended
December 31,2022 December 31,2021
Interest expense
Bank borrowings $ 190,063
 $ 78,050
Lease liabilities 27,680 28,590
$ 217,743 $ 106,640
Expenses by nature
Year ended Year ended
December31,2022 December31,2021
Employee benefit expenses $ 29,155,537
 $ 27,465,041
Depreciation 1,176,920 998,212
Amortisation 1,627,409 1,302,659
Employee benefit expenses
Year ended Year ended
December31,2022 December31,2021
Wages and salaries $ 27,606,128
 $ 26,163,019
Labor and health insurance fees 817,557 662,438
Pension costs 395,164 331,831
Other personnel expenses 336,688 307,753
Total $ 29,155,537 $ 27,465,041

(25) Finance costs

(26) Expenses by nature

(27) Employee benefit expenses

A. In accordance with the Company’s Articles of Incorporation, the Company shall appropriate no higher than 3% for directors’ remuneration and no less than 1% for employees’ compensation, if the Company generates profit. If the Company has accumulated deficit, earnings should be reserved to cover losses before the appropriation of directors’ remuneration and employees’ compensation.

Aforementioned employees’ compensation could be distributed by cash or stocks. Specifics

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of the compensation are to be determined by a majority vote at a meeting of the Board of Directors attended by at least two-thirds of the total number of directors. The resolution should be reported to the shareholders during the shareholders’ meeting.

  • B. For the years ended December 31, 2022 and 2021, employees’ compensation were accrued at $4,765,898 and $4,956,694, respectively; directors’ remuneration were accrued at $120,000 and $130,000, respectively. The amounts were estimated as operating cost or operating expense in accordance with the Company’s Articles of Incorporation.

On March 18, 2022, the employees’ compensation of $4,956,694 and directors’ remuneration of $130,000 for 2021 resolved at the meeting of the Board of Directors agreed with those amounts recognized in the 2021 financial statements.

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

(28) Income tax

  • A. Income tax expense
the website of the Taiwan Stock Exchange.
ome tax
Income tax expense
Year ended Year ended
December 31,2022 December 31,2021
Current income tax:
Current income tax on profit for the year $ 969,312
 $ 934,395
Tax on undistributed earnings 106,293 64,850
Prior year income tax overestimation ( 355,446) ( 276,529)
Total current income tax 720,159 722,716
Deferred income tax:
Origination and reversal of temporary
differences ( 2,444) ( 805)
Income tax expense $ 717,715 $ 721,911
Reconciliation between income tax expense and accounting profit
Year ended Year ended
December 31,2022 December 31,2021
Income tax calculated based on income $ 3,413,672
 $ 3,528,450
before tax
Expenses disallowed by tax regulation and
effects from tax-exempt income ( 2,446,804)
 ( 2,594,860)
Prior year income tax overestimation ( 355,446)
 ( 276,529)
Tax on undistributed earnings 106,293 64,850
Income tax expense $ 717,715 $ 721,911
  • B. Reconciliation between income tax expense and accounting profit

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  • C. Amounts of deferred income tax assets or liabilities as a result of temporary differences are as follows:
follows:
Deferred income tax assets:
�Temporary differences:
Unrealised loss on market price decline
and obsolete and slow-moving
inventories and others
Deferred income tax liabilities:
�Temporary differences:
Unrealised exchange gain

Total
Deferred income tax assets:
�Temporary differences:
Unrealised loss on market price decline
and obsolete and slow-moving
inventories and others
Deferred income tax liabilities:
�Temporary differences:
Unrealised exchange gain
Total		 2022 December31
132,978

62,725)
70,253
Recognised in
January1
profitor loss
171,321
$ 38,343)
($ $ 103,512)
(
40,787
(
67,809
$ 2,444
$ $ Recognised in
January1
profit or loss
169,876
$ 1,445
$ 102,872)
(
640)
(

67,004
$ 805
$ 2021
$ (
$
January1 Recognised in
profit or loss		 December 31
171,321
$ 103,512)
(
67,809
$
  • D. The amounts of deductible temporary differences that were not recognized as deferred income tax assets are as follows:
tax assets are as follows:
Deductible temporary differences December 31,2022
2,179,722
$		 December 31,2021
1,414,597
$
  • E. As at December 31, 2022, the Company’s income tax returns through 2020 have been assessed and approved by the Tax Authority.

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(29) Earnings per share

Earnings per share
Basic earnings per share
Profit attributable to common
shareholders of the parent company
Diluted earnings per share
Profit attributable to common
shareholders of the parent company
Assumed conversion of all dilutive
potential common shares
Employees’ compensation
Profit attributable to common shareholders
of the parent company plus assumed
conversion of all dilutive potential
common shares
Basic earnings per share
Profit attributable to common
shareholders of the parent company
Diluted earnings per share
Profit attributable to common
shareholders of the parent company
Assumed conversion of all dilutive
potential common shares
Employees’ compensation
Profit attributable to common shareholders
of the parent company plus assumed
conversion of all dilutive potential
common shares		 YearendedDecember31,2022
Weighted average number
of common shares
Earnings
Amount after
outstanding (shares
per share
tax
in thousands)
(indollars)
16,204,052
$ 512,410
31.62
$ 16,204,052
$ 512,410
-
19,175
16,204,052
$ 531,585
30.48
$ YearendedDecember31,2021		 Earnings
per share
(indollars)
31.62
$
30.48
$
Amount after
tax
16,852,759
$ 16,852,759
$ -
16,852,759
$		 Weighted average number
of common shares
outstanding (shares
in thousands)
510,684
510,684
9,726
520,410		 Earnings
per share
(indollars)
33.00
$
32.38
$

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(30) Supplemental cash flow information

Investing activities with partial cash payments

Purchase of property, plant and equipment
Add: Opening balance of payable on equipment
Less: Ending balance of payable on equipment
Cash paid during the year
Purchase of intangible assets
Add: Opening balance of payable on
software and intellectual property
Less: Ending balance of payable on
software and intellectual property
(
Cash paid during the year		 Year ended
December31,2022
2,282,159
$ 283,796
114,514
(
2,680,469
$ Year ended
December31,2022
1,805,878
$ 1,445,930
1,292,307)

(
1,959,501
$		 Year ended
December31,2021
2,735,005
$ 58,959
283,796)

2,510,168
$ Year ended
December31,2021
1,472,144
$ 1,152,591
1,445,930)

1,178,805
$

(31) Changes in liabilities from financing activities

At January 1, 2022
Changes in cash flow from
financing activities
Interest paid
Interest of lease liabilities
Impact of changes in
foreign exchange
Changes in other non-cash
items
At December 31, 2022
At January 1, 2021
Changes in cash flow from
financing activities
Interest paid
Interest of lease liabilities
Impact of changes in
foreign exchange
Changes in other non-cash
items
At December 31, 2021		 Liabilities from
Short-term
Guarantee
Lease
Long-term
financing
borrowings
deposits
liabilities
borrowings
activities-total
13,342,100
$ 1,448
$ 1,332,705
$ 1,002,799
$ 15,679,052
$ 395,894
892)
(
97,150)
(
711,110
1,008,962
-
-
27,680)
(
-
27,680)
(
-
-
27,680
-
27,680
-
-
1,156)
(
-
1,156)
(
-
-
67,232
593)
(
66,639
13,737,994
$ 556
$ 1,301,631
$ 1,713,316
$ 16,753,497
$ Liabilities from
Short-term
Guarantee
Lease
Long-term
financing
borrowings
deposits
liabilities
borrowings
activities-total
11,456,690
$ 1,251
$ 1,377,257
$ -
$ 12,835,198
$ 1,885,410
197
90,779)
(
1,017,360
2,812,188
-
-
28,590)
(
-
28,590)
(
-
-
28,590
-
28,590
-
-
3,056)
(
-
3,056)
(
-
-
49,283
14,561)
(
34,722
13,342,100
$ 1,448
$ 1,332,705
$ 1,002,799
$ 15,679,052
$		 Liabilities from
Short-term
Guarantee
Lease
Long-term
financing
borrowings
deposits
liabilities
borrowings
activities-total
13,342,100
$ 1,448
$ 1,332,705
$ 1,002,799
$ 15,679,052
$ 395,894
892)
(
97,150)
(
711,110
1,008,962
-
-
27,680)
(
-
27,680)
(
-
-
27,680
-
27,680
-
-
1,156)
(
-
1,156)
(
-
-
67,232
593)
(
66,639
13,737,994
$ 556
$ 1,301,631
$ 1,713,316
$ 16,753,497
$ Liabilities from
Short-term
Guarantee
Lease
Long-term
financing
borrowings
deposits
liabilities
borrowings
activities-total
11,456,690
$ 1,251
$ 1,377,257
$ -
$ 12,835,198
$ 1,885,410
197
90,779)
(
1,017,360
2,812,188
-
-
28,590)
(
-
28,590)
(
-
-
28,590
-
28,590
-
-
3,056)
(
-
3,056)
(
-
-
49,283
14,561)
(
34,722
13,342,100
$ 1,448
$ 1,332,705
$ 1,002,799
$ 15,679,052
$
15,679,052
$

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7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

The ultimate controlling party of the Group is the Company.

  • (2) Names of related parties and relationship
Names of related parties and relationship
Names of relatedparties Relationshipwith theCompany
G.M.I Technology Inc.
Actions Semiconductor Co., Ltd.
C-Media Electronics Inc.
Greatek Electronics Inc.
EmBestor Technology Inc.		 Other related party
Other related party
Other related party
Other related party
Other related party

(3) Significant related party transactions and balances

  • A. Operating revenue
gnificant related party transactions and balances
Operating revenue
Sales of goods�
G.M.I Technology Inc.
Others		 Year ended
December 31,2022
16,520,851
$ 395,667
16,916,518
$		 Year ended
December 31,2021
16,083,737
$ 623,758
16,707,495
$

Goods are sold based on the price lists in force and terms that would be available to third parties, and the general collection term was 30 ~ 60 days after monthly billings.

  • B. Processing cost
Processing cost
Greatek Electronics Inc.
Others		 Year ended
December 31,2022
1,057,117
$ 10,598
1,067,715
$		 Year ended
December 31,2021
1,339,141
$ 8,413
1,347,554
$

Processing cost is paid to related parties on normal commercial terms and conditions, and the general payment term was 69 days after monthly billings.

  • C. Receivables from related parties
Receivables from related parties
Accounts receivable�
G.M.I Technology Inc.
Other		 December 31,2022
2,548,128
$ 46,117
2,594,245
$		 December 31,2021
3,146,078
$ 46,106
3,192,184
$

Aforementioned receivables were 30 ~ 60 days after monthly billings. The receivables from related parties arise mainly from sale transactions. The receivables are unsecured in nature and bear no interest.

~50~

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D. Payables to related parties

Payables to related parties
Accounts payable�
Greatek Electronics Inc.
Others		 December 31,2022
156,225
$ 71
156,296
$		 December 31,2021
333,380
$ 1,033
334,413
$

The payment term above was 69 days after monthly billings. The payables to related parties arise mainly from processing cost. The payables bear no interest.

E. Other transactions and other payables (receivables):

Other related parties-
Sales commissions
Cash dividends revenue
(
Technical royalty revenue
(
Other		 Ending
Amount
balance
722,091
$ 90,401
$ 30,114)
$ -
$ (
14,291)
$ -
$ (
-
$ -
$ December31,2022
Year ended		 December31,2021
Year ended		 December31,2021
Year ended
Amount
722,091
$ 30,114)
$ 14,291)
$ -
$		 Amount
633,550
$ 21,761)
$ 31,451)
$ 327
$		 Ending
balance
101,253
$
-
$
-
$
-
$

The payment term above was 49 days after monthly billings; the collection term was 30 ~ 60 days after monthly billings.

(4) Key management compensation

days after monthly billings.
Key management compensation
Salaries and other short-term employee benefits
Post-employment benefits
Total		 Year ended
December 31,2022
564,883
$ 3,875
568,758
$		 Year ended
December 31,2021
248,487
$ 3,103
251,590
$

8. PLEDGED ASSETS

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

Pledged asset
Time deposits (shown in
financial assets at amortised
cost non-current)
"		 December31,2022
December31,2021
31,348
$ 31,048
$ 54,559
49,053
85,907
$ 80,101
$ Bookvalue		 Purposes
Guarantee for the
importation customs
duties of materials
Guarantee for leasing
land and office in
science park
December31,2022
31,348
$ 54,559
85,907
$

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

  • (1) Contingencies

  • A. In 2020, Divx, LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court of Delaware against the Company’s IC products. On July 4, 2021, DivX terminated the investigation against the Company in ITC.

  • B. In 2020, KONINKLIJKE PHILIPS N.V. and PHILIPS NORTH AMERICA LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court of Delaware against the Company’s IC products. On March 23, 2022, ITC issued the final determination finding non-infringement for the accused Company’s IC products and non-existence of the required domestic industry.

  • C. Future Link Systems, LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court for the Western �

  • District of Texas against the Company’s IC products. Due to the Plaintiff/ Complainant s withdrawal of its patent infringement complaints, the patent infringement cases have been terminated.

  • D. BANDSPEED, LLC brought an action for patent infringement in United States District Court for the Western District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

  • E. Advanced Micro Devices, Inc./ ATI Technologies ULC brought an action for patent infringement in United States International Trade Commission (“ITC”) and United States District Court for the Eastern District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

  • F. American Patent LLC brought an action for patent infringement in United States District Court for the Eastern District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

  • (2) Commitments

None.

10. SIGNIFICANT DISASTER LOSS

  • None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

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

~52~

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(2) Financial instruments

A. Financial instruments by category

nancial instruments
Financial instruments by category
Financial assets
Financial assets at fair value through
profit or loss
Financial assets mandatorily
measured at fair value through
profit or loss
Financial assets at fair value through
other comprehensive income
Designation of equity instrument
Financial assets at amortised cost/
Receivables
Cash and cash equivalents
Financial assets at amortised cost
Accounts receivable (including
related parties)
Other receivables
Refundable deposits
Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings
Notes payable
Accounts payable (including related
parties)
Other payables (including related
parties)
Long-term borrowings
Guarantee deposits
Other financial liabilities
Lease liabilities		 December 31,2022
1,921,432
$ 3,099,759
$ 13,754,035
$ 42,214,318
12,012,685
488,769
2,191,910
70,661,717
$ 13,737,994
$ -
10,496,375
27,774,896
1,713,316
556
8,932,366
62,655,503
$ 1,301,631
$		 December 31,2021
1,952,647
$
3,644,878
$
7,197,351
$ 43,820,977
15,989,005
156,928
734,855
67,899,116
$
13,342,100
$ 3,276
11,439,981
24,746,394
1,002,799
1,448
7,521,493
58,057,491
$
1,332,705
$

  • B. Financial risk management policies

  • (a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.

(b) Risk management is carried out by a Group finance under policies approved by the Board of Directors. Group finance identifies, evaluates, and hedges financial risks in close cooperation with the Group’s operating units.

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  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Foreign exchange risk

  • i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to USD and CNY. Foreign exchange risk arises from future commercial transactions, recognized assets, and liabilities.

  • ii. Management has set up a policy to require the Group to manage its foreign exchange risk against its functional currency. The Group is required to hedge its entire foreign exchange risk exposure with the Group finance.

  • iii. The Group’s businesses involve some functional currency operations (the Company’s and other certain subsidiaries’ functional currency: NTD � other certain subsidiaries’ functional currency: USD and CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 December31,2022 December31,2022
Foreign currency
amount
(In thousands)
246,929
$ 1,881,393
354,424		 Exchangerate
30.708
30.708
30.708		 Book value
(NTD)
7,582,696
$ 57,773,816
10,883,652

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December 31, 2021

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 Foreign currency
amount
(In thousands)
371,907
$ 1,692,376
458,477		 Exchangerate
27.690
27.690
27.690		 Book value
(NTD)
10,298,105
$ 46,861,891
12,695,228

The exchange gains (losses), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2022 and 2021, amounted to $304,092 and ($109,466), respectively. Analysis of foreign currency market risk arising from significant foreign exchange variation:

variation:
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 YearendedDecember31,2022
Sensitivityanalysis
Effect on
Degree ofvariation
profitor loss
1%
75,827
$ 1%
-
1%
108,837)
(		 Effect on other
comprehensive
income
-
$ 577,738
-

~55~

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Year ended December 31, 2021

Sensitivity analysis

Sensitivityanalysis
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 Effect on
Degree of variation
profit or loss
1%
102,981
$ 1%
-
1%
126,952)
(		 Effect on other
comprehensive
income
-
$ 468,619
-

Price risk

  • i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.

  • ii. The Group’s investments in equity securities comprise shares and open-end funds issued by the domestic and foreign companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 10% with all other variables held constant, post-tax profit for the years ended December 31, 2022 and 2021 would have increased/decreased by $192,143 and $195,265, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $309,976 and $364,488, respectively, as a result of gains/losses on equity securities classified as at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

The Group has no material interest rate risk.

(b) Credit risk

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

  • ii. The Group manages their credit risk taking into consideration the entire Group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past

~56~

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experience and other factors.

