SiS — Annual Report 2020

Jul 21, 2021

Silicon: www.sis.com Registered address: No. 180, Sec. 2, Gongdao 5th Rd., East Dist., Hsinchu City Tel: 886-3-516-6000 Fax: 886-3-571-1479

Company Spokesperson Name: Cheng-Chien Chien Title: Chairman Tel: 886-3-516-6000 Fax: 886-3-571-1479 Email: support@sis.com

Deputy Spokesperson Name: Shur-Jung Shyi Title: President Tel: 886-3-516-6000 Fax: 886-3-571-1479 Email: support@sis.com

CPA

Ernst & Young Global Limited www.ey.com 9F, 333 Keelung Rd., Sec. 1, Taipei City Name of CPAs:Shao-Pin Kuo Tel: 886-2-2720-4000

Stock Transfer Agent Horizon Securities Corp. www.honsec.com.tw 3F, No. 236, Sec. 4, Xinyi Road, Taipei City Tel: 886-2-2719-8899

-----Disclaimer------

THIS IS A TRANSLATION OF 2020 ANNUAL REPORT ("THE REPORT") OF SILICON INTEGRATED SYSTEMS CORPORATION ("THE COMPANY"). THE TRANSLATION IS INTENDED FOR REFERENCE ONLY AND NO OTHER PURPOSE. THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF THE REPORT SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETATION OF THE SUBECT MATTER STATED HEREIN.

Table of Contents

Chapter I.	Letter to Shareholders···························································································································· 1
Chapter II.	Company Profile
I.	Date of Incorporation······································································································································· 3
II.	Company History·············································································································································· 3
Chapter III.	Corporate Governance Report
I.	Organizational System······································································································································ 4
II.	Information on the President, Vice Presidents, Assistant Managers, and Supervisors of
	Divisions and Branches····································································································································· 6
III.	Remuneration of the Directors, President, and Vice Presidents···································································· 12
IV.	Implementation of Corporate Governance···································································································· 17
V.	Information on CPA Fees································································································································ 51
VI.	Information on Replacement of CPAs ············································································································ 52
VII.	The Company's Chairman, Presidents, Financial or Accounting Managers that Hold any
	Positions in the Company's CPA Firm or its Affiliates in the Past Year ··························································· 52
VIII.	Change in Shareholdings by Directors, Managers, and Shareholders with over 10%
	Shareholdings················································································································································· 52
IX.	Information on the Relationship Between the Top Ten Shareholders who are a Related
	Party, Spouse, or Relative within the Second Degree of Kinship to Each Other············································· 54
X.	Shareholdings in Any Single Enterprise by the Company, Its Directors, Managers, and
	Any Companies Controlled Directly or Indirectly by the Company ································································ 54
Chapter IV.	Capital Overview
I.	Sources of Capital··········································································································································· 55
II.	Shareholder Structure···································································································································· 56
III.	Shareholding Distribution ······························································································································ 56
IV.	List of Major Shareholders····························································································································· 56
V.	Share Price, Net Worth, Earnings, Dividends Per Share, and Related Information for the
	Past 2 Years····················································································································································· 57
VI.	Dividend Policy and Its Implementation ········································································································ 57
VII.	Impact on Business Performance and Earnings Per Share of Share Distribution Proposed
	at the Shareholders' Meeting························································································································· 59
VIII.	Employee and Directors Compensation········································································································· 60
IX.	Repurchase of the Company's Shares············································································································ 61
X.	Corporate Bonds ············································································································································ 61
XI.	Preferred Shares············································································································································· 61
XII.	Global Depository Receipts···························································································································· 61
XIII.	Employee Share Options································································································································ 61
XIV.	Employee Restricted Shares··························································································································· 61
XV.	Issuance of New Shares in Connection with Mergers and Acquisitions or Transfer of the
	Shares of other Companies···························································································································· 62
XVI.	Implementation of the Capital Utilization Plan······························································································ 62

I.	Business Activities·········································································································································· 63
II.	Market, Production and Sales Highlights ······································································································· 73
III.	Employees······················································································································································ 78
IV.	Environmental Expenses································································································································ 78
V.	Labor Relations··············································································································································· 79
VI.	Material Contracts·········································································································································· 80

I.	Financial Position ··········································································································································· 81
II.	Financial Performance···································································································································· 83
III.	Cash Flows······················································································································································ 85
IV.	Effect on Financial Operations of Major Capital Expenditures during the Most Recent Year························ 85
V.	Reinvestment Policy for the Most Recent Fiscal Year, Main Reasons and Improvement Plan
	for Profits and Losses, and Investment Plans for the Coming Year································································ 85
VI.	Risks ······························································································································································· 86
VII.	Other Important Issues·································································································································· 87

I.	Information on Affiliates ································································································································ 88
II.	Private Placements of Securities···················································································································· 90
III.	Shares of the Company Held or Disposed of by Subsidiaries········································································· 90
IV.	Other Necessary Supplemental Information·································································································· 90
V.	Matters with Material Impact on Shareholders Interests or Security Prices ················································· 90

I.	Condensed Balance Sheets for the Past Year································································································· 91
II.	Condensed Income Statement, Name and Audit Opinion of CPA for the Past Year······································· 93
III.	Financial Analyses for the Past Year··············································································································· 95
IV.	Impact on the Company's Financial Condition of the Company and its Affiliates and
	Financial Difficulties ······································································································································· 98
V.	Audit Committee's Review Report················································································································· 99
VI.	Parent Company Only Financial Statements································································································ 100
VII.	Consolidated Financial Statements·············································································································· 204

Chapter I Letter to Shareholders

Dear Shareholders,

In 2020, the world was covered by a gloomy cloud under the impact of the COVID-19 epidemic. However, the semiconductor industry experienced rapid growth due to the demand for end products arising from the trend of working at home. As a result, the demand for components for such products exceeded production. This was reflected in the significant growth in revenue of MEMS and IC Foundry that we have invested in, which resulted in an increase in shareholders' equity by approximately NT\$9.803 billion. In addition, we have also invested in HuiTong Intelligence (80% shareholding), which is engaged in AIOT services, providing network intelligent end products and remote intelligence systems. These investments are important foundations of SiS.

The Company's core business is still in touchscreen IC chips. In 2021, the Company will shift focus to the development of end products, such as touch pens, TWS microphones, smart speakers, and large display touchscreens.

2020 Business Performance

Results of the Business Plan

In the touchscreen field, we continuously devote time and effort to developing large-capacity chips for the education and industrial control markets, among others. In 2020, to improve and enhance the performance of large projection screens, the Company will also release smart presentation products featuring touchscreens, anti-ambient lights and light adjustment functions that can be applied in home, office and shopping mall presentations, education and ultra-large touchscreens up to 136" for outdoor advertisement. In addition, MEMS microphones will be installed in smart speakers and smart conference systems.

The Company's financial condition, profitability and research and development are as follows:

Unit: NT\$'000

Financial Condition

Item	2020	2019	Increase (decrease)
			amount
Revenue	160,171	222,952	(62,781)
Gross profit	45,135	86,889	(41,754)
Operating loss	(447,374)	(355,576)	(91,798)
Net loss for the period	(300,090)	(224,691)	(75,399)

(I) IFRS Consolidated Financial Statements

Profitability

(I) IFRS Consolidated Financial Statements

	Item	2020	2019
Return on assets (%)		(2.36)	(3.17)
Return on equity (%)		(2.38)	(3.21)
	Operating loss	(7.09)	(6.42)
Ratio to paid-in capital (%)	Net loss before tax	(4.07)	(3.92)
Net profit margin (%)		(187.36)	(100.78)
Earnings per share (NT\$)		(0.47)	(0.37)

Research and development

• Continued to improve chip performance and improve the existing education, industrial control, and large projection screen markets. Develop large soft projection screen and glass system touchscreen module products, which are highly cost-effective.
• Launched USI and MPP2.0 specification stylus pens and environmental color stylus pens for notebook computers.
• Continued to develop microelectromechanical sound control products for AI applications.

Summary of 2021 Business Plan

Thank you for the support and encouragement from our shareholders, we will continue to invest in R&D resources and innovative technologies to improve the performance of our existing products and promote new modules, so as to increase revenue and return profits to our shareholders.

Sincerely,

We wish you all health and good fortune.

Chairman: Cheng-Chien Chien Manager: Shur-Jung Shyi

Chapter II Company Profile

I. Date of Incorporation

The Company was incorporated on August 26, 1987.

II. Company History

The Company, Silicon Integrated Systems Corp. (SiS). was officially listed on the Taiwan Stock Exchange under the code "2363" in August 1997. At present, the Company and its subsidiaries have approximately 200 employees. The Company has set up offices in Shenzhen and Suzhou in order to provide services to more customers with its proximity to the market.

The Company is the leader in cutting-edge digital technology with the innovation advantage brought by its research and development. In order to meet the diversified consumption patterns, the Company is committed to providing humane, intelligent and eco-friendly products and further accelerating the popularity of cloud entertainment. Our products are used in a wide range of applications, including touchscreen devices, tablets, personal computers, and intellectual property core services, which have changed the interactive lifestyle of the new generation of digital home users.

In addition to creating value through high-quality technology innovation and customer service, the Company's business philosophy is also to actively fulfill its corporate social responsibility. By acting as a corporate citizen, the Company contributes to the national economy, improves the quality of life of employees, communities, and society, and enhances its competitive advantage based on corporate responsibility. The Company continues to focus on a wide range of academic activities, including the education of knowledge and information communication, encouraging academic research and technology development, organizing academic seminars and workshops, providing scholarships for academic research and nurturing outstanding talents, and promoting international academic exchanges. The Company hopes to contribute to Taiwan's technology education, fulfill corporate social responsibility, and maintain the balance and sustainable development of the economy, society, and the environment.

• (I) In response to the reorganization of the Company: SiS Holding Limited was liquidated in December 2014.
• (II) Mars Investments (SAMOA) Ltd. invested and established Suzhou MLight Electronics Co., Ltd. in August 2014.
• (III) In order to simplify the organizational structure and enhance management efficiency, the Company merged with its wholly-owned subsidiary (Yungchi Investment Co., Ltd.) on December 31, 2016, which was approved by the competent authority and became effective in February 2017.
• (IV) Invested in and established HuiTong Intelligence Co., Ltd. in September 2020 with a shareholding of 80%.
• (V) Other issues, such as company reorganization, substantial transfer or replacement of equity of directors or major shareholders with shareholdings of over 10%, change of ownership, or significant changes in the operation method or business: None.
• (VI) Other matters that are material to the understanding of the Company's development that may affect the shareholders' interest and information of earlier years: None.

Chapter III Corporate Governance Report

I. Organizational System

(I) Organizational Chart

(II) Introduction to the Company's Organization and Functions

Chairman/President Office

Overall management of the Company's business operations, planning and overseeing the execution of the Company's overall strategy.

Internal Audit Office

Assists the Board of Directors, independent directors, and managers in examining and reviewing the deficiencies of the internal control system and evaluating the effectiveness and efficiency of operations. Provision of timely suggestions for improvement to ensure the continuous and effective implementation of the internal control system, which shall act as a basis for the review and amendment of the internal control system. Execution of the nine cycles of internal control (sales and receipts, procurement and payment, production, financing, investment, payroll, property, plant and equipment, research and development, and computerized operations) and audits required by the competent authorities. Reporting of the Securities and Futures Bureau the annual audit plan, implementation results, internal control findings, and following-up improvement in accordance with government regulations.

Audit Committee

Supervision of the appropriate presentation of the Company's financial statements, election (dismissal), independence and performance of the certified public accountants, the effective implementation of the Company's internal controls, the Company's compliance with relevant laws and regulations, and the Company's risk control mechanism.

Remuneration Committee

Aims to assist the Board of Directors in implementing and evaluating the Company's overall compensation and benefits policies, as well as the compensation of managers. Its duties are to determine the overall remuneration policy and structure of the Company, the remuneration and payment method of directors (including the Chairman), the remuneration and payment method of managers, the incentive and tenure incentive for managers, and other matters as specified or authorized by the Board of Director.

Administration Office

Management of human resources, information engineering, legal affairs, intellectual property, procurement, plant affairs, and administration and execution of domestic and overseas subsidiaries.

Financial and Accounting Office

Responsible for fund allocation, credit management, account management, tax reporting, stock affairs, investment evaluation and management, and preparation of financial statements.

Production Office

Production and sales/production management, packaging and testing outsourcing, quality service, and wafer procurement. Development of the Company's product testing technology and program, product testing, and production. Management of the order processing and shipment arrangement of the Company. Acts as a window for customer complaints, responsible for reporting customer complaints to the relevant department and reply the results to customers.

Product R&D Office

Research and development of the Company's products and procedures establishment.

Sales Office

Development and maintenance of global customers and agents, market intelligence collection and analysis, and contract (order) review in order to keep track of the market and customer. Provision of timely sales strategies and product guidance to achieve sales targets. Responsible for customer technical support and service.

II. Information on the President, Vice Presidents, Assistant Managers, and Supervisors of Divisions and Branches

(I) Director Information

Name/Title	Date of		Shareholding When Elected April 10, 2019 (Closing Date)			Current Shareholding 2021.03.29	Spouse/Minor Shareholding
Nationality/Place of Registration/Gender	Election (Appointment)	Term (Years)	Number of Shares	Shareholding	Number of Shares	Shareholding	Number of Shares	Shareholding
Cheng-Chien Chien/ Chairman R.O.C./ Male	2019.06.21 2004.06.01	3	1,033,602	0.19%	1,746,465	0.27%	0	-
United Microelectronics Corp./Corporate Director Representative:	2019.06.21 2003.1.14	3	107,855,728	20.19%	119,979,103	19.01%	0	-
Kuei-Hung Tseng/Male R.O.C./R.O.C.	2020.04.06 2020.04.06	3	0	-	0	-	0	-
Hsun Chieh Investment Co., Ltd./Corporate Director	2019.06.21 2016.06.21	3	8,215,607	1.53%	30,292,438	4.80%	0	-
Representative: Wan-Ling Cheng/ Female/R.O.C./R.O.C.	2019.06.21 2016.06.21	3	0	-	0	-	0	-
Wen-Chi Chen/Director R.O.C./Male	2019.06.21 2004.06.01	3	2,752,453	0.51%	2,848,654	0.45%	0	-
Shur-Jung Shyi/Director R.O.C. and United States/Male	2019.06.21 2013.06.28	3	18,256	0.003%	20,789	0.003%	0	-
Hsin-Shen Liu /Director R.O.C./Male	2019.06.21 1992.05.23	3	7,650,780	1.43%	8,712,708	1.38%	0	-
Tsi-Wang Huang/Independent Director R.O.C./Male	2019.06.21 2013.06.28	3	0	-	0	-	0	-
Jui-Hsiang Lo/Independent Director R.O.C./Male	2019.06.21 2013.06.28	3	0	-	0	-	0	-
Ya-Ching Li/Independent Director R.O.C./Female	2019.06.21 2019.06.21	3	0	-	0	-	0	-

Note 1. The shareholding is calculated based on the number of issued shares of 630,967,473 shares, less 3 treasury shares, and the number of outstanding shares of 630,967,470 shares as of March 29, 2021. The shareholding of outstanding shares is calculated by unconditionally rounding off two decimal places.

Note 2. Mr. Cheng-Chien Chien was first elected as the representative of the Company's corporate director of the 7th term on June 01, 2004, which was interrupted by the reassignment of the corporate director. He was elected as a director of the 9th term as a natural person.

• Note 3. Chairman Chien is also the Chief Strategy Officer of the Company. In order to enhance operational efficiency and decision execution, the Chairman also maintains close communication with the directors about the Company's operations, plans and policies to implement corporate governance. In the future, the Company intends to increase the number of independent directors to enhance the functions of the Board of Directors and strengthen the supervisory function. More than half of the board members are not also employees or managers. More than half of the Board members are not employees or managers of the Company.
• Note 4. On April 6, 2020, United Microelectronics reassigned Mr. Kuei-Hung Tseng as its corporate director representative.
• Note 5. On June 21, 2016, Ms. Wan-Ling Cheng was elected as the Company's corporate supervisor representative of the 10th term. She is currently a corporate director representative.
• Note 6. On June 1, 2001, Mr. Wen-Chi Chen was elected as the Company's corporate director representative of the 7th term, which was interrupted by the reassignment of the corporate director. On June 11, 2017, he was elected as a director of the 9th term as a natural person up to now.
• Note 7. On May 23, 1992, Mr. Hsin-Shen Liu was elected as a director representative of the 3rd term as a natural person. He was the Company's supervisor of the 7th, 8th and 9th of term. He is currently a director.

Note 8. None of the directors of the Company has held the Company's shares in the names of others.

Note. 9. The directors of the Company do not have executives, directors or supervisors who are spouses or within the second degree of kinship.

Major Academic Background and Working Experience	Position Concurrently Held at the Company and Other Companies
MBA, Saginaw Valley State University Chairman, XGI Technology	Chief Strategy Officer of SiS, Director of Unimicron Technology, Chairman of HuitTong Intelligence, Director of Shieh Yong Capital, Vice Chairman of Asia Pacific Mircrosystems, Director of Mars Investment, Executive Director of Shenzhen Bangtong
Corporate Director
Department of Accounting, Chengchi University Chief Accountant, United Microelectronics	Chief Accountant, United Microelectronics
Corporate Director
State University of New York at Buffalo, Master's degree in Accounting / Assistant Manager of Hsun Chieh Investment	Assistant Vice President of Hsun Chieh Investment
Department of Electronic Engineering, Tamkang University Chairman of SiS, Chairman of MemoCom	Chairman of Waltop International Director, Arima Lasers Corp
MA in Electrical Engineering, New York State University President, XGI Technology	President of SiS, Director of HuitTong Intelligence, Supervisor of Waltop International, Executive Director of Suzhou MLight Electronics
High School Graduation
Department of Electronic Engineering, Tamkang University Chairman and President, Taiwan Kaiwei Semiconductor Co., Ltd	Independent Director and Remuneration Committee Member of Advance Materials, Remuneration Committee member of DIVA Laboratories, Director of Megawin Technology
Master's Degree, Department of Business Administration, Chengchi University Bachelor of Electrical and Electronic Engineering, Chiao Tung University	Chairman of IC Plus, Director of Dadikid.com, Director, Cloudberry Consultant
School of Accounting, University of Missouri, USA	Senior Assistant of President of GCS Holdings, Independent Director and Remuneration Committee member of Unimicron, Director of D-Tech Optoelectronics, Director of GCOM Semiconductor, Supervisor of Unikorn Semiconductor

Major Shareholder of Institutional Shareholder

Name of Institutional Shareholder	Major Shareholder of Institutional Shareholder	Shareholding %
	JPMorgan Chase Bank, N.A. acting in its capacity as depositary and representative to the holders of ADRs	5.63
	Hsun Chieh Investment Co., Ltd.	3.61
	Nan Shan Life Insurance Company, Ltd.	2.60
	Silicon Integrated Systems Corp.	2.33
	Yann Yuan Investment Co., Ltd.	1.64
United Microelectronics	New Labor Pension Fund	1.60
Corp. (Note 1)	Cathay Life Insurance Co., Ltd.	1.54
	JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	1.46
	Prudential Assurance Company Ltd.	1.24
	JPMorgan Chase Bank, N.A., Taipei Branch in Custody for Stichting Depositary APG Emerging Markets Equity Pool	1.15
Hsun Chieh Investment	Shieh Yong Capital Co., Ltd. (Note 3)	63.51
Co., Ltd. (Note 2)	United Microelectronics Corp.	36.49

Note 1. The shareholding base date of United Microelectronics's institutional shareholders is April 12, 2020, which is the closing date at the 2020 annual shareholders' meeting.

Note 2. The shareholding of Hsun Chieh Investment is based on the change registration form on October 6, 2020

Major shareholders of institutional shareholders in which the major shareholders are institutions

Name of Institutional Shareholder	Major Shareholder of Institutional Shareholder/Shareholding
Nan Shan Life Insurance Company, Ltd. (Note 1)	Trust Account of Juncheng Investment Co., Ltd. in First Commercial Bank 60.00%, Juncheng Investment Co., Ltd. 29.54%, Ying-Tsung Tu 2.89%, Ruentex Hsing Co., Ltd. 0.29%, Ruen Hua Dyeing & Weaving Co., Ltd. 0.27%, Ruentex Development Co., Ltd. 0.23%, Ruentex Industries Co., Ltd. 0.21%, Stock, Trust and Property Account of Nan Shan Life in Taishin Bank 0.20%, Hsintou Investment Co., Ltd. 0.15%, Ruentex Leasing Co., Ltd. 0.13%
Yann Yuan Investment Co., Ltd. (Note 2)	Hsipin Investment Co., Ltd 32.21%, United Microelectronics Corp. 30.87%, King Yuan Electronics Co., Ltd. 16.77%, Unimicron Technology Corp. 13.42%, Sigurd Microelectronics 4.02%, Pohua Investment Co., Ltd. 2.68%
Cathay Life Insurance Co., Ltd. (Note 3)	Cathay Financial Holdings 100%
Shieh Yong Capital Co., Ltd. (Note 4)	Unimicron Technology Corp. 16.67%, Silicon Integrated Systems Corp. 16.67%, Novatek Microelectronics Corp. 15.15%, Yann Yuan Investment Co., Ltd. 12.20%, Faraday Technology Corporation 12.12%, King Yuan Electronics Co., Ltd. 7.58%

Note 1. The shareholding base date of Nan Shan Life Insurance Company, Ltd. is April 30, 2020.

Note 2. The shareholding of Yann Yuan Investment is based on the change registration form on February 17, 2021.

Note 3. The shareholding of Cathay Life Insurance is based on the change registration form on November 13, 2020.The shareholding of Shieh Yong Capital is based on the change registration form on February 14, 2020.

Professional Qualifications and Independence of Directors

Qualifications	Meeting One of the Following Professional Qualification Requirements, Together with At Least Five Years of Work
										Independence (Note)
		Experience
	An instructor or	A Judge, Public
	higher position in a	Prosecutor,														Number of
	department of	Attorney, Certified														Other Public
	commerce, law,	Public Accountant,	Having Work													Companies
	finance,	or Other	Experience in													where the
	accounting, or	Professional or	the Areas of													Individual
	other academic	Technical Specialist	Commerce,
	department	who Has Passed a	Law, Finance,	1	2	3	4	5	6	7	8	9	10	11	12	Concurrently
	related to the	National	or Accounting,													Serves as an
	business needs of	Examination and	or Otherwise													Independent
	the Company in a	Has Been Awarded	Necessary for													Director
	public or private	a Certificate in a	the Business
	junior college,	Profession
Title	college or	Necessary for the
Name	university	Business
Chairman
Cheng-Chien	-	-	Yes			V	V	V	V	V	V	V	V	V	V	0
Chien
Director United
Microelectronics	-	-	-	V		V	V			V	V	V	V	V		0
Director
Kuei-Hung Tseng	-	-	Yes	V		V	V	V	V	V	V	V	V	V		0
Director Hsun
Chieh	-	-	-	V		V	V			V	V	V	V	V		0
Investment
Director	-	-	Yes	V		V	V	V	V	V	V	V	V	V		0
Wan-Ling Cheng
Director Wen-Chi	-	-	Yes			V	V	V	V	V	V	V	V	V	V	0
Chen
Director	-	-	Yes			V	V	V	V	V	V	V	V	V	V	0
Shur-Jung Shyi
Director	-	-	Yes	V		V	V	V	V	V	V	V	V	V	V	0
Hsin-Shen Liu
Independent
Director	-	-	Yes	V	V	V	V	V	V	V	V	V	V	V	V	1
Tsi-Wang Huang
Independent
Director	-	-	Yes	V	V	V	V	V	V	V	V	V	V	V	V	0
Jui-Hsiang Lo
Independent
Director Ya-Ching	-	-	Yes	V	V	V	V	V	V	V	V	V	V	V	V	1
Li

Note: Please check "✓" the corresponding boxes if the directors meet the following conditions during the two years prior to the nomination and during the term of office.

(1) Not an employee of the Company or any of its affiliates.

(2) Not a director or supervisor of the Company or any of its affiliates (except for independent directors appointed in accordance with the Act or the laws and regulations of the local country, and concurrently serving at the Company and its parent company, subsidiary or a subsidiary of the same parent).

(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or is ranked in the top 10 in shareholdings.

(4) Not an officer related to (1) subparagraph or not a person whose spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship related to (2) subparagraph and (3) subparagraph.

(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total outstanding shares of the Company or ranks among the top 5 corporate shareholders in the terms of share volume held or is assigned according to the Item 1 or 2, Article 27 of the Company Act. (This does not apply in cases where the person is an Independent Director of the Company, its parent or subsidiary established in pursuant to this law or local laws).

(6) Not a director, supervisor or employee of a company controlled by the same person who has shares over half of the Company's director seats or voting rights (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

(7) Not a director, supervisor, or employee of another company or institution who, or whose spouse, is a chairman, president, or person holding an equivalent position of the Company (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).

(8) Not a director (governor), supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. However, the aforementioned does not apply to the specified company or institution holding 20 percent or more and no more than 50 percent of the total number of issued shares of the public company and the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

(9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, director, supervisor, managerial officer or spouse thereof that provides auditing service for the Company or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT\$500,000 in the past two years. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

(10) Not a spouse or a relative within the second degree of kinship to any other director of the Company.

(11) Circumstances in Article 30 of the Company Act are not applicable.

(12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

(II) Information of Managers

		Election	Shareholding		Current Shares Held by Children of Minor Age
Title/Nationality	Name/Gender	(appointment) date	Number of Shares	Shareholding	Number of Shares	Shareholding
President R.O.C. and United States	Shur-Jung Shyi Male	2013.02.01	20,789	0.00%	0	-
Chief Strategy Officer R.O.C.	Cheng-Chien Chien Male	2013.01.01	1,746,465	0.27%	0	-
Vice President R.O.C. and United States	Sin-Kuo Cho Male	2007.09.03	0	0.00%	0	-
Chief Financial Officer/ Chief Corporate Governance Officer R.O.C.	Ming-Hua Su Male	2013.01.01 2020.03.18	336,984	0.05%	414	0.00%
Chief Accountant R.O.C.	Yuan-Kwei Chen Male	2013.01.01	0	0.00%	0

Note 1. The shareholding is calculated based on the number of issued shares of 630,967,473 shares, less 3 treasury shares, and the number of outstanding shares of 630,967,470 shares as of March 29, 2021. The shareholding of outstanding shares is calculated by unconditionally rounding off two decimal places.

Note 2. The shareholdings of managers are calculated based on the number of shares held on March 29, 2021.

Note 3. Election and appointment date of the Company's managers.

Note 4. Chairman Chien is also the Chief Strategy Officer of the Company. In order to enhance operational efficiency and decision execution, the Chairman also maintains close communication with the directors about the Company's operations, plans and policies to implement corporate governance. In the future, the Company intends to increase the number of independent directors to enhance the functions of the Board of Directors and strengthen the supervisory function. More than half of the board members are not also employees or managers. More than half of the Board members are not employees or managers of the Company.

Note 5. None of the managers has held the Company's shares in the names of others.

Note 6. All managers are not spouses or relatives within the second degree of kinship of other managers

Major Experience (Education)	Position Concurrently Held at Other Companies
MA in Electrical Engineering, New York State University President, XGI Technology	Director of SiS, Director of HuitTong Intelligence, Supervisor of Waltop International, Executive Director of Suzhou MLight Electronics
MBA, Saginaw Valley State University Chairman, XGI Technology	Chief Strategy Officer of SiS, Director of Unimicron Technology, Chairman of HuitTong Intelligence, Director of Shieh Yong Capital, Vice Chairman of Asia Pacific Mircrosystems, Director of Mars Investment, Executive Director of Shenzhen Bangtong
Master in Computer, New Jersey Technology Institute Market Technology Assistant Manager of Alteram, President of Vxis Technology	Director, Epostar (BVI)
Bachelor of Business Management, Feng Chia University	Supervisor of Vxis Technology, Supervisor of HuitTong Intelligence
Bachelor of Accounting, Culture University	None

III. Remuneration of the Directors, President, and Vice Presidents

(I) Director Remuneration

						Director Remuneration					Ratio of Total
			Remuneration		Pension		Director Compensation		Business Expenses		Remuneration (A+B+C+D) to Net Profit
			(A)		(B)		(C)		(D)		After Tax (Note 4)
Position	Name	The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements
Chairman	Cheng-Chien Chien	-	-	-	-	-	-	625	625	-0.20%	-0.20%
Director	United Microelectronics Corp. Representative: Kuei-Hung Tseng Representative: Wen-Chieh Wang	-	-	-	-	-	-	35 110	35 110	-0.01% -0.03%	-0.01% -0.03%
Director	Hsun Chieh Investment Co., Ltd. Representative: Wan-Ling Cheng	-	-	-	-	-	-	145	145	-0.04%	-0.04%
Director	Wen-Chi Chen	-	-	-	-	-	-	145	145	-0.04%	-0.04%
Director	Shur-Jung Shyi	-	-	-	-	-	-	145	145	-0.04%	-0.04%
Director	Hsin-Shen Liu	-	-	-	-	-	-	140	140	-0.04%	-0.04%
Independent Director	Tsai-Wang Huang	-	-	-	-	-	-	625	625	-0.20%	-0.20%
Independent Director	Jui-Hsiang Lo	-	-	-	-	-	-	625	625	-0.20%	-0.20%
Independent Director	Ya-Ching Li	-	-	-	-	-	-	620	620	-0.20%	-0.20%

(II) Range of Director Remuneration

		Name of Director
	Total Amount of Remuneration (A+B+C+D)		(A+B+C+D+E+F+G)	Total Amount of Remuneration
Range of Remuneration Paid to Directors	The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements
	Cheng-Chien Chien,	Cheng-Chien Chien,	Wen-Chieh Wang,	Wen-Chieh Wang,
	Wen-Chieh Wang	Wen-Chieh Wang	Kuei-Hung Tseng	Kuei-Hung Tseng
	Kuei-Hung Tseng,	Kuei-Hung Tseng,	Wan-Ling Cheng,	Wan-Ling Cheng,
	Wan-Ling Cheng	Wan-Ling Cheng	Wen-Chi Chen	Wen-Chi Chen
Below NT\$2,000,000	Wen-Chi Chen,	Wen-Chi Chen,	Hsin-Shen Liu,	Hsin-Shen Liu,
	Shur-Jung Shyi	Shur-Jung Shyi	Hsin-Shen Liu	Hsin-Shen Liu
	Hsin-Shen Liu,	Hsin-Shen Liu,	Jui-Hsiang Lo,	Jui-Hsiang Lo,
	Hsin-Shen Liu	Hsin-Shen Liu	Jui-Hsiang Lo	Jui-Hsiang Lo
	Jui-Hsiang Lo,	Jui-Hsiang Lo,
	Jui-Hsiang Lo	Jui-Hsiang Lo
NT\$2,000,000 (inclusive) ~ NT\$5,000,000			Cheng-Chien Chien,	Cheng-Chien Chien,
(exclusive)			Shur-Jung Shyi	Shur-Jung Shyi
Total	10	10	10	10

Note 1. General directors are: director Cheng-Chien Chien, director Wen-Chieh Wang, director Wan-Ling Cheng, director Wan-Ling Cheng, director Wen-Chi Chen, director Shur-Jung Shyi, director Hsin-Shen Liu.

Note 2. Independent directors are: independent director Tsi-Wang Huang, independent director Jui-Hsiang Lo, independent director Ya-Ching Li.

Note 3. On April 6, 2020, the institutional director representative of United Microelectronics was changed from director Wen-Chieh Wang to director Kuei-Hung Tseng. Director Wan-Ling Cheng is the Legal representative of Hsun Chieh Investment.

Unit: NT\$'000

			Relevant Remuneration Received by Directors who Are Also Employees
	Salary, Bonus, and Allowance (E)		Severance Pay and Pension (F)		Employee Compensation (G)				Ratio of Total Remuneration (A+B+C+D+E+F+G) to Net Profit After Tax (Note 4)	Remuneration from Invested
The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements	Cash	The Company Stock	Cash	All Companies in Consolidated Financial Statements Stock	The Company	All Companies in Consolidated Financial Statements	Companies Other than Subsidiaries or the Parent Company
3,320	3,320	-	-	-	1,580	-	1,580	-1.84%	-1.84%	None
-	-	-	-	-	-	-	-	-0.01% -0.03%	0.01% -0.03%	None
-	-	-	-	-	-	-		-0.04%	-0.04%	None
-	-	-	-	-	-	-	-	-0.04%	-0.04%	None
3,170	3,170	108	108	-	1,264	-	1,264	-1.56%	-1.56%	None
-	-	-	-	-	-	-	-	-0.04%	-0.04%	None
-	-	-	-	-	-	-	-	-0.20%	-0.20%	None
-	-	-	-	-	-	-	-	-0.20%	-0.20%	None
-	-	-	-	-	-	-	-	-0.20%	-0.20%	None

Note 1. Directors of the 11th term were elected on June 21, 2019.

Note 2. Information of director remuneration updated as of December 12, 2020.

Note 3. In 2020, the consolidated net loss after tax attributable to the owners of the parent company was NT\$299,468 thousand

Note 4. The ratio is calculated by unconditionally rounding off two decimal places.

Note 5. With regard to the remuneration of the Company's independent directors, in addition to the evaluation results of the performance evaluation of the directors, the Remuneration Committee shall, in accordance with Article 24 of the Company's Articles of Incorporation, consider the independent director's participation and contribution in the Company's operations, connect the reasonable fairness of the performance risk with the remuneration received, take into account the Company's operating performance and the general remuneration in the industry, and submit to the Board of Directors for approval.

Note 6. Other than disclosures in the above table, remuneration paid to directors for providing services (e.g., providing consulting services as a non-employee) for all companies in consolidated financial statements in the most recent year: None.

(III) Manager Remuneration

Unit: NT\$'000

		Salary (A)		Severance Pay and Pension (B)		Bonus and Allowance (C)
			All Companies		All Companies		All Companies
Position	Name		in		in		in
		The Company	Consolidated	The Company	Consolidated	The Company	Consolidated
			Financial		Financial		Financial
			Statements		Statements		Statements
President	Shur-Jung Shyi	3,170	3,170	108	108	-	-
Chief Strategy	Cheng-Chien	3,320	3,320	-	-	-	-
Officer	Chien
Vice President	Sin-Kuo Cho	2,681	2,681	108	108	200	200
Chief Financial officer/ Chief Corporate Governance Officer	Ming-Hua Su	2,127	2,127	-	-	-	-

(IV) Top Five Managers with the Highest Remuneration

	Name	Salary (A)		Severance Pay and Pension (B)			Bonus and Allowance (C)
Position		The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements	The Company	All Companies in Consolidated Financial Statements
Chief Strategy Officer	Cheng-Chien Chien	3,320	3,320	-	-	-	-
President	Shur-Jung Shyi	3,170	3,170	108	108	-	-
Vice President	Sin-Kuo Cho	2,681	2,681	108	108	200	200
Chief Financial officer/ Chief Corporate Governance Officer	Ming-Hua Su	2,127	2,127	-	-	-	-

(V) Range of Manager Remuneration

	Name of President and Vice President
Range of Remuneration Paid to the President	Total Amount of Remuneration (A+B+C+D)
and Vice Presidents	The Company	All Companies in Consolidated Financial
		Statements
NT\$2,000,000 (inclusive) ~ NT\$5,000,000	Cheng-Chien Chien, Shur-Jung Shyi	Cheng-Chien Chien, Shur-Jung Shyi
(exclusive)	Sin-Kuo Cho, Ming-Hua Su	Sin-Kuo Cho, Ming-Hua Su
Total	4	4

Unit: NT\$'000

	Employee Compensation (D)			Ratio of Total Remuneration (A+B+C+D) to Net Profit After Tax (Note 2)		Remuneration from Invested
The Company			All Companies in Consolidated Financial Statements		All Companies in Consolidated	Companies Other than Subsidiaries
Cash	Stock	Cash	Stock	The Company	Financial Statements	or the Parent Company
-	1,264	-	1,264	-1.51%	-1.51%	None
-	1,580	-	1,580	-1.63%	-1.63%	None
-	474	-	474	-1.15%	-1.15%	None
-	758	-	758	-0.96%	-0.96%	None

Note 1. Information of President, Vice President and supervisors updated as of December 12, 2020.

Note 2. In 2020, the consolidated net loss after tax attributable to the owners of the parent company was NT299,468 thousand.

Note 3. The ratio is calculated by unconditionally rounding off two decimal places.

Unit: NT\$'000

	Employee Compensation (D)			Ratio of Total Remuneration (A+B+C+D) to Net Profit After Tax (Note 2)		Remuneration from Invested
The Company		All Companies in Consolidated Financial Statements		The Company	All Companies in Consolidated	Companies Other than Subsidiaries
Cash	Stock	Cash	Stock		Financial Statements	or the Parent Company
-	1,580	-	1,580	-1.63%	-1.63%	None
-	1,264		1,264	-1.51%	-1.51%	None
-	474	- -	474	-1.15%	-1.15%	None
-	758	-	758	-0.96%	-0.96%	None

Note 1. Information of President, Vice President and supervisors updated as of December 12, 2020.

Note 2. In 2020, the consolidated net loss after tax attributable to the owners of the parent company was NT\$299,468 thousand.

Note 3. The ratio is calculated by unconditionally rounding off two decimal places.

Name of manager who distributed employee compensation and the distribution status: The Company did not distribute employee compensation in 2019.

(VI) Analysis of Director, Supervisor and Manager Remuneration

A. Analysis of Director and Manager Remuneration in the Past Two Years

Unit: NT\$'000

		Total remuneration to net profit (loss) after tax ratio
		2020		2019
Position	Remuneration	Net profit (loss) after tax	Total remuneration to net profit (loss) after tax	Remuneration	Net profit (loss) after tax	Total remuneration to net profit (loss) after tax
Director	3,215		-1.07%	2,860		-1.27%
Supervisor	-	(299,468)	-	133	(224,691)	-0.05%
Manager	15,790		-5.27%	14,543		-6.47%

Note 1. The term of office of the Board of Directors of the 10th was from June 21, 2016 to June 20, 2019. Members of the Board of Directors included 7 directors (including 2 independent directors) and 2 supervisors.

Note 2. The Board of Directors of the 11th term was appointed on June 21, 2019. Members of the Board of Directors included 9 directors (including 3 independent directors).

Note 3. The ratio is calculated by unconditionally rounding off two decimal places.

• B. Remuneration policies, standards and packages, procedures for determining remuneration, and connection between operating performance and future risk exposure
• In accordance with the Compensation Committee Charter of the Company, the compensation system for directors, supervisors and managers includes cash compensation, stock options, stock dividends, retirement benefits or severance pay, allowances and other substantial incentives, which shall be approved by the Remuneration Committee of the Company and then submitted to the Board of Directors for approval.
• Director remuneration distribution policy and the procedures of determining remuneration: In addition to the monthly fixed amount of transportation fee, pursuant to the Company's Articles of Incorporation, the net profit after final accounts shall be used to pay the income tax in accordance with the laws and regulations and offset the accumulated loss. Afterward, 10% shall be allocated as a legal reserve. The percentage of director and supervisor remuneration shall not exceed 2% of the aforementioned balance.
• The manager's compensation policy, standards and packages are determined with reference to the industry standard, the Company's payroll regulations, the manager's respective areas of responsibility, the performance and achievement rate of the same year, and the reasonable compensation based on the contribution to the Company's overall operation in that year.
• The Company has assessed that there are no significant future risks.

IV. Implementation of Corporate Governance

• (I) Operation of the Board of Directors
• A. Participation of the directors of 11th term in 2019, 2020 and 2021 and the operation of the Board of Directors:

The 11th Board of Directors held 9 meetings from June 21, 2019 to March 29, 2021 (extraordinary on June 21, 2019, August 2, 2019, November 6, 2019, March 18, 2020, April 27, 2020, May 11, 2020,
	August 10, 2020, November 9, 2020 and March 17, 2021)
Position	Name	Attendance in person	Attendance by proxy	Actual attendence	Remarks
Chairman	Cheng-Chien Chien	9	0	100 %
	Representative of United Microelectronics: Wen-Chieh Wang	4	0	100 %
Director	Representative of United Microelectronics: Kuei-Hung Tseng	5	0	100 %	Note 2
Director	Representative of Hsun Chieh Investment: Wan-Ling Cheng	8	1	89 %	Entrusted on August 2, 2019
Director Wen-Chi Chen		9	0	100 %
Director	Shur-Jung Shyi	9	0	100 %
Director	Hsin-Shen Liu	7	2	77 %	Entrusted on November 9, 2020 and March 17, 2021
Independent Director	Tsai-Wang Huang	9	0	100 %
Independent Director	Jui-Hsiang Lo	9	0	100 %
Independent Director	Ya-Ching Li	8	1	89 %	Entrusted on November 9, 2020

Note 1. The Company's directors of the 11th term was appointed on June 21, 2019.

Note 2. On April 6, 2020, the institutional director representative of United Microelectronics was changed from director Wen-Chieh Wang to director Kuei-Hung Tseng.

Note 3. The actual attendance rate is calculated on the basis of the number of Board meetings held during the tenure and the number of meetings attended. Data updated as of the date of publication of the Annual Report

Other matters to be recorded:

Matters set out in Article 14-3 of the Securities and Exchange Act and other resolutions made by the Board of Directors which are opposed or reserved by the independent directors; these are recorded or the independent directors have submitted written statements against the resolutions: the independent directors of the Company agree with the resolution of the Board of Directors without any objection or reservation.

Recusals of directors from voting due to conflicts of interests:

• (1) At the election of Remuneration Committee members on August 2, 2019, independent director Tsi-Wang Huang, Jui-Hsiang Lo, and Ya-Ching Li recused from the discussion and voting of the
• resolution. The rest of the attending directors approved the resolution without any objection. (2) With regard to the transfer of shares to employees from the repurchase of shares on August 10, 2020, Chairman Cheng-Chien Chien and director Shur-Jung Shyi recused from the discussion and voting of the resolution. The rest of the attending directors approved the resolution without any objection. With regard to the Get Green Energy proposal, Chairman Cheng-Chien Chien recused from the discussion, handling, and voting of the resolution. The rest of the attending directors approved the resolution without any objection. (3) With regard to Goaltop Technology's capital increase by cash on March 17, 2021, Chairman
• Cheng-Chien Chien recused from the discussion, handling, and voting of the resolution. The rest of the attending directors approved the resolution without any objection. Communication between the independent directors and the Chief Internal Auditor: The Company's
• internal audit department submits monthly audit reports and follow-up reports on audit findings to
• the independent directors, reports audit findings at the quarterly Board meetings, and holds regular discussions with the independent directors. Targets and implementation of the Board of Directors' functions in the current and most recent years: In order to implement corporate governance and enhance the functions of the Company's Board of Directors, performance targets are established to strengthen the efficiency of the Board of Directors' operations. The Company established the "Board of Directors Performance Evaluation Procedures" in 2019 and conducts performance evaluation annually. For the sustainable development of the Company and to assist the Board of Directors to strengthen the management mechanism and improve the corporate governance, the Audit Committee was established in 2019 to enhance the operational efficiency of the Board of Directors.

B. Evaluation of the Board of Director

Frequency		Once a year
Period		January 1, 2020 - December 31, 2020
Scope of evaluation	Evaluation method	Evaluation aspects		Single/total evaluation results
		Participation in the Company's operation (12 items)	4.83
		Improvement of the Board of Directors decision-making quality (12 items)	4.58
Board of Directors	Internal evaluation of the Board of Directors	Composition and structure of the Board of Directors (7 items)	5.00	4.84
		Election and continuous education of the directors (7 items)	5.00
		Internal control (7 items)	5.00
		Understanding of the Company's objectives and missions (3 items)	4.98
		Understanding of the duties of directors (3 items)	4.99
	Self-evaluation and peer evaluation of Board members	Participation in the Company's operation (8 items)	4.95	4.97
Individual directors		Management and communication of the internal relations (3 items)	4.97
		Expertise and continuing education of the directors (3 items)	4.99
		Internal control (3 items)	5.00
		Participation in the Company's operation (4 items)	5.00
	Self-evaluation and peer	Understanding of the duties of the Audit Committee (6 items)	4.98
Audit Committee	evaluation of the Audit Committee members	Improvement of the Board of Directors decision-making quality (7 items)	5.00	4.99
		Composition and election of the Audit Committee members (3 items)	5.00
		Internal control (3 items)	5.00
		Participation in the Company's operation (4 items)	5.00
Remuneration Committer	Self-evaluation and peer	Understanding of the duties of the Remuneration Committee (5 items)	4.96
	evaluation of the Remuneration Committee	Improvement of the Board of Directors decision-making quality (6 items)	5.00	4.99
	members	Composition and election of the Remuneration Committee members (3 items)	5.00
		Internal control (1 item)	5.00

Note 1. The evaluation results are presented in five levels, and the principles of the assessment levels are as follows: Number 1: Very poor (strongly disagree); Number 2: Poor (disagree); Number 3: Moderate (average); Number 4: Excellent (agree); Number 5: Excellent (strongly agree).

Note 2. Reported at the Board meeting on March 17, 2021.

C. Results of Board of Directors Performance Evaluation

The selection of the Company's Board members is taken into account: the operational development needs and facilitation of the full performance of the Board of Directors' functions. The Board meetings have an open discussion atmosphere, which enables the directors to provide guidance and supervision, and are able to form medium and long-term strategies and annual plans that can be implemented, and that is conducive to the Company's sustainable operation. The Board of Directors attaches great importance to corporate risk management. The Chief Corporate Governance Officer is committed to providing the necessary assistance to the directors to facilitate timely access to sufficient information and resources for Board members to exercise their duties. The evaluation report also recommends the revision of the Nomination Committee Charter and the definition of the division of responsibilities of the committee, so as to serve as a reference for the Company to improve the performance of the Board of Directors.

(II) Operations of the Audit Committee:

The Audit Committee supports the Board of Directors to oversee the Company and responsible for the missions granted by Company Act, Securities and Exchange Act, and other related laws and regulations. The Company's Audit Committee is composed all independent directors. The operation of the committee complies with the Audit Committee Charter.

• A. Key work items of the Audit Committee:
• (1) The Company's financial statements
• (2) The Company's internal control system
• (3) Material properties, derivatives, loaning of funds, and provision of endorsements/guarantees
• (4) Audit plan of the internal audit department and implementation of such plan
• (5) Appointment, discharge, compensation, and independence of certified public accountants
• (6) Management's understanding of the risks and control procedures of compliance to laws and regulations
• B. The 1st Audit Committee members' participation in the operation of the Audit Committee in 2019, 2020, and 2021:

The 1st Audit Committee held 9 meetings from June 21, 2019 to March 29, 2021 (extraordinary on June 21, 2019, August 2, 2019, November 6, 2019, March 18, 2020, April 27, 2020, May 11, 2020, August 10, 2020, November 9, 2020 and March 17, 2021)
Attendance in Attendance by Actual Position Name Remarks person proxy attendence
Independent Director	Tsai-Wang Huang	9	0	100 %
Independent Director	Jui-Hsiang Lo	9	0	100 %
Independent Director	Ya-Ching Li	8	1	89 %	Entrusted on November 9, 2020

Note:The Audit Committee was established on June 21, 2019

• C. With regard to the implementation of the Audit Committee, if any of the following circumstances occurs, the dates, terms of the meetings, contents of motions, all Audit Committee resolutions, and the Company's handling of such resolutions shall be specified.
• (1) Matters set out in Article 14-5 of the Securities and Exchange Act

Board of Directors Date/Term	Major resolutions	Audit Committee resolution	The Company's response to the Audit Committee
2019.08.02 1st meeting of the 11th term	2019 Q2 Financial Report Goaltop Technology's capital increase by cash	Approved by all attending committee members	Approved by directors participated in the discussion
2019.11.06 2nd meeting of the 11th term	2019 Q3 Financial Report 2020 Audit Plan Chingchi Technology investment proposal Capital increase by cash in sub-subsidiary Suzhou MLight Electronics	Approved by all attending committee members	Approved by directors participated in the discussion
2020.03.18 3rd meeting of the 11th term	Deliberation of the independence evaluation of the Company's CPAs 2019 Financial Report and Financial Statements Change of CPA 2019 Internal Control Statement Addition to the internal control/internal audit system 2019 Earnings Distribution Proposal	Approved by all attending committee members	Approved by directors participated in the discussion
2020.04.27 4th meeting of the 11th term	Amendment to the 2019 Earnings Distribution Proposal	Approved by all attending committee members	Approved by directors participated in the discussion
2020.05.11 5th meeting of the 11th term	2020 Q1 Financial Report Subsidiary Mars Investments Ltd.'s capital increase in cash Donation to the SiS Education Foundation Amendment to the Audit Plan	Approved by all attending committee members	Approved by directors participated in the discussion
2020.08.10 6th meeting of the 11th term	2020 Q2 Financial Report Sales of the shares of EpoStar Electronics(BVI) Corp. Accounts receivable that are three months past due: unrelating to loans of funds Setting the base date of the Company's capital increase by issuance of new shares and shareholders ex-dividend	Approved by all attending committee members	Approved by directors participated in the discussion
2020.11.09 7th meeting of the 11th term	2020 Q3 Financial Report 2020 Audit Plan Accounts receivable that are three months past due: unrelating to loans of funds Increase of bank credit limit	Approved by all attending committee members	Approved by directors participated in the discussion
2021.03.17 8th meeting of the 11th term	Deliberation of the independence evaluation of the Company's CPAs 2020 Financial Statements Accounts receivable that are three months past due: unrelating to loans of funds 2020 Internal Control System Statement Donation to the SiS Education Foundation Subsidiary Mars's capital increase by cash Goaltop Technology's capital increase by cash 2020 Earnings distribution Proposal Issuance of new shares by capital increase from earnings	Approved by all attending committee members	Approved by directors participated in the discussion

(2) In addition to the above-mentioned matters, other matters which were not approved by the Audit

Committee but were approved by two-thirds or more of all directors: None.

