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RT Interim / Quarterly Report 2020

Dec 9, 2020

52043_rns_2020-12-09_b38867a1-3889-4e79-a0a4-e8683da2b4da.pdf

Interim / Quarterly Report

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REALTEK SEMICONDUCTOR CORPORATION

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

SEPTEMBER 30, 2020 AND 2019 (Stock code : 2379)

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE PWCR20000114

To the Board of Directors and Shareholders of Realtek Semiconductor Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of Realtek Semiconductor Corporation and subsidiaries as of September 30, 2020 and 2019, and the related consolidated statements of comprehensive income for the three-month and nine-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the nine-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

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

Basis for Qualified Conclusion

As explained in Notes 4(3) and 6(7), the consolidated financial statements of certain insignificant consolidated subsidiaries, investments accounted for under equity method and the information disclosed in Note 13 were based solely on the reports prepared by the those subsidiaries and investee companies, which were not reviewed by independent accountants. Those statements reflect total assets of NT$3,522,216 thousand and NT$3,014,962 thousand, constituting 4.33% and 4.05% of the consolidated total assets, and total liabilities of NT$904,177 thousand and NT$707,958 thousand, constituting 1.68%

~2~

and 1.48% of the consolidated total liabilities as of September 30, 2020 and 2019, respectively, and total comprehensive income (loss) of NT$87,423 thousand, NT$(38,531) thousand, NT$(220,913) thousand and NT$(235,857) thousand, constituting 3.76%, (2.07%), (4.06%) and (4.26%) of the consolidated total comprehensive income for the three-month and nine-month periods then ended, respectively. Furthermore, the investments accounted for under equity method as of September 30, 2020 and 2019 amounted to NT$157,172 thousand and NT$234,409 thousand, respectively, and the related investment loss were NT$8,129 thousand, NT$3,808 thousand, NT$29,604 thousand and NT$16,120 thousand for the three-month and nine-month periods then ended, respectively.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain insignificant consolidated subsidiaries and investments accounted for under equity method been reviewed by independent accountants, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Realtek Semiconductor Corporation and subsidiaries as of September 30, 2020 and 2019, and of its consolidated financial performance for the three-month and nine-month periods then ended and its consolidated cash flows for the nine-month periods then ended in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Lin, Yu-Kuan Cheng, Ya-Huei For and on behalf PricewaterhouseCoopers, Taiwan October 30, 2020

------------------------------------------------------------------------------------------------------------------------------------------------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 report of independent accountants 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.

~3~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2020, DECEMBER 31, 2019 AND SEPTEMBER 30, 2019 (Expressed in thousands of New Taiwan dollars) (The balance sheets as of September 30, 2020 and 2019 are reviewed, not audited)

Assets Notes September 30, 2020
AMOUNT
%
$
5,428,155
7
418,983
1
40,815,495
50
12,359,165
15
2,646,010
3
364,277
-
7,965,548
10
336,956
-
70,334,589
86
2,347,603
3
79,485
-
157,172
-
4,359,424
6
1,671,680
2
45,774
-
2,188,289
3
141,389
-
50,946
-
11,041,762
14
$
81,376,351
100
(Continued)		 December 31, 2019
AMOUNT
%
$
5,727,911
8
74,012
-
39,558,054
54
8,254,011
11
2,196,717
3
768,699
1
7,391,535
10
318,652
1
64,289,591
88
1,859,478
2
69,477
-
185,972
-
3,446,162
5
1,403,245
2
49,136
-
1,952,960
3
114,163
-
61,646
-
9,142,239
12
$
73,431,830
100		 September 30, 2019 September 30, 2019
AMOUNT
$
5,428,155
418,983
40,815,495
12,359,165
2,646,010
364,277
7,965,548
336,956
70,334,589
2,347,603
79,485
157,172
4,359,424
1,671,680
45,774
2,188,289
141,389
50,946
11,041,762
$
81,376,351
(Continued)		 AMOUNT
$
5,727,911
74,012
39,558,054
8,254,011
2,196,717
768,699
7,391,535
318,652
64,289,591
1,859,478
69,477
185,972
3,446,162
1,403,245
49,136
1,952,960
114,163
61,646
9,142,239
$
73,431,830		 AMOUNT
$
4,404,208
326,876
40,258,529
8,987,105
2,209,129
689,011
7,900,307
426,575
65,201,740
1,774,058
66,434
234,409
3,421,313
1,043,968
50,541
2,326,095
81,557
333,302
9,331,677
$
74,533,417		 %
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
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		 6(1)
6(2)
6(4)
6(5)
6(5) and 7
6(6)
6(3)
6(4) and 8
6(7)
6(8)
6(9)
6(10)
6(11)		 6
-
54
12
3
1
11
-
87
2
-
-
5
2
-
3
-
1
13
100

~4~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2020, DECEMBER 31, 2019 AND SEPTEMBER 30, 2019 (Expressed in thousands of New Taiwan dollars) (The balance sheets as of September 30, 2020 and 2019 are reviewed, not audited)

September 30, 2020 September 30, 2020 December 31, 2019 December 31, 2019 September 30, 2019
Liabilities andEquity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
2100 Short-term borrowings 6(12) $ 13,550,080 17 $ 18,966,042 26 $ 17,900,000 24
2130 Contract liabilities - current 6(20) 317,285 - 104,974 - 109,237 -
2150 Notes payable 29,203 - 3,276 - 4,594 -
2170 Accounts payable 9,684,550 12 7,441,724 10 7,619,700 10
2180 Accounts payable - related 7
parties 349,181 - 329,514 1 303,881 1
2200 Other payables 6(13) 19,502,707 24 10,746,168 15 13,671,781 18
2220 Other payables - related parties 7 85,885 - 87,293 - 77,077 -
2230 Current income tax liabilities 898,558 1 828,790 1 716,568 1
2280 Lease liabilities - current 91,054 - 84,328 - 79,977 -
2300 Other current liabilities 6(20) 6,889,319 9 5,378,078 7 5,247,654 7
21XX Total current liabilities 51,397,822 63 43,970,187 60 45,730,469 61
Non-current liabilities
2550 Provisions - non-current 6(15) 1,040,789 1 1,075,809 2 1,109,256 2
2570 Deferred income tax liabilities 75,363 - 51,723 - 20,568 -
2580 Lease liabilities - non-current 1,305,378 2 1,028,347 1 955,155 1
2600 Other non-current liabilities 72,036 - 77,080 - 77,706 -
25XX Total non-current
liabilities 2,493,566 3 2,232,959 3 2,162,685 3
2XXX Total liabilities 53,891,388 66 46,203,146 63 47,893,154 64
Equity
Share capital 6(16)
3110 Common shares 5,106,849 6 5,080,955 7 5,080,955 7
Capital surplus 6(17)
3200 Capital surplus 2,120,746 3 2,736,854 3 2,736,628 4
Retained earnings 6(18)
3310 Legal reserve 5,577,083 7 4,902,176 7 4,902,176 7
3320 Special reserve 217,036 - - - - -
3350 Undistributed earnings 15,396,174 19 14,716,036 20 13,072,582 17
Other equity 6(19)
3400 Other equity interest ( 942,574 ) ( 1 ) ( 217,036) - 838,248 1
31XX Equity attributable to
holders of the parent
company 27,475,314 34 27,218,985 37 26,630,589 36
36XX Non-controlling interest 9,649 - 9,699 - 9,674 -
3XXX Total equity 27,484,963 34 27,228,684 37 26,640,263 36
Significant contingent liabilities 9
and unrecognized contract
commitments
3X2X Total liabilities and equity $ 81,376,351 100 $ 73,431,830 100 $ 74,533,417 100

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

~5~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (The statements of comprehensive income are reviewed, not audited)

Items Notes
 Three months ended September 30 Three months ended September 30
2020 2019
4000
Operating revenue
5000
Operating costs
5950
Gross profit
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit losses
6000
Total operating expenses
6900
Operating income
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of loss of associates and joint ventures accounted
for under equity method
7000
Total non-operating income and expenses
7900
Profit before income tax, net
7950
Income tax expense
8200
Net income for the period

(Continued)

~6~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

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

(The statements of comprehensive income are reviewed, not audited)
Three months ended September 30
2020

2019
Items
Notes
AMOUNT % AMOUNT
Other comprehensive (loss)income, net Components of
other comprehensive income that will not be
reclassified to profit
6(19)




8316
Unrealised incomes from investments in equity
instruments measured at fair value through other
comprehensive income
$ 467,658
2 $ 52,009
8320
Share of other comprehensive income of associates and
joint ventures accounted for under equity method,
components of other comprehensive income that will
not be reclassified to profit

-
-
132
8310
Total components of other comprehensive income that
will not be reclassified to profit

467,658
2
52,141
Components of other comprehensive (loss)income that
will be reclassified to profit or loss




8361
Cumulative translation differences of foreign operation
(
654,176)(
3)(
113,121)(
8360
Total components of other comprehensive
(loss)income that will be reclassified to profit or loss
(
654,176)(
3)(
113,121)(
8300
Other comprehensive (loss)income, net
($
186,518)(
1)($
60,980)
8500
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457
Profit attributable to:




8610
Equity holders of the parent company
$ 2,509,330
11 $ 1,922,421
8620
Non-controlling interest

9
-
16
Profit for the period
$ 2,509,339
11 $ 1,922,437
Comprehensive income




8710
Equity holders of the parent company
$ 2,322,812
10 $ 1,861,441
8720
Non-controlling interest

9
-
16
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457


Earnings per share (in dollars)


9750
Basic earnings per share
6(28)
$
4.91$ 9850
Diluted earnings per share
6(28)
$
4.89 $		 (The statements of comprehensive income are reviewed, not audited)
Three months ended September 30
2020

2019
Items
Notes
AMOUNT % AMOUNT
Other comprehensive (loss)income, net Components of
other comprehensive income that will not be
reclassified to profit
6(19)




8316
Unrealised incomes from investments in equity
instruments measured at fair value through other
comprehensive income
$ 467,658
2 $ 52,009
8320
Share of other comprehensive income of associates and
joint ventures accounted for under equity method,
components of other comprehensive income that will
not be reclassified to profit

-
-
132
8310
Total components of other comprehensive income that
will not be reclassified to profit

467,658
2
52,141
Components of other comprehensive (loss)income that
will be reclassified to profit or loss




8361
Cumulative translation differences of foreign operation
(
654,176)(
3)(
113,121)(
8360
Total components of other comprehensive
(loss)income that will be reclassified to profit or loss
(
654,176)(
3)(
113,121)(
8300
Other comprehensive (loss)income, net
($
186,518)(
1)($
60,980)
8500
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457
Profit attributable to:




8610
Equity holders of the parent company
$ 2,509,330
11 $ 1,922,421
8620
Non-controlling interest

9
-
16
Profit for the period
$ 2,509,339
11 $ 1,922,437
Comprehensive income




8710
Equity holders of the parent company
$ 2,322,812
10 $ 1,861,441
8720
Non-controlling interest

9
-
16
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457


Earnings per share (in dollars)


9750
Basic earnings per share
6(28)
$
4.91$ 9850
Diluted earnings per share
6(28)
$
4.89 $		 (The statements of comprehensive income are reviewed, not audited)
Three months ended September 30
2020

2019
Items
Notes
AMOUNT % AMOUNT
Other comprehensive (loss)income, net Components of
other comprehensive income that will not be
reclassified to profit
6(19)




8316
Unrealised incomes from investments in equity
instruments measured at fair value through other
comprehensive income
$ 467,658
2 $ 52,009
8320
Share of other comprehensive income of associates and
joint ventures accounted for under equity method,
components of other comprehensive income that will
not be reclassified to profit

-
-
132
8310
Total components of other comprehensive income that
will not be reclassified to profit

467,658
2
52,141
Components of other comprehensive (loss)income that
will be reclassified to profit or loss




8361
Cumulative translation differences of foreign operation
(
654,176)(
3)(
113,121)(
8360
Total components of other comprehensive
(loss)income that will be reclassified to profit or loss
(
654,176)(
3)(
113,121)(
8300
Other comprehensive (loss)income, net
($
186,518)(
1)($
60,980)
8500
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457
Profit attributable to:




8610
Equity holders of the parent company
$ 2,509,330
11 $ 1,922,421
8620
Non-controlling interest

9
-
16
Profit for the period
$ 2,509,339
11 $ 1,922,437
Comprehensive income




8710
Equity holders of the parent company
$ 2,322,812
10 $ 1,861,441
8720
Non-controlling interest

9
-
16
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457


Earnings per share (in dollars)


9750
Basic earnings per share
6(28)
$
4.91$ 9850
Diluted earnings per share
6(28)
$
4.89 $		 (The statements of comprehensive income are reviewed, not audited)
Three months ended September 30
2020

2019
Items
Notes
AMOUNT % AMOUNT
Other comprehensive (loss)income, net Components of
other comprehensive income that will not be
reclassified to profit
6(19)




8316
Unrealised incomes from investments in equity
instruments measured at fair value through other
comprehensive income
$ 467,658
2 $ 52,009
8320
Share of other comprehensive income of associates and
joint ventures accounted for under equity method,
components of other comprehensive income that will
not be reclassified to profit

-
-
132
8310
Total components of other comprehensive income that
will not be reclassified to profit

467,658
2
52,141
Components of other comprehensive (loss)income that
will be reclassified to profit or loss