  • iii. The Group adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.

  • iv. The Group adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

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

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

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

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

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

  • vi. The Group classifies customers’ accounts receivable in accordance with customer types. The Group applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis.

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

  • viii. The Group used the forecast ability of semiconductor industry research report to adjust historical and timely information to assess the default possibility of accounts receivable. As at December 31, 2022, and 2021, the provision matrix are as follows:

At December 31, 2022
Expected loss rate
Total book value
Loss allowance
At December 31, 2021
Expected loss rate
Total book value
Loss allowance		 Notpast due
0%~1%
12,034,050
$ 64,819
$ Notpast due
0%~1%
15,874,298
$ 96,119
$		 1~90 days
past due
0%~1%
43,893
$ 439
$ 1~90 days
past due
0%~1%
212,956
$ 2,130
$		 Over 90 days
past due
100%
37
$ 37
$ Over 90 days
past due
100%
461
$ 461
$		 Total
12,077,980
$
65,295
$
Total
16,087,715
$
98,710
$

~57~

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  • ix. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable are as follows:
At January 1
Reversal of impairment loss
(
At December 31
At January 1
Provision for impairment loss
At December 31		 Loss allowance for
98,710
$ 33,415)

65,295
$ 2022
accounts receivable
Loss allowance for
accounts receivable
95,360
$ 3,350
98,710
$ 2021
  • x. For investments in debt instruments to the Group at amortised cost, the credit rating levels are presented below:
are presented below:
Financial assets at amortised cost
Group 1
Group 2
Financial assets at amortised cost
Group 1		 December 31,2022
12 months Significant
increase in
credit risk
Impairment
of credit
-
$ -
$ -
-
-
$ -
$ Lifetime
December31,2021		 Total
Significant
increase in
credit risk
41,681,744
$ 532,574
42,214,318
$		 41,681,744
$ 532,574
42,214,318
$
Total
43,820,977
12 months Lifetime
Significant
increase in
credit risk		 Impairment
ofcredit
43,820,977
$		 -
$		 -
$		 $
  • Group 1: Time deposits with original maturity over three months deposited in financial institutions having good credit quality.

Group 2: Standard Poor’s, Fitch’s, or Moody’s rating of A-level.

  • (c) Liquidity risk

  • i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group finance. Group finance monitors forecasts of the Group’s liquidity requirements

~58~

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to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities.

  • ii. Group finance invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the above-mentioned forecasts.

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

Non-derivative financial liabilities:

Non-derivative financial liabilities:
December 31, 2022
Short-term borrowings
Accounts payable (including related
parties)
Other payables (including related parties)
Lease liabilities
Long-term borrowings
Guarantee deposits
Other financial liabilities
Non-derivative financial liabilities:
December 31, 2021
Short-term borrowings
Notes payable
Accounts payable (including related
parties)
Other payables (including related parties)
Lease liabilities
Long-term borrowings
Guarantee deposits
Other financial liabilities		 Less than 1
year
13,737,994
$ 10,496,375
27,774,896
120,508
-
-
8,932,366
Less than 1
year
13,342,100
$ 3,276
11,439,981
24,746,394
115,821
-
-
7,521,493		 Between 1
and 5 years
-
$ -
-
307,758
1,728,470
-
-
Between 1
and 5 years
-
$ -
-
-
334,479
1,017,360
-
-		 Over5 years
-
$ -
-
1,305,338
-
556
-
Over5 years
-
$ -
-
-
1,340,088
-
1,448
-

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

~59~

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(3) Fair value information

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

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks and beneficiary certificates is included in Level 1.

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

  • Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.

  • B. Fair value information of investment property at cost is provided in Note 6(10).

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

  • (a) The related information of nature of the assets is as follows:

December 31, 2022
Assets
Recurring fair value measurement
Financial assets at fair value
through profit or loss
Equity securities
Hybrid instrument
Financial assets at fair value
through other comprehensive
income
Equity securities
Total
December 31, 2021
Assets
Recurring fair value measurement
Financial assets at fair value
through profit or loss
Equity securities
Financial assets at fair value
through other comprehensive
income
Equity securities
Total		 Level 1
1,868,432
$ -
747,198
2,615,630
$ Level 1
1,952,647
$ 824,506
2,777,153
$		 Level 2
-
$ -
-
-
$ Level 2
-
$ -
-
$		 Level3
-
$ 53,000
2,352,561
2,405,561
$ Level3
-
$ 2,820,372
2,820,372
$		 Total
1,868,432
$ 53,000
3,099,759
5,021,191
$
Total
1,952,647
$ 3,644,878
5,597,525
$

~60~

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  • (b) The methods and assumptions the Group used to measure fair value are as follows:

  • i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

ClosedOpenConvertible Listed end end Government Corporate (exchangeable) shares fund fund bond bond bond Market Closing Closing Net asset Translation Weighted average Closing price quoted price price price value price quoted price

  • ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

  • iii. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs.

  • D. For the years ended December 31, 2022 and 2021, there was no transfer between Level 1 and Level 2.

  • E. The following chart is the movement of Level 3 for the years ended December 31, 2022 and 2021:

2021:
At January 1
Received in the period
(Losses) gains recognized in other
comprehensive income
(
At December 31		 2022
Non-derivative
equityinstrument
2,820,372
$ 53,000
467,811)

2,405,561
$		 2021
Non-derivative
equityinstrument
2,031,480
$ -
788,892
2,820,372
$

  • F. For the years ended December 31, 2022 and 2021, there was no transfer into or out from Level 3.

  • G. The finance division is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, updating inputs used to the valuation model and making any other necessary

~61~

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adjustments to the fair value.

  • H. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:
Non-derivative
equity
instrument:
Unlisted
shares
�
Private equity
fund investment
Hybrid
instrument
Convertible
notes
Non-derivative
equity
instrument:
Unlisted
shares
�
Private equity
fund investment		 Fair value at
December 31,
2022		 Valuation
technique		 Significant
unobservable
input		 Range
(weighted
average)		 Relationship of
inputstofairvalue
118,812
$ 40,408
2,193,341
53,000
Fair value at
December 31,
2021		 Market
comparable
companies
Net asset
value
Net asset
value
Binomial
Model
Valuation
technique		 Price to book
ratio multiple
Not applicable
Not applicable
Not applicable
Significant
unobservable
input		 3.18
-
-
-
Range
(weighted
average)		 The higher the
multiple, the higher
the fair value
Not applicable
Not applicable
Not applicable
Relationship of
inputstofairvalue
106,304
$ 30,270
2,683,798		 Market
comparable
companies
Net asset value
Net asset value		 Price to book
ratio multiple
Not applicable
Not applicable		 15.33
-
-		 The higher the
multiple, the higher
the fair value
Not applicable
Not applicable
  • I. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

~62~

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Financial assets
Equity instrument
Financial assets
Equity instrument		 Input Change
± 1%
Change
± 1%		 December Favourable
Unfavourable
Change
change
1,519
$ 1,519)
($ 31,2022
comprehensiveincome
Recognized in other
Favourable
Unfavourable
Change
change
7,283
$ 7,283)
($ 31,2021
Recognized in other
comprehensiveincome
Favourable
Unfavourable
Change
change
-
$ -
$ Recognizedinprofitor loss
December
Favourable
Change
-
$
Price to
book ratio
multiple
Input
Favourable
Unfavourable
Change
change
-
$ -
$ Recognizedinprofitor loss
Favourable
Change
-
$
Price to
book ratio
multiple

’ - (4) Effects on the Group s operation arising from the COVID 19 pandemic

In response to the COVID-19 pandemic, the Company adjusted the working pattern of its employees, enhanced cleaning and disinfection and other measures to comply with the government regulations. As at December 31, 2022, the Group assessed that the epidemic had no significant impact on the overall operating activities and financial statements.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

  • A. Loans to others: Please refer to table 1.

  • B. Provision of endorsements and guarantees to others: Please refer to table 2.

  • C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

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

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

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

  • G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paidin capital or more: Please refer to table 4.

  • H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

  • I. Trading in derivative instruments undertaken during the reporting periods: None.

  • J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees

Names, locations, and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

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(3) Information on investments in Mainland China

  • A. Basic information: Please refer to table 8.

  • B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to tables 1, 2 and 6.

(4) Major shareholders information

As at December 31, 2022, the Company had no shareholders who hold over 5% (including 5%) of the Company’s shares.

14. SEGMENT INFORMATION

(1) General information

The Group operates business only in a single industry. The Chief Operating Decision-Maker, who allocates resources and assesses performance of the Group as a whole, has identified that the Group has only one reportable operating segment.

(2) Measurement of segment information

The Chief Operating Decision-Maker assesses the performance of the operating segments based on the consolidated financial statements. The accounting policy of operating segments is the same as that described in Note 4.

(3) Information on segment profit (loss), assets and liabilities

The revenue from external customers and segment financial information reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the consolidated statement of comprehensive income.

(4) Reconciliation for segment profit (loss)

The segment assets, liabilities and profit before income tax reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the consolidated balance sheet and consolidated statement of comprehensive income. As a result, no reconciliation was reported.

(5) Information on products and services

Revenue from external customers is derived from the sale of integrated circuits. Other income is derived from design, royalty and technical services.

Breakdown of the revenue from all sources are as follows:

Revenue from ICs
Others
Total		 Year ended
December 31,2022
111,560,194
$ 229,597
111,789,791
$		 Year ended
December 31,2021
105,374,969
$ 129,317
105,504,286
$

~64~

-191-

(6) Geographical information

Geographical information for the years ended December 31, 2022 and 2021 is as follows:

Taiwan
Asia
Others
Total		 Revenue
Non-current assets
48,934,459
$ 10,914,084
$ 61,794,824
643,800
1,060,508
79,018
111,789,791
$ 11,636,902
$ Year ended December 31,2022		 Year ended December 31,2021 Year ended December 31,2021
Revenue
48,934,459
$ 61,794,824
1,060,508
111,789,791
$		 Revenue
48,015,150
$ 56,984,374
504,762
105,504,286
$		 Non-current assets
9,397,141
$ 670,167
96,671
10,163,979
$

Note: Non-current assets exclude financial instruments and deferred income tax assets.

(7) Major customer information

Major customer information of the Group for the years ended December 31, 2022 and 2021 is as follows:

follows:
Customer B
Customer D
Customer A		 Revenue
Segment
23,180,512
$ The whole group
25,425,420
"
16,520,851
"
Year ended December 31,2022		 Year ended December 31,2021
Revenue
23,180,512
$ 25,425,420
16,520,851		 Revenue
24,336,918
$ 22,895,750
16,083,737		 Segment
The whole group
"
"

~65~

-192-

Item
Value
Collateral
Limit on loans
granted to
a single party
Ceiling on total loans
granted
(Note 2)
Footnote
Interest rate(%)
Nature of
loan
Amount of
transactions with the
borrower
Reason for short-
term
financing
Allowance for doubtful
accounts
Maximum outstanding
balance during the year
ended
December 31, 2022
(Note 3)
Balance at
December
31, 2022
Actual amount
drawn down
(Note 4)
No
(Note 1)
Creditor
Borrower
General ledger account
Is a related
party		 None None None None None None None None None None None
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-
$		 - - - - - - - - - -
None None None None None None None None None None None
-
$		 - - - - - - - - - -
Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations Operations
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Y Y Y Y Y Y Y Y Y Y Y
Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties
Hung-wei Venture Capital
Co., Ltd.		 RayMX Microelectronics
Corp.		 AICONNX Technology
Corp.		 Bluocean Inc. Talent Eagle Enterprise Inc. Leading Enterprises Limited Amber Universal Inc. Talent Eagle Enterprise Inc. Blueocean Inc. Talent Eagle Enterprise Inc. Leading Enterprises Limited
Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Leading Enterprises Limited Amber Universal Inc. Amber Universal Inc. Cortina Access, Inc.
� � � � � � � � � � �

-193-

Item
Value
Collateral
Limit on loans
granted to
a single party
Ceiling on total loans
granted
(Note 2)
Footnote
Interest rate(%)
Nature of
loan
Amount of
transactions with the
borrower
Reason for short-
term
financing
Allowance for doubtful
accounts
balance during the year
ended
December 31, 2022
(Note 3)
Balance at
December
31, 2022
Actual amount
drawn down
(Note 4)
No
(Note 1)
Creditor
Borrower
General ledger account
Is a related
party		 None None None None None None None None None Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:
(1) The Company is ‘0’.
(2) The subsidiaries are numbered in order starting from ‘1’.
Note 2: The Company’s “Procedures for Provision of Loans” are as follows:
(1) Ceiling on total loans granted by the Company to all parties is 40% of the Company’s net assets value as per its most recent financial statements.
(2) Limit on loans to a single party with business transactions is the business transactions occurred between the creditor and borrower in the current year. The business transaction amount is the higher of purchasing and selling during current year on the year of financing.
(3) For companies needing for short-term financing, the cumulative lending amount may not exceed 40% of the borrowing company’s net assets based on its latest financial statements audited or reviewed by independent auditors.
The amount the Company or its subsidiaries lend to an individual entity may not exceed 10% of the Company’s or subsidiary’s net assets based on its latest financial statements audited or reviewed by independent auditors.
For the foreign companies which the Company holds 100% of the voting rights directly or indirectly, limit on loans is not restricted as stipulated in the above item (3). However, the ceiling on total loans and limit on loans to a single party may not exceed 40% of the Company’s net assets based on
its latest financial statements audited or reviewed by independent auditors.
Note 3: Acccumulated maximum outstandings balance of loans to others as at the reporting month of the current period.
Note 4: Fill in the actual amount of loans to others used by the borrowing company.
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�
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None None None None None None None None None
�
�		 - - - - - - - -
Operations Operations Operations Operations Operations Operations Operations Operations Operations
�
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���� � � � ���� � ���� � �
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�		 � � � ������ � ������� � �
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�		 ������ ������� ��������� ��������� ��������� ������� ������� �������
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Y Y Y Y Y Y Y Y Y
Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties
Leading Enterprises Limited RayMX Microelectronics
Corp.		 Realsil Microelectronics
Corp.		 Bluocean Inc. Amber Universal Inc. Talent Eagle Enterprise Inc. Suzhou Pankore Integrated
Circuit Technology Co. Ltd		 RayMX Microelectronics
Corp.		 Suzhou Pankore Integrated
Circuit Technology Co. Ltd
Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realsil Microelectronics Corp. Realsil Microelectronics Corp. Cortina Network Systems
(Shanghai) Co., Ltd.
� � � � � � � � �

-194-

Company name
Relationship
with the
endorser/
guarantor
(Note 2)
REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
Provision of endorsements and guarantees to others
For the year ended December 31, 2022
Table 2
Expressed in thousands of NTD
(Except as otherwise indicated)
Outstanding
endorsement/
guarantee
amount at
December 31,
2022
(Note 5)
Actual amont
drawn down
(Note 6)
Number
(Note 1)
Endorser/
guarantor
Party being
endorsed/guaranteed
Limited on
endorsements/
guarantees
provided for a
single party
(Note 3)
Maximum
outstanding
endorsement/
amount as at
December 31, 2022
(Note 4)
Provision of
endorsements/
guarantees to the
party in
Mainland China
(Note 7)
Footnote
Amount of
endorsements/gurante
es secured with
collateral
Ratio of accumulated
endorsement/ guarantee
amount to net
asset value of
the endorser/ guarantor
company
Ceiling on total amount of
endorsements/
guarantees provided
(Note 3)
Provision of
endorsements/
guarantees by
parent
company to
subsidiary
(Note 7)
Provision of
endorsements/
guarantees by
subsidiary to
parent company
(Note 7)		 Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:
(1)The Company is ‘0’.
(2)The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories:
(1) Having business relationship.
(2) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(3) The endorser/guarantor company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.
(4) The endorser/guarantor parent company owns directly or indirectly owns more than 50% voting shares of the endorsed/guaranteed subsidiary.
(5) Mutual guarantee of the trade as required by the construction contract.
(6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.
Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as at the reporting period.
Note 5: Fill in the amount approved by the Board of Directors or the chairman has been authorised by the Board of Directors based on subparagraph 8, Article 12 of the Regulations Gorverning Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.
Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.
Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.
Note 3: Ceiling on total endorsements/guarantees granted by the Company and subsidiaries is 50% of the Company’s net asset based on the latest financial statements audited or reviewed by independent auditors, and limit on endorsements/guarantees to a single party is 50% of the
Company's net asset based on the latest financial statements audited or reviewed by independent auditors.
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Realtek Singapore Private
Limited		 Leading Enterprises Limited Realsil Microelectronics
Corp.		 RayMX Microelectronics
Corp.		 AICONNX
Technology
Corp.		 Realsil Microelectronics
Corp.		 RayMX Microelectronics
Corp.
Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Leading Enterprises Limited Realsil Microelectronics
Corp.
� � � � � � �

-195-

Number of shares
Book value
(Note 3)
Ownership (%)
Fair value
(Except as otherwise indicated)
Table 3
Expressed in thousands of NTD
Footnote
(Note 4)
Securities held by
Marketable securities
�Note 1�
Relationship with the
securities issuer(Note 2)
General
ledger account
As at December 31, 2022
������� ������ ������ ������ ������� ������ ������� ������ ��������� ������� ������� ������� ������ ������� ������� ������ ������ �
����� � ������ ����� ����� ����� ����� � ������ � � ����� � ����� ����� ����� ������ �����
������� ������ ������ ������ ������� ������ ������� ������ ��������� ������� ������� ������� ������ ������� ������� ������ ������ �
��������� � ���������� ��������� ���������� ��������� ��������� ��������� ��������� � � ��������� ������� ��������� ��������� ��������� ��������� ���������
Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at amortised cost Financial assets at amortised cost Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income
Other related parties None None Other related parties None Other related parties None None None None None None None Other related parties Other related parties None Other related parties None
C-media Electronics Inc. - Common stock Nuheara Ltd - Convertible notes Nuheara Ltd - Common stock Compal broadband networks Inc. -
Common stock		 Shieh-Yong Investment Co., Ltd. -
Common stock		 Compal broadband networks Inc. -
Common stock		 Fortemedia Inc. - Common stock Starix Technology, Inc.-Preferred stock Octtasia Investment Holding Inc. - Common
stock		 Apple Inc. - Corporate bond Qualcomm Inc. - Corporate bond Octtasia Investment Holding Inc. - Common
stock		 United Microelectronics Corporation -
Common stock		 C-media Electronics Inc.- Common stock Greatek Electroninc Inc. - Common stock Subtron technology Co., Ltd - Common
stock		 Embestor Technology Inc. -
Common stock		 CyWeeMotion Group Limited
Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realking Investment Co., Ltd. Realsun Investment Co., Ltd. Realsun Investment Co., Ltd. Leading Enterprises Limited Leading Enterprises Limited Leading Enterprises Limited Leading Enterprises Limited Leading Enterprises Limited Amber Universal Inc. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Blueocean Inc.