• D. Recusals of independent directors from resolutions due to conflicts of interests: None.
• E. Communication between the independent directors and the Chief Internal Auditor, and the CPAs:
• (1) In addition to submitting monthly audit finding reports and follow-up reports to the independent directors by the Company's internal audit department, the Company's Chief Internal Auditor holds at least one meeting of the Audit Committee every half year to report on audit work, audit results, and follow-ups to the independent directors.
• (2) Every half year, the Company's CPAs report and communicate to independent directors regarding the review or audit results of the Company and its subsidiaries at home and abroad, internal control audit, the impact of the amendments to and release of IFRSs on the Company, and other relevant legal requirements.
• (3) Communication between the independent directors and the Chief Internal Auditor In addition to submitting monthly audit reports and follow-up reports to the independent directors,

the Company's internal audit department explains the audit, the audit results, and their follow-ups at the Board meetings and holds regular meetings with the independent directors.

Date	Key communication topics (meetings)
2020.05.11	Improvement of deficiencies and irregularities of the internal control system of the past year
2020.08.10	Internal Audit Plan for the next year
(4)	Communication between the independent directors and CPAs
Date	Key communication topics (meetings)
2020.03.18	2019 Consolidated and Parent Company Only Financial Report review results, Discussion and communication on the application of IFRS published and the impact of the new amendments in 2020
2020.08.10	2020 H1 Financial Report review results, Discussion and communication on the applicable issues of the IFRS and the impact of new amendments.
2021.03.17	2020 Consolidated and Parent Company Only Financial Report review results, Discussion and communication on the application of IFRS published and the impact of the new amendments in 2021

(5) The chief internal auditor, CPAs, and independent directors can communicate directly with each

other as needed at any time, and the communication channel runs smoothly.

(III) Implementation of Corporate Governance

	Item	Implementation Answer/Explanation	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
I.	Best Practice Principles for TWSE/GTSM Listed Companies	Has the Company established and disclosed its code of practice on corporate governance based on Corporate Governance
		Yes/To establish a good corporate governance system, the Company has established its own Corporate Governance Principles based on the "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" prepared by Taiwan Stock Exchange Corporation and Taipei Exchange to establish an effective corporate governance framework and then abide by it. In addition to complying with the laws and regulations and the Articles of Incorporation, the Company's corporate governance system is based on the principles of protecting the rights and interests of shareholders, strengthening the functions of the Board of Directors, fulfilling the functions of the Audit Committee, respecting the rights and interests of stakeholders, and enhancing the transparency of information, as well as upholding Ethical Corporate Management Best Practice Principles, with the hope to fulfill corporate responsibility for sustainable management and enhance operational performance through effective corporate governance operations.	None
II.	Shareholding structure and shareholders' rights	The Principles are disclosed and available for download on the Company's website at www.sis.com.
	Does the Company establish and implement internal operating procedures to deal with shareholders' suggestions, doubts, disputes, and litigation	Yes/The Company attaches great attention to right-to-know of shareholders and complies with the relevant regulations of information disclosure, and shall, in a frequent and timely manner, provide the Company's financial, business, internal shareholding, and corporate governance information to the shareholders through the MOPS or the Company's website. For ensuring shareholder's interests, the Company has appointed dedicated staff to handle the suggestions, inquiries, and disputes of shareholders.	None
	Does the Company possess a list of its major shareholders with controlling power as well as the ultimate owners of those major shareholders	Yes/The Company has established a system, where a dedicated person will retain at all times a register of major shareholders who own a relatively high percentage of shares and have controlling power, and of the persons with ultimate control over those major shareholders. Pursuant to the information disclosure requirements, the Company shall regularly disclose relevant pledges and addition/decrease in the shares of shareholders who have over 10% of the Company shares. The Company shall also disclose major items that can result in changes in shares so other shareholders can conduct supervision.	None
	Does the Company establish and execute a risk management and firewall system with its affiliates	Yes/The Company and its affiliates have established specific rules for their personnel, assets, and financial affairs, which clearly stated their responsibilities. In addition, risk assessments are conducted and firewalls are established to prevent unpredictable issues.	None
	Does the Company establish internal rules against insiders using undisclosed information for securities trading	Yes/ The Company has established and effectively implemented a comprehensive internal control system in accordance with relevant laws, orders and stamdards. In addition to the regular self-inspection of each department, the audit department reviews the results of self-inspection of each department from time to time for better supervision.	None

	Item	Implementation Answer/Explanation	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
III.	Composition and responsibilities of the Board of Directors
	Has the Board of Directors established diversified policies for the the composition of its members and ensure smooth implementation	Yes/The Company has a policy for the nomination and election of directors, taking into account the organizational culture, operating style, and long-term development, and has established a policy to diversify the composition of the Board of Directors. The Company's Board of Directors is composed of nine directors (including two female directors) with different professional backgrounds, who are responsible for the operation and supervision of the Company. The diversity of academic and industrial experience of the Board of Directors is beneficial to corporate operational decision-making and medium and long-term strategic planning. The Board of Directors currently has three independent directors (including one female director), two of whom have served for 8 years and one of whom has served for 2 years. The number of directors who are not managers of the Company exceeds half of the Board of Directors. Related information is available on the Company's website at www.sis.com.	None
	Does the Company voluntarily establish other functional committees in addition to the Remuneration Committee and Audit Committee required by the laws	No/ The Company has established the Remuneration Committee and the Audit Committee, which are composed of independent directors in accordance with the law, to contribute to the Company's sustainable development, assist the Board of Directors in strengthening the management mechanism and improve corporate governance. The Chief Corporate Governance Officer has been established to be responsible for the operation of corporate governance and to coordinate departments of the Company. A comprehensive and effective corporate governance structure has been established to fulfill the responsibility of sustainable management and to improve the performance of the Company's operations. In the future, other functional committees will be established according to legal requirements and actual needs.	None
	Does the Company establish Board of Directors Performance Evaluation Procedures and its evaluation methods, conduct the evaluation annually and regularly, report the results of evaluations to the Board of Directors, and use them as a reference for individual directors' remuneration and nomination and renewal	Yes/The Company has established standards and methods to evaluate the performance of the Board of Directors, conducts Board evaluation, self/peer evaluation annually and regularly, reports the results of evaluations to the Remuneration Committee and the Board of Directors, and use them as a reference for individual directors' remuneration and nomination and renewal. The self/peer evaluation of the Board of Directors and Board members is an evaluation of their participation in the Company's operations, improvement of the Board of Directors decision-making quality, composition and structure of the Board of Directors, election and continuing education of directors, internal control, understanding of the Company's objectives and missions, understanding of directors' responsibilities, participation in the Company's operations, management and communication of the internal relations, and expertise and continuing education of directors. The Board of Directors had a high attendance rate of over 95%. The overall performance evaluation can be found on page 18 of this Annual Report.	None
	Does the Company regularly evaluate the independence of the CPAs	Yes/The Company's Audit Committee regularly evaluates the internal quality control procedures of the CPAs and their independence on the basis of the following matters, which are reported to the Board of Directors for approval: The CPAs' independence statement; the audit or non-audit services provided by the CPAs are reviewed in advance by the Audit Committee to ensure that the non-audit services do not affect the audit results; the same CPA does not provide CPA services for more than five consecutive years; the suitability and independence of the certified public accountants are evaluated annually, including the scale and reputation of the accounting firm, the nature and extent of non-audit services provided, peer reviews, the quality of audit services, and whether there is any lawsuits.	None

Governance Implementation Best-Practice Item Answer/Explanation Principles for TWSE/TPEx Listed Companies and Reasons Thereof IV. Does the Company has a suitable and appropriate number of corporate governance officer and designates a Chief Corporate Governance Officer to be responsible for corporate governance-related matters Yes/The Company's Chief Financial Officer was approved to act as the Chief Corporate Governance Officer by the Remuneration Committee and the Board of Directors on March 18, 2020, who has more than three years of experience as the head of finance and stock affairs of a public company and has completed 15 hours of professional education as required by law in 2020. The Chief Corporate Governance Officer is responsible for supervising the stock affairs division under the finance department on matters related to the convening of Board meetings and shareholders' meetings, preparing minutes and disclosures, providing information necessary for directors to perform their duties, assisting directors in complying with laws and regulations, and assisting directors in their appointment and continuing education. In addition, the Chief Corporate Governance Officer communicates with the independent directors on an annual basis on matters related to corporate governance. In 2020, the implementation of corporate governance was as follows:  Oversee the planning and implementation of the corporate governance system of the Company and its subsidiaries; report regularly to the Board of Directors on important issues or legal amendments related to the Company's business sectors and corporate governance.  The Company arranges training courses according to the needs of Board members, evaluates and purchases appropriate liability insurance for directors, supervisors, and important employees; the company reports the contents of the insurance policy to the Board of Directors. None  The independent directors meet regularly and as necessary with the accountants and auditors to implement internal audit and control systems.  The agenda of the directors' meetings is notified to the directors 7 days in advance, and the meetings are convened and information is provided. If there is a conflict of interest in a resolution, those with a conflict of interests shall be recused from the discussion and voting. The minutes of the Board meetings are completed and sent to the directors within 20 days after the meeting.  To implement corporate governance, the performance of the Board of Directors, functional committees, and individual directors are regularly evaluated in accordance with the "Board of Directors Performance Evaluation Procedures" established by the Company.  The Company holds corporate meetings every year for its business performance, participates in investment forums from time to time, has dedicated staff to serve shareholders, and established diversified communication channels with investors.  The Company sets the date of the shareholders' meeting in accordance with the law, prepares and publishes the notice of the meeting, the meeting handbook, and the minutes of the meeting within the statutory period, and handles the registration of changes in the Articles of Incorporation or the election of directors within the statutory period. The Company also assigns a senior officer responsible for corporate governance-related matters and coordinate all corporate governance matters of the Company. V. Has the Company established communication channels with stakeholders, set up a stakeholder area on the Company's website, and responded appropriately to important social responsibility issues of the stakeholders Yes/ The Company has a spokesperson, stock affiar office, investor relations, and email address to maintain smooth communication channels with banks and employees, consumers, suppliers, None communities, or stakeholders of the Company, and to respect and protect their legitimate rights and interests. VI. Does the Company appoint a professional shareholder service agency to deal with shareholder affairs Yes/The Company has appointed a professional shareholder service agency, Horizon Securities None Corp., to deal with shareholder affairs on behalf of the Company.		Deviations from the
		Corporate

	Item	Implementation Answer/Explanation	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
VII.	Information Disclosure
	Does the Company have a website to disclose the financial operations and corporate governance information	Yes/The Company's website is at http://www.sis.com, which established an Internet-based reporting system for information disclosure. A dedicated staff was appointed to be responsible for gathering and disclosing information. A spokesperson system was also established so as to ensure the proper and timely disclosure of information on policies that might affect the decisions of shareholders and stakeholders.	None
	Did the Company adopt other means of information disclosure	Yes/The Company sets up a bilingual website with the use of Internet access, which is maintained by a dedicated staff and provides updated information on the Company's financial business and corporate governance. The information is detailed and accurate for the reference of shareholders and stakeholders.	None
	Does the Company announces and files the annual financial reports within two months after the close of the fiscal year and publicly announce and file the first, second, and third quarterly financial reports and the operation of each month ahead of the required deadline	No/The Company announces and files financial reports and its monthly operating within the period prescribed by the competent authority. Through the efforts of different departments and the cooperation with the accounting firm, the Company will make the announcement and filing of annual financial, whenever possible, reports within two months after the close of the fiscal year as the main objective of our annual efforts. The Company looks forward to providing shareholders and investors with more transparent and timely financial information.	None
VIII.		Is there any other important information to facilitate a better understanding of the Company's corporate governance: Yes
	Employee benefits and care	The Company adheres to relevant labor laws to protect employees' legitimate interests. The Company has comprehensive and generous welfare measures for our employees. In addition to free medical checkups every 1-2 years, the Company also provides psychological counseling services for its employees to relieve their stress. In addition, the Company provides employees' family members with consultant service on economic and legal expertise, and encourage them to communicate directly with the management to appropriately reflect their opinions on the Company's operation and financial condition or major decisions involving their interests.	None
	Investor relations	The Company has been attaching great attention to the right-to-know of investors and shareholders and complies with the relevant regulations of information disclosure through the shareholders' meetings and spokesperson system. The Company provides information on its financial, business, internal shareholding, and corporate governance to the shareholders and investors in a frequent and timely manner through the MOPS or the Company's website.	None
	Supplier relations	Upholding the principle of honesty, equality, and mutual benefit, the Company is committed to building a foundation of harmonious relationship and trust with its partners and customers with good business reputations to create a win-win situation. The Company has also set up a dedicated customer service department responsible for the communication and coordination with the inquiries of its suppliers and customers.	None

			Deviations from the
			Corporate
			Governance
	Item	Implementation	Best-Practice
		Answer/Explanation	Principles for
			TWSE/TPEx Listed
			Companies and
			Reasons Thereof
	Rights of stakeholder	The Company maintains smooth communication channels with
		banks, employees, consumers, suppliers, communities or
		stakeholders of the Company, and respects and protects their
		legitimate interests. When any of a stakeholder's legitimate interests	None
		are infringed, the Company shall handle the matter in a proper
		manner and in good faith.
	Implementation of risk	The Company has a sound financial, business and accounting
	management policies and	management system, conducts comprehensive risk assessments
	risk evaluation measures	with its major banks, customers, and suppliers, and implements
		necessary control mechanisms to identify and prevent potential	None
		risks, so as to enhance the correctness and accuracy of its
		decision-making and reduce its credit risk and operating risks.
	Implementation of customer	The Company has a dedicated customer service department, which
	policy	is responsible for providing customer consultation and assisting in
		handling customer-related issues, and responding to relevant	None
		contractors in a timely manner to provide the assistance required by
		the customers.
	Purchase of liability	To reduce and spread the unexpected risk arising from unexpected
	insurance for the directors	accidents or omissions of directors and supervisors to the Company
	and supervisors	and its shareholders, the Company purchases liability insurance for
		its directors and supervisors every year. In 2020 and 2021, the
		Company purchased "Directors, Supervisors and Important	None
		Employees Liability Insurance" with Cathay Century Insurance Co.,
		Ltd. in an amount of US\$10 million for the directors, supervisors,
		and important employees of the Company.
	Continuous education of	Relevant information is on the following page
	directors, supervisors, and		None
	managers
IX.		The improvements made in accordance with the Corporate Governance Evaluation results issued in the most recent year
		and provide prioritized plans for improvement with aspects yet to be improved
		Yes/In accordance with the results of last year's corporate governance evaluation, the Company has
		disclosed its company profile (including company history, product introduction, organizational
		structure, and management team) and investor relations contact window and response to
		shareholders' inquiries on the Company's website. The Company will prioritize the improvement of
		early disclosure of the shareholders' meeting handbook and annual report, increasing the number of	None
		independent directors to meet diversity, gender policy, and detailed disclosure of relevant corporate
		information in the annual report and on the Company's website. The future self-evaluation report or
		evaluation report will be made in accordance with the needs of the company and the regulations of
	the competent authorities.

Continuous education of directors 2020

		Education Date				Training
Position	Name	From	To	Training Institution	Course Name	Hours
		2020.07.29	2020.07.29	Academy of Banking and Finance	Corporate Governance and Sustainable Management Seminar	3
Chairman	Cheng-Chien Chien	2020.09.18	2020.09.18	Securities & Futures Institute	Prevention of Insider Trading and Promotion of Insider Equity Trading Seminar	3
		2020.09.11	2020.09.11	Securities & Futures Institute	Prevention of Insider Trading and Promotion of Insider Equity Trading Seminar	3
Director	Kuei-Hung Tseng	2020.10.23	2020.10.23	Taiwan Stock Exchange	Corporate Governance and Corporate Integrity Directors and Supervisors Seminar	3
		2020.11.25	2020.11.25	Taiwan Corporate Governance Association	Latest development, impact, and countermeasures for US-China trade war and	3
	Wan-Ling	2020.07.22	2020.07.22	Academy of Banking and Finance	Corporate Governance and Sustainable Management Seminar	3
Director	Cheng	2020.09.30	2020.09.30	Securities & Futures Institute	Prevention of Insider Trading and Promotion of Insider Equity Trading	3
		2020.07.29	2020.07.29	Academy of Banking and Finance	Corporate Governance and Sustainable Management	3
Director	Shur-Jung Shyi	2020.09.18	2020.09.18	Securities & Futures Institute	Prevention of Insider Trading and Promotion of Insider Equity Trading	3
Independent	Tsai-Wang	2020.07.22	2020.07.22	Academy of Banking and Finance	Corporate Governance and Sustainable Management	3
Director	Huang	2020.07.28	2020.07.28	global changes Seminar Seminar Seminar Seminar Corporate Integrity Taiwan Corporate Management and Merger 3 Governance Association Strategy and Planning Corporate Social Taiwan Corporate Responsibility and 3 Governance Association Sustainable Competition Taiwan Corporate Case Sharing of Recent 3 Governance Association Equity Disputes Compliance Audit Practice for Corporate
Independent Director	Jui-Hsiang Lo	2020.08.06	2020.08.06
		2020.08.06	2020.08.06
Independent Director	Ya-Ching Li	2020.07.07	2020.07.07	Accounting Research and Development Foundation in Taiwan	Shareholders' Meetings and Mergers and Acquisitions Special Issues	3
		2020.07.22	2020.07.22	Academy of Banking and Finance	Corporate Governance and Sustainable Management Seminar	3

Continuous education of managers in 2020

Position	Name	Education Date		Training Institution	Course Name	Training
		From	To			Hours
		2020.07.29	2020.07.29	Academy of Banking and Finance	Corporate Governance and Sustainable Management Seminar	3
President	Shur-Jung Shyi	2020.09.18	2020.09.18	Securities & Futures Institute	Prevention of Insider Trading and Promotion of Insider Equity Trading Seminar	3
Chief	Cheng-Chien	2020.07.29	2020.07.29	Academy of Banking and Finance	Corporate Governance and Sustainable Management Seminar	3
Strategy Officer	Chien		2020.09.18	2020.09.18	Securities & Futures Institute	Prevention of Insider Trading and Promotion of Insider Equity Trading Seminar	3
	Ming-Hua Su	2020.07.29	2020.07.29	Academy of Banking and Finance	Corporate Governance and Sustainable Management Seminar	3
		2020.09.11	2020.09.11	Securities & Futures Institute	Prevention of Insider Trading and Promotion of Insider Equity Trading Seminar	3
Chief Corporate Governance Officer		2020.11.16	2020.11.16	Securities & Futures Institute	Seminar on Understanding Commodities Derivative Transactions and Sound Operations of Corporate Sustainable Management Practices of Listed Companies	3
		2020.12.17	2020.12.17	Taiwan Corporate Governance Association	Corporate Governance and Legal Compliance	3
		2020.12.22	2020.12.22	Academy of Banking and Finance	Corporate Governance Seminar	3
Chief Accountant	Yuan-Kwei Chen	2020.08.13	2020.08.14	Accounting Research and Development Foundation in Taiwan	Continuing Education Course for Chief Accountant of Issuers, Securities Firms and the Securities Exchange	12

(IV) Operation of the Remuneration Committee

The operation of the Committee aimed to strengthen corporate governance and risk management. The Committee evaluates and monitors the remuneration system of directors and managers of the Company to motivate and retain talents. The main responsibilities are to regularly review the performance evaluation and policies and systems of the directors' and managers' remuneration, and evaluate and set the remuneration of directors and managers.

A. Key Work Items of the Remuneration Committee Approval of director-related remuneration, review of managers' performance and remuneration structure, and approval of managers' salaries and bonuses

B. Information of the 4th Remuneration Committee members

B.	Information of the 4th Remuneration Committee members
Qualifications		Meeting One of the Following Professional
		Qualification Requirements, Together with At Least					Independence (Note 1)
		Five Years of Work Experience
		A Judge, Public
	An instructor or	Prosecutor,
	higher position	Attorney,
	in a	Certified Public												Number of Other Public
	department of	Accountant, or	Having Work											Companies in
	commerce, law,	Other	Experience in											Which the
	finance,	Professional or	the Areas of											Individual is	Remarks
	accounting, or	Technical	Commerce,											Concurrently	(Note 2)
	other academic	Specialist who	Law, Finance,	1	2	3	4	5	6	7	8	9	10	Serving as a
	department	Has Passed a	or											Remuneration
	related to the	National	Accounting,											Committee
	business needs	Examination	or Otherwise											Member
	of the Company	and Has Been	Necessary for
	in a public or	Awarded a	the Business
	private junior	Certificate in a
Title	college, college	Profession
Name	or university	Necessary for
Independent		the Business
Director
Tsai-Wang	-	-	Yes	V	V	V	V	V	V	V	V	V	V	2	None
Huang
Independent
Director	-	-	Yes	V	V	V	V	V	V	V	V	V	V	0	None
Jui-Hsiang Lo
Independent
Director	-	-	Yes	V	V	V	V	V	V	V	V	V	V	1	None
Ya-Ching Li
Note 1.	Please check "✓" the corresponding boxes if the directors meet the following conditions during the two years prior to the nomination and
(1)	during the term of office. Not an employee of the Company or any of its affiliates.
(2)	Not a director or supervisor of the Company or any of its affiliates (except for independent directors appointed in accordance with
	the Act or the laws and regulations of the local country, and concurrently serving at the Company and its parent company, subsidiary or a subsidiary of the same parent).
(3)	Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the
	person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or is

ranked in the top 10 in shareholdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the officer in

• the preceding 1 subparagraph, or of any of the persons in the preceding three subparagraphs. (5) Not a director, supervisor, or employee of an institutional shareholder that directly holds 5%or more of the total number of issued shares of the Company, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of the Company under Paragraph 1 or 2, Article 27 of the Company Act (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).
• (6) Not a director, supervisor or employee of a company controlled by the same person who has shares over half of the Company's director seats or voting rights (except for an independent director appointed in accordance with the Act or the laws and regulations
• of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent). (7) Not a director, supervisor, or employee of another company or institution who, or whose spouse, is a chairman, president, or person holding an equivalent position of the Company (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent). (8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution
• that has a financial or business relationship with the Company (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of the Company and concurrently serving as an independent director, as appointed in accordance with the Act or the laws and regulations of the local country, at the Company and its parent or subsidiary or a subsidiary
• of the same parent). (9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, director, supervisor, managerial officer or spouse thereof that provides auditing service for the Company or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT\$500,000 in the past two years. However, this does not apply in cases where members of Remuneration Committee, Review Committee for Public Tender Offer or Special Committee for Mergers and Acquisitions perform their functions in accordance with Securities and Exchange Act or Business Mergers and Acquisitions Act. (10) Not under any of the categories stated in Article 30 of the Company Act. Note 2. If the member's title is a director, please explain whether Article 6, Paragraph 5 of "Regulations Governing the Appointment and Exercise of
• Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter" is complied with. Note 3. The 4th Remuneration Committee was inaugurated on June 21, 2019.

C. Operation of the 4th Remuneration Committee in 2019, 2020 and 2021

	The term of office of the 4th Remuneration Committee is August 2, 2019 to June 2020, 2022 Six meetings were held from August 2, 2019 to March 20, 2021
(August 2, 2019, November 6, 2019, March 18, 2020, August 10, 2020, November 9, 2020 and March, 17, 2021)
Position	Name	Attendance in person	Attendance by proxy	Actual attendence	Remarks
Convener	Tsai-Wang Huang	6	0	100 %
Committee Member	Jui-Hsiang Lo	6	0	100 %
Committee Member	Ya-Ching Li	5	1	83 %	Entrusted on November 9, 2020

The Remuneration Committee has three members.

Note 1. The attendance rate is calculated on the basis of the number of Remuneration Committee meetings held during the term of office and the number of meetings attended.

Note 2. Data updated as of the date of publication of the Annual Report

Other matters to be recorded:

• If the Board of Directors refuses to adopt or amends a recommendation of the Remuneration Committee, the date of the meeting, session, content of the motion, resolution by the Board of Directors, and the company's response to the Remuneration Committee's opinion (e.g., if the remuneration passed by the Board of Directors exceeds the recommendation of the Remuneration Committee, the circumstances and cause for the difference shall be specified) shall be specified: None.
• If there are resolutions of the Remuneration Committee to which members object or express reservations, and for which there is a record or declaration in writing, the date of the meeting, session, content of the motion, all members' opinions and the response to members' opinion shall be specified: None.
• D. Important resolutions of the 4th Remuneration Committee from 2019 to the date of publication of the Annual Report on March 29, 2021
• (1) 1st meeting of the 4th Audit Committee (August 2, 2019) Election of the convenor and meeting chairperson
• (2) 2nd meeting of the 4th Audit Committee (November 6, 2019) Review of the 2019 managers (including all employees) remuneration adjustment proposal, the 2020 managers (including all employees) performance bonus evaluation proposal, the 2020 managers year-end bonus evaluation proposal, and the 2020 work plan of the Remuneration Committee.
• (3) 3rd meeting of the 4th Audit Committee (March 18, 2020) 2019 Board of Directors, individual directors, Audit Committee and Remuneration Committee performance evaluation, establishment of the Chief Corporate Governance Officer.
• (4) 4th meeting of the 4th Audit Committee (August 10, 2020) 12th repurchase of shares transferred to employees.
• (5) 5th meeting of the 4th Audit Committee (November 9, 2020) Review of the 2020 managers (including all employees) remuneration adjustment proposal, the 2021 managers (including all employees) performance bonus evaluation proposal, the 2021 managers year-end bonus evaluation proposal, and the 2021 work plan of the Remuneration Committee.
• (6) 6th meeting of the 4th Audit Committee (March 17, 2021) 2020 Board of Directors, individual directors, Audit Committee and Remuneration Committee performance evaluation
• E. Remuneration Committee members have different opinions on the adoption of important resolutions with records or written statements: None

(V) Fulfillment of Social Responsibilities

I.	Item	Implementation Answer/Explanation Does the Company assess ESG risks associated with its operations based on the principle of materiality, and establish	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	related risk management policies or strategies
	environmental, social and governance.	Yes/The Company conducts risk assessment from time to time according to the different nature of ESG issues related to the Company's operations, and formulates related risk management policies or strategies. The Company also actively fulfills corporate social responsibility while engaging in business operations to meet the international trend of maintaining a balance between	None
II.		Does the Company establish a dedicated (part-time) unit to implement corporate social responsibility and have
		management appointed by the Board of Directors to be in charge of corporate social responsibility and to report the
III.	implementation status to the Board of Directors No/Although the Company does not have a dedicated (part-time) unit to implement corporate social responsibility, the Company has been actively implementing various corporate responsibility policies within the existing organizational structure in accordance with the work attributes of each department, with a view to implementing corporate governance, developing a sustainable environment, and safeguarding social welfare. Environmental issues	None
	Has the Company	Yes/The Environmental Safety and Health Department is responsible
	established proper environmental management systems based on the characteristics of the industries	for collecting and evaluating adequate and timely information of the impact of operational activities on the natural environment. Establish measurable goals and objectives, review the sustainability and relevance of these objectives from time to time, and review the progress of environmental sustainability goals or objectives.	None
	Is the Company committed to improving resource efficiency and to the use of renewable materials with low environmental impact	Yes/ Due to the limited global resources and the phenomenon of climate change and global warming, the Company actively strives to improve the efficiency of resource conservation and recycling, including water resources and all kinds of energy, in the hope of reducing the burden on the earth and the environment, so that the earth's resources can be conserved and utilized in a sustainable manner.	None
	Does the Company evaluate current and future climate change potential risks and opportunities and take countermeasures for climate issues	Yes/The Company evaluates the potential risks and opportunities to enterprises arising from climate changes from time to time, conducts risk assessments and analyses for enterprises based on different climate changes in different periods and topics, and makes effective prevention and control in response to the risks.	None
	Does the Company inspect its greenhouse gas emissions, water consumption, and the total weight of wastes in the past two years. Does the Company formulate policies on energy conservation and carbon reduction, greenhouse gas reduction, water reduction, or waste management	No/Although the Company has not specified and compiled statistics on greenhouse air emissions, water consumption, and the total weight of waste in the past, it is actively committed to low carbon, energy reduction, proper disposal of waste, and effective recycling of renewable energy for the Company and its employees in consideration of climate change in recent years and the related corporate responsibility as a member of the earth, with a hope to build a green Taiwan and environmental-friendly earth.	None

	Item	Implementation Answer/Explanation	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
IV.	Social issues
	Does the Company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights	Yes/The Company adheres to its management philosophy; we have established management policies and procedures for related issues in our rules and regulations and international human rights conventions, in the hope that we can more actively fulfill our corporate social responsibility.	None
	Does the Company formulate and implement reasonable employee benefit measures and appropriately reflect operating performance or results in employee compensation	Yes/ Please refer to page 79 of this Annual Report for the welfare measures and benefits for the Company's employees. Employees' remuneration is based on their academic background and working experience, performance and market standards, and do not differ due to gender, race, religion, political affiliation or marital status. The Company also protect the rights and interests of the employees in accordance with relevant laws and regulations and systems. The Company conducts performance appraisals for all employees on a regular basis every year for the purpose of promotion, employee training and development, and remuneration payment.	None
	Does the Company provide a safe and healthy working environment and organize training on health and safety for its employees on a regular basis	Yes/The Company provides a safe and healthy working environment for employees, including the provision of necessary health and first aid facilities and the implementation of related education and training from time to time, as well as the implementation and reporting of employee temperature and environment-related tests on a regular basis, and strives to reduce the risk factors to employees' safety and health, in order to maintain their safety and health and prevent the occurrence of occupational hazards.	None
	Has the Company established effective career development training plans	Yes/The Company organizes training and seminars from time to time to actively train our employees' career abilities through different training and communication with the peers.	None
	Does the Company comply with relevant regulations and international standards regarding customer health and safety, right to privacy, marketing and labeling of its products and services and set up relevant consumer protection policies and complaint procedures	Yes/The Company actively and clearly explains and labels the health and safety, customer privacy, marketing, and labeling of our products and services to our customers in accordance with relevant laws and regulations and international standards. The Company also provides relevant communication and consultation channels to properly communicate and serve our customers. The Company attaches great importance to the interests of the customers. In addition to providing the necessary consultation and after-sales services, the Company also provide effective and simple channels for complaints to protect the rights of consumers.	None
	Does the Company formulate supplier management policies that require suppliers to follow relevant regulations on issues such as environmental protection, occupational safety and health, or labor rights and the implementation	Yes/In accordance with relevant governmental laws and regulations and international standards, the Company has defined the management policies for suppliers in the Company's rules and regulations to ensure the safety of the working environment, human rights, and ethical standards for the implementation of the green supply chain. In addition to the Company's rules and regulations, the Company requires suppliers to comply with the laws and regulations of the place where they operate.	None
V.	body?	Does the Company refer to internationally-used standards or guidelines for the preparation of reports such as CSR reports to disclose non-financial information? Are the aforementioned reports certified or assured by a third-party accreditation
	from third-party accreditation bodies in the future.	Yes/The Company's CSR report is prepared in accordance with international report preparation standards and guidelines. The Company will actively obtain confirmation and valuable opinions	None

	Item	Implementation Answer/Explanation	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
VI.	deviations from such principles	If the Company has established Corporate Social Responsibility Best Practice Principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies," please describe the implementation and any
	Group's management and operations.	The Company has established Corporate Social Responsibility Best Practice Principles. In pursuit of corporate globalization and economic development, the Company respects social ethics and the rights of other stakeholders, and attaches great importance to issues such as resource depletion and environmental pollution. In addition to sustainable operation and profitability, the Company should also take into account the responsibilities and obligations of stakeholders in the environment, society, corporate governance, and human rights, and incorporate them into the basic responsibilities of the To implement the corporate social responsibility, the Company is advised to follow the principles below: Promote corporate governance, develop a sustainable environment, maintain social welfare, and enhance the information
VII.	disclosure related to corporate social responsibility. direction. charitable activities:     	Other important information to facilitate a better understanding of corporate social responsibility practices The Company shall also pay attention to the issues such as consumer rights, social environmental protection and public welfare, and attach importance to its social responsibility while pursuing business expansion and maximizing shareholders' benefits. While engaging in business activities, the management team also actively fulfill its corporate social responsibility to follow the international trend of maintaining a balance between environmental, social and corporate governance, enhance national economic contribution, improve the quality of life of employees, communities and society, and fulfill the mission of corporate social responsibility, incorporating social responsibility into the Company's business activities and development The Company organizes, co-organizes, or donates to charity events from time to time each year. In view of the corporate philosophy of participating in public welfare and giving back to the community. The Company participated in the following Support fundraising of services provided to underprivileged children, participate in the bakery of Children Are Us Foundation and the charity sales of World Peace Organization. Announce charity fundraising activities on the website and provide invoice donation boxes. Organize blood donation activities and call on the employees to actively pay attention to blood shortage. Take active and effective actions to create a work environment that is in line with gender equality policies, and regularly provide women's health checkups and set up caring parking spaces and breastfeeding rooms to provide a convenient and safe workplace for pregnant workers, disabled employees, and those who carry heavy loads. The workplace was awarded as a friendly workplace by the government. In support of environmental protection and better resource utilization, encourage employees to recycle and reuse all unused stationery and reusable photocopying paper. In 2000, SiS established the SiS Education Foundation. Adhering to the principle of "what is taken from the community is used in the community", the Foundation's mission is to promote education, sponsor technology research and development, and promote information dissemination. It actively encourages young students to engage in relevant research to enhance academic development and innovation and strengthen competitiveness. The Foundation also supports various educational and artistic activities through corporate actions. The Foundation participated in the following charitable activities in 2020: Donation for Construction of the Shuang Ho Campus of Taipei Medical University; support to Information Technology Activities of Chinese Professional Management Association of Hsinchu; donation for Fundraising Project for Disadvantaged Students of Shih Chien University; sponsorship to Construction of Children's Welfare Park of Chung-Yi Social Welfare Foundation; donation for Academic Counseling for the Disadvantaged of Boyo Social Welfare Foundation; sponsorship for the
		2020 Tsinghua University Freshman Pilot Camp of Tsinghua University; donation for Diversified Learning for Disadvantaged Children of Eden Social Welfare Foundation; donation for the Scholarship for Disabled of Saint Joseph Social Welfare Foundation; and donation for Service and Emergency Relief for Disadvantaged Children of Andrew Charity Association.

(VI) Integrity Management

	Item	Implementation Answer/Explanation	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
I. 	Does the Company have policies and practices for ethical corporate management passed by the Board of Directors and clearly state them in regulations and publicly available documents Do the Board of Directors and senior management make commitments to actively implement those business policie	Establishment of ethical corporate management policies and programs Yes/In order to assist the Company in establishing a corporate culture and sound development of ethical management and to provide a reference framework for the establishment of solid business operations, the Company has established the Ethical Corporate Management Best Practice Principles, Procedures for Ethical Management and Guidelines for Conduct, and the Rules for Handling Reports of Illegal, Unethical or Dishonest Practices in accordance with the relevant regulations of the competent authorities and the Company's policies, which have been approved by the Board of Directors. The Company also discloses its corporate culture and policies for ethical management, the Board of Directors and the management on its website and actively implemented and enforced them in internal management and external business activities.	None
	Does the Company establish an evaluation mechanism for the risk of unethical conduct regularly analyzes and evaluates business activities with higher risks of unethical conduct in the business scope Does the Company formulate a plan to prevent unethical conducts, which at least covers the precautionary measures prescribed in Article 7 Paragraph 2 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies	Yes/The Company has established the Ethical Corporate Management Best Practice Principles, and established the Procedures for Ethical Management and Guidelines for Conduct, and the Rules for Handling Reports of Illegal, Unethical or Dishonest Practices in accordance with the Principles. The details of the Code cover all aspects and the code of conduct. Through internal announcements and training from time to time, the Company aims to provide clear and precise regulations and explanations for different types of dishonest conduct, so that the Company's employees can comply with the standard and avoid unnecessary deviations and incidents of dishonest conduct, prevent unethical conducts of employees, and establish a solid risk control mechanism. Establish fair, honest, trustworthy and transparent business activities.	None
	Does the Company establish relevant policies which are duly enforced to prevent unethical conduct and provide implementation procedures, guidelines, consequences of violation and complaint procedures in such policies	Yes/Dishonest conducts within the scope of business and activities of the Company include political candidates or party officials, as well as any stated-owned or private enterprises or organizations and their directors, supervisors, managers, employees, persons with substantial control or other interested parties, etc. If the Company's personnel are threatened or intimidated to provide or promise to pay for the facilitation, they shall record the process and report to their immediate supervisors, and notify the Company's dedicated department to handle the matter in order to eliminate dishonest conducts.	None

			Deviations from the Ethical Corporate Management Best
		Implementation	Practice Principles
	Item	Answer/Explanation	for TWSE/TPEx
			Listed Companies
			and Reasons
			Thereof
II.	Fulfillment of ethical corporate management
	Does the Company evaluate	Yes/Before entering into a contract with another party, the Company
	business partners' ethical	has fully understood the ethical management of the other party and
	records and include	includes ethical management in the terms and conditions of the	None
	ethics-related clauses in the	contract, which stipulated ethical conduct, such as clear and
	business contracts signed with	reasonable payment terms, including payment location and method,
	the counterparties	as well as taxation laws to be complied with.
	Has the Company established	Yes/The Company's Legal Department is responsible for the
	a dedicated unit under Board	implementation, explanation, consultation service and notification
	of Directors to implement	of the Company's ethical corporate management and monitoring
	ethical corporate management, and report to	the implementation. Human Resources Administration Department has incorporated ethical corporate management into employee
	Board of Directors on a	performance appraisal and human resources policies, and has
	regular basis on ethnic	established a reward system and complaint channels, and reports to	None
	operation policies as well as	Board of Directors on the implementation and effectiveness of the
	precautionary measures	ethical corporate management policy and prevention of dishonest
	against unethical conduct and	conduct as a basis for monitoring.
	their implementation
	information
	Does the Company establish	Yes/The Company has adopted policies for preventing conflicts of
	policies to prevent conflicts of	interest and offer appropriate means for the related personnel to
	interest and provide appropriate communication	explain whether their interests would potentially conflict with those of the companies in the group. If a director or supervisor has an
	channels, and implement such	interest in a proposal listed by Board of Directors that is harmful to
	policy properly	the interests of the Group, he or she may present his or her opinion
		and answer questions, and may not participate in the discussion and	None
		voting, and shall recuse himself or herself and may not exercise his
		or her voting rights on behalf of other directors. Directors,
		supervisors, and managers of companies in the Group shall not use
		their positions in the Group to improperly benefit their own relatives or any other person.
	To implement relevant	Yes/The Company follows Ethical Corporate Management Best
	policies on ethical conduct,	Practice Principles, Procedures for Ethical Management and
	has the Company established	Guidelines for Conduct, and Rules for Handling Reports of Illegal,
	effective accounting and	Unethical or Dishonest Practices, which were approved by Board of
	internal control systems and	Directors as guidelines. The Company has effectively established an
	assign an internal audit unit to	accounting system and an internal control system for the purpose of
	develop relevant auditing	implementing ethical corporate management, and has established a	None
	plans according to the assessment results of	risk assessment and verification plan for each item in accordance with the aforementioned methods, and reviews the results of each
	unethical conduct risks. Does	risk assessment and plan from time to time and requests for
	the Company inspect the	improvement immediately to ensure that the design and
	implementation of such	implementation of this system remains accurate and effective. In the
	auditing plans or assign CPAs	future, the Company will also consider the need for an accountant
	to implement the auditing	to perform such audits in light of the scale of the audits.
	Does the Company regularly	No/Although the Company does not regularly conduct internal and
	conduct internal and external	external training on ethical corporate management, it conducts	None
	educational training on ethical corporate management	seminars and training for its employees from time to time.

III. 	Item Operation of the whistle-blowing system Does the Company establish both a	Implementation Answer/Explanation Yes/The Company provides proper reporting channels and shall keep the identity of the whistle-blower and the content of the	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	reward/whistle-blowing system and convenient whistle-blowing channels. Are appropriate personnel assigned to the alleged party	report confidential. In addition, the Company has established a disciplinary and complaint system for violations of the ethical corporate management, and immediately discloses the titles, names, dates of violations, details of violations, and the follow-up actions on the Group's intranet.	None
	Does the Company establish the standard operating procedures for investigating reported misconduct, follow-up measures to be taken after the investigation, and related confidentiality mechanisms	Yes/The Company has established standard operating procedures and confidentiality mechanisms for the investigation of reports of illegal, unethical or dishonest conduct in accordance with the rules and regulations governing the handling of such reports. Any related incidents shall be reported to the Company's dedicated unit to prevent any leakage of information.	None
	Does the Company provide protection for whistle-blowers against improper treatment	Yes/The Company has established a whistleblower protection policy in accordance with the Company's Ethical Corporate Management Best Practice Principles, the Procedures for Ethical Management and Guidelines for Conduct, and the Rules for Handling Reports of Illegal, Unethical or Dishonest Practices. The Company has a dedicated unit to handle such cases and to protect whistleblowers from improper treatment.	None
IV.		Enhanced disclosure of ethical corporate management information
	Does the Company disclose the Ethical Corporate Management Best Practice Principles and the results of its implementation on the company website and MOPS	Yes/Company website: http://www.sis.com The Company discloses its policy of ethical management on the company website, and shall make timely announcements of the policy in product launches, in order to make its suppliers, customers, and other business-related institutions and personnel fully aware of its principles and rules with respect to ethical management.	None
V.	deviations from the Principles	If the Company has established its own ethical corporate management principles based on the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, please describe the implementation and any
VI.	Employees. involved.	The Company has established the "Ethical Corporate Management Best Practice Principles", the "Code of Ethical Conduct for Directors and Managers", and the "Code of Ethics for Employees" In accordance with Company Act, Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption Act, Government Procurement Act, Act on Recusal of Public Servants Due to Conflicts of Interest. All directors, managers, and employees of the Company must comply with the Code and related regulations. Please refer to "Code of Ethics for Employees" on pages 38 to 41 of this Annual Report for information on the implementation of the Company's Code of Ethics for Important information to facilitate a better understanding of the Company's ethical corporate management practices The Company shall engage in commercial activities in a fair and transparent manner. Prior to any commercial transactions, companies in the Group shall consider the legality of its agents, suppliers, clients, or other trading counterparts and whether any of them are involved in unethical conduct or are discovered thereof during credit assessment and shall avoid any dealings with persons so	None None

Code of Ethical Conduct for Directors and Managers

• Article 1 In order to bring the conduct of all directors and managers of the Company to a more ethical standard, this Code of Ethical Conduct was hereby enacted.
• Article 2 The Code of Ethical Conduct shall include the following:
• I. Prevent conflicts of interest
  • Conflicts of interest occur when personal interest intervenes or is likely to intervene in the overall interests of the Company, where a director or manager of the Company is unable to perform their duties in an objective and efficient manner, or when a person in such a position takes advantage of his/her position in the Company to obtain improper benefits for either themselves or their spouse, parents, children, or relatives within the second degree of kinship. The Company shall pay special attention to loans of funds, provisions of guarantees, and major asset transactions, or the purchase (or sale) of goods involving the affiliated enterprises at which a director or manager works. The Company shall adopt policies for preventing conflicts of interest and also offer appropriate means for directors and managerial officers to voluntarily explain whether their interests would potentially conflict with those of the Company.
• II. Prevent inappropriate profits derived from their positions The Company shall prevent its directors or managers from engaging in any of the following activities:
  • 1. Seeking an opportunity to pursue personal gain by using company property or information, or taking advantage of their positions.
  • 1. Obtaining personal gain by using company property or information, or taking advantage of their positions.
  • 1. Competing against the Company.

Where the Company has an opportunity for profit, it is the responsibility of the directors and managers to maximize reasonable and proper benefits that can be obtained by the Company.

III. Duty of confidentiality

The directors and managers of the Company shall be bound by the obligation to maintain the confidentiality of any information regarding the Company itself or its suppliers and customers, except when authorized or required by law to disclose such information. Confidential information includes any private information that, if exploited by a competitor or disclosed, could result in damage to the Company or its suppliers and customers.

IV. Fair trade

Directors and managers shall treat all suppliers and customers, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.

• V. Safeguard and proper use of company properties Directors and managers have the responsibility to safeguard company assets and ensure that they can be effectively and lawfully used for official business purposes. Avoid any theft, negligence in care, or waste of company assets that will directly impact the Company's profitability.
• VI. Compliance with laws and regulations

Directors or managers shall comply with Securities Exchange Act and other laws and regulations when performing their duties.

VII. Encourage reporting on illegal or unethical activities

The Company shall raise employees' awareness of ethics internally and encourage employees to report to supervisors, managerial officers, or other appropriate individuals upon suspicion or discovery of any activity in violation of law or regulations or Code of Ethical Conduct. In order to encourage employees to report illegal conduct, the Company shall make employees aware that the Company will use its best efforts to ensure the safety of informants and protect them from reprisals.

VIII. Punishment

When a director, supervisor, or manager violates "Code of Ethical Conduct," the Company shall handle the matter in accordance with the disciplinary measures prescribed in the Code, and shall disclose in time on MOPS the date of the violation by the violator, reasons for the violation, the provisions of the Code violated, and the disciplinary actions taken. The Company shall also establish relevant complaint channels to provide the person violating Code of Ethical Conduct with remedies.

Article 3 Exemption procedure

Any exemption for directors or managerial officers from compliance with the Code shall be adopted by a resolution of the Board of Directors, and that information on the date on which the Board of Directors adopted the resolution for exemption, objections or reservations of independent directors, and the period of, reasons for, and principles behind the application of the exemption shall be disclosed without delay on MOPS, in order that the shareholders may evaluate the appropriateness of the Board resolution to forestall any arbitrary or dubious exemption from the Code, and to safeguard the interests of the Company by ensuring appropriate mechanisms for controlling any circumstance under which such an exemption occurs.

Article 4 Code of Ethical Conduct for Directors and Managers and any amendments hereto shall be implemented after approval by Board of Dirtectors.

Code of Ethics for Employees

• Article 1 Code of Ethics for Employees is hereby established to enhance the ethics, honesty, and professionalism of the Company and its employees.
• Article 2 This Code and related procedures and rules are applicable to all employees of the Company (including heads of functional organizations and other managers).
• Article 3 Content

• I. Ethics and integrity

  • 1. The Company is committed to business ethics and upholds the principle of ethical operation. The purpose of this Code is to require the Company and all employees to comply with all applicable legal requirements and company policies. For inquiries on any ethical or legal matter, please seek professional advice from the department head or the Company's Legal Department.
  • 1. Ethical standards are not limited to legal provisions. Even when permitted by law, all business should be conducted in good faith and avoid any conflict of interest.
  • 1. The principles of ethics and integrity include:
  • (1) Conducting all business in good faith and keeping faithful records of all transactions.
  • (2) Business information shall be kept confidential, while business and operational records shall be maintained when performing duties to value the business assets and honor intellectual property of the Company, its customers, and partners.

• (3) The Company's account records, invoices, records, entries, funds and assets must be properly prepared and maintained so that the Company's transactions and business transactions are properly and accurately reflected. It is prohibited to produce false or misleading statements or records in the entries, records, financial statements or other documents, and to intentionally conceal or disguise the Company's transactions. It is prohibited to open, maintain, or use any secret accounts with banks or any third-party institutions for the purpose of the Company's account.