8361
Cumulative translation differences of foreign operation
(
654,176)(
3)(
113,121)(
8360
Total components of other comprehensive
(loss)income that will be reclassified to profit or loss
(
654,176)(
3)(
113,121)(
8300
Other comprehensive (loss)income, net
($
186,518)(
1)($
60,980)
8500
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457
Profit attributable to:




8610
Equity holders of the parent company
$ 2,509,330
11 $ 1,922,421
8620
Non-controlling interest

9
-
16
Profit for the period
$ 2,509,339
11 $ 1,922,437
Comprehensive income




8710
Equity holders of the parent company
$ 2,322,812
10 $ 1,861,441
8720
Non-controlling interest

9
-
16
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457


Earnings per share (in dollars)


9750
Basic earnings per share
6(28)
$
4.91$ 9850
Diluted earnings per share
6(28)
$
4.89 $		 (The statements of comprehensive income are reviewed, not audited)
Three months ended September 30
2020

2019
Items
Notes
AMOUNT % AMOUNT
Other comprehensive (loss)income, net Components of
other comprehensive income that will not be
reclassified to profit
6(19)




8316
Unrealised incomes from investments in equity
instruments measured at fair value through other
comprehensive income
$ 467,658
2 $ 52,009
8320
Share of other comprehensive income of associates and
joint ventures accounted for under equity method,
components of other comprehensive income that will
not be reclassified to profit

-
-
132
8310
Total components of other comprehensive income that
will not be reclassified to profit

467,658
2
52,141
Components of other comprehensive (loss)income that
will be reclassified to profit or loss




8361
Cumulative translation differences of foreign operation
(
654,176)(
3)(
113,121)(
8360
Total components of other comprehensive
(loss)income that will be reclassified to profit or loss
(
654,176)(
3)(
113,121)(
8300
Other comprehensive (loss)income, net
($
186,518)(
1)($
60,980)
8500
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457
Profit attributable to:




8610
Equity holders of the parent company
$ 2,509,330
11 $ 1,922,421
8620
Non-controlling interest

9
-
16
Profit for the period
$ 2,509,339
11 $ 1,922,437
Comprehensive income




8710
Equity holders of the parent company
$ 2,322,812
10 $ 1,861,441
8720
Non-controlling interest

9
-
16
Total comprehensive income for the period
$ 2,322,821
10 $ 1,861,457


Earnings per share (in dollars)


9750
Basic earnings per share
6(28)
$
4.91$ 9850
Diluted earnings per share
6(28)
$
4.89 $

%

1
-
1


1)(

1)(
-(
12

12
-
12

12
-
12


3.78
3.77		 Nine months ended September 30 Nine months ended September 30
2020
%

2
-
2


3)(

3)(

1)(
10

11
-
11

10
-
10


4.91
4.89		 2019 2020 2019
AMOUNT


$ 467,658

-

467,658



654,176)(

654,176)(
$
186,518)(
$ 2,322,821


$ 2,509,330

9
$ 2,509,339


$ 2,322,812

9
$ 2,322,821


$		 AMOUNT


$ 52,009

132

52,141



113,121)(

113,121)(
$
60,980)
$ 1,861,457


$ 1,922,421

16
$ 1,922,437


$ 1,861,441

16
$ 1,861,457


$
Other comprehensive (loss)income, net Components of
other comprehensive income that will not be
reclassified to profit

8316
Unrealised incomes from investments in equity
instruments measured at fair value through other
comprehensive income
8320
Share of other comprehensive income of associates and
joint ventures accounted for under equity method,
components of other comprehensive income that will
not be reclassified to profit
8310
Total components of other comprehensive income that
will not be reclassified to profit
Components of other comprehensive (loss)income that
will be reclassified to profit or loss
8361
Cumulative translation differences of foreign operation
8360
Total components of other comprehensive
(loss)income that will be reclassified to profit or loss
8300
Other comprehensive (loss)income, net
8500
Total comprehensive income for the period
Profit attributable to:
8610
Equity holders of the parent company
8620
Non-controlling interest
Profit for the period
Comprehensive income
8710
Equity holders of the parent company
8720
Non-controlling interest
Total comprehensive income for the period
Earnings per share (in dollars)
9750
Basic earnings per share

9850
Diluted earnings per share
 6(19)

(
(
(
6(28)
6(28)
$ $

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

~7~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 (Expressed in thousands of New Taiwan dollars)

(The statements of changes in equity are reviewed, not audited))

Nine-month period ended September 30, 2019
Balance at January 1, 2019
Net income for the period
Other comprehensive income for the period
Total comprehensive income
Distribution of 2018 earnings
Legal reserve
Special reserve
Cash dividends
Cash from capital surplus
Changes in equity of associates accounted for under equity
method
Disposal of investments in equity instruments measured at
fair value through other comprehensive income
Balance at September 30, 2019
Nine-month period ended September 30, 2020
Balance at January 1, 2020
Net income for the period
Other comprehensive income (loss) for the period
Total comprehensive income (loss)
Distribution of 2019 earnings
Legal reserve
Special reserve
Cash dividends
Employees' compensation transferred to commom shares
Cash from capital surplus
Changes in non-controlling interest
Changes in equity of associates accounted for under equity
method
Cash dividends returned
Balance at September 30, 2020		 Notes Equity attributableto Equity attributableto Equity attributableto o wners of the parent wners of the parent wners of the parent wners of the parent Non-controlling
interest		 Totalequity
Commonshares Capitalsurplus Retained earnings Otherequityinterest Total
Legal reserve Special reserve Undistributed
earnings		 Financial
statements
translation
differences of
foreignoperations
a
f		 Unrealised gains
from financial
ssets measured at
air value through
other
comprehensive
income
6(19)
6(18)
6(18)
6(18)
6(17)
6(17)
6(19)
6(19)
6(18)
6(18)
6(16)(17)
6(17)
6(17)
6(17)		 $ 5,080,955
-
-
-
-
-
-
-
-
-
$ 5,080,955
$ 5,080,955
-
-
-
-
-
-
25,894
-
-
-
-
$ 5,106,849		 $ 3,236,659
-
-
-
-
-
-
(
508,095 )
8,064
-
$ 2,736,628
$ 2,736,854
-
-
-
-
-
-
393,591
(
1,021,370 )
-
11,706
(
35 )
$ 2,120,746		 $ 4,467,099
-
-
-
435,077
-
-
-
-
-
$ 4,902,176
$ 4,902,176
-
-
-
674,907
-
-
-
-
-
-
-
$ 5,577,083		 $
600,443
-
-
-
-
(
600,443 )
-
-
-
-
$
-
$
-
-
-
-
-
217,036
-
-
-
-
-
-
$
217,036		 $ 10,850,172
5,146,829
-
5,146,829
(
435,077 )
600,443
(
3,048,573 )
-
-
(
41,212 )
$ 13,072,582
$ 14,716,036
6,168,245
-
6,168,245
(
674,907 )
(
217,036 )
(
4,596,164 )
-
-
-
-
-
$ 15,396,174		 $
129,811
-
281,594
281,594
-
-
-
-
-
-
$
411,405
($
762,143 )
-
(
1,260,932 )
(
1,260,932 )
-
-
-
-
-
-
-
-
($ 2,023,075 )		 $
272,153
-
113,478
113,478
-
-
-
-
-
41,212
$
426,843
$
545,107
-
535,394
535,394
-
-
-
-
-
-
-
-
$ 1,080,501		 $ 24,637,292
5,146,829
395,072
5,541,901
-
-
(
3,048,573 )
(
508,095 )
8,064
-
$ 26,630,589
$ 27,218,985
6,168,245
(
725,538 )
5,442,707
-
-
(
4,596,164 )
419,485
(
1,021,370 )
-
11,706
(
35 )
$ 27,475,314		 $
9,607
67
-
67
-
-

-

-
-
-
$
9,674
$
9,699
33

-
33
-
-

-
-

-
(
83 )
-

-
$
9,649		 $ 24,646,899
5,146,896
395,072
5,541,968
-
-
(
3,048,573 )
(
508,095 )
8,064
-
$ 26,640,263
$ 27,228,684
6,168,278
(
725,538 )
5,442,740
-
-
(
4,596,164 )
419,485
(
1,021,370 )
(
83 )
11,706
(
35 )
$ 27,484,963

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

~8~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(The statements of cash flows are reviewed, not audited)

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

Amortization

Expected credit losses

Interest expense

Interest income

Dividend income

Gain on financial assets at fair value through
profit or loss

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

Loss on disposal of property, plant and
equipment

Gain on disposal of investments

Other intangible assets transferred to expenses
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or
loss - current
Accounts receivable, net
Accounts receivable, net - related parties
Other receivables
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		 Nine-month periods ended September 30
Notes
2020
2019
$
6,565,345 $
5,477,317
6(25)
616,190
516,581
6(11)(25)
838,142
751,927
12(2)
31,971
23,267
6(24)
120,653
110,881
6(21)
(
708,519 ) (
947,479 )
6(22)
(
24,877 ) (
30,150 )
6(2)(23)
(
92,591 ) (
4,953 )
6(7)
29,604
16,120
6(23)
126
125
6(23)
(
466 )
-
-
526
(
252,380 )
1,003,148
(
4,133,790 ) (
3,349,059 )
(
452,628 ) (
430,784 )
(
79,295 ) (
60,368 )
(
574,013 ) (
2,020,499 )
(
18,272 ) (
129,248 )
212,311 (
39,843 )
25,927 (
4,063 )
2,242,826
1,965,012
19,667
91,856
3,163,720
2,380,901
(
1,407 )
8,030
1,511,241
1,529,596
-
105,133
(
2,845 ) (
1,850 )

(Continued)

~9~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(The statements of cash flows are reviewed, not audited)

Cash inflow generated from operations
Receipt of interest
Receipt of dividend
Interest paid
Income tax paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost
Proceeds from disposal of financial assets at
amortised cost
Proceeds from disposal of financial assets at fair
value through other comprehensive income
Proceeds from disposal of investments accounted
for under equity method
Proceeds from capital reduction of investee
accounted for under equity method

Acquisition of property, plant and equipment

Acquisition of intangible assets

Increase in refundable deposits
Decrease (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
Repayment of principal portion of lease liabilities

Guarantee deposits returned

Net cash flows (used in) from financing
activities
Effect of exchange rate
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 Nine-month periods ended September 30
Notes
2020
2019
$
9,036,640 $
6,962,124
1,192,236
976,026
24,877
30,150
(
126,196 ) (
98,929 )
(
325,984 ) (
225,162 )
9,801,573
7,644,209
(
42,274,169 ) (
40,564,403 )
39,678,590
31,828,528
-
939
466
-
6(7)
20,684
17,908
6(29)
(
1,350,374 ) (
593,605 )
6(29)
(
778,772 ) (
1,200,555 )
(
19,073 ) (
1,666 )
29,773 (
303,494 )
(
4,692,875 ) (
10,816,348 )
165,554,217
96,069,590
(
170,958,419 ) (
92,695,901 )
6(30)
(
66,952 ) (
69,181 )
6(30)
(
2,199 ) (
1,427 )
(
5,473,353 )
3,303,081
64,899 (
36,385 )
(
299,756 )
94,557
5,727,911
4,309,651
$
5,428,155 $
4,404,208

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

~10~

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan Dollars, except as otherwise indicated) (REVIEWED, NOT AUDITED)

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-Based Industrial 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 softwares 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 reported to the Board of Directors on October 30, 2020.

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”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ January 1, 2020 Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020 Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’ January 1, 2020 Amendment to IFRS 16, ‘Covid-19-related rent concessions’ June 1, 2020 (Note)

Note ： Earlier application from January 1, 2020 is allowed by FSC.

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

~11~

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

by the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 4, ‘Extension of the temporary exemption from applying January 1, 2021 IFRS 9’

The above standards and interpretations 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:

and financial performance based on the Group’s assessment.
IFRSs issued by IASB but not yet endorsed by the FSC
New standards, interpretations and amendments issued by IASB but not
IFRSsasendorsed by the FSC are as follows:		 yet included in the
New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IFRS 3,‘Reference to the conceptual framework’
Amendments to IFRS 10 and IAS 28,‘Sale or contribution of assets between
an investor and its associate or joint venture’
IFRS 17,‘Insurance contracts’
Amendments to IFRS 17, 'Insurance contracts'
Amendments to IAS 1,‘Classification of liabilities as current or non-current’
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
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16,‘Interest Rate
Benchmark Reform—Phase 2’		 January 1, 2022
To be determined by
International Accounting
Standards Board
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2021

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

~12~

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2019, except for the compliance statement, basis of preparation, basis of consolidation and interim financial statements apply as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

  • (1) Compliance statement

  • A. The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

  • B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2019.

  • (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 International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations 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 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:

  • Basis for preparation of the consolidated financial statements as of September 30, 2020 is consistent with the 2019 consolidated financial statements.