-196-

Number of shares
Book value
(Note 3)
Ownership (%)
Fair value
(Except as otherwise indicated)
Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)
December 31, 2022
Table 3
Expressed in thousands of NTD
Footnote
(Note 4)
Securities held by
Marketable securities
�Note 1�
Relationship with the
securities issuer(Note 2)
General
ledger account
As at December 31, 2022		 Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9 ‘Financial instruments'.
Note 2: Leave the column blank if the issuer of marketable securities is non-related party.
Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost for the marketable
securities not measured at fair value.
Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in
the footnote if the securities presented herein have such conditions.
�����������
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����� ����� � � � � � � � � � � � � � � �
�������� ������ ������� ������ ������� ������� ������ ������ ������ ������ ������ ������ ������� ������ ������ ������ �������
��������� ��������� ���������� ���������� ���������� ���������� ���������� ��������� ���������� ��������� ��������� ���������� ���������� ���������� ���������� ��������� �
Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through other
comprehensive income		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss		 Financial assets at fair value through profit
or loss
None None None None None None None None None None None None None None None None None
Eargo, Inc. - Common stock Eargo, Inc. - Common stock Cuam Money Fund JIA SHI Monetary Fund BOC Cash Fund Guang-Fa Currency Fund WAN JIA Monetary Fund Guang-Fa Demand Policy Loan Fund Jian-Xin Monetary Fund Pu-Yin Monetary Fund Capital Increase Monetary Fund A Capital Increase Monetary Fund B Ri-Ri-Xin Fund Step by step Gold Fund Cuam Money Fund JIA SHI Monetary Fund Bond funds
Blueocean Inc. Talent Eagle Enterprise Inc. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realtek Semiconductor (Shen Zhen) Corp. Realtek Semiconductor (Shen Zhen) Corp. Realtek Semiconductor (Shen Zhen) Corp. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Network Systems (Shanghai) Co. Ltd. Realtek Investment Singapore Private Limited

-197-

Purchase
(sales)
Amount
Percentage of
total purchase
(sales)
Credit term
Unit price
Credit term
Balance
Percentage of total
notes/accounts
receivable (payable)
Footnote
Purchase/seller
Counterparty
Relationship with the
counterparty
Transaction
Differences in transaction terms
compared to third party
transactions
Notes/accounts receivable(payable)
9% 0% 0% 0% 12% 1% 0%
1,048,725
$		 - 46,131 21,130 1,478,273 90,031)
(		 64,824)
(
Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions
Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions
Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions
(8%) 0% 0% 0% (7%) 1% 1%
9,142,682)
($		 53,120)
(		 337,353)
(		 97,058)
(		 7,281,111)
(		 694,922 350,704
(Sales) (Sales) (Sales) (Sales) (Sales) Purchase Purchase
Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties
G.M.I Technology Inc. Actions Semiconductor Co., Ltd. C-Media Electronics Inc. G.M.I Technology Inc. G.M.I Technology Inc. Greatek Electronics Inc. Greatek Electronics Inc.
Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation RayMX Microelectronics Corp. Realtek Singapore Private Limited Realtek Semiconductor Corporation Realtek Singapore Private Limited

-198-

Table 5
Amount
Action taken
Amount collected
subsequent to the
balance sheet date
Allowance for
doubtful accounts
Creditor
Counterparty
Relationship with
the counterparty
Balance as at
December 31, 2022
Turnover rate
Overdue receivables
December 31, 2022
Expressed in thousands of NTD
(Except as otherwise indicated)		 10,593
$		 -
691,384
$		 727,379
- -
$ - -
6.50 5.17
1,048,725
$		 1,478,273
Other related
parties		 Other related
parties
G.M.I Technology Inc. G.M.I Technology Inc.
Realtek Semiconductor Corporation Realtek Singapore Private Limited

-199-

General ledger account
Amount
Transaction terms
Percentage of
consolidated total
operating revenues or
total assets (Note 3)
Number
(Note 1)
Company name
Counterparty
Relationship
(Note 2)
Transaction
(Except as otherwise indicated)
REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES
Significant inter-company transactions during the reporting period
For the year ended December 31, 2022
Table 6
Expressed in thousands of NTD
0.04%		 0.12% 0.02% 0.56% 0.15% 2.52% 0.06% 0.56% 0.04% 0.22% 0.01% 0.14% 0.04% 0.17% 0.01% 0.06% 0.03% 0.01% 0.04% Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:
(1) Parent company is ‘0’.
(2) The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer
to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the
subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):
(1) Parent company to subsidiary.
(2) Subsidiary to parent company.
(3) Subsidiary to subsidiary
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on
accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.
Note 4: Only transactions above NT$10 million are disclosed. Transactions of related parties are not further disclosed here.
No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.
$ 49,959 132,850 18,801 623,576 169,841 2,812,029 73,699 628,378 41,456 245,414 14,724 151,947 40,600 186,317 7,537 67,041 36,193 15,674 49,959

Other receivables		 Technical service fees Other payables Technical service fees Other payables Technical service fees Prepaid account Technical service fees Other payables Technical service fees Other payables Technical service fees Other payables Technical service fees Other payables Technical service fees Technical service fees Technical service fees Other receivables
� � � � � � � � � � � � � � � � � � �
RayMX Microelectronics Corp.
 Realtek Korea Inc. Realtek Korea Inc. Ubilinx Technology Inc. Ubilinx Technology Inc. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realtek Semiconductor(Shen Zhen) Corp. Realtek Semiconductor(Shen Zhen) Corp. Cortina Access, Inc. Cortina Access, Inc. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Systems Taiwan Limited Cortina Systems Taiwan Limited Realtek Semiconductor (Japan) Corp. Realtek Viet Nam Co. Ltd. Realtek Semiconductor (Malaysia) Sdn. Bhd. RayMX Microelectronics Corp.
Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited
� � � � � � � � � � � � � � � � � � �

-200-

Balance as at
December 31, 2022
Balance as at
December 31,
2021
Number of shares
Ownership (%)
Book value
Net profit (loss)
of the investee for the
year ended
December 31, 2022
Investment income
(loss)
recognised by the
Company for the year
ended December 31,
2022
Footnote
Investor
Investee
Location
Main business
activities
Initial investment amount
Shares held as at December 31, 2022
Information on investees
For the year ended December 31, 2022
Table 7
Expressed in thousands of NTD
(Except as otherwise indicated)
REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES		 Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
136,075)
($		 69,393 15,286,889 39,716)
(		 6,459 117,565 16,284 85,095)
(		 5,547)
(		 37)
(		 184 20,948)
(
76,336)
($		 69,393 15,285,229 33,218)
(		 27,379)
(		 117,565 16,284 85,095)
(		 5,547)
(		 37)
(		 276 22,073)
(
$ - 3,735,840 47,105,531 - - 6,925,958 691,262 422,217 259,432 5,030 19,436 5,269)
(
- 100% 100% - - 100% 100% 100% 100% 100% 66.67% 100%
- 41,432 116,059,638 - - 200,000,000 28,000,000 25,000,000 29,392,985 500,000 1,918,910 2,000,000
$ 13,676,922 4,358,823 3,928,798 3,047,285 3,159,429 5,538,000 280,000 250,000 293,930 5,000 19,189 20,000
$ - 4,833,896 4,357,007 - - 6,141,600 280,000 250,000 293,930 5,000 19,189 20,000
Investment holdings Investment holdings ICs manufacturing, design, research,
development, sales, and marketing		 Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings ICs manufacturing, design, research,
development, sales, and marketing		 Manufacturing and installation of
computer equipment and wholesasle,
retail and related services of
electronic materials and
information/software		 ICs manufacturing, design, research,
development, sales, and marketing
British Virgin
Islands		 British Virgin
Islands		 Singapore Cayman
Islands		 Cayman
Islands		 Singapore Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan
Leading Enterprises Limited Amber Universal Inc. Realtek Singapore Private
Limited		 Bluocean Inc. Talent Eagle Enterprise Inc. Realtek Investment Singapore
Private Limited		 Realsun Investments Co., Ltd. Hung-wei Venture Capital Co.,
Ltd.		 Realking Investments Co., Ltd. Realsun Technology
Corporatioin		 Bobitag Inc. AICONNX Technology
Corporation
Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation

-201-

Balance as at
December 31, 2022
Balance as at
December 31,
2021
Number of shares
Ownership (%)
Book value
Net profit (loss)
of the investee for the
year ended
December 31, 2022
Investment income
(loss)
recognised by the
Company for the year
ended December 31,
2022
Footnote
Investor
Investee
Location
Main business
activities
Initial investment amount
Shares held as at December 31, 2022
Information on investees
For the year ended December 31, 2022
Table 7
Expressed in thousands of NTD
(Except as otherwise indicated)
REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary
2,822)
($		 6,811)
(		 2,465)
(		 5,668)
(		 2,957)
(		 176)
(		 45 23)
(		 138,531 17,389
47,721)
($		 13,674)
(		 24,645)
(		 24,645)
(		 24,645)
(		 176)
(		 45 23)
(		 138,531 17,389
$ 2,276 135,808 7,242 16,655 8,690 1,971 7,950 1,121 2,138,374 926,727
6.89% 37.38% 10% 23% 12% 100% 100% 100% 100% 100%
2,000,000 20,000,000 1,000,000 2,300,000 1,200,000 400 300,000 - 2,825,000 16,892
$ 110,000 200,000 10,000 23,000 12,000 4,812 8,307 5,326 782,243 1,131,026
$ 110,000 200,000 10,000 23,000 12,000 4,627 9,212 5,901 867,501 1,254,299
Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Venture capital activities Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Information collection and technical
support		 Investment holdings Information services and technical
support		 Investment holdings R&D and technical support
Taiwan Taiwan Taiwan Taiwan Taiwan Japan Mauritius Hong Kong Mauritius U.S.A
Estinet Technologies
Incorporation		 Innorich Venture Capital Corp. Starmems Semiconductor
Corporation		 Starmems Semiconductor
Corporation		 Starmems Semiconductor
Corporation		 Realtek Semiconductor (Japan)
Corp.		 Circon Universal Inc. Realtek Semiconductor (Hong
Kong) Limited		 Empsonic Enterprises Inc. Cortina Access Inc.
Realtek Semiconductor
Corporation		 Realking Investments Co., Ltd. Realking Investments Co., Ltd. Realsun Investments Co., Ltd. Hung-wei Venture Capital Co.,
Ltd.		 Leading Enterprises Limited Leading Enterprises Limited Amber Universal Inc. Realtek Singapore Private Limited Realtek Singapore Private Limited

-202-

Balance as at
December 31, 2022
Balance as at
December 31,
2021
Number of shares
Ownership (%)
Book value
Net profit (loss)
of the investee for the
year ended
December 31, 2022
Investment income
(loss)
recognised by the
Company for the year
ended December 31,
2022
Footnote
Investor
Investee
Location
Main business
activities
Initial investment amount
Shares held as at December 31, 2022
Information on investees
For the year ended December 31, 2022
Table 7
Expressed in thousands of NTD
(Except as otherwise indicated)		 Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Note�The amount of foreign currencies denominated in New Taiwan dollars in this table, which relates to income and expenses which were re-translated at the average exchange rate from January 1, 2022 to December 31, 2022, others were re-translated at the
exchange rate prevailing at the end of the financial reporting period.
23,963
$		 2,421 59,739 6,498 33,838)
(		 14,021 2,327 5,624
23,963
$		 2,421 76,336)
(		 33,218)
(		 27,379)
(		 14,021 2,327 5,624
$ 75,126 85,185 14,287,695 3,506,802 2,377,010 296,291 67,368 54,047
100% 100% 100% 100% 100% 100% 100% 100%
21,130,000 4,000,000 34,630 110,050,000 114,100,000 60,000,000 10,450,000 200,000
$ 55,380 110,760 - - - 1,661,400 69,275 -
$ 61,416 122,832 15,167,602 3,379,415 3,503,783 1,842,480 72,519 48,177
R&D and technical support R&D and technical support Investment holdings Investment holdings Investment holdings R&D and technical support R&D and technical support R&D and technical support
Taiwan Vietnam British Virgin
Islands		 Cayman
Islands		 Cayman
Islands		 U.S.A Malaysia Korea
Cortina Systems Taiwan Limited Realtek Viet Nam Co., Ltd. Leading Enterprises Limited Bluocean Inc. Talent Eagle Enterprise Inc. Ubilinx Technology Inc. Realtek Semiconductor
(Malaysia) Sdn.Bhd.		 Realtek Korea Inc.
Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Talent Eagle Enterprise Inc. Bluocean Inc. Bluocean Inc.

-203-

==> picture [440 x 681] intentionally omitted <==

-204-

VI. Parent Company Only Financial Statements

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR22003333

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, 2022 and 2021, 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 auditors (please refer to the Other matter section ), the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the parent company only financial satatements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our audits and the reports of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

~2~

-205-

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Company’s 2022 parent company only financial statements. 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.

Key audit matters for the Company’s 2022 parent company only financial statements are stated as follows:

Valuation of inventories

Description

Refer to Note 4(11) of the parent company only financial statements for inventory valuation policies, Note 5(2) for uncertainty of accounting estimates and assumptions of inventory valuation 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 valuation of inventories as one of the key audit matters.

How our audit addressed the matter

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

  1. Obtained an understanding of accounting policies on the provision for inventory valuation losses and assessed the reasonableness.

  2. 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.

  3. Evaluated and confirmed the reasonableness of net realizable value for inventories through validating respective supporting documents.

~3~

-206-

Other matter – Reference to the audits of other auditors

We did not audit the financial statements of certain investments accounted for under equity method. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the reports of the other auditors. Investments accounted for under equity method amounted to NT$424,493 thousand and NT$763,850 thousand, constituting 0.42% and 0.83% of total assets as at December 31, 2022 and 2021, respectively. Comprehensive (losses) income amounted to (NT$266,649) thousand and NT$236,416 thousand, constituting (1.29)% and 1.42% of total comprehensive income for the years ended December 31, 2022 and 2021, 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.

Auditor’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 an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards of Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error

~4~

-207-

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 Standards on Auditing of the Republic of China, we exercise professional judgement and professional skepticism throughout the audit. We also:

  1. Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our 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.