• (4) It is prohibited to destroy, falsify or forge any records that may be relevant to investigations, litigation, or legal proceedings.
• (5) All employees are obligated to report any suspected breach of conduct or violation of this Code to the management.
• II. Respect individuals and customers
• 1. The Company values the privacy and integrity of each employee and has adopted strict standards to protect the privacy and confidentiality of personal information. Business information of customers and others shall be handled in the same manner as described above.
• 1. Each employee shall make every effort to treat the Company's customers, suppliers, competitors and other employees fairly. All employees shall not manipulate, conceal or misuse proprietary information, misrepresent material facts, or engage in other unfair trades.
• 1. The Company maintains an open communication channel in which employees are encouraged to participate in the Company's affairs and respond to their opinions to managers in all levels.
• III. Avoid conflicts of interest
• 1. Each employee must disclose details to and obtain approval from the Chairman and the President's Office before engaging in any business, investment or related activity that may constitute a conflict of interest between the employee and the Company. The relevant employees shall report potential conflicts of interest involving themselves or the Company to Company's Human Resources Department.
• 1. All employees shall avoid conflicts of interest, such as taking a part-time job in an unaffiliated company, negotiating or trading with the Company for themselves or their relatives. Each employee shall not
  2. (1) take away any business opportunity of the Company through the use of the Company's property, information, or by virtue of his or her position for his or her own benefit;
  3. (2) obtain benefits through the use of the Company's property, information or by virtue of his or her position;
  4. (3) Competing against the Company.
• 1. Any conduct that may result in the transfer of the Company's resources or interests to oneself or to one's relatives is prohibited. If employees consider that certain acts can benefit the Company and themselves, they may obtain special permission, provided that it is reported to and has obtained approval from the chairman.
• 1. All employees are prohibited from providing or disclosing confidential information to third parties without the appropriate authorization from the Company. It is strictly prohibited to use confidential or insider information for personal benefits, or as a present or to cause damage to others.
• 1. All employees are prohibited from engaging in the aforementioned activities through agents, partners or other representatives for the purpose of circumventing this Code.
• 1. All persons involved in the review, evaluation or selection of suppliers shall avoid any involvement in any situation that may affect a fair decision.
• 1. Employees shall not seek or accept loans from the Company, or require the Company to provide a guarantee for a loan for themselves or their relatives, except with the prior approval of the Company's Board of Directors and not in violation of any applicable law.
• 1. Prior authorization must be obtained for the use of the Company's services, equipment, facilities, goods or other resources that is not related to the Company's business. All employees are expected to ensure that the Company's assets are used effectively. The Company's tangible or intangible assets may only be used by authorized employees or designated persons within the scope of the Company's legal operations.
• 1. Annual declaration of interests is made for the employees of the affiliated department that are confirmed by the functional organization head. For employees or their family members who are within second degree lineage (inclusive) that have investments or hold any position involving the Company's customers, distributors, customers of distributors, suppliers or competitors under such employees' duties, they are required to declare their interests honestly and by level through the annual interest reporting system. The Human Resources Department compiles information on the heads of related departments and functional organizations and submit it to the head of the functional organization to which the related department belongs and to the chairman. However, the Company is not required to report investments in companies invested by the Company, companies in which the Company has made publicly permitted investments, and listed companies.
• 1. All employees are prohibited to disclose confidential information about the Company to third parties (including but not limited to customers, suppliers or other persons who are not required to access such information) through opportunities arising from their duties (including but not limited to relevant meetings: production and marketing meetings, annual planning, policy development).
• IV. Gifts and entertainment
• 1. All employees are prohibited from accepting or giving kickbacks or other improper benefits (including any cash or other properties: such as coupons, checks, stock certificates, etc.) to customers, suppliers or other persons related to the Company's business.
• 1. All employees are prohibited from accepting entertainment.
• 1. If a gift is given to a business person for the purpose of maintaining a proper business relationship, the gift shall be printed with the Company's logo whenever possible.
• 1. Any business entertainment should be accepted or arranged in accordance with the Company's regulations and general business etiquette, and should not be too extravagant or frequent that will incur significant or unnecessary expenses.
• V. Complete, fair, accurate, timely and understandable disclosure
• 1. It is important to the Company that all books of account or records of the Company shall be complete, fair, accurate and timely in reflecting all transactions and dispositions of assets.
• 1. All employees involved in the Company's disclosure process should be aware of and understand the disclosure procedures to be followed by the Company with their responsibilities. The Company shall also ensure that documents containing relevant information or other disclosures to the public are reported or sent to Securities and Futures Bureau of the Financial Supervisory Commission, Executive Yuan in a complete, fair, accurate, timely and understandable manner.
• 1. The financial statements and related disclosures must not contain any material errors. Employee shall not knowingly, or procure others to, provide misleading, incomplete or inaccurate statement to the accountants or attorneys in connection with any audit, or filing or application with any governmental authority (such as Securities and Futures Bureau of the Financial Supervisory Commission, Executive Yuan, Republic of China).
• 1. Individual or other person acting at his or her direction shall not influence, directly or indirectly, any of the Company's auditors or accountants by coercion, manipulation, misleading or fraudulent means if he or she knows (or should know) that his or her conduct is likely to result in materially misleading disclosures of the Company's financial statements.
• VI. Implementation of Code of Ethics and fraud prevention and protection against whistle-blowing and retaliation
• 1. All employees shall comply with governmental laws and regulations, as well as rules and procedures prescribed by the Company.
• 1. Relevant personnel should be alert to any violation of governmental laws and regulations, Code of Ethics, or fraud. When in doubt or aware of any violation of governmental laws and regulations, Code of Eethics or fraud (illegal acts or serious misconduct by the Company's employees or supervisors), they shall report it to the independent director, Chief Auditor, the head of human resources and the head of legal affairs, or directly to the head of human resources or through another appropriate department head. Once the Company receives a whistleblower report, the Company will form an investigation team to investigate the suspected fraud described in the report.
• 1. Employees who report any violations of the Code of Ethics or fraud and who participate in the investigation process will be protected from retaliation or unfair treatment.
• 1. The Company will take appropriate action against any employee who violates the Code of Ethics or commits fraud, depending on the severity of the situation. Each employee is responsible for reading, understanding and complying with the contents of this Code. In case of inquiries, please seek clarification immediately. Any questions regarding the law or the requirements of this Code may be submitted to the Company's Human Resources Department or the head of Legal Department.
• VII. Exemptions and amendments
• 1. The Company may exempt employees from this Code under certain circumstances. The Company's Board of Directors may grant exemptions from this Code to management only in exceptional circumstances. The Company will immediately disclose the names of the exempted management and the reasons for such exemption.
• 1. The Company shall promptly disclose any amendments to the Code. All employees are obligated to understand the contents after the amendment of this Code by the Company.
• Article 4 The Company's Code of Ethics for Employees and any amendments hereto shall be implemented after approval by Board of Directors.

Ethical Corporate Management Best Practice Principles

• Article 1 These Principles are adopted to assist the Company to foster a corporate culture of ethical management and sound development, and offer a reference framework for establishing good commercial practices. These Principles are applicable to business groups and organizations of the Company, which comprise its subsidiaries, any foundation to which the Company's direct or indirect contribution of funds exceeds 50 percent of the total funds received, and other institutions or juridical persons which are substantially controlled by the Company.
• Article 2 The Company's directors, managers, employees, mandataries or persons with substantial control (hereinafter referred to as substantial controllers) shall not offer, promise, demand or receive, directly or indirectly, any improper benefits or commit any other unethical conduct that is unethical, illegal or in breach of a commitment in order to obtain or maintain benefits (hereinafter referred to as unethical conduct) in the course of business.

Parties referred to in the preceding paragraph include civil servants, political candidates, political parties or members of political parties, state-run or private-owned businesses or institutions, and their directors, supervisors, managers, employees or substantial controllers or other stakeholders.

• Article 3 Benefits referred to in these Principles mean any valuable items, including money, endowments, commissions, positions, services, preferential treatment or rebates of any type or in any name. Benefits received or given occasionally in accordance with accepted social customs and that do not adversely affect specific rights and obligations shall be excluded.
• Article 4 The Company shall comply with Company Act, Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption Act, Government Procurement Act, Act on Recusal of Public Servants Due to Conflicts of Interest, and relevant regulations in relation to TWSE/GTSM listed companies and other related business law and regulations, as the foundation for ethical corporate management.
• Article 5 The company shall abide by the operational philosophies of honesty, transparency and responsibility, base policies on the principle of good faith and obtain approval from the board of directors, and establish good corporate governance and risk control and management mechanism so as to create an operational environment for sustainable development.
• Article 6 The Company shall in their own ethical management policy clearly and thoroughly prescribe the specific ethical management practices and the programs to forestall unethical conduct (the "Prevention Programs"), including operational procedures, guidelines, and training. When establishing the Prevention Programs, the Company shall comply with relevant laws and regulations of the territory where the Company and its business group are operating.

In the course of developing Prevention Programs, the Company shall negotiate with staff, labor union members, important trading counterparties, or other stakeholders.

Article 7 The Company shall establish an assessment mechanism for the risk of unethical conduct, analyze and evaluate the business activities within the scope of business that has a higher risk of unethical conduct, formulate the Prevention Programs accordingly, and review the appropriateness and effectiveness of Prevention Programs.

The Company shall establish Prevention Programs with reference to common domestic and international standards or guidelines that should cover at least the following behavioral prevention measures:

• I. Offering and acceptance of bribes.
• II. Offering illegal political donations.
• III. Improper charitable donations or sponsorship.
• IV. Offering or acceptance of unreasonable presents or hospitality, or other improper benefits.

• V. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights.

• VI. Engaging in unfair competitive practices.

• VII. Damage directly or indirectly caused to the rights or interests, health, or safety of consumers or other stakeholders in the course of research and development, procurement, manufacture, provision, or sale of products and services.
• Article 8 The Company shall request its directors and senior management to issue a statement of compliance with the ethical management policy and require in the terms of employment that employees comply with such policy.

The Company and its respective business group shall clearly specify in their internal rules and external documents the ethical corporate management policies, the commitment by Board of Directors and the management on rigorous and thorough implementation of such policies, and shall carry out the policies in internal management and in commercial activities.

The Company shall compile documented information on the ethical management policy, statement, commitment and implementation mentioned in the first and second paragraphs and retain said information properly.

• Article 9 The Company shall engage in commercial activities in a fair and transparent manner based on the principle of ethical management. Prior to any commercial transactions, the Company shall take into consideration the legality of its agents, suppliers, clients, or other trading counterparties and whether any of them are involved in unethical conduct, and shall avoid any dealings with persons so involved. When entering into contracts with its agents, suppliers, clients, or other trading counterparties, the Company shall include in such contracts terms requiring compliance with ethical corporate management policy and that in the event the trading counterparties are involved in unethical conduct,the Company may at any time terminate or rescind the contracts.
• Article 10 When conducting business, the Company and its directors, managers, employees, mandataries, and substantial controllers, may not directly or indirectly offer, promise to offer, request, or accept any improper benefits in whatever form to or from clients, agents, contractors, suppliers, public servants, or other stakeholders.
• Article 11 The Company and its directors, officers, employees, mandataries, and substantial controllers shall make direct or indirect contributions to political parties or organizations or individuals involved in political activities in accordance with Political Donations Act and the Company's internal procedures, and shall not use them to obtain commercial benefits or trading advantage.
• Article 12 When making or offering donations and sponsorship, the Company and its directors, supervisors, managers, employees, mandataries, and substantial controllers shall comply with relevant laws and regulations and internal operational procedures, and shall not surreptitiously engage in bribery.
• Article 13 The Company and its directors, managers, employees, mandataries, and substantial controllers shall not directly or indirectly offer or accept any unreasonable presents, hospitality or other improper benefits to establish business relationships or influence commercial transactions.
• Article 14 The Company and its directors, managers, employees, mandataries, and substantial controllers shall observe applicable laws and regulations, its own internal operational procedures, and contractual provisions concerning intellectual property, and shall not use, disclose, dispose, or damage intellectual property or otherwise infringe intellectual property rights without the prior consent of the intellectual property rights holders.

• Article 15 The Company shall engage in business activities in accordance with applicable competition laws and regulations, and shall not fix prices, make rigged bids, establish output restrictions or quotas, or share or divide markets by allocating customers, suppliers, territories, or lines of commerce.

• Article 16 In the course of research and development, procurement, manufacture, provision, or sale of products and services, the Company and its directors, managers, employees, mandataries, and substantial controllers shall observe applicable laws and regulations and international standards to ensure the transparency of information about, and safety of, its products and services. The Company shall also adopt and publish a policy on the protection of the rights and interests of consumers or other stakeholders, and carry out the policy in the operations, with a view to preventing its products and services from directly or indirectly damaging the rights and interests, health, and safety of consumers or other stakeholders. Where there are sufficient facts to determine that the products or services are likely to pose any hazard to the safety and health of consumers or other stakeholders, the Company shall, in principle, recall those products or suspend the services immediately.

• Article 17 The directors, managers, employees, mandataries, and substantial controllers of the Company shall exercise the due care of good administrators to urge itself to prevent unethical conduct, always review the results of the preventive measures, and continually make adjustments so as to ensure thorough implementation of its ethical corporate management policies.

To achieve sound ethical corporate management, the Company shall establish a dedicated unit that is under the Board and avail itself of adequate resources and the staff itself with competent personnel; the unit shall be responsible for establishing and supervising the implementation of the ethical corporate management policies and Prevention Programs. The dedicated unit shall be in charge of the following matters, and shall report to the Board on a regular basis:

• I. Assisting in incorporating ethics and moral values into the Company's business strategy and adopting appropriate preventive measures against corruption and malfeasance to ensure ethical management in compliance with the requirements of laws and regulations.
• II. Analyzing and assessing on a regular basis the risk of involvement in unethical conduct within the business scope, adopting accordingly programs to prevent unethical conduct, and setting out in each program the standard operating procedures and conduct guidelines with respect to the operations and business.
• III. Planning internal organization, structure, and allocation of responsibilities. Setting up mutual supervision and checks-and-balance mechanisms for operating activities within business scopes that are at high risk of unethical conduct.
• IV. Promoting and coordinating awareness and educational activities with respect to ethics policy.
• V. Developing a whistle-blowing system and ensuring its operating effectiveness.
• VI. Assisting Board of Directors and management in auditing and assessing whether the prevention measures taken for the purpose of implementing ethical management are effectively operated, and preparing reports on the assessment of compliance with the ethical management in operating procedures from time to time.
• Article 18 The Company's directors, management, employees, mandataries, and substantial controllers shall comply with laws and regulations and Prevention Programs when conducting business.

Article 19 The Company have established policies for preventing conflicts of interest in the code of ethics for the Company's directors and managers to identify, monitor, and manage risks possibly resulting from unethical conduct, and shall also offer appropriate means for directors, supervisors, managers, and other stakeholders attending or present at board meetings to voluntarily explain whether their interests would potentially conflict with those of the Company.

The Company's directors, managers and other interested parties attending or participating in the Board meetings shall state their important interests at such Board meeting if they have an interest in the proposals listed in the Board meeting or in the legal person they represent. If it may damage the Company's interests, he/she shall not join the discussion and voting, and shall be recused from the discussion and voting, and shall not exercise his/her voting rights on behalf of other directors. Directors shall maintain self-discipline and shall not improperly support each other.

The directors, managers, employees, mandataries, and substantial controllers shall not take advantage of their positions or influence in the companies to obtain improper benefits for themselves, their spouses, parents, children or any other person.

Article 20 The Company shall establish an effective accounting system and internal control system for business activities with a high risk of unethical conduct. No private ledgers or off-the-book accounts may be retained, and this should be monitored at all times, to ensure continuous and effective design and implementation of the systems.

The internal audit unit of the Company shall, based on the results of the assessment of the risk of involvement in unethical conduct, devise relevant audit plans, including auditees, audit scope, audit items, audit frequency, etc., and examine accordingly the compliance with Prevention Programs. The internal audit unit may engage a certified public accountant to carry out the audit and may engage professionals to assist if necessary.

The results of examination referred to in the preceding paragraph shall be reported to the senior management and the ethical management dedicated unit and put down in writing in the form of an audit report to be submitted to the Board of Directors.

• Article 21 The Company shall formulate operating procedures and behavior guidelines in accordance with the provisions of Article 6 to regulate directors, managers, employees, mandataries, and substantial controllers on how to conduct business; the content shall at least contain the following matters:
• I. Standards for determining whether improper benefits have been offered or accepted.
• II. Procedures for offering legitimate political donations.
• III. Procedures and the standard rates for offering charitable donations or sponsorship.
• IV. Rules for avoiding work-related conflicts of interests and how they should be reported and handled.
• V. Rules for keeping confidential trade secrets and sensitive business information obtained in the ordinary course of business.
• VI. Regulations and procedures for dealing with suppliers, clients and business transaction counterparties suspected of unethical conduct.
• VII. Handling procedures for violations of Ethical Corporate Management Best Practice Principles
• VIII. Disciplinary measures on offenders.

Article 22 Chairman, President, or the senior management of the Company shall communicate the importance of corporate ethics to directors, employees, and mandataries.

The Company shall periodically organize training and awareness programs for directors, managers, employees, mandataries, and substantial controllers and invite the commercial transaction counterparties so they understand the Company's resolve to implement ethical corporate management, the related policies, Prevention Programs and the consequences of committing unethical conduct.

The Company shall integrate its ethical management policy with employee performance appraisal and human resources policy, and establish a clear and effective reward and disciplinary system.

• Article 23 The Company shall adopt a whistle-blowing system and scrupulously operate the system. The whistle-blowing system shall include at least the following:
• I The Company has established and announced an internal independent mailbox, hotline, or commissioned other external independent organizations to provide whistle-blowing mailbox and hotline for the Company's internal and external personnel.
• II The dedicated personnel or unit to handle the whistle-blowing system. Any case involving a director or senior manager shall be reported to the independent directors. Categories of reported misconduct shall be delineated and standard operating procedures for the investigation of each shall be adopted.
• III After the investigation of the prescribed prosecution case is completed, follow-up measures to be taken in accordance with the severity of the circumstances shall be reported to the competent authority or transferred to judicial institutions for investigation if necessary.
• IV Documentation of case acceptance, investigation processes, investigation results, and relevant documents.
• V The identity of whistle-blowers and the content of reported cases shall be kept confidential.
• VI Measures to provide protection for whistle-blowers against improper treatment due to whistle-blowing.
• VII Whistle-blowing incentive measures.

When material misconduct or likelihood of material impairment to the Company comes to the awareness upon investigation, the dedicated personnel or unit handling the whistle-blowing system shall immediately prepare a report and notify the independent directors in a written form.

• Article 24 The Company should adopt and publish a well-defined disciplinary and appeal system for handling violations of the ethical corporate management rules, and shall make immediate disclosure on the Company's internal website of the title and name of the violator, the date and details of the violation, and the actions taken in response.
• Article 25 The company should establish quantitative data to promote ethical management, continuously analyze and evaluate effects on promoting ethical management policies, disclose the adoption measures, performance conditions, quantitative data and effects on promoting ethical management on the company's website, annual report and prospectus, and disclose the content of ethical management rules at MOPS.
• Article 26 The Company shall, at all times, monitor the development of relevant local and international regulations concerning ethical management and encourage its directors, managers, and employees to make suggestions, based on which the adopted ethical management policies and measures taken will be reviewed and improved with a view to achieving better implementation of ethical management.
• Article 27 The Company's Ethical Corporate Management Best Practice Principles and any amendments hereto shall be implemented after approval by the Board of Directors.

(VII) The Company shall disclose access to its Corporate Governance Best Practice Principles and related rules and regulations if it has such rules and regulations

The "Corporate Governance" section of the Company's website explains the relevant corporate governance policies and their implementation, and provides investors with access to download the relevant corporate governance regulations; please refer to the Company's website at http://www.sis.com/. For more information on the Company's corporate governance practices, please refer to Corporate Governance Practices section of this Annual Report.

(VIII) Other material information that enables a better understanding of the Company's corporate governance shall be disclosed together

In order to establish a good internal mechanism for handling and disclosing material information, to avoid improper leakage of information, and to ensure the consistency and accuracy of information released by the Company, the Company has established the "Internal Material Information Handling Procedures" for all directors, managers and employees of the Company to follow and to provide education and guidance in a timely manner.

• (IX) Implementation of the internal control system
• A. Statement on Internal Control

Silicon Integrated Systems Corp. Statement on Internal Control

Date: March 17, 2021

Based on the self-assessment results, the Company issued the following statement with regard to its internal control system in 2020:

• I. The Company acknowledges that it is the responsibility of the Board of Directors and managerial officers to establish, implement, and maintain the established internal control system. Its purpose is to reasonably ensure the effectiveness and efficiency of operation(including income, performance, and asset safety) and reliability of financial reporting, as well as compliance with relevant regulations and laws.
• II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its 3 stated objectives above. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond control. Nevertheless, the internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.
• III. The Company evaluates the design and operating effectiveness of the internal control system based on the criteria provided in the "Regulations Governing the Establishment of Internal Control Systems by Public Companies" (herein below, the "Regulations"). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring. Each key component includes several items. Please refer to the Regulations for the aforementioned items.
• IV. The Company has adopted the aforesaid assessment items for the internal control system to review whether the design and implementation of the internal control system are effective.
• V. Based on the review results in the preceding paragraph, the Company is of the opinion that, as of December 31, 2020, the internal control system (including the supervision and management of subsidiaries), including the design and implementation of the internal control system relating to the effectiveness and efficiency of the operations, reliability of financial reporting, and compliance with applicable laws and regulations, are effective and can reasonably assure the achievement of the foregoing goals.
• VI. This statement is an integral part of the Company's Annual Report and prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
• VII. This statement was approved by the Board of Directors on March 17, 2021, and none of the nine directors in attendance objected to it and all consented to the content expressed in this statement

Silicon Integrated Systems Corp.

Chairman: Cheng-Chien Chien

President: Shur-Jung Shyi

• B. If a CPA has been hired to carry out a special audit of the internal control system, the CPA audit report shall be disclosed: None.
• (X) Sanctions imposed on the Company or its personnel in accordance with the laws, or disciplinary actions taken by the Company against its personnel for any violation of internal control rules, as well as details of the sanctions, major deficiencies and subsequent improvements: None.
• (XI) Major resolutions at the shareholders' meetings and Board meetings
• A. The Company's 2020 annual shareholders' meeting was held at No. 180, Sec. 2, Gongdao 5th Rd., East Dist., Hsinchu City (Silicon Technology Building). Resolutions and implementation of the attending shareholders are as follows:

Resolution at the shareholders' meetings	Implementation
Ratified the Company's 2019 Business Report and Financial Statements	The Company in 2019 Consolidated revenue of NT\$222,952 thousand. Net loss after tax of NT\$224,691 thousand. Net loss per share of NT\$0.42
Ratified the Company's 2019 Earnings Distribution	The Company in 2019 Beginning retained earnings of NT\$893,855,764 Plus reversal of special reserve of NT\$4,576,364,481 Plus remeasurement of defined benefit plans of NT\$1,291,388 Plus investments accounted for using the equity method -actuarial gains and losses adjustment of NT\$2,818,479 Less loss on sale - Investments in equity instruments measured at fair value through other comprehensive income or loss of NT\$40,079,407 Beginning retained earnings after adjustment NT\$5,434,250,705 Net loss after tax of NT\$224,691,305 Provision of special reserve in 2019 of NT\$2,878,280,689 Less provision of legal reserve of NT\$143,742,295 Distributable earnings for the period of NT\$2,187,536,416 Less cash dividend of NT\$0.36/share NT\$192,262,491 Less share dividend of NT\$1.44/share NT\$769,049,960 Ending retained earnings of NT\$1,226,223,965
Issuance of new shares by capital	Enforced as resolved
increase from earnings

• B. A summary of the material resolutions adopted by the Board of Directors of the Company from January 1, 2020 to the date of publication of this Annual Report are as follows.
• (1) 3rd meeting of the 11th Board of Directors (March 18, 2020)

Approved the review of the independence evaluation of the Company's certified public accountant. Approved the 2019 Business Report and Financial Statements. Approved the change of certified public accountant. Approved the 2019 Internal Control System Statement. Approved the establishment of the "Corporate Governance Best Practice Principles" of the Company. Approved the establishment of the "Corporate Social Responsibility Best Practice Principles" of the Company. Approved the establishment of the "Ethical Corporate Management Best Practice Principles" of the Company. Approved the establishment of the "Policy on Nomination and Election of Directors" of the Company. Approved the amendment of the "Rules of Procedures of the Board of Directors" of the Company. Approved the establishment of the Company's Chief Corporate Governance Officer. Approved the revision of internal control/internal audit system. Approved the 2019 Earnings Distribution. Approved the 2019 Issuance of new shares by capital increase from earnings. Approved the date, venue and proposals accepted of the 2020 annual shareholders' meeting.

• (2) 4th meeting of the 11th Board of Directors (April 27, 2020) Amendment to the 2019 Earnings Distribution Proposal
• (3) 5th meeting of the 11th Board of Directors (May 11, 2020) The capital increase of subsidiary Mars, the donation to the SiS Education Foundation, and the amendment of the annual audit plan
• (4) 6th meeting of the 11th Board of Directors (August 10, 2020) Sale of EpoStar Electronics (BVI) Corp. shares, non-funding loans of accounts receivable that were three months past due, transfer of the 12th share buyback to employees, and setting the base date for the Company's new capital increase and shareholders' ex-dividend
• (5) 7th meeting of the 11th Board of Directors (November 9, 2020)

The 2020 audit plan, the non-funding loans of accounts receivable that were three months past due, the increase of bank credit line, the review of the 2020 salary adjustment for managers (including all employees), the evaluation of the 2021 performance bonus for managers (including all employees), the evaluation of the 2021 year-end bonus for managers, and the 2021 work plan of the Remuneration Committee.

(6) 8th meeting of the 11th Board of Directors (March 17, 2021)

Approval of the independence evaluation of the Company's certified public accountants. Approved the 2020 Financial Statements, non-funding loans of accounts receivable that were three months past due, the 2020 Internal Control System Statement, the donation to SiS Education Foundation, the capital increase of subsidiary Mars, and the capital increase of Goaltop Technology. Approved the 2020 Earnings Distribution. Approved the 2020 Issuance of new shares by capital increase from earnings. Approved the date, venue and proposals accepted of the 2021 annual shareholders' meeting.

• (XII) Directors (including independent directors) or supervisors have different opinions on important resolutions passed by the Board of Directors with records or written statements: None
• (XIII) Resignation and dismissal of Chairman, President, Chief Accountant, Chief Financial Officer, Chief Internal Auditor, Chief Corporate Governance Officer and Head of Research and Development: None

V. Information on CPA Fees

Name of CPA Firm	Name of CPA	Audit Period	Remarks
	Shao-Pin Kuo,
	Hsin-Min Hsu	2020 Q1 until now	Adjustments of internal
Ernst & Young	Shao-Pin Kuo,		duties in the firm
	Chia-Ling Tu	2018 Q2 to 2019 Q4

Unit: NT\$'000

	Amount Ranges/Fees	Audit Fees	Non-audit Fees	Total
1	Less than NT\$2,000,000	-	110	110
2	NT\$2,000,000 (inclusive) ~ NT\$4,000,000	2,510	-	2,510
3	NT\$4,000,000 (inclusive) ~ NT\$6,000,000	-	-	-
4	NT\$6,000,000 (inclusive) ~ NT\$8,000,000	-	-	-
5	NT\$8,000,000 (inclusive) ~ NT\$10,000,000	-	-	-
6	More than NT\$10,000,000 (inclusive)	-	-	-

Note 1. The audit fees refer to the fees paid to CPAs by the Company with regards to the services of financial report auditing, verification, review, financial forecast auditing, and tax certification.

Note 2. The non-audit fee refers to \$30,000 for the service fee for the capital review report released for the change of registration for the issuance of new shares by capital increase from earnings and \$80,000 for the service charge for filing of the report for the issuance of new shares by capital increase from earnings.

Unit: NT\$'000

	Name of CPA Firm: Ernst & Young
		Non-audit Fees
Name of CPA	Audit Fees	System Design	Company	Human	Others	Subtotal	CPA Audit	Remarks
			Registration	Resources			Period
Shao-Pin
Kuo
Hsin-Min	2,510	-	110	-	-	2,620	2020
Hsu

(I) Disclosure of audit and non-audit fees as well as details of the non-audit services where the non-audit fees paid to the certified public accountants, the independent certified public accounting firm and/or its affiliates account for 25% or more of the audit fees: None.

• (II) When the Company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees and the reasons shall be disclosed: As of 2021 up to the date of publication of this Annual Report, there was no change in the CPA firm of the Company.
• (III) Disclosure of the amount, percentage and reasons of decrease where the audit fees are lower than the previous fiscal year by 10% or more: None.

VI. Replacement of CPA

The former CPAs for the Company's financial statements were Shao-Pin Kuo and Chia-Ling Tu from Ernst & Young Global Limited. In accordance with Article 68 of Statement of Auditing Standards No. 46, and Article 29 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, the presiding CPAs should be rotated within a period of time (usually no more than 8 years). Ernst & Young Associates has made internal reassignment in accordance with the letter from the competent authority. On December 25, 2019, Ernst & Young informed the Company with a letter that the CPAs for the Company's financial statements were changed to Shao-Pin Kuo and Hsin-Min Hsu. The adjustment of the CPA is made in accordance with the regulations of the Jin-Guan-Zheng-Yi-Zi Letter No. 1020030203 issued by the Financial Supervisory Commission dated September 9, 2013. The replacement of the CPAs is adjusted internally by the CPA firm and is not included in the scope of the announcement and report. The change in the composition of the CPAs was approved by the Company's 3rd meeting of the 11th Board of Directors and became effective from the 2020 Q1 Financial Statements.

• VII. The Company's Chairman, Presidents, or financial and accounting managers did not hold any positions in the CPA firm or its affiliates last year.
• VIII. Any transfer of equity interests and pledge of or change in equity interests by a director, managerial officer, or shareholder with a stake of more than 10 percent in the most recent year and up to the date of publication of the Annual Report. Where the counterparty in any such transfer or pledge of equity interests is a related party, disclose the counterparty's name, its relationship between that party and the Company as well as the Company's directors, and shareholders who hold more than 10% of the shares, and the number of shares transferred or pledged.

(I) Change of equity of directors, managers and shareholders in the most recent year and up to the date of publication of the Annual Report.

		2020			As of March 29, 2021
		Increase	Increase	Increase	Increase
Position	Name	(Decrease) in	(Decrease) in	(Decrease) in	(Decrease) in
		the Number of	the number of	the Number of	the number of
		Shares	Pledged Shares	Shares	Pledged Shares
Chairman/Chief	Cheng-Chien Chien	712,863	-	-	-
Strategy Officer
		402,533	-	-	-
Chairman/President	Shur-Jung Shyi	(400,000)
	United Microelectronics Corp.	14,623,375	-	-	-
Director	Legal representative: Kuei-Hung Tseng	-	-	-	-
	Hsun Chieh Investment Co., Ltd.	22,076,831	-	-	-
Director	Legal representative: Wan-Ling Cheng
Director	Wen-Chi Chen	356,201	-	-	-
Director	Hsin-Shen Liu	1,061,928	-	-	-
Independent Director	Tsai-Wang Huang	-	-	-	-
Independent Director	Jui-Hsiang Lo	-	-	-	-
Independent Director	Ya-Ching Li	-	-	-	-
		156,940	-	-	-
Vice President	Sin-Kuo Cho	(156,940)
Chief Financial Officer/
Chief Corporate	Ming-Hua Su	281,072	-	-	-
Governance Officer
		150,000	-	-	-
Chief Accountant	Yuan-Kwei Chen	(150,000)

(II) Equity transfer information (where the counterparty is a related party): None

(III) Equity pledge information (where the counterparty is a related party): None.

IX. Information of the Top Ten Shareholders who are Related Parties or have a Spousal or Familial Relationship within the Second Degree of Kinship:

		Current Shareholding		Spouse & Minor Shareholding		Shareholding in the Names of Others	Among ten largest shareholders, name and relationship with any one who is a related
Name	Number of Shares	% of Shareholding	Number of	% of Shareholding	Number of	% of Shareholding	party or a relative within the second degree of kinship		Remarks
			Shares		Shares		Name	Relationship
United Microelectronics Corp.	119,979,103	19.01	-	-	-	-	Hsun Chieh Investment	Related party
Chairman: Chia-Tsung Hung	0	0.00	-	-	-	-	-	-
Hsun Chieh Investment Co., Ltd.	19,960,438	3.16	-	-	-	-	United Microelectronics	Related party
Chairman: Chun Kuan	0	0.00					-	-
Hsin-Shen Liu	8,712,708	1.38	-	-	-	-	-	-	-
Vanguard Emerging Markets Stock Index Fund, a series of Vanguard International Equity Index Funds	7,070,203	1.12	- -	- -	- -	- -	- -	- -
Credit Suisse Securities (Europe) Limited	6,969,255	1.10	-	-	-	-	-	-
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	6,582,628	1.04	-	-	-	-	-	-
Yung Chin Investment Corporation Chairman: Yung-Ken Chu	3,992,632 0	0.63 0.00	-	-	-	-	-	-
J.P. MORGAN SECURITIES PLC	3,228,044	0.51	-	-	-	-	-	-
Cong-Ming Zhuang	3,057,678	0.48	-	-	-	-	-	-
Wen-Chi Chen	2,848,654	0.45	-	-	-	-	-	-

Note 1. As of September 29, 2020, the number of shares outstanding was 630,967,470 after deducting 3 treasury shares.

Note 2. The base date of shareholding is September 29, 2020. The shareholding ratio is calculated by unconditionally rounding off two decimal places.

X. Share Ownership in Affiliated Companies by the Company and its Directors, Managers, as well as Entities Controlled Directly and Indirectly by the Company, as well as the Condolidated Shareholding

Unit: Share

Investee business		Ownership by the Company	Indirectly Controlled by the Company	Investment by Directors, Managers and by Companies Directly or	Total Ownership
	Number of	Shareholding	Number of		Number of	Shareholding
	Shares	%	Shares	Shareholding %	Shares	%
Waltop International Corp.	3,394,344	27.70	238,168	1.95	3,632,512	29.65
Vxis Technology Corp.	4,032,703	34.03	0	0.00	4,032,703	34.03
Goaltop Technology Corporation	9,000,000	27.55	500,000	1.53	9,500,000	29.08
NextHID Inc.	-	38.57	-	0.00	-	38.57
HuiTong intelligence Co., Ltd.	4,000,000	80.00	0	0.00	4,000,000	80.00

Note 1. Data as of March 29, 2021. Refers to the long-term investment by the Company using the equity method.

Chapter IV Fund Raising

I. Source of Capital

Unit: NT\$'000/thousand shares

			Authorized Capital		Paid-in Capital		Remarks
Month/Year	Issue Price	Number of Shares	Amount	Number of Shares	Amount	Source of Capital	Capital Increase by Assets Other than Cash	Others
2012.03.28		1,800,000	18,000,000	627,733	6,277,330	Cancellation of Treasury Shares of 30,000,000 shares	-	Note 1
2013.08.09		1,800,000	18,000,000	613,535	6,135,350	Cancellation of Treasury Shares of 14,198,000 shares	-	Note 2
2016.10.05		1,800,000	18,000,000	560,062	5,600,625	Cancellation of Treasury Shares of 53,473,499 shares	-	Note 3
2019.06.21		1,800,000	18,000,000	554,062	5,540,625	Cancellation of Treasury Shares of 6,000,000 shares	-	Note 4
2020.10.11		1,800,000	18,000,000	630,967	6,309,675	Capital Increase from Earnings of 76,905,960 shares		Note 5

Note 1. Cancellation of treasury share of 30,000,000 shares, capital decrease of NT\$300,000,000.

Note 2. Cancellation of treasury share of 14,198,000 shares, capital decrease of NT\$141,980,000.

Note 3. Capital reduction to cover losses, decrease of 53,472,499 shares, capital decrease of NT\$534,724,990.

Note 4. Cancellation of treasury share of 6,000,000 shares, capital decrease of NT\$60,000,000.

Note 5. Issuance of new shares by capital increase from earnings, capital increase of NT\$769,049,960

		Amount of Stock Warrants
Share Type	Outstanding Shares (Note)	Unissued Shares	Total Shares	(Unit)
Registered Common Shares	630,967,470	1,149,032,527	1,800,000,000	200,000,000

Note 1. As of the date of publication of the Annual Report, the outstanding shares are based on the Company's issued ordinary shares less 3 shares of the Company's treasury shares.

Information About Shelf Registration System: N/A

Note 2. The original 4 shares of treasury shares were deficient due to the capital reduction in September 2009 as a result of the issuance of overseas depositary receipts in January 2003. On November 30, 2012, the depositary institution, Bank of New York, USA, instructed the custodian bank, Mega International Commercial Bank, to remit the shares to SiS's account. The treasury share was reduced to 3 shares due to the capital reduction in October 2016.

II. Shareholder Structure

Shareholder Structure/Amount	Government Agencies	Financial Institutions	Other Institutional Shareholders	Individuals	Foreign Institutions and Overseas Persons	Total
Number of Shareholders	0	1	154	86,453	118	86,726
Number of Shares Held	0	52,384	156,513,421	433,266,158	41,135,510	630,967,473
Percentage of Shareholding	0.00%	0.01%	24.81%	68.67%	6.51%	100.00%

Note 1. The base date of shareholding is September 29, 2020.

Note 2. As of September 29, 2020, the number of shares outstanding was 630,967,470 after deducting 3 treasury shares.

Note 3. As of the base date of shareholding, the Company did not have any shareholdings from Chinese investors.

III. Share Ownership Distribution

Range of Shares	Number of Shareholders	Number of Shares Held	Percentage of Shareholding
1~999	41,007	10,051,989	1.59
1,000~5,000	29,730	62,571,272	9.92
5,001~10,000	7,165	46,829,922	7.42
10,001~15,000	3,935	45,520,437	7.21
15,001~20,000	1,029	17,579,310	2.79
20,001~30,000	1,653	39,443,285	6.25
30,001~50,000	993	37,560,287	5.95
50,001~100,000	673	44,212,236	7.01
100,001~200,000	324	42,123,647	6.68
200,001~400,000	123	33,655,882	5.33
400,001~600,000	45	22,049,035	3.50
600,001~800,000	11	7,555,023	1.20
800,001~1,000,000	10	9,036,925	1.43
Over 1,000,001 shares	28	212,778,223	33.72
Total	86,726	630,967,473	100.00

Note 1. The base date of shareholding is September 29, 2020.

Note 2. As of September 29, 2020, the number of shares outstanding was 630,967,470 after deducting 3 treasury shares.

Preferred shares: N/A

IV. List of Major Shareholders

List of Major Shareholders	Number of Shares Held	Percentage of Shareholding
United Microelectronics Corp.	119,979,103	19.01
Hsun Chieh Investment Co., Ltd.	19,960,438	3.16
Hsin-Shen Liu	8,712,708	1.38
Vanguard Emerging Markets Stock Index Fund, a series of	7,070,203	1.12
Vanguard International Equity Index Funds
Credit Suisse Securities (Europe) Limited	6,969,255	1.10
JPMorgan Chase Bank N.A., Taipei Branch in custody for	6,582,628	1.04
Vanguard Total International Stock Index Fund, a series of
Vanguard Star Funds
Yung Chin Investment Corporation	3,992,632	0.63
J.P. MORGAN SECURITIES PLC	3,228,044	0.51
Cong-Ming Zhuang	3,057,678	0.48
Wen-Chi Chen	2,848,654	0.45

Note 1. The base date of shareholding is September 29, 2020.

Note 2. On September 29, 2020, the number of shares outstanding was 630,967,470 after deducting 3 treasury shares, and the shareholding ratio was calculated by unconditionally rounding off two decimal places.

V. Market Price, Net Value, Earnings, Dividend per Share and Relevant Information in the Most Recent Two Years

	Item/Year		2021 (Note 3)	2020	2019
	Highest		19.30	21.30	9.63
Market Price Per Share	Lowest		15.20	5.35	7.60
	Average		16.93	11.56	8.37
	Before Distribution		(Note 3)	27.73	14.41
Net Worth per Share	After Distribution		-	(Note 2)	13.07
Earnings per Share	shares)	Weighted Average Shares (thousand	(Note 3)	630,966	615,053
	Earnings Per Share		(Note 3)	(0.47)	(0.37)
		Cash Dividend (Per Share)	-	(Note 2)	0.347005076
	Stock	Issuance of Shares by Earnings (Per Share)	-	(Note 2)	1.3880202975
Dividends Per Share	Dividends	Stock dividends appropriated from capital surplus	-	-	-
	Accumulated unpaid dividends		-	-	-
Return on	Price/Earnings Ratio		(Note 3)	(Note 4)	-
	Price/Dividend Ratio		-	-	-
Investment	Cash Dividends Yield %		-	-	-

Note 1. Earnings per share calculated based on the weighted average number of shares for the year.

Note 2. The Company distributed dividend in 2020.

Note 3. 2021 data as of the date of publication on March 29. The information reviewed by the accountants for the most recent quarter is not yet available.

Note 4. On March 17, 2021, the Board of Directors resolved to set the amount of cash dividends and share dividends to be distributed to shareholders from the Company's 2020 earnings in 2021, effective upon the resolution of the 2021 annual shareholders' meeting.

VI. The Company's dividend policy and implementation

• (I) The Company's dividend policy is as follows:
• A. Dividend policy prescribed in the Articles of Incorporation

The Company shall allocate the remaining amount from the profit before tax after offsetting the accumulated loss to the employee compensation and director compensation. The percentage of employee compensation shall be no less than 5% of the aforementioned balance and the percentage of director compensation shall be no more than 2% of the aforementioned balance. Employee compensation is distributed by share or cash. Director compensation is distributed by cash. The distribution method, amount, or shares to be distributed of the employee compensation, as well as the amount to be distributed of the director compensation shall be approved by a majority of the attending directors at a Board meeting attended by over two-thirds of the directors, and then reported at the shareholders' meeting. Employees' compensation in stock or cash includes employees of companies in which the Company holds more than 50% of the shares. If there is any surplus in the annual accounts, the Company shall first deduct tax contributions and make up for losses, and then set aside 10% of the remaining balance as legal reserve, and after setting aside or reversing the special reserve as required by law. If there is still a surplus, the remaining balance shall be added to the accumulated undistributed earnings of previous years and submitted to the shareholders for resolution by the Board of Directors for distribution.

B. Dividends Policy of the Company

The distribution of the Company's dividends is determined with reference to industry trends, future revenue and profitability, capital expenditure estimates, and working capital requirements. Dividends may be distributed as cash dividends or share dividends, either individually or in aggregation. Cash dividends shall not be less than 20% of the total amount of dividends distributed to shareholders for the year.

(II) Proposed dividend distribution at the shareholders' meeting: The 2020 Earnings Distribution was approved by the Board of Directors on March 17, 2021, as shown in the table below. The proposed distribution will be made in accordance with the relevant regulations after the resolution of the annual shareholders' meeting in 2021.

Currency Unit: NT\$

Cash dividends of ordinary shares (NT\$0.80 per share)	504,773,976
Share dividends of ordinary shares (NT\$0.80 per share)	504,773,970

(III) Explanation for an anticipated material change in dividend policy: There is no material changes in the Company's dividend policy.

VII. Impact of the proposed stock dividend payment by the shareholders' meeting on the business performance and earnings per share of the Company

	Item/Year		2021 (Estimated)
	Beginning paid-in capital		6,309,674,730
	Cash dividend per share		NT\$0.8
Share distribution of the year	Capital increase from earnings per share		0.08 share
	Shares allotted per share for recapitalization of capital reserve		0
	Operating profit
	YoY ratio of increase (decrease) in operating profit
	Net income
	YoY ratio of increase (decrease) in NIAT
Change in business performance	Earnings per Share	N/A (Note 2)
	Ratio of earnings per share increase (decrease) compared to the same period last year
	Average annual return on investment (annual average PE ratio)
		Expected earnings per Share
	If the surplus to capital increase is realized through cash dividend	Pro-forma average annual return on investment
	If the capital reserve is not transferred to	Expected earnings per Share
Pro-forma earnings per share and P/E ratio	the capital increase	Pro-forma average annual return on investment	N/A (Note 2)
	If the capital reserve is not processed	Expected earnings per Share
	and the surplus is transferred to the	Pro-forma average annual return on
	capital, the cash dividend will be	investment
	distributed.

Note 1. With regard to the resolutions at the 2021 annual shareholders' meeting, if, prior to the ex-dividend date, there is a change in the share price of the Company's ordinary shares due to a change in laws or regulations or a change in the approval of the competent authorities (e.g., the Company repurchases its shares for transfer or cancellation, the issuance of new shares in exchange for domestic cash and the execution of employee stock options), which results in the change in the dividend distribution rate, the shareholders' meeting shall authorize the Board of Directors to handle such issues in full authority.

Note 2. In accordance with the "Regulations Governing the Publication of Financial Forecasts of Public Companies", the Company is not required to disclose the financial forecasts for 2021.

VIII. Employee and Director Compensation

(I) Percentage or range of the remuneration of employees and directors as set forth in the Articles of Incorporation

In accordance with the Company's Articles of Incorporation:

After offsetting the accumulated losses with the profit before tax for the year, the remaining amount shall be appropriated as compensation to employees and directors. The percentage of the aforementioned compensation to employees shall be no less than 5% of the aforementioned balance, and the percentage of the compensation to directors shall be no more than 2% of the aforementioned balance. Employee compensation is distributed by share or cash. Director compensation is distributed by cash. The distribution method, amount, or shares to be distributed of the employee compensation, as well as the amount to be distributed of the director compensation shall be approved by a majority of the attending directors at a Board meeting attended by over two-thirds of the directors, and then reported at the shareholders' meeting. Employees' compensation in stock or cash includes employees of companies in which the Company holds more than 50% of the shares.

• (II) The basis for estimating the amount of employee and director compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period: Not applicable as no compensation is distributed this year.
• (III) Information on any approval by the Board of Directors of distribution of compensation:
• A. Employee compensation and director compensation distributed in cash or shares: Not applicable as no compensation is distributed this year.
• B. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the net profit after tax stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: Not applicable as no compensation is distributed this year.
• (IV) Distribution of employees and directors compensation for the previous year, including the number of shares distributed, amount and share price: Not applicable as the Company did not distribute any dividends in 2019.

IX. Share repurchase by the Company:

(I) Completed

Term of repurchase	12th
Purpose of repurchase	Shares transferred to employees
Repurchase period	November 8, 2018 to January 7, 2019
Range of repurchase price	NT\$5.44 to NT\$10.00
Type and quantity of shares repurchased	Ordinary share of 20,000,000 shares
Amount of shares repurchased	NT\$182,840,575
Shares that have been canceled or transferred	Ordinary shares transferred to employees of 20,000,000 shares
Cumulative shares of the Company	Ordinary share 0 shares
Total treasury stock holdings as a percentage of total shares issued	0.00%

(II) Undergoing: None.

X. Corporate Bonds

• (I) Corporate Bonds: None
• (II) Convertible Corporate Bonds: None
• (III) Exchangeable Corporate Bonds: None
• (IV) Issuance of Corporate Bonds by Shelf Registration: None
• (V) Information on Bonds with Warrants: None

XI. Preferred Shares

• (I) Preferred Shares: None
• (II) Information on Preferred Shares with Warrants: None

XII. Global Depository Receipts: None

XIII. Employee Stock Options

• (I) Unexpired employee stock options issued by the Company in existence as of the date of publication of the annual report on March 29, 2021, and the effect of such options upon shareholders' equity: None.
• (II) Name of manager who acquired employee stock options as of the date of publication of the Annual Report on March 29, 2021, and the acquisition and subscription: None
• (III) Names of the top ten employees who have acquired employee stock options as of the date of publication of the annual report on March 29, 2021, and the acquisition and subscription: None

XIV. New Restricted Employee Shares: None

XV. New Shares Issuance in Connection with Mergers and Acquisitions

• (I) The Company acquired or transferred shares of other companies and issued new shares in the most recent year and as of the date of publication of the Annual Report: None.
• (II) The Company's Board of Directors resolved to issue new shares through merger or acquisition of shares of other companies in the most recent year and up to the date of publication of the Annual Report: None.

XVI. Implementation of capital utilization plan: None.

Chapter V. Operational Highlights

I. Business Activities

• (I) Scope of Business
• A. Principal Business Activities of the Group

Research, development, production, manufacture and sales of the following products:

• (1) Integrated circuits
• (2) Products and components listed above, system products, design of integrated circuits, testing services
• (3) Trading business related to side business
• (4) Touch chip control circuit boards
• (5) Touch panel application modules and solution design services
• B. Group's Business Focus

The Group's main businesses are research and development, production and manufacturing, and sales of integrated circuits, which accounted for approximately 100% of the business.