~13~

B. Subsidiaries included in the consolidated financial statements:

Name of investor Name of
subsidiary		 Main business
activities		 Ownership (%) Ownership (%) Ownership (%) Description
September
30,2020		 December
31,2019		 September
30,2019
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
Limited		 Investment
holdings
〃
ICs
manufacturing,
design, research,
development,
sales, and
marketing
Investment
holdings
〃
〃
〃
〃
〃		 100%
100%
89%
100%
100%
100%
100%
100%
100%		 100%
100%
89%
100%
100%
100%
100%
100%
100%		 100%
100%
89%
100%
100%
100%
100%
100%
100%		 Note 1
Note 1
Note 1

~14~

Ownership (%)

Name of investor Name of
subsidiary		 Main business
activities		 September
30,2020		 December
31,2019		 September
30,2019		 Description
Realtek
Semiconductor
Corporation
Realtek
Semiconductor
Corporation
Leading
Enterprises
Limited
Leading
Enterprises
Limited
Leading
Enterprises
Limited
Amber Universal
Inc.
Amber Universal
Inc.
Empsonic
Enterprises Inc.
Realtek Singapore
Private Limited		 Realsun
Technology
Corporation
Bobitag Inc.
Realtek
Semiconductor
(Japan) Corp.
Circon Universal
Inc.
Realtek Singapore
Private Limited
Realtek
Semiconductor
(HK) Limited
Realtek
Semiconductor
(Shen Zhen) Corp.
Realsil
Microelectronics
Corp.
Cortina Access
Inc.		 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 design,sales
and consultancy
Investment
holdings
ICs
manufacturing,
design, research,
development,
sales, and
marketing
Information
services and
technical support
R&D and
technical support
〃
R&D and
information
services		 100%
67%
100%
100%
11%
100%
100%
100%
100%		 100%
67%
100%
100%
11%
100%
100%
100%
100%		 100%
67%
100%
100%
11%
100%
100%
100%
100%		 Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1

~15~

Ownership (%)

Name of investor Name of
subsidiary		 Main business
activities		 September
30,2020		 December
31,2019		 September
30,2019		 Description
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1
Note 1 &
Note 2
Note 1 &
Note 3
Note 1 &
Note 3
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Talent Eagle
Enterprise Inc.
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realtek Singapore
Private Limited
Realsil
Microelectronics
Corp.
Bluocean Inc.
Realsil
Microelectronics
Corp.
Realtek
Semiconductor
(Shen Zhen) Corp.		 Cortina Systems
Taiwan Limited
Cortina Network
Systems Shanghai
Co., Ltd.
Ubilinx
Technology Inc.
Empsonic
Enterprises Inc.
Realtek
Viet Nam
Co., Ltd.
RayMX
Microelectronics
Corp.
RayMX
Microelectronics
Corp.
Realtek
Semiconductor
(Malaysia) SDN.
BHD.
Suzhou PanKore
Integrated Circuit
Technology Co.
Ltd.
Suzhou PanKore
Integrated Circuit
Technology Co.
Ltd.		 R&D and
technical support
〃
R&D and
information
services
Investment
holdings
R&D and
technical support
ICs
manufacturing,
design, research,
development,
sales, and
marketing
〃
R&D and
technical support
ICs
manufacturing,
design, research,
development,
sales, and
marketing
〃		 100%
100%
100%
100%
100%
19%
81%
100%
80%
20%		 100%
100%
100%
100%
100%
29%
71%
-
-
-		 100%
100%
100%
100%
100%
29%
71%
-
-
-

~16~

  • Note 1: The financial statements of the entity as of and for the nine-month periods ended

  • September 30, 2020 and 2019 were not reviewed by the independent auditors as the entity did not meet the definition of a significant subsidiary.

  • Note 2: Realtek Semiconductor (Malaysia) SDN. BHD. was incorporated and registered on June 10, 2020.

  • Note 3: Suzhou PanKore Integrated Circuit Technology Co. Ltd. was incorporated and registered on July 3, 2020.

  • 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) Employee benefits

Pensions - Defined benefit plan

Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

(5) Income tax

  • A. The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

  • B. If a change in tax rate is enacted in an interim period, the Group recognizes the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognized outside profit or loss is recognized in other comprehensive income or equity while the effect of the change on items recognized in profit or loss is recognized in profit or loss.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

There have been no significant changes as of September 30, 2020. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2019.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds
Checking accounts and demand
deposits
Time deposits		 September 30,2020
902
$ 5,111,442
315,811
5,428,155
$		 December 31,2019
841
$ 4,221,046
1,506,024
5,727,911
$		 September 30,2019
853
$ 4,345,273
58,082
4,404,208
$

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.

~17~

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

Items
Current items:
Financial assets mandatorily
measured at fair value through
profit or loss
Listed stocks
Beneficiary certificates		 September 30,2020
160,808
$ 258,175
418,983
$		 December 31,2019
69,001
$ 5,011
74,012
$		 September 30,2019
68,416
$ 258,460
326,876
$
  • A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:
Amounts recognized in profit or loss in relation to
loss are listed below:		 financial assets at fair value through profit or alue through profit or
Financial assets mandatorily measured at fair
value through profit or loss
Equity instruments
Beneficiary certificates
Financial assets mandatorily measured at fair
value through profit or loss
Equity instruments
Beneficiary certificates		 For the three-month
period ended
For the three-month
period ended
September 30,2020
September 30,2019
48,340
$ 1,949
$ 182
2,194
48,522
$ 4,143
$ For the nine-month
period ended
For the nine-month
period ended
September 30,2020
September 30,2019
91,807
$ 1,364)
($ 784
6,317
92,591
$ 4,953
$		 For the three-month
period ended
September 30,2019
1,949
$ 2,194
4,143
$
For the nine-month
period ended
September 30,2019
4,953
$

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 September 30,2020
480,011
$ 12,964
1,854,628
2,347,603
$		 December 31,2019
492,258
$ 13,357
1,353,863
1,859,478
$		 September 30,2019
Non-current items:
Equity instruments
Listed stocks
Emerging stocks
Unlisted stocks		 464,127
$ 13,007
1,296,924
1,774,058
$

~18~

  • 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 $2,347,603, $1,859,478 and $1,774,058 on September 30, 2020, December 31, 2019 and September 30, 2019, 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
Cumulative losses reclassified to
retained earnings due to derecognition
Equity instruments at fair value through other
comprehensive income
Fair value change recognised in other
comprehensive income
Cumulative losses reclassified to
retained earnings due to derecognition		 For the three-month
period ended
September 30,2020
467,658
$ -
$ For the nine-month
period ended
September 30,2020
525,515
$ -
$		 For the three-month
period ended
September 30,2019
52,009
$
41,212
$
For the nine-month
period ended
September 30,2019
109,761
$
41,212
$
  • C. The Group has no financial assets at fair value through other comprehensive income pledged to others.

(4) Financial assets at amortised cost

others.
Financial assets at amortised cost
Items September 30,2020
40,815,495
$ 79,485
$		 December 31,2019
39,558,054
$ 69,477
$		 September 30,2019
Current items:
Time deposits
Non-current items:
Time deposits		 40,258,529
$
66,434
$

  • A. Details of the Group’s financial assets at amortised 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).

~19~

(5) Accounts receivable

Accountsreceivable
September 30,2020 December 31,2019 September 30,2019
Accounts receivable $ 12,455,011 $ 8,321,221 $ 9,055,733
Accounts receivable - related
parties 2,661,742 2,209,114 2,222,043
Less: Allowance for bad debts ( 111,578) ( 79,607) ( 81,542)
$ 15,005,175 $ 10,450,728 $ 11,196,234
A. The aging analysis of accounts receivable is as follows:
September 30,2020 December 31,2019 September 30,2019
Not past due $ 14,703,751 $ 10,153,312 $ 10,849,129
Up to 30 days 262,659 376,366 418,570
31 to 90 days 149,925 1 9,415
Over 90 days 418 656 662
$ 15,116,753 $ 10,530,335 $ 11,277,776

The above aging analysis is based on past due date.

  • B. As of September 30, 2020, December 31, 2019 and September 30, 2019, accounts receivable was all from contracts with customers. And as of January 1, 2019, the balance of receivables from contracts with customers amounted to $7,419,793.

  • 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).

(6) Inventories

Inventories
Raw materials
Work in process
Finished goods
Raw materials
Work in process
Finished goods		 September 30,2020
Allowance for
obsolescence and
Cost
market value decline
894,675
$ 31,356)
($ 6,144,004
646,893)
(
2,382,325
777,207)
(
9,421,004
$ 1,455,456)
($ December 31,2019		 Book value
863,319
$ 5,497,111
1,605,118
7,965,548
$
Allowance for
obsolescence and
Cost
market value decline
1,054,744
$ 26,672)
($ 4,624,767
355,239)
(
2,550,754
456,819)
(
8,230,265
$ 838,730)
($		 Book value
1,028,072
$ 4,269,528
2,093,935
7,391,535
$

~20~

Raw materials
Work in process
Finished goods		 September 30,2019
Allowance for
obsolescence and
Cost
market value decline
829,997
$ 22,572)
($ 5,010,378
399,868)
(
3,030,018
547,646)
(
8,870,393
$ 970,086)
($		 Book value
807,425
$ 4,610,510
2,482,372
7,900,307
$

Operating costs incurred on inventories for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

30, 2020 and 2019 were as follows:
Cost of inventories sold and others
Loss on market value decline and obsolete and
slow-moving inventories
Loss on scrap inventory
Cost of inventories sold and others
Loss on market value decline and obsolete and
slow-moving inventories
Loss on scrap inventory		 For the three-month
period ended
September 30,2020
12,953,264
$ 164,683
24,750
13,142,697
$ For the nine-month
period ended
September 30,2020
31,257,966
$ 621,453
45,559
31,924,978
$		 For the three-month
period ended
September 30,2019
9,072,424
$ 68,868
22,294
9,163,586
$
For the nine-month
period ended
September 30,2019
24,474,983
$ 292,877
34,879
24,802,739
$

(7) Investments accounted for under equity method

Technology Partner V Venture
Capital Corporation
5V Technologies, Taiwan Ltd.
Estinet Technologies Incorporation
Innorich Venture Capital Corp.		 September 30,2020
255
$ -
9,245
147,672
157,172
$		 December 31,2019

22,247
$ -
3,701
160,024
185,972
$		 September 30,2019
24,926
$ 7,466
40,764
161,253
234,409
$
  • A. The loss on investments accounted for under equity method amounted to $8,129, $3,808, $29,604

and $16,120 for the three-month and nine-month periods ended September 30, 2020 and 2019, respectively.

  • B. In February 2020, the Group sold all shares of 5V Technologies, Taiwan Ltd. and the gain on disposal of investments amounted to $466.

~21~

C. The Group received the proceeds of $20,684 from the capital reduction carried out by Technology Partner V Venture Capital Corporation in July 2020. The investee was dissolved on September 21, 2020 and was still in the process of liquidation as of September 30, 2020.

(8) Property, plant and equipment

At January 1, 2020
Cost
Accumulated
depreciation and
impairment
2020
Opening net book
amount
Additions
Disposals
Reclassifications
Depreciation
Net exchange difference
Closing net book amount
At September 30, 2020
Cost
Accumulated
depreciation and
impairment
At January 1, 2019
Cost
Accumulated
depreciation and
impairment
2019
Opening net book
amount
Additions
Disposals
Reclassifications
Depreciation
Net exchange difference
Closing net book amount
At September 30, 2019
Cost
Accumulated
depreciation and
impairment		 Land
Buildings
Machinery
Test equipment
Office equipment
Others
Total
-
$ 3,222,502
$ 3,899,552
$ 2,623,658
$ 280,814
$ 850,212
$ 10,876,738
$ -
1,305,695)
(
3,529,856)
(
1,809,993)
(
176,813)
(
608,219)
(
7,430,576)
(
-
$ 1,916,807
$ 369,696
$ 813,665
$ 104,001
$ 241,993
$ 3,446,162
$ -
$ 1,916,807
$ 369,696
$ 813,665
$ 104,001
$ 241,993
$ 3,446,162
$ 387,280
158,076
97,457
600,732
35,705
170,926
1,450,176
-
2)
(
-
-
123)
(
1)
(
126)
(
-
-
-
1,712
-
1,712)
(
-
-
80,966)
(
68,168)
(
302,951)
(
23,734)
(
58,000)
(
533,819)
(
-
922)
(
1,851
2,011)
(
1,204)
(
683)
(
2,969)
(
387,280
$ 1,992,993
$ 400,836
$ 1,111,147
$ 114,645
$ 352,523
$ 4,359,424
$ 387,280
$ 3,373,683
$ 3,822,259
$ 3,195,584
$ 313,732
$ 1,011,115
$ 12,103,653
$ -
1,380,690)
(
3,421,423)
(
2,084,437)
(
199,087)
(
658,592)
(
7,744,229)
(
387,280
$ 1,992,993
$ 400,836
$ 1,111,147
$ 114,645
$ 352,523
$ 4,359,424
$ Land
Buildings
Machinery
Test equipment
Office equipment
Others
Total
-
$ 3,246,163
$ 3,726,816
$ 2,225,944
$ 232,162
$ 754,293
$ 10,185,378
$ -
1,197,942)
(
3,456,955)
(
1,514,287)
(
151,702)
(
547,914)
(
6,868,800)
(
-
$ 2,048,221
$ 269,861
$ 711,657
$ 80,460
$ 206,379
$ 3,316,578
$ -
$ 2,048,221
$ 269,861
$ 711,657
$ 80,460
$ 206,379
$ 3,316,578
$ -
-
100,238
358,035
40,947
63,529
562,749
-
18)
(
-
8)
(
97)
(
2)
(
125)
(
-
-
27,167
-
-
27,167)
(
-
-
93,154)
(
55,597)
(
234,067)
(
19,650)
(
45,918)
(
448,386)
(
-
8,397)
(
2,272
3,980)
(
149)
(
751
9,503)
(
-
$ 1,946,652
$ 343,941
$ 831,637
$ 101,511
$ 197,572
$ 3,421,313
$ -
$ 3,228,393
$ 3,856,726
$ 2,569,760
$ 271,495
$ 788,981
$ 10,715,355
$ -
1,281,741)
(
3,512,785)
(
1,738,123)
(
169,984)
(
591,409)
(
7,294,042)
(
-
$ 1,946,652
$ 343,941
$ 831,637
$ 101,511
$ 197,572
$ 3,421,313
$

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.