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

~5~

-208-

  1. 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 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 parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Li, Tien-Yi

[Cheng, Ya-Huei ]

For and on behalf of PricewaterhouseCoopers, Taiwan

February 24, 2023

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

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

~6~

-209-

REALTEK SEMICONDUCTOR CORPORATION

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(2) and 7
7
6(3)
8
6(4)
6(5)
6(6)
6(7)		 December 31, 2022
December 31, 2021
AMOUNT
%
AMOUNT
%

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�
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�
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�
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�
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�
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�
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�
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�
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�
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�
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��
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��
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�
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�
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�
����������
��
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��

�����������
���
����������
���		 December 31, 2021 December 31, 2021
%
Current assets
1100
Cash and cash equivalents

1110
Financial assets at fair value through
profit or loss - current
1170
Accounts receivable, net

1180
Accounts receivable, net - related
parties

1200
Other receivables
1210
Other receivables - related parties

130X
Inventories, net

1410
Prepayments
11XX
Total current assets
Non-current assets
1510
Financial assets at fair value through
profit or loss - non-current
1517
Financial assets at fair value through
other comprehensive income - non-
current
1535
Financial assets at fair value - non-
current

1550
Investments accounted for under
equity method

1600
Property, plant and equipment

1755
Right-of-use assets

1780
Intangible assets

1840
Deferred income tax assets
1900
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets
���

(Continued)

~7~

-210-

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity Notes
6(8)
6(16)
7
6(9)
7
6(16)
6(10)
6(11)
6(12)
6(13)
6(14)
6(15)
9		 December 31, 2022
December 31, 2021
AMOUNT
%
AMOUNT
%

����������
���
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��
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�
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�
�
�
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�
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�
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�
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��

�����������
����
����������
���
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
2280
Lease liabilities - current
2300
Other current liabilities

21XX
Total current liabilities
Non-current liabilities
2540
Long-term borrowings

2570
Deferred income tax liabilities
2580
Lease liabilities - non-current
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
3XXX
Total equity
Significant contingent liabilities and
unrecognized contract commitments

3X2X
Total liabilities and equity

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

~8~

-211-

REALTEK SEMICONDUCTOR CORPORATION

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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

Year ended December 31 ended December 31 ended December 31
2022 2021
Items Notes AMOUNT % AMOUNT %
4000 Operating revenue
 6(16) and 7 � ���������� ��� � ����������
���
5000 Operating costs
 6(3) and 7 �
������������		 ����
������������		 ���
5900 Gross profit ���������� �� ����������
��
5910 Unrealized profit from sales �
����		 � �
�
5920 Realized profit from sales ����� � �
�
5950 Net operating margin ���������� �� ����������
��
Operating expenses
7
6100
Selling expenses
�
�����������
���
�����������		 ��
6200 General and administrative expenses �
�����������		 ���
�����������		 ��
6300 Research and development expenses �
������������		 ����
������������		 ���
6450 Expected credit gains (losses)
 12(2) ������ ��
������
�
6000 Total operating expenses �
������������		 ����
������������		 ���
6900 Operating income ��������� � ���������
�
Non-operating income and expenses
7100
Interest income
7
�������
�
������
�
7010 Other income
 7 ������� � ������
�
7020 Other gains and losses ������� ��
���������		 ��
7050 Finance costs �
��������		 ��
�������
�
7070 Share of profit of associates and
 6(4)
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 � ���������� �� � ����������
��
Other comprehensive income, net
6(15)
Components of other comprehensive
income (losses) that will not be
reclassified to profit or loss
8316
Unrealised income from investments
in equity instruments measured at
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8330 Share of other comprehensive
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Components of other comprehensive
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Earnings Per Share (in dollars)
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The accompanying notes are an integral part of these parent company only financial statements.

~9~

-212-

Total equity ���������� ���������� ������� � ���������� � ��������� � ��������� � ��� ��� ���������� ���������� ���������� ��������� ���������� � � ���������� � ������� ��������� � ��� ����������
REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021 (Expressed in thousands of New Taiwan dollars) Retained Earnings
Other equity interest		 Unrealised income from financial assets Financial statements
measured at fair		 translation
value through other		 Undistributed
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Notes 6(15) 6(14) 6(14) 6(13) 6(13) 6(13) 6(15) 6(14) 6(14) 6(14) 6(12)(13) 6(13) 6(13)
2021 Balance at January 1, 2021 Net income for the year Other comprehensive income (loss) Total comprehensive income (loss) Distribution of 2020 earnings Special reserve Cash dividends Cash from capital surplus Changes in equity of associates accounted for under equity method Cash dividends returned Balance at December 31, 2021 2022 Balance at January 1, 2022 Net income for the year Other comprehensive income (loss) Total comprehensive income (loss) Distribution of 2021 earnings Legal reserve Special reserve Cash dividends Employees’ compensation transferred to common shares Cash from capital surplus Cash dividends returned Balance at December 31, 2022

-213-

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(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)losses

Interest expense
Interest income
Dividend income
Losses(gains) on financial assets at fair value
through profit or loss
Share of gain of associates and joint ventures
accounted for under equity method

Gain on disposal of property, plant and
equipment
Losses on disposal of investments
Impairment loss
Gains arising from lease modifications
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
Other receivables, - 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
Other current liabilities
Accrued pension obligations		 Notes
2022
2021
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~11~

-214-

REALTEK SEMICONDUCTOR CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through
profit or loss
Acquisition of financial assets at fair value through
other comprehensive income
Acquisition of financial assets at amortised cost
Proceeds from disposal of financial assets at
amortised cost
Increase in other receivables, - related parties
Decrease in other receivables, - related parties
Acquisition of investments accounted for under
equity method
Proceeds from disposal of investments accounted
for under equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets
Increase in refundable deposits
Increase in other non-current assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in long-term borrowings
Repayment of principal portion of lease liabilities
(Decrease) increase in guarantee deposits
Cash from capital surplus and cash dividends
Cash dividends returned
Net cash flows used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Notes
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2021
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~12~

-215-

REALTEK SEMICONDUCTOR CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

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

1. HISTORY AND ORGANISATION

Realtek Semiconductor Corporation (the “Company”) was incorporated as a company limited by shares on October 21, 1987 and commenced commercial operations in March 1988. The Company was based in Hsinchu Science Park since October 28, 1989. The Company is engaged in the research, development, design, testing, and sales of ICs and application softwares for these products.

  1. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These parent company only financial statements were authorised for issuance by the Board of Directors on February 24, 2023.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRSs”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments that came into effect as endorsed by the FSC and became effective from 2022 are as follows:

became effective from 2022 are as follows:
New Standards,InterpretationsandAmendments Effective date by
International
Accounting
StandardsBoard
Amendments to IFRS 3, ‘Reference to the conceptual framework’
Amendments to IAS 16, ‘Property, plant and equipment:proceeds before
intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract’
Annual improvements to IFRS Standards 2018–2020		 January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2022

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

~13~

-216-

(2) Effect of new issuances of or amendments to IFRSs that came into effect as endorsed by the FSC

but not yet adopted by the Company

New standards, interpretations and amendments that came into effect as endorsed by the FSC effective from 2023 are as follows:

effective from 2023 are as follows:
New Standards,InterpretationsandAmendments Effective date by
International Accounting
StandardsBoard
Amendments to IAS 1, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
Amendments to IAS 12, ‘Deferred tax related to assets and
liabilities arising from a single transaction’		 January 1, 2023
January 1, 2023
January 1, 2023

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

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

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

endorsed by the FSC are as follows:
New Standards,InterpretationsandAmendments Effective date by
International Accounting
StandardsBoard
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’
Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, 'Insurance contracts'
Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 –
comparative information'
Amendments to IAS 1, ‘Classification of liabilities as current or
non-current’
Amendments to IAS 1, ‘Non-current liabilities with covenants’		 To be determined by
International Accounting
Standards Board
January 1, 2024
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2024
January 1, 2024

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

~14~

-217-

  • (2) Basis of preparation

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

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

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

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

  • B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

  • (3) Foreign currency translation

  • Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The parent company only financial statements are presented in New Taiwan dollars, which is the Company’s functional currency.

  • A. Foreign currency transactions and balances

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

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

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

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

~15~

-218-

  • B. Translation of foreign operations

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

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

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

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

    • (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Company retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

    • (c) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

  • (4) Classification of current and non-current items

  • A. Assets that meet one of the following criteria are classified as current assets:

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

    • (b) Assets held mainly for trading purposes;

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

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

    • Otherwise they are classified as non-current assets.

  • B. Liabilities that meet one of the following criteria are classified as current liabilities:

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

    • (b) Liabilities held mainly for trading purposes;

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

    • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Otherwise they are classified as non-current liabilities.

  • (5) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known

~16~

-219-

amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

  • (6) Financial assets at fair value through profit or loss

  • A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income. Financial assets at amortised cost or fair value through other comprehensive income are designated as at fair value through profit or loss at initial recognition when they eliminate or significantly reduce a measurement or recognition inconsistency.

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

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

  • D. The Company recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

  • (7) Financial assets at amortised cost

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

  • (8) Accounts receivable

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

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

(9) Impairment of financial assets

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

(10) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

(11) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the

~17~

-220-

weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

  • (12) Investments accounted for under equity method / associates

  • A. Subsidiaries are all entities controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

  • B. Unrealised profit (loss) occurred from the transactions between the Company and subsidiaries have been offset. The accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

  • C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognize losses proportionate to its ownership.

  • D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for under equity method and are initially recognized at cost.

  • E. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate (including any other unsecured receivables), the Company does not recognize further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.

  • F. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognizes the Company’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

  • G. Unrealised gains or losses on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

  • H. In the case that an associate issues new shares and the Company does not subscribe or acquire

~18~

-221-

new shares proportionately, which results in a change in the Company’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Company’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

  • I. Upon loss of significant influence over an associate, the Company remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.

  • J. When the Company disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

  • K. Pursuant to the Regulations Governing the Preparation of Financial Reports by Securities Issuers, profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the parent company only financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the parent company only financial statements.

  • (13) Property, plant and equipment

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

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

  • C. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

  • D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic

~19~

-222-

benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of the fixed assets are as follows: buildings - 10~55 years and other fixed assets - 3~5 years.

  • (14) Leasing arrangements (lessee) � right-of-use assets/lease liabilities

  • A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company.

  • B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Fixed payments, less any lease incentives receivable.

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

  • C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

    • (a) The amount of the initial measurement of lease liability; and

    • (b) Any lease payments made at or before the commencement date.

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

  • (15) Intangible assets

  • A. Computer software

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 1 to 5 years.

  • B. Other intangible assets

  • Separately acquired intangible assets with a finite useful life are stated at cost, net of accumulated amortisation and accumulated impairment. Intangible assets acquired in a business combination are recognized at fair value at acquisition date. The amortisation amounts of separately and parent company only acquired intangible assets were amortised on a straight-line basis over their estimated useful lives of 2-5 years.

(16) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than

~20~

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what the depreciated or amortised historical cost would have been if the impairment had not been recognized.

(17) Borrowings

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

  • (18) Notes and accounts payable

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

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

(19) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(20) Employee benefits

  • A. Short-term employee benefits

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

  • B. Pension

  • (a) Defined contribution plan

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

  • (b) Defined benefit plan

  • i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of highquality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.

~21~

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     - ii. Remeasurements arising on defined benefit plan are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.

  • C. Employees’ compensation and directors’ remuneration

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

  • (21) Income tax

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

  • B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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

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

  • E. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from research and development expenditures to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

~22~

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(22) Share capital

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

(23) Dividends

Cash dividends are recorded as liabilities in the Company’s financial statements in the period in which they are resolved by the Board of Directors. Stock dividends are recorded as stock dividends to be distributed in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders and are reclassified to ordinary shares on the effective date of new shares issuance.

(24) Revenue recognition

  • A. Sales of goods

  • (a) The Company manufactures and sells various integrated circuit related products. Sales are recognized when control of the products has transferred, being when the products are delivered to the customers, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

  • (b) Revenue from these sales is recognized based on the price specified in the contract. A refund liability is recognized for expected sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Company does not adjust the transaction price to reflect the time value of money.

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

  • B. Services revenue

Revenue from design, royalty and technical services is recognized after completing the services in which the services are rendered.

(25) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Company will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises expenses for the related costs for which the grants are intended to compensate.

~23~

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

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

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

None.

(2) Critical accounting estimates and assumptions

  • Evaluation of inventories

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

As at December 31, 2022, the carrying amount of inventories was $12,024,974.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS
Cash and cash equivalents
Cash on hand and revolving funds
Checking accounts and demand deposits		 December31,2022
577
$ 2,538,235
2,538,812
$		 December31,2021
706
$ 2,873,629
2,874,335
$

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

(2) Accounts receivable

Accounts receivable
Accounts receivable
Accounts receivable – related parties
Less: Allowance for bad debts
(		 December31,2022
5,418,624
$ 1,107,285
65,295)

(
6,460,614
$		 December31,2021
7,989,004
$ 1,828,032
98,710)
9,718,326
$

~24~

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A. The aging analysis of accounts receivable is as follows:

Not past due
Up to 30 days
31 to 90 days
Over 90 days		 6,481,979
$ 43,893
-
37
6,525,909
$ December31,2022		 December31,2021
9,733,237
$ 81,271
2,067
461
9,817,036
$

The above aging analysis is based on past due date.

  • B. As at December 31, 2022 and 2021, accounts receivable arose from contracts with customers. As at January 1, 2021, the balance of receivables from contracts with customers amounted to $9,493,340.

  • C. The Company has no accounts receivable pledged to others.

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

(3) Inventories

Inventories
Raw materials
Work in process
Finished goods
Total
Raw materials
Work in process
Finished goods
Total		 December31,2022
Cost
3,586,261
$ 4,477,022
6,181,572
14,244,855
$		 Allowance for
obsolescence and
marketvalue decline
730,842)
($ 696,981)
(
792,058)
(
2,219,881)
($ December31,2021		 Bookvalue
2,855,419
$ 3,780,041
5,389,514
12,024,974
$
Cost
3,254,646
$ 3,475,396
5,853,480
12,583,522
$		 Bookvalue
3,050,650
$ 3,237,223
5,513,022
11,800,895
$

~25~

-228-

Operating costs incurred on inventories for the years ended December 31, 2022 and 2021 were as follows:

Operating costs incurred on inventories for the years ended December 31, 2022 and 2021 were as
follows:		 Operating costs incurred on inventories for the years ended December 31, 2022 and 2021 were as
follows:		 Operating costs incurred on inventories for the years ended December 31, 2022 and 2021 were as
follows:
(4) Investments accounted for under equity method
2022
2021
Cost of inventories sold and others
34,051,261
$ 35,229,040
$ Loss on decline in (gain on reversal of) market value,
obsolete and slow-moving inventory
1,437,254
233,181)
(
Loss on scrap inventory
213,203
374,036
35,701,718
$ 35,369,895
$ Years endedDecember31,
December 31,2022
December 31,2021
Subsidiaries:
Leading Enterprises Limited
-
$ 13,271,128
$ Amber Universal Inc.
3,735,840
3,495,793
Realtek Singapore Private Limited
47,105,531
18,474,782
Realtek Investment Singapore Private Limited
6,925,958
6,138,099
Talent Eagle Enterprise Inc.
-
2,190,704
Bluocean Inc.
-
3,281,950
Realsun Investments Co., Ltd.
691,262
880,497
Hung-wei Venture Capital Co., Ltd.
422,217
758,769
Realking Investments Co., Ltd.
259,432
285,893
Realsun Technology Corporatioin
5,030
5,074
Bobitag Inc.
19,436
19,347
AICONNX Technology Corporation
5,269)
(
19,980
Associates:
Estinet Technologies Incorporation
2,276
5,081
59,161,713
$ 48,827,097
$
13,271,128
$ 3,495,793
18,474,782
6,138,099
2,190,704
3,281,950
880,497
758,769
285,893
5,074
19,347
19,980
5,081
48,827,097
$

  • A. Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s 2022 consolidated financial statements.

  • B. The gain on investments accounted for under equity method amounted to $15,206,534 and $13,564,251 for the years ended December 31, 2022 and 2021, respectively.

  • C. AICONNX Technology Corporation was incorporated on December 20, 2021. The Company’s investment in the investee amounted to $20,000.