C. Current products and services of the Group

Projected capacitive touch chips, touch chip control circuit boards, multimedia graphics chips, SoC integration and design services, touch panel application modules and solution design services, etc.

D. Development of new products and services

Projected multi-touch capacitive touchscreen chips, capacitive stylus touchscreen chips, stylus control chips, touch panel modules, glass touchscreen modules, touch panel application modules and solution design services, and microelectromechanical microphone chips and solutions.

(II) Industry Overview

A. Current Status and Development of the Industry

Since 2011, the Company has been gradually withdrawing from the PC chipset business and transforming to consumer products. The Company has chosen projected capacitive touchscreen chips and in-cell touch chips as the main development directions in the future, which can support all kinds of touch sensors in the market, such as GFF, G1F, OGS, GF2, GG(DITO), GG(SITO). The current status and development of the touchscreen industry are as follows: As more humane and intuitive touch devices are continuously introduced into mobile devices, such as cell phones, tablets, NBs, PCs and AIOs (All-in-One computers), touchscreens have become a trend that affects all kinds of consumer goods, such as ticketing and ordering systems, car touch panels, bank ATMs, etc. These functions have replaced the traditional keypad and have been integrated into the human-machine interface of daily life, industrial production and medical equipment, making touch an indispensable part of the electronics industry.

The growth of PC before the epidemic is slowing down or even declining. Although tablets and smartphones are the largest supply of touch products in the touch market and the largest application market for touch chips, the gross margin of touch chips for cell phones and tablets has declined significantly due to the stabilization of touch technology and the large number of competitors. After the outbreak of the epidemic, due to the impact of working from home and not being able to leave home, the whole PC industry has become a trend, the entire sales channel has been hitting new highs through the Internet and driving the entire touch IC industry. In addition, as less time is spent in school, school classes were replaced by online classes. Therefore, the market of large-size educational whiteboards has been stagnant, while personal PC devices continue to grow. Since 2016, active stylus pens have been gaining popularity in the consumer touchscreen market. The application of touch products has become a trend since active stylus pens became supported by the Apple iPad. Touchscreen controller manufacturers have successively announced the support of active stylus pens with customized specifications. CPU manufacturer Intel was the first to establish an active stylus pen agreement named the Universal Stylus Initiative (USI). On the other hand, the OS giant Microsoft defined its own active stylus pen agreement named Microsoft Pen Protocol (MPP). Since 2017, consumer touch NB products of major brand manufacturers have entered the MPP. During the epidemic in 2020, the NB's sales results were very impressive, while the stylus pen function became a necessary option. MPP became the leader of the market in 2017. By 2018, when Google followed the USI for its active stylus pen for Chromebooks, USI had begun to gain attention. The trend of active stylus pens has offered new opportunities for touchscreen chip manufacturers, computer peripheral manufacturers, OS vendors, OEMs, and brand manufacturers. The entire supply chain has also become active and well prepared to enter a new touchscreen era.

B. Relationship Amongst the Upstream, Midstream, and Downstream Industry

The structure of Taiwan's IC industry is unique because of the close vertical integration between IC design and manufacturing and the downstream packaging and testing industries. Therefore, close cooperation between industries in the whole value chain is crucial to provide comprehensive services to our customers.

IC design: MediaTek, Silicon, VIA Technologies, Ali, Sunplus, Realtek, Elan Microelectronics, Silicon Motion, Phison Electronics

Photomask: Taiwan Mask, Toppan Chunghwa Electronics

Foundry model: United Microelectronics, TMC, Vanguard International Semiconductor

Package testing: ASE Technology, Siliconware Precision Industries, King Yuan Electronics, OSE

C. Product Development Trends

Touch panels can be divided into two types according to their structure: external and in-cell. External touch panels can be divided into resistive and capacitive types. In the early stage, resistive panels were once the mainstream due to their simple structure, but now projected capacitive input has matured and become the mainstream in multi-touch technology. The embedded technology of projected capacitive input can be divided into on-cell and in-cell technology. Due to the difficulty in improving the yield rate and the need for in-cell technology to cooperate with LCD panel manufacturers and change the TFT process, it is not able to become mainstream in a short time. Coupled with the maturity of out-cell TP technology and significantly lower cost, the embedded touch technology is not able to completely replace out-cell. At present, small-size on-cell technology is maturing and the yield rate is improving, with a gradual increase in market share.

In the NB market, led by the trend of stylus pen of Microsoft surface-pro and APPLE iPad, OEMs started to fully integrate stylus pen function to their touch solutions in 2018. Although most of the stylus pens are still optional, OEMs need this new feature to compete with the best-selling Surface Pro series. Therefore, they have to include stylus pens as one of the necessary features, and this has made stylus pens an important and mandatory feature after 2019, then becoming a popular trend in 2020. Stylus pens have become one of the indispensable features in the market. The touch chip released by the Company in 2020 is designed for MPP and USI, the two major stylus pen protocols in the market.

In addition to the development of MPP or USI stylus pen touch master chips, in Q4 2020, we have also completed the design and development of the stylus pen control chip and smoothly entered into the introduction of OEM, so as to ensure the best compatibility of touch master chips and stylus pen control chips. The stylus pen control chip can support both MPP and USI protocols in a 2-in-1 stylus pen control chip, which allows one pen to support two different protocols of MPP and USI platforms at the same time, enabling cross-platform applicable. To easily place the stylus pen in the device, minimizing the size of stylus pens is the next design focus. Because the battery life shortens as the battery size becomes smaller, the next challenge is power saving. With the ultra-low capacitance and extremely power-saving IC design, users can use the pen for an hour after charging for a few seconds, achieving the ultimate goal of charging and using at any time. For the in-cell touch solution, we started to cooperate with well-known LCD manufacturers in 2020. Also, we successfully obtained the relevant certifications and passed the test, which shows that our touch IC technology has advanced a big step forward.

For large-size touch applications, the Company extends its design service to glass touch application modules, which can be applied to glass window advertisements and office glass partitions. Projection equipment is combined with touch and advertisement application to become a new media interactive advertisement solution, which can also be applied to office interactive whiteboard. In particular, for large-size screens, compared to LCD touchscreens, the projection touch interactive solution has better advantages.

66

Under the impact of the COVID-19 epidemic in 2020, the hover touch solution has become one of the emerging features. The Company launched a corresponding solution in the fourth quarter of 2020 and started to introduce it to industrial control customers in the first quarter of 2021.

Due to the impact of the COVID-19 epidemic, industrial computer customers have introduced a new hover touch solution, which is another extension of projected capacitive input.

D. Competition

The demand for touch panels is driven by touch-enabled mobile devices, prompting the industry to actively develop various specifications to meet different needs. External projected capacitive technologies include Glass-Glass (GG), Glass-Film-Film (GFF), Glass One Film (G1F), One Glass Solution (OGS), also known as Touch on Lens (TOL), GF2, etc. Embedded technologies include in-cell and on-cell. In the past two years, stylus pen solutions have become the mainstream of the market; this is a huge technological change for the whole touch market and makes the touch market active. In 2020, the Company launched the corresponding stylus pen touch master chip and stylus pen control chip, and started the design integrated by customers and was put into mass production in 2020, and will increase the market share in 2021.

In the consumer electronics, industrial and automotive touch products sector, the Company has launched a series of ultra-large products in the external capacitive touch sector, featuring 40-finger touch, high interruption resistance, spill resistance, and false triggering by palms; these can meet the demand of the touch market in all aspects, such as consumer handheld devices, tablet, notebook, as well as all-in-one devices, industrial and business POS, ultra-large interactive whiteboard (IWB), and touch solutions that are in compliance with the AEC-Q100 regulation. The operating systems support Windows 7/8.1/10, Android, and Linux. The touch chip supports various touch sensor types in the market, such as GFF, G1F, OGS, GF2, GG(DITO), GG(SITO), and various sensor materials, such as ITO, Metal Mesh, AgNano, and Carbon Nano, etc. The Company is the leader in the ultra-large capacitive touch market. The Company launched 84" projected capacitive solution early in 2014, and this has secured our mature technology in the ultra-large size sector. This solution attracted many customers to cooperate with us for trial production, and was successfully put into mass production in Q1 2015. The Company launched the 100" projected capacitive touch solution in Q1 2015 and also showcased the 134" multi-finger touch demo in Q3 2015. However, the large-size touchscreen market is shrinking rapidly due to the impact of the epidemic in 2020. As business travel is hindered, business promotion is greatly restricted. Therefore, we must shift the direction of large-size touchscreens. In the industrial computer sector, the Company has developed firmware adaptation software tools and improved algorithm technology to meet the diverse needs of a small number of customers in the industrial computer field, giving industrial computer customers more autonomy in adaptation and significantly reducing support requirements and costs. In the industrial computer market, customers' requirements for noise resistance have increased. The Company has developed new solutions to improve noise

resistance in response to the demand. These solutions were successfully launched and put into mass production in 2018 to enhance the competitiveness of the Company's IC. In addition, the Company has maintained its leading position in large-size IWB and projection whiteboard (PWB). After the development of multi-pen and multi-color stylus pen applications in 2018, due to the high cost of stylus pens, customers can only use them in high-end models, and this would affect the promotion of the stylus pen. However, traditional passive stylus pens are limited by performance and cannot meet the user's writing needs. The Company has improved the pen algorithm for passive stylus pens, developed pen pressure detection and ultra-short delay response time to meet the user's writing needs and improve the Company's competitiveness in large-size conference room systems.

(III) Technology, Research and Development Overview

In terms of technology requirements, the Company's single-chip and multi-chip technology have become mature. In the single-chip sector, our single chips were only able to support 17" Win8 NB in 2014Q1, 24" Win8 AIO in 2015Q1. In 2016, single chips were able to support 27" Win10 AIO. The Company has also broken through the bottleneck of multi-chip data synchronization and refresh rate in large-size applications. With the increasingly mature metal-mesh TP technology, the Company has successfully broken through the 85" true flat projected capacitive touch technology, which was well-received by customers with its high market acceptance and cost advantage. We showcased the 268" 7m ultra-wide capacitive touch projection whiteboard at the exhibition in 2017Q1. In addition to the consumer market and ultra-large touch solutions, the Company has also successfully passed the stringent automotive AEC-Q100 regulation to provide touch solutions in the automotive market. In 2017, our vehicle touch solution was successfully adopted by a car manufacturer as a factory-installed feature, which has passed the strict 100,000 km testing and put into mass production. In addition, for the development of capacitive stylus pen, the Company have started to invest in research and development in 2016. In 2017, chips were produced successively for testing. Currently, the stylus chip supporting MPP has passed the test and has been adopted by customers, and was put into mass production in the second half of 2019. The stylus pen chip supporting the USI agreement has passed the test and has been adopted by customers for promotion. However, the large-size touchscreen market is shrinking rapidly due to the impact of the epidemic in 2020. As business travel is hindered, business promotion is greatly restricted. Therefore, we must shift the direction of large-size touchscreens. In the industrial computer sector, the Company has developed firmware adaptation software tools and improved algorithm technology to meet the diverse needs of a small number of customers in the industrial computer field; this gives industrial computer customers more autonomy in adaptation and significantly reducing support requirements and costs. In the industrial computer market, customers' requirements for noise resistance have increased. The Company has developed new solutions to improve noise resistance in response to the demand; these solutions were successfully launched and put into mass production in 2018 to enhance the competitiveness of the Company's IC. In addition, the Company has maintained its leading position in large-size IWB and projection whiteboard (PWB). After the development of multi-pen and

multi-color stylus pen applications in 2018, due to the high cost of stylus pens, customers can only use them in high-end models, and this would affect the promotion of the stylus pen. However, traditional passive stylus pens are limited by performance and cannot meet the user's writing needs. The Company has improved the pen algorithm for passive stylus pens, developed pen pressure detection and ultra-short delay response time to meet the user's writing needs and improve the Company's competitiveness in large-size conference room systems.

There are two major types of microelectromechanical microphones: analog output and digital output. Analog output microelectromechanical microphones are generally used in cell phones, hands-free headphones, Bluetooth wireless headphones, noise-canceling headphones, and voice control products, such as smart speakers, remote controls, etc. Digital output microelectromechanical microphones are generally used in notebook computers, smart TVs, video conferencing systems, microphone arrays, and voice control products. According to different market requirements and application specifications, the Company needs to develop products with corresponding specifications, such as low power consumption, noise resistance, high signal-to-noise ratio, etc.

The Company has developed analog output and digital output microelectromechanical microphone chips and solutions, and they are all in the process of testing and sample promotion.

A. R&D Expense

Unit: NT\$'000

Item	As of March 29 (Note)	2020	2019
R&D expense	52,281	325,022	316,624
Net operating profit	44,225	160,171	222,952
R&D expense to Net operating profit (%)	118.22	202.92	142.01

Note 1. The information is based on IFRS consolidation data as of March 29, 2021, which is a self-calculated figure.

• B. R&D results
• February 2018

Developed the multi-pen and multi-color stylus pens for large size IWB, and simultaneously supported writing of four stylus pens, and different color settings. Several customers have integrated their designs into the new product.

March 2018

ICs in large-size IWB under the 95 series support the 50-point multitouch function.

May 2018

Large-size IWB and projection touch whiteboard support of MAC OS, and were provided to North American customers.

June 2018

Adjusted the multi-pen and multi-color solution for BOE 75" IWB and presented it at BOE annual product conference.

• July 2018
• Completed the customer's object detection solutions for 55", 65", and 75" IWBs, and these solutions are applied to advertising and marketing. Object detection enables the timely presentation of product descriptions.
• October 2018

MPP stylus pen chip passed the test and was invited to participate in the Microsoft WinHEC2018 event, where the Company showcased its stylus pen products.

June 2019

SiS 65" touch IC module passed the hardware testing of the conference room system of the world's major manufacturers and was the only qualified touch IC supplier.

September 2019

USI stylus pen passed the test and was invited to present USI agreement stylus pen chip event and demonstration with USI Association.

February 2020

Participated in the Taipei International Furniture Show 2020 and exhibited SiS's latest large-size touch panel and applications at the World Trade Center Hall, including modern office glass touch whiteboard, glass window advertising touch panel, and intelligent touch bed panel.

November 2020

SiS microelectromechanical microphone cooperated with NBCAM camera module manufacturer to provide laptop solutions, which passed the SPET test by a third-party lab.

December 2020

SiS USI touch IC cooperated with panel manufacturer to provide USI On-Cell Touch Panel (OTP) solution and passed USI and performance certification together with USI stylus pen.

January 2021

SiS microelectromechanical microphone passed Modern Standby certification.

February 2021

SiS USI stylus pen IC supports color absorption function and transmits color information through the USI agreement, replacing Bluetooth transmission, providing differentiated specifications.

• (VI) Long and Short-Term Business Development Plans
• A. Short-Term Business Development Plans

In the consumer PC market, we are actively preparing the newly developed MPP and USI active pen solutions for certification, sample delivery, and mass production to further extend our business to the top 5 global brands of ODM manufacturers, and these will be the most important business goals this year. With the efforts of our branches in mainland China, SIS's team service has been recognized by our customers. The large interactive whiteboards in the education market in mainland China have already gained a considerable market share. However, under the epidemic in 2020, the large-sized interactive whiteboards in the education market have been stagnant, and the Company has quickly shifted the relevant R&D and promotion resources to glass touch solutions. In 2019, the Company tapped into the touch module market, and integrate touch panel modules through key touch technology to provide customers with one-stop services. In the fourth quarter of 2020, the Company started to obtain orders from customers and designed in the Company's touch panel modules successively. The Company will continue to promote this project in 2021. In the microelectromechanical microphone chip and solution market, the Company is actively preparing the newly developed analog output and digital output solutions for certification, sampling, and mass production; this will be one of our most important business goals this year.

B. Long-Term Business Development Plans

In the long term, the Company will continue to develop consumer, commercial and industrial touch chips. In addition to the Company's existing IC development capabilities, the Company also combines its existing FAE and software support capabilities to provide Total Solution to most of the existing system vendors or white label mobile device market as well as the new education market and continue to expand our market share in the small and medium-size market. In addition to the original consumer products, the Company is also actively expanding its touch products into the industrial computer and automotive markets. In the ultra-large projected capacitive touch sector, the Company has gained a head start and continues to increase its market share, especially with the lower cost of TP and the competitive price, which have made customers willing to replace optical touch. With the new stylus pen technology offered by SiS, customers coupling with other softwares are able to develop new functions to fulfill the demand of end consumers and achieve the product differentiation, and this also accelerates customers' willingness to replace. The Company has also successfully developed a cost-competitive pen-pressure passive stylus pen solution that is ideal for large-sized conference room touch screens and has been successfully introduced to major manufacturers of conference room systems worldwide. Currently, the ultra-large interactive multimedia touch experience has led to another wave of touch chip growth in the global conference room and education markets. With the increasing penetration of touch applications in All-in-One computers, notebooks, industrial computers and automotive displays, the Company's strength in ultra-large touch has been demonstrated in the ultra-large touch market. We integrate touch panel and multi-functional glass touch panel solution, not only do we provide touch hardware, but also integrate the content of the comprehensive service

solution, so that customers have more options to integrate touch panel into product applications. With the completion of the development of the touch chips that support stylus pen and the mass production of stylus pen chips, the Company has further become a professional chip design company, which provides capacitive touch screen chips, stylus pen chips and Total Solution with comprehensive services of all sizes and all kinds of functions.

In the microelectromechanical microphone chip and solution market, the Company continues to develop different application markets and looks for more voice control and algorithm partners, so that its products can be extended to different voice application markets.

II. Market, Production and Sales Overview

(I) Market Analysis

A. Analysis of Market Sales of the Company's Products

					Unit: NT\$'000
Region/Item		2020			2019
		Sales Amount	Ratio (%)	Sales Amount	Ratio (%)
	Asia	78,223	48.84	93,290	41.84
Foreign Sales	Others	4,411	2.75	9,539	4.28
	Subtotal	82,633	51.59	102,829	46.12
Domestic Sales		77,537	48.41	120,123	53.88
Total		160,171	100.00	222,952	100.00

Note 1. The above sales amounts are expressed in net amount/consolidated using IFRSs.

B. Market Share

According to the statistics of IEK Industrial Economics and Trends Research Center (ITRI), in 2020, the total production of the IC design industry was NT\$852.9 billion; the total revenue of the Company was NT\$160 million, accounting for 0.01876% of the market share of Taiwan's total production of the IC design industry.

• C. Supply, Demand and Growth of the Market in the Future
• (1) Supply and Demand

Touch ICs and stylus pen ICs are upstream of the entire touch industry, and the market demand is growing steadily. Domestic suppliers include SiS, FocalTech Systems, ELAN, eGalax_ePMIA, and PixArt Imaging, etc. Foreign suppliers include Atmel, Cypress, Synaptics, Melfa, Cirel, etc.

(2) Demand

Touch ICs are widely used in handheld mobile devices, NB, AIO, and other human-machine interfaces that can replace button control with touch panels. Currently, cell phones and tablet PC are the top two in terms of production volume, but the gross margin is relatively low. The cost of ultra-large touch panels continues to decrease and the demand of the ultra-large touch panel market has formed another wave of growth momentum. In addition, MPP stylus pen and USI stylus pen applications are growing in NB and AIO markets. Ultra-large touch panels will be an important profit direction for the Company.

(3) Growth Rate

The touch control trend is sweeping across the world, maintaining steady growth despite the unstable economic growth. In addition, Microsoft tablet (Surface Pro), Microsoft AIO (Surface Studio) and Microsoft conference room IWB system (Surface Hub) introduced stylus pen functions; the introduction stimulated the market demand for touch functions. Google also launched the conference room IWB system (Google Jambo), which also supports stylus pen solutions. This series of human-machine interface reform is closely related to touch control. The new generation of touch technology is no longer limited to finger touch, and it brings back pens to the input interface, which is what humans are used to. These new technologies will bring people a more diversified, convenient, and customized human-machine interface. In addition to finger touch applications, the use of pen and handwriting is what human beings are used to.

Capacitive touch technology that can simulate actual handwriting will also be a technology that has a great opportunity to change the touch control sector. This will also bring another wave of growth opportunities for consumer touch products.

• D. Competitive Niche, Advantages and Adverse Factors of Development Prospects and Countermeasures
• (1) Competitive Niches

With a strong financial foundation, the Company is continuously investing in R&D resources to develop high-function and advanced products to meet the diverse and flexible needs of the customers. With solid cost control capability, the Company is now leading the industry in the ultra-large IWB (electronic whiteboard) touch sector and has gained a head start in the conference room and education markets. Experience in chip integration is the foundation of the Company's leading position in the ultra-large segment, especially for the integration technology with a high threshold. The Company has been working in the PC chipset sector for more than 20 years and have established good relationships with major brands and system manufacturers worldwide; these are our competitive advantages. In addition to the ultra-large touch ICs we originally provided, the Company has also launched ultra-large touch film sets to make it easier for customers to integrate and open up our market share in the ultra-large market in China. The Company will continue to lead the market with our professional chip design advantage to develop stylus pen chips that support MPP and USI specifications, and will show our advantage in the touch market again this time.

• (2) Advantages of Development Prospects
• The clustering effect of Taiwan's computer industry has a positive impact on the competitive advantage of the IC design industry and should be utilized. The strong demand in the emerging mainland China market is also a focus of the Company.
• Our advantages in production are as follows: flexible and responsive manufacturing capabilities, cost and control capabilities, more efficient resource utilization, reduced cycle time, diversified customer base, maximum capacity utilization, and faster growth.
• With a strong management team and local support team in mainland China, we are able to adjust product design specifications and mass production schedules to meet customer needs.

• The demand for cheap computer products is strong, so the most effective way is to find cheaper components. The Company also fulfilled the need to reduce the cost of wafers through integration, using connectable technology to reduce the development cost of ultra-large touch solutions.

• The performance requirements of oversize require a high degree of integration capability and experience. Ultra-large integration solutions are required to maintain revenue with a high gross margin.

• The demand for ultra-large touch solutions in the mainland market is increasing rapidly. The Company's efforts in the mainland market and the establishment of a local support team are important niches for capturing market share.
• Large-size LCD and large-size touch panel prices continue to decline, and this is favorable to the promotion of large-size touch solutions and the replacement of infrared touch panels.
• The large size glass touch panel solution can replace the traditional lightbox advertising and provide a new media advertising solution that focuses on interaction. Meanwhile, this solution also takes into account environmental protection and provides a feeling of freshness to attract customers.
• (3) Adverse Factors of Development Prospects
• Fierce competition in the industry, short product lifecycle, difficulty in maintaining gross margin are the adverse factors for development.
• Small and medium-sized touch solutions lack technical leadership for mainstream specifications and will be controlled by large foreign manufacturers.
• The penetration rate of touch-related consumer PC products is still not high enough. The demand for touch products is still mostly for cell phone and tablet applications. The touch penetration rate of large-size IWB is high, but low-cost infrared still has the largest order amount. Therefore, the price factor is still the main reason.
• (4) Countermeasures
• Continuously invest in professional technology research and development capabilities and introduce strategic partners.
• Enhance the innovation ability and design products with different characteristics. Establish a clear market segmentation to give full play to our core competitiveness.
• Cooperate with panel manufacturers to develop more competitive products.

• Integrate the industry chain to reduce cost and price, and control the price by volume.

• (II) Key Functions and Manufacturing Process of Core Products

• A. Key Applications of the Products

Instead of using the traditional mechanical buttons, the intuitive user interface allows users to operate by touching the screen with fingers or the pen tip. It can be used in consumer electronic products such as cell phones, notebooks, tablets, road navigation systems, interactive whiteboards, and human-machine interface for industrial computers.

B. Production process

(III) Supply of Major Raw Materials United Microelectronics Corp. is the primary raw material supplier for the chips of the Company and has a

stable source of supply.

(IV) Information on Manufacturers and Customers that Account for over 10% of Sales and Purchases

A. Supplier Information

Unit: NT\$'000

			2020		2019
			Percent to				Percent to
Item			the Annual	Relationship			the Annual	Relationship
	Name	Amount	Net	with the	Name	Amount	Net	with the
			Purchase	Issuer			Purchase	Issuer
			Amount (%)				Amount (%)
	United
1	Microelectronics	23,990	28	Note 2	Company A	32,037	23	None
					United
2	Company A	22,191	25	None	Microelectronics	30,677	22	Note 2
3	Others	40,391	47	None	Company B	15,205	11	None
4					Others	59,538	44	None
	Net purchase	86,572	100		Net purchase	137,457	100

Note 1. Adopted IFRS consolidated information.

Note 2. Shareholders with over 10% shareholdings

B. Information on Sales Customers

Unit: NT\$'000

			2020		2019
Item	Name	Amount	Percent to the Annual Net Sales Amount (%)	Relationship with the Issuer	Name	Amount	Percent to the Annual Net Sales Amount (%)	Relationship with the Issuer
1	Company A	46,920	29	None	Company A	46,168	21	None
2	Company B	34,113	21	None	Company B	44,491	20	None
3	Others	79,138	50	None	Others	132,293	59	None
	Net sales	160,171	100		Net sales	222,952	100

Note 1. Adopted IFRS consolidated information.

(IX) Production Volume and Value

Unit: NT\$'000/Thousand

Year/Production		2020			2019
Volume and Value	Production	Production	Production	Production	Production	Production
/Major Products	Capacity	Volume	Value	Capacity	Volume	Value
Consumer
Electronic IC	-	7,000	73,411	-	3,485	127,983
Total	-	7,000	73,411	-	3,485	127,983

Note 1. The Company's products are not subject to production capacity restrictions.

Note 2. Adopted IFRS consolidated information.

(X) Sales Volume/Value

Unit: NT\$'000/Thousand

Year/	2020				2019
Sales Volume and	Domestic Sales		Foreign Sales		Domestic Sales		Foreign Sales
Value/	Sales	Sales	Sales	Sales	Sales	Sales	Sales	Sales
Major Products	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Consumer Electronic IC	1,083	77,538	5,756	82,633	1,982	120,123	834	102,829
Total	1,083	77,538	5,756	82,633	1,982	120,123	834	102,829

Note 1. Adopted IFRS consolidated information.

III. Employees

	Year	As of March 29	2020	2019
	Technicians	1	0	0
Number of	Engineers	168	171	194
Employees	Employees	26	25	26
	Total	195	196	220
	Average Age	40.8	40.4	39.8
	Average Service Year	10	9.8	9.0
Academic	PhD (%)	0.5	0.5	0.5
Distribution	Master Degree (%)	39.5	39.3	43.6
Ratio %	Bachelor Degree (%)	58.5	59.2	55.4
	High School (%)	1.5	1.0	0.5

Note 1. Adopted consolidated information.

Note 2. The publication of this Annual Report is March 29, 2021.

IV. Environmental Expenses

• (I) Total losses (including compensation) and penalties arising from environmental pollutions in the past year and up to the date of publication of the Annual Report: None
• (II) Countermeasures in the future, including improvement measures and possible expenditures:

The Company is primarily engaged in the design, testing, and sales of integrated circuits and complies with environmental regulations and relevant international standards and norms. In the course of business activities, the Company also aims to protect the nature and strive for environment-friendly and sustainable management. Provide a working environment that is environmentally friendly, safe and hygienic, and establish an appropriate management system so that all employees can work with peace of mind and happiness. In accordance with the environmental, safety and health policy, adhering to the concept of sustainable management, the Company continues to control, prevent and improve environmental protection and green energy. At the same time, the Company participates in activities such as the Taiwan Semiconductor Industry Association and is committed to promoting the environmental, safety and health management system by responding to the activities organized by the competent authorities.

Engage in R&D, production and service in accordance with the following principles to reduce the impact of the Group's operations on the natural environment:

• A. Comply with and implement domestic regulations and other related requirements on environmental, safety and health.
• B. Reduce the resource and energy consumption of products and services.
• C. Increase the durability of products and maximize the lifecycle of renewable resources.
• D. Increase the efficiency of products and services, and improve the recyclability and reuse of raw materials or products.
• E. Establish an environmental, safety and health management system, and continuously prevent and improve pollution.
• F. Regularly review the operation of the environmental, safety and health policy and management system through management and review.
• G. Conduct environmental training courses for management and employees, and regularly review environmental sustainability goals and progress.

V. Labor Relations

The Company's human resource policy respects and guarantees basic labor human rights principles, and establish appropriate management methods and procedures. In order to protect the legal interests of employees, the Company has established the "Work Rules of Silicon Integrated Systems Corporation" in accordance with the Labor Standards Act and related laws and regulations. The Company also provides employees with information on labor laws and regulations for employees to comply with. If the employees have any doubts about the labor human rights protection policy, the Company will appoint a labor-management meeting to discuss the matter. If the discussion fails to reach a consensus, it will be submitted to the competent authority.

• (I) The implementation of employee welfare measures, further education, training, retirement systems and implementation, as well as agreements between employers and employees and measures to protect the rights and interests of employees
• A. Employee Benefits and Measures
  • (1) Labor insurance and national health insurance: All employees of the Company participate in labor insurance and national health insurance in accordance with the law.
  • (2) Group insurance: All regular employees of the Company are entitled to group insurance from the day they report to work. The premiums are borne by the Company according to the standards of different grades. Employees' dependents and parents are allowed to add insurance at their own expense. The insurance premiums of which are cheaper, providing an extra layer of protection and care for the employees' families.
  • (3) Bonus system: Provide bonuses (festivals, performance bonuses, intellectual property rights bonuses, awards for excellent performance and senior employees) and employee share options.
  • (4) Leisure facilities: Restaurant, coffee bar, gymnasium, basketball court, snooker, badminton, pool, rhythmic yoga, newspaper and library, as well as outdoor walking paths, providing the best place for employees to dine, socialize and work out.
  • (5) Retirement system: The Company contributes labor retirement fund to the Labor Retirement Fund Supervisory Committee in accordance with the law, and handles employee pension payments in accordance with the Labor Standards Act. Starting from July 1, 2005, for those who choose the Labor Pension Act retirement system, the Company shall pay 6% of their monthly salaries to the retirement account under the Bureau of Labor Insurance in order to fully protect the rights and interests of employees.
• B. Employee Welfare Committee
  • (1) In order to enhance employee welfare, the Company has established the Employee Welfare Committee to provide employees with recreational activities, annual celebration subsidies, medical treatment, and further education and other related benefits. The Employee Welfare Committee Charter shall be formulated and reported to the competent authorities in accordance with the regulations.
  • (2) The source of employee benefits shall be appropriated in accordance with the "Employee Welfare Fund Act".

C. Training Programs

In accordance with the relevant training procedures and regulations of the Company, annual training plans are formulated to meet the needs of employees. The Company offers new employee training, professional and technical training, management training, self-initiative training, quality management training, safety and health, to provide employees with comprehensive professional skill development and self-growth courses required for their careers.

D. Employees Code of Conduct

To ensure the conduct of the Company's employees in compliance with the Code of Conduct and to provide a basis for rewards and punishments, and to provide a better understanding for the Company's stakeholders to the ethical standards and code of conduct that the Company's employees should follow in performing their duties, the Company has established the Employee Code of Conduct and a rewards and punishments system.

E. Labor-management agreements and measures for preserving employees' rights and interests in recent years

The Company's employees are well qualified and the Group's management philosophy and policies are implemented. In addition, the Group has an internal website to provide employees with up-to-date information and an employee suggestion box to receive different voices.

(II) The Company maintained a healthy labor relation and did not incur any loss from labor disputes in the past year and up to the date of publication of the Annual Report.

VI. Material Contracts: None

Chapter VI. Review and Analysis of Financial Condition and Financial Performance

I. Financial Condition

(I) IFRS Parent Company Only Financial Statements

					Unit: NT\$'000
	Item/Year	2020	2019	Increase (decrease) amount	Change ratio %
Current assets		874,160	1,039,912	(165,752)	(15.94)
Property, plant and equipment		742,862	756,066	(13,204)	(1.75)
Intangible assets		5,764	7,045	(1,281)	(18.18)
Other Assets		15,939,902	5,966,498	9,973,404	167.16
Total Assets		17,562,688	7,769,521	9,793,167	126.05
Current liabilities	Before distribution	58,549	67,107	(8,558)	(12.75)
	After distribution	(Note)	67,107	-	-
Non-current liabilities		5,942	6,906	(964)	(13.96)
	Before distribution	64,491	74,013	(9,522)	(12.87)
Total Liabilities	After distribution	(Note)	74,013	-	-
	Equity attributable to owners of the parent company	-	-	-	-
Share capital		6,309,675	5,540,625	769,050	13.88
Capital surplus		85,807	6,445	79,362	1,231.37
	Before distribution	3,957,463	5,209,558	(1,252,095)	(24.03)
Retained earnings	After distribution	(Note)	5,209,558	-	-
Other equity interest		7,145,252	(2,878,280)	10,023,532	(348.25)
Treasury share		-	(182,840)	182,840	(100.00)
Non-controlling interest		-	-	-	-
Total equity	Before distribution	17,498,197	7,695,508	9,802,689	127.38
	After distribution	(Note)	7,695,508	-	-

Note: Subject to the approval at the 2021 annual shareholders' meeting

Differentiation analysis:

• 1. The decrease in current assets was mainly due to the decrease in cash and cash equivalents.
• 1. The increase in other assets and other equity was mainly due to the increase in the fair value of financial assets measured at fair value through other comprehensive income.
• 1. The increase in capital surplus was due to the transfer of treasury shares to employees.

(II) IFRS Consolidated Financial Statements

Item/Year 2020 2019 Increase (decrease) amount Change ratio % Current assets 957,445 1,093,145 (135,700) (12.41) Property, plant and equipment 749,534 756,976 (7,442) (0.98) Intangible assets 7,054 7,045 9 0.13 Other Assets 15,880,076 5,921,489 9,958,587 168.18 Total Assets 17,594,109 7,778,655 9,815,454 126.18 Current liabilities Before distribution 73,859 76,116 (2,257) (2.97) After distribution (Note) 76,116 - - Non-current liabilities 12,675 7,031 5,644 80.27 Total Liabilities Before distribution 86,534 83,147 3,387 4.07 After distribution (Note) 83,147 - - Equity attributable to owners of the parent company 17,498,197 7,695,508 9,802,689 127.38 Share capital 6,309,675 5,540,625 769,050 13.88 Capital surplus 85,807 6,445 79,362 1,231.37 Retained earnings Before distribution 3,957,463 5,209,558 (1,252,095) (24.03) After distribution (Note) 5,209,558 - - Other equity interest 7,145,252 (2,878,280) 10,023,532 (348.25) Treasury share 0 (182,840) 182,840 (100.00) Non-controlling interest 9,378 - 9,378 - Total equity Before distribution 17,507,575 7,695,508 9,802,689 127.38 After distribution (Note) 7,695,508 - -

Note: Subject to the approval at the 2021 annual shareholders' meeting

Differentiation analysis:

• 1. The decrease in current assets was mainly due to the decrease in cash and cash equivalents.
• 1. The increase in other assets and other equity was mainly due to the increase in the fair value of financial assets measured at fair value through other comprehensive income.
• 1. The increase in capital surplus was due to the transfer of treasury shares to employees.

Unit: NT\$'000

II. Financial Performance

(I) IFRS Parent Company Only Financial Statements

				Unit: NT\$'000
Item/Year	2020	2019	Increase (decrease) amount	Change ratio %
Sales revenue	136,621	208,639	(72,018)	(34.52)
Gross profit	37,230	74,653	(37,423)	(50.13)
Operating income	(414,064)	(335,281)	(78,783)	23.50
Non-operating income and expenses	158,061	117,982	40,079	33.97
Profit before income tax	(256,003)	(217,299)	(38,704)	17.81
Income from continuing operations	(299,468)	(224,691)	(74,777)	33.28
Loss from discontinued operations	-	-	-	-
Net income	(299,468)	(224,691)	(74,777)	33.28
Other income (net amount after tax) for the period	10,032,217	1,662,113	8,370,104	503.58
Total comprehensive income for the period	9,732,749	1,437,422	8,295,327	577.10
Net income attributable to owners of the parent company	-	-	-	-
Net income attributable to non-controlling interests	-	-	-	-
Comprehensive income attributable to owners of the	-	-	-	-
parent company
Comprehensive income attributable to non-controlling	-	-	-	-
interests
Earnings per share	(0.47)	(0.37)	(0.10)	27.03

Differentiation analysis:

• 1. The changes in operating revenues, operating costs and gross profit were mainly due to changes in customer portfolio.
• 1. The increase in non-operating income and expenses was mainly due to the increase in dividend income recognized and the increase in loss of investment using the equity method.
• 1. The increase in other comprehensive income was mainly due to the increase in fair value of financial assets non-current measured at fair value through other comprehensive income.

The Company continues to focus on touch technologies that support a wide range of touch sensors, and continues to improve chip performance and reduce costs, and actively develops application products in the related sector. The future development of touch applications will gain popularity as the price of touch panels becomes more affordable and the human-machine interaction interface is simplified; this will facilitate the Company in achieving its profit target.

(II) IFRS Consolidated Financial Statements

Unit: NT\$'000

Item/Year	2020	2019	Increase (decrease) amount	Change ratio %
Sales revenue	160,171	222,952	(62,781)	(28.16)
Gross profit	45,135	86,889	(41,754)	(48.05)
Operating income	(447,374)	(355,576)	(91,798)	25.82
Non-operating income and expenses	190,804	138,391	52,413	37.87
Profit before income tax	(256,570)	(217,185)	(39,385)	18.13
Income from continuing operations	(300,090)	(224,691)	(75,399)	33.56
Loss from discontinued operations		-	-	-
Net income	(300,090)	(224,691)	(75,399)	33.56
Other income (net amount after tax) for the period	10,032,217	1,662,113	8,370,104	503.58
Total comprehensive income for the period	9,732,127	1,437,422	8,294,705	577.05
Net income attributable to owners of the parent company	(299,468)	(224,691)	(74,777)	33.28
Net income attributable to non-controlling interests	(622)	-	(622)	-
Comprehensive income attributable to owners of the parent company	9,732,749	1,437,422	8,295,327	577.10
Comprehensive income attributable to non-controlling interests	(622)	-	(622)	-
Earnings per share	(0.47)	(0.37)	(0.10)	27.03

Differentiation analysis:

• 1. The changes in operating revenues, operating costs and gross profit were mainly due to changes in customer portfolio.
• 1. The increase in non-operating income and expenses was mainly due to the increase in dividend income recognized and the increase in loss of investment using the equity method.
• 1. The increase in other comprehensive income was mainly due to the increase in fair value of financial assets non-current measured at fair value through other comprehensive income.

The Company continues to focus on touch technologies that support a wide range of touch sensors, and continues to improve chip performance and reduce costs, and actively develops application products in the related sector. The future development of touch applications will gain popularity as the price of touch panels becomes more affordable and the human-machine interaction interface is simplified; this will facilitate the Company in achieving its profit target.

III. Cash Flows

(I) Analysis and Improvement Plan of the Change in Cash Flow in 2020

Unit: NT\$'000

Beginning Cash	Net cash flows from	Net cash flows from			Remedial measures for cash inadequacy
Balance	operating activities	investing and financing activities	Cash balance	Investment plan	Financial plan
971,613	(346,829)	194,576	819,360	-	-
1.		The net cash outflow from operating activities was NT\$346,829 thousand.
2.		The net cash inflow from investing activities was NT\$197,326 thousand

• 1. The net cash outflow from financing activities was NT\$3,577 thousand
• 1. The effect of exchange rate changes on cash and cash equivalents was NT\$827 thousand
• 1. There was no cash inadequacy and liquidity deficit for the year.
• 1. Adopted IFRS consolidated information.
• (II) Cash flow analysis for the coming year

Unit: NT\$'000

Beginning Cash Balance	Expected net cash flows from operating activities	Expected net cash flows from investing and financing activities	Expected cash surplus	Remedial measures for expected cash inadequacy Investment plan	Financial plan
819,360	(197,664)	182,186	803,882	-	-

Note: Adopted IFRS consolidated information

IV. There were no significant capital expenditures in the recent year, so there was no impact on financial operations.

V. Investment policy for the recent year, main reasons for profit or loss, improvement plan and investment plan for the coming year

• (I) The main reasons for the profit or loss of the investment policy: None.
• (II) Improvement plans: None.
• (III) Investment plans for the coming year: No significant investment plans.

VI. Risk Issues

• (I) Impact of interest rate, exchange rate changes and inflation on the Company's profit or loss and future countermeasures
• A. Changes in interest rates: The Company has sufficient working capital and no bank borrowings. An increase in interest rates would result in an increase in interest income. The Company's financial department closely monitors changes in market interest rates to reduce the impact of interest rate changes on the Company's financial condition.
• B. Changes in exchange rates: The Company engages in derivatives transactions using forward exchange contracts for the purpose of hedging the exchange rate risk arising from its operations. To avoid the exchange rate risk arising from the receivables denominated in foreign currencies held, the sales of forward foreign exchange contracts are the primary instrument for hedging. The Company's exchange loss was NT\$2,309 thousand in 2020.
• C. Inflation: Inflation has no significant impact on the Company.
• (II) The Company's policy on high-risk, highly leveraged investments, loaning of funds, endorsement and guarantee, and derivatives transactions, the main reasons for profit or loss, and future countermeasures.

The Company has established a sound financial, business, and accounting management system in accordance with relevant laws and regulations, and shall properly conduct comprehensive risk assessments with its related companies on correspondent banks, customers and suppliers, and implement necessary control mechanisms to reduce credit risks.

In order to effectively manage financial affairs and avoid potential trading risks, the Company has established various internal procedures and management practices in accordance with the relevant laws and regulations of the competent authorities, including "Regulations Governing Loaning of Funds," "Regulations Governing Provision of Endorsements/Guarantees," and "Procedures for Derivative Transactions." As of the date of publication of this Annual Report, the Company has not engaged in any high-risk and high-leverage investment activities related to the loaning of funds and the provision of endorsement and guarantee. The Company engages in derivative transactions mainly for the purpose of hedging the exchange rate risk arising from its operations.

• (III) Future R&D plans and expected R&D expenses:
• A. Future R&D plans: Multi-point projected capacitive touch chips, in-cell embedded touch chips, and system-level applications.
• B. Estimated R&D expenses: The estimated R&D expenses for 2021 and 2022 are approximately NT\$330,000,000 per annum.

(IV) Impact of recent changes in domestic and international policies and regulations on the Company's financial operations and countermeasures:

The Company complies with national policies and laws. The finance and legal departments keep track of important changes in domestic and international policies and laws, and make timely adjustments to the Group's internal systems and business activities in accordance with the latest changes in laws and regulations to ensure smooth operation of the Group.

(V) Impact of technological changes and industry changes on the Company's financial and business operations and countermeasures:

The Company keeps an eye on domestic and international technological and industrial developments to review and improve their impact on the Group's financial and business conditions. With excellent research and development capabilities, the Company continues to upgrade relevant technologies, develop new products, and provide comprehensive technical services to release products that meet customers' needs. At the same time, the Company has enhanced its service efficiency, strengthened interaction with customers, and had a deep understanding of the pulse and trend of the technology industry. Therefore, technological changes and industry changes have no significant impact on the Company's financial condition.

• (VI) Impact of changes in corporate image change on corporate crisis management and countermeasures: The Company has always attached importance to corporate governance and community relations, and has been able to fully and effectively integrate and utilize the Group's resources to enhance the overall operational performance. In recent years, the Company has been committed to holding social welfare activities. The Company has plans and measures for all kinds of emergencies to minimize the uncertainty of business operation.
• (VII) Expected benefits, potential risks, and countermeasures of mergers and acquisitions: As of the date of publication of the Annual Report, the Company does not have any merger and acquisition plans.
• (VIII) Expected benefits, potential risks, and countermeasures of plant expansion: The Company currently has no plans to expand its plants.
• (IX) Risks and countermeasures of concentrated imports or sales:
• A. The concentration of imports is due to the characteristics of the industry and the supply and demand of the market.
• B. The Company's customers are diversified and there is no risk of concentrated sales.
• (X) As of the date of publication of the Annual Report, there was no significant transfer of equity by the Company's directors or substantial shareholders holding more than 10% of the shares.
• (XI) As of the date of publication of the Annual Report, there was no change in the Company's ownership.
• (XII) For litigation or non-litigation events, the Company shall include the litigation, non-litigation or administrative disputes that have been determined or are still pending against the Company, its directors, president, persons in charge, substantial shareholders holding more than 10% of the shares, and subsidiaries, whose outcome may have a significant impact on shareholders' equity or stock prices: None.
• (XIII) As of the date of publication of the Annual Report, the Company has no other significant risks.

VII. Other Important Issues: None

Chapter VII. Special Disclosure

I. Information on Affiliates

(I) Structure of affiliates

Note: Information as of March 29, 2021.

(II) General information of affiliates

Name of Affiliates	Date of Incorporation	Location	Paid-in Capital	Main Business Activities
HuiTong Intelligence Co., Ltd.	September 2020	Taiwan	NT\$50,000,000	IC design industry
Mars Investments Limited	January 2013	Samoa	US5,587,100	Investment business
SiS Technology (Shenzhen) Co., Ltd	October 2010	China Shenzhen	CNY2,000,000	Development, consulting and sales of electronic products and technology
Suzhou MLight Electronics Co., Ltd.	June 2014	China Suzhou	CNY25,500,000	Design, manufacture and sale of integrated circuits

Note: Information as of March 29, 2021.

• (III) Information on common shareholders of treated as controlled companies and affiliates: None.
• (IV) Industry and relationship of the overall business of the affiliates

The Company and its affiliates engage in the design, sales and investment of IC products.

(V) Information on the directors, supervisors and president of affiliates

				Shareholding
Name of Affiliates	Position	Name or Representative	Number
			of Shares	Shareholdings
	Chairman	Cheng-Chien Chien	0	0%
	Director	Representative of Silicon Integrated Systems Corp.:	4,000,000	80%
HuiTong Intelligence Co., Ltd.	Supervisor	Shur-Jung Shyi
		Ming-Hua Su	0	0%
Mars Investments Limited	Director	Representative of Silicon Integrated Systems Corp.:	5,587,100	100%
		Cheng-Chien Chien
SiS Technology (Shenzhen)	Executive	Representative of Mars Investments Limited:	-	100%
Co., Ltd	Director	Cheng-Chien Chien
Suzhou MLight Electronics	Executive	Representative of Mars Investments Limited: Shur-Jung	-	100%
Co., Ltd.	Director	Shyi

Note: Information as of March 29, 2021.

(VI) Operation of affiliates

Unit: NT\$'000, except for earnings (loss) per share

Name of Affiliates	Capital	Total Assets	Total Liabilities	Net Value	Operating Income for the Period	Operating Profit for the Period	Profit or Loss (After Tax) for the Period	Earnings per Share (After Tax)
HuiTong Intelligence Co., Ltd.	50,000	56,463	9,572	46,891	2,625	(3,050)	(3,109)	(0.06)
Mars Investments Limited	172,499	34,563	423	34,140	(22,972)	(29,355)	(29,563)	(5.29)
SiS Technology (Shenzhen) Co., Ltd	9,320	19,143	6,894	12,249	14,536	1,138	1,134	N/A
Suzhou MLight Electronics Co., Ltd.	119,934	34,706	16,029	18,677	51,213	(25,039)	(23,959)	N/A

Note: Information as of March 29, 2020, which is the parent company financial statements.

(VII) Report of Affiliates

1. Relationship overview between the subsidiaries and the holding company

Name of Holding	Reason of	Shareholdings and Pledges of Holding Company				Directors, Supervisors, and Managers
Company	Holding	Number of Shares Held	Shareholdings	Pledged Shares	Position	Name
HuiTong Intelligence Co., Ltd.	Director and supervisor	4,000,000	80%	0	Chairman Director Supervisor	Cheng-Chien Chien Shur-Jung Shyi Ming-Hua Su
Mars Investments Limited	Director	5,587,100	100%	0	Director	Cheng-Chien Chien
SiS Technology (Shenzhen) Co., Ltd	Director	-	100%	0	Executive Director	Cheng-Chien Chien
Suzhou MLight Electronics Co., Ltd.	Director	-	100%	0	Executive Director	Shur-Jung Shyi

Note: Information as of March 29, 2020, which is the parent company financial statements.

• 1. Transactions
• (1) Import and export transactions: In 2020, the Company's sales to Suzhou MLight Electronics Co., Ltd. amounted to NT\$30,203 thousand.
• (2) Property transactions: In 2020, the Company sold office equipment of NT\$320 thousand to HuiTong Intelligence Co., Ltd.
• (3) Lease of assets: None.
• (4) Other significant transactions: None
• 1. Endorsements and guarantees: None
• 1. Derivative transactions: None

(VIII) Consolidated financial statements of affiliates

Statement of Declaration

The entities that are required to be included in the consolidated financial statements of the Company as of and for the year ended December 31, 2020 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10, "Consolidated Financial Statements". In addition, the information required to be disclosed in the consolidated financial statements is included in the consolidated financial statements. Consequently, the Company and subsidiaries do not prepare a separate set of consolidated financial statements.