~22~

－ (9) Leasing arrangements lessee

  • A. The Group leases various assets including land and buildings. 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 are as follows:

Land
Buildings
Land
Buildings
Land
Buildings		 Carryingamount
September 30,2020
1,404,707
$ 266,973
1,671,680
$		 December 31,2019
1,082,850
$ 320,395
1,403,245
$ Depreciation		 September 30,2019
703,744
$ 340,224
1,043,968
$
For the nine-month
period ended
September 30,2020
19,984
$ 59,544
79,528
$

  • C. For the three-month and nine-month periods ended September 30, 2020 and 2019, the additions to right-of-use assets were $4,183, $40,907, $347,619 and $40,907, 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
Items affecting profit or loss
Interest expense on lease liabilities		 For the three-month
period ended
September 30,2020
7,599
$ For the nine-month
period ended
September 30,2020
21,430
$		 For the three-month
period ended
September 30,2019
5,940
$
For the nine-month
period ended
September 30,2019
17,565
$

~23~

  • E. For the three-month and nine-month periods ended September 30, 2020 and 2019, the Group’s total cash outflow for leases were $31,275, $24,457, $88,382 and $70,098, respectively.

(10) Investment property

Investment property
Buildings
2020 2019
At January 1
Cost $ 80,799
 $ 83,688
Accumulated depreciation and impairment ( 31,663) ( 28,820)
$ 49,136 $ 54,868
Opening net book value $ 49,136
 $ 54,868
Depreciation ( 2,843)
 ( 3,015)
Net exchange difference ( 519) ( 1,312)
Closing net book amount $ 45,774 $ 50,541
At September 30
Cost $ 79,955
 $ 81,517
Accumulated depreciation and impairment ( 34,181) ( 30,976)
$ 45,774 $ 50,541
  • 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 period
Rental income from the lease of the investment
property
Operating expenses arising from the
investment property that generated rental
income during the period		 For the three-month
period ended
September 30,2020
280
$ 946
$ For the nine-month
period ended
September 30,2020
841
$ 2,843
$		 For the three-month
period ended
September 30,2019
290
$
987
$
For the nine-month
period ended
September 30,2019
1,206
$
3,015
$
  • 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 of September 30, 2020, December 31, 2019 and September 30, 2019, the fair value was $128,220, $134,439 and $135,999, respectively.

~24~

(11) Intangible assets

Intangible assets
Computer Intellectual
software property Goodwill Others Total
At January 1, 2020
Cost $ 4,083,596
 $ 4,500,995
 $ 645,724
 $ 291,141
 $ 9,521,456
Accumulated amortisation
and impairment ( 3,307,376)
 ( 3,550,602)
 ( 498,707)
 ( 211,811)
 ( 7,568,496)
$ 776,220 $ 950,393 $ 147,017 $ 79,330 $ 1,952,960
2020
Opening net book amount $ 776,220
 $ 950,393
 $ 147,017
 $ 79,330
 $ 1,952,960
Additions 743,517 335,647 - - 1,079,164
Reclassifications 538 - - ( 570)
 ( 32)
Amortisation ( 495,840)
 ( 320,287)
 - ( 22,015)
 ( 838,142)
Net exchange difference ( 41)
 1,172 ( 4,787)
 ( 2,005)
 ( 5,661)
Closing net book amount $ 1,024,394 $ 966,925 $ 142,230 $ 54,740 $ 2,188,289
At September 30, 2020
Cost $ 4,825,132
 $ 4,834,646
 $ 640,937
 $ 281,145
 $ 10,581,860
Accumulated amortisation
and impairment ( 3,800,738)
 ( 3,867,721)
 ( 498,707)
 ( 226,405)
 ( 8,393,571)
$ 1,024,394 $ 966,925 $ 142,230 $ 54,740 $ 2,188,289
Computer Intellectual
software property Goodwill Others Total
At January 1, 2019
Cost $ 3,234,611
 $ 3,911,807
 $ 650,778
 $ 298,916
 $ 8,096,112
Accumulated amortisation
and impairment ( 2,738,897)
 ( 3,149,643)
 ( 350,621)
 ( 170,702)
 ( 6,409,863)
$ 495,714 $ 762,164 $ 300,157 $ 128,214 $ 1,686,249
2019
Opening net book amount $ 495,714
 $ 762,164
 $ 300,157
 $ 128,214
 $ 1,686,249
Additions 831,751 557,483 - 604 1,389,838
Transfers 1,800 - - ( 2,326)
 ( 526)
Amortisation ( 420,920)
 ( 296,491)
 - ( 34,516)
 ( 751,927)
Net exchange difference - ( 1,820)
 3,018 1,263 2,461
Closing net book amount $ 908,345 $ 1,021,336 $ 303,175 $ 93,239 $ 2,326,095
At September 30, 2019
Cost $ 4,068,266
 $ 4,464,159
 $ 653,796
 $ 300,141
 $ 9,486,362
Accumulated amortisation
and impairment ( 3,159,921)
 ( 3,442,823)
 ( 350,621)
 ( 206,902)
 ( 7,160,267)
$ 908,345 $ 1,021,336 $ 303,175 $ 93,239 $ 2,326,095

~25~

Details of amortisation on intangible assets are as follows:

Operating costs
Operating expenses
Operating costs
Operating expenses		 For the three-month
period ended
September 30,2020
1,018
$ 287,895
288,913
$ For the nine-month
period ended
September 30,2020
5,422
$ 832,720
838,142
$		 For the three-month
period ended
September 30,2019
904
$ 273,827
274,731
$
For the nine-month
period ended
September 30,2019
2,964
$ 748,963
751,927
$

(12) Short-term borrowings

Short-term borrowings
Type of borrowings
Bank borrowings
Unsecured borrowings
Type of borrowings
Bank borrowings
Unsecured borrowings
Type of borrowings
Bank borrowings
Unsecured borrowings		 September 30,2020
13,550,080
$ December 31,2019
18,966,042
$ September 30,2019
17,900,000
$		 Interest rate range
0.48%~0.69%
Interest rate range
0.71%~2.64%
Interest rate range
0.60%~0.79%		 Collateral
None
Collateral
None
Collateral
None

Interest expense recognized in profit or loss amounted to $25,919, $35,132, $99,223 and $93,316 for the three-month and nine-month periods ended September 30, 2020 and 2019, respectively.

(13) Other payables

Other payables
Accrued salaries
Payable for dividends and
cash from capital surplus
Payable for employees'
compensation
Other accrued expenses
Payables on equipment
Payables on software and
intellectual property
Others		 September 30,2020
5,109,201
$ 5,617,534
5,368,937
1,876,600
213,152
1,025,737
291,546
19,502,707
$		 December 31,2019
4,041,988
$ -
3,978,638
1,715,223
113,350
725,345
171,624
10,746,168
$		 September 30,2019
4,212,593
$ 3,556,668
3,243,726
1,417,455
79,545
873,721
288,073
13,671,781
$

~26~

(14) Pension

  • A. (a) The Company and its domestic subsidiaries have 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 and its domestic subsidiaries contribute 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 and its domestic subsidiaries 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 and its domestic subsidiaries will make contributions for the deficit by next March.

  • (b) The pension costs under the defined contribution pension plans of the Group for the threemonth and nine-month periods ended September 30, 2020 and 2019 were $553, $882, $1,657 and $2,648, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2021 amount to $6,000.

  • B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have 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 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. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • (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.

~27~

  • (c) The pension costs under the defined contribution pension plans of the Group for the threemonth and nine-month periods ended September 30, 2020 and 2019 were $73,444, $65,677, $213,493 and $190,479, respectively.

(15) Provision

month and nine-month periods ended September 30, 2020 and 2019 w
$213,493 and $190,479, respectively.
Provision		 ere$73,444, $65,677,
2020
At January 1
1,075,809
$ Changes in provision
-
Effect of exchange rate
35,020)
(
At September 30
1,040,789
$		 2019
999,868
$ 105,133
4,255
1,109,256
$

As of September 30, 2020, provisions were estimated for possible infringement litigations.

  • (16) Share capital

  • A. As of September 30, 2020, the Company’s authorised capital was $8,900,000, consisting of 890 million shares of ordinary stock (including 80 million thousand shares reserved for employee stock options), and the paid-in capital was $5,106,849 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. The beginning balance and closing balance of the number of the Company’s ordinary shares outstanding of the period remain the same as in previous two periods.

remain the same as in previous two periods.
At January 1
Employees’compensation transferred to
common shares
At September 30		 2020
2019
508,095
508,095
2,589
-
510,684
508,095
Unit : Thousands of shares
508,095
-
508,095

  • B. On March 20, 2020, the Board of Directors of the Company during their meeting resolved for the Company to provide Employees’ compensation in the form of stocks amounting to $419,485. The Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution. The closing price was $162 (in dollars) per share, and the Company issued 2,589 thousand new shares, which was approved by the Competence Authority. The effective date for the issuance was April 8, 2020, and the related registration for the issuance was completed on April 20, 2020.

  • 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 of September 30, 2020, the outstanding GDRs were 332 thousand units, or 1,326 thousand shares of common stock, representing 0.26% of the Company’s total common stocks.

~28~

(17) 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. insufficient.
Sharepremium
At January 1
2,688,155
$ Employees' compensation
tranferred to common shares
393,591
Cash from capital surplus
1,021,370)
(
Change in associates accounted
for under equity method
-
Cash dividends returned
-
At September 30
2,060,376
$ Sharepremium
At January 1
3,196,250
$ Change in associates accounted
for under equity method
-
Cash from capital surplus
508,095)
(
At September 30
2,688,155
$		 2020
Change in associates
accounted for under
equitymethod
40,208
$ 8,064
-
48,272
$

(18) 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

~29~

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. 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 over 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 2019 and 2018 earnings had been resolved at the stockholders’ meeting on June 10, 2020 and June 12, 2019. Details are summarised below:

Legal reserve
(Reversal of) special reserve
Cash dividends
Total		 Dividends
per share
Dividends
per share
Amount
(in dollars)
Amount
(in dollars)
674,907
$ -
$ 435,077
$ -
$ 217,036
-
600,443)
(
-
4,596,164
9.00
3,048,573
6.00
5,488,107
$ 9.00
$ 2,883,207
$ 6.00
$ 2019
2018		 2018 2018
Amount
674,907
$ 217,036
4,596,164
5,488,107
$		 Dividends
per share
(in dollars)
-
$ -
6.00
6.00
$

  • E. On April 24, 2020, 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 per share). The aforementioned cash dividends of distribution of 2019 earnings and cash dividends from capital surplus have been resolved by the Board of Directors on April 24, 2020.

  • F. On June 12, 2019, the stockholders resolved during their meeting to distribute $508,095 by cash ($1 per share) from capital surplus.

~30~

(19) Other equity items

Other equity items
2020
Unrealised gains Currency
on valuation translation difference Total
At January 1 $ 545,107
 ($ 762,143)
 ($ 217,036)
Revaluation:
–Group 525,515 - 525,515
–Associates 9,879 - 9,879
Currency translation
differences:
–Group - ( 1,260,932) ( 1,260,932)
At September 30 $ 1,080,501 ($ 2,023,075) ($ 942,574)
2019
Unrealised gains Currency
on valuation translation difference Total
At January 1 $ 272,153
 $ 129,811
 $ 401,964
Revaluation:
–Group 109,761 - 109,761
–Associates 3,717 - 3,717
Reclassified to retained
earnings 41,212 - 41,212
Currency translation
differences:
–Group - 281,594 281,594
At September 30 $ 426,843 $ 411,405 $ 838,248
Operating revenue
For the three-month For the three-month
period ended period ended
September 30,2020 September 30,2019
Revenue from contracts with customers $ 22,408,776 $ 16,043,111
For the nine-month For the nine-month
period ended period ended
September 30,2020 September 30,2019
Revenue from contracts with customers $ 55,674,973 $ 44,059,307

(20) Operating revenue

~31~

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:

following major product lines:
For the three-month period ended September 30, 2020
Revenue from external customer contracts
Timing of revenue recognition
At a point in time
For the nine-month period ended September 30, 2020
Revenue from external customer contracts
Timing of revenue recognition
At a point in time
For the three-month period ended September 30, 2019
Revenue from external customer contracts
Timing of revenue recognition
At a point in time
For the nine-month period ended September 30, 2019
Revenue from external customer contracts
Timing of revenue recognition
At a point in time		 Integrated
circuitproducts
22,324,814
$ 22,324,814
$ Integrated
circuitproducts
55,531,740
$ 55,531,740
$ Integrated
circuitproducts
16,012,869
$ 16,012,869
$ Integrated
circuitproducts
43,963,093
$ 43,963,093
$		 Others
83,962
$ 83,962
$ Others
143,233
$ 143,233
$ Others
30,242
$ 30,242
$ Others
96,214
$ 96,214
$		 Total
22,408,776
$
22,408,776
$
Total
55,674,973
$
55,674,973
$
Total
16,043,111
$
16,043,111
$
Total
44,059,307
$
44,059,307
$