~26~

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(5) Property, plant and equipment

At January 1, 2022
Cost
Accumulated
depreciation and
impairment
2022
At January 1
Additions
Disposals
Reclassifications
Depreciation
At December 31
At December 31, 2022
Cost
Accumulated
depreciation and
impairment
At January 1, 2021
Cost
Accumulated
depreciation and
impairment
2021
At January 1
Additions
Reclassifications
Depreciation
At December 31
At December 31, 2021
Cost
Accumulated
depreciation and
impairment		 Land
489,370
$ -

489,370
$ 489,370
$ -
-
-
-

489,370
$ 489,370
$ -

489,370
$ Land
387,280
$ -

387,280
$ 387,280
$ -
102,090
-

489,370
$ 489,370
$ -

489,370
$		 Buildings
2,815,676
$ 1,133,175)
(
(
1,682,501
$ 1,682,501
$ -
-
-
79,926)
(
(
1,602,575
$ 2,375,329
$ 772,754)
(
(
1,602,575
$ Buildings
2,758,801
$ 1,050,324)
(

1,708,477
$ 1,708,477
$ 14,108
42,767
82,851)
(

1,682,501
$ 2,815,676
$ 1,133,175)
(

1,682,501
$		 Machinery
Testequipment
Office equipment
Others
Total
4,145,587
$ 3,476,211
$ 434,352
$ 2,403,370
$ 13,764,566
$ 3,516,970)

2,294,535)
(
210,265)
(
718,143)
(
7,873,088)
(
628,617
$ 1,181,676
$ 224,087
$ 1,685,227
$ 5,891,478
$ 628,617
$ 1,181,676
$ 224,087
$ 1,685,227
$ 5,891,478
$ 121,371
683,932
39,965
1,334,467
2,179,735
-
3,062)
(
-
-
3,062)
(
172,492
2,891
-
175,577)
(
194)
(
167,225)

511,688)
(
54,970)
(
120,979)
(
934,788)
(
755,255
$ 1,353,749
$ 209,082
$ 2,723,138
$ 7,133,169
$ 1,268,586
$ 2,922,654
$ 381,989
$ 3,010,717
$ 10,448,645
$ 513,331)

1,568,905)
(
172,907)
(
287,579)
(
3,315,476)
(
755,255
$ 1,353,749
$ 209,082
$ 2,723,138
$ 7,133,169
$ Machinery
Test equipment
Office equipment
Others
Total
3,800,466
$ 2,904,416
$ 278,569
$ 1,034,223
$ 11,163,755
$ 3,401,211)
(
1,889,965)
(
167,599)
(
627,652)
(
7,136,751)
(
399,255
$ 1,014,451
$ 110,970
$ 406,571
$ 4,027,004
$ 399,255
$ 1,014,451
$ 110,970
$ 406,571
$ 4,027,004
$ 353,207
612,924
155,783
1,514,004
2,650,026
-
-
-
144,857)
(
-
123,845)
(
445,699)
(
42,666)
(
90,491)
(
785,552)
(
628,617
$ 1,181,676
$ 224,087
$ 1,685,227
$ 5,891,478
$ 4,145,587
$ 3,476,211
$ 434,352
$ 2,403,370
$ 13,764,566
$ 3,516,970)
(
2,294,535)
(
210,265)
(
718,143)
(
7,873,088)
(
628,617
$ 1,181,676
$ 224,087
$ 1,685,227
$ 5,891,478
$

A. There was no capitalization of borrowing costs attributable to the property, plant and equipment.

B. The Company has no property, plant and equipment pledged to others.

~27~

-230-

� (6) Leasing arrangements lessee

  • A. The Company leases various assets including land, buildings and transportation equipment. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

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

Land
Buildings
Transportation equipment
Land
Buildings
Transportation equipment		 Carrying amount
December31,2022
December31,2021
1,328,950
$ 1,350,829
$ 2,590
4,944
149
1,943
1,331,689
$ 1,357,716
$ Depreciation		 December31,2021
1,350,829
$ 4,944
1,943
1,357,716
$
Years endedDecember31,
2022
33,148
$ 6,967
1,794
41,909
$		 2021
26,910
$ 19,572
1,644
48,126
$

  • C. For the years ended December 31, 2022 and 2021, the additions to right-of-use assets were $15,882 and $23,235, respectively.

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

Items affecting profit or loss
Interest expense on lease liabilities		 Years endedDecember31, Years endedDecember31,
2022
19,203
$		 2021
18,924
$
  • E. For the years ended December 31, 2022 and 2021, the Company’s total cash outflow for leases were $47,345 and $54,217, respectively.

~28~

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(7) Intangible assets

At January 1, 2022
Cost
Accumulated amortisation
and impairment

2022
At January 1
Additions
Amortisation

At December 31
At December 31, 2022
Cost
Accumulated amortisation
and impairment

At January 1, 2021
Cost
Accumulated amortisation
and impairment

2021
At January 1
Additions
Amortisation

At December 31
At December 31, 2021
Cost
Accumulated amortisation
and impairment
 Computer software
5,611,613
$ 4,721,984)
(

889,629
$ 889,629
$ 1,453,003
957,019)
(

1,385,613
$ 7,064,615
$ 5,679,001)
(

1,385,614
$ Computer software
5,071,405
$ 3,975,903)
(

1,095,502
$ 1,095,502
$ 540,208
746,081)
(

889,629
$ 5,611,613
$ 4,721,984)
(

889,629
$		 Intellectualproperty
5,614,097
$ 4,375,313)
(
1,238,784
$ 1,238,784
$ 308,553
632,973)
(
914,364
$ 5,922,651
$ 5,008,287)
(
914,364
$ Intellectualproperty
4,707,768
$ 3,848,863)
(
858,905
$ 858,905
$ 906,329
526,450)
(
1,238,784
$ 5,614,097
$ 4,375,313)
(
1,238,784
$		 Others
15,398
$ -

15,398
$ 15,398
$ 38,241
-

53,639
$ 53,638
$ -

53,638
$ Others
1,222
$ -
(
1,222
$ 1,222
$ 14,176
-
(
15,398
$ 15,398
$ -
(
15,398
$		 Total
11,241,108
$ 9,097,297)
(
2,143,811
$ 2,143,811
$ 1,799,797
1,589,992)
(
2,353,616
$ 13,040,904
$ 10,687,288)
(
2,353,616
$ Total
9,780,395
$ 7,824,766)

1,955,629
$ 1,955,629
$ 1,460,713
1,272,531)

2,143,811
$ 11,241,108
$ 9,097,297)

2,143,811
$

Details of amortisation on intangible assets are as follows:

Operating costs
Operating expenses		 Years endedDecember31, Years endedDecember31,
2022
2,615
$ 1,587,377
1,589,992
$		 2021
1,374
$ 1,271,157
1,272,531
$

~29~

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(8) Short-term borrowings

Short-term borrowings
Type ofborrowings
Bank borrowings
Unsecured borrowings
Type ofborrowings
Bank borrowings
Unsecured borrowings		 December31,2022
13,737,994
$ December31,2021
13,342,100
$		 Interest raterange
1.18%~2.3%
Interest raterange
0.42%~0.57%		 Collateral
None
Collateral
None

The interest expense of long-term and short-term borrowing recognized in profit or loss amounted to $182,251 and $75,951 for the years ended December 31, 2022 and 2021, respectively.

(9) Other payables

Other payables
Accrued salaries and bonus
Payable for employees’compensation
Other accrued expenses
Payables on equipment
Payables on software and intellectual property
Others		 December31,2022
10,097,356
$ 12,001,135
2,075,424
114,514
1,292,307
23,330
25,604,066
$		 December31,2021
8,499,995
$ 11,117,373
1,373,848
283,796
1,445,930
184,695
22,905,637
$

- (10) Long term borrowings

Long-term borrowings
Type ofborrowings
Loan for Accelerated
Investment by Domestic Corporations (Note)
Type ofborrowings
Loan for Accelerated
Investment by Domestic Corporations (Note)		 Borrowing period Repayment term
Interest raterange
Collateral
December31,2022
Repayable in instalment
over the agreed period
0.925%������%
None
1,713,316
$ Repayment term
Interest raterange
Collateral
December31,2021
Repayable in instalment
over the agreed period
0.30%
None
1,002,799
$
2021/11/8~
2027/12/15
Borrowing period
2021/11/8~
2026/12/15

Note � The Ministry of Economic Affairs implemented the “Action Plan for Accelerated Investment by Domestic Corporations” on July 1, 2019. An entity can apply for a subsidised loan for an eligible investment project from financial institutions at a preferential interest rate. The Company is qualified for the loan as approved by the Ministry of Economic Affairs and entered into a loan contract with a financial institution with a credit period of 5 years. The loan is used for construction of plant and related facilities.

~30~

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(11) Pension

  • A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

  • (b) The amounts recognized in the balance sheet are determined as follows:

December 31,2022 December 31,2021
Present value of defined benefit obligations ($ 624,489)
 ($ 628,846)
Fair value of plan assets 533,997 534,371
Net liability in the balance sheet ($ 90,492) ($ 94,475)
  • (c) Movement in net defined benefit liabilities are as follows:

2022

2022
At January 1
Current service cost
Interest (expense) income
Remeasurements:
Return on plan assets (excluding amounts
included in interest income or expense)
Change in financial assumptions
Experience adjustments
Pension fund contribution
Paid pension
At December 31		 Present value of
defined benefit
obligations		 Fair value of
plan assets		 Net defined
benefit liability
628,846)
($ 1,136)
(
4,641)
(
634,623)
(
-
38,312
36,894)
(
1,418
-
8,716
624,489)
($		 534,371
$ -
3,760
538,131
1,418)
(
-
-
1,418)
(
6,000
8,716)
(
533,997
$		 94,475)
($ 1,136)
(
881)
(
96,492)
(
1,418)
(
38,312
36,894)
(
-
6,000
-
90,492)
($

~31~

-234-

At January 1
Current service cost
Interest (expense) income
Remeasurements:
Return on plan assets (excluding amounts
included in interest income or expense)
Change in demographic assumptions
Change in financial assumptions
Experience adjustments
Pension fund contribution
Paid pension
At December 31		 2021
Present value of
defined benefit
obligations		 Fair value of
plan assets		 Net defined
benefit liability
600,923)
($ 1,079)
(
2,056)
(
604,058)
(
-
34,449)
(
29,040
30,534)
(
35,943)
(
-
11,155
628,846)
($		 501,842
$ -
1,741
503,583
35,943
-
-
-
35,943
6,000
11,155)
(
534,371
$		 99,081)
($ 1,079)
(
315)
(
100,475)
(
35,943
34,449)
(
29,040
30,534)
(
-
6,000
-
94,475)
($

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

  • (e) The principal actuarial assumptions used were as follows:
Discount rate
Future salary increases		 Years endedDecember31, Years endedDecember31,
2022
1.40%
4.75%		 2021
0.75%
4.75%

Future mortality rate was estimated based on the 6th Taiwan Standard Ordinary Experience Mortality Table for the years ended December 31, 2022 and 2021.

~32~

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

December 31, 2022
Effect on present value
of defined benefit obligation
December 31, 2021
Effect on present value
of defined benefit obligation		 Increase by
Decrease by
0.25%
0.25%
14,986
$ 15,511)
($ (
16,290
$ 16,894)
($ (
Discount rate		 Future salaryincreases Future salaryincreases
Increase by
0.25%
14,986
$ (
16,290
$ (		 Increase by
0.25%
14,672)
$ 15,888)
$		 Decrease by
0.25%
14,260
$
15,415
$

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

  • (f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2023 amount to $6,000.

  • (g) As at December 31, 2022, the weighted average duration of the retirement plan is 11 years. The analysis of timing of the future pension payment was as follows:

Within 1 year
2~5 years
5~10 years		 340,419
$ 147,204
162,984
650,607
$

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

    • (b) The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2022 and 2021 were $349,206 and $307,768, respectively.

  • (12) Share capital

  • A. As at December 31, 2022, the Company’s authorised capital was $8,900,000, consisting of 890 million shares of ordinary stock (including 80 million shares reserved for employee stock options), and the paid-in capital was $5,128,636 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

~33~

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Movements in the number (thousands of shares) of the Company's common shares outstanding are as follows:

At January 1
Employees' compensation transferred
to common stock
At December 31		 2022
510,684
2,179
512,863		 2021
510,684
-
510,684

  • B. On March 18, 2022, the Company’s Board of Directors resolved to distribute employees’ compensation in the form of stocks amounting to $991,338. The Company issued 2,179 thousand shares based on the closing price of the Company’s share at the previous day of the Board meeting resolution at 455 NT dollar, which was approved by the competent authority, and the record date of issuance of new shares was March 30, 2022. The registration for the distribution of employees’ compensation was completed on April 13, 2022.

  • C. On January 24, 2002, the Company increased its new common stock and sold its old common stock by issuing 13,924 thousand units of GDRs for cash. Each GDR unit represents 4 common stocks, so the total common stocks issued were 55,694 thousand shares. The Company’s GDRs are traded in Luxembourg stock exchange. As at December 31, 2022, the outstanding GDRs were 311 thousand units, or 1,244 thousand shares of common stock, representing 0.24% of the Company’s total common stocks.

  • (13) Capital surplus

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

deficit unless the legal reserve is insufficient. ufficient.
Share premium
At January 1
1,039,006
$ Employees’compensation
transferred to common stock
969,551
Cash from capital surplus
1,025,727)
(
Cash dividends returned
-
At December 31
982,830
$		 2022
Change in equity of
associates accounted
for under
equitymethod
61,261
$ -
-
-
61,261
$

~34~

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2021

Change in equity of

associates accounted

for under

for under
Share premium
At January 1
2,060,376
$ Change in equity of associates
accounted for under equity method
-
Cash from capital surplus
1,021,370)
(
Cash dividends returned
-
At December 31
1,039,006
$		 equitymethod
61,035
$ 226
-
-
61,261
$		 Others
Total
597
$ 2,122,008
$ -
226
-
1,021,370)
(
215
215
812
$ 1,101,079
$

(14) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve, if legal reserve has accumulated to an amount equal to the paid-in capital, then legal reserve is not required to be set aside any more. After that, special reserve shall be set aside or reversed in accordance with the related laws or the regulations made by the Competent Authority. The remainder, if any, along with prior year’s accumulated undistributed earnings shall be proposed by the Board of Directors. However, the appropriation of earnings shall be resolved by the shareholders if earnings are distributed by issuing new shares, or the appropriation of earnings shall be resolved by the Board of Directors, if earnings are distributed in the form of cash. The Company should consider factors affecting finance, business and operations to appropriate distributable earnings for the period, and appropriate all or partial reserve in accordance with regulations of the Competent Authority. Cash dividends distributed are at least 50% of the addition of distributable earnings for the current year.

The Company’s dividend policy takes into consideration the Company’s future expansion plans and future cash flows. In accordance with the Company’s dividend policy, cash dividends shall account for at least 10% of the total dividends distributed.

In accordance with Company Act Article 240, Item 5 and Article 241, Item 2, the resolution, for all or partial of distributable dividends, legal reserve and capital surplus are distributed in the form of cash, will be adopted by a majority vote at a meeting of the Board of Directors attended by at least two-thirds of the total number of directors, and will be reported to the shareholders.

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

~35~

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

  • D. The appropriations of 2021 and 2020 earnings had been resolved at the shareholders � meeting on June 8, 2022 and August 9, 2021, respectively. Details are summarised below:

Legal reserve
Special reserve
Cash dividends		 Dividends per
Amount
share (indollars)
1,685,276
$ -
$ 220,040
-
12,821,591
25.00
14,726,907
$ 25.00
$ 2021		 2020 2020
Amount
1,685,276
$ 220,040
12,821,591
14,726,907
$		 Amount
-
$ 1,339,013
6,128,219
7,467,232
$		 Dividends per
share (indollars)
-
$ -
12.00
12.00
$

  • E. On April 22, 2022, the Board of Directors of the Company proposed to distribute cash dividends from capital surplus to shareholders in the amount of $1,025,727 (2 NT dollars per share).

  • F. On April 23, 2021, the Board of Directors of the Company proposed to distribute cash dividends from capital surplus to shareholders in the amount of $1,021,370 (2 NT dollars per share).

(15) Other equity items

share).
Other equity items
At January 1
Revaluation:
–the Company
–Subsidiary and
associates
Currency translation
differences:
–Subsidiary and
associates
At December 31		 2022
Unrealised
gains(losses) on
valuation
2,380,781
$ 26,419
1,015,383)
(
-
1,391,817
$

~36~

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At January 1
Revaluation:
–Subsidiary and
associates
Currency translation
differences:
–Subsidiary and
associates
At December 31		 2021
Unrealised
gains onvaluation		 Currency
translationdifference
Total
2,940,958)
($ 1,556,049)
($ -
995,872
1,215,913)
(
1,215,913)
(
4,156,871)
($ 1,776,090)
($		 Total
1,384,909
$ 995,872
-
2,380,781
$

(16) Operating revenue

Operating revenue
Revenue from contracts with customers Years endedDecember31,
2022
67,491,952
$		 2021
68,352,652
$

A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services at a point in time in the following major product lines:

Integrated

following major product lines: Integrated
YearendedDecember31,2022 circuitproducts
67,267,956
$ 67,267,956
$ Integrated
circuitproducts
68,225,415
$ 68,225,415
$		 Others
223,996
$ 223,996
$ Others
127,237
$ 127,237
$		 Total
Revenue from external customer contracts
Timing of revenue recognition
At a point in time
YearendedDecember31,2021		 67,491,952
$
67,491,952
$
Total
Revenue from external customer contracts
Timing of revenue recognition
At a point in time		 68,352,652
$
68,352,652
$

B. Contract liabilities

The Company has recognized the following revenue-related contract liabilities:

Contract liabilities
– advance sales receipts		 December31,2022
52,282
$		 December31,2021
84,259
$		 January1,2021
163,080
$

Revenue recognized that was included in the contract liability balance at the beginning of the period:

period:
Contract liabilities – advance sales receipts Years endedDecember31,
2022
67,789
$		 2021
130,391
$

~37~

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C. Refund liabilities (shown in other current liabilities)

The Company estimates the discounts based on accumulated experience. The estimation is subject to an assessment at each reporting date.