Sincerely,

Silicon Integrated Systems Corp.

Person in charge: Cheng-Chien Chien

March 17, 2021

• II. In the past year and up to the date of publication of the Annual Report, the Company had no private placement of marketable securities.
• III. In the past year and up to the date of publication of the Annual Report, the subsidiaries did not hold or dispose of the Company's shares.
• IV. Other necessary supplementary information: None.
• V. In the past year and up to the date of publication of the Annual Report, there were no events that had a significant impact on shareholders' equity or the securities price as defined in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act.

Chapter VIII. Financial Overview

I. Condensed Balance Sheet of the Most Recent Year

(I) IFRS Condensed Parent Company Only Balance Sheet

Unit: NT\$'000
			Financial Information for the Most Recent 5 Years
	Item/Year	2020	2019	2018	2017	2016
Current assets		874,160	1,039,912	1,251,665	1,113,644	1,478,849
Property, plant and equipment		742,862	756,066	767,579	767,387	765,812
Intangible assets		5,764	7,045	6,842	2,980	3,478
Other Assets		15,939,902	5,966,498	4,353,902	5,437,569	4,463,285
Total Assets		17,562,688	7,769,521	6,379,988	7,321,580	6,711,424
	Before distribution	58,549	67,107	84,162	63,706	54,063
Current liabilities After distribution		(Note 3)	67,107	84,162	63,706	54,063
Non-current liabilities	5,942	6,906	5,737	5,308	3,125
Total Liabilities	Before distribution	64,491	74,013	89,899	69,014	57,188
	After distribution	(Note 3)	74,013	89,899	69,014	57,188
Equity attributable to owners of the parent company		-	-	-	-	-
Share capital		6,309,675	5,540,625	5,600,625	5,600,625	5,600,625
Capital surplus		85,807	6,445	16,268	24,522	35,452
Retained earnings	Before distribution	3,957,463	5,209,558	5,470,220	(482,989)	(196,106)
	After distribution	(Note 3)	5,209,558	5,470,220	(482,989)	(196,106)
Other equity interest	7,145,252	(2,878,280)	(4,576,364)	2,100,408	1,214,265
Treasury stock		0	(182,840)	(220,660)	-	-
Non-controlling interest		-	-	-	-	-
Before distribution		17,498,197	7,695,508	6,290,089	7,252,566	6,654,236
Total equity	After distribution	(Note 3)	7,695,508	6,290,089	7,252,566	6,654,236

Note 1. The above financial information has been audited by the CPAs.

Note 2. The Company does not have the most recent financial statements as of the date of publication of the Annual Report.

Note 3. Subject to the approval at the 2021 annual shareholders' meeting

(II) IFRS Condensed Consolidated Balance Sheet

Unit: NT\$'000

			Financial Information for the Most Recent 5 Years
	Item/Year	2020	2019	2018	2017	2016
Current assets		957,445	1,093,145	1,289,063	1,156,926	1,533,252
Property, plant and equipment		749,534	756,976	761,919	768,177	767,714
Intangible assets		7,054	7,045	6,842	2,980	3,616
Other Assets		15,880,076	5,921,489	4,326,633	5,397,559	4,410,346
Total Assets		17,594,109	7,778,655	6,384,457	7,325,642	6,714,928
Current liabilities	Before distribution	73,859	76,116	88,501	67,640	57,076
	After distribution	(Note 3)	76,116	88,501	67,640	57,076
Non-current liabilities		12,675	7,031	5,867	5,436	3,616
	Before distribution	86,534	83,147	94,368	73,076	60,692
Total Liabilities	After distribution	(Note 3)	83,147	94,368	73,076	60,692
Equity attributable to owners of the parent company		17,498,197	7,695,508	6,290,089	7,252,566	6,654,236
Share capital		6,309,675	5,540,625	5,600,625	5,600,625	5,600,625
Capital surplus		85,807	6,445	16,268	24,522	35,452
	Before distribution	3,957,463	5,209,558	5,470,220	(482,989)	(196,106)
Retained earnings	After distribution	(Note 3)	5,209,558	5,470,220	(482,989)	(196,106)
Other equity interest		7,145,252	(2,787,280)	(4,576,364)	2,110,408	1,214,265
Treasury stock		0	(182,840)	(220,660)	-	-
Non-controlling interest		9,378	-	-	-	-
Before distribution		17,507,575	7,695,508	6,290,089	7,252,566	6,654,236
Total equity	After distribution	(Note 3)	7,695,508	6,290,089	7,252,566	6,654,236

Note 1. The above financial information has been audited by the CPAs.

Note 2. The Company does not have the most recent financial statements as of the date of publication of the Annual Report.

Note 3. Subject to the approval at the 2021 annual shareholders' meeting

II. Condensed Income Statement of the Most Recent Year

(I) IFRS Condensed Parent Company Only Income Statement

					Unit: NT\$'000
			Financial Information for the Most Recent 5 Years
Item/Year	2020	2019	2018	2017	2016
Sales revenue	136,621	208,639	210,251	195,783	179,130
Gross profit	37,230	74,653	28,417	90,422	105,697
Operating income	(414,064)	(335,281)	(378,509)	(289,797)	(267,897)
Non-operating income and expenses	158,061	117,982	219,115	62,245	179,015
Profit before income tax	(256,003)	(217,299)	(159,394)	(227,552)	(88,882)
Income from continuing operations	(299,468)	(224,691)	(175,218)	(277,552)	(188,882)
Loss from discontinued operations	-	-	-	-	-
Net income	(299,468)	(224,691)	(175,218)	(277,552)	(188,882)
Other income (net amount after tax) for the period	10,032,217	1,662,113	(975,911)	891,150	(267,217)
Total comprehensive income for the period	9,732,749	1,437,422	(1,151,129)	613,598	(456,099)
Net income attributable to owners of the parent company		-	-	-	-
Net income attributable to non-controlling interests		-	-	-	-
Comprehensive income attributable to owners of the parent		-	-	-	-
company
Comprehensive income attributable to non-controlling interests		-	-	-	-
Earnings per share	(0.47)	(0.37)	(0.32)	(0.50)	(0.34)

Note 1. The above financial information has been audited by the CPAs.

Note 2. The Company does not have the most recent financial statements as of the date of publication of the Annual Report.

(II) IFRS Condensed Consolidated Income Statement

Unit: NT\$'000

			Financial Information for the Most Recent 5 Years
Item/Year	2020	2019	2018	2017	2016
Sales revenue	160,171	222,952	223,085	211,988	182,873
Gross profit	45,135	86,889	44,341	103,399	107,637
Operating income	(447,574)	(355,576)	(389,264)	(301,322)	(290,745)
Non-operating income and expenses	190,804	138,391	229,893	74,002	202,502
Profit before income tax	(256,570)	(217,185)	(159,371)	(227,320)	(88,243)
Income from continuing operations	(300,090)	(224,691)	(175,218)	(277,552)	(188,882)
Loss from discontinued operations	-	-	-	-	-
Net income	(300,090)	(224,691)	(175,218)	(277,552)	(188,882)
Other income (net amount after tax) for the period	10,032,217	1,662,113	(975,911)	891,150	(267,217)
Total comprehensive income for the period	9,732,127	1,437,422	(1,151,129)	613,598	(456,099)
Net income attributable to owners of the parent company	(299,468)	(224,691)	(175,218)	(277,552)	(188,882)
Net income attributable to non-controlling interests	(622)	-	-	-	-
Comprehensive income attributable to owners of the parent
company	9,732,749	1,437,422	(1,151,129)	613,598	(456,099)
Comprehensive income attributable to non-controlling interests	(622)	-	-	-	-
Earnings per share	(0.47)	(0.37)	(0.32)	(0.50)	(0.34)

Note 1. The above financial information has been audited by the CPAs.

Note 2. The Company does not have the most recent financial statements as of the date of publication of the Annual Report.

Names and auditing opinions of the CPAs

Year	Name of CPA Firm	Name of CPA	Audit Opinion
2020	Ernst & Young	Shao-Pin Kuo, Hsin-Min Hsu	Unqualified opinion
2019	Ernst & Young	Shao-Pin Kuo, Chia-Ling Tu	Unqualified opinion
2018	Ernst & Young	Shao-Pin Kuo, Chia-Ling Tu	Unqualified opinion
2017	Ernst & Young	Wan-Ju Chiu, Chia-Ling Tu	Unqualified opinion
2016	Ernst & Young	Wan-Ju Chiu, Chia-Ling Tu	Unqualified opinion

III. Financial Analyses of the Most Recent Year

					2016
Debt to asset ratio	0.37	0.95	1.41	0.94	0.85
Ratio of long-term capital to property, plant, and equipment	2,355.51	1,017.84	825.93	945.10	868.91
Current ratio	1,493.04	1,549.63	1,487.21	1,748.10	2,735.42
Quick ratio	1,384.07	1,453.16	1,383.45	1,666.26	2,674.09
Interest coverage ratio	-	-	-	-	-
Accounts receivable turnover rate (times)	5.16	5.95	5.21	5.52	3.93
Average days for cash receipts	70.74	61.34	70.06	66.12	92.88
Inventory turnover rate (times)	0.72	0.87	1.28	1.01	0.67
Accounts payable turnover rate (times)	6.70	8.54	9.37	6.74	6.93
Average days for sale of goods	506.94	419.54	285.16	361.39	544.78
Property, plant, and equipment turnover rate (times)	0.18	0.27	0.28	0.26	0.23
Total assets turnover rate	0.01	0.03	0.03	0.03	0.03
Return on assets (%)	(2.36)	(3.17)	(2.56)	(3.96)	(2.72)
Equity return ratio (%)	(2.38)	(3.21)	(2.59)	(3.99)	(2.75)
Ratio of net profit before tax to paid-in capital (%)	(4.06)	(3.92)	(2.85)	(4.06)	(1.59)
Net profit margin (%)	(219.20)	(107.69)	(83.34)	(141.77)	(105.44)
Earnings per share (NT\$)	(0.47)	(0.37)	(0.32)	(0.50)	(0.34)
Cash flow ratio (%)	(557.81)	(388.33)	(417.19)	(378.15)	(350.93)
Cash flow adequacy ratio (%)	(468.20)	(1,268.95)	(750.47)	(1,215.41)	(6,353.75)
Cash reinvestment ratio (%)	(2.76)	(2.91)	(4.66)	(2.84)	(2.41)
Operating leverage	-	-	-	-	-
Financial leverage	-	-	-	-	-
	Analysis Item/Year	2020	2019	2018	Financial analysis for the most recent 5 years 2017

(III) IFRS Parent Company Only Financial Statement

Reasons for the changes in financial ratios for the last two years are as follows

1. Financial structure: The decrease in liabilities to asset ratio was due to the increase in the valuation of financial assets during the period.

2. Solvency: The increase in the current ratio and quick ratio was due to the decrease in cash.

3. Operating Capacity: The increase in inventory and decrease in cost of goods sold resulted in a decrease in inventory turnover rate and an increase in the average days for sale of goods

4. Profitability: The loss for the period was mainly due to the decrease in sales revenue.

5. Cash Flow: Mainly due to the increase in net cash outflow from operating activities.

Note 1. The above financial information has been audited by the CPAs.

Note 2. The calculation of earnings (loss) per share is based on the weighted average number of shares outstanding during the year.

Note 3. The formula for calculating financial ratios is shown on the following page:

• 1. Financial structure
• (1) Debt ratio = Total liabilities/Total assets.
• (2) Ratio of long-term capital to property, plant, and equipment = (Total equity + Non-current liabilities)/Net value of property, plant, and equipment.
• 1. Solvency
• (1) Current ratio = Current assets/Current liabilities.
• (2) Quick ratio = (Current assets Inventories Prepaid expenses)/Current liabilities.
• (3) Interest coverage ratio = Income before tax and interest expenses/Interest expenses.
• 1. Operating ability
• (1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.
• (2) Average days for cash receipts = 365/Accounts receivable turnover rate.
• (3) Inventory turnover rate = Cost of goods sold/Average inventories.
• (4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.
• (5) Average days for sale of goods = 365/Inventory turnover rate.
• (6) Property, plant, and equipment turnover rate = Net sales/Average net property, plant, and equipment.
• (7) Total assets turnover rate = Net sales/Average total assets.
• 1. Profitability
• (1) Return on assets = [Income after tax + Interest expenses x (1 tax rate)]/Average total assets.
• (2) Return on equity = Income after tax/Average total equity.
• (3) Net profit margin = Income after tax/Net sales.
• (4) Earnings per share = (Income attributable to owners of the parent preferred stock dividends)/Weighted average number of shares issued.
• 1. Cash flows
• (1) Cash flow ratio = Net cash flows generated from operating activities/Current liabilities.
• (2) Cash flow adequacy ratio = Five-year sum of net cash flows generated from operating activities/Five-year sum of capital expenditure, inventory additions and cash dividends).
• (3) Cash reinvestment ratio = (Net cash flows from operating cash dividends)/(Gross amount of property, plant, and equipment + Long term investment + Other non-current assets + Working capital).
• 1. Leverage
• (1) Operating leverage = (Net Sales-Variable Cost and expense) / Income from Operations
• (2) Financial leverage = Operating income/(Operating income Interest expenses).

(IV) IFRS Consolidated Financial Statement

					Financial analysis for the most recent 5 years
	Analysis Item/Year	2020	2019	2018	2017	2016
	Debt to asset ratio	0.49	1.07	1.48	1.00	0.90
Financial structure (%)	Ratio of long-term capital to property, plant, and equipment	2,335.79	1,016.61	825.56	944.13	866.76
	Current ratio	1,296.31	1,436.16	1,456.55	1,710.42	2,686.33
Solvency (%)	Quick ratio	1,184.65	1,328.41	1,338.59	1,613.91	2,608.47
	Interest coverage ratio	-	-	-	-	-
	Accounts receivable turnover rate (times)	5.13	6.83	6.28	6.23	4.29
	Average days for cash receipts	71.15	53.44	58.12	58.59	85.08
	Inventory turnover rate (times)	0.69	0.76	1.10	0.90	0.62
Operating ability	Accounts payable turnover rate (times)	7.50	8.39	9.15	6.90	6.74
	Average days for sale of goods	528.99	480.26	331.82	405.56	588.71
	Property, plant, and equipment turnover rate (times)	0.21	0.29	0.29	0.28	0.24
	Total assets turnover rate	0.01	0.03	0.03	0.03	0.03
	Return on assets (%)	(2.36)	(3.17)	(2.56)	(3.95)	(2.72)
	Equity return ratio (%)	(2.38)	(3.21)	(2.59)	(3.99)	(2.75)
Profitability	Ratio of net profit before tax to paid-in capital (%)	(4.07)	(3.92)	(2.85)	(4.06)	(1.58)
	Net profit margin (%)	(187.36)	(100.78)	(78.54)	(130.93)	(103.29)
	Earnings per share (NT\$)	(0.47)	(0.37)	(0.32)	(0.50)	(0.34)
	Cash flow ratio (%)	(469.58)	(386.78)	(397.04)	(384.61)	(370.75)
Cash Flows	Cash flow adequacy ratio (%)	(480.31)	(1,241.96)	(738.17)	(1,195.13)	(5,557.45)
	Cash reinvestment ratio (%)	(2.87)	(3.29)	(4.66)	(3.06)	(2.68)
Leverage	Operating leverage	-	-	-	-	-
	Financial leverage	-	-	-	-	-

Reasons for the changes in financial ratios for the last two years are as follows

1. Financial structure: The decrease in liabilities to asset ratio was due to the increase in the valuation of financial assets during the period.

2. Solvency: The increase in the current ratio and quick ratio was due to the decrease in cash.

3. Operating Capacity: The increase in inventory and decrease in cost of goods sold resulted in a decrease in inventory turnover rate and an increase in the average days for sale of goods

4. Profitability: The loss for the period was mainly due to the decrease in sales revenue.

5. Cash Flow: Mainly due to the increase in net cash outflow from operating activities.

Note 1. The above financial information has been audited by the CPAs.

Note 2. The calculation of earnings (loss) per share is based on the weighted average number of shares outstanding during the year.

Note 3. The formula for calculating financial ratios is shown on the following page:

• 1. Financial structure
• (1) Debt ratio = Total liabilities/Total assets.
• (2) Ratio of long-term capital to property, plant, and equipment = (Total equity + Non-current liabilities)/Net value of property, plant, and equipment.
• 1. Solvency
• (1) Current ratio = Current assets/Current liabilities.
• (2) Quick ratio = (Current assets Inventories Prepaid expenses)/Current liabilities.
• (3) Interest coverage ratio = Income before tax and interest expenses/Interest expenses.
• 1. Operating ability
• (1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.
• (2) Average days for cash receipts = 365/Accounts receivable turnover rate.
• (3) Inventory turnover rate = Cost of goods sold/Average inventories.
• (4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.
• (5) Average days for sale of goods = 365/Inventory turnover rate.
• (6) Property, plant, and equipment turnover rate = Net sales/Average net property, plant, and equipment.
• (7) Total assets turnover rate = Net sales/Average total assets.
• 1. Profitability
• (1) Return on assets = [Income after tax + Interest expenses x (1 tax rate)]/Average total assets.
• (2) Return on equity = Income after tax/Average total equity.
• (3) Net profit margin = Income after tax/Net sales.
• (4) Earnings per share = (Income attributable to owners of the parent preferred stock dividends)/Weighted average number of shares issued.
• 1. Cash flows
• (1) Cash flow ratio = Net cash flows generated from operating activities/Current liabilities.
• (2) Cash flow adequacy ratio = Five-year sum of net cash flows generated from operating activities/Five-year sum of capital expenditure, inventory additions and cash dividends).
• (3) Cash reinvestment ratio = (Net cash flows from operating cash dividends)/(Gross amount of property, plant, and equipment + Long term investment + Other non-current assets + Working capital).
• 1. Leverage
• (1) Operating leverage = (Net Sales-Variable Cost and expense) / Income from Operations
• (2) Financial leverage = Operating income/(Operating income Interest expenses).

IV. In the past year and up to the date of publication of the Annual Report, the Company and its affiliates have no financial difficulties.

V. Audit Committee's Review Report

Silicon Integrated Systems Corp.

Audit Committee's Review Report

The 2020 financial statements (including consolidated financial statements) of the Company prepared and delivered by the Board of Directors had been jointly audited by CPA Shao-Pin Kuo, Hsin-Min Hsu from Ernst & Young Global Limited, who hold sufficient opinion that the above documents fairly present the financial status, operating result and cash flow of the Company The Business Report and the earnings distribution have been reviewed by the Audit Committee, who has not found any inconsistencies with applicable laws in the review of the aforementioned documents. Therefore, the Audit Committee hereby issues this report in compliance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Sincerely,

Silicon Integrated Systems Corp. 2021 Annual Shareholders' Meeting

Convenor of the Audit Committee: Tsi-Wang Huang

March 17, 2021

VI. Parent Company Only Financial Statements

2363

Silicon Integrated Systems Corp. Parent Company Only Financial Statements With Report of Independent Accountants For The Years Ended December 31, 2020 and 2019

English Translation of a Report and Financial Statements Originally Issued in Chinese

SILICON INTEGRATED SYSTEMS CORPORATION

PARENT COMPANY ONLY FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Address: No.180, Sec. 2, Gongdao 5th Rd., Hsinchu City, Taiwan R.O.C. Telephone: 886-3-516-6000

Notice to Readers

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

Independent Auditors' Report

To Silicon Integrated Systems Corporation

Opinion

We have audited the accompanying parent company only balance sheets of Silicon Integrated Systems Corporation ("the Company") as of December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the parent company only financial statements, including the summary of significant accounting policies (together "the parent company only financial statements").

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter – Making Reference to the Audits of Component Auditors section of our report), the parent company only financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and cash flows for the years ended December 31, 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reposts of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2020 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

The Company recognized NT\$ 136,621 thousand as net sales for the year ended December 31, 2020. Sales of products is the main operating activity of the Company. Its sales regions include not only Taiwan but also Asia and other regions. Trade terms of sales of products under each sales order may be different. It is necessary for the Company to judge and determine the performance obligations and the timing of its satisfaction under each sales order. As a result, we determined the matter to be a key audit matter.

Our audit procedures include (but are not limited to) evaluating and testing the effectiveness of internal control which is related to the timing of revenue recognition; assessing the appropriateness of the accounting policy for revenue recognition; performing test of details on samples selected; tracing to relevant documentation of transactions, reviewing the significant terms of sales orders and agreements, identifying the performance obligations of the sales orders and agreements and timing of its satisfaction, performing cutoff procedures and reviewing sales allowance after the reporting date. Please refer to Note 4 and Note 6 in notes to the parent company only financial statements.

Non-financial asset impairment

The Company's book value of property, plant and equipment amounted to NT\$742, 862 thousand as of December 31, 2020, representing 4% of total assets. As there existed an impairment indicator of the Company's cash-generating unit, the Company performed an impairment testing on the cashgenerating unit. After performing the testing, the Company concludes that the cash-generating unit's net fair value is higher than its carrying amount and therefore no impairment loss is recognized. Since the estimate of net fair value involves management's judgements and subjective assumptions, we determined the matter to be a key audit matter.

Our audit procedures include (but are not limited to) understanding and evaluating the management process related to assets impairment recognition and measurement, evaluating the reasonableness of the property, plant and equipment appraisal report, reviewing the calculation of the fair value of property, plant and equipment which is adopting the comparative method, and inspecting the evidence of the Company's ownership of the perperty.

Please refer to Note 5 and Note 6 in notes to the parent company only financial statements.

Other Matter – Making Reference to the Audits of Component Auditors

We did not audit the financial statements of certain investee companies, which were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. The investment in these investee companies under equity method amounted to NT\$144,111 thousand and NT\$186,331 thousand, accounting for 1% and 2% of total assets as of December 31, 2020 and 2019, respectively. The related shares of losses recognized from these subsidiaries, associates and joint ventures under the equity method amounted to NT\$71,392 thousand and NT\$60,566 thousand, accounting for 28% and 28% of the net loss before tax for the years ended December 31, 2020 and 2019, respectively.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

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

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

Those charged with governance, including audit committee, are responsible for overseeing the financial reporting process of the Company.

Auditor's Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2020 parent company only financial statements and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Kuo, Shao-Pin

Hsu, Hsin-Min

Ernst & Young, Taiwan

March 17, 2021

Notice to Readers

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying 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, Ernst & Young 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.

SILICON INTEGRATED SYSTEMS CORPORATION English Translation of the Parent Company Only Financial Statements Originally Issued in Chinese PARENT COMPANY ONLY BALANCE SHEETS

As of December 31, 2020 and 2019 (Amounts in thousands of New Taiwan Dollars)

ASSETS	Notes	December 31, 2020	%	December 31, 2019	%
Current assets
Cash and cash equivalents	4, 6(1)	750,662 \$	4	941,156 \$	12
Financial assets measured at amortized cost-current	4, 6(3)	9,605	-	9,585	-
Trade receivables, net	4, 6(4), 6(12)	16,723	-	16,702	-
Trade receivables-related parties, net	4, 6(4),6(12), 7	11,588	-	7,316	-
Other receivables		21,783	-	411	-
Inventories, net	4, 6(5)	57,806	1	55,662	1
Prepayments		2,366	-	3,111	-
Other current assets		3,627	-	5,969	-
Total current assets		874,160	5	1,039,912	13
Non-current assets
Financial assets at fair value through other comprehensive income-noncurrent	4, 6(2)	15,697,723	90	5,633,503	72
Investments accounted for using the equity method	4, 6(6)	184,392	1	234,954	3
Property, plant and equipment	4, 6(7)	742,862	4	756,066	10
Right-of-use assests	4, 6(13)	261	-	2,308	-
Intangible assets	4, 6(8)	5,764	-	7,045	-
Deferred tax assets	4, 5, 6(17)	-	-	43,513	1
Refundable deposits		162	-	342	-
Net defined benefit assets-noncurrent	4, 5, 6(9)	57,364	-	51,878	1
Total non-current assets		16,688,528	95	6,729,609	87
Total assets		17,562,688 \$	100	7,769,521 \$	100

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

SILICON INTEGRATED SYSTEMS CORPORATION PARENT COMPANY ONLY BALANCE SHEETS English Translation of the Parent Company Only Financial Statements Originally Issued in Chinese

As of December 31, 2020 and 2019 (Amounts in thousands of New Taiwan Dollars)

LIABILITIES AND EQUITY	Notes	December 31, 2020	%	December 31, 2019	%
Current liabilities
Accounts payable	12	10,270	-	5,089	-
Accounts payable-related parties	7,12	6,130	-	8,175	-
Other payables	12	35,970	-	41,726	1
Lease liabilities-current	4, 6(13),12	220	-	1,122	-
Other current liabilities		2,745	-	3,205	-
Refund liabilities		3,214	-	7,790	-
Total current liabilities		58,549	-	67,107	1
Non-current liabilities
Deferred tax liabilities	4, 5, 6(17)	2,487	-	2,535	-
Lease liabilities-noncurrent	4, 6(13),12	50	-	1,069	-
Guarantee deposits		3,405	-	3,302	-
Total non-current liabilities		5,942	-	6,906	-
Total liabilities		64,491	-	74,013	1
Equity
Share capital	6(10)
Common stock		6,309,675	36	5,540,625	71
Capital surplus	4,6(10)	85,807	1	6,445	-
Retained earnings	6(10)
Legal reserve		143,742	1	-	-
Special reserve		2,878,280	16	4,576,364	59
Unappropriated earnings		935,441	5	633,194	8
Other equity		7,145,252	41	(2,878,280)	(37)
Treasury stock		-	-	(182,840)	(2)
Total equity		17,498,197	100	7,695,508	99
Total liabilities and equity		17,562,688 \$	100	7,769,521 \$	100

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

English Translation of the Parent Company Only Financial Statements Originally Issued in Chinese SILICON INTEGRATED SYSTEMS CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2020 and 2019 (Amounts in thousands of New Taiwan Dollars, except for earnings per share)

				For the years ended December 31
Description	Notes	2020	%	2019	%
Net sales	4, 5, 6(11), 7	136,621 \$	100	208,639 \$	100
Operating costs	6(5), 6(13), 6(14), 7	(99,391)	(73)	(133,986)	(64)
Gross profit		37,230	27	74,653	36
Operating expenses	6(12), 6(13), 6(14), 7
Selling expenses		(21,993)	(16)	(7,500)	(4)
General and administrative expenses		(105,811)	(77)	(84,417)	(40)
Research and development expenses		(323,505)	(237)	(318,030)	(153)
Expected credit losses		15	-	13	-
Total operating expenses		(451,294)	(330)	(409,934)	(197)
Operating loss		(414,064)	(303)	(335,281)	(161)
Non-operating income and expenses	4, 6(6), 6(15)
Interest income		3,198	2	5,942	3
Other income		266,200	195	196,338	94
Other gains and losses		(10,174)	(7)	(2,122)	(1)
Finance costs		(55)	-	(108)	-
Share of profit or loss of subsidiaries, associates, and joint ventures accounted for using equity method		(101,108)	(74)	(82,068)	(39)
Total non-operating income and expenses		158,061	116	117,982	57
Income before income tax		(256,003)	(187)	(217,299)	(104)
Income tax expense	4, 5, 6(17)	(43,465)	(32)	(7,392)	(4)
Net income		(299,468)	(219)	(224,691)	(108)
Other comprehensive income	6(16)
Items that will not be reclassified subsequently to profit or loss
Remeasurements of defined benefit pension plans	6(9)	5,465	4	1,291	1
Unrealized gains or losses from equity instrument investments measured at fair value through other comprehensive income		10,025,377	7,338	1,658,768	795
Remeasurements of defined benefit pension plans of subsidiaries, associates and joint ventures accounted for using equity method		-	-	2,818	1
Items that may be reclassified subsequently to profit or loss
Exchange differences resulting from translating the financial statements of foreign operations		1,375	1	(764)	-
Other comprehensive income, net of tax		10,032,217	7,343	1,662,113	797
Total comprehensive income		9,732,749 \$	7,124	1,437,422 \$	689
Earnings per share (NTD)	6(18)
Basic Earnings Per Share (in New Taiwan Dollars)		(0.47) \$		(0.37) \$
Diluted Earnings Per Share (in New Taiwan Dollars)		(0.47) \$		(0.37) \$

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

10 110 English Translation of the Parent Company Only Financial Statements Originally Issued in Chinese For the years ended December 31, 2020 and 2019 PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY SILICON INTEGRATED SYSTEMS CORPORATION

(Amounts in thousands of New Taiwan Dollars)

				Retained earnings			Other equity
						translating the financial Exchange differences statements of foreign resulting from	assets measured at fair losses from financial Unrealized gains or value through other
Description	Common stock	Capital surplus	Legal reserve	Special reserve	Undistributed earnings	operations	comprehensive income	Treasury stock	Total equity
Balance as of January 1, 2019	5,600,625 \$	16,268 \$	- \$	- \$	5,470,220 \$	(5,202) \$	(4,571,162) \$	(220,660) \$	6,290,089 \$
Appropriation and distribution of 2018 retained earnings Special reserve	-	-	-	4,576,364	(4,576,364)	-	-	-	-
Share of changes in associates and joint ventures accounted for Other changes in capital surplus using equity method	-	(2,598)	-	-	-	-	-	-	(2,598)
Net loss for the year ended December 31, 2019	-	-	-	-	(224,691)	-	-	-	(224,691)
Other comprehensive income (loss) for the year ended December 31, 2019	-	-	-	-	4,109	(764)	1,658,768	-	1,662,113
Total comprehensive income (loss)	-	-	-	-	(220,582)	(764)	1,658,768	-	1,437,422
Treasury stock cancelled Treasury stock acquired	(60,000) -	(7,225) -	- -	- -	- -	- -	- -	(29,405) 67,225	(29,405) -
Disposal of equity instruments investments measured at fair value through other comprehensive income	-	-	-	-	(40,080)	-	40,080	-	-
Balance as of December 31, 2019	5,540,625 \$	6,445 \$	- \$	4,576,364 \$	633,194 \$	(5,966) \$	(2,872,314) \$	(182,840) \$	7,695,508 \$
Balance as of January 1, 2020	5,540,625 \$	6,445 \$	- \$	4,576,364 \$	633,194 \$	(5,966) \$	(2,872,314) \$	(182,840) \$	7,695,508 \$
Appropriation and distribution of 2019 retained earnings Cash dividends Special reserve Legal reserve	- -	- -	143,742 -	(1,698,084) -	(143,742) (192,262) 1,698,084	- -	- -	- -	(192,262) - -
Share dividends	- 769,050	- -	- -	- -	(769,050)	- -	- -	- -	-
Share of changes in associates and joint ventures accounted for Other changes in capital surplus using equity method	-	7,796	-	-	-	-	-	-	7,796
Other comprehensive income (loss) for the year ended December 31, 2020 Net loss for the year ended December 31, 2020	- -	- -	- -	- -	(299,468) 5,465	1,375 -	10,025,377 -	- -	(299,468) 10,032,217
Total comprehensive income (loss)	-	-	-	-	(294,003)	1,375	10,025,377	-	9,732,749
Disposal of equity instruments investments measured at fair value through other comprehensive income Treasury stock acquired	- -	71,160 -	- -	- -	3,220 -	- -	(3,220) -	182,840 -	254,000 -
Balance as of December 31, 2020 Others	- 6,309,675 \$	406 85,807 \$	143,742 - \$	2,878,280 - \$	935,441 - \$	(4,591) - \$	7,149,843 - \$	- - \$	406 17,498,197 \$

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

111 11

English Translation of the Parent Company Only Financial Statements Originally Issued in Chinese SILICON INTEGRATED SYSTEMS CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the years ended December 31, 2020 and 2019 (Amounts in thousands of New Taiwan Dollars)

		For the years ended December 31
Description	2020	2019
Cash flows from operating activities :
Net income before tax	\$ (256,003)	\$ (217,299)
Adjustments for:
The profit or loss items which did not affect cash flows:
Depreciation	16,687	16,470
Amortization	1,566	1,234
Expected credit gains	(15)	(13)
Interest expenses	55	108
Interest income	(3,198)	(5,941)
Dividend income	(236,400)	(168,344)
Share-based payment	71,200	-
Share of profit or loss of subsidiaries, associates, and joint ventures accounted for using the equity method	101,108	82,068
Gain on disposal of property, plant and equipment	467	(148)
Losses on disposal of investments	7,157	-
Others	(33)	-
Changes in operating assets and liabilities:
Trade receivables	(6)	7,769
Trade receivables-related parties	(4,272)	13,376
Other receivables	(874)	(65)
Other receivables-related parties	-	30
Inventories	(2,144)	12,570
Prepayments	745	7,700
Other current assets	2,342	2,311
Other operating assets Accounts payable	(21) 5,181	(221) (8,740)
Accounts payable-related parties	(2,045)	3,903
Other payables	(5,756)	(14,101)
Other current liabilities	(5,036)	1,041
Cash generated from operating activities	(309,295)	(266,292)
Interest received	3,293	5,692
Income tax paid	(20,593)	6
Net cash used in operating activities	(326,595)	(260,594)
Cash flows from investing activities :
Acquisition of financial assets at fair value through other	-	(5,877)
comprehensive income
Proceeds from disposal of financial assets at fair value through other	19,550	42,986
comprehensive income
Acquisition of financial assets measured at amortized cost	(20)	(19)
Acquisition of investments accounted for using the equity method	(109,426)	(85,698)
Acquisition of property, plant and equipment	(4,801)	(9,963)
Proceeds from disposal of property, plant and equipment	1,842	148
Decrease (Increase) in refundable deposits	180	(20)
Acquisition of intangible assets	(285)	(1,437)
Decrease in long-term lease receivable	-	13,881
Dividend received	238,900	170,360
Net cash provided by investing activities	145,940	124,361
Cash flows from financing activities :
Increase in guarantee deposits	103	105
Cash payment for the principle portion of lease liabilities	(886)	(1,499)
Cash dividends Treasury stock acquired	(192,262) -	- (29,405)
Treasury stock sold to employees	182,800	-
Others	406	-
Net cash used in financing activities	(9,839)	(30,799)
Net decrease in cash and cash equivalents	(190,494)	(167,032)
Cash and cash equivalents at the beginning of the year	941,156	1,108,188
Cash and cash equivalents at the end of the year	\$ 750,662	\$ 941,156

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

English Translation of Financial Statements Originally Issued in Chinese SILICON INTEGRATED SYSTEMS CORPORATION NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

1. HISTORY AND ORGANIZATION

Silicon Integrated Systems Corporation ("The Company") was incorporated in August 26, 2006. The Company primarily engages in the R&D, production, manufacturing and selling of integrated circuits and the related components, system products, design of the integrated circuits, testing and assembly service of I/O precision packaging, and import and export business for the aforementioned products. On august, 1997, the shares of the Company were listed on the Taiwan Stock Exchange. The Company's registered office and the main business location is at No. 180, Sec. 2, Gongdao 5th Rd., Hsinchu City, Taiwan (R.O.C.)

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

The parent company only financial statements were authorized for issue in accordance with the resolution of the Board of Directors' meeting on March 17, 2021.

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission ("FSC") and become effective for annual periods beginning on or after January 1, 2020. Apart from the nature and the impact of the new standards and amendments which are described below, all other standards and interpretations of initial application have no material impact on the Company:

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board ("IASB") and endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date
		Issued by IASB
a	Interest Rate Benchmark Reform - Phase 2 (Amendments	January 1, 2021
	to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

(a) Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies' financial statements:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• A. A company will not have to derecognise or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
• B. A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
• C. A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after January 1, 2021 have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board ("IASB") which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date
		Issued by IASB
a	IFRS 10 "Consolidated Financial Statements" and IAS 28	To be determined
	"Investments in Associates and Joint Ventures" — Sale or	by IASB
	Contribution of Assets between an Investor and its
	Associate or Joint Ventures
B	IFRS 17 "Insurance Contracts"	January 1, 2023
C	Classification of Liabilities as Current or Non-current –	January 1, 2023
	Amendments to IAS 1
D	Narrow-scope amendments of IFRS, including	January 1, 2022
	Amendments to IFRS 3, Amendments to IAS 16,
	Amendments to IAS 37 and the Annual Improvements
E	Disclosure Initiative - Accounting Policies – Amendments	January 1, 2023
	to IAS 1
F	Definition of Accounting Estimates – Amendments to IAS	January 1, 2023
	8

(a) IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The amendments address the inconsistency between the requirements in IFRS 10 and IAS 28, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of nonmonetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint venture. IFRS 10 requires full profit or loss recognition on the loss of control of a subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 "Business Combinations" between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors' interests in the associate or joint venture.

(b) IFRS 17 "Insurance Contracts"

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

• (1) estimates of future cash flows;
• (2) discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
• (3) a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(c) Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

• (d) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
• A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential "day 2" gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.
• B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.

C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

D. Annual Improvements to IFRS Standards 2018 – 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee's leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

(e) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

(f) Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

The abovementioned standards and interpretations issued by IASB have not yet been endorsed by FSC at the date when the Company's financial statements were authorized for issue, the local effective dates are to be determined by FSC. The remaining new or amended standards and interpretations have no material impact on the Company.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of Compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers ("the Regulations").

(2) Basis of Preparation

According to article 21 of the Regulations, the profit or loss and other comprehensive income presented in the parent company only financial reports will be the same as the allocations of profit or loss and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports will be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis. Therefore, the investments in subsidiaries will be disclosed under "Investments accounted for using the equity method" in the parent company only financial report and change in value will be adjusted.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars ("NT\$") unless otherwise stated.

(3) Foreign Currency Transactions

The parent company only financial statements are presented in NT\$.

Transactions in foreign currencies are initially recorded by the Company's functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
• B. Foreign currency items within the scope of IFRS 9 "Financial Instruments" are accounted for based on the accounting policy for financial instruments.
• C. Exchange differences arising on a monetary item that forms part of a reporting entity's net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(4) Translation of Financial Statements in Foreign Currency

Each foreign operation of the Company determines its functional currency upon its primary economic environment and items included in the financial statements of each operation are measured using that functional currency. The assets and liabilities of foreign operations are translated into New Taiwan Dollars at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. On the partial disposal of foreign operations that results in a loss of control, loss of significant influence or joint control but retaining partial equity is considered a disposal.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is adjusted in " investments accounted for using the equity method". In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(5) Current and Non-Current Distinction

An asset is classified as current when:

• A. The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle.
• B. The Company holds the asset primarily for the purpose of trading.
• C. The Company expects to realize the asset within twelve months after the reporting period.
• D. The asset is cash or cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

• A. The Company expects to settle the liability in its normal operating cycle.
• B. The Company holds the liability primarily for the purpose of trading.
• C. The liability is due to be settled within twelve months after the reporting period.
• D. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

(6) Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, (including time deposits with original maturities of three months or less).

(7) Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Financial assets and financial liabilities within the scope of IFRS 9 "Financial Instruments" are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of:

• (a) the Company's business model for managing the financial assets and
• (b) the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

• (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
• (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

(a) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(b) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

• (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
• (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income is described as below:

• (a) A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
• (b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
• (c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
• (i) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
• (ii) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Besides, at initial recognition, the Company makes an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies. Amounts presented in other comprehensive income are not subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and should be recorded as financial assets measured at fair value through other comprehensive income on balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.

Financial assets measured at fair value through profit or loss

Financial assets were measured at amortized cost or measured at fair value through other comprehensive income only if they met particular conditions. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement are recognized in profit or loss which includes any dividend or interest received on such financial assets.

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial assets measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and does not reduce the carrying amount in the statement of financial position.

The Company measures expected credit losses of a financial instrument in a way that reflects:

• (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
• (b) the time value of money; and
• (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The loss allowance is measured as follows:

• (a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance for a financial asset at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that condition is no longer met.
• (b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
• (c) For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
• (d) For financing lease receivable arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has been increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

• (a) The rights to receive cash flows from the asset have expired.
• (b) The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
• (c) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

A financial liability is classified as held for trading if:

• (a) It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term.
• (b) On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
• (c) It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• (a) it eliminates or significantly reduces a measurement or recognition inconsistency; or
• (b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities held for trading including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(8) Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• A. in the principal market for the asset or liability; or
• B. in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques which are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(9) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials — Purchase cost on first in first out.

Finished goods and work in progress — Stated at standard cost and the cost difference is allocated to the cost of goods sold and the inventory at the end of the period at the checkout, so that it is close to the weighted average cost valuation.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 but not within the scoping of inventories.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(10)Investments accounted for using the equity method

An associate is an entity over which the Company has significant influence. A joint venture is a type of joint arrangement whereby the Company that has joint control of the arrangement has rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company's share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company's related interest in the associate or joint venture.

When changes in the net assets of an associate or joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Company's percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro rata basis.

When the associate or joint venture issues new shares, and the Company's interest in an associate or joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in capital surplus and investments accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 "Investments in Associates and Joint Ventures". If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the 'share of profit or loss of an associate' in the statement of comprehensive income in accordance with IAS 36 "Impairment of Assets". In determining the value in use of the investment, the Company estimates:

• (1)Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate or joint venture and the proceeds on the ultimate disposal of the investment; or
• (2)The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for goodwill impairment testing in IAS 36 "Impairment of Assets".

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

(11)Property, Plant and Equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciation. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 "Property, plant and equipment". When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings and facilities	3-50 years
Machinery equipment	3-5 years
Transportation equipment	5 years
Office equipment	3-5 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(12)Leases

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

• A. the right to obtain substantially all of the economic benefits from use of the identified asset; and
• B. the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximizing the use of observable information.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

• A. fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• B. variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
• C. amounts expected to be payable by the lessee under residual value guarantees;
• D. the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
• E. payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortized cost basis, which is increasing the carrying amount to reflect interest on the lease liability by using an effective interest method; and reducing the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

• A. the amount of the initial measurement of the lease liability;
• B. any lease payments made at or before the commencement date, less any lease incentives received;
• C. any initial direct costs incurred by the lessee; and
• D. an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

For subsequent measurement of the right-of-use asset, the Company measures the right-ofuse asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use assets applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 "Impairment of Assets" to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and presents interest expense separately from the depreciation charge associated with those leases in the income statement.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

The Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(13)Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortized over the useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and is treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the CGU level. The assessment of indefinite useful life is reviewed annually to determine whether the indefinite useful life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are recognized in other operating income and expenses.

Research and development costs

Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Company can demonstrate:

• A. the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• B. its intention to complete and its ability to use or sell the asset;
• C. how the asset will generate future economic benefits;
• D. the availability of resources to complete the asset; and
• E. the ability to measure reliably the expenditure during development.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit.

	IPs	Computer software
Useful lives	(3 years) Finite	(10 years) Finite
Internally generated or acquired	Acquired	Acquired

Abovementioned intangible assets are amortized on a straight-line basis over the estimated useful life.

(14)Impairment of Non-Financial Assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 "Impairment of Assets" may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset's or CGU's recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

A CGU, or the groups of CGUs, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the CGU (groups of CGUs), then to the other assets of the unit (groups of units) pro rata on the basis of the carrying amount of each asset in the unit (groups of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15)Treasury Shares

Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. Any difference between the carrying amount and the consideration is recognized in equity.

(16)Revenue Recognition

The Company's revenue arising from contracts with customers mainly include sale of goods. The accounting policies for the Company's types of revenues are explained as follows:

Sale of goods

The Company manufactures and sells merchandise. Sales are recognized when goods have been shipped and customers have obtained the control (the customer has the ability to direct the use of the goods and obtain substantially all of the remaining benefits from the goods). The main products of the Company are touch ICs and server and industrial computer ICs Sales transactions are usually accompanied by discounts. Therefore, revenues from these sales are recognized based on the price specified in the contract, net of the estimated volume discounts. Based on previous experience, the Company uses the expected value method to estimate volume discounts. However, revenues are only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Refund liability is also recognized during the period specified in the contract.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The credit period of the Company's sale of goods is from 30 to 90 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The period between the Company transfers the goods to customers and when the customers pay for that goods is usually short and has no significant financing component to the contract.

(17)Post-Employment Benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee's name in the specific bank account and hence, not associated with the Company. Therefore, fund assets are not included in the Company's parent company only financial statements.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Remeasurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

• A. the date of the plan amendment or curtailment; and
• B. the date that the Company recognizes related restructuring or termination costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(18)Share-based Payment Transactions

The cost of equity-settled transactions between the Company and its employees is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it fully vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

The cost of restricted shares issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Company recognizes unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(19)Income Tax

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The additional income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the stockholders' meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• A. where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
• B. in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

A. where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

B. in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company's parent company only financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

A. Impairment of non-financial assets

An impairment exists when the carrying value of an asset or CGU exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or CGU. The value in use calculation is based on a discounted cash flow model. The main assumption is that the recoverable amount of the CGU is used, which may affect the result of its impairment test.

B. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could cause future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective company's domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. Please refer to Note 6 for more details on unrecognized deferred tax assets of the Company as of December 31, 2020.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and Cash Equivalents

	December 31,
	2020	2019
Cash on hand and savings accounts	\$143,662	\$118,156
Time deposits	607,000	823,000
Total	\$750,662	\$941,156

(2) Financial Assets at Fair Value through Other Comprehensive Income-noncurrent

		December 31,
	2020	2019
Equity instruments investments measured at fair value
through other comprehensive income-noncurrent
Listed companies' stocks	\$13,504,363	\$4,738,008
Unlisted companies' stocks	2,193,360	895,495
Total	\$15,697,723	\$5,633,503

The Company increased its investment in financial assets at fair value through other comprehensive income by NT\$5,877 thousand during 2019.

Financial assets at fair value through other comprehensive income were not pledged. Please refer to Note 12 for more details on credit risk.

The Company lost significant influence over Asia Pacific Microsystems, Inc. as the Company did not subscribe to the new shares issued by Asia Pacific Microsystems, Inc. proportionately. Please refer to Note 6(6).

In consideration of the Company's investment strategy, during 2020, the Company disposed of certain listed shares (classified as financial assets measured at fair value through other comprehensive income) with fair value of NT\$19,550 thousand at the time of disposal. Related unrealized gain of NT\$3,220 thousand was transferred from other equity to retain earnings.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

In consideration of the Company's investment strategy, during 2019, the Company disposed of certain listed shares (classified as financial assets measured at fair value through other comprehensive income) with fair value of NT\$42,986 thousand at the time of disposal. Related unrealized loss of NT\$40,080 thousand was transferred from other equity to retain earnings.

Dividends received from equity instruments investments measured at fair value through other comprehensive income. were NT\$236,400 thousand for the year ended December 31, 2020.

Dividends received from equity instruments investments measured at fair value through other comprehensive income were NT\$168,344 thousand for the year ended December 31, 2019.

The Company has equity instrument investments measured at fair value through other comprehensive income. Details on dividends recognized for the years ended of 2020 and 2019 are as follows:

			December 31,
		2020	2019
	Related to investments held at the end of the reporting period	\$236,400	\$168,344
	Related to investments derecognized during the period	-	-
	Dividends recognized during the period	\$236,400	\$168,344
(3)	Financial Assets Measured at Amortized Cost		December 31,
		2020	2019

No loss allowance was recognized for financial assets measured at amortized cost. Please refer to Note 8 for more details on financial assets measured at amortized cost under pledge.

Time deposits \$9,605 \$9,585

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

	December 31,
	2020	2019
Trade receivable	\$17,015	\$17,009
Less: allowances for goods returns and discounts	-	-
Less: allowance for doubtful debts	(292)	(307)
Subtotal	16,723	16,702
Trade receivables from related parties	11,588	7,316
Less: allowance for doubtful debts	-	-
Subtotal	11,588	7,316
Total	\$28,311	\$24,018

(4) Trade Receivables and Trade Receivables from Related Parties

Trade receivables were not pledged.

Trade receivables are generally on 30-90 day terms. The total carrying amounts were NT\$28,603 thousand and NT\$24,325 thousand as of December 31, 2020 and 2019, respectively. Please refer to Note 6(12) for more details on impairment of trade receivables for the years ended December 31, 2020 and 2019. Please refer to Note 12 for more details on credit risk management.

(5) Inventories

	December 31,
	2020	2019
Raw materials	\$94	\$235
Work in process	38,803	27,336
Finished goods	18,909	28,091
Total	\$57,806	\$55,662

The cost of inventories recognized in expenses amounted to NT\$99,391 thousand, including the write-down of inventories of NT\$1,996 thousand for the year ended December 31, 2020.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The cost of inventories recognized in expenses amounted to NT\$133,986 thousand, including the reversal of write-down of NT\$24,972 thousand for the year ended December 31, 2019.