B. Contract liabilities

The Group has recognized the following revenue-related contract liabilities:

Contract liabilities–
advance sales receipts		 September 30,2020
December 31,2019
317,285
$ 104,974
$		 September 30,2019
109,237
$

Revenue recognized that was included in the contract liability balance at the beginning of the period:

For the three-month For the three-month period ended period ended September 30, 2020 September 30, 2019 Contract liabilities – advance sales receipts $ - $ 1,345 For the nine-month For the nine-month period ended period ended September 30, 2020 September 30, 2019 Contract liabilities – advance sales receipts $ 98,318 $ 137,702

~32~

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:

September 30, 2020 December 31, 2019 September 30, 2019 Refund liabilities – current $ 6,867,600 $ 5,368,247 $ 5,236,443

(21) Interest income

Interest income
Otherincome
Other gains and losses
For the three-month
period ended
For the three-month
period ended
September 30,2020
September 30,2019
Interest income from bank deposits
159,156
$ 335,206
$ For the nine-month
period ended
For the nine-month
period ended
September 30,2020
September 30,2019
Interest income from bank deposits
708,519
$ 947,479
$ For the three-month
period ended
For the three-month
period ended
September 30,2020
September 30,2019
Dividend income
24,877
$ 29,767
$ Other income
54,569
17,637
79,446
$ 47,404
$ For the nine-month
period ended
For the nine-month
period ended
September 30,2020
September 30,2019
Dividend income
24,877
$ 30,150
$ Other income
101,362
49,861
126,239
$ 80,011
$ For the three-month
period ended
For the three-month
period ended
September 30,2020
September 30,2019
Losses on disposal of property, plant and
equipment
41)
($ 28)
($ Net currency exchange (losses) gains
147,161)
(
33,382
Gains on financial assets at fair value
through profit or loss
48,522
4,143
Other income (losses)
1,656
854)
(
97,024)
($ 36,643
$		 For the three-month
period ended
September 30,2019
335,206
$
For the nine-month
period ended
September 30,2019
947,479
$
For the three-month
period ended
September 30,2019
29,767
$ 17,637
47,404
$
For the nine-month
period ended
September 30,2019
30,150
$ 49,861
80,011
$

(22) Other income

(23) Other gains and losses

~33~

For the nine-month For the nine-month
period ended period ended
September 30,2020 September 30,2019
Losses on disposal of property, plant and
equipment ($ 126)
 ($ 125)
Gains on disposal of investments 466 -
Net currency exchange (losses) gains ( 201,940)
 34,150
Gains on financial assets at fair value through
profit or loss 92,591 4,953
Other income (losses) 1,812 ( 2,931)
($ 107,197) $ 36,047
Finance costs
For the three-month For the three-month
period ended period ended
September 30,2020 September 30,2019
Interest expense
Bank borrowings $ 25,919
 $ 35,132
Lease liabilities 7,599 5,940
$ 33,518 $ 41,072
For the nine-month For the nine-month
period ended period ended
September 30,2020 September 30,2019
Interest expense
Bank borrowings $ 99,223
 $ 93,316
Lease liabilities 21,430 17,565
$ 120,653 $ 110,881
Expenses by nature
For the three-month For the three-month
period ended period ended
September 30,2020 September 30,2019
Employee benefit expenses $ 4,690,550 $ 3,594,483
Depreciation $ 213,981 $ 181,782
Amortisation $ 288,913 $ 274,731
For the nine-month For the nine-month
period ended period ended
September 30,2020 September 30,2019
Employee benefit expenses $ 12,446,849 $ 10,111,374
Depreciation $ 616,190 $ 516,581
Amortisation $ 838,142 $ 751,927

(24) Finance costs

(25) Expenses by nature

~34~

(26) Employee benefit expenses

Employee benefit expenses
Wages and salaries
Labor and health insurance fees
Pension costs
Other personnel expenses
Total
Wages and salaries
Labor and health insurance fees
Pension costs
Other personnel expenses
Total		 For the three-month
period ended
September 30,2020
4,448,085
$ 117,581
73,997
50,887
4,690,550
$ For the nine-month
period ended
September 30,2020
11,728,608
$ 362,688
215,150
140,403
12,446,849
$		 For the three-month
period ended
September 30,2019
3,387,022
$ 104,695
66,559
36,207
3,594,483
$
For the nine-month
period ended
September 30,2019
9,501,379
$ 321,357
193,127
95,511
10,111,374
$

  • 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 over two-thirds of the total number of directors. The resolution should be reported to the shareholders during the shareholders’ meeting.

  • B. For the three-month and nine-month periods ended September 30, 2020 and 2019, employees’ compensation was accrued at $735,906, $508,252, $1,809,783 and $1,359,523, respectively; directors’ remuneration was accrued at $18,408, $33,884, $90,000 and $90,635, respectively. The amounts were estimated as operating cost or operating expense in accordance with the Company’s Articles of Association.

  • Employees’ compensation was $2,097,424, and directors’ remuneration was $119,828 for 2019. Employees’ compensation and directors’ remuneration of 2019 as resolved at the meeting of the Board of Directors were in agreement with those amounts recognized in the 2019 financial statements. Employees’ compensation of 2019 will be distributed in the form of shares amounting to 2,589 thousand shares.

  • 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.

~35~

(27) Income tax

A. Income tax expense

ome tax
Income tax expense
For the three-month For the three-month
period ended period ended
September 30,2020 September 30,2019
Current income tax:
Current income tax on profit for the period $ 159,155
 $ 124,973
Prior year income tax overestimation 1,983 -
Total current income tax 161,138 124,973
Deferred income tax:
Origination and reversal of temporary
differences ( 628) ( 604)
Income tax expense $ 160,510 $ 124,369
For the nine-month For the nine-month
period ended period ended
September 30,2020 September 30,2019
Current income tax:
Current income tax on profit for the period $ 458,660
 $ 279,570
Tax on undistributed surplus earnings 63,048 74,745
Prior year income tax overestimation ( 121,055) ( 19,067)
Total current income tax 400,653 335,248
Deferred income tax:
Origination and reversal of temporary
differences ( 3,586) ( 4,827)
Income tax expense $ 397,067 $ 330,421

B. As of September 30, 2020, the Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

~36~

(28) Earnings per share

Earningsper share

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’compensation
Profit attributable to ordinary
shareholders of the parent plus assumed
conversion of all dilutive potential
ordinary shares

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’compensation
Profit attributable to ordinary
shareholders of the parent plus assumed
conversion of all dilutive potential
ordinary shares		 For the three-monthperiod ended September 30,2020
Amount after
Weighted average number
of ordinary shares
outstanding (shares
Earnings
per share
tax
in thousands)
(in dollars)
2,509,330
$ 510,684
4.91
$ 2,509,330
$ 510,684
-
1,997
2,509,330
$ 512,681
4.89
$ For the three-monthperiod ended September 30,2019		 Earnings
per share
(in dollars)
4.91
$
4.89
$
Amount after

tax
1,922,421
$ 1,922,421
$ -
1,922,421
$		 Weighted average number
of ordinary shares
outstanding (shares
in thousands)
508,095
508,095
2,210
510,305		 Earnings
per share
(in dollars)
3.78
$
3.77
$

~37~


Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’compensation
Profit attributable to ordinary
shareholders of the parent plus assumed
conversion of all dilutive potential
ordinary shares

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all dilutive
potential ordinary shares
Employees’compensation
Profit attributable to ordinary
shareholders of the parent plus assumed
conversion of all dilutive potential
ordinary shares		 For the nine-monthperiod ended September 30,2020 For the nine-monthperiod ended September 30,2020 For the nine-monthperiod ended September 30,2020
Amount after
Weighted average number
of ordinary shares
outstanding (shares
Earnings
per share
tax
in thousands)
(in dollars)
6,168,245
$ 509,938
12.10
$ 6,168,245
$ 509,938
-
8,644
6,168,245
$ 518,582
11.89
$ For the nine-monthperiod ended September 30,2019		 Earnings
per share
(in dollars)
12.10
$
11.89
$
Amount after

tax
5,146,829
$ 5,146,829
$ -
5,146,829
$		 Weighted average number
of ordinary shares
outstanding (shares
in thousands)
508,095
508,095
5,911
514,006		 Earnings
per share
(in dollars)
10.13
$
10.01
$

~38~

(29) Supplemental cash flow information

Investing activities with partial cash payments

Changes in liabilities from financing activities
For the nine-month
period ended
September 30,2020
Purchase of property, plant and equipment
1,450,176
$ Add: Opening balance of payable on equipment
113,350
Less: Ending balance of payable on equipment
213,152)
(
Cash paid during the period
1,350,374
$ For the nine-month
period ended
September 30,2020
Purchase of intangible assets
1,079,164
$ Add: Opening balance of payable on
software and intellectual property
725,345
Less: Ending balance of payable on
software and intellectual property
1,025,737)
(
Cash paid during the period
778,772
$ For the nine-month
period ended
September 30,2020
Cash dividends declared
4,596,164
$ Cash from capital surplus
1,021,370
Ending balance of other payables
(shown in other payables)
5,617,534)
(
Cash paid during the period
-
$ Short-term
Guarantee
deposits
Lease
borrowings
received
liabilities
At January 1, 2020
18,966,042
$ 3,450
$ 1,112,675
$ Changes in cash flow from financing
activities
5,404,202)
(
2,199)
(
66,952)
(
Interest paid
-
-
21,430)
(
Interest of lease liabilities
-
-
21,430
Impact of changes in foreign exchange
11,760)
(
-
3,090
Changes in other non-cash items
-
-
347,619
At September 30, 2020
13,550,080
$ 1,251
$ 1,396,432
$		 For the nine-month
period ended
September 30,2019
562,749
$ 110,401
79,545)
(
593,605
$ For the nine-month
period ended
September 30,2019
1,389,838
$ 684,438
873,721)
(
1,200,555
$ For the nine-month
period ended
September 30,2019
3,048,573
$ 508,095
3,556,668)
(
-
$ Payable for
Liabilities from
financing
dividends
activities-gross
-
$ 20,082,167
$ -
5,473,353)
(
-
21,430)
(
-
21,430
-
8,670)
(
5,617,534
5,965,153
5,617,534
$ 20,565,297
$

(30) Changes in liabilities from financing activities

~39~

At January 1, 2019
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 September 30, 2019		 Short-term
Guarantee
deposits
Lease
borrowings
received
liabilities
14,526,311
$ 4,887
$ 1,048,079
$ 3,373,689
1,427)
(
69,181)
(
-
-
917)
(
-
-
17,565
-
-
39,586
-
-
-
17,900,000
$ 3,460
$ 1,035,132
$		 Payable for
Liabilities from
financing
dividends
activities-gross
-
$ 15,579,277
$ -
3,303,081
-
917)
(
-
17,565
-
39,586
3,556,668
3,556,668
3,556,668
$ 22,495,260
$

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 Relationship with the Company G.M.I Technology Inc. Other related party Actions Semiconductor Co., Ltd. Other related party C-Media Electronics Inc. Other related party Greatek Electronics Inc. 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
Sales of goods﹕
G.M.I Technology Inc.
Others		 For the three-month
period ended
September 30,2020
3,140,146
$ 114,228
3,254,374
$ For the nine-month
period ended
September 30,2020
8,682,936
$ 242,346
8,925,282
$		 For the three-month
period ended
September 30,2019
2,918,303
$ 71,691
2,989,994
$
For the nine-month
period ended
September 30,2019
7,961,576
$ 194,656
8,156,232
$

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.

~40~

B. Processing cost

Processing cost
Greatek Electronics Inc.
Greatek Electronics Inc.		 For the three-month
period ended
September 30,2020
321,525
$ For the nine-month
period ended
September 30,2020
925,392
$		 For the three-month
period ended
September 30,2019
297,148
$
For the nine-month
period ended
September 30,2019
1,005,042
$

Processing cost is paid to associates 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		 September 30,2020
2,586,316
$ 59,694
2,646,010
$		 December 31,2019
2,142,256
$ 54,461
2,196,717
$		 September 30,2019
2,153,214
$ 55,915
2,209,129
$

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.

D. Payables to related parties

bear no interest.
Payables to related parties
Accounts payable﹕
Greatek Electronics Inc.		 September 30,2020
349,181
$		 December 31,2019
329,514
$		 September 30,2019
303,881
$

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 (receivables) payables:

For the nine-month period For the nine-month period For the nine-month period For the nine-month period For the nine-month period For the nine-month period
ended September 30,2020 ended September 30,2019
Ending Ending
Amount balance Amount balance
Other related parties-
Sales commissions $ 338,292 $ 85,885 $ 313,200 $ 77,077
Cash dividends revenue ($ 14,380) $ - ($ 16,698) $ -
Technical royalty revenue ($ 3,573) $ - ($ 3,464) $ -
Other $ 712 $ - $ 320 $ -

The payment term above was 49 days after monthly billings; collection term was 30 ~ 60 days after monthly billings.