Refund liabilities – current

December 31, 2022 December 31, 2021 $ 5,701,692 $ 5,044,386

(17) Interest income

Interest income from bank deposits Other interest income

Years endedDecember31, Years endedDecember31,
2022
64,434
$ 162,768
227,202
$		 2021
4,621
$ 23,182
27,803
$

(18) Other income

Other income
 227,202
$ 27,803
$		 227,202
$ 27,803
$
Rent income
Dividend income
Grant income
Other income		 Years endedDecember31,
2022
4,176
$ 1,278
97,243
124,492
227,189
$		 2021
4,226
$ 1,434
53,621
7,262
66,543
$

(19) Other gains and losses

Other gains and losses
Years ended December31,
2022 2021
Gains on disposal of property, plant and equipment $ 1,002
 $ 200
Losses on disposal of investments - ( 145)
Net currency exchange gains (losses) 281,355 ( 76,404)
(Losses) gains on financial assets
at fair value through profit or loss ( 71,596)
 47,244
Other losses ( 7,688)
 ( 176,833)
Gains arising from lease modifications 24 236
$ 203,097 ($ 205,702)

~38~

-241-

(20) Finance costs

Finance costs
Expenses by nature
Employee benefit expenses
Interest expense
Bank borrowings
Lease liabilities
Employee benefit expenses
Depreciation
Amortisation
Wages and salaries
Labor and health insurance fees
Pension costs
Other personnel expenses		 Years endedDecember31,
2022
2021
182,251
$ 75,951
$ 19,203
18,924
201,454
$ 94,875
$ Years endedDecember31,		 2021
75,951
$ 18,924
94,875
$
2022
2021
23,814,213
$ 23,378,582
$ 976,697
833,678
1,589,992
1,272,531
Years endedDecember31,		 2021
2022
22,400,629
$ 774,930
351,223
287,431
23,814,213
$		 2021
22,176,909
$ 627,431
309,162
265,080
23,378,582
$

(21) Expenses by nature

(22) Employee benefit expenses

  • A. In accordance with the Company’s Articles of Incorporation, the Company shall appropriate no higher than 3% for directors’ remuneration and no less than 1% for employees’ compensation, if the Company generates profit. If the Company has accumulated deficit, earnings should be reserved to cover losses before the appropriation of directors’ remuneration and employees’ compensation.

  • Aforementioned employees’ compensation could be distributed by cash or stocks. Specifics of the compensation are to be determined by a majority vote at a meeting of the Board of Directors attended by at least two-thirds of the number of directors. The resolution should be reported to the shareholders during the shareholders’ meeting.

  • B. For the years ended December 31, 2022 and 2021, employees’ compensation were accrued at $4,765,898 and $4,956,694, respectively; directors’ remuneration were accrued at $120,000 and $130,000, respectively. The amounts were estimated as operating cost or operating expense in accordance with the Company’s Articles of Incorparation.

  • On March 18, 2022, the employees’ compensation of $4,956,694 and directors’ remuneration of $130,000 for 2021 resolved at the meeting of the Board of Directors agreed with those amounts recognized in the 2021 financial statements.

~39~

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

(23) Income tax

A. Income tax expense

ome tax
Income tax expense
Current income tax:
Current income tax on profits for the year
Tax on undistributed earnings
Prior year income tax overestimation
(
Total current income tax
Deferred income tax:
Origination and reversal of temporary
differences
(
Income tax expense		 2022
2021
929,588
$ 917,484
$ 106,293
64,850
355,446)

276,529)
(
680,435
705,805
2,435)

805)
(
678,000
$ 705,000
$ Years endedDecember31,
2022
929,588
$ 106,293
355,446)

(
680,435
2,435)

(
678,000
$

B. Reconciliation between income tax expense and accounting profit

Years ended December31, December31,
2022 2021
Income tax calculated based on income before
tax $ 3,376,410
 $ 3,511,552
Expenses disallowed by tax regulation and
effects from tax-exempt income ( 2,449,257)
 ( 2,594,873)
Prior year income tax overestimation ( 355,446)
 ( 276,529)
Tax on undistributed earnings 106,293 64,850
Income tax expense $ 678,000 $ 705,000

~40~

-243-

  • C. Amounts of deferred income tax assets or liabilities as a result of temporary differences are as follows:
follows:
Deferred income tax assets:
-Temporary differences:
Unrealised loss on market price decline
and obsolete and slow-moving
inventories and others
Deferred income tax liabilities:
-Temporary differences:
Unrealised exchange gain
(
Deferred income tax assets:
-Temporary differences:
Unrealised loss on market price decline
and obsolete and slow-moving
inventories and others
Deferred income tax liabilities:
-Temporary differences:
Unrealised exchange gain
(		 YearendedDecember31,2022
January1
Recognised in
profitor loss
December31
171,321
$ 38,352)
($ 132,969
$ 103,512)

40,787
62,725)
(
67,809
$ 2,435
$ 70,244
$ YearendedDecember31,2021		 December31
132,969
$ 62,725)
70,244
$
January1
169,876
$ 102,872)

67,004
$		 Recognised in
profitor loss
1,445
$ 640)

(
805
$		 December31
( 171,321
$ 103,512)
67,809
$
  • D. The amounts of deductible temporary differences that were not recognized as deferred income tax assets are as follows:
tax assets are as follows:
Deductible temporary differences December31,2022
2,179,722
$		 December31,2021
1,414,597
$
  • E. As at December 31, 2022, the Company’s income tax returns through 2020 have been assessed and approved by the Tax Authority.

~41~

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(24) Earnings per share

Earnings per share
Basic earnings per share
Profit attributable to common
shareholders
Diluted earnings per share
Profit attributable to common
shareholders
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
Profit attributable to common
shareholders plus assumed
conversion of all dilutive
potential ordinary shares
Basic earnings per share
Profit attributable to common
shareholders
Diluted earnings per share
Profit attributable to common
shareholders
Assumed conversion of all dilutive
potential ordinary shares
Employees’ compensation
Profit attributable to common
shareholders plus assumed
conversion of all dilutive
potential ordinary shares		 YearendedDecember31,2022 Earnings per
share
(indollars)
Amount after
tax		 Weighted average number of
ordinary shares outstanding
(sharesin thousands)
31.62
$ 30.48
$ Earnings per
share
(indollars)
Amount after
tax		 Weighted average number of
ordinary shares outstanding
(sharesin thousands)
16,852,759
$ 16,852,759
$ -
16,852,759
$		 510,684
510,684
9,726
520,410		 33.00
$ 32.38
$

~42~

-245-

(25) Supplemental cash flow information

Investing activities with partial cash payments

Supplemental cash flow information
Investing activities with partial cash payments		 Supplemental cash flow information
Investing activities with partial cash payments		 Supplemental cash flow information
Investing activities with partial cash payments		 Supplemental cash flow information
Investing activities with partial cash payments		 Supplemental cash flow information
Investing activities with partial cash payments
Changes in liabilities from financing activities
Purchase of property, plant and equipment
$ Add: Opening balance of payable on equipment
Less: Ending balance of payable on equipment
(
Cash paid during the year
$ Purchase of intangible assets
$ Add: Opening balance of payable on
software and intellectual property
Less: Ending balance of payable on
software and intellectual property
(
Cash paid during the year
$ Short-term
borrowings
Guarantee
deposits
At January 1, 2022
13,342,100
$ 1,050
$ Changes in cash flow from
financing activities
395,894
719)
(
Interest paid
-
-
Interest on lease liabilities
-
-
Changes in other non-cash
items
-
-
At December 31, 2022
13,737,994
$ 331
$ Short-term
borrowings
Guarantee
deposits
At January 1, 2021
11,456,690
$ 1,038
$ Changes in cash flow from
financing activities
1,885,410
12
Interest paid
-
-
Interest on lease liabilities
-
-
Changes in other non-cash
items
-
-
At December 31, 2021
13,342,100
$ 1,050
$		 2022
2021
2,179,735

2,650,026
$ 283,796
58,959
114,514)

283,796)
(
2,349,017
2,425,189
$ Years endedDecember31,
2022
2021
1,799,797

1,460,713
$ 1,445,930
1,152,591
1,292,307)

1,445,930)
(
1,953,420
1,167,374
$ Years endedDecember31,
Lease
liabilities
Long-term
borrowings
Liabilities from
financing
activities-total
1,105,395
$ 1,002,799
$ 15,451,344
$ 26,897)
(
711,110
1,079,388
19,203)
(
-
19,203)
(
19,203
-
19,203
15,728
593)
(
15,135
1,094,226
$ 1,713,316
$ 16,545,867
$ Lease
liabilities
Long-term
borrowings
Liabilities from
financing
activities-total
1,124,974
$ -
$ 12,582,702
$ 35,293)
(
1,017,360
2,867,489
18,924)
(
-
18,924)
(
18,924
-
18,924
15,714
14,561)
(
1,153
1,105,395
$ 1,002,799
$ 15,451,344
$
$
$
2022
1,799,797

1,445,930
1,292,307)


1,953,420
Lease
liabilities
1,105,395
$ 26,897)
(
19,203)
(
19,203
15,728
(
1,094,226
$ Lease
liabilities
1,124,974
$ 35,293)
(
18,924)
(
18,924
15,714
(
1,105,395
$
$
$ 1,953,420
Lease
liabilities

At January 1, 2022
Changes in cash flow from
financing activities
Interest paid
Interest on lease liabilities
Changes in other non-cash
items
At December 31, 2022
At January 1, 2021
Changes in cash flow from
financing activities
Interest paid
Interest on lease liabilities
Changes in other non-cash
items
At December 31, 2021
Short-term
borrowings
13,342,100
$ 395,894
-
-
-
13,737,994
$ Short-term
borrowings		 1,050
$ 719)
(
-
-
-
331
$ Guarantee
deposits		 1,105,395
$ 26,897)
(
19,203)
(
19,203
15,728
1,094,226
$ Lease
liabilities		 ( 1,002,799
$ 711,110
-
-
593)

1,713,316
$ Long-term
borrowings		 15,451,344
$ 1,079,388
19,203)
(
19,203
15,135
16,545,867
$ Liabilities from
financing
activities-total
11,456,690
$ 1,885,410
-
-
-
13,342,100
$		 1,038
$ 12
-
-
-
1,050
$		 1,124,974
$ 35,293)
(
18,924)
(
18,924
15,714
1,105,395
$		 ( -
$ 1,017,360
-
-
14,561)

1,002,799
$		 12,582,702
$ 2,867,489
18,924)
(
18,924
1,153
15,451,344
$

(26) Changes in liabilities from financing activities

~43~

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

LATED PARTY TRANSACTIONS
Names of related parties and relationship
Names of related parties Relationship with the Company
Leading Enterprises Limited
Realtek Singapore Private Limited
Bluocean Inc.
Talent Eagle Enterprise Inc.
Amber Universal Inc.
Hung-wei Venture Capital Co., Ltd.
AICONNX Technology Corporation
Cortina Systems Taiwan Limited
RayMX Microelectronics Corp.
G.M.I Technology Inc.
Actions Semiconductor Co., Ltd.
C-Media Electronics Inc.
Greatek Electronics Inc.
EmBestor Technology Inc.		 Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Sub-subsidiary
Sub-subsidiary
Other related party
Other related party
Other related party
Other related party
Other related party

(2) Significant related party transactions and balances

  • A. Operating revenue
nificant related party transactions and balances
Operating revenue
Sales of goods�
G.M.I Technology Inc.
Others		 Years endedDecember31,
2022
9,142,682
$ 390,473
9,533,155
$		 2021
9,690,767
$ 604,767
10,295,534
$

Goods are sold based on the price lists in force and terms that would be available to third parties, and the general collection term was 30 ~ 60 days after monthly billings.

B. Processing cost

and the general collection term was 30 ~ 60 days
Processing cost		 after monthly billings. after monthly billings.
Greatek Electronics Inc. Years endedDecember31,
2022
694,922
$		 2021
1,009,689
$

Processing cost is paid to related parties on normal commercial terms and conditions, and the general payment term was 69 days after monthly billings.

  • C. Receivables from related parties
general payment term was 69 days after monthly
Receivables from related parties		 billings.
Accounts receivable�
G.M.I Technology Inc.
Others		 December31,2022
1,048,725
$
47,487

1,096,212
$		 December31,2021
$ 1,763,556
46,113
1,809,669
$

~44~

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Aforementioned receivables were 30 ~ 60 days after monthly billings. The receivables from related parties arise mainly from sale transactions. The receivables bear no interest.

D. Payables to related parties:

Payables to related parties:
Accounts payable�
Greatek Electronics Inc.
Other		 December31,2022
90,031
$ 71
90,102
$		 December31,2021
235,939
$ 1,034
$236,973

The payment term above was 69 days after monthly billings. The payables to related parties arise mainly from processing cost. The payables are unsecured in nature and bear no interest.

E. Other transactions and other payables (receivables):

Other related parties-
Sales commissions
Technical royalty revenue
(
Cash dividend income
(
Others
Subsidiaries and sub-subsidiaries-
Interest income
(
Other income
Cash dividend income
(
Rent income
(
Technical service fees
Others		 Ending
Ending
Amount
balance
Amount
balance
412,307
$ 36,122
$ 396,355
$ 63,954
$ 911)
$ -
$ 31,451)
($ -
$ 1,278)
$ -
$ 1,434)
($ -
$ -
$ 7,701
$ -
$ -
$ 162,768)
$ 34,772)
($ 23,182)
($ 18,285)
($ -
$ 49,959)
($ -
$ 53,368)
($ 9,304,732)
$ 3,070,800)
($ 5,669,060)
($ -
$ 2,030)
$ 243)
($ 1,922)
($ 248)
($ 756,426
$ 188,642
$ -
$ -
$ -
$ 66
$ -
$ -
$ 2022
2021
Years endedDecember 31,
Ending
Amount
balance
412,307
$ 36,122
$ 911)
$ -
$ (
1,278)
$ -
$ (
-
$ 7,701
$ 162,768)
$ 34,772)
($ (
-
$ 49,959)
($ 9,304,732)
$ 3,070,800)
($ (
2,030)
$ 243)
($ (
756,426
$ 188,642
$ -
$ 66
$ 2022
Amount
412,307
$ 911)
$ 1,278)
$ -
$ 162,768)
$ (
-
$ (
9,304,732)
$ (
2,030)
$ (
756,426
$ -
$

The payment term above was 49 days after monthly billings; collection term was 30 ~ 60 days after monthly billings.

  • F. Acquisition of financial assets:
AICONNX
Technology
Corporation		 Accounts
No. ofshares
Investments
accounted for
under equity
method
2,000,000		 Objects
AICONNX
Technology
Corporation
equity
(Investment
Establishment)		 YearendedDecember31,2021
Consideration
20,000
$

~45~

-248-

G. Loans to related parties :

(a) Outstanding balance:

ns to related parties :
Outstanding balance:
Subsidiaries
Leading Enterprises Limited
Talent Eagle Enterprise Inc.
Bluocean Inc.
Amber Universal Inc.
Hung-wei Venture Capital Co., Ltd.		 December31,2022
1,197,612
$ -
-
2,487,348
70,000
3,754,960
$		 December31,2021
2,422,875
$ 1,661,400
1,661,400
1,629,557
87,000
7,462,232
$

(b) Interest income

Subsidiaries

Years endedDecember31, Years endedDecember31,
2022
162,768
$		 2021
23,182
$

The loans to subsidiaries are repayable monthly within one year, and carry interest at 2% and 0.58% for the years ended December 31, 2022 and 2021, respectively.

H. Endorsements and guarantees provided to related parties:

Subsidiaries

nd 2021, respectively.
parties:
December31,2022
17,766,228
$		 December31,2021
14,339,165
$

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits
Post-employment benefits
Total		 Years endedDecember31,
2022
564,883
$ 3,875
568,758
$		 2021
248,487
$ 3,103
251,590
$

8. PLEDGED ASSETS

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

Pledgedasset
Time deposits (shown in
financial assets at amortised
cost - non-current)
"		 December31,2022
December31,2021
31,348
$ 31,048
$ 49,849
44,810
81,197
$ 75,858
$ Bookvalue		 Purposes
December31,2022
31,348
$ 49,849
81,197
$
Guarantee for
the importation customs
duties of materials
Guarantee for leasing land
and office in Science Park

~46~

-249-

  1. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

  2. (1) Contingencies

  3. A. In 2020, Divx, LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court of Delaware against the Company’s IC products. On July 4, 2021, DivX terminated the investigation against the Company in ITC.

  4. B. In 2020, KONINKLIJKE PHILIPS N.V. and PHILIPS NORTH AMERICA LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court of Delaware against the Company’s IC products. On March 23, 2022, ITC issued the final determination finding non-infringement for the accused Company’s IC products and non-existence of the required domestic industry.

  5. C. Future Link Systems, LLC brought actions for patent infringement in United States International Trade Commission (“ITC”) and United States District Court for the Western �

  6. District of Texas against the Company’s IC products. Due to the Plaintiff/ Complainant s withdrawal of its patent infringement complaints, the patent infringement cases have been terminated.

  7. D. BANDSPEED, LLC brought an action for patent infringement in United States District Court for the Western District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

  8. E. Advanced Micro Devices, Inc./ ATI Technologies ULC brought an action for patent infringement in United States International Trade Commission (“ITC”) and United States District Court for the Eastern District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

  9. F. American Patent LLC brought an action for patent infringement in United States District Court for the Eastern District of Texas against the Company’s IC products. The case is still pending, and the Company is unable to reliably determine the outcome of the case.

  10. (2) Commitments

None.