No inventories were pledged.

(6) Investments Accounted for Using the Equity Method

Details of the investments accounted for under the equity method are follows:

December 31,
2020		2019
	Percentage of		Percentage of
	Ownership		Ownership
Amount	(%)	Amount	(%)
\$34,140	100.00	\$42,329	100.00
37,512	80.00	-	-
71,652		42,329
45,247	34.03	44,305	34.03
32,428	27.55	45,333	30.00
2,486	27.70	31,143	25.96
-	-	65,550	26.78
26,438	38.57	-	-
106,599		186,331
6,141		6,294
\$184,392		\$234,954

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• A. The Company increased its investment in Mars Investments (SAMOA) Ltd. by NT\$20,619 thousand and NT\$36,740 thousand for the years ended December 31, 2020 and 2019, respectively.
• B. The Company subscribed to the new shares issued by Goaltop Technology Corporation in the amount of NT\$30,000 thousand for the year ended December 31, 2019. Related registration processes were completed on October 15, 2019.
• C. The Company subscribed to the new shares issued by Waltop International Corporation in the amount of NT\$18,694 thousand for the year ended December 31, 2020. Related registration processes were completed on September 17, 2020. The Company subscribed to the new shares issued by Waltop International Corporation in the amount of NT\$18,958 thousand for the year ended December 31, 2019. Related registration processes were completed on April 19, 2019.
• D. The Company did not subscribe to the new shares proportionate to its original ownership interest of Asia Pacific Microsystems Inc. and lost the significant influence since the percentage of ownership decreased from 26% to 15.37%. Accordingly, the Company transferred the investment from investments accounted for using the equity method to equity instrument investments measured at fair value through other comprehensive income based on the fair value at the date the Company lost significant influence. The difference between fair value and book value of the investment ( NT\$7,157 thousand in the amount) was recognized as losses on disposal of investments.
• E. The Company invested in Haining Jingqi Technology Co., Ltd. in the amount of NT\$30,112 thousand in 2020. Relevant filing processes in Mainland China were completed on May 29,2020.
• F. The Company subscribed to the new shares issued by HuiTong intelligence Company Limited in the amount of NT\$40,000 thousand for the year ended December 31, 2020. Related registration processes were completed on November 5, 2020.
• (a) Investments in subsidiaries

Investments in subsidiaries are presented in the one line-item "investments accounted for using the equity method" in the parent company only financial statements with necessary valuation adjustments.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(b) Investments in associates

The Company's investments in Waltop International Corporation, Vxis Technology Corporation, Goaltop Technology Corporation and Haining Jingqi Technology Corporation are not individually material. The summarized financial information of the Company's ownership in those associates is as follows:

	December 31,
	2020	2019
Loss from continuing operations	\$(68,904)	\$(60,566)
Other comprehensive income (post-tax)	-	2,818
Total comprehensive income	\$(68,904)	\$(57,748)

As of December 31, 2020 and 2019, the aforementioned associates did not have contingent liabilities or capital commitments and the investments in associates were not pledged.

(7) Property, Plant and Equipment

		As of
	December 31,	December 31,
	2020	2019
Owner-occupied property, plant and equipment	\$742,862	\$756,066

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(a) Property, plant and equipment for own-use

		Buildings and	Machinery	Transportation
	Land	facilities	equipment	equipment	Office equipment	Total
Cost:
As of January 1, 2020	\$476,328	\$976,154	\$426,596	\$2,071	\$136,073	\$2,017,222
Additions	-	3,810	495	-	496	4,801
Disposals	-	(288)	(7,216)	-	(3,259)	(10,763)
As of December 31, 2020	\$476,328	\$979,676	\$419,875	\$2,071	\$133,310	\$2,011,260
As of January 1, 2019	\$476,328	\$974,656	\$423,763	\$1,831	\$135,649	\$2,012,227
Additions	-	1,498	6,662	1,030	493	9,683
Disposals	-	-	(3,829)	(790)	(69)	(4,688)
As of December 31, 2019	\$476,328	\$976,154	\$426,596	\$2,071	\$136,073	\$2,017,222
Depreciation and Impairment:
As of January 1, 2020	\$-	\$715,001	\$410,721	\$850	\$134,584	\$1,261,156
Depreciation	-	8,859	5,597	396	844	15,696
Disposals	-	(176)	(5,089)	-	(3,189)	(8,454)
As of December 31, 2020	\$-	\$723,684	\$411,229	\$1,246	\$132,239	\$1,268,398
As of January 1, 2019	\$-	\$706,248	\$409,261	\$1,432	\$133,707	\$1,250,648
Depreciation	-	8,753	5,289	208	946	15,196
Disposals	-	-	(3,829)	(790)	(69)	(4,688)
As of December 31, 2019	\$-	\$715,001	\$410,721	\$850	\$134,584	\$1,261,156
Net carrying amounts as of:
December 31, 2020	\$476,328	\$255,992	\$8,646	\$825	\$1,071	\$742,862
December 31, 2019	\$476,328	\$261,153	\$15,875	\$1,221	\$1,489	\$756,066

(b) There was no interest capitalization during the year of 2020 and 2019.

• (c) Main components of buildings include main building structure, electric engineering and air-conditioning equipment, etc., which are depreciated over useful lives of 50 years and 10 years, respectively.
• (d) Certain of the Company's R&D building land is farmland and therefore is registered under a third party's name. The farmland has been mortgaged to the Company for security.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(e) The investment activities partially influenced the cash flow are as follows:

	As of
	December 31,	December 31,
	2020	2019
Acquisition of property, plant and
equipment	\$4,801	\$9,683
Net increase in payables to equipment	-	280
Total	\$4,801	\$9,963

(f) Property, plant and equipment were not pledged.

(8) Intangible Assets

	Software	Patents	Total
Cost:
As of January 1, 2020	\$9,548	\$309,335	\$318,883
Additions	285	-	285
As of December 31, 2020	\$9,833	\$309,335	\$319,168
As of January 1, 2019	\$8,111	\$309,335	\$317,446
Additions	1,437	-	1,437
As of December 31, 2019	\$9,548	\$309,335	\$318,883
Amortization and Impairment:
As of January 1, 2020	\$2,503	\$309,335	\$311,838
Amortization	1,566	-	1,566
As of December 31, 2020	\$4,069	\$309,335	\$313,404
As of January 1, 2019	\$1,269	\$309,335	\$310,604
Amortization	1,234	-	1,234
As of December 31, 2019	\$2,503	\$309,335	\$311,838
Net carrying amount as of:
December 31, 2020	\$5,764	\$-	\$5,764
December 31, 2019	\$7,045	\$-	\$7,045

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Amortization expense of intangible assets:

	As of
	December 31,	December 31,
	2020	2019
Selling expenses	\$4	\$-
General and administrative expense	496	408
Research and development expenses	1,066	826
Total	\$1,566	\$1,234

(9) Post-Employment Benefits

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. The Company has made monthly contributions of 6% of each individual employee's salaries or wages to employees' pension accounts.

Pension expenses under the defined contribution plan for the years ended December 31, 2020 and 2019 were NT\$10,126 thousand and NT\$10,458 thousand, respectively.

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contributes an amount equivalent to 2% of the employees' total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assesses the balance in the designated labor pension fund. If the amount is not sufficient to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March the following year.

SILICON INTEGRATED SYSTEMS CORPORATION NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandation, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT\$0 to its defined benefit plan during the 12 months beginning after December 31, 2020.

The weighted average duration of the defined benefit obligations was 11 years and 12 years as of December 31, 2020 and 2019, respectively.

Pension costs recognized in profit or loss are as follows:

		As of
	December 31,	December 31,
	2020	2019
Current service costs	\$367	\$346
Net interest on the net defined benefit liabilities	(389)	(567)
Total	\$(22)	\$(221)

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

	December 31,		January 1,
	2020	2019	2019
Defined benefit obligation	\$61,096	\$73,656	\$69,718
Plan assets at fair value	(118,460)	(125,534)	(120,084)
Other non-current liabilities-accrued pension
liabilities (assets) recognized on the balance
sheets	\$(57,364)	\$(51,878)	\$(50,366)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Reconciliations of liabilities (assets) of the defined benefit plan are as follows:

			Net defined
	Defined benefit	Plan assets	benefit liabilities
	obligation	at fair value	(assets)
As of January 1, 2019	\$69,718	\$(120,084)	\$(50,366)
Current service cost	346	-	346
Interest expense (income)	784	(1,351)	(567)
Subtotal	70,848	(121,435)	(50,587)
Remeasurements of the defined benefit liability (asset):
Actuarial gains and losses
arising from changes in
demographic assumptions	2,069	-	2,069
Actuarial gains and losses
arising from changes in
financial assumptions	1,160	-	1,160
Experience adjustments	(421)	-	(421)
Remeasurements of the
defined benefit assets	-	(4,099)	(4,099)
Subtotal	2,808	(4,099)	(1,291)
As of December 31, 2019	\$73,656	\$(125,534)	\$(51,878)
Current service cost	367	-	367
Interest expense (income)	553	(941)	(388)
Subtotal	74,576	(126,475)	(51,899)
Remeasurements of the defined
benefit liabilities/assets:
Actuarial gains and losses
arising from changes in
demographic assumptions	344	-	344
Actuarial gains and losses
arising from changes in
financial assumptions	75	-	75
Experience adjustments	(1,766)	-	(1,766)
Remeasurements of the
defined benefit assets	-	(4,118)	(4,118)
Remeasurements of the
defined benefit liabilities	(12,133)	12,133	-
Subtotal	(13,480)	8,015	(5,465)
As of December 31, 2020	\$61,096	\$(118,460)	\$(57,364)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The principal assumptions used in determining the Company's defined benefit plan are as follows:

		December 31,
	2020	2019
Discount rate	0.500%	0.750%
Expected rate of salary increases	3.750%	4.000%

Sensitivity analysis of significant assumptions is as follows:

	For the years ended December 31,
	2020		2019
	Defined	Defined	Defined	Defined
	benefit	benefit	benefit	benefit
	obligation	obligation	obligation	obligation
	increase	decrease	increase	decrease
Discount rate increase by 0.25%	\$-	\$1,596	\$-	\$2,093
Discount rate decrease by 0.25%	1,663	-	2,184	-
Rate of future salary increase by 0.25%	1,587	-	2,085	-
Rate of future salary decrease by 0.25%	-	1,532	-	2,010

The sensitivity analysis above is based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analysis compared to the previous period.

(10)Equities

A. Common stock

The Company's authorized capital as of December 31, 2020 and 2019 was NT\$18,000,000 thousand, divided into 1,800,000 thousand shares, each at a par value of NT\$10. The Company's issued capital was NT\$6,309,675 thousand and NT\$5,540,625 thousand, divided into 630,967 thousand shares and 554,062 thousand shares, as of December 31, 2020 and 2019, respectively, each at a par value of NT\$10.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

B. Capital surplus

	December 31,
	2020	2019
From share of changes in associates and joint
ventures	\$11,453	\$3,657
Others	74,354	2,788
Total	\$85,807	\$6,445

According to the Company Act, the capital surplus shall not be used except for offset the deficit of the Company. When a company incurs no loss, it may distribute the capital surplus generated from the excess of the issuance price over the par value of share capital and donations. The distribution could be made in cash to its shareholders in proportion to the number of shares being held by each of them.

C. Treasury shares

On May 10 and November 7, 2018, Board of Directors of the Company resolved to purchase and transfer the treasury shares to employees. During the period from May 11, 2018 to January 7, 2019, the Company purchased 26,000 thousand common shares in the amount of NT\$250,065 thousand on the centralized securities exchange market.

On July 15, 2019, the Company retired 6,000 thousand common shares and the registration processes have been completed.

On September 4, 2020, the Company transferred 20,000 thousand common shares to employees, each at a price of NT\$12.7, and recognized NT\$71,200 thousand as compensation expenses for the year end December 31, 2020.

D. Retained earnings and dividend policy:

According to the Company's Articles of Incorporation, current year's earnings, if any, shall be distributed in the following order:

(a)reserve for tax payments;

(b)offset accumulated losses in previous years, if any;

(c)legal reserve, which is 10% of leftover profits.

(d)allocation or reverse of special reserve as required by law or government authorities;

(e)the board of directors will prepare a distribution proposal and submit the same to the shareholders' meeting for review and approval by a resolution.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Pursuant to existing regulations, the Company is required to set aside additional special reserve equivalent to the earnings for the year or undistributed retained earnings for prior year according to the debit balance of the components of shareholders' equity for the year (and prior year). For any subsequent reversal of other net deductions from shareholders' equity, the amount reversed may be distributed.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paid-in capital. The legal reserve can be used to offset the deficit of the Company. When the Company incurs not loss, it may distribute the portion of legal reserve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Following the adoption of TIFRS, the FSC on April 6, 2012 issued Order No. Financial-Supervisory-Securities-Corporate-1010012865, which sets out the following provisions for compliance: On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders' equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the Company shall set aside an equal amount of special reserve. Following a company's adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to "other net deductions from shareholders' equity" for the current fiscal year, provided that if the Company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders' equity. For any subsequent reversal of other net deductions from shareholders' equity, the amount reversed may be distributed.

As of December 31, 2020 and 2019, special reserve set aside for the first-time adoption of TIFRS amounted to NT\$0.

Details of the 2019 and 2018 earnings distribution and dividends per share as resolved by general shareholders' meeting on June 10, 2020 and June 21, 2019, respectively, are as follows:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

	Appropriation of earnings		Dividends per share (NT\$)
	2019	2018	2019	2018
Legal reserve	\$143,742	\$-
(Reversal of) increase in
special reserve	(1,698,084)	4,576,364
Common stock - cash dividend	192,262	-	0.347	-
Common stock - stock dividend	769,050	-	1.388	-

Please refer to Note 6(14) for information regarding the employees' compensation (bonuses) and remuneration to directors.

(11)Operating Income

		For the years ended December 31,
	2020	2019
Revenue from contracts with customers
Sales of goods	\$136,621	\$208,639

Revenues from contracts with customers are all recognized at a point in time for the years ended December 31, 2020 and 2019.

(12)Expected Credit Losses

	For the years ended December 31,
	2020 2019
Operating expenses – Expected credit gain
Trade Receivables	\$(15)	\$(13)

Please refer to Note 12 for more details on credit risk.

The Company measures the allowance of its receivables (including trade receivables and trade receivables from related parties) at an amount equal to lifetime expected credit losses. The assessment of the Company's loss allowance as of December 31, 2020 and 2019 is as follows:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

				Past due
	Neither past	Within 90	91-180	181-270	271-365	After 366
	due (Note)	days	days	days	days	days	Total
Gross carrying
amount	\$20,375	\$7,936	\$-	\$-	\$-	\$292	\$28,603
Loss ratio	-	-	25%	50%	75%	100%
Lifetime
expected
credit losses	-	-	-	-	-	(292)	(292)
Carrying amount of
trade
receivables	\$20,375	\$7,936	\$-	\$-	\$-	\$-	\$28,311
	As of December 31, 2019
				Past due
	Neither past	Within 90	91-180	181-270	271-365	After 366
	due (Note)	days	days	days	days	days	Total
Gross carrying
amount	\$13,606	\$8,429	\$1,983	\$-	\$-	\$307	\$24,325
Loss ratio	-	-	25%	50%	75%	100%
Lifetime expected
credit losses	-	-	-	-	-	(307)	(307)
Carrying
amount of trade
receivables	\$13,606	\$8,429	\$1,983	\$-	\$-	\$-	\$24,018

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The movements in the provision for impairment of trade receivables for the years ended December 31, 2020 and 2019 are as follows:

	Trade receivables
As of January 1, 2020	\$307
Decrease for the current period	(15)
As of December 31, 2020	\$292
As of January 1, 2019	\$320
Decrease for the current period	(13)
As of December 31, 2019	\$307

(13)Leases

A. The Company as lessee

The Company leases various property (buildings and facilities), machinery equipment and office equipment. These leases have terms between 1 and 5 years.

The effect that leases have on the financial position, financial performance and cash flows of the Company are as follows:

(a)Amounts recognized in the balance sheet

i. Right-of-use asset

The carrying amount of right-of-use assets

	December 31,
	2020	2019
Buildings and facilities	\$49	\$1,933
Machinery equipment	66	127
Office equipment	146	248
Total	\$261	\$2,308

During the years ended December 31, 2020 and 2019, the Company's additions to right-of-use assets amounted to NT\$0 thousand and NT\$186 thousand, respectively.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

ii. Lease liability

	December 31,
	2020	2019
Lease liability	\$270	\$2,191
Lease liability-current	\$220	\$1,122
Lease liability-noncurrent	50	1,069
Total	\$270	\$2,191

Please refer to Note 6(15)4. for the interest on lease liability recognized during the years ended December 31, 2020 and 2019, and refer to Note 12(5). for the maturity analysis of lease liabilities as of December 31, 2020 and 2019.

(b)Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

	For the years ended December 31,
	2020	2019
Buildings and facilities	\$828	\$1,113
Machinery equipment	61	59
Office equipment	102	102
Total	\$991	\$1,274

(c)Income and costs relating to leasing activities

	For the years ended December 31,
	2020	2019
The expense relating to leases of low-value assets	\$21	\$21

(d)Cash outflow relating to leasing activities

During the years ended December 31, 2020 and 2019, the Company's total cash outflow for leases amounted to NT\$907 thousand and NT\$1,520 thousand, respectively.

B. The Company as a lessor

The Company entered into an office lease agreement. As the lease did not transfer substantially all the risks and rewards incidental to the ownership of the underlying asset, the Company classified the lease as an operating lease.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company has entered into machinery equipment lease agreements with terms of five years . These leases are classified as finance leases as they transferred substantially all the risks and rewards incidental to the ownership of the underlying assets.

The Company terminated the original agreement on September 30, 2019. Please refer to Note 7(3) for more details on lease.

	For the years ended December 31,
	2020	2019
Lease income for operating leases
Income relating to fixed lease payments and
variable lease payments that depend on an index
or a rate	\$26,153	\$24,921
Subtotal	26,153	24,921
Lease income for finance leases
Finance income on the net investment in the lease	-	273
Subtotal	-	273
Total	\$26,153	\$25,194

The undiscounted lease payments to be received for the remaining years as of December 31, 2020 and 2019 are as follows:

	For the years ended December 31,
	2020	2019
Not later than one year	\$25,725	\$22,936
Later than one years and not later than five years	22,800	26,118
Later than five years	-	-
Total	\$48,525	\$49,054

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(14)Employee Benefits, Depreciation and Amortization Expenses are summarized by Function As Follows:

	For the years ended December 31,
		2020		2019
	Operating	Operating		Operating	Operating
	Costs	Expenses	Total	Costs	Expenses	Total
Employee benefits
expense
Payroll	\$9,306	\$290,786	\$300,092	\$6,866	\$223,662	\$230,528
Labor and health	546	15,888	16,434	537	16,435	16,972
Pension	269	9,834	10,103	247	9,991	10,238
Board
Compensation	-	3,215	3,215	-	2,860	2,860
Others	-	1,474	1,474	-	1,901	1,901
Total	\$10,121	\$321,197	\$331,318	\$7,650	\$254,849	\$262,499
Depreciation	\$455	\$16,232	\$16,687	\$381	\$16,089	\$16,470
Amortization	\$-	\$1,566	1,566	\$-	\$1,234	\$1,234

The numbers of the Company's employees were 187 and 190, including 7 and 6 nonemployee directors as of December 31, 2020 and 2019, respectively.

The Company's average employee benefit expenses for the years ended December 31, 2020 and 2019, were NT\$1,823 thousand and NT\$1,411 thousand, respectively. The Company's average payroll expenses for the years ended December 31, 2020 and 2019, were NT\$1,667 thousand and NT\$1,253 thousand, respectively. The Company's average variable payroll expense adjustment for the year ended December 31, 2020 increased by 33.04%.

According to the Articles of Incorporation of the Company, no less than 5% of profit of the current year is distributable as employees' compensation and no higher than 2% of profit of the current year is distributable as remuneration to directors. However, the Company's accumulated losses shall have been covered (if any). The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders' meeting. Information on the Board of Directors' resolution regarding the employees' compensation and remuneration to directors can be obtained from the "Market Observation Post System" on the website of the TWSE.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company incurred net losses in both 2020 and 2019 and thus the Company did not accrue employees' compensation and remuneration to directors and supervisors.

(15)Non-Operating Income and Expenses

A. Interest income

	For the years ended December 31,
	2020	2019
Financial assets measured at amortized cost	\$3,198	\$5,669
Others	-	273
Total	\$3,198	\$5,942

B. Other income

	For the years ended December 31,
	2020	2019
Rental income	\$26,153	\$24,921
Dividend income	236,400	168,344
Others	3,647	3,073
Total	\$266,200	\$196,338

C. Other gains and losses

	For the years ended December 31,
	2020	2019
(Losses) gains on disposal of property, plant and
equipment	\$(467)	\$148
Losses on disposal of investment	(7,157)	-
Foreign exchange losses, net	(2,583)	(2,270)
Gain on lease modification	33	-
Total	\$(10,174)	\$(2,122)
D. Finance costs
		For the years ended December 31,
	2020	2019
Interest expenses on lease liabilities	\$(55)	\$(108)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(16)Components of Other Comprehensive Income

For the year ended December 31, 2020

		Reclassification	Other		Other
		adjustments	comprehensive		comprehensive
	Arising during	during the	income, before	Income tax	income, net of
	the period	period	tax	benefit	tax
Not to be reclassified to profit
or loss:
Remeasurements of the
defined benefit plan	\$5,465	\$-	\$5,465	\$-	\$5,465
Unrealized gains from equity
instrument investments
measured at fair value through
other comprehensive income	10,025,377	-	10,025,377	-	10,025,377
To be reclassified to profit or
loss in subsequent periods:
Exchange differences
resulting from translating
the financial statements of
foreign operations	1,375	-	1,375	-	1,375
Total other comprehensive
Income	\$10,032,217	\$-	\$10,032,217	\$-	\$10,032,217

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

For the year ended December 31, 2019

		Reclassification	Other		Other
		adjustments	comprehensive		comprehensive
	Arising during	during the	income, before	Income tax	income, net of
	the period	period	tax	benefit	tax
Not to be reclassified to profit
or loss:
Remeasurements of the
defined benefit plan	\$1,291	\$-	\$1,291	\$-	\$1,291
Unrealized gains from equity
instrument investments
measured at fair value through
other comprehensive income	1,658,768	-	1,658,768	-	1,658,768
Share of other comprehensive
income of associates and joint
ventures accounted for using
the equity method	2,818	-	2,818	-	2,818
To be reclassified to profit or
loss in subsequent periods:
Exchange differences
resulting from translating
the financial statements of
foreign operations	(764)	-	(764)	-	(764)
Total other comprehensive
Income	\$1,662,113	\$-	\$1,662,113	\$-	\$1,662,113

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(17)Income Tax

(a) The major components of income tax expense are as follows: Income tax expense (benefit) recognized in profit or loss

	For the years ended December 31,
	2020	2019
Current income tax expense:
Current income tax payable	\$-	\$-
Adjustments in respect of current income tax of	-	652
prior periods
Deferred tax expense (income):
Deferred income tax related to origination and
reversal of temporary differences	(6,345)	(617)
Deferred income tax related to recognition and
derecognition of tax losses and unused tax
credits	49,810	7,357
Income tax expense recognized in profit or loss	\$43,465	\$7,392

Reconciliation of income tax expense and the accounting profit multiplied by applicable tax rates is as follows:

	For the years ended December 31,
	2020	2019
Accounting losses before tax from continuing operations	\$(256,003)	\$(217,299)
At statutory income tax rate	\$(51,201)	\$(43,460)
Adjustments in respect of current income tax of prior
periods	-	652
Tax effect of expenses not deductible for tax purposes	(37,188)	(21,556)
Adjustments of deferred tax assets/liabilities for write	131,854	71,756
downs/reversals and different jurisdictional tax rates
Income tax expense (benefit) recognized in profit or loss	\$43,465	\$7,392

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(b) Deferred tax assets (liabilities) relate to the following:

For the year ended December 31, 2020

			Recognized in
		Recognized	other	Charged
	Beginning	in profit or	comprehensive	directly to	Exchange	Ending
	balance	loss	income	equity	differences	balance
Temporary differences
Depreciation difference for tax purpose	\$(2,484)	\$1	\$-	\$-	\$-	\$(2,483)
Unrealized exchange gains	(51)	47	-	-	-	(4)
Impairment loss	6,506	-	-	-	-	6,506
Investments accounted for using the
equity method	19,382	6,796	-	-	-	26,178
Loss allowance	33	17	-	-	-	50
Unrealized allowance for inventory
obsolescence	16,034	399	-	-	-	16,433
Others	1,558	(915)	-	-	-	643
Unused tax losses	-	(49,810)	-	-	-	(49,810)
Deferred tax expense		\$(43,465)	\$-	\$-	\$-
Net deferred tax assets / (liabilities)	\$40,978					\$(2,487)
Reflected in balance sheet as follows:
Deferred tax assets	\$43,513					\$-
Deferred tax liabilities	\$(2,535)					\$(2,487)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

For the year ended December 31, 2019

	Recognized in
		Recognized	other	Charged
	Beginning	in profit or	comprehensive	directly to	Exchange	Ending
	balance	loss	income	equity	differences	balance
Temporary differences
Depreciation difference for tax purpose	\$(2,484)	\$-	\$-	\$-	\$-	\$(2,484)
Unrealized exchange gains	(56)	5	-	-	-	(51)
Impairment loss	6,506	-	-	-	-	6,506
Investments accounted for using the	15,086	4,296	-	-	-	19,382
equity method
Loss allowance	70	(37)	-	-	-	33
Unrealized allowance for inventory	19,850	(3,816)	-	-	-	16,034
obsolescence
Others	1,449	109	-	-	-	1,558
Unused tax losses	7,298	(7,298)	-	-	-	-
Deferred tax expense		\$(6,741)	\$-	\$-	\$-
Net deferred tax assets / (liabilities)	\$47,719					\$40,978
Reflected in balance sheet as follows:
Deferred tax assets	\$50,259					\$43,513
Deferred tax liabilities	\$(2,540)					\$(2,535)

(c) The following table contains information of the unused tax losses of the Company:

		Unused tax losses as at
	Tax losses for the	December 31,	December 31,
Year	period	2020	2019	Expiration year
2011	\$472,178	\$472,178	\$472,178	2021
2012	1,343,045	1,343,045	1,343,045	2022
2013	594,767	594,767	594,767	2023
2014	856,518	856,518	856,518	2024
2015	44,752	44,752	44,752	2025
2016	40,639	40,639	40,639	2026
2017	86,061	86,061	86,061	2027
2018	138,422	138,422	138,422	2028
2019	308,713	308,713	308,713	2029
2020	410,267	410,267	-	2030
		\$4,295,362	\$3,885,095

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(d) Unrecognized deferred tax assets

As of December 31, 2020 and 2019, deferred tax assets that have not been recognized amounted to NT\$865,417 thousand and NT\$709,760 thousand, respectively.

The Company does not have undistributed earnings generated in and before 1997.

(e) The assessment of income tax returns As of December 31, 2020, income tax returns of the Company have been assessed and approved up to 2018.

(18)Earnings Per Share

Basic earnings per share is calculated by dividing net profit for the year attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

	For the years ended December 31,
	2020	2019
A. Basic earnings per share
Net loss (in thousand NT\$)	\$(299,468)	\$(224,691)
Weighted average number of ordinary shares outstanding for basic earnings per share (in
thousands)	630,966	615,053
Basic earnings per share (NT\$)	\$(0.47)	\$(0.37)
B. Diluted earnings per share
Net loss (in thousand NT\$)	\$(299,468)	\$(224,691)
Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands)	630,966	615,053
Effect of dilution:
Weighted average number of ordinary shares
outstanding after dilution (in thousand)	630,966	615,053
Diluted earnings per share (NT\$)	\$(0.47)	\$(0.37)
167

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The employee stock options have anti-dilutive effect and therefore are not included in the calculation of 2020 and 2019 diluted earnings per share.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were authorized for issue.

7. Related Party Transactions

Name and nature of relationship of the related parties

Name of the related parties	Nature of relationship of the related parties
HuiTong intelligence Company Limited	Subsidiary
Shenzhen SiS Technology Co., Ltd.	Subsidiary
Suzhou Mlight Electronics Co., Ltd.	Subsidiary
United Microelectronics Corp.	The Company's director
Wsltop International Corporation	Associate
Goaltop Technology Corporation	Associate
Haining Jingqi Technology Co., Ltd.	Associate

(1) Significant transactions with related parties

A.Sales

	For the years ended December 31,
	2020	2019
Associates	\$30,618	\$44,790

The sales price to related parties was determined through mutual agreement based on the market demands. The trade credit terms with related parties were 90 days, while the terms with non-related parties were 30 to 90 days. The outstanding balance due from related parties as of December 31, 2020 and 2019 was unsecured, non-interest bearing and must be settled in cash. The receivables from the related parties were not guaranteed.

B. Purchases

		For the years ended December 31,
	2020	2019
Other related parties	\$23,990	\$30,677

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The purchase price to the above related parties is determined through mutual agreement based on the market demands. The trade credit terms with the related parties and thirdparty suppliers were the same.

C. Leases

The Company signed two lease contracts to lease two machines to associates in November and December 2018. Total rent of the leases was NT\$16,527 thousand (paid in 60 monthly payments) plus a purchase option at maturity of NT\$1,080 thousand. Total carrying amount of the two machines was NT\$16,527 thousand. The Company classified the leases as finance leases.

The Company early terminated the leases on September 30, 2019 and sold the two machines at the price of NT\$14,000 thousand. Total interest income recognized for the leases was NT\$273 thousand for the year ended December 31, 2019.

D.Trade receivables from related parties

	December 31,
	2020	2019
Associates	\$11,588	\$7,316
E. Accounts payable to related parties
	December 31,
	2020	2019
Other related parties	\$6,130	\$8,175

F. Others

Technical services fee paid by the Company to subsidiaries amounted to NT\$14,641 thousand and NT\$15,299 thousand for the years ended December 31, 2020 and 2019, respectively.

G. Key management personnel compensation

	For the years ended December 31,
	2020	2019
Short-term employee benefits	\$13,792	\$15,279
Post-employment benefits	306	379
Total	\$14,098	\$15,658

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

8. Assets Pledged As Collateral

The following table lists assets of the Company pledged as security:

	Carrying amount
Items	December 31, 2020	December 31, 2019	Purpose of pledge
Financial assets measured at
amortized cost-current	\$2,105	\$2,085	Customs clearance
Total	\$2,105	\$2,085

9. Contingencies and Off Balance Sheet Commitments None.

10. Losses due to Major Disasters None.

11. Significant Subsequent Events None.

1. Others

(1) Categories of Financial Instruments

	December 31,
	2020	2019
Financial assets
Financial assets at fair value through other
comprehensive income	\$15,697,723	\$5,663,503
Financial assets measured at amortized cost
Cash and cash equivalents (exclude cash on hand)	750,231	940,671
Financial assets measured at amortized cost-current	9,605	9,585
Trade receivables (including related parties)	28,311	24,018
Other receivables (including related parties)	21,783	411
Refundable deposits	162	342
Subtotal	810,092	975,027
Total	\$16,507,815	\$6,638,530

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

	December 31,
	2020	2019
Financial liabilities
Financial liabilities at amortized cost:
Accounts payables (including related parties)	\$16,400	\$13,264
Other payables	35,970	41,726
Guarantee deposits	3,405	3,302
Lease liabilities	270	2,191
Total	\$56,045	\$60,483

(2) Financial Risk Management Objectives and Policies

The Company's principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Company identifies, measures and manages the aforementioned risks based on the Company's policy and risk tendency.

The Company has established appropriate policies, procedures and internal controls for financial risk management. The plans for material treasury activities are reviewed by Board of Directors and Audit Committee in accordance with relevant regulations and internal controls. The Company complies with its financial risk management policies at all times.

(3) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise foreign currency risk, interest rate risk and other price risk. (Such as equity risk)

In practice, it is rarely the case that a single risk variable will change independently from other risk variables; there are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into accounts the interdependencies between risk variables.

Foreign currency risk

The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenues or expenses are denominated in a different currency from the Company's functional currency) and the Company's net investments in foreign subsidiaries.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Some receivables and payables are denominated in the same foreign currency, and it will result in economic hedging effect. Further, net investments in foreign operations are primarily for strategic purposes, and they are not hedged by the Company.

The Company's sensitivity analysis to foreign currency risk mainly focuses on foreign currency monetary items at the end of the reporting period. The Company's foreign currency risk is mainly from the volatility in the exchange rates of US\$. The sensitivity analysis is as follows:

When NTD appreciates or depreciates against USD by 1%, the profit for the years ended December 31, 2020 and 2019 decreases / increases by NT\$537 thousand and NT\$631 thousand, respectively.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's investment at variable interest rates. As a whole, the interest rates risk is minimal.

Equity price risk

The Company's equity investments, including listed and unlisted equity securities, are exposed to market price risk arising from uncertainties of future values of equity securities. The Company's investments in listed and unlisted equity securities are classified under financial assets at fair value through other comprehensive income. The Company manages the equity price risk through diversification and placing limits on individual and total equity investments. Reports on the equity portfolio are submitted to the Company's senior management on a regular basis. The Company's Board of Directors reviews and approves certain significant equity investments according to level of authority.

At the reporting date ended December 31, 2020 and 2019, a change of 1% in the price of the listed equity securities classified under equity instrument investments measured at fair value through other comprehensive income would have impact of NT\$135,044 thousand and NT\$47,380 thousand, respectively, on the equity attributable to the Company.

Please refer to Note 12(7) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(4) Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for trade receivables) and from its financing activities (including bank deposits and other financial instruments).

Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and controls relating to customer credit risk management. Credit limits are established for all customers based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company's internal rating criteria, etc. Certain customer's credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of December 31, 2020 and 2019, receivables from top ten customers represented 97% and 96% of the total trade receivables of the Company, respectively. The credit concentration risk of other accounts receivables was insignificant.

The Company manages its exposure to credit risk arising from bank deposits, fixed income securities and other financial instruments in accordance with established group policies. Since the counter-parties are selected reputable financial institutions and companies, the Company believes its exposure to credit risk is not significant.

The Company adopted IFRS 9 to assess the expected credit losses. The measurement indicators of the Company are described as follows:

			Carrying amount
				As of
		Measurement method for expected	December 31,	December 31,
Level of credit risk	Indicator	credit losses	2020	2019
Simplified method
(Note)	Note	Lifetime expected credit losses	\$28,603	\$24,325

Note: Includes trade receivables.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(5) Liquidity Risk Management

The Company's objective is to maintain a balance between continuity of funding and flexibility through use of cash and cash equivalents, highly liquid equity investments and bank borrowings. The table below summarizes the maturity profile of the Company's financial liabilities based on the contractual undiscounted payments and contractual maturity.

	Less than 1 year	1 to 3 years	Total
As of December 31, 2020
Accounts payables
(including related parties)	\$16,400	\$-	\$16,400
Other payables	35,970	-	35,970
Guarantee deposits	-	3,405	3,405
Lease liabilities	226	51	277
As of December 31, 2019
Accounts payables
(including related parties)	\$13,264	\$-	\$13,264
Other payables	41,726	-	41,726
Guarantee deposits	-	3,302	3,302
Lease liabilities	1,344	1,087	2,431

Non-derivative financial instruments

(6) Fair Value of Financial Instruments

A. The methods and assumptions applied in determining the fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

• (a)The carrying amount of cash and cash equivalents, trade receivables, accounts payables and other current financial assets approximates their fair value due to their short maturities.
• (b)For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (i.e. listed equity securities) at the reporting date.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• (c)Fair value of equity instruments without market quotations (i.e. unlisted equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).
• B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company's financial assets measured at amortized cost approximates their fair value since short maturities.

• C. Fair value recognized on the balance sheet Please refer to Note 12(7) for fair value measurement hierarchy for financial instruments of the Company.
• (7) Fair Value Measurement Hierarchy
• A. Fair value measurement hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole.

• Level 1, 2 and 3 inputs are described as follows:
• Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
• Level 2 Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.

Level 3 – Unobservable inputs for the assets or liabilities.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

B. Fair value measurement hierarchy of the Company's assets and liabilities The Company does not have assets measured at fair value on a non-recurring basis; the following table presents the fair value measurement hierarchy of the Company's assets and liabilities on a recurring basis:

As of December 31, 2020

	Level 1	Level 2	Level 3	Total
Assets measured at fair value:
Financial assets at fair value through
other comprehensive income
Equity instruments measured at fair
comprehensive value through other
income	\$13,504,363	\$-	\$2,193,360	\$15,697,723
As of December 31, 2019
	Level 1	Level 2	Level 3	Total
Assets measured at fair value:
Financial assets at fair value through
other comprehensive income
Equity instruments measured at fair
value through other comprehensive
income	\$4,738,008	\$-	\$895,495	\$5,633,503

Transfers between Level 1 and Level 2 during the period

During the years ended December 31, 2020 and 2019, there were no transfers between Level 1 and Level 2 fair value measurements.

The detail movement of recurring fair value measurements in Level 3 Reconciliation for recurring fair value measurements in Level 3 of the fair value hierarchy during the period is as follows:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

	Assets
	Financial assets at fair value through other comprehensive
	income
	Stocks
As of January 1, 2020	\$895,495
Total gains and losses recognized for the year ended December 31, 2020: Amount recognized in profit or loss (presented in "other profit or loss") Amount recognized in OCI (presented in "unrealized gains (losses) from equity instrument investments measured at fair value through other
comprehensive income")	1,239,472
Acquisitions/issues for the year ended December 31, 2020	58,393
Disposals/settlements for the year ended December 31, 2020	-
Transfer in (out) Level 3	-
As of December 31, 2020	\$2,193,360
	Assets
	Financial assets at fair
	value through other
	comprehensive
	income
	Stocks
As of January 1, 2019:	\$717,376
Total gains and losses recognized for the year ended December 31, 2019:
Amount recognized in profit or loss (presented in "other profit or loss") Amount recognized in OCI (presented in "unrealized gains (losses) from	-
equity instrument investments measured at fair value through other comprehensive income")	178,119
Acquisitions/issues for the year ended December 31, 2019	-
Disposals/settlements for the year ended December 31, 2019	-
Transfer in (out) Level 3	-
As of December 31, 2019	\$895,495

Total gains related to assets recognized for the years ended December 31, 2020 and 2019 amounted to NT\$1,239,472 thousand and NT\$178,119 thousand, respectively.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Information on significant unobservable inputs to valuation of fair value measurements categorized within Level 3 of the fair value hierarchy

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of December 31, 2020

		Significant		Relationship
	Valuation	unobservable	Quantitative	between inputs	Sensitivity of the
	techniques	inputs	information	and fair value	input to fair value
Financial assets:
Financial assets
at fair value
through other
comprehensive
Stocks	Asset	Lack of	30%	The higher the	1% increase
	approach	marketability		discount for	(decrease) in the
				lack of	discount for lack
				marketability	of marketability
				, the lower	would result in
				the fair value	decrease/increase
				of the stocks.	in company's
					equity by
					NT\$29,422
					thousand.
Stocks	Market	Lack of	30%	The higher the	1% increase
	approach	marketability		discount for	(decrease) in the
				lack of	discount for lack
				marketability	of marketability
				, the lower	would result in
				the fair value	decrease/increase
				of the stocks.	in company's
					equity by
					NT\$1,912
					thousand.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

		Significant		Relationship
	Valuation	unobservable	Quantitative	between inputs	Sensitivity of the
	techniques	inputs	information	and fair value	input to fair value
Financial assets: Financial assets at fair value through other comprehensive Stocks	Asset approach	Lack of marketability	30%	The higher the discount for	1% increase (decrease) in the
				lack of marketability , the lower the fair value of the stocks.	discount for lack of marketability would result in decrease/increase in company's equity by NT\$12,634 thousand.
Stocks	Market approach	Lack of marketability	30%	The higher the discount for lack of marketability , the lower the fair value of the stocks.	1% increase (decrease) in the discount for lack of marketability would result in decrease/increase in company's equity by NT\$159 thousand.

As of December 31, 2019

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(8) Significant Assets and Liabilities Denominated in Foreign Currencies Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

		December 31, 2020
	Foreign
	currencies
	(thousand)	Exchange rate	NTD (thousand)
Financial assets
Monetary item:
USD	\$2,208	28.48	\$62,896
Financial liabilities
Monetary items:
USD	324	28.48	9,226
		December 31, 2019
	Foreign
	currencies
	(thousand)	Exchange rate	NTD (thousand)
Financial assets
Monetary item:
USD	\$2,498	29.98	\$74,890
Financial liabilities
Monetary items:

The Company has various functional currencies, and hence is not able to disclose the information of exchange gains and losses of monetary financial assets and liabilities by each significant assets and liabilities denominated in foreign currencies. The foreign exchange lose was NT\$2,583 thousand and NT\$2,270 thousand for the years ended December 31, 2020 and 2019, respectively.

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(9) Capital Management

The primary objective of the Company's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. Additional Disclosures

• (1) The following are additional disclosures for the Company and its affiliates:
• A. Financing provided to others for the year ended December 31, 2020: None.
• B. Endorsement/Guarantee provided to others for the year ended December 31, 2020: None.
• C. Securities held as of December 31, 2020: Please refer to Attachment 1.
• D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• E. Acquisition of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• F. Disposal of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• G. Related party transactions for purchases and sales amounts exceeding the lower of NT\$100 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• H. Receivables from related parties with amounts exceeding the lower of NT\$100 million or 20 percent of capital stock as of December 31, 2020: None.
• I. Financial instruments and derivative transactions: None.
• J. Intercompany relationships and significant intercompany transactions: Please refer to Attachment 2.
• (2) Information on Investees
• A. Information regarding investee companies over which the Company can exercises significant influence or control: Please refer to Attachment 3.
• B. The following are additional disclosures for investee companies the Company has significant influence or control over:
  • (a) Financing provided to others for the year ended December 31, 2020: None.
  • (b) Endorsement/Guarantee provided to others for the year ended December 31, 2020: None.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• (c) Securities held as of December 31, 2020: None.
• (d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• (e) Acquisition of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• (f) Disposal of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• (g) Related party transactions for purchases and sales amounts exceeding the lower of NT\$100 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• (h) Receivables from related parties with amounts exceeding the lower of NT\$100 million or 20 percent of capital stock as of December 31, 2020: None.
• (i) Financial instruments and derivative transactions: None.
• (3) Investment in Mainland China Please refer to Attachment 4.
• (4) Main Shareholder Information Please refer to Attachment 5.

ATTACHMENT 1 (Securities held as of December 31, 2020) (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

						Balances as of December 31, 2020
	Securities Type	Marketable securities type and name	Relationship with the company	Financial statement account	Shares/Units	Carrying amount	Percentage of ownership (%)	Fair value	Note
SILICON INTEGRATED SYSTEMS CORPORATION Stocks		UNITED MICROELECTRONICS CORPORATION	The Company's director	Non-current financial assets at fair value through other comprehensive income	285,380	13,455,687	2.30%	13,455,687	None
	Stocks	Megawin Technology Co.,Ltd.	-	Non-current financial assets at fair value through other comprehensive income	2,610	48,676	6.81%	48,676	None
	Stocks	EpoStar Electronics (BVI) Corporation	-	Non-current financial assets at fair value through other comprehensive income	3,105	9,688	12.95%	9,688	None
	Stocks	Shieh Yong Investment Co., Ltd.	-	Non-current financial assets at fair value through other comprehensive income	127,182	2,059,527	16.67%	2,059,527	None
	Stocks	GLOBAL MOBILE CORP.	-	Non-current financial assets at fair value through other comprehensive income	5,400	-	1.96%	-	None
	Stocks	VADEM CORPORATION-Special shares	-	Non-current financial assets at fair value through other comprehensive income	269	-	-	-	None
	Stocks	TAIWAN IMPLANT TECHNOLOGY CO., LTD.	-	Non-current financial assets at fair value through other comprehensive income	1,328	8,009	7.96%	8,009	None
	Stocks	TC-1 Cuture Fund	-	Non-current financial assets at fair value through other comprehensive income	1,000	-	3.61%	-	None
	Stocks	ASIA PACIFIC MICROSYSTEMS, INC.	-	Non-current financial assets at fair value through other comprehensive income	7,218	116,136	15.37%	116,136	None
	Funds	Maxima Ventures Services V, Inc.	-	Non-current financial assets at fair value through other comprehensive income	16	-	4.84%	-	None

ATTACHMENT 2 (Intercompany relationships and significant intercompany transactions) (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

	Percentage of consolidated operating	revenues or consolidated total assets	(Note 3)	8.99%	0.05%	18.55%	0.04%	0.20%
Transactions			Term	-	-	-	-	-
			Amount	\$14,641	84	30,203	72	320
			Account	Operating expense	Operating expense	Revenue	Other revenue	Other revenue
	Relationship with	the Company	(Note 2)	1	1	1	1	1
			Counterparty	Shenzhen SiS Technology Co., Ltd.	Suzhou Mlight Electronics Co., Ltd.	Suzhou Mlight Electronics Co., Ltd.	Suzhou Mlight Electronics Co., Ltd.	HuiTong intelligence Company Limited
			Related Party	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation
		No.	(Note 1)	0	0	0	0	0

Note 1: The parent company and its subsidiaries are coded as follows:

• 1. The parent company is coded "0".
• 1. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2: Transactions are categorized as follows:

• 1. The parent company to subsidiary.
• 1. The subsidiary to parent company.
• 1. The subsidiary to subsidiary.

Note 3: When calculating the percentage of transaction amount to the consolidated revenues or the consolidated assets: Items of the balance sheets are calculated as its ending balance to total consolidated assets; items of income statement are calculated by its cumulative balance to the total consolidated income. ATTACHMENT 3 :(Names, locations and related information of investee companies as of December 31, 2020) (Not including investment in Mainland China) (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

				Original Investment Amount			Balance as of December 31, 2020
Investor company	Investee company	Address	Main businesses and products	balance Ending	Beginning balance	Number of shares	Percentage of ownership	Carrying amount	Net income (loss) of investee	income (loss) Investment recognized	Note
Silicon Integrated Systems Corporation	Mars Investments (SAMOA) Ltd.	SAMOA	General investing	\$172,499	\$151,880	5,587	100.00%	\$34,140	\$(29,563)	\$(29,563) Subsidiary
	HuiTong Intelligence Company Limited	Taipei City, Taiwan	Develop various AIOT products and provide integrated solutions	40,000	-	4,000	80.00%	37,512	(3,109)		(2,488) Subsidiary
	Waltop International Corporation	Hsinchu City, Taiwan	Tablet PC module, wireless pen input crystal and module	259,807	241,113	3,394	27.70%	2,486	(110,493)	(46,129)	using the equity accounted for The investee method
	Vxis Technology Corporation	Hsinchu City, Taiwan	Manufacturing of electronic parts	144,760	144,760	4,033	34.03%	45,247	10,113	3,442	using the equity accounted for The investee method
	Goaltop Technolog Corporation	Taoyuan City, Taiwan	Manufacturing and sales of electronic parts	114,000	114,000	9,000	27.55%	32,428	(73,404)	(21,923)	using the equity accounted for The investee method

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise) ATTACHMENT 4 (Investment in Mainland China as of December 31, 2020)

	Accumulated Inward	Remittance of Earnings	December 31, 2020 as of	\$-	\$-	\$-
			Carrying Value as of December 31, 2020	\$12,249	\$18,677	\$26,438
			Investment Income (Loss) Recognized	\$1,134	\$(23,959)	\$(4,294)
			Percentage of Ownership	100.00%	100.00%	38.57%
		Net Income (Loss)	of Investee Company	\$1,134	\$(23,959)	\$(10,867)
	Accumulated Outflow of	Investment from	December 31, 2020 Taiwan as of	\$8,296	\$119,934	\$30,112
Investment Flows			Inflow	\$-	\$-	\$-
			Outflow	\$-	\$14,691	\$30,112
	Accumulated Outflow of	Investment from	January 1, 2020 Taiwan as of	\$8,296	\$105,243	\$-
			Method of Investment	Mainland China through Indirectly investment in companies registered in a third region	Mainland China through Indirectly investment in companies registered in a third region	Investment China
			Total Amount of Paid-in Capital	\$9,320	\$119,934	\$30,112
			Main Businesses and Products	Electronics product technologies consultation and sales, and import and export business development, technical	Design, production and sales of various integrated circuits	manufacturing and software Electronics components development
			Investee Company	Shenzhen SiS Technology Co.,Ltd.	Suzhou Mlight Electronics Co.,Ltd.	Haining Jingqi Technology Co., Ltd.