~41~

(4) Key management compensation

Key management compensation
Salaries and other short-term employee benefits
Post-employment benefits
Total
Salaries and other short-term employee benefits
Post-employment benefits
Total		 For the three-month
period ended
September 30,2020
13,541
$ 676
14,217
$ For the nine-month
period ended
September 30,2020
82,017
$ 2,045
84,062
$		 For the three-month
period ended
September 30,2019
13,820
$ 693
14,513
$
For the nine-month
period ended
September 30,2019
68,662
$ 2,004
70,666
$

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset September 30,2020
December 31,2019

30,578
$ 34,307
$ 48,907
35,170
79,485
$ 69,477
$ Book value		 Book value September 30,2019
30,288
$ 36,146
66,434
$		 Purposes
Time deposits
(shown in financial
assets at amortised
cost non-current)
"		 Guarantee for customs
duties for the importation
of materials
Guarantee for leasing
land and office
  1. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) Contingencies

None.

(2) Commitments

The Company acquired a property located in Zhongshan District, Taipei City from Huaku Development Co., Ltd. with the transaction amount of $699,100. As of September 30, 2020, the unpaid payments amount to $103,540.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

~42~

12. OTHERS

(1) Capital management

There have been no significant changes as of September 30, 2020. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2019.

(2) Financial instruments

A. Financial instruments by category

September 30, 2020 December 31, 2019 September 30, 2019

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 accounts payable
(including related parties)
Guarantee deposits received
Other financial liabilities
Lease liability		 418,983
$ 2,347,603
$ 5,428,155
$ 40,894,980
15,005,175
364,277
51,457
61,744,044
$ 13,550,080
$ 29,203
10,033,731
19,588,592
1,251
6,867,600
50,070,457
$ 1,396,432
$		 74,012
$ 1,859,478
$ 5,727,911
$ 39,627,531
10,450,728
768,699
32,384
56,607,253
$ 18,966,042
$ 3,276
7,771,238
10,833,461
3,450
5,368,247
42,945,714
$ 1,112,675
$		 326,876
$
1,774,058
$
4,404,208
$ 40,324,963
11,196,234
689,011
30,239
56,644,655
$
17,900,000
$ 4,594
7,923,581
13,748,858
3,460
5,236,443
44,816,936
$
1,035,132
$

~43~

  • 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 finance division (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.

  • 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 the 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:

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		 September 30,2020
Foreign
currency
amount
(In thousands)
382,056
$ 1,368,632
245,662		 Exchange rate
29.126
29.126
29.126		 Book value
(NTD)
11,127,763
$ 39,862,776
7,155,151

~44~

December 31, 2019

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 Foreign
currency
amount
Book value
(In thousands)
Exchange rate
(NTD)
325,970
$ 30.106
9,813,647
$ 1,285,500
30.106
38,701,252
220,816
30.106
6,647,887
September 30,2019		 Foreign
currency
amount
Book value
(In thousands)
Exchange rate
(NTD)
325,970
$ 30.106
9,813,647
$ 1,285,500
30.106
38,701,252
220,816
30.106
6,647,887
September 30,2019		 Book value
(NTD)
Foreign
currency
amount
(In thousands)
354,544
$ 1,341,501
183,621		 Exchange rate
31.042
31.042
31.042		 Book value
(NTD)
11,005,761
$ 41,642,868
5,699,955

The exchange (loss) gain including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and nine-month periods ended September 30, 2020 and 2019, amounted to ($147,161), $33,382, ($201,940) and $34,150, respectively.

~45~

Analysis of foreign currency market risk arising from significant foreign exchange variation:

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
CNY:USD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD:NTD
CNY:USD
Non-monetary items
USD:NTD
Financial liabilities
Monetary items
USD:NTD		 For the nine-monthperiod ended September 30,2020 For the nine-monthperiod ended September 30,2020
Sensitivityanalysis
Effect on
Effect on other
comprehensive
Degree of variation
profit or loss
income
1%
111,278
$ -
$ 0%
3
-
1%
-
398,628
1%
71,552)
(
-
For the nine-monthperiod ended September 30,2019
Sensitivityanalysis
Effect on
Degree of variation
profit or loss
1%
110,058
$ 1%
-
1%
-
1%
57,000)
(		 Effect on other
comprehensive
income
-
$ -
416,429
-

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.

~46~

  • 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 nine-month periods ended September 30, 2020 and 2019 would have increased/decreased by $41,898 and $32,688, 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 $234,760 and $177,406, 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 amortised 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 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 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.

~47~

  • 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 forecastability of semiconductor industry research report to adjust historical and timely information to assess the default possibility of accounts receivable. As of September 30, 2020, December 31, 2019 and September 30, 2019, the provision matrix are as follows:

matrix are as follows:
At September 30, 2020
Expected loss rate
Total book value
Loss allowance
At December 31, 2019
Expected loss rate
Total book value
Loss allowance
At September 30, 2019
Expected loss rate
Total book value
Loss allowance		 Notpast due
0%~1%
14,703,751
$ 107,034
$ Notpast due
0%~1%
10,153,312
$ 75,187
$ Notpast due
0%~1%
10,849,129
$ 77,735
$		 1~90 days
past due
0%~1%
412,584
$ 4,126
$ 1~90 days
past due
0%~1%
376,367
$ 3,764
$ 1~90 days
past due
0%~1%
427,985
$ 3,145
$		 Over 90 days
past due
100%
418
$ 418
$ Over 90 days
past due
100%
656
$ 656
$ Over 90 days
past due
100%
662
$ 662
$		 Total
15,116,753
$
111,578
$
Total
10,530,335
$
79,607
$
Total
11,277,776
$
81,542
$

~48~

  • ix. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable are as follows:
Movements in relation to the Group applying the modified
allowance for accounts receivable are as follows:		 approach to provide loss
At January 1
Provision for impairment loss
At September 30
At January 1
Provision for impairment loss
Effect of exchange rate
At September 30		 2020
Loss allowance for
accounts receivable
79,607
$ 31,971
111,578
$
2019
Loss allowance for
accounts receivable
58,172
$ 23,267
103
81,542
$
  • x. For financial assets at amortised cost, the credit rating levels are presented below:
Financial assets at
amortised cost
Financial assets at
amortised cost
Financial assets at
amortised cost		 September 30,2020
12 months
40,894,980
$		 Significant
increase in
Impairment of
credit risk
credit
-
$ -
$ Lifetime
December 31,2019		 Total
Significant
increase in
credit risk
-
$ December
40,894,980
$
12 months
39,627,531
$		 Significant
increase in
Impairment of
credit risk
credit
-
$ -
$ Lifetime
September 30,2019		 Total
Significant
increase in
credit risk
-
$ September
39,627,531
$
12 months
40,324,963
$		 Significant
increase in
Impairment of
credit risk
credit
-
$ -
$ Lifetime		 Total
Significant
increase in
credit risk
-
$
40,324,963
$

~49~

The Group’s financial assets at amortised cost are all time deposits with an original due date of more than three months, and there is no significant abnormality in credit risk assessment.

  • (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 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 head-room 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:
Short-term borrowings
Notes payable
Accounts payable (including related
parties)
Other payables (including related parties)
Lease liability
Guarantee deposits received
Other financial liabilities
September 30, 2020
Non-derivative financial liabilities:
Short-term borrowings
Notes payable
Accounts payable (including related
parties)
Other payables (including related parties)
Lease liability
Guarantee deposits received
Other financial liabilities
December 31, 2019		 Less than 1
year
13,550,080
$ 29,203
10,033,731
19,588,592
119,886
-
6,867,600
Less than 1
year
18,966,042
$ 3,276
7,771,238
10,833,461
107,586
-
5,368,247		 Between 1
and 5years
-
$ -
-
-
357,772
-
-
Between 1
and 5years
-
$ -
-
-
354,895
-
-		 Over 5years
-
$ -
-
-
1,407,937
1,251
-
Over 5years
-
$ -
-
-
982,688
3,450
-

~50~

Non-derivative financial liabilities:

Non-derivative financial liabilities:
Short-term borrowings
Notes payable
Accounts payable (including related
parties)
Other payables (including related parties)
Lease liabilities
Guarantee deposits received
Other financial liabilities
September 30, 2019		 Less than 1
year
17,900,000
$ 4,594
7,923,581
13,748,858
106,470
-
5,236,443		 Between 1
and 5years
-
$ -
-
-
363,525
-
-		 Over 5years
-
$ -
-
-
859,277
3,460
-
  • 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.

(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).

~51~

C. The related information of financial and non-financial and non-financial and non-financial instruments measured at 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:
September 30, 2020 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurement
Financial assets at fair value
through profit or loss
Equity securities $ 418,983
 $ -
 $ -
 $ 418,983
Financial assets at fair value
through other comprehensive
income
Equity securities 492,975 - 1,854,628 2,347,603
Total $ 911,958 $ - $ 1,854,628 $ 2,766,586
December 31, 2019 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurement
Financial assets at fair value
through profit or loss
Equity securities $ 74,012
 $ -
 $ -
 $ 74,012
Financial assets at fair value
through other comprehensive
income
Equity securities 505,615 - 1,353,863 1,859,478
Total $ 579,627 $ - $ 1,353,863 $ 1,933,490
September 30, 2019 Level 1 Level 2 Level 3 Total
Assets
Recurring fair value measurement
Financial assets at fair value
through profit or loss
Equity securities $ 326,876
 $ -
 $ -
 $ 326,876
Financial assets at fair value
through other comprehensive
income
Equity securities 477,134 - 1,296,924 1,774,058
Total $ 804,010 $ - $ 1,296,924 $ 2,100,934

~52~

  • (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 quoted Closing Closing Net asset Translation Weighted Closing price price price price value price average quoted price

  • ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. 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 nine-month periods ended September 30, 2020 and 2019, there was no transfer between Level 1 and Level 2.

  • E. The following chart is the movement of Level 3 for the nine-month periods ended September 30, 2020 and 2019:

30, 2020 and 2019:
At January 1
Gains recognized in other
comprehensive income
At September 30		 2020 2019
Non-derivative equityinstrument
1,353,863
$ 500,765
1,854,628
$		 Non-derivative equityinstrument
1,058,137
$ 238,787
1,296,924
$
  • F. For the nine-month periods ended September 30, 2020 and 2019, there was no transfer into or out from Level 3.

~53~

  • G. 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.

  • 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
Non-
derivative
equity
instrument:
Unlisted
shares
〃
Private equity
fund
investment		 Fair value at
September 30,
2020		 Valuation
technique		 Significant
unobservable
input		 Range
(weighted
average)		 Relationship of
inputs to fair value
111,817
$ 22,282
1,720,529
Fair value at
December 31,
2019		 Market
comparable
companies
Net asset
value
Net asset
value
Valuation
technique		 Price to book
ratio multiple
Not applicable
Not applicable
Significant
unobservable
input		 3.17
-
-
Range
(weighted
average)		 The higher the
multiple, the higher
the fair value
Not applicable
Not applicable
Relationship of
inputs to fair value
115,580
$ 19,791
1,218,492		 Market
comparable
companies
Net asset
value
Net asset
value		 Price to book
ratio multiple
Not applicable
Not applicable		 3.58
-
-		 The higher the
multiple, the higher
the fair value
Not applicable
Not applicable

~54~

Non-
derivative
equity
instrument:
Unlisted
shares
〃
Private equity
fund
investment		 Fair value at
September 30,
2020		 Valuation
technique		 Significant
unobservable
input		 Range
(weighted
average)
Relationship of
inputs to fair value
2.90 The higher the
multiple, the higher
the fair value
- Not applicable
- Not applicable
119,172
$ 28,000
1,149,752		 Market
comparable
companies
The last
transaction price
of the non-active
market
Net asset
value		 Price to book
ratio multiple
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 categorised within Level 3 if the inputs used to valuation models have changed:

September 30, 2020

September 30,2020
Financial assets
Equity instrument
Financial assets
Equity instrument		 Input Change
± 1%

Change
± 1%
 Favourable Unfavourable Favourable Unfavourable
Change
change
Change
change
-
$ -
$ 1,408
$ 1,408)
($ Recognized inprofit or loss
comprehensive income
Recognized in other
Favourable Unfavourable Favourable Unfavourable
Change
change
Change
change
-
$ -
$ 1,581
$ 1,581)
($ December 31,2019
Recognized inprofit or loss
comprehensive income
Recognized in other
Price to
book ratio
multiple
Input
Favourable Unfavourable
Change
change
-
$ -
$ Recognized inprofit or loss
Price to
book ratio
multiple

~55~

September 30, 2019

Recognized in other Recognized in profit or loss comprehensive income Favourable Unfavourable Favourable Unfavourable Input Change Change change Change change Financial assets Price to Equity instrument book ratio ± 1% $ - $ - $ 1,435 ($ 1,435) multiple

’ - (4) Effects on the Group s operation arising from the COVID 19 pandemic

  • The Company’s significant subsidiary, Realtek Singapore Private Limited, was located in Singapore. As a result of the COVID-19 outbreak, the local government implemented prevention measures against COVID-19 starting from April 2020. Under these measures, residents were not allowed to leave their homes and unessential establishments were closed, and this subsidiary had adjusted its employees’ work shifts accordingly. The prevention measures have been relaxed since June 2020. As of September 30, 2020, there were no significant effects to the Group’s operating activities and financial statements arising from the pandemic under the Group’s assessment.

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: Please refer to table 4.

  • 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 5.

  • H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 6.

  • I. Trading in derivative instruments undertaken during the reporting periods: None.

  • J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

  • (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8.

~56~

(3) Information on investments in Mainland China

  • A. Basic information: Please refer to table 9.

  • 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 7.

(4) Major shareholders information

As of September 30, 2020, the Company had no shareholders who hold the Company’s shares over 5% (including 5%).

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.