  1. SIGNIFICANT DISASTER LOSS

  2. None.

  3. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

  4. None.

~47~

-250-

12. OTHERS

(1) Capital management

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

(2) Financial instruments

A. Financial instruments by category

shareholders, issue new shares or sell assets to reduce
nancial instruments
Financial instruments by category		 debt.
Financial assets
Financial assets at fair value through profit or loss
Financial assets mandatorily measured at fair value
through profit or loss
Financial assets at fair value through other
comprehensive income
Designation of equity instrument
Financial assets at amortised cost/Receivables
Cash and cash equivalents
Financial assets at amortised cost
Accounts receivable (including related parties)
Other receivables (including related parties)
Refundable deposits
Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings
Notes payable
Accounts payable (including related parties)
Other payable (including related parties)
Long-term borrowings
Guarantee deposits
Other financial liability
Lease liability		 December31,2022
110,533
$ 61,455
$ 2,538,812
$ 81,197
6,460,614
6,913,596
2,171,839
18,166,058
$ 13,737,994
$ -
4,501,710
25,836,597
1,713,316
331
5,701,692
51,491,640
$ 1,094,226
$		 December31,2021
129,129
$
-
$
2,874,335
$ 75,858
9,718,326
7,542,294
719,802
20,930,615
$
13,342,100
$ 3,276
7,586,416
22,969,591
1,002,799
1,050
5,044,386
49,949,618
$
1,105,395
$

B. Financial risk management policies

(a) The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.

~48~

-251-

  • (b) Risk management is carried out by a Company finance under policies approved by the Board of Directors. Company finance identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units.

  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Foreign exchange risk

  • i. The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities.

  • ii. Management has set up a policy to require the Company to manage its foreign exchange risk against its functional currency. The Company is required to hedge its entire foreign exchange risk exposure with the Company finance.

  • iii. The Company’s businesses involve some functional currency operations (the Company’s functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 December31,2022 December31,2022 December31,2022
Foreign
currency
amount
(In thousands)
432,408
$ 1,881,393
354,424		 Exchangerate
30.708
30.708
30.708		 Book value
(NTD)
13,278,385
$ 57,773,816
10,883,652

~49~

-252-

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 December31,2021 December31,2021 December31,2021
Foreign
currency
amount
(In thousands)
721,980
$ 1,692,376
458,477		 Exchangerate
27.690
27.690
27.690		 Book value
(NTD)
19,991,626
$ 46,861,891
12,695,228

The total exchange gain(loss), including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2022 and 2021, amounted to $281,355 and $(76,404), respectively. Analysis of foreign currency market risk arising from significant foreign exchange variation:

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 YearendedDecember31, YearendedDecember31, 2022
Sensitivityanalysis
Degree ofvariation
1%
1%
1%		 Effect on
profitor loss
132,784
$ -
108,825)
(		 Effect on other
comprehensive
income
-
$ 577,673
-

~50~

-253-

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 YearendedDecember31, YearendedDecember31, 2021
Sensitivityanalysis
Degree ofvariation
1%
1%
1%		 Effect on
profitor loss
199,916
$ -
126,952)
(		 Effect on other
comprehensive
income
-
$ 468,619
-

Price risk

  • i. The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.

  • ii. The Company’s investments in equity securities comprise shares issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had decreased/increased by 10% with all other variables held constant, post-tax profit for the years ended December 31, 2022 and 2021 would have decreased/increased by $11,053 and $12,913, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $6,146 and $0, respectively, as a result of gains/losses on equity securities classified as at fair value through other comprehensive income.

  • Cash flow and fair value interest rate risk

The Company has no material interest rate risk.

  • (b) Credit risk

  • i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of financial assets at amortised cost, at fair value through profit or loss and at fair value through other comprehensive income.

  • ii. The Company manages their credit risk taking into consideration the entire Company’s concern. According to the Company’s credit policy, the Company is responsible for

~51~

-254-

managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.

  • iii. The Company adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.

  • iv. The Company adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

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

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

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

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

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

  • vi. The Company classifies customers’ accounts receivable in accordance with customer types. The Company applies the modified approach using provision matrix to estimate expected credit loss under the provision matrix basis.

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

  • viii. The Company used the forecast ability of semiconductor industry research report to adjust historical and timely information to assess the default possibility of accounts receivable. On December 31, 2022 and 2021, the provision matrix is as follows:

At December 31, 2022
Expected loss rate
Total book value
Loss allowance		 Notpastdue
0-1%
6,481,979
$ 64,819
$		 1~90
days pastdue
0-1%
43,893
$ 439
$		 Over 90 days
pastdue
100%
37
$ 37
$		 Total
6,525,909
$
65,295
$

~52~

-255-

At December 31, 2021
Expected loss rate
Total book value
Loss allowance		 Notpastdue
0-1%
9,733,237
$ 96,119
$		 1~90
days pastdue
0-1%
83,338
$ 2,130
$		 Over 90 days
pastdue
100%
461
$ 461
$		 Total
9,817,036
$
98,710
$

ix. Movements in relation to the Company applying the modified approach to provide loss allowance for accounts receivable are as follows:

At January 1
Reversal of impairment
(
At December 31
At January 1
Provision for impairment
At December 31		 2022
Loss allowance for
accountsreceivable
98,710
$ 33,415)

65,295
$ 2021
Loss allowance for
accountsreceivable
95,360
$ 3,350
98,710
$
  • x. For financial assets at amortised cost, the credit rating levels are presented below:
Financial assets at
amortised cost
Financial assets at
amortised cost		 December31,2022 December31,2022 December31,2022 Total
81,197
12 months
81,197
$ 12 months
75,858
$		 Significant
increase in
Impairment
credit risk
ofcredit
-
$ -
$ Lifetime
December31,2021
$ $ $
12 months Lifetime Total
Significant
increase in
credit risk
-
$		 Impairment
ofcredit
75,858
$		 -
$		 75,858
$

The financial assets at amortized cost are bank time deposits with original maturity more than three months, and there is no significant abnormality in credit risk assessment.

~53~

-256-

(c) Liquidity risk

  • i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company finance. Company finance monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities.

  • ii. Company finance invests surplus cash in interest bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

  • iii. The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

in the table are the contractual undiscounted
Non-derivative financial liabilities:		 cash flows.
December 31, 2022
Short-term borrowings
Notes payable
Accounts payable (including related parties)
Other payables (including related parties)
Lease liability
Long-term borrowings
Guarantee deposits
Other financial liabilities
Non-derivative financial liabilities:
December 31, 2021
Short-term borrowings
Notes payable
Accounts payable (including related parties)
Other payables (including related parties)
Lease liability
Long-term borrowings
Guarantee deposits
Other financial liabilities		 Less than 1
year		 Between 1
and 5 years		 Over5 years
13,737,994
$ -
4,501,710
25,836,597
43,884
-
-
5,701,692
Less than 1
year		 -
$ -
-
-
158,424
1,728,470
-
-
Between 1
and 5 years		 -
$ -
-
-
1,305,338
-
331
-
Over5 years
13,342,100
$ 3,276
7,586,416
22,969,591
45,175
-
-
5,044,386		 -
$ -
-
-
162,621
1,017,360
-
-		 -
$ -
-
-
1,328,389
-
1,050
-

~54~

-257- 

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

  • (3) Fair value information

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

    • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks and beneficiary certificates is included in Level 1.

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

    • Level 3: Unobservable inputs for the asset or liability. The fair value of the Company's investment in equity investment without active market is included in Level 3.

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

December 31, 2022
Assets
Recurring fair value measurement
Financial assets at fair value
through profit or loss
Equity securities
Hybrid instruments
Financial assets at fair value
through other comprehensive income
Equity securities
Total
December 31, 2021
Assets
Recurring fair value measurement
Financial assets at fair value
through profit or loss
Equity securities		 Level 1
57,533
$ -
61,455
118,988
$ Level 1
129,129
$		 Level 2
-
$ -
-
-
$ Level 2
-
$		 Level3
-
$ 53,000
-
53,000
$ Level3
-
$		 Total
57,533
$ 53,000
61,455
171,988
$ Total
129,129
$		 Total
57,533
$ 53,000
61,455
171,988
$ Total
129,129
$
129,129
$

~55~

-258-

  • (b) The methods and assumptions the Company used to measure fair value are as follows:

  • i. The instruments the Company used market quoted prices as their fair values (that is, Level

    • 1) are listed below by characteristics:
Market quoted
price		 Listed
shares		 Closed-
endfund		 Open-end
fund		 Government
bond		 Corporate
bond		 Convertible
(exchangeable)
bond
Closing price Closing
price		 Net asset
value		 Transaction
price		 Weighted
average
quoted price		 Closing price

  • ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques. The fair value of financial instruments measured by using valuation techniques can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date.

  • iii. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional input.

  • C. For the years ended December 31, 2022 and 2021, there was no transfer between Level 1 and Level 2.

  • D. The following chart is the movement of Level 3 for the years ended December 31, 2022 and 2021:.

2021:.
At January 1
Acquisition in the period
At December 31		 2022
Non-derivative equity
-
$ 53,000
53,000
$		 2021
Non-derivative equity
-
$ -
-
$
  • E. For the years ended December 31, 2022 and 2021, there was no transfer into or out from Level 3.

~56~

-259-

  • F. The finance division is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

  • G. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Fair value at Significant Range Relationship December Valuation unobservable (weighted of inputs to 31,2022 technique input average) fair value Hybrid instruments: Convertible $ 53,000 Binomial Not applicable - Not note Model applicable

December 31, 2021 � None.

13. SUPPLEMENTARY DISCLOSURES

  • (1) Significant transactions information

  • A. Loans to others: Please refer to table 1.

  • B. Provision of endorsements and guarantees to others: Please refer to table 2.

  • C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

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

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

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

  • G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paidin capital or more: Please refer to table 4.

  • H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

  • I. Trading in derivative instruments undertaken during the reporting periods: None.

  • J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

~57~

-260-

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

  • (3) Information on investments in Mainland China

  • A. Basic information: Please refer to table 8.

  • B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 1, table 2 and table 6.

(4) Major shareholders information

As at December 31, 2022, the Company had no shareholders who hold over 5% (including 5%) of the Company’s shares.

14. SEGMENT INFORMATION

Not applicable.

~58~

-261-

Item
Value
REALTEK SEMICONDUCTOR CORPORATION
Loans to others
For the year ended December 31, 2022
Table 1
Expressed in thousands of NTD
(Except as otherwise indicated)
Collateral
Limit on loans
granted to
a single party
Ceiling on total loans
granted
(Note 2)
Footnote
Interest rate
Nature of
loan
Amount of
transactions with the
borrower
Reason for short-
term
financing
Allowance for doubtful
accounts
Maximum outstanding
balance during the year
ended
December 31,
2022
(Note 3)
Balance at
December
31, 2022
Actual amount
drawn down
(Note 4)
No
(Note 1)
Creditor
Borrower
General ledger account
Is a related
party		 None None None None None None None None None None None None None
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Y Y Y Y Y Y Y Y Y Y Y Y Y
Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties
Hung-wei Venture Capital
Co., Ltd.		 RayMX Microelectronics
Corp.		 AICONNX Technology Corp. Bluocean Inc. Talent Eagle
Enterprise Inc.		 Leading Enterprises
Limited		 Amber Universal
Inc.		 Talent Eagle
Enterprise Inc.		 Bluocean Inc. Talent Eagle Enterprise Inc. Leading Enterprises Limited Leading Enterprises Limited RayMX Microelectronics
Corp.
Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Leading Enterprises Limited Amber Universal Inc. Amber Universal Inc. Cortina Access, Inc. Realtek Investment Singapore
Private Limited		 Realtek Investment Singapore
Private Limited
� � � � � � � � � � � � �

-262-

Item
Value
Collateral
Limit on loans
granted to
a single party
Ceiling on total loans
granted
(Note 2)
Footnote
Interest rate
Nature of
loan
Amount of
transactions with the
borrower
Reason for short-
term
financing
Allowance for doubtful
accounts
Maximum outstanding
balance during the year
ended
December 31,
2022
(Note 3)
Balance at
December
31, 2022
Actual amount
drawn down
(Note 4)
No
(Note 1)
Creditor
Borrower
General ledger account
Is a related
party		 None None None None None None None Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:
(1) The Company is ‘0’.
(2) The subsidiaries are numbered in order starting from ‘1’.
Note 2: The Company’s “Procedures for Provision of Loans” are as follows:
(1) Ceiling on total loans granted by the Company to all parties is 40% of the Company’s net assets value as per its most recent financial statements.
(2) Limit on loans to a single party with business transactions is the business transactions occurred between the creditor and borrower in the current year. The business transaction amount is the higher of purchasing and selling during current year on the year of financing.
(3) For companies needing for short-term financing, the cumulative lending amount may not exceed 40% of the borrowing company’s net assets based on its latest financial statements audited or reviewed by independent auditors.
The amount the Company or its subsidiaries lend to an individual entity may not exceed 10% of the Company’s or subsidiary’s net assets based on its latest financial statements audited or reviewed by independent auditors.
For the foreign companies which the Company holds 100% of the voting rights directly or indirectly, limit on loans is not restricted as stipulated in the above item (3). However, the ceiling on total loans and limit on loans to a single party may not exceed 40% of the Company’s net assets based on
its latest financial statements audited or reviewed by independent auditors.
Note 3: Acccumulated maximum outstandings balance of loans to others as at the reporting month of the current period.
Note 4: Fill in the actual amount of loans to others used by the borrowing company.
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None None None None None None None
�
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Operations Operations Operations Operations Operations Operations Operations
�
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Y Y Y Y Y Y Y
Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties		 Other receivables-related
parties
Realsil Microelectronics
Corp.		 Bluocean Inc. Amber Universal
Inc.		 Talent Eagle
Enterprise Inc.		 Suzhou Pankore Integrated
Circuit Technology Co. Ltd		 RayMX Microelectronics
Corp.		 Suzhou Pankore Integrated
Circuit Technology Co. Ltd
Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realtek Singapore Private
Limited		 Realsil Microelectronics Corp. Realsil Microelectronics Corp. Cortina Network Systems
Shanghai Co., Ltd.
� � � � � � �

-263-

Company name
Relationship
with the
endorser/
guarantor
(Note 2)
Provision of endorsements and guarantees to others
For the year ended December 31, 2022
Table 2
Expressed in thousands of NTD
(Except as otherwise indicated)
Outstanding
endorsement/
guarantee
amount at
December 31,
2022
(Note 5)
Actual amont
drawn down
(Note 6)
Number
(Note 1)
Endorser/
guarantor
Party being
endorsed/guaranteed
Limited on
endorsements/
guarantees
provided for a
single party
(Note 3)
Maximum
outstanding
endorsement/
amount as of
December 31, 2022
(Note 4)
Provision of
endorsements/
guarantees to
the party in
Mainland
China
(Note 7)
Footnote
Amount of
endorsements/
gurantees
secured with
collateral
Ratio of accumulated
endorsement/ guarantee
amount to net
asset value of
the endorser/ guarantor
company
Ceiling on total amount of
endorsements/
guarantees provided
(Note 3)
Provision of
endorsements/
guarantees by
parent
company to
subsidiary
(Note 7)
Provision of
endorsements/
guarantees by
subsidiary to
parent
company
(Note 7)		 Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:
(1)The Company is ‘0’.
(2)The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories:
(1) Having business relationship.
(2) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(3) The endorser/guarantor company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.
(4) The endorser/guarantor parent company owns directly or indirectly owns more than 50% voting shares of the endorsed/guaranteed subsidiary.
(5) Mutual guarantee of the trade as required by the construction contract.
(6) Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.
Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.
Note 5: Fill in the amount approved by the Board of Directors or the chairman has been authorised by the Board of Directors based on subparagraph 8, Article 12 of the Regulations Gorverning Loaning of Funds and Making of Endorsements/Guarantees by Public Companies.
Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.
Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.
Note 3: Ceiling on total endorsements/guarantees granted by the Company and subsidiaries is 50% of the Company’s net asset based on the latest financial statements audited or reviewed by independent auditors, and limit on endorsements/guarantees to
a single party is 50% of the Company’s net asset based on the latest financial statements audited or reviewed by independent auditors.
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Realtek Singapore
Private Limited		 Leading Enterprises
Limited		 Realsil
Microelectronics
Corp.		 RayMX
Microelectronics
Corp.		 AICONNX
Technology
Corp.		 Realsil
Microelectronics
Corp.		 RayMX
Microelectronics
Corp.
Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Realtek
Semiconductor
Corporation		 Leading Enterprises
Limited		 Realsil Microelectronics
Corp.
� � � � � � �

-264-

Number of shares
Book value
(Note 3)
Ownership (%)
Fair value
(Except as otherwise indicated)
Table 3
Expressed in thousands of NTD
Footnote
(Note 4)
Securities held by
Marketable securities
�Note 1�
Relationship with the
securities issuer(Note 2)
General
ledger account
As of December 31, 2022
������� ������ ������ ������ ������� ������ ������� ������ ��������� ������� ������� ������� ������ ������� ������� ������ ������ �
����� � ������ ����� ����� ����� ����� � ������ � � ����� � ����� ����� ����� ������ �����
������� ������ ������ ������ ������� ������ ������� ������ ��������� ������� ������� ������� ������ ������� ������� ������ ������ �
��������� � ���������� ��������� ���������� ��������� ��������� ��������� ��������� � � ��������� ������� ��������� ��������� ��������� ��������� ���������
Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at amortised cost Financial assets at amortised cost Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income
Other related parties None None Other related parties None Other related parties None None None None None None None Other related parties Other related parties None Other related parties None
C-media Electronics Inc. - Common stock Nuheara Ltd - Convertible notes Nuheara Ltd - Common stock Compal broadband networks Inc. - Common
stock		 Shieh-Yong Investment Co., Ltd. -
Common stock		 Compal broadband networks Inc. - Common
stock		 Fortemedia Inc. - Common stock Starix Technology, Inc. - Preferred stock Octtasia Investment Holding Inc -
Common stock		 Apple Inc.-Corporate bond Qualcomm Inc. - Corporate bond Octtasia Investment Holding Inc. - Common
stock		 United Microelectronics Corporation. -
Common stock		 C-media Electronics Inc.- Common stock Greatek Electroninc Inc. - Common stock Subtron technology Co., Ltd - Common
stock		 Embestor Technology Inc. -
Common stock		 CyWeeMotion Group Ltd
Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realking Investment Co., Ltd. Realsun Investment Co., Ltd. Realsun Investment Co., Ltd. Leading Enterprises Limited Leading Enterprises Limited Leading Enterprises Limited Leading Enterprises Limited Leading Enterprises Limited Amber Universal Inc. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Hung-wei Venture Capital Co., Ltd. Blueocean Inc.