Upper limit on investment	\$10,498,918
Investment amounts authorized by Investment Commission, MOEA	\$158,315
Accumulated investment in Mainland China as of December 30, 2020	\$158,315

ATTACHMENT 5 (The information of Major shareholder as of December 31, 2020)

%) wnership ( Percentage of o	% 19.01
Units/shares) mber of shares ( Nu	119,979,103
Shares me Na	N O ATI R O RP O NICS C ROELECTRO MIC D NITE U

SILICON INTEGRATED SYSTEMS CORPORATION 1. STATEMENT OF CASH AND CASH EQUIVALENTS As of December 31, 2020

Item	Description	Amount	Note
Petty Cash		\$ 431
Bank Deposits
Time deposits	NTD 607,000 thousand	607,000
Foreign currency	USD 1,222 thousand, exchange rate 1:28.48	34,807
	JPY 35 thousand, exchange rate 1:0.2763	10
	EUR 0.046 thousand, exchange rate 1:35.02	2
Savings		108,268
Checkings		144
Total		\$ 750,662

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

SILICON INTEGRATED SYSTEMS CORPORATION 2. STATEMENT OF TRADE RECEIVABLES As of December 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

Client	Description	Amount	Note
Trade receivables
Client A		\$ 5,523
Client B		5,038
Client C		4,848
Others	The amount of individual	1,606
	client in others does not
	exceed 5% of the account
	balance.
Subtotal		17,015
Less : allowance for doubtful debts		(292)
Net amount		16,723
Trade receivables-relate parties
Suzhou Mlight Electronics Co., Ltd.		11,249
Others		339
Subtotal		11,588
Total		\$ 28,311

SILICON INTEGRATED SYSTEMS CORPORATION 3. STATEMENT OF INVENTORIES As of December 31, 2020

			Amount
Item	Description	Cost	Fair Value	Note
Raw materials		\$ 139	\$ 96	Fair value is based on net realizable value
Work in process		58,685	89,478
Finished goods		81,149	36,189
Total		139,973	\$ 125,763
Less:allowance for
inventory valuation losses		(82,167)
Net Amount		\$ 57,806

(Amounts in Thousands of New Taiwan Dollars)

													(Amounts in Thousands of New Taiwan Dollars)
													Fair Value / Net Assets
		Beginning Balance	Acquisition		Disposal		Investment	Differences on Exchange			Ending Balance		Value
Shares			Shares		Shares		Income	Translation of		Shares			Unit Price	Total
(Thousands)		Amount	(Thousands)	Amount	(Thousands)	Amount	(Loss)	Foreign Operations	Others	(Thousands)	%	Amount	(dollars)	Amount	Collateral	Note
4,033		44,305 \$	-	- \$	-	(2,500) \$	3,442 \$	- \$	- \$	4,033	34.03%	45,247 \$	11.22	45,247 \$
3,812		31,143	1,869	18,694	(2,287)	-	(46,129)	-	(1,222)	3,394	27.70%	2,486	0.73	2,486
4,892		42,329	695	20,619	-	-	(29,563)	755	-	5,587	100.00%	34,140	6.11	34,140
9,000		45,333	-	-	-	-	(21,923)	-	9,018	9,000	27.55%	32,428	3.60	32,428
7,218		65,550	-	-	(7,218)	(65,550)	-	-	-	-	0.00%	-	-	-
	-	-	7,000	30,112	-	-	(4,294)	620	-	7,000	38.57%	26,438	3.78	26,438
	-	-	4,000	40,000	-	-	(2,488)	-	-	4,000	80.00%	37,512	9.38	37,512
		228,660		109,425		(68,050)	(100,955)	1,375	7,796			178,251
		6,294		-		-	(153)	-	-			6,141
		234,954 \$		109,425 \$		(68,050) \$	(101,108) \$	1,375 \$	7,796 \$			184,392 \$

SILICON INTEGRATED SYSTEMS CORPORATION 4. STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD For the year ended December 31, 2020

191

	Beginning Balance		Acquisition		Disposal		Adjustments		Ending Balance
Item	(Thousands) Shares	Fair Value	(Thousands) Shares	Amount	(Thousands) Shares	Amount		(Thousands) Shares	Fair Value	Collateral	Note
United Microelectronics Corporation	285,380	4,694,508 \$	-	- \$	-	- \$	8,761,179 \$	285,380	\$13,455,687
Megawin Technology Co.,Ltd.	3,610	43,500	-	-	(1,000)	(19,550)	24,726	2,610	48,676
Shieh Yong Investment Co., Ltd.	127,182	884,363	-	-	-	-	1,175,164	127,182	2,059,527
Global Mobile Corp.	5,400	-	-	-	-	-	-	5,400	-
Vadem Corporation-Special shares	269	-	-	-	-	-	-	269	-
Taiwan Implant Technology Co., Ltd.	1,328	4,728	-	-	-	-	3,281	1,328	8,009
EpoStar Electronics (BVI) Corporation	3,105	6,397	-	-	-	-	3,291	3,105	9,688
TC-1 Cuture Fund	1,000	7	-	-	-	-	(7)	1,000	-
Maxima Ventures Services V, Inc.	16	-	-	-	-	-	-	16	-
Asia Pacific Microsystems, Inc.	-	-	7,218	58,393	-	-	57,743	7,218	116,136
Total		5,633,503 \$		58,393 \$		(19,550) \$	10,025,377 \$		15,697,723 \$

SILICON INTEGRATED SYSTEMS CORPORATION 5. STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NONCURRENT For the year ended December 31, 2020

192

SILICON INTEGRATED SYSTEMS CORPORATION 6. STATEMENT OF COST OF PROPERTY, PLANT EQUIPMENT AND INTANGIBLE ASSETS As of December 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

Item	Description	Amount	Note
Property, Plant and Equipment		\$742,862	Please refer to Note 6(7) of the financial statements.
Intangible Assets		\$5,764	Please refer to Note 6(8) of the financial statements.

SILICON INTEGRATED SYSTEMS CORPORATION 7. RIGHT-OF-USE ASSETS

As of December 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

Item	Beginning Balance		Acquisition		Disposal	Ending Balance
Cost
Buildings and facilities	\$	3,046	\$	-	\$ (2,825)	\$ 221
Machinery equipment		186		-	-	186
Office equipment		350		-	-	350
Total		3,582		-	(2,825)	757
Depreciation
Buildings and facilities		1,113		828	(1,769)	172
Machinery equipment		59		61	-	120
Office equipment		102		102	-	204
Total		1,274		991	(1,769)	496
Book value		\$2,308		\$(991)	\$ (1,056)	\$261

SILICON INTEGRATED SYSTEMS CORPORATION 8. STATEMENT OF ACCOUNTS PAYABLES As of December 31, 2020

Supplier	Description	Amount	Note
Vendor
Vendor A		\$ 2,844
Vendor B		2,583
Vendor C		1,604
Vendor D		1,584
Others	The amount of individual	1,655
	vendor in others does not
	exceed 5% of the account
	balance.
Subtotal		\$ 10,270
Accounts payables - related parties
United Microelectronics Corpration		\$ 6,130
Total		\$ 16,400

SILICON INTEGRATED SYSTEMS CORPORATION 9. STATEMENT OF OTHER PAYABLES As of December 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

Item	Description	Amount	Note
Personnel		\$ 20,743
Accrued expenses		8,284
Other accrued expenses-other		1,968
Others	The amount of individual	4,975
	item in others does not
	exceed 5% of the account
	balance.
Total		\$ 35,970

ES TI LI BI mber 31, 2020 A E LI AS E OF L Dece NT As of E M E AT T 10. S

(Amounts in Thousands of New Taiwan Dollars)

m Ite	m Lease Ter	Discount rate	Balance Ending	Note
Buildings and facilities	~2021/07/31 2019/08/01	% 3.58	52
ment Machinery equip	2019/01/16~2021/01/31	% 3.58	68
ment Office equip	~2022/05/31 2017/06/01	% 3.58	150
Total			270 \$	Note 1

NOTE 1:Includes current portion of lease liabilities of NT\$220 thousand.

SILICON INTEGRATED SYSTEMS CORPORATION 11. STATEMENT OF NET SALES For the year ended December 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

Item	Units	Amount	Note
Sales revenues
IC	6,921 thousand units	\$139,267
Less: sales returns and discounts		(2,646)
Net operating revenues		\$ 136,621

SILICON INTEGRATED SYSTEMS CORPORATION 12. STATEMENT OF OPERATING COSTS For the year ended December 31, 2020

Item	Description	Amount	Note
Direct material
Beginning of year		\$ 277
Add: raw material purchased		34,879
Transfer to expenses		892
Less: Raw material, end of year		(139)
Direct material uesd		35,909
Manufacturing Expenses		16,244
Processing cost		34,757
Manufacturing Costs		86,910
Add: Work in process, beginning of year		44,450
Work in process purchased		14,085
Less: Work in process, end of year		(58,685)
Transfer to expenses		(727)
Cost of Finished Goods		86,033
Add: Finished goods, beginning of year		91,106
Finished goods purchased		2,848
Less: Finished goods, end of year		(81,149)
Other		(1,443)
Loss as a result of the net realized value of		1,996
inventory being lower than its cost
Total Operating Costs		\$ 99,391

(Amounts in Thousands of New Taiwan Dollars)

SILICON INTEGRATED SYSTEMS CORPORATION 13. STATEMENT OF SELLING EXPENSES For the year ended December 31, 2020

		(Amounts in Thousands of New Taiwan Dollars)
--	--	----------------------------------------------	--

Item	Description	Amount	Note
Payroll expense		\$ 17,289
Others	The amount of individual	4,704
	item in others does not
	exceed 5% of the account
	balance.
Total		\$ 21,993

SILICON INTEGRATED SYSTEMS CORPORATION 14. STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES For the year ended December 31, 2020

Item	Description	Amount	Note
Payroll expense		\$ 68,269
Professional service expense		8,473
Taxes		5,765
Repairs and maintenance		5,687
Others	The amount of individual	17,617
	item in others does not
	exceed 5% of the account
Total	balance.	\$ 105,811

(Amounts in Thousands of New Taiwan Dollars)

SILICON INTEGRATED SYSTEMS CORPORATION 15. STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES For the year ended December 31, 2020

Item	Summary	Amount	Note
Payroll expense		\$ 219,537
Repairs and maintenance		22,794
Professional service expense		16,271
Others	The amount of individual	64,903
	item in others does not
	exceed 5% of the account
	balance.
Total		\$ 323,505

(Amounts in Thousands of New Taiwan Dollars)

Feature				A (	Ne mounts in Thousands of	Dollars) wan w Tai
		For the year ended Dece	mber 31, 2020		For the year ended Dece	mber 31, 2019
Nature	Operating Costs	Operating Expenses	Total	Operating Costs	Operating Expenses	Total
mployee benefits expense E	Please refer to
Payroll	6(17)
Labor and health inscurauce
Pension
mpensation Board co
Others
Depreciation
mortization A

16.STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION, AND AMORIZATION EXPENSES For the year ended December 31, 2020

SILICON INTEGRATED SYSTEMS CORPORATION

VII. Consolidated Financial Statements

Silicon Integrated Systems Corp. And Subsidiaries Consolidated Financial Statements With Report of Independent Accountants For The Years Ended December 31, 2020 and 2019

English Translation of a Report and Financial Statements Originally Issued in Chinese

SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Address: No.180, Sec. 2, Gongdao 5th Rd., Hsinchu City, Taiwan R.O.C. Telephone: 886-3-516-6000

Notice to Readers

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

REPRESENTATION LETTER

The entities included in the consolidated financial statements as of December 31, 2020 and for the year then ended prepared under the International Financial Reporting Standards, No.10 are the same as the entities to be included in the combined financial statements of the Company, if any to be prepared, pursuant to the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises (referred to as "Combined Financial Statements"). Also, the footnotes disclosed in the Consolidated Financial Statements have fully covered the required information in such Combined Financial Statements. Accordingly, the Company did not prepare any other set of Combined Financial Statements than the Consolidated Financial Statements.

Very truly yours,

Silicon Integrated Systems Corporation

Chairman: Louis Chien

March 17, 2021

Independent Auditors' Report

To Silicon Integrated Systems Corporation

Opinion

We have audited the accompanying consolidated balance sheets of Silicon Integrated Systems Corporation and its subsidiaries ("the Company") as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2020 and 2019, and notes to the consolidated financial statements, including the summary of significant accounting policies (together "the consolidated financial statements").

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Matter – Making Reference to the Audits of Component Auditors section of our report), the consolidated financial position of the Company as of December 31, 2020 and 2019, and their consolidated financial performance and cash flows for the years ended December 31, 2020 and 2019, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed and became effective by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the reposts of other auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2020 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition

The Company recognized NT\$160,171 thousand as net sales for the year ended December 31, 2020. Sales of products is the main operating activity of the Company. Its sales regions include not only Taiwan but also Asia and other regions. Trade terms of sales of products under each sales order may be different. It is necessary for the Company to judge and determine the performance obligations and the timing of its satisfaction under each sales order. As a result, we determined the matter to be a key audit matter.

Our audit procedures include (but are not limited to) evaluating and testing the effectiveness of internal control which is related to the timing of revenue recognition; assessing the appropriateness of the accounting policy for revenue recognition; performing test of details on samples selected; tracing to relevant documentation of transactions, reviewing the significant terms of sales orders and agreements, identifying the performance obligations of the sales orders and agreements and timing of its satisfaction, performing cutoff procedures and reviewing sales allowance after the reporting date. Please refer to Note 4 and Note 6 in notes to the consolidated financial statements.

Non-financial asset impairment

The Company's book value of property, plant and equipment amounted to NT\$749,534 thousand as of December 31, 2020, representing 4% of total assets. As there existed an impairment indicator of the Company's cash-generating unit, the Company performed an impairment testing on the cashgenerating unit. After performing the testing, the Company concludes that the cash-generating unit's net fair value is higher than its carrying amount and therefore no impairment loss is recognized. Since the estimate of net fair value involves management's judgements and subjective assumptions, we determined the matter to be a key audit matter.

Our audit procedures include (but are not limited to) understanding and evaluating the management process related to assets impairment recognition and measurement, evaluating the reasonableness of the property, plant and equipment appraisal report, reviewing the calculation of the fair value of property, plant and equipment which is adopting the comparative method, and inspecting the evidence of the Company's ownership of the perperty.

Please refer to Note 5 and Note 6 in notes to the consolidated financial statements.

Other Matter – Making Reference to the Audits of Component Auditors

We did not audit the financial statements of certain consolidated subsidiaries, whose statements reflected total assets in the amount of NT\$56,463 thousand, constituting 0% of the consolidated total assets as of December 31, 2020; and total operating revenues in the amount of NT\$2,625 thousand, constituting 2% of the consolidated operating revenues for the year ended December 31, 2020. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors.

We did not audit the financial statements of certain associates and joint ventures accounted for under the equity method whose statements are based solely on the reports of other auditors. The investment in these associates and joint ventures under equity method amounted to NT\$106,599 thousand and NT\$186,331 thousand, representing 1% and 2% of the consolidated total assets as of December 31, 2020 and 2019, respectively. The related shares of losses from the associates and joint ventures under the equity method amounted to NT\$68,904 thousand and NT\$60,566 thousand, representing 27% and 28% of the consolidated net loss before tax for the years ended December 31, 2020 and 2019, respectively.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

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

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

Those charged with governance, including audit committee, are responsible for overseeing the financial reporting process of the Company.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

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

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2020 consolidated financial statements and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Others

We have audited and expressed an unqualified opinion on the parent company only financial statements of Silicon Integrated Systems Corporation as of and for the years ended December 31, 2020 and 2019.

Kuo, Shao-Pin

Hsu, Hsin-Min

Ernst & Young, Taiwan

March 17, 2021

Notice to Readers

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying 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, Ernst & Young 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.

SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES English Translation of the Consolidated Financial Statements Originally Issued in Chinese

CONSOLIDATED BALANCE SHEETS

As of December 31, 2020 and 2019 (Amounts in thousands of New Taiwan Dollars)

ASSETS	Notes	December 31, 2020	%	December 31, 2019	%
Current assets
Cash and cash equivalents	4, 6(1)	819,360 \$	5	971,613 \$	13
Financial assets measured at amortized cost-current	4, 6(3), 12	9,605	-	9,585	-
Trade receivables, net	4, 6(4), 6(12), 12	21,306	-	29,007	-
Trade receivables-related parties, net	4, 6(4), 6(12), 7	2,631	-	-	-
Other receivables	12	22,066	-	925	-
Inventories, net	4, 6(5)	73,127	1	71,910	1
Prepayments		4,583	-	3,460	-
Other current assets		4,767	-	6,645	-
Total current assets		957,445	6	1,093,145	14
Non-current assets
Financial assets at fair value through other comprehensive income-noncurrent	4, 6(2)	15,697,723	89	5,633,503	72
Investments accounted for using the equity method	4, 6(6)	106,599	1	186,331	2
Property, plant and equipment	4, 6(7)	749,534	4	756,976	10
Right-of-use assests	4, 6(13)	15,026	-	4,792	-
Intangible assets	4, 6(8)	7,054	-	7,045	-
Deferred tax assets	4, 5, 6(17)	-	-	43,513	1
Prepayment for equipment		705	-	31	-
Refundable deposits	12	2,659	-	1,441	-
Net defined benefit assets-noncurrent	4, 5, 6(9)	57,364	-	51,878	1
Total non-current assets		16,636,664	94	6,685,510	86
Total assets		17,594,109 \$	100	7,778,655 \$	100

English Translation of the Consolidated Financial Statements Originally Issued in Chinese SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of New Taiwan Dollars) As of December 31, 2020 and 2019

LIABILITIES AND EQUITY	Notes	December 31, 2020	%	December 31, 2019	%
Current liabilities
Accounts payable	12	10,270	-	6,108	-
Accounts payable-related parties	7, 12	6,130	-	8,175	-
Other payables	12	41,258	-	47,139	1
Payables on equipment		1,706	-	-	-
Lease liabilities-current	4, 6(13), 12	8,293	-	3,649	-
Other current liabilities		2,988	-	3,255	-
Refund liabilities		3,214	-	7,790	-
Total current liabilities		73,859	-	76,116	1
Non-current liabilities
Deferred tax liabilities	4, 5, 6(17)	2,487	-	2,535	-
Lease liabilities-noncurrent	4, 6(13), 12	6,783	-	1,069	-
Guarantee deposits	12	3,405	-	3,427	-
Total non-current liabilities		12,675	-	7,031	-
Total liabilities		86,534	-	83,147	1
Equity
Share capital	6(10)
Common stock		6,309,675	36	5,540,625	71
Capital surplus	4,6(10)	85,807	1	6,445	-
Retained earnings	6(10)
Legal reserve		143,742	1	-	-
Special reserve		2,878,280	16	4,576,364	59
Unappropriated earnings		935,441	5	633,194	8
Other equity		7,145,252	41	(2,878,280)	(37)
Treasury stock	4,6(10)	-	-	(182,840)	(2)
Equity attributable to owners of the parent		17,498,197	100	7,695,508	99
Non-controlling interests	4	9,378	-	-	-
Total equity		17,507,575	100	7,695,508	99
Total liabilities and equity		17,594,109 \$	100	7,778,655 \$	100

English Translation of the Consolidated Financial Statements Originally Issued in Chinese SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2020 and 2019

(Amounts in thousands of New Taiwan Dollars, except for earnings per share)

				For the years ended December 31
Description	Notes	2020	%	2019	%
Net sales	4, 5, 6(11), 14	160,171 \$	100	222,952 \$	100
Operating costs	6(5), 6(13), 6(14), 7	(115,036)	(72)	(136,063)	(61)
Gross profit		45,135	28	86,889	39
Operating expenses	6(12), 6(13), 6(14), 7
Selling expenses		(41,542)	(26)	(27,775)	(12)
General and administrative expenses		(120,040)	(75)	(96,661)	(43)
Research and development expenses		(325,022)	(203)	(316,624)	(142)
Expected credit losses		(5,905)	(3)	(1,405)	(1)
Total operating expenses		(492,509)	(307)	(442,465)	(198)
Operating loss		(447,374)	(279)	(355,576)	(159)
Non-operating income and expenses	4, 6(6), 6(15)
Interest income		3,316	2	6,063	3
Other income		266,612	166	196,616	87
Other gains and losses		(10,025)	(6)	(3,463)	(2)
Finance costs		(195)	-	(259)	-
Share of profit or loss of subsidiaries, associates, and joint ventures accounted for using equity method		(68,904)	(43)	(60,566)	(27)
Total non-operating income and expenses		190,804	119	138,391	61
Income before income tax		(256,570)	(160)	(217,185)	(98)
Income tax expense	4, 5, 6(17)	(43,520)	(27)	(7,506)	(3)
Net income		(300,090)	(187)	(224,691)	(101)
Other comprehensive income	6(16)
Items that will not be reclassified subsequently to profit or loss
Remeasurements of defined benefit pension plans	6(9)	5,465	3	1,291	1
Unrealized gains or losses from equity instrument investments measured at fair value through other comprehensive income		10,025,377	6,259	1,658,768	744
Remeasurements of defined benefit pension plans of subsidiaries, associates and joint ventures accounted for using equity method		-	-	2,818	1
Items that may be reclassified subsequently to profit or loss
Exchange differences resulting from translating the financial statements of foreign operations		1,375	1	(764)	-
Other comprehensive income, net of tax		10,032,217	6,263	1,662,113	746
Total comprehensive income		9,732,127 \$	6,076	1,437,422 \$	645
Net income for the periods attributable to :
Owners of the parent		\$(299,468)	(187)	\$(224,691)	(101)
Non-controlling interests		(622)	-	-	-
		\$(300,090)	(187)	\$(224,691)	(101)
Total comprehensive income for the periods attributable to :
Owners of the parent		\$9,732,749	6,076	\$1,437,422	645
Non-controlling interests		(622)	-	-	-
		\$9,732,127	6,076	\$1,437,422	645
Basic Earnings Per Share (in New Taiwan Dollars) Earnings per share (NTD)	6(18)	(0.47) \$		(0.37) \$
Diluted Earnings Per Share (in New Taiwan Dollars)		(0.47) \$		(0.37) \$

English Translation of the Consolidated Financial Statements Originally Issued in Chinese SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended December 31, 2020 and 2019

(Amounts in thousands of New Taiwan Dollars)

					Equity attributable to owners of the parent
				Retained earnings			Other equity
					Undistributed	Exchange differences financial statements resulting from translating the	losses from financial other comprehensive Unrealized gains or assets measured at fair value through		to owners of attributable Equity	Non-controlling
Description Balance as of January 1, 2019	Common stock 5,600,625 \$	Capital surplus 16,268 \$	- Legal reserve \$	Special reserve - \$	5,470,220 earnings \$	(5,202) of foreign operations \$	(4,571,162) income \$	(220,660) Treasury stock \$	6,290,089 the parent \$	- interests \$	6,290,089 Total equity \$
Appropriation and distribution of 2018 retained earnings Special reserve	-	-	-	4,576,364	(4,576,364)	-	-	-	-	-	-
Share of changes in associates and joint ventures accounted for Other changes in capital surplus using equity method	-	(2,598)	-	-	-	-	-	-	(2,598)	-	(2,598)
Other comprehensive income (loss) for the year ended December 31, 2019 Net loss for the year ended December 31, 2019	- -	- -	- -	- -	(224,691) 4,109	(764) -	1,658,768 -	- -	(224,691) 1,662,113	- -	(224,691) 1,662,113
Total comprehensive income (loss)	-	-	-	-	(220,582)	(764)	1,658,768	-	1,437,422	-	1,437,422
Disposal of equity instruments investments measured at fair value Treasury stock cancelled Treasury stock acquired	(60,000) - -	(7,225) - -	- - -	- - -	(40,080) - -	- - -	40,080 - -	(29,405) 67,225 -	(29,405) - -	- - -	(29,405) - -
through other comprehensive income Balance as of December 31, 2019	5,540,625 \$	6,445 \$	- \$	4,576,364 \$	633,194 \$	(5,966) \$	(2,872,314) \$	(182,840) \$	7,695,508 \$	- \$	7,695,508 \$
Balance as of January 1, 2020	5,540,625 \$	6,445 \$	- \$	4,576,364 \$	633,194 \$	(5,966) \$	(2,872,314) \$	(182,840) \$	7,695,508 \$	- \$	7,695,508 \$
Appropriation and distribution of 2019 retained earnings Legal reserve	-	-	143,742	-	(143,742)	-	-	-	-	-	-
Cash dividends Special reserve	-	-	-	(1,698,084)	(192,262) 1,698,084	-	-	-	-	-	-
Share dividends	- 769,050	- -	- -	- -	(769,050)	- -	- -	- -	(192,262) -	- -	(192,262) -
Share of changes in associates and joint ventures accounted for Other changes in capital surplus using equity method	-	7,796	-	-	-	-	-	-	7,796	-	7,796
Net loss for the year ended December 31, 2020	-	-	-	-	(299,468)	-	-	-	(299,468)	(622)	(300,090)
Other comprehensive income (loss) for the year ended December 31, 2020	-	-	-	-	5,465	1,375	10,025,377	-	10,032,217	-	10,032,217
Total comprehensive income (loss)	-	-	-	-	(294,003)	1,375	10,025,377	-	9,732,749	(622)	9,732,127
Treasury stock acquired	-	71,160	-	-	-	-	-	182,840	254,000	-	254,000
Disposal of equity instruments investments measured at fair value	-	-	-	-	3,220	-	(3,220)	-	-	-	-
through other comprehensive income Non-controlling Interests Others	- -	406 -	- -	- -	- -	- -	- -	- -	- 406	10,000 -	406 10,000
Balance as of December 31, 2020	6,309,675 \$	85,807 \$	143,742 \$	2,878,280 \$	935,441 \$	(4,591) \$	7,149,843 \$	- \$	17,498,197 \$	9,378 \$	17,507,575 \$

CONSOLIDATED STATEMENTS OF CASH FLOWS English Translation of the Consolidated Financial Statements Originally Issued in Chinese (Amounts in thousands of New Taiwan Dollars) For the years ended December 31, 2020 and 2019 SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES

	For the years ended December 31
Description	2020	2019
Cash flows from operating activities :
Net income before tax	\$ (256,570)	\$ (217,185)
Adjustments for:
The profit or loss items which did not affect cash flows:
Depreciation	21,736	20,056
Amortization	1,857	1,234
Expected credit gains	5,905	1,405
Interest expenses	195	259
Interest income	(3,316)	(6,063)
Dividend income	(236,400)	(168,344)
Share-based payment	71,200	-
Share of profit or loss of subsidiaries, associates, and joint ventures accounted for using the equity method	68,904	60,566
Gain on disposal of property, plant and equipment	468	(144)
Losses on disposal of investments	7,157	-
Others	(33)	-
Changes in operating assets and liabilities:
Notes receivables	-	299
Trade receivables	1,669	(1,039)
Trade receivables-related parties	(2,631)	3,000
Other receivables	(643)	(566)
Other receivables-related parties	-	4
Inventories	(1,217)	13,004
Prepayments	(1,123)	7,440
Other current assets	1,878	1,939
Other operating assets	(21)	(221)
Accounts payable	4,162	(7,761)
Accounts payable-related parties	(2,045)	3,903
Other payables	(5,881)	(12,718)
Other current liabilities	(4,843)	822
Cash generated from operating activities	(329,592)	(300,110)
Interest received	3,411	5,814
Income tax paid	(20,648)	(108)
Net cash used in operating activities	(346,829)	(294,404)
Cash flows from investing activities :
Acquisition of financial assets at fair value through other comprehensive income	-	(5,877)
Proceeds from disposal of financial assets at fair value through other comprehensive income	19,550	42,986
Acquisition of financial assets measured at amortized cost	(20)	(19)
Acquisition of investments accounted for using the equity method	(48,807)	(48,958)
Acquisition of property, plant and equipment	(10,055)	(10,868)
Proceeds from disposal of property, plant and equipment	1,522	162
Decrease (increase) in refundable deposits	(1,218)	(277)
Acquisition of intangible assets	(1,872)	(1,437)
Decrease in long-term lease receivable	-	13,881
Increase in prepaid equipment	(674)	(31)
Dividend received	238,900	170,360
Net cash provided by investing activities	197,326	159,922
Cash flows from financing activities :
Increase in guarantee deposits	(22)	100
Cash payment for the principle portion of lease liabilities	(4,499)	(4,909)
Cash dividends	(192,262)	-
Treasury stock acquired	-	(29,405)
Treasury stock sold to employees	182,800	-
Change in non-controlling interests	10,000	-
Others	406	-
Net cash used in financing activities	(3,577)	(34,214)
Effect of changes in exchange rate on cash and cash equivalents	827	(997)
Net decrease in cash and cash equivalents	(152,253)	(169,693)
Cash and cash equivalents at the beginning of the year	971,613	1,141,306
Cash and cash equivalents at the end of the year	\$ 819,360	\$ 971,613

English Translation of Financial Statements Originally Issued in Chinese SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

1. HISTORY AND ORGANIZATION

Silicon Integrated Systems Corporation ("The Company") was incorporated in August 26, 2006. The Company primarily engages in the R&D, production, manufacturing and selling of integrated circuits and the related components, system products, design of the integrated circuits, testing and assembly service of I/O precision packaging, and import and export business for the aforementioned products. On august, 1997, the shares of the Company were listed on the Taiwan Stock Exchange. The Company's registered office and the main business location is at No. 180, Sec. 2, Gongdao 5th Rd., Hsinchu City, Taiwan (R.O.C.)

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

The consolidated financial statements were authorized for issue in accordance with the resolution of the Board of Directors' meeting on March 17, 2021.

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission ("FSC") and become effective for annual periods beginning on or after January 1, 2020. Apart from the nature and the impact of the new standards and amendments which are described below, all other standards and interpretations of initial application have no material impact on the Company:

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board ("IASB") and endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date
		Issued by IASB
a	Interest Rate Benchmark Reform - Phase 2 (Amendments	January 1, 2021
	to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

(a) Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

The final phase amendments mainly relate to the effects of the interest rate benchmark reform on the companies' financial statements:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• A. A company will not have to derecognise or adjust the carrying amount of financial instruments for changes to contractual cash flows as required by the reform, but will instead update the effective interest rate to reflect the change to the alternative benchmark rate;
• B. A company will not have to discontinue its hedge accounting solely because it makes changes required by the reform, if the hedge meets other hedge accounting criteria; and
• C. A company will be required to disclose information about new risks arising from the reform and how it manages the transition to alternative benchmark rates.

The abovementioned amendments that are applicable for annual periods beginning on or after January 1, 2021 have no material impact on the Company.

(3) Standards or interpretations issued, revised or amended, by International Accounting Standards Board ("IASB") which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations	Effective Date
		Issued by IASB
a	IFRS 10 "Consolidated Financial Statements" and IAS 28	To be determined
	"Investments in Associates and Joint Ventures" — Sale or	by IASB
	Contribution of Assets between an Investor and its
	Associate or Joint Ventures
b	IFRS 17 "Insurance Contracts"	January 1, 2023
c	Classification of Liabilities as Current or Non-current –	January 1, 2023
	Amendments to IAS 1
d	Narrow-scope amendments of IFRS, including	January 1, 2022
	Amendments to IFRS 3, Amendments to IAS 16,
	Amendments to IAS 37 and the Annual Improvements
e	Disclosure Initiative - Accounting Policies – Amendments	January 1, 2023
	to IAS 1
f	Definition of Accounting Estimates – Amendments to IAS	January 1, 2023
	8

(a) IFRS 10 "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures" - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The amendments address the inconsistency between the requirements in IFRS 10 and IAS 28, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of nonmonetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint venture. IFRS 10 requires full profit or loss recognition on the loss of control of a subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 "Business Combinations" between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors' interests in the associate or joint venture.

(b) IFRS 17 "Insurance Contracts"

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

• (1) estimates of future cash flows;
• (2) discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows; and
• (3) a risk adjustment for non-financial risk.

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(c) Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

• (d) Narrow-scope amendments of IFRS, including Amendments to IFRS 3, Amendments to IAS 16, Amendments to IAS 37 and the Annual Improvements
• A. Updating a Reference to the Conceptual Framework (Amendments to IFRS 3) The amendments updated IFRS 3 by replacing a reference to an old version of the Conceptual Framework for Financial Reporting with a reference to the latest version, which was issued in March 2018. The amendments also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential "day 2" gains or losses arising for liabilities and contingent liabilities. Besides, the amendments clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Conceptual Framework.
• B. Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)

The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.

C. Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37) The amendments clarify what costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

D. Annual Improvements to IFRS Standards 2018 – 2020

Amendment to IFRS 1

The amendment simplifies the application of IFRS 1 by a subsidiary that becomes a first-time adopter after its parent in relation to the measurement of cumulative translation differences.

Amendment to IFRS 9 Financial Instruments

The amendment clarifies the fees a company includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability.

Amendment to Illustrative Examples Accompanying IFRS 16 Leases

The amendment to Illustrative Example 13 accompanying IFRS 16 modifies the treatment of lease incentives relating to lessee's leasehold improvements.

Amendment to IAS 41

The amendment removes a requirement to exclude cash flows from taxation when measuring fair value thereby aligning the fair value measurement requirements in IAS 41 with those in other IFRS Standards.

(e) Disclosure Initiative - Accounting Policies – Amendments to IAS 1

The amendments improve accounting policy disclosures that to provide more useful information to investors and other primary users of the financial statements.

(f) Definition of Accounting Estimates – Amendments to IAS 8

The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to help companies distinguish changes in accounting estimates from changes in accounting policies.

The abovementioned standards and interpretations issued by IASB have not yet been endorsed by FSC at the date when the Company's financial statements were authorized for issue, the local effective dates are to be determined by FSC. The remaining new or amended standards and interpretations have no material impact on the Company.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers ("the Regulations") and TIFRS as endorsed by FSC.

(2) Basis of Preparation

The accompanying consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The accompanying consolidated financial statements are expressed in thousands of New Taiwan Dollars ("NT\$") unless otherwise stated.

(3) Basis of Consolidation

Preparation principle of the consolidated financial statements

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if and only if the Company has:

• A. power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);
• B. exposure, or rights, to variable returns from its involvement with the investee; and
• C. the ability to use its power over the investee to affect its returns.

When the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

A. the contractual arrangement with the other vote holders of the investee;

• B. rights arising from other contractual arrangements;
• C. the Company's voting rights and potential voting rights.

The Company re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Company obtains control, and continue to be consolidated until the date the Company ceases to control subsidiary. The financial statements of the subsidiaries are prepared for the same reporting period with the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If the Company loses control of a subsidiary, it:

• A. derecognizes the assets (including goodwill) and liabilities of the subsidiary;
• B. derecognizes the carrying amount of any non-controlling interest;
• C. recognizes the fair value of the consideration received;
• D. recognizes the fair value of any investment retained;
• E. recognizes any surplus or deficit in profit or loss; and
• F. reclassifies the parent's share of components previously recognized in other comprehensive income to profit or loss.

Percentage of Ownership Investor Subsidiary Business nature

The consolidated entities are listed as follows:

			December 31,	December 31,
Investor	Subsidiary	Business nature	2020	2019
SIS	Mars Investments (SAMOA) Ltd.	General investing	100.00%	100.00%
SIS	HuiTong Intelligence Co., Ltd.	Develop various AIOT products and provide integrated solutions	80.00%	-
Mars Investments (SAMOA) Ltd.	Shenzhen SiS Technology Co., Ltd.	Marketing and technical service business	100.00%	100.00%
Mars Investments (SAMOA) Ltd.	Suzhou Mlight Electronics Co., Ltd.	Design, production, and sales integrated circuits	100.00%	100.00%

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Note:

HuiTong Intelligence Co., Ltd. was incorporated on September 15 ,2020.

(4) Foreign Currency Transactions

The Company's consolidated financial statements are presented in NT\$, which is also the parent company's functional currency. Each entity in the Company determines its functional currency upon its primary economic environment and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Company's entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

• A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
• B. Foreign currency items within the scope of IFRS 9 "Financial Instruments" are accounted for based on the accounting policy for financial instruments.
• C. Exchange differences arising on a monetary item that forms part of a reporting entity's net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(5) Translation of Financial Statements in Foreign Currency

Each foreign operation of the Company determines its functional currency upon its primary economic environment and items included in the financial statements of each operation are measured using that functional currency. The assets and liabilities of foreign operations are translated into New Taiwan Dollars at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. On the partial disposal of foreign operations that results in a loss of control, loss of significant influence or joint control but retaining partial equity is considered a disposal.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is adjusted in "investments accounted for using the equity method". In partial disposal of an associate or jointly controlled entity that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(6) Current and Non-Current Distinction

An asset is classified as current when:

• A. The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle.
• B. The Company holds the asset primarily for the purpose of trading.
• C. The Company expects to realize the asset within twelve months after the reporting period.
• D. The asset is cash or cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

All other assets are classified as non-current.

A liability is classified as current when:

• A. The Company expects to settle the liability in its normal operating cycle.
• B. The Company holds the liability primarily for the purpose of trading.
• C. The liability is due to be settled within twelve months after the reporting period.
• D. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

(7) Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, (including time deposits with original maturities of three months or less).

(8) Financial Instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities within the scope of IFRS 9 "Financial Instruments" are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of:

• (a) the Company's business model for managing the financial assets and
• (b) the contractual cash flow characteristics of the financial asset.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

• (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
• (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• (a) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
• (b) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

• (a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
• (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income is described as below:

• (a) A gain or loss on a financial asset measured at fair value through other comprehensive income is recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
• (b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
• (c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
• (i) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.
• (ii) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, at initial recognition, the Company makes an irrevocable election to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies. Amounts presented in other comprehensive income are not subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and should be recorded as financial assets measured at fair value through other comprehensive income on balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Financial assets measured at fair value through profit or loss

Financial assets were measured at amortized cost or measured at fair value through other comprehensive income only if they met particular conditions. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement are recognized in profit or loss which includes any dividend or interest received on such financial assets.

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial assets measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and does not reduce the carrying amount in the statement of financial position.

The Company measures expected credit losses of a financial instrument in a way that reflects:

• (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
• (b) the time value of money; and
• (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measured as follows:

(a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance for a financial asset at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that condition is no longer met.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• (b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
• (c) For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
• (d) For financing lease receivable arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has been increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

• (a) The rights to receive cash flows from the asset have expired.
• (b) The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
• (c) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

A financial liability is classified as held for trading if:

• (a) It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term.
• (b) On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or
• (c) It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

• (a) it eliminates or significantly reduces a measurement or recognition inconsistency; or
• (b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the company is provided internally on that basis to the key management personnel.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Gains or losses on the subsequent measurement of liabilities held for trading including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(9) Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• A. in the principal market for the asset or liability; or
• B. in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques which are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(10)Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials — Purchase cost on first in first out.

Finished goods and work in progress — Stated at standard cost and the cost difference is allocated to the cost of goods sold and the inventory at the end of the period at the checkout, so that it is close to the weighted average cost valuation.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 but not within the scoping of inventories.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(11)Investments accounted for using the equity method

An associate is an entity over which the Company has significant influence. A joint venture is a type of joint arrangement whereby the Company that has joint control of the arrangement has rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company's share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company's related interest in the associate or joint venture.

When changes in the net assets of an associate or joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Company's percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro rata basis.

When the associate or joint venture issues new shares, and the Company's interest in an associate or joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in capital surplus and investments accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 "Investments in Associates and Joint Ventures". If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the 'share of profit or loss of an associate' in the statement of comprehensive income in accordance with IAS 36 "Impairment of Assets". In determining the value in use of the investment, the Company estimates:

• (1)Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate or joint venture and the proceeds on the ultimate disposal of the investment; or
• (2)The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for goodwill impairment testing in IAS 36 "Impairment of Assets".

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss.

(12)Property, Plant and Equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment loss, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognizes such parts as individual assets with specific useful lives and depreciation. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 "Property, plant and equipment". When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings and facilities	3-50 years
Machinery equipment	3-5 years
Transportation equipment	5 years
Office equipment	3-5 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(13)Leases

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

• A. the right to obtain substantially all of the economic benefits from use of the identified asset; and
• B. the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximizing the use of observable information.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

• A. fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• B. variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
• C. amounts expected to be payable by the lessee under residual value guarantees;
• D. the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
• E. payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortized cost basis, which is increasing the carrying amount to reflect interest on the lease liability by using an effective interest method; and reducing the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

• A. the amount of the initial measurement of the lease liability;
• B. any lease payments made at or before the commencement date, less any lease incentives received;
• C. any initial direct costs incurred by the lessee; and
• D. an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

For subsequent measurement of the right-of-use asset, the Company measures the right-ofuse asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use assets applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 "Impairment of Assets" to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and presents interest expense separately from the depreciation charge associated with those leases in the consolidated income statement.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

The Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(14)Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortized over the useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and is treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the CGU level. The assessment of indefinite useful life is reviewed annually to determine whether the indefinite useful life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are recognized in other operating income and expenses.

Research and development costs

Research costs are expensed as incurred. Development expenditures, on an individual project, are recognized as an intangible asset when the Company can demonstrate:

• A. the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• B. its intention to complete and its ability to use or sell the asset;
• C. how the asset will generate future economic benefits;
• D. the availability of resources to complete the asset; and
• E. the ability to measure reliably the expenditure during development.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. During the period of development, the asset is tested for impairment annually. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit.

	IPs	Computer software
Useful lives	(3-5 years) Finite	(10 years) Finite
Internally generated or acquired	Acquired	Acquired

Abovementioned intangible assets are amortized on a straight-line basis over the estimated useful life.

(15)Impairment of Non-Financial Assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 "Impairment of Assets" may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset's or CGU's recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

A CGU, or the groups of CGUs, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the CGU (groups of CGUs), then to the other assets of the unit (groups of units) pro rata on the basis of the carrying amount of each asset in the unit (groups of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(16)Treasury Shares

Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. Any difference between the carrying amount and the consideration is recognized in equity.

(17)Revenue Recognition

The Company's revenue arising from contracts with customers mainly include sale of goods. The accounting policies for the Company's types of revenues are explained as follows:

Sale of goods

The Company manufactures and sells merchandise. Sales are recognized when goods have been shipped and customers have obtained the control (the customer has the ability to direct the use of the goods and obtain substantially all of the remaining benefits from the goods). The main products of the Company are touch ICs and server and industrial computer ICs Sales transactions are usually accompanied by discounts. Therefore, revenues from these sales are recognized based on the price specified in the contract, net of the estimated volume discounts. Based on previous experience, the Company uses the expected value method to estimate volume discounts. However, revenues are only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Refund liability is also recognized during the period specified in the contract.

The credit period of the Company's sale of goods is from 30 to 90 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The period between the Company transfers the goods to customers and when the customers pay for that goods is usually short and has no significant financing component to the contract.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(18)Post-Employment Benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee's name in the specific bank account and hence, not associated with the Company. Therefore, fund assets are not included in the Company's consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Remeasurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

A. the date of the plan amendment or curtailment; and

B. the date that the group recognizes related restructuring or termination costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(19)Share-based Payment Transactions

The cost of equity-settled transactions between the Company and its subsidiaries is recognized based on the fair value of the equity instruments granted. The fair value of the equity instruments is determined by using an appropriate pricing model.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The cost of equity-settled transactions is recognized, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it fully vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

The cost of restricted shares issued is recognized as salary expense based on the fair value of the equity instruments on the grant date, together with a corresponding increase in other capital reserves in equity, over the vesting period. The Company recognizes unearned employee salary which is a transitional contra equity account; the balance in the account will be recognized as salary expense over the passage of vesting period.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(20)Income Tax

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The additional income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the stockholders' meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• A. where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
• B. in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

A. where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

B. in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company's consolidated financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

A. Impairment of non-financial assets

An impairment exists when the carrying value of an asset or CGU exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or CGU. The value in use calculation is based on a discounted cash flow model. The main assumption is that the recoverable amount of the CGU is used, which may affect the result of its impairment test.

B. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could cause future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective company's domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies. Please refer to Note 6 for more details on unrecognized deferred tax assets of the Company as of December 31, 2020.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and Cash Equivalents

	December 31,
	2020	2019
Cash on hand and savings accounts	\$206,967	\$143,380
Time deposits	612,393	828,233
Total	\$819,360	\$971,613

(2) Financial Assets at Fair Value through Other Comprehensive Income-noncurrent

		December 31,
	2020	2019
Equity instruments investments measured at fair value
through other comprehensive income-noncurrent
Listed companies' stocks	\$13,504,363	\$4,738,008
Unlisted companies' stocks	2,193,360	895,495
Total	\$15,697,723	\$5,633,503

The Company increased its investment in financial assets at fair value through other comprehensive income by NT\$5,877 thousand during 2019.

Financial assets at fair value through other comprehensive income were not pledged. Please refer to Note 12 for more details on credit risk.

The Company lost significant influence over Asia Pacific Microsystems, Inc. as the Company did not subscribe to the new shares issued by Asia Pacific Microsystems, Inc. proportionately. Please refer to Note 6(6).

In consideration of the Company's investment strategy, during 2020, the Company disposed of certain listed shares (classified as financial assets measured at fair value through other comprehensive income) with fair value of NT\$19,550 thousand at the time of disposal. Related unrealized gain of NT\$3,220 thousand was transferred from other equity to retain earnings.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

In consideration of the Company's investment strategy, during 2019, the Company disposed of certain listed shares (classified as financial assets measured at fair value through other comprehensive income) with fair valus of NT\$42,986 thousand at the time of dispoal. Related unrealized loss of NT\$40,080 thousand was transferred from other equity to retain earnings.

Dividends received from equity instruments investments measured at fair value through other comprehensive income were NT\$236,400 thousand for the year ended December 31, 2020.

Dividends received from equity instruments investments measured at fair value through other comprehensive income were NT\$168,344 thousand for the year ended December 31, 2019.

The Company has equity instrument investments measured at fair value through other comprehensive income. Details on dividends recognized for the years ended of 2020 and 2019 are as follows:

		December 31,
	2020	2019
Related to investments held at the end of the reporting period	\$236,400	\$168,344
Related to investments derecognized during the period	-	-
Dividends recognized during the period	\$236,400	\$168,344
(3) Financial Assets Measured at Amortized Cost
		December 31,
	2020	2019
Time deposits	\$9,605	\$9,585

No loss allowance was recognized for financial assets measured at amortized cost. Please refer to Note 8 for more details on financial assets measured at amortized cost under pledge.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

		December 31,
	2020	2019
Trade receivable	\$28,460	\$31,345
Less: allowances for goods returns and discounts	-	-
Less: allowance for doubtful debts	(7,154)	(2,338)
Subtotal	21,306	29,007
Trade receivables from related parties	2,631	-
Less: allowance for doubtful debts	-	-
Subtotal	2,631	-
Total	\$23,937	\$29,007

(4) Trade Receivables and Trade Receivables from Related Parties

Trade receivables were not pledged.

Trade receivables are generally on 30-90 day terms. The total carrying amounts were NT\$31,091 thousand and NT\$31,345 thousand as of December 31, 2020 and 2019, respectively. Please refer to Note 6(12) for more details on impairment of trade receivables for the years ended December 31, 2020 and 2019. Please refer to Note 12 for more details on credit risk management.

(5) Inventories

	December 31,
	2020	2019
Raw materials	\$94	\$235
Work in process	38,803	27,336
Finished goods	34,230	44,339
Total	\$73,127	\$71,910

The cost of inventories recognized in expenses amounted to NT\$115,036 thousand, including the write-down of inventories of NT\$2,730 thousand for the year ended December 31, 2020.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The cost of inventories recognized in expenses amounted to NT\$136,063 thousand, including the reversal of write-down of NT\$21,727 thousand for the year ended December 31, 2019.

No inventories were pledged.