~57~

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Loans to others

For the nine-month period ended September 30, 2020

Reason for
short-term
financing
Allowance
for doubtful
accounts
Maximum
outstanding balance
during the nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
Interest rate
Nature of
loan
Amount of
transactions
with the
borrower		 Collateral Collateral Limit on loans
granted to
a singleparty		 Ceiling on total loans
granted
(Note 2)		 Footnote
Item
Value
0 Realtek
Semiconductor
Corporation		 Realtek Singapore
Private Limited		 Other receivables-
related parties		 Y 873,780
$		 873,780
$		 -
$		 - Short-term
financing		 -
$		 Operations -
$		 None -
$		 2,747,531
$		 10,990,125
$		 None
0 Realtek
Semiconductor
Corporation		 Amber Universal
Inc.		 Other receivables-
related parties		 Y 902,906 902,906 620,384 0.20 Short-term
financing		 - Operations - None - 2,747,531 10,990,125 None
0 Realtek
Semiconductor
Corporation		 Bluocean Inc. Other receivables-
related parties		 Y 1,747,560 1,747,560 1,671,832 0.20 Short-term
financing		 - Operations - None - 2,747,531 10,990,125 None
0 Realtek
Semiconductor
Corporation		 Talent Eagle
Enterprise Inc.		 Other receivables-
related parties		 Y 1,747,560 1,747,560 1,470,863 0.20 Short-term
financing		 - Operations - None - 2,747,531 10,990,125 None
0 Realtek
Semiconductor
Corporation		 Leading Enterprises
Limited		 Other receivables-
related parties		 Y 1,747,560 1,747,560 567,957 0.20 Short-term
financing		 - Operations - None - 2,747,531 10,990,125 None
1 Leading Enterprises
Limited		 Bluocean Inc. Other receivables-
related parties		 Y 1,747,560 1,747,560 1,738,240 0.20 Short-term
financing		 - Operations - None - 10,990,125 10,990,125 None
1 Leading Enterprises
Limited		 Talent Eagle
Enterprise Inc.		 Other receivables-
related parties		 Y 5,825,200 5,825,200 4,829,487 0.20 Short-term
financing		 - Operations - None - 10,990,125 10,990,125 None
2 Amber Universal Inc. Bluocean Inc. Other receivables-
related parties		 Y 1,456,300 1,456,300 1,186,885 0.20 Short-term
financing		 - Operations - None - 10,990,125 10,990,125 None
3 Cortina Access, Inc. Leading Enterprises
Limited		 Other receivables-
related parties		 Y 873,780 873,780 669,898 1.60 Short-term
financing		 - Operations - None - 10,990,125 10,990,125 None 
Table 1 Page 1

Table 1

Expressed in thousands of NTD

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Loans to others

For the nine-month period ended September 30, 2020

(Except as otherwise indicated)

Reason for
short-term
financing
Allowance
for doubtful
accounts
Maximum
outstanding balance
during the nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
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 nine-
month period ended
September 30, 2020
(Note 3)
Balance at
September
30,2020
Actual amount
drawn down
(Note 4)
No.
(Note 1)
Creditor
Borrower
General ledger
account
Is a related
party
Interest rate
Nature of
loan
Amount of
transactions
with the
borrower		 Collateral Collateral Limit on loans
granted to
a singleparty		 Ceiling on total loans
granted
(Note 2)		 Footnote
Item
Value
4 Realtek Investment
Singapore Private
Limited		 Realtek Singapore
Private Limited		 Other receivables-
related parties		 Y 2,912,600
$		 2,912,600
$		 -
$		 - Short-term
financing		 -
$		 Operations -
$		 None -
$		 10,990,125
$		 10,990,125
$		 None
5 Realtek Singapore
Private Limited		 Realsil
Microelectronics
Corp.		 Other receivables-
related parties		 Y 873,780 873,780 - - Short-term
financing		 - Operations - None - 10,990,125 10,990,125 None
6 Realsil
Microelectronics
Corp.		 RayMX
Microelectronics
Corp.		 Other receivables-
related parties		 Y 342,128 342,128 55,596 4.35 Short-term
financing		 - Operations - None - 10,990,125 10,990,125 None
6 Realsil
Microelectronics
Corp.		 Suzhou PanKore
Integrated Circuit
Technology Co.
Ltd.		 Other receivables-
related parties		 Y 342,128 342,128 - - Short-term
financing		 - Operations - None - 10,990,125 10,990,125 None
7 Cortina Network
systems Shanghai
Co., Ltd.		 Realsil
Microelectronics
Corp.		 Other receivables-
related parties		 Y 128,298 128,298 - - Short-term
financing		 - Operations - None - 10,990,125 10,990,125 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: Accumulated maximum outstanding balance of loans to others as of the reporting month of the current period.

Note 4: Fill in the actual amount of loans to others used by the borrowing company. 

Table 1 Page 2

Table 2

Expressed in thousands of NTD

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Provision of endorsements and guarantees to others

For the nine-month period ended September 30, 2020

(Except as otherwise indicated)

Party being

endorsed/guaranteed

endorsed/guaranteed endorsed/guaranteed
Number
(Note 1)
Endorser/
guarantor		 Companyname
Relationship
with the
endorser/
guarantor
(Note 2)		 Limited on
endorsements/
guarantees
provided for a
single party
(Note 3)		 Maximum
outstanding
endorsement/
amount as of
September 30,
2020
(Note 4)		 Outstanding
endorsement/
guarantee
amount at
September 30,
2020
(Note 5)		 Actual amont
drawn down
(Note 6)		 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)		 Provision of
endorsements/
guarantees to
the party in
Mainland
China
(Note 7)		 Footnote
0 Realtek
Semiconductor
Corporation		 Realtek Singapore
Private Limited		 2 13,737,657
$		 2,747,531
$		 2,747,531
$		 -
$		 -
$		 10% 13,737,657
$		 Y N N
0 Realtek
Semiconductor
Corporation		 Leading Enterprises
Limited		 2 13,737,657 5,495,063 5,495,063 - - 20% 13,737,657 Y N N
0 Realtek
Semiconductor
Corporation		 Realsil
Microelectronics
Corp.		 2 13,737,657 824,259 824,259 - - 3% 13,737,657 Y N Y
0 Realtek
Semiconductor
Corporation		 RayMX
Microelectronics
Corp.		 2 13,737,657 824,259 824,259 - - 3% 13,737,657 Y N Y
1 Leading
Enterprises
Limited		 Realsil
Microelectronics
Corp.		 2 13,737,657 549,506 549,506 - - 2% 13,737,657 N N Y
2 Realsil
Microelectronics
Corp.		 RayMX
Microelectronics
Corp.		 2 13,737,657 549,506 549,506 - - 2% 13,737,657 N N Y

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 endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.

  • (4) The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.

  • (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 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 accountants, 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 accountants.

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 if the chairman has been authorised by the Board of Directors based on subparagraph 8, Article 12 of the Regulations Governing 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. 
Table 2

Table 3

Expressed in thousands of NTD

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

September 30, 2020

(Except as otherwise indicated)

Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 As ofSeptember30,2020 As ofSeptember30,2020 As ofSeptember30,2020 Footnote
(Note 4)
Number of shares Book value
(Note3)		 Ownership (%)
Fairvalue
Realtek Semiconductor Corporation C-media Electronics Inc. -
Common stock		 Other related parties Financial assets at fair value through
profit or loss		 1,623,501 $ 66,969 2.05% $ 66,969
Realking Investment Limited Compal broadband networks Inc. -
Common stock		 None Financial assets at fair value through
other comprehensive income		 3,575,000 92,235 5.34% 92,235
Realsun Investment Co., Ltd. Shieh-Yong Investment Co., Ltd. -
Common stock		 None Financial assets at fair value through
other comprehensive income		 23,124,000 292,143 3.03% 292,143
Realsun Investment Co., Ltd. Compal broadband networks Inc. -
Common stock		 None Financial assets at fair value through
other comprehensive income		 3,575,000 92,235 5.34% 92,235
Leading Enterprises Limited Fortemedia Inc. -
Common stock		 None Financial assets at fair value through
other comprehensive income		 8,623,301 94,341 6.89% 94,341
Leading Enterprises Limited Starix Technology, Inc.-
Preferred stock		 None Financial assets at fair value through
other comprehensive income		 5,000,000 17,476 - 17,476
Leading Enterprises Limited Octtasia Investment Holding Inc. -
Common stock		 None Financial assets at fair value through
other comprehensive income		 9,000,000 936,521 12.49% 936,521
Amber Universal Inc. Octtasia Investment Holding Inc. -
Common stock		 None Financial assets at fair value through
other comprehensive income		 4,726,836 491,865 6.56% 491,865
Hung-wei Venture Capital Co., Ltd. United Microelectronics Corporation -
Common stock		 None Financial assets at fair value through
other comprehensive income		 336,346 9,603 - 9,603
Hung-wei Venture Capital Co., Ltd. C-media Electronics Inc.-
Common stock		 Other related parties Financial assets at fair value through
profit or loss		 2,274,875 93,839 2.88% 93,839
Hung-wei Venture Capital Co., Ltd. Greatek Electroninc Inc. -
Common stock		 Other related parties Financial assets at fair value through
other comprehensive income		 5,823,602 285,938 1.05% 285,938
Hung-wei Venture Capital Co., Ltd. Subtron technology Co., Ltd -
Common stock		 None Financial assets at fair value through
other comprehensive income		 1,093,968 12,964 0.33% 12,964
Hung-wei Venture Capital Co., Ltd. Embestor Technology Inc. -
Common stock		 Other related parties Financial assets at fair value through
other comprehensive income		 2,800,000 22,282 12.17% 22,282
Realsil Microelectronics Corp. Cuam Money Fund None Financial assets at fair value through
profit or loss		 10,000,000 42,766 - 42,766
Realsil Microelectronics Corp. Harvest Money Fund None Financial assets at fair value through
profit or loss		 5,365,452 22,946 - 22,946
Realsil Microelectronics Corp. Xin Chen Money Fund None Financial assets at fair value through
profit or loss		 10,012,711 42,819 - 42,819 
Table 3 Page 1

Table 3

Expressed in thousands of NTD

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

September 30, 2020

(Except as otherwise indicated)

Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 Securities held by
Marketable securities
（Note 1）
Relationship with the
securities issuer(Note 2)
General
ledger account		 As ofSeptember30,2020 As ofSeptember30,2020 As ofSeptember30,2020 Footnote
(Note 4)
Number of shares Book value
(Note3)		 Ownership (%)
Fairvalue
Realtek Semiconductor (Shen Zhen)
Corp.		 Tian Tianjin Stable Fund None Financial assets at fair value through
profit or loss		 5,891,560 $ 25,196 - $ 25,196
Realtek Semiconductor (Shen Zhen)
Corp.		 Tian Tianjin Aggressive Fund None Financial assets at fair value through
profit or loss		 12,803,840 54,757 - 54,757
Realtek Semiconductor (Shen Zhen)
Corp.		 Cash Appreciation Currency Fund None Financial assets at fair value through
profit or loss		 6,181,241 26,435 - 26,435
Cortina Network Systems Shanghai
Co., Ltd.		 Step by step Gold Fund None Financial assets at fair value through
profit or loss		 3,600,000 15,396 - 15,396
Cortina Network Systems Shanghai
Co., Ltd.		 Tian Tianjin Stable Fund None Financial assets at fair value through
profit or loss		 6,514,903 27,860 - 27,860
Bluocean Inc. CyWeeMotion Group Limited None Financial assets at fair value through
other comprehensive income		 4,800,000 - 6.59% -

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 or amortised cost deducted by accumulated impairment 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. 