-265-

Number of shares
Book value
(Note 3)
Ownership (%)
Fair value
(Except as otherwise indicated)
Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)
December 31, 2022
Table 3
Expressed in thousands of NTD
Footnote
(Note 4)
Securities held by
Marketable securities
�Note 1�
Relationship with the
securities issuer(Note 2)
General
ledger account
As of December 31, 2022		 Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9 ‘Financial instrument'.
Note 2: Leave the column blank if the issuer of marketable securities is non-related party.
Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at
fair value; fill in the acquisition cost for the marketable securities not measured at fair value.
Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in
the footnote if the securities presented herein have such conditions.
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��������� ��������� ���������� ���������� ���������� ���������� ���������� ��������� ���������� ��������� ��������� ���������� ���������� ���������� ���������� ��������� �
Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
other comprehensive income		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss		 Financial assets at fair value through
profit or loss
None None None None None None None None None None None None None None None None None
Eargo, Inc. - Common stock Eargo, Inc. - Common stock Cuam Money Fund JIA SHI Monetary Fund BOC Cash Fund Guang-Fa Currency Fund WAN JIA Monetary Fund Guang-Fa Demand Policy Loan Fund Jian-Xin Monetary Fund Pu-Yin Monetary Fund Capital Increase Monetary Fund A Capital Increase Monetary Fund B Ri-Ri-Xin Fund Step by step Gold Fund Cuam Money Fund JIA SHI Monetary Fund Bond funds
Blueocean Inc. Talent Eagle Enterprise Inc. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realtek Semiconductor (Shen Zhen) Corp. Realtek Semiconductor (Shen Zhen) Corp. Realtek Semiconductor (Shen Zhen) Corp. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Network Systems (Shanghai) Co. Ltd. Realtek Investment Singapore Private Limited

-266-

Purchase
(sales)
Amount
Percentage of
total purchase
(sales)
Credit term
Unit price
Credit term
Balance
Percentage of total
notes/accounts
receivable (payable)
Footnote
Purchase/seller
Counterparty
Relationship with the
counterparty
Transaction
Differences in transaction terms
compared to third party
transactions
Notes/accounts receivable(payable)
(Except as otherwise indicated)
Table 4
Expressed in thousands of NTD
9% 0% 0% 0% 12% 1% 0%
1,048,725
$		 - 46,131 21,130 1,478,273 90,031)
(		 64,824)
(
Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions
Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions
Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions
(8%) 0% 0% 0% (7%) 1% 1%
9,142,682)
($		 53,120)
(		 337,353)
(		 97,058)
(		 7,281,111)
(		 694,922 350,704
(Sales) (Sales) (Sales) (Sales) (Sales) Purchase Purchase
Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties Other related parties
G.M.I Technology Inc. Actions Semiconductor Co., Ltd. C-Media Electronics Inc. G.M.I Technology Inc. G.M.I Technology Inc. Greatek Electronics Inc. Greatek Electronics Inc.
Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation RayMX Microelectronics Corp. Realtek Singapore Private Limited Realtek Semiconductor Corporation Realtek Singapore Private Limited

-267-

Table 5
Amount
Action taken
Amount collected
subsequent to the
balance sheet date
Allowance for
doubtful accounts
Creditor
Counterparty
Relationship with
the counterparty
Balance as at
December 31, 2022
Turnover rate
Overdue receivables
Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more
December 31, 2022
Expressed in thousands of NTD
(Except as otherwise indicated)		 10,593
$		 -
691,384
$		 727,379
- -
$ - -
6.50 5.17
1,048,725
$		 1,478,273
Other related
parties		 Other related
parties
G.M.I Technology Inc. G.M.I Technology Inc.
Realtek Semiconductor Corporation Realtek Singapore Private Limited

-268-

General ledger account
Amount
Transaction terms
Percentage of
consolidated total
operating revenues or
total assets (Note 3)
Number
(Note 1)
Company name
Counterparty
Relationship
(Note 2)
Transaction
(Except as otherwise indicated)
REALTEK SEMICONDUCTOR CORPORATION
Significant inter-company transactions during the reporting period
For the year ended December 31, 2022
Table 6
Expressed in thousands of NTD
0.04%		 0.12% 0.02% 0.56% 0.15% 2.25% 0.06% 0.56% 0.04% 0.22% 0.01% 0.14% 0.04% 0.17% 0.01% 0.06% 0.03% 0.01% 0.04% Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:
(1) Parent company is ‘0’.
(2) The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer
to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the
subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):
(1) Parent company to subsidiary.
(2) Subsidiary to parent company.
(3) Subsidiary to subsidiary
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on
accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.
Note 4: Only transactions above NT$10 million are disclosed. Transactions of related parties are not further disclosed here.
No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.		 No similar transaction can be compared with. Transaction prices and terms are
determined in accordance with mutual agreement.
$ 49,959 132,850 18,801 623,576 169,841 2,812,029 73,699 628,378 41,456 245,414 14,724 151,947 40,600 186,317 7,537 67,041 36,193 15,674 49,959

Other receivables		 Technical service fees Other payables Technical service fees Other payables Technical service fees Prepaid account Technical service fees Other payables Technical service fees Other payables Technical service fees Other payables Technical service fees Other payables Technical service fees Technical service fees Technical service fees Other receivables
� � � � � � � � � � � � � � � � � � �
RayMX Microelectronics Corp.
 Realtek Korea Inc. Realtek Korea Inc. Ubilinx Technology Inc. Ubilinx Technology Inc. Realsil Microelectronics Corp. Realsil Microelectronics Corp. Realtek Semiconductor(Shen Zhen) Corp. Realtek Semiconductor(Shen Zhen) Corp. Cortina Access Inc. Cortina Access Inc. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Network Systems (Shanghai) Co. Ltd. Cortina Systems Taiwan Limited Cortina Systems Taiwan Limited Realtek Semiconductor (Japan) Inc. Realtek Viet Nam Co., Ltd Realtek Semiconductor (Malaysia) Sdn.Bhd RayMX Microelectronics Corp.
Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Semiconductor Corporation Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited
� � � � � � � � � � � � � � � � � � �

-269-

Balance as at
December 31, 2022
Balance as at
December 31,
2021
Number of shares
Ownership (%)
Book value
Net profit (loss)
of the investee for the
year ended
December 31, 2022
Investment income
(loss)
recognised by the
Company for the year
ended December 31,
2022
Footnote
Investor
Investee
Location
Main business
activities
Initial investment amount
Shares held as at December 31, 2022
Table 7
Expressed in thousands of NTD
(Except as otherwise indicated)		 Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
136,075)
($		 69,393 15,286,889 39,716)
(		 6,459 117,565 16,284 85,095)
(		 5,547)
(		 37)
(		 184 20,948)
(
76,336)
($		 69,393 15,285,229 33,218)
(		 27,379)
(		 117,565 16,284 85,095)
(		 5,547)
(		 37)
(		 276 22,073)
(
$ - 3,735,840 47,105,531 - - 6,925,958 691,262 422,217 259,432 5,030 19,436 5,269)
(
- 100% 100% - - 100% 100% 100% 100% 100% 66.67% 100%
- 41,432 116,059,638 - - 200,000,000 28,000,000 25,000,000 29,392,985 500,000 1,918,910 2,000,000
$ 13,676,922 4,358,823 3,928,798 3,047,285 3,159,429 5,538,000 280,000 250,000 293,930 5,000 19,189 20,000
$ - 4,833,896 4,357,007 - - 6,141,600 280,000 250,000 293,930 5,000 19,189 20,000
Investment holdings Investment holdings ICs manufacturing, design, research,
development, sales, and marketing		 Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings Investment holdings ICs manufacturing, design, research,
development, sales, and marketing		 Manufacturing and installation of
computer equipment and wholesasle,
retail and related services of
electronic materials and
information/software		 ICs manufacturing, design, research,
development, sales, and marketing
British Virgin
Islands		 British Virgin
Islands		 Singapore Cayman
Islands		 Cayman
Islands		 Singapore Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan
Leading Enterprises Limited Amber Universal Inc. Realtek Singapore Private
Limited		 Bluocean Inc. Talent Eagle Enterprise Inc. Realtek Investment Singapore
Private Limited		 Realsun Investments Co., Ltd. Hung-wei Venture Capital Co.,
Ltd.		 Realking Investments Co., Ltd. Realsun Technology
Corporatioin		 Bobitag Inc. AICONNX Technology
Corporation
Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation		 Realtek Semiconductor
Corporation

-270-

Balance as at
December 31, 2022
Balance as at
December 31,
2021
Number of shares
Ownership (%)
Book value
Net profit (loss)
of the investee for the
year ended
December 31, 2022
Investment income
(loss)
recognised by the
Company for the year
ended December 31,
2022
Footnote
Investor
Investee
Location
Main business
activities
Initial investment amount
Shares held as at December 31, 2022
Table 7
Expressed in thousands of NTD
(Except as otherwise indicated)		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Investments
accounted for
under equity
method		 Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary
(2,822)
$		 (6,811) 2,465)
(		 5,668)
(		 2,957)
(		 176)
(		 45 23)
(		 138,531 17,389
(47,721)
$		 (13,674) 24,645)
(		 24,645)
(		 24,645)
(		 176)
(		 45 23)
(		 138,531 17,389
$ 2,276 135,808 7,242 16,655 8,690 1,971 7,950 1,121 2,138,374 926,727
6.89% 37.38% 10% 23% 12% 100% 100% 100% 100% 100%
2,000,000 20,000,000 1,000,000 2,300,000 1,200,000 400 300,000 - 2,825,000 16,892
$ 110,000 200,000 10,000 23,000 12,000 4,812 8,307 5,326 782,243 1,131,026
$ 110,000 200,000 10,000 23,000 12,000 4,627 9,212 5,901 867,501 1,254,299
Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Venture capital activities Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Research and development, design,
manufacturing, sales and other
services of electronic components,
information/Software and integrated
circuits.		 Information collection and technical
support		 Investment holdings Information services and technical
support		 Investment holdings R&D and technical support
Taiwan Taiwan Taiwan Taiwan Taiwan Japan Mauritius Hong Kong Mauritius U.S.A
Estinet Technologies
Incorporation		 Innorich Venture Capital Corp. Starmems Semiconductor
Corporation		 Starmems Semiconductor
Corporation		 Starmems Semiconductor
Corporation		 Realtek Semiconductor (Japan)
Corp.		 Circon Universal Inc. Realtek Semiconductor (Hong
Kong) Limited		 Empsonic Enterprises Inc. Cortina Access Inc.
Realtek Semiconductor
Corporation		 Realking Investments Co., Ltd. Realking Investments Co., Ltd. Realsun Investments Co., Ltd. Hung-wei Venture Capital Co.,
Ltd.		 Leading Enterprises Limited Leading Enterprises Limited Amber Universal Inc. Realtek Singapore Private Limited Realtek Singapore Private Limited

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Balance as at
December 31, 2022
Balance as at
December 31,
2021
Number of shares
Ownership (%)
Book value
Net profit (loss)
of the investee for the
year ended
December 31, 2022
Investment income
(loss)
recognised by the
Company for the year
ended December 31,
2022
Footnote
Investor
Investee
Location
Main business
activities
Initial investment amount
Shares held as at December 31, 2022
Information on investees
For the year ended December 31, 2022
Table 7
Expressed in thousands of NTD
(Except as otherwise indicated)		 Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Sub-Subsidiary Note�The amount of foreign currencies denominated in New Taiwan dollars in this table, which related to income and expenses were re-translated at the average exchange rate from January 1, 2022 to December 31, 2022, others were re-translated at the
exchange rate prevailing at the end of the financial reporting period.
23,963
$		 2,421 59,739 6,498 33,838)
(		 14,021 2,357 5,624
23,963
$		 2,421 76,336)
(		 33,218)
(		 27,379)
(		 14,021 2,327 5,624
$ 75,126 85,185 14,287,695 3,506,802 2,377,010 296,291 67,368 54,047
100% 100% 100% 100% 100% 100% 100% 100%
21,130,000 4,000,000 34,630 110,050,000 114,100,000 60,000,000 10,450,000 200,000
$ 55,380 110,760 - - - 1,661,400 69,275 -
$ 61,416 122,832 15,167,602 3,379,415 3,503,783 1,842,480 72,519 48,177
R&D and technical support R&D and technical support Investment holdings Investment holdings Investment holdings R&D and information services R&D and information services R&D and information services
Taiwan Vietnam British Virgin
Islands		 Cayman
Islands		 Cayman
Islands		 U.S.A Malaysia Korea
Cortina Systems Taiwan Limited Realtek Viet Nam Co., Ltd. Leading Enterprises Limited Bluocean Inc. Talent Eagle Enterprise Inc. Ubilinx Technology Inc. Realtek Semiconductor
(Malaysia) Sdn. Bhd.		 Realtek Korea Inc.
Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Realtek Singapore Private Limited Talent Eagle Enterprise Inc. Bluocean Inc. Bluocean Inc.

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Remitted to
Mainland
China
Remitted
back to
Taiwan
Footnote
Accumulated
amount of
remittance from
Taiwan to
Mainland China
as of December
31, 2022
Net income of
investee for the
year ended
December 31,
2022
Investee in Mainland
China
Main business activities
Paid-in Capital
Investment
method
(Note1)
Accumulated amount of
remittance from Taiwan to
Mainland China as of
January 1, 2022
Ownership held
by the Company
(direct or
indirect)
Investment income (loss)
recognised by the
Company for the year
ended December 31,
2022
(Note2(2))
Book value of
investment in
Mainland China
as of December
31, 2022
Accumulated
amount of investment
income remitted back to
Taiwan as of December 31,
2022
Amount remitted from
Taiwan to Mainland
China/Amount remitted
back to Taiwan for the year
ended December 31, 2022		 Cortina Network
Systems (Shanghai) Co.,
Ltd.
R&D and technical support
110,549
$ (2)
110,549
$ $ -
$ -
110,549
$ 10,346
$ 100%
10,346
$ 112,605
$ $ -
Realsil Microelectronics
Corp.
R&D and technical support
859,824
(2)
859,824
-
-
859,824
146,081
100%
146,081
2,133,820
-
Realtek Semiconductor
(Shen Zhen) Corp.
R&D and technical support
153,540
(2)
153,540
-
-
153,540
21,793
100%
21,793
311,475
-
RayMX Microelectronics
Corp.
ICs manufacturing, design,
research, development,
sales, and marketing
115,838
(2)
115,838
-
-
115,838
21,114)
(
100%
21,114)
(
382,720
-
Suzhou Pankore
Integrated Circuit
Technology Co. Ltd.
ICs manufacturing, design,
research, development,
sales, and marketing
44,129
(2)
44,129
-
-
44,129
83,656)
(
100%
83,656)
(
141,859)
(
-
Company name
Accumulated amount
of remittance from Taiwan
to Mainland
China as of
December 31, 2022
Investment amount
approved by the
Investment
Commission of the
Ministry of Economic
Affairs
(MOEA)
Ceiling on
investments in
Mainland China
imposed by the
Investment
Commission of
MOEA
Cortina Network
Systems (Shanghai) Co.,
Ltd.
110,549
$ 110,549
$ $ 28,051,940
Realsil Microlectronics
Corp.
859,824
859,824
Realtek Semiconductor
(Shan Zhen) Corp.
153,540
153,540
RayMX Microelectronics
Corp.
115,838
115,838
Suzhou Pankore
Integrated Circuit
Technology Co. Ltd.
44,129
44,129
Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:
(1) Directly invest in a company in Mainland China.
(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China.
(3) Others.

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