(6) Investments Accounted for Using the Equity Method

Details of the investments accounted for under the equity method are as follows:

		December 31,
		2020	2019
		Percentage of		Percentage of
		Ownership		Ownership
Investee companies	Amount	(%)	Amount	(%)
Investments in associates
Vxis Technology Corporation	45,247	34.03	44,305	34.03
Goaltop Technology Corporation
(NOTE A)	32,428	27.55	45,333	30.00
Waltop International Corporation
(NOTE B)	2,486	27.70	31,143	25.96
Asia Pacific Microsystems, Inc.
(NOTE C)	-	-	65,550	26.78
Haining Jingqi Technology
Corporation (NOTE D)	26,438	38.57	-	-
Total	\$106,599		\$186,331

• A. The Company subscribed to the new shares issued by Goaltop Technolog Corporation in the amount of NT\$30,000 thousand for the year ended December 31, 2019. Related registration processes were completed on October 15, 2019.
• B. The Company subscribed to the new shares issued by Waltop International Corporation in the amount of NT\$18,694 thousand for the year ended December 31, 2020. Related registration processes were completed on September 17, 2020. The Company subscribed to the new shares issued by Waltop International Corporation in the amount of NT\$18,958 thousand for the year ended December 31, 2019. Related registration processes were completed on April 19, 2019.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• C. The Company did not subscribe to the new shares proportionate to its original ownership interest of Asia Pacific Microsystems Inc. and lost the significant influence since the percentage of ownership decreased from 26% to 15.37%. Accordingly, the Company transferred the investment from investments accounted for using the equity method to equity instrument investments measured at fair value through other comprehensive income based on the fair value at the date the Company lost significant influence. The difference between fair value and book value of the investment (NT\$7,157 thousand in the amount) was recognized as losses on disposal of investments.
• D. The Company invested in Haining Jingqi Technology Co., Ltd. in the amount of NT\$30,112 thousand in 2020. Relevant filing processes in Mainland China were completed on May 29, 2020.

The Company's investments in Waltop International Corporation, Vxis Technology Corporation, Goaltop Technology Corporation and Haining Jingqi Technology Corporation are not individually material. The summarized financial information of the Company's ownership in those associates is as follows:

	December 31,
	2020	2019
Loss from continuing operations	\$(68,904)	\$(60,566)
Other comprehensive income (post-tax)	-	2,818
Total comprehensive income	\$(68,904)	\$(57,748)

As of December 31, 2020 and 2019, the aforementioned associates did not have contingent liabilities or capital commitments and the investments in associates were not pledged.

(7) Property, Plant and Equipment

		As of
	December 31,	December 31,
	2020	2019
Owner-occupied property, plant and equipment	\$749,534	\$756,976

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(a) Property, plant and equipment for own-use

		Buildings and	Machinery	Transportation
	Land	facilities	equipment	equipment	Office equipment	Total
Cost:
As of January 1, 2020	\$476,328	\$976,154	\$426,597	\$2,071	\$141,887	\$2,023,037
Additions	-	6,011	2,358	-	2,796	11,165
Disposals	-	(288)	(7,217)	-	(3,299)	(10,804)
Exchange differences	-	-	-	-	119	119
As of December 31, 2020	\$476,328	\$981,877	\$421,738	\$2,071	\$141,503	\$2,023,517
As of January 1, 2019	\$476,328	\$974,656	\$423,764	\$1,831	\$140,819	\$2,017,398
Additions	-	1,498	6,662	1,030	1,398	10,588
Disposals	-	-	(3,829)	(790)	(105)	(4,724)
Exchange differences	-	-	-	-	(225)	(225)
As of December 31, 2019	\$476,328	\$976,154	\$426,597	\$2,071	\$141,887	\$2,023,037
Depreciation and Impairment:
As of January 1, 2020	\$-	\$715,001	\$410,721	\$850	\$139,489	\$1,266,061
Depreciation	-	8,933	5,612	415	1,363	16,323
Disposals	-	(176)	(5,090)	-	(3,228)	(8,494)
Exchange differences	-	-	-	-	93	93
As of December 31, 2020	\$-	\$723,758	\$411,243	\$1,265	\$137,717	\$1,273,983
As of January 1, 2019	\$-	\$706,248	\$409,261	\$1,432	\$138,538	\$1,255,479
Depreciation	-	8,753	5,289	208	1,228	15,478
Disposals	-	-	(3,829)	(790)	(87)	(4,706)
Exchange differences	-	-	-	-	(190)	(190)
As of December 31, 2019	\$-	\$715,001	\$410,721	\$850	\$139,489	\$1,266,061
Net carrying amounts as of:
December 31, 2020	\$476,328	\$258,119	\$10,495	\$806	\$3,786	\$749,534
December 31, 2019	\$476,328	\$261,153	\$15,876	\$1,221	\$2,398	\$756,976

(b) There was no interest capitalization during the year of 2020 and 2019.

(c) Main components of buildings include main building structure, electric engineering and air-conditioning equipment, etc., which are depreciated over useful lives of 50 years and 10 years, respectively.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• (d) Certain of the Company's R&D building land is farmland and therefore is registered under a third party's name. The farmland has been mortgaged to the Company for security.
• (e) The investment activities partially influenced the cash flow are as follows:

	As of
	December 31,	December 31,
	2020	2019
Acquisition of property, plant and
equipment	\$10,845	\$10,588
Increase in right-of-use assets	916	-
Increase/(decrease) in payables to equipment	(1,706)	280
Total	\$10,055	\$10,868

(f) Property, plant and equipment were not pledged.

(8) Intangible Assets

	Software	Patents	Total
Cost:
As of January 1, 2020	\$10,081	\$265,866	\$275,947
Additions	1,872	-	1,872
As of December 31, 2020	\$11,953	\$265,866	\$277,819
As of January 1, 2019	\$8,644	\$265,866	\$274,510
Additions	1,437	-	1,437
As of December 31, 2019	\$10,081	\$265,866	\$275,947
Amortization and Impairment:
As of January 1, 2020	\$3,036	\$265,866	\$268,902
Amortization	1,857	-	1,857
Exchange differences	6	-	6
As of December 31, 2020	\$4,899	\$265,866	\$270,765
As of January 1, 2019	\$1,802	\$265,866	\$267,668
Amortization	1,234	-	1,234
As of December 31, 2019	\$3,036	\$265,866	\$268,902
Net carrying amount as of:
December 31, 2020	\$7,054	\$-	\$7,054
December 31, 2019	\$7,045	\$-	\$7,045

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Amortization expense of intangible assets:

		As of
	December 31, December 31,
	2020	2019
Selling expenses	\$4	\$-
General and administrative expense	776	408
Research and development expenses	1,077	826
Total	\$1,857	\$1,234

(9) Post-Employment Benefits

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. The Company has made monthly contributions of 6% of each individual employee's salaries or wages to employees' pension accounts.

Subsidiaries located in the People's Republic of China will contribute social welfare benefits based on a certain percentage of employee's salaries or wages to the employee's individual pension accounts.

Pension benefits for employees of overseas subsidiaries are provided in accordance with the local regulations.

Pension expenses under the defined contribution plan for the years ended December 31, 2020 and 2019 were NT\$10,711 thousand and NT\$10,906 thousand, respectively.

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contributes an amount equivalent to 2% of the employees' total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assesses the balance in the designated labor pension fund. If the amount is not sufficient to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March the following year.

SILICON INTEGRATED SYSTEMS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under mandation, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regards to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT\$0 to its defined benefit plan during the 12 months beginning after December 31, 2020.

The weighted average duration of the defined benefit obligations was 11 years and 12 years as of December 31, 2020 and 2019, respectively.

Pension costs recognized in profit or loss are as follows:

	As of
	December 31, December 31,
	2020	2019
Current service costs	\$367	\$346
Net interest on the net defined benefit liabilities	(389)	(567)
Total	\$(22)	\$(221)

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

	December 31,		January 1,
	2020	2019	2019
Defined benefit obligation	\$61,096	\$73,656	\$69,718
Plan assets at fair value	(118,460)	(125,534)	(120,084)
Other non-current liabilities-accrued pension
liabilities (assets) recognized on the balance
sheets	\$(57,364)	\$(51,878)	\$(50,366)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

			Net defined
	Defined benefit	Plan assets	benefit liabilities
	obligation	at fair value	(assets)
As of January 1, 2019	\$69,718	\$(120,084)	\$(50,366)
Current service cost	346	-	346
Interest expense (income)	784	(1,351)	(567)
Subtotal	70,848	(121,435)	(50,587)
Remeasurements of the defined benefit liability (asset):
Actuarial gains and losses
arising from changes in
demographic assumptions	2,069	-	2,069
Actuarial gains and losses
arising from changes in
financial assumptions	1,160	-	1,160
Experience adjustments	(421)	-	(421)
Remeasurements of the
defined benefit assets	-	(4,099)	(4,099)
Subtotal	2,808	(4,099)	(1,291)
As of December 31, 2019	\$73,656	\$(125,534)	\$(51,878)
Current service cost	367	-	367
Interest expense (income)	553	(941)	(388)
Subtotal	74,576	(126,475)	(51,899)
Remeasurements of the defined
benefit liabilities/assets:
Actuarial gains and losses
arising from changes in
demographic assumptions	344	-	344
Actuarial gains and losses
arising from changes in
financial assumptions	75	-	75
Experience adjustments	(1,766)	-	(1,766)
Remeasurements of the
defined benefit assets	-	(4,118)	(4,118)
Remeasurements of the
defined benefit liabilities	(12,133)	12,133	-
Subtotal	(13,480)	8,015	(5,465)
As of December 31, 2020	\$61,096	\$(118,460)	\$(57,364)

Reconciliations of liabilities (assets) of the defined benefit plan are as follows:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The principal assumptions used in determining the Company's defined benefit plan are as follows:

		December 31,
	2020	2019
Discount rate	0.500%	0.750%
Expected rate of salary increases	3.750%	4.000%

Sensitivity analysis of significant assumptions is as follows:

	For the years ended December 31,
		2020		2019
	Defined	Defined		Defined
	benefit	benefit	benefit	benefit
	obligation	obligation	obligation	obligation
	increase	decrease	increase	decrease
Discount rate increase by 0.25%	\$-	\$1,596	\$-	\$2,093
Discount rate decrease by 0.25%	1,663	-	2,184	-
Rate of future salary increase by 0.25%	1,587	-	2,085	-
Rate of future salary decrease by 0.25%	-	1,532	-	2,010

The sensitivity analysis above is based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analysis compared to the previous period.

(10)Equities

A. Common stock

The Company's authorized capital as of December 31, 2020 and 2019 was NT\$18,000,000 thousand, divided into 1,800,000 thousand shares, each at a par value of NT\$10. The Company's issued capital was NT\$6,309,675 thousand and NT\$5,540,625 thousand, divided into 630,967 thousand shares and 554,062 thousand shares, as of December 31, 2020 and 2019, respectively, each at a par value of NT\$10.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

B. Capital surplus

	December 31,
	2020	2019
From share of changes in associates and joint
ventures	\$11,453	\$3,657
Others	74,354	2,788
Total	\$85,807	\$6,445

According to the Company Act, the capital surplus shall not be used except for offset the deficit of the company. When a company incurs no loss, it may distribute the capital surplus generated from the excess of the issuance price over the par value of share capital and donations. The distribution could be made in cash to its shareholders in proportion to the number of shares being held by each of them.

C. Treasury shares

On May 10 and November 7, 2018, Board of Directors of the Company resolved to purchase and transfer the treasury shares to employees. During the period from May 11, 2018 to January 7, 2019, the Company purchased 26,000 thousand common shares in the amount of NT\$250,065 thousand on the centralized securities exchange market.

On July 15, 2019, the Company retired 6,000 thousand common shares and the registration processes have been completed.

On September 4, 2020, the Company transferred 20,000 thousand common shares to employees, each at a price of NT\$12.7, and recognized NT\$71,200 thousand as compensation expenses for the year end December 31, 2020.

D. Retained earnings and dividend policy:

According to the Company's Articles of Incorporation, current year's earnings, if any, shall be distributed in the following order:

(a)reserve for tax payments;

(b)offset accumulated losses in previous years, if any;

(c)legal reserve, which is 10% of leftover profits.

(d)allocation or reverse of special reserve as required by law or government authorities;

(e)the board of directors will prepare a distribution proposal and submit the same to the shareholders' meeting for review and approval by a resolution.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Pursuant to existing regulations, the Company is required to set aside additional special reserve equivalent to the earnings for the year or undistributed retained earnings for prior year according to the debit balance of the components of shareholders' equity for the year (and prior year). For any subsequent reversal of other net deductions from shareholders' equity, the amount reversed may be distributed.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paid-in capital. The legal reserve can be used to offset the deficit of the Company. When the Company incurs not loss, it may distribute the portion of legal reserve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Following the adoption of TIFRS, the FSC on April 6, 2012 issued Order No. Financial-Supervisory-Securities-Corporate-1010012865, which sets out the following provisions for compliance: On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders' equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. Following a company's adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to "other net deductions from shareholders' equity" for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders' equity. For any subsequent reversal of other net deductions from shareholders' equity, the amount reversed may be distributed.

As of December 31, 2020 and 2019, special reserve set aside for the first-time adoption of TIFRS amounted to NT\$0.

Details of the 2019 and 2018 earnings distribution and dividends per share as resolved by general shareholders' meeting on June 10, 2020 and June 21, 2019, respectively, are as follows:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

	Appropriation of earnings		Dividends per share (NT\$)
	2019	2018	2019	2018
Legal reserve	\$143,742	\$-
(Reversal of) increase in
special reserve	(1,698,084)	4,576,364
Common stock - cash dividend	192,262	-	0.347	-
Common stock - stock dividend	769,050	-	1.388	-

Please refer to Note 6(14) for information regarding the employees' compensation (bonuses) and remuneration to directors.

(11)Operating Income

		For the years ended December 31,
	2020	2019
Revenue from contracts with customers
Sales of goods	\$160,171	\$222,952

Revenues from contracts with customers are all recognized at a point in time for the years ended December 31, 2020 and 2019.

(12)Expected Credit Losses

		For the years ended December 31,
	2020	2019
Operating expenses – Expected credit loss
Trade Receivables	\$5,905	\$1,405

Please refer to Note 12 for more details on credit risk.

The Company measures the allowance of its receivables (including trade receivables and trade receivables from related parties) at an amount equal to lifetime expected credit losses. The assessment of the Company's loss allowance as of December 31, 2020 and 2019 is as follows:

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

				Past due
	Neither past	Within 90	91-180	181-270	271-365	After 366
	due (Note)	days	days	days	days	days	Total
Gross carrying
amount	\$15,310	\$4,887	\$-	\$5,616	\$3,726	\$1,552	\$31,091
Loss ratio	-	-	25%	50%	75%	100%
Lifetime expected
credit losses	-	-	-	(2,808)	(2,794)	(1,552)	(7,154)
Carrying amount of trade
receivables	\$15,310	\$4,887	\$-	\$2,808	\$932	\$-	\$23,937
	As of December 31, 2019			Past due
	Neither past	Within 90	91-180	181-270	271-365	After 366
	due (Note)	days	days	days	days	days	Total
Gross carrying amount	\$17,446	\$11,156	\$-	\$423	\$773	\$1,547	\$31,345
Loss ratio	-	-	25%	50%	75%	100%
Lifetime expected
credit losses	-	-	-	(211)	(580)	(1,547)	(2,338)
Carrying amount of trade
receivables	\$17,446	\$11,156	\$-	\$212	\$193	\$-	\$29,007

As of December 31, 2020

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The movements in the provision for impairment of trade receivables for the years ended December 31, 2020 and 2019 are as follows:

	Trade receivables
As of January 1, 2020	\$2,338
Increase for the current period	5,905
Reversal for the current period	(1,216)
Effect of changes in exchange rate	127
As of December 31, 2020	\$7,154
As of January 1, 2019	\$1,237
Increase for the current period	1,405
Effect of changes in exchange rate	(304)
As of December 31, 2019	\$2,338

(13)Leases

A. The Company as lessee

The Company leases various property (buildings and facilities), machinery equipment and office equipment. These leases have terms between 1 and 5 years.

The effect that leases have on the financial position, financial performance and cash flows of the Company are as follows :

(a)Amounts recognized in the balance sheet

i. Right-of-use asset

The carrying amount of right-of-use assets

	December 31,
	2020	2019
Buildings and facilities	\$14,814	\$4,417
Machinery equipment	66	127
Office equipment	146	248
Total	\$15,026	\$4,792

During the years ended December 31, 2020 and 2019, the Company's additions to right-of-use assets amounted to NT\$16,490 thousand and NT\$1,270 thousand, respectively.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

ii. Lease liability

	For the years ended December 31,
	2020	2019
Lease liability	\$15,076	\$4,718
Lease liability-current	\$8,293	\$3,649
Lease liability-noncurrent	6,783	1,069
Total	\$15,076	\$4,718

Please refer to Note 6(15)4. for the interest on lease liability recognized during the years ended December 31, 2020 and 2019, and refer to Note 12(5). for the maturity analysis of lease liabilities as of December 31, 2020 and 2019.

(b)Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

2019
\$4,417
59
102
\$4,578

(c)Income and costs relating to leasing activities

	For the years ended December 31,
	2020	2019
The expense relating to leases of low-value assets	\$21	\$21

(d)Cash outflow relating to leasing activities

During the years ended December 31, 2020 and 2019, the Company's total cash outflow for leases amounted to NT\$4,520 thousand and NT\$4,930 thousand, respectively.

B. The Company as a lessor

The Company entered into an office lease agreement. As the lease did not transfer substantially all the risks and rewards incidental to the ownership of the underlying asset, the Company classified the lease as an operating lease.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company has entered into machinery equipment lease agreements with terms of five years. These leases are classified as finance leases as they transferred substantially all the risks and rewards incidental to the ownership of the underlying assets.

The Company terminated the original agreement on September 30, 2019. Please refer to Note 7(3) for more details on lease.

	For the years ended December 31,
	2020	2019
Lease income for operating leases
Income relating to fixed lease payments and
variable lease payments that depend on an index
or a rate	\$26,153	\$24,921
Subtotal	26,153	24,921
Lease income for finance leases
Finance income on the net investment in the lease	-	273
Subtotal	-	273
Total	\$26,153	\$25,194

The undiscounted lease payments to be received for the remaining years as of December 31, 2020 and 2019 are as follows:

	For the years ended December 31,
	2020	2019
Not later than one year	\$26,083	\$22,936
Later than one years and not later than five years	23,159	26,118
Later than five years	-	-
Total	\$49,242	\$49,054

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(14)Employee Benefits, Depreciation and Amortization Expenses are summarized by Function As Follows:

	For the years ended December 31,
		2020		2019
	Operating	Operating			Operating Operating
	Costs	Expenses	Total	Costs	Expenses	Total
Employee benefits
expense
Payroll	\$12,241	\$318,120	\$330,361	\$8,368	\$249,924	\$258,292
Labor and health	783	17,757	18,540	840	20,206	21,046
Pension	368	10,320	10,688	247	10,438	10,685
Others	-	4,689	4,689	-	4,761	4,761
Total	\$13,392	\$350,886	\$364,278	\$9,455	\$285,329	\$294,784
Depreciation	\$525	\$21,211	\$21,736	\$381	\$19,675	\$20,056
Amortization	\$10	\$1,847	\$1,857	\$-	\$1,234	\$1,234

According to the Articles of Incorporation of the Company, no less than 5% of profit of the current year is distributable as employees' compensation and no higher than 2% of profit of the current year is distributable as remuneration to directors. However, the Company's accumulated losses shall have been covered (if any). The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees' compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders' meeting. Information on the Board of Directors' resolution regarding the employees' compensation and remuneration to directors can be obtained from the "Market Observation Post System" on the website of the TWSE.

The Company incurred net losses in both 2020 and 2019 and thus the Company did not accrue employees' compensation and remuneration to directors and supervisors.

(15)Non-Operating Income and Expenses

A. Interest income

	For the years ended December 31,
	2020	2019
Financial assets measured at amortized cost	\$3,316	\$5,790
Others	-	273
Total	\$3,316	\$6,063

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

B. Other income

For the years ended December 31,
2020	2019
\$26,153	\$24,921
236,400	168,344
4,059	3,351
\$266,612	\$196,616

C. Other gains and losses

	For the years ended December 31,
	2020	2019
Foreign exchange losses, net	\$(2,309)	\$(3,405)
(Losses) gains on disposal of property, plant and
equipment	(468)	-
Losses on disposal of investment	(7,157)	-
Others	(124)	(58)
Gain on lease modification	33	-
Total	\$(10,025)	\$(3,463)

D. Finance cost

		For the years ended December 31,
	2020	2019
Interest expenses on lease liabilities	\$(195)	\$(259)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(16)Components of Other Comprehensive Income

For the year ended December 31, 2020

		Reclassification	Other		Other
		adjustments	comprehensive		comprehensive
	Arising during	during the	income, before	Income tax	income, net of
	the period	period	tax	benefit	tax
Not to be reclassified to profit
or loss:
Remeasurements of the
defined benefit plan	\$5,465	\$-	\$5,465	\$-	\$5,465
Unrealized gains from equity
instrument investments
measured at fair value through
other comprehensive income	10,025,377	-	10,025,377	-	10,025,377
Share of other comprehensive
income of associates and joint
ventures accounted for using
the equity method	-	-	-	-	-
To be reclassified to profit or
loss in subsequent periods:
Exchange differences
resulting from translating
the financial statements of
foreign operations	1,375	-	1,375	-	1,375
Total other comprehensive
income	\$10,032,217	\$-	\$10,032,217	\$-	\$10,032,217

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

For the year ended December 31, 2019

		Reclassification	Other		Other
		adjustments	comprehensive		comprehensive
	Arising during	during the	income, before	Income tax	income, net of
	the period	period	tax	benefit	tax
Not to be reclassified to profit
or loss:
Remeasurements of the
defined benefit plan	\$1,291	\$-	\$1,291	\$-	\$1,291
Unrealized gains from equity
instrument investments
measured at fair value through
other comprehensive income	1,658,768	-	1,658,768	-	1,658,768
Share of other comprehensive
income of associates and joint
ventures accounted for using
the equity method	2,818	-	2,818	-	2,818
To be reclassified to profit or
loss in subsequent periods:
Exchange differences
resulting from translating
the financial statements of
foreign operations	(764)	-	(764)	-	(764)
Total other comprehensive
income	\$1,662,113	\$-	\$1,662,113	\$-	\$1,662,113

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(17)Income Tax

(a) The major components of income tax expense are as follows: Income tax expense (benefit) recognized in profit or loss

	For the years ended December 31,
	2020	2019
Current income tax expense:
Current income tax payable	\$55	\$114
Adjustments in respect of current income tax of
prior periods	-	652
Deferred tax expense (income):
Deferred income tax related to origination and
reversal of temporary differences	(6,345)	(617)
Deferred income tax related to recognition and
derecognition of tax losses and unused tax
credits	49,810	7,357
Income tax expense recognized in profit or loss	\$43,520	\$7,506

Reconciliation of income tax expense and the accounting profit multiplied by applicable tax rates is as follows:

	For the years ended December 31,
	2020	2019
Accounting losses before tax from continuing operations	\$(256,570)	\$(217,185)
At statutory income tax rate	\$(51,314)	\$(43,437)
Adjustments in respect of current income tax of prior
periods	-	652
Tax effect of expenses not deductible for tax purposes	(37,188)	(21,556)
Adjustments of deferred tax assets/liabilities for write
downs/reversals and different jurisdictional tax rates	131,854	71,756
Others	168	91
Income tax expense (benefit) recognized in profit or loss	\$43,520	\$7,506

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(b) Deferred tax assets (liabilities) related to the following: For the year ended December 31, 2020

			Recognized in
		Recognized	other	Charged
	Beginning	in profit or	comprehensive	directly to	Exchange	Ending
	balance	loss	income	equity	differences	balance
Temporary differences
Depreciation difference for tax purpose	\$(2,484)	\$1	\$-	\$-	\$-	\$(2,483)
Unrealized exchange gains	(51)	47	-	-	-	(4)
Impairment loss	6,506	-	-	-	-	6,506
Investments accounted for using the equity method	19,382	6,796	-	-	-	26,178
Loss allowance	33	17	-	-	-	50
Unrealized allowance for inventory obsolescence	16,034	399	-	-	-	16,433
Others	1,558	(915)	-	-	-	643
Unused tax losses	-	(49,810)	-	-	-	(49,810)
Deferred tax expense		\$(43,465)	\$-	\$-	\$-
Net deferred tax assets / (liabilities)	\$40,978					\$(2,487)
Reflected in balance sheet as follows:
Deferred tax assets	\$43,513					\$-
Deferred tax liabilities	\$(2,535)					\$(2,487)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

For the year ended December 31, 2019

			Recognized in
		Recognized	other	Charged
	Beginning	in profit or	comprehensive	directly to	Exchange	Ending
	balance	loss	income	equity	differences	balance
Temporary differences
Depreciation difference for tax purpose	\$(2,484)	\$-	\$-	\$-	\$-	\$(2,484)
Unrealized exchange gains	(56)	5	-	-	-	(51)
Impairment loss	6,506	-	-	-	-	6,506
Investments accounted for using the equity method	15,086	4,296	-	-	-	19,382
Loss allowance	70	(37)	-	-	-	33
Unrealized allowance for inventory obsolescence	19,850	(3,816)	-	-	-	16,034
Others	1,449	109	-	-	-	1,558
Unused tax losses	7,298	(7,298)	-	-	-	-
Deferred tax income		\$(6,741)	\$-	\$-	\$-
Net deferred tax assets / (liabilities)	\$47,719					\$40,978
Reflected in balance sheet as follows:
Deferred tax assets	\$50,259					\$43,513
Deferred tax liabilities	\$(2,540)					\$(2,535)

(c) The following table contains information of the unused tax losses of the Company:

			Unused tax losses as at
	Tax losses for the	December 31,	December 31,
Year	period	2020	2019	Expiration year
2011	\$472,178	\$472,178	\$472,178	2021
2012	1,343,045	1,343,045	1,343,045	2022
2013	594,767	594,767	594,767	2023
2014	856,518	856,518	856,518	2024
2015	44,752	44,752	44,752	2025
2016	40,639	40,639	40,639	2026
2017	86,061	86,061	86,061	2027
2018	138,422	138,422	138,422	2028
2019	308,713	308,713	308,713	2029
2020	413,376	413,376	-	2030
		\$4,298,471	\$3,885,095

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(d) Unrecognized deferred tax assets

As of December 31, 2020 and 2019, deferred tax assets that have not been recognized amounted to NT\$866,039 thousand and NT\$709,760 thousand, respectively.

The Company does not have undistributed earnings generated in and before 1997.

(e) The assessment of income tax returns As of December 31, 2020, the assessment of income tax returns of the Company and its material subsidiaries are as follows:

	The assessment of income tax returns
Silicon Integrated Systems Corp.	Assessed and approved up to 2018
Subsidiary- HuiTong intelligence Company Limited	Note
Subsidiary- Suzhou Mlight Electronics Co., Ltd. Subsidiary- Shenzhen SiS Technology Co., Ltd	Assessed up to 2019 Assessed up to 2019

Note:

HuiTong intelligence Company Limited was not established until September 15, 2020.

(18)Earnings Per Share

Basic earnings per share is calculated by dividing net profit for the year attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

	For the years ended December 31,
	2020	2019
A. Basic earnings per share
Net loss (in thousand NT\$)	\$(299,468)	\$(224,691)
Weighted average number of ordinary shares
outstanding for basic earnings per share (in
thousands)	630,966	615,053
Basic earnings per share (NT\$)	\$(0.47)	\$(0.37)

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

	For the years ended December 31,
	2020	2019
B. Diluted earnings per share
Net loss (in thousand NT\$)	\$(299,468)	\$(224,691)
Weighted average number of ordinary shares
outstanding for basic earnings per share (in
thousands)	630,966	615,053
Effect of dilution:
Weighted average number of ordinary shares
outstanding after dilution (in thousand)	630,966	615,053
Diluted earnings per share (NT\$)	\$(0.47)	\$(0.37)

The employee stock options have anti-dilutive effect and therefore are not included in the calculation of 2020 and 2019 diluted earnings per share.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were authorized for issue.

1. Related Party Transactions

Name and nature of relationship of the related parties

Name of the related parties	Nature of relationship of the related parties
United Microelectronics Corp.	The Company's director
Wsltop International Corporation	Associate
Goaltop Technology Corporation	Associate
Haining Jingqi Technology Co., Ltd.	Associate

(1) Significant transactions with related parties

A.Sales

		For the years ended December 31,
	2020	2019
Associates	\$9,150	\$25

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The sales price to related parties was determined through mutual agreement based on the market demands. The trade credit terms with related parties were 90 days, while the terms with non-related parties were 30 to 90 days. The outstanding balance due from related parties as of December 31, 2020 and 2019 was unsecured, non-interest bearing and must be settled in cash. The receivables from the related parties were not guaranteed.

B. Purchases

	For the years ended December 31,
2020	2019
\$23,990	\$30,677

The purchase price to the above related parties is determined through mutual agreement based on the market demands. The trade credit terms with the related parties and thirdparty suppliers were the same.

C. Leases

The Company signed two lease contracts to lease two machines to associates in November and December 2018. Total rent of the leases was NT\$16,527 thousand (paid in 60 monthly payments) plus a purchase option at maturity of NT\$1,080 thousand. Total carrying amount of the two machines was NT\$16,527 thousand. The Company classified the leases as finance leases.

The Company early terminated the leases on September 30, 2019 and sold the two machines at the price of NT\$14,000 thousand. Total interest income recognized for the leases was NT\$273 thousand for the year ended December 31, 2019.

D.Trade receivables from related parties

December 31,
2020	2019
\$2,631	\$-

E. Accounts payable to related parties

	December 31,
	2020	2019
Other relate parties	\$6,130	\$8,175

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

F. Key management personnel compensation

	For the years ended December 31,
	2020	2019
Short-term employee benefits	\$19,088	\$19,670
Post-employment benefits	761	827
Total	\$19,849	\$20,497

8. Assets Pledged As Collateral

The following table lists assets of the Company pledged as security:

		Carrying amount
Items	December 31, 2020	December 31, 2019	Purpose of pledge
Financial assets measured at
amortized cost-current	\$2,105	\$2,085	Customs clearance
Total	\$2,105	\$2,085

9. Contingencies and Off Balance Sheet Commitments None.

10. Losses due to Major Disasters None.

11. Significant Subsequent Events None.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

12. Others

(1) Categories of Financial Instruments

	December 31,
	2020	2019
Financial assets
Financial assets at fair value through other
comprehensive income	\$15,697,723	\$5,663,503
Financial assets measured at amortized cost
Cash and cash equivalents (exclude cash on hand)	818,882	971,034
Financial assets measured at amortized cost-current	9,605	9,585
Trade receivables (including related parties)	23,937	29,007
Other receivables (including related parties)	22,066	925
Refundable deposits	2,659	1,441
Subtotal	877,149	1,011,992
Total	\$16,574,872	\$6,675,495
Financial liabilities
Financial liabilities at amortized cost:
Accounts payables (including related parties)	\$16,400	\$14,283
Other payables	41,258	47,139
Guarantee deposits	3,405	3,427
Lease liabilities	15,076	4,718
Total	\$76,139	\$69,567

(2) Financial Risk Management Objectives and Policies

The Company's principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activities. The Company identifies, measures and manages the aforementioned risks based on the Company's policy and risk tendency.

The Company has established appropriate policies, procedures and internal controls for financial risk management. The plans for material treasury activities are reviewed by Board of Directors and Audit Committee in accordance with relevant regulations and internal controls. The Company complies with its financial risk management policies at all times.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(3) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise foreign currency risk, interest rate risk and other price risk. (Such as equity risk)

In practice, it is rarely the case that a single risk variable will change independently from other risk variables; there are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into accounts the interdependencies between risk variables.

Foreign currency risk

The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense are denominated in a different currency from the Company's functional currency) and the Company's net investments in foreign subsidiaries.

Some receivables and payables are denominated in the same foreign currency, and it will result in economic hedging effect. Further, net investments in foreign operations are primarily for strategic purposes, and they are not hedged by the Company.

The Company's sensitivity analysis to foreign currency risk mainly focuses on foreign currency monetary items at the end of the reporting period. The Company's foreign currency risk is mainly from the volatility in the exchange rates for USD and CNY. The sensitivity analysis is as follows:

When NTD appreciates or depreciates against USD by 1%, the profit for the years ended December 31, 2020 and 2019 decreases / increases by NT\$596 thousand and NT\$670 thousand, respectively.

When NTD appreciates or depreciates against CNY by 1%, the profit for the years ended December 31, 2020 and 2019 decreases / increases by NT\$286 thousand and NT\$314 thousand, respectively.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's investment at variable interest rates. As a whole, the interest rates risk is minimal.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Equity price risk

The Company's equity investments, including listed and unlisted equity securities, are exposed to market price risk arising from uncertainties of future values of equity securities. The Company's investments in listed and unlisted equity securities are classified under financial assets at fair value through other comprehensive income. The Company manages the equity price risk through diversification and placing limits on individual and total equity investments. Reports on the equity portfolio are submitted to the Company's senior management on a regular basis. The Company's Board of Directors reviews and approves certain significant equity investments according to level of authority.

At the reporting date ended December 31, 2020 and 2019, a change of 1% in the price of the listed equity securities classified under equity instrument investments measured at fair value through other comprehensive income would have impact of NT\$135,044 thousand and NT\$47,380 thousand, respectively, on the equity attributable to the Company.

Please refer to Note 12(7) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit Risk Management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for trade receivables) and from its financing activities (including bank deposits and other financial instruments).

Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and controls relating to customer credit risk management. Credit limits are established for all customers based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company's internal rating criteria, etc. Certain customer's credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of December 31, 2020 and 2019, receivables from top ten customers represented 92% and 98% of the total trade receivables of the Company, respectively. The credit concentration risk of other accounts receivables was insignificant.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The Company manages its exposure to credit risk arising from bank deposits, fixed income securities and other financial instruments in accordance with established group policies. Since the counter-parties are selected reputable financial institutions and companies, the Company believes its exposure to credit risk is not significant.

The Company adopted IFRS 9 to assess the expected credit losses. The measurement indicators of the Company are described as follows:

			Carrying amount
			As of
		Measurement method for expected	December 31,	December 31,
Level of credit risk	Indicator	credit losses	2020	2019
Simplified method
(Note)	Note	Lifetime expected credit losses	\$31,091	\$31,345

Note: Includes trade receivables.

(5) Liquidity Risk Management

The Company's objective is to maintain a balance between continuity of funding and flexibility through use of cash and cash equivalents, highly liquid equity investments and bank borrowings. The table below summarizes the maturity profile of the Company's financial liabilities based on the contractual undiscounted payments and contractual maturity.

Non-derivative financial instruments

	Less than 1 year	2 to 3 years	Total
As of December 31, 2020
Accounts payables
(including related parties)	\$16,400	\$-	\$16,400
Other payables	41,258	-	41,258
Guarantee deposits	-	3,405	3,405
Lease liabilities	8,849	6,896	15,745
As of December 31, 2019
Accounts payables
(including related parties)	\$14,283	\$-	\$14,283
Other payables	47,139	-	47,139
Guarantee deposits	-	3,427	3,427
Lease liabilities	3,913	1,087	5,000

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• (6) Fair Value of Financial Instruments
• A. The methods and assumptions applied in determining the fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

• (a)The carrying amount of cash and cash equivalents, trade receivables, accounts payables and other current financial assets approximates their fair value due to their short maturities.
• (b)For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (i.e. listed equity securities) at the reporting date.
• (c)Fair value of equity instruments without market quotations (i.e. unlisted equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).
• B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company's financial assets measured at amortized cost approximates their fair value since short maturities.

C. Fair value recognized on the balance sheet

Please refer to Note 12(7) for fair value measurement hierarchy for financial instruments of the Company.

• (7) Fair Value Measurement Hierarchy
• A. Fair value measurement hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Level 1, 2 and 3 inputs are described as follows:

• Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
• Level 2 Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.
• Level 3 Unobservable inputs for the assets or liabilities.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company's assets and liabilities The Company does not have assets that are measured at fair value on a non-recurring basis; the following table presents the fair value measurement hierarchy of the Company's assets and liabilities on a recurring basis:

As of December 31, 2020

	Level 1	Level 2	Level 3	Total
Assets measured at fair value:
Financial assets at fair value through
other comprehensive income
Equity instruments measured at fair
comprehensive value through other
income	\$13,504,363	\$-	\$2,193,360	\$15,697,723
As of December 31, 2019
	Level 1	Level 2	Level 3	Total
Assets measured at fair value:
Financial assets at fair value through
other comprehensive income
Equity instruments measured at fair
value through other comprehensive
income	\$4,738,008	\$-	\$895,495	\$5,633,503

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Transfers between Level 1 and Level 2 during the period

During the years ended December 31, 2020 and 2019, there were no transfers between Level 1 and Level 2 fair value measurements.

The detail movement of recurring fair value measurements in Level 3

Reconciliation for recurring fair value measurements in Level 3 of the fair value hierarchy during the period is as follows:

	Assets
	Financial assets at fair value through other comprehensive income
	Stocks
As of January 1, 2020 Total gains and losses recognized for the year ended December 31, 2020: Amount recognized in profit or loss (presented in "other profit or loss") Amount recognized in OCI (presented in "unrealized gains (losses) from equity instrument investments measured at fair value through other	\$895,495
comprehensive income")	1,239,472
Acquisitions/issues for the year ended December 31, 2020	58,393
Disposals/settlements for the year ended December 31, 2020	-
Transfer in (out) Level 3	-
As of December 31, 2020	\$2,193,360
	Assets
	Financial assets at fair value through other comprehensive income
	Stocks
As of January 1, 2019:	\$717,376
Total gains and losses recognized for the year ended December 31, 2019: Amount recognized in profit or loss (presented in "other profit or loss") Amount recognized in OCI (presented in "unrealized gains (losses) from	-
equity instrument investments measured at fair value through other comprehensive income")	178,119
Acquisitions/issues for the year ended December 31, 2019	-
Disposals/settlements for the year ended December 31, 2019	-
Transfer in (out) Level 3	-
As of December 31, 2019	\$895,495

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

Total gains related to assets recognized for the years ended December 31, 2020 and 2019 amounted to NT\$1,239,472 thousand and NT\$178,119 thousand, respectively.

Information on significant unobservable inputs to valuation of fair value measurements categorized within Level 3 of the fair value hierarchy

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of December 31, 2020

		Significant		Relationship
	Valuation	unobservable	Quantitative	between inputs	Sensitivity of the
	techniques	inputs	information	and fair value	input to fair value
Financial assets: Financial assets at fair value through other comprehensive
Stocks	Asset approach	Lack of marketability	30%	The higher the discount for lack of marketability , the lower the fair value of the stocks.	1% increase (decrease) in the discount for lack of marketability would result in decrease/increase in company's equity by NT\$29,422 thousand.
Stocks	Market approach	Lack of marketability	30%	The higher the discount for lack of marketability , the lower the fair value of the stocks.	1% increase (decrease) in the discount for lack of marketability would result in decrease/increase in company's equity by NT\$1,912 thousand.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

	Valuation techniques	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity of the input to fair value
Financial assets: Financial assets at fair value through other comprehensive
Stocks	Asset approach	Lack of marketability	30%	The higher the discount for lack of marketability , the lower the fair value of the stocks.	1% increase (decrease) in the discount for lack of marketability would result in decrease/increase in company's equity by NT\$12,634 thousand.
Stocks	Market approach	Lack of marketability	30%	The higher the discount for lack of marketability , the lower the fair value of the stocks.	1% increase (decrease) in the discount for lack of marketability would result in decrease/increase in company's equity by NT\$159 thousand.

As of December 31, 2019

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

(8) Significant Assets and Liabilities Denominated in Foreign Currencies Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

		December 31, 2020
	Foreign currencies (thousand)	Exchange rate	NTD (thousand)
Financial assets
Monetary item:
USD	\$2,422	28.48	\$68,986
CNY	7,604	4.377	33,284
Financial liabilities
Monetary items:
USD	\$327	28.48	\$9,308
CNY	1,063	4.377	4,654
		December 31, 2019
	Foreign
	currencies
	(thousand)	Exchange rate	NTD (thousand)
Financial assets
Monetary item:
USD	\$2,636	29.98	\$79,023
CNY	9,231	4.305	39,740
Financial liabilities
Monetary items:
USD	\$400	29.98	\$11,979
CNY	1,928	4.305	8,298

The Company has various functional currencies, and hence is not able to disclose the information of exchange gains and losses of monetary financial assets and liabilities by each significant assets and liabilities denominated in foreign currencies. The foreign exchange lose was NT\$2,309 thousand and NT\$3,405 thousand for the years ended December 31, 2020 and 2019, respectively.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

(9) Capital Management

The primary objective of the Company's capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares.

13. Additional Disclosures

• (1) The following are additional disclosures for the Company and its affiliates:
• A. Financing provided to others for the year ended December 31, 2020: None.
• B. Endorsement/Guarantee provided to others for the year ended December 31, 2020: None.
• C. Securities held as of December 31, 2020: Please refer to Attachment 1.
• D. Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• E. Acquisition of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• F. Disposal of individual real estate with amount exceeding the lower of NT\$300 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• G. Related party transactions for purchases and sales amounts exceeding the lower of NT\$100 million or 20 percent of the capital stock for the year ended December 31, 2020: None.
• H. Receivables from related parties with amounts exceeding the lower of NT\$100 million or 20 percent of capital stock as of December 31, 2020: None.
• I. Financial instruments and derivative transactions: None.
• J. Intercompany relationships and significant intercompany transactions: Please refer to Attachment 2.
• (2) Information on Investees
• A. Information regarding investee companies over which the Company can exercises significant influence or direct or indirect control: Please refer to Attachment 3.
• B. When directly or indirectly controlling the investee company, the relevant information of items (1)~(9) of the preceding paragraph of the investee company shall be disclosed: Please refer to Attachment 1 and 3.

(Amounts are expressed in thousands of New Taiwan Dollars unless otherwise stated)

• (3) Investment in Mainland China Please refer to Attachment 4.
• (4) Main Shareholder Information Please refer to Attachment 5.

14. Segment Information

(1) General information

The major sales of the Company come from touch ICs and niche graphics processing units which can be applied on servers and industrial computers. The chief operating decision maker reviews the overall operating results to make decisions about resources to be allocated and evaluates the overall performance. Therefore, the Company is aggregated into a single segment.

(2) Geographical information

A. Net sales from external customers

	For the years ended December 31
	2020	2019
Taiwan	\$77,537	\$120,123
Asia	78,223	93,290
Others	4,411	9,539
Total	\$160,171	\$222,952

B. Non-current assets

	For the years ended December 31
	2020	2019
Taiwan	\$760,782	\$765,420
Others	10,697	3,393
Total	\$771,479	\$768,813

(3) Major customers

Individual customers accounting for at least 10% of operating revenues is as follows:

	For the years ended December 31
	2020	2019
Customer A	\$46,920	\$46,168
Customer B	34,113	44,491
Customer C	5,596	30,263
Total	\$86,629	\$120,922

ATTACHMENT 1 (Securities held as of December 31, 2020) (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

	Note	None	None	None	None	None	None	None	None	None	None
	Fair value	13,455,687	48,676	9,688	2,059,527	-	-	8,009	-	116,136	-
	Percentage of ownership (%)	2.30%	6.81%	12.95%	16.67%	1.96%	-	7.96%	3.61%	15.37%	4.84%
Balances as of December 31, 2020	Carrying amount	13,455,687	48,676	9,688	2,059,527	-	-	8,009	-	116,136	-
	Shares/Units	285,380	2,610	3,105	127,182	5,400	269	1,328	1,000	7,218	16
	Financial statement account	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income	Non-current financial assets at fair value through other comprehensive income
	Relationship with the company	The Company's director	-	-	-	-	-	-	-	-	-
	Marketable securities type and name	UNITED MICROELECTRONICS CORPORATION	Megawin Technology Co.,Ltd.	EpoStar Electronics (BVI) Corporation	Shieh Yong Investment Co., Ltd.	GLOBAL MOBILE CORP.	VADEM CORPORATION-Special shares	TAIWAN IMPLANT TECHNOLOGY CO., LTD.	TC-1 Cuture Fund	ASIA PACIFIC MICROSYSTEMS, INC.	Maxima Ventures Services V, Inc.
	Securities Type		Stocks	Stocks	Stocks	Stocks	Stocks	Stocks	Stocks	Stocks	Funds
	Held company name	SILICON INTEGRATED SYSTEMS CORPORATION Stocks

ATTACHMENT 2 (Intercompany relationships and significant intercompany transactions) (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

	Percentage of consolidated operating	revenues or consolidated total assets	(Note 3)	8.99%	0.05%	18.55%	0.04%	0.20%
Transactions			Term	-	-	-	-	-
			Amount	\$14,641	84	30,203	72	320
			Account	Operating expense	Operating expense	Revenue	Other revenue	Other revenue
	Relationship with	the Company	(Note 2)	1	1	1	1	1
			Counterparty	Shenzhen SiS Technology Co., Ltd.	Suzhou Mlight Electronics Co., Ltd.	Suzhou Mlight Electronics Co., Ltd.	Suzhou Mlight Electronics Co., Ltd.	HuiTong intelligence Company Limited
			Related Party	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation	Silicon Integrated Systems Corporation
		No.	(Note 1)	0	0	0	0	0

Note 1: The parent company and its subsidiaries are coded as follows:

• 1. The parent company is coded "0".
• 1. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2: Transactions are categorized as follows:

• 1. The parent company to subsidiary.
• 1. The subsidiary to parent company.
• 1. The subsidiary to subsidiary.

Note 3: When calculating the percentage of transaction amount to the consolidated revenues or the consolidated assets: Items of the balance sheets are calculated as its ending balance to total consolidated assets; items of income statement are calculated by its cumulative balance to the total consolidated income. ATTACHMENT 3 :(Names, locations and related information of investee companies as of December 31, 2020) (Not including investment in Mainland China) (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

				Original Investment Amount			Balance as of December 31, 2020
Investor company	Investee company	Address	Main businesses and products	balance Ending	Beginning balance	Number of shares	Percentage of ownership	Carrying amount	Net income (loss) of investee	income (loss) Investment recognized	Note
Silicon Integrated Systems Corporation	Mars Investments (SAMOA) Ltd.	SAMOA	General investing	\$172,499	\$151,880	5,587	100.00%	\$34,140	\$(29,563)	\$(29,563) Subsidiary
	HuiTong Intelligence Company Limited	Taipei City, Taiwan	Develop various AIOT products and provide integrated solutions	40,000	-	4,000	80.00%	37,512	(3,109)		(2,488) Subsidiary
	Waltop International Corporation	Hsinchu City, Taiwan	Tablet PC module, wireless pen input crystal and module	259,807	241,113	3,394	27.70%	2,486	(110,493)	(46,129)	using the equity accounted for The investee method
	Vxis Technology Corporation	Hsinchu City, Taiwan	Manufacturing of electronic parts	144,760	144,760	4,033	34.03%	45,247	10,113	3,442	using the equity accounted for The investee method
	Goaltop Technolog Corporation	Taoyuan City, Taiwan	Manufacturing and sales of electronic parts	114,000	114,000	9,000	27.55%	32,428	(73,404)	(21,923)	using the equity accounted for The investee method

ATTACHMENT 4 (Investment in Mainland China as of December 31, 2020)	(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

	\$-	\$-	\$-
Remittance of Earnings Accumulated Inward December 31, 2020 as of
Carrying Value as of December 31, 2020	\$12,249	\$18,677	\$26,438
Investment Income (Loss) Recognized	\$1,134	\$(23,959)	\$(4,294)
Percentage of Ownership	100.00%	100.00%	38.57%
Net Income (Loss) of Investee Company	\$1,134	\$(23,959)	\$(10,867)
December 31, 2020 Investment from Accumulated Taiwan as of Outflow of	\$8,296	\$119,934	\$30,112
Inflow Investment Flows	\$-	\$-	\$-
Outflow	\$-	\$14,691	\$30,112
Investment from January 1, 2020 Taiwan as of Accumulated Outflow of	\$8,296	\$105,243	\$-
Method of Investment	Mainland China through Indirectly investment in companies registered in a third region	Mainland China through Indirectly investment in companies registered in a third region	Investment China
Total Amount of Paid-in Capital	\$9,320	\$119,934	\$30,112
Main Businesses and Products	Electronics product technologies consultation and sales, and import and export business development, technical	Design, production and sales of various integrated circuits	manufacturing and software Electronics components development
Investee Company	Shenzhen SiS Technology Co.,Ltd.	Suzhou Mlight Electronics Co.,Ltd.	Haining Jingqi Technology Co., Ltd.

Upper limit on investment	\$10,498,918
Investment amounts authorized by Investment Commission, MOEA	\$158,315
Accumulated investment in Mainland China as of December 30, 2020	\$158,315

ATTACHMENT 5 (The information of Major shareholder as of December 31, 2020)

%) wnership ( Percentage of o	% 19.01
Units/shares) mber of shares ( Nu	119,979,103
Shares me Na	N O ATI R O RP O NICS C ROELECTRO MIC D NITE U

Silicon Integrated Systems Corp. Chairman: Cheng-Chien Chien