Table 3 Page 2

Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more For the nine-month period ended September 30, 2020

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Real estate
acquired by		 Real estate
acquired		 Date of the
event		 Transaction
amount		 Status of
payment		 Counterparty Relationship
with the
counterparty		 the real estate is disclosed below:
If the counterparty is a related party, information as to the last transaction of		 the real estate is disclosed below:
If the counterparty is a related party, information as to the last transaction of		 the real estate is disclosed below:
If the counterparty is a related party, information as to the last transaction of		 the real estate is disclosed below:
If the counterparty is a related party, information as to the last transaction of		 Basis or
reference used
in setting the
price		 Reason for
acquisition of
real estate and
status of the
real estate		 Other
commitments
Original owner who
sold the real estate
to the counterparty		 Relationship
between the original
owner and the
acquirer		 Date of the
original
transaction		 Amount
Realtek
Semiconductor
Corporation		 Property in
Zhongshan
District, Taipei
City		 April 1, 2020
(entered into the
contract and
paid the first
payment)		 $699,100 Paid
$595,560
based on the
contract		 Huaku
Development Co.,
Ltd.		 None - - - $ - Negotiated with
the counterparty
based on the
appraisal report
issued by CCIS
Real Estate Joint
Appraisers Firm
and resolved by
the Board of
Directors		 Owner-occupied
office		 None 
Table 4

Table 5

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

For the nine-month period ended September 30, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Purchase/seller Counterparty Relationship with the
counterparty		 Transaction Transaction Differences in transaction terms
compared to third party
transactions		 Differences in transaction terms
compared to third party
transactions		 Notes/accounts receivable(payable) Notes/accounts receivable(payable) Footnote
Purchase
(sales)		 Amount Percentage of
total purchase
(sales)		 Credit term Unitprice Credit term Balance Percentage of total
notes/accounts
receivable(payable)
Realtek Semiconductor Corporation G.M.I Technology Inc. Other related parties (Sales) 5,136,453)
($		 (9%) Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 1,497,720
$		 10%
Realtek Semiconductor Corporation Actions Semiconductor Co., Ltd. Other related parties (Sales) 123,222)
(		 0% Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 18,879 0%
Realtek Semiconductor Corporation C-Media Electronics Inc. Other related parties (Sales) 119,124)
(		 0% Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 40,815 0%
Realtek Singapore Private Limited G.M.I Technology Inc. Other related parties (Sales) 3,409,706)
(		 (6%) Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 1,013,875 7%
RayMX Microelectronics Corp. G.M.I Technology Inc. Other related parties (Sales) 136,777)
(		 0% Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 74,721 0%
Realtek Semiconductor Corporation Greatek Electronics Inc. Other related parties Purchase 794,658 3% Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 276,376)
(		 3%
Realtek Singapore Private Limited Greatek Electronics Inc. Other related parties Purchase 130,734 0% Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 Approximately
the same with
third party
transactions		 72,805)
(		 (0%) 
Table 5

Table 6

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

September 30, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Creditor Counterparty Relationship with
the counterparty		 Balance as at
September 30,2020		 Turnover rate Overdue receivables Overdue receivables Amount collected
subsequent to the
balance sheet date		 Allowance for
doubtful accounts
Amount Action taken
Realtek Semiconductor Corporation G.M.I Technology Inc. Other related
parties		 1,497,720
$		 5.13 $ - - 648,837
$		 15,128
$
Realtek Singapore Private Limited G.M.I Technology Inc. Other related
parties		 1,013,875 4.68 - - 459,510 - 
Table 6

Table 7

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Significant inter-company transactions during the reporting period For the nine-month period ended September 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

Number
(Note 1)		 Companyname Counterparty Relationship
(Note 2)		 General ledger account Amount Transaction terms Percentage of
consolidated total
operating revenues or
total assets (Note 3)
0 Realtek Semiconductor Corporation RayMX Microelectronics Corp. 1 Other receivables $ 47,386 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.06%
1 Realtek Singapore Private Limited Realsil Microelectronics Corp. 3 Technical service fees 1,376,797 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 2.47%
1 Realtek Singapore Private Limited Realsil Microelectronics Corp. 3 Other payables 553,394 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.68%
1 Realtek Singapore Private Limited Realtek Semiconductor (Shen Zhen) Corp. 3 Technical service fees 250,653 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.45%
1 Realtek Singapore Private Limited Realtek Semiconductor (Shen Zhen) Corp. 3 Other payables 104,854 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.13%
1 Realtek Singapore Private Limited Cortina Access, Inc. 3 Technical service fees 142,644 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.26%
1 Realtek Singapore Private Limited Cortina Access, Inc. 3 Other payables 33,630 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.04%
1 Realtek Singapore Private Limited Cortina Network Systems Shanghai Co., Ltd. 3 Technical service fees 73,925 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.13%
1 Realtek Singapore Private Limited Cortina Network Systems Shanghai Co., Ltd. 3 Other payables 48,089 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.06% 
Table 7 Page 1

Table 7

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES Significant inter-company transactions during the reporting period

For the nine-month period ended September 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

Number
(Note 1)		 Companyname Counterparty Relationship
(Note 2)		 General ledger account Amount Transaction terms Percentage of
consolidated total
operating revenues or
total assets (Note 3)
1 Realtek Singapore Private Limited Cortina Systems Taiwan Limited 3 Technical service fees $ 72,552 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.13%
1 Realtek Singapore Private Limited Cortina Systems Taiwan Limited 3 Other payables 15,900 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.02%
1 Realtek Singapore Private Limited Realtek Semiconductor (Japan) Corp. 3 Technical service fees 48,558 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.09%
1 Realtek Singapore Private Limited RayMX Microelectronics Corp. 3 Other receivables 47,386 No similar transaction can be compared with.
Transaction prices and terms are determined in
accordance with mutual agreement.		 0.06%

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. 

Table 7 Page 2

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Information on investees

For the nine-month period ended September 30, 2020

Investor Investee Location Main business
activities		 Initial investment amount Initial investment amount Shares held as at September 30,2020 Shares held as at September 30,2020 Shares held as at September 30,2020 Net profit (loss)
of the investee for the
nine-month period ended
September 30,2020		 Investment income (loss)
recognised by the
Company for the nine-
month period ended
September 30,2020		 Footnote
Balance as at
September 30,
2020		 Balance as at
December 31,
2019		 Number of shares Ownership (%) Book value
Realtek Semiconductor
Corporation		 Leading Enterprises Limited British Virgin
Islands		 Investment holdings $ 14,517,272 $ 15,005,734 39,130 100% $ 11,608,201 526,985
$		 526,985
$		 Subsidiary
Realtek Semiconductor
Corporation		 Amber Universal Inc. British Virgin
Islands		 Investment holdings 4,584,906 4,739,146 41,432 100% 3,391,955 24,626 24,626 Subsidiary
Realtek Semiconductor
Corporation		 Realtek Singapore Private
Limited		 Singapore ICs manufacturing, design, research,
development, sales, and marketing		 2,330,080 2,408,480 80,000,000 89.03% 13,373,424 3,782,418 3,380,226 Subsidiary
Realtek Semiconductor
Corporation		 Bluocean Inc. Cayman
Islands		 Investment holdings 3,205,316 3,313,165 110,050,000 100% 3,437,190 72,828 72,828 Subsidiary
Realtek Semiconductor
Corporation		 Talent Eagle Enterprise Inc. Cayman
Islands		 Investment holdings 3,323,277 3,435,095 114,100,000 100% 2,313,357 192,491)
(		 192,491)
(		 Subsidiary
Realtek Semiconductor
Corporation		 Realtek Investment Singapore
Private Limited		 Singapore Investment holdings 5,825,200 6,021,200 200,000,000 100% 6,388,174 107,913 107,913 Subsidiary
Realtek Semiconductor
Corporation		 Realsun Investments Co., Ltd. Taiwan Investment holdings 280,000 280,000 28,000,000 100% 417,222 5,065 5,065 Subsidiary
Realtek Semiconductor
Corporation		 Hung-wei Venture Capital Co.,
Ltd.		 Taiwan Investment holdings 250,000 250,000 25,000,000 100% 502,196 71,032 71,032 Subsidiary
Realtek Semiconductor
Corporation		 Realking Investments Limited Taiwan Investment holdings 293,930 293,930 29,392,985 100% 267,920 7,222)
(		 7,222)
(		 Subsidiary
Realtek Semiconductor
Corporation		 Realsun Technology
Corporatioin		 Taiwan ICs manufacturing, design, research,
development, sales, and marketing		 5,000 5,000 500,000 100% 5,118 57 57 Subsidiary
Realtek Semiconductor
Corporation		 Bobitag Inc. Taiwan Manufacturing and installation of
computer equipment and wholesasle,
retail and related services of
electronic materials and
information/software		 19,189 19,189 1,918,910 66.67% 19,299 100 67 Subsidiary
Realtek Semiconductor
Corporation		 Technology Partner V Venture
Capital Corporation		 Taiwan Investment holdings 66,657 66,657 - - 255 746)
(		 11,188)
(		 Investments
accounted for
under equity
mothod
Realtek Semiconductor
Corporation		 Estinet Technologies
Incorporation		 Taiwan Research and development, design,
manufacturing, sales and other
services of electronic
components,information/Software
and integrated circuits		 110,000 110,000 2,000,000 11.48% 9,245 44,181)
(		 6,065)
(		 Investments
accounted for
under equity
mothod		 
Table 8 Page 1

Table 8

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Information on investees

For the nine-month period ended September 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investor Investee Location Main business
activities		 Initial investment amount Initial investment amount Shares held as at September 30,2020 Shares held as at September 30,2020 Shares held as at September 30,2020 Net profit (loss)
of the investee for the
nine-month period ended
September 30,2020		 Investment income (loss)
recognised by the
Company for the nine-
month period ended
September 30,2020		 Footnote
Balance as at
September 30,
2020		 Balance as at
December 31,
2019		 Number of shares Ownership (%) Book value
Realking Investments Limited Innorich Venture Capital Corp. Taiwan Venture capital activities $ 200,000 $ 200,000 20,000,000 37.38% $ 147,672 32,943)
($		 12,351)
($		 Investments
accounted for
under equity
mothod
Leading Enterprises Limited Realtek Semiconductor (Japan)
Corp.		 Japan ICs deign,sales, and consultancy 5,516 5,542 400 100% 12,856 10,554 10,554 Sub-Subsidiary
Leading Enterprises Limited Circon Universal Inc. Mauritius Investment holdings 1,887,365 1,950,869 64,800,000 100% 7,895 10 10 Sub-Subsidiary
Leading Enterprises Limited Realtek Singapore Private
Limited		 Singapore ICs manufacturing, design, research,
development, sales, and marketing		 1,216,642 1,257,578 9,856,425 10.97% 1,649,448 3,782,418 414,897 Sub-Subsidiary
Amber Universal Inc. Realtek Semiconductor (HK)
Limited		 Hong Kong Information services and technical
support		 5,637 5,799 - 100% 1,106 21)
(		 21)
(		 Sub-Subsidiary
Realtek Singapore Private Limited Empsonic Enterprises Inc. Mauritius Investment holdings 822,810 850,495 2,825,000 100% 1,380,755 47,200)
(		 47,200)
(		 Sub-Subsidiary
Realtek Singapore Private Limited Cortina Access Inc. U.S.A R&D and information services 1,189,681 1,229,710 16,892 100% 1,002,490 15,932 15,932 Sub-Subsidiary
Realtek Singapore Private Limited Cortina Systems Taiwan Limited Taiwan R&D and technical support 58,252 60,212 21,130,000 100% 62,828 750 750 Sub-Subsidiary
Realtek Singapore Private Limited Realtek Viet Nam Co., Ltd. Vietnam R&D and technical support 116,504 30,106 4,000,000 100% 98,216 12,146)
(		 12,146)
(		 Sub-Subsidiary
Talent Eagle Enterprise Inc. Ubilinx Technology Inc. U.S.A R&D and information services 1,456,300 1,204,240 50,000,000 100% 45,590 293,210)
(		 293,210)
(		 Sub-Subsidiary
Bluocean Inc. Realtek Semiconductor
(Malaysia)SDN. BHD.		 Malaysia R&D and technical support 73,244 - 10,450,000 100% 69,864 3,227)
(		 3,227)
(		 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, 2020 to September 30, 2020, others were re-translated at the exchange rate prevailing at the end of the financial reporting period. 

Table 8 Page 2

Table 9

Expressed in thousands of NTD

(Except as otherwise indicated)

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

Information on investments in Mainland China

For the nine-month period ended September 30, 2020

Investee in Mainland
China		 Main business activities Paid-in Capital Investment
method
(Note1)		 Accumulated amount of
remittance from Taiwan to
Mainland China as of
January1,2020		 Amount remitted from
Taiwan to Mainland
China/Amount remitted
back to Taiwan for the
nine-month period ended
September 30,2020		 Amount remitted from
Taiwan to Mainland
China/Amount remitted
back to Taiwan for the
nine-month period ended
September 30,2020		 Accumulated
amount of
remittance from
Taiwan to
Mainland China
as of September
30,2020		 Net income of
investee for the
nine-month
period ended
September 30,
2020		 Ownership held
by the Company
(direct or
indirect)		 Investment income (loss)
recognised by the
Company for nine-month
period ended
September 30, 2020
(Note2)		 Book value of
investment in
Mainland China
as of September
30,2020		 Accumulated
amount of investment
income remitted back to
Taiwan as of September
30,2020		 Footnote
Remitted to
Mainland
China		 Remitted
back to
Taiwan
Cortina Network
Systems Shanghai Co.,
Ltd.
Realsil Microelectronics
Corp.
Realtek Semiconductor
(Shen Zhen) Corp.
RayMX Microelectronics
Corp.
Suzhou PanKore
Integrated Circuit
Technology Co. Ltd.		 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		 104,854
$ 815,528
145,630
112,260
4,277		 (2)
(2)
(2)
(2)
(2)		 104,854
$ 815,528
145,630
112,260
-		 $ -
-
-
-
4,277		 $ -
-
-
-
-		 104,854
$ 815,528
145,630
112,260
4,277		 1,493
$ 48,675)
(
7,486)
(
88,544)
(
788)
(		 100%
100%
100%
100%
100%		 1,493
$ 48,675)
(
7,486)
(
88,544)
(
788)
(		 98,737
$ 1,231,216
243,826
4,410)
(
3,487		 $ -
-
-
-
-
Companyname Accumulated amount
of remittance from Taiwan
to Mainland
China as of
September30,2020		 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.
Realsil Microlectronics
Corp.
Realtek Semiconductor
(Shan Zhen) Corp.
RayMX Microelectronics
Corp.
Suzhou PanKore
Integrated Circuit
Technology Co. Ltd.		 104,854
$ 815,528
145,630
112,260
4,277		 104,854
$ 815,528
145,630
112,260
4,277		 $ 16,485,188

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.

Note 2: In the 'Investment income (loss) recognised by the Company for the nine-month period ended September 30, 2020' column was recorded based on the financial statements prepared by the company.

Note 3: 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, 2020 to September 30, 2020, others were re-translated at the exchange rate prevailing at the end of the financial reporting period. 

Table 9

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