SUNON - Annual Report 2022 | FinancialReports.eu

Stock Code ： 2421

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Sunonwealth Electric Machine Industry Co., Ltd. 2022 Annual Report

Printed on April 11, 2023

Company Website : http://www.sunon.com

Taiwan Stock Exchange Market Observation Post System : http://mops.twse.com.tw

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I. Spokesperson: Name:William Li Title: Vice President Tel: (07)8135888 Email: [email protected]

Deputy Spokesperson Name: Ling-Wen Huang Title: Special Assistant, Secretariat of the Board Tel: (07)8135888 Email: [email protected]

II. Contact Information of the Head Office, Branch Offices and Factories Head Office: No. 30, Ln. 296, Xinya Rd., Qianzhen Dist., Kaohsiung City , Taiwan Tel: (07)8135888

Taipei Office: 4F., No. 356, Sec. 1, Neihu Rd., Neihu Dist., Taipei City, Taiwan Tel: (02)27992383

Kunshan Plant: NO.168 Nanbang Road Kunshan , Jiangsu ,China Tel: +86-512-57700108

Beihai Plant:B2, B6, Beihai Comprehensive Bonded Zone, Beihai Avenue West, Beihai City, Guangxi Province, China

Tel: +86-779-6666888

Beihai Plant: Lot 5, Block 8, Hermosa Ecozone Industrial Park, Brgy. Palihan, Hermosa, Bataan, Philippines.

Tel: +63-472409120

III. Stock Transfer Agency

Name: Grand Fortune Securities Co., Ltd. Stock Transfer Agent Address: 6F, No. 6, Section 1, Chung Hsiao West Road, Taipei City Tel: (02) 2371-1658

Website: www.gfortune.com.tw

IV. Contact Information of the Certified Public Accountants for the Latest Financial Report Name: Accountant Ching-Lin Li CPA and Kuo-Ming Li CPA Firm: Crowe (TW) CPAs

Address: 27F.-1, No. 6, Siwei 3rd Rd., Lingya Dist., Kaohsiung City, Taiwan Tel: (07)3312133

Website: www.crowe.tw

V. Overseas securities listing exchange and information:None
VI. Company website

http://www.sunon.com

	Table of Contents	Table of Contents
A.	Letter to Shareholders--------------------------------------------------------------------------------------		1
B.	Company Profile---------------------------------------------------------------------------------------------		4
	I.	Date of establishment ----------------------------------------------------------------------------------	4
	II.	Company history ----------------------------------------------------------------------------------------	4
C.	Corporate Governance Report----------------------------------------------------------------------------		10
	I.	Organization system ------------------------------------------------------------------------------------	10
	II.	Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and
		Department Directors -----------------------------------------------------------------------------------	13
	III.	Remunerations to Directors, Supervisors, President, and Vice Presidents in recent years ----	25
	IV.	Implementation of corporate governance ------------------------------------------------------------	37
	V.	Information on CPA fees--------------------------------------------------------------------------------	79
	VI.	Information on Replacement of CPAs ----------------------------------------------------------------	79
	VII.	The Chairman, President and Financial or Accounting Managerial Officer of the Company
		who had worked for the Independent CPA or the affiliate in the past year ----------------------	79
	VIII.	Share transfer by Directors, Supervisors, Managerial Officers, and shareholders holding
		more than 10% interests and changes to share pledging by them ---------------------------------	80
	IX.	Information on the relationship between any of the top ten shareholders (related party,
		spouse, or kinship within the second degree) --------------------------------------------------------	81
	X.	The shareholding of the Company, Director, Supervisor, Managerial Officers and an
		enterprise that is directly or indirectly controlled by the Company in the invested company
		and the calculation of the consolidated shareholding percentage ---------------------------------	83
D.	Funding Status------------------------------------------------------------------------------------------------		84
	I.	Source of Capital Shares -------------------------------------------------------------------------------	84
	II.	Shareholders ---------------------------------------------------------------------------------------------	86
	III.	Shareholding distribution status ----------------------------------------------------------------------	87
	IV.	List of major shareholders -----------------------------------------------------------------------------	87
	V.	Market price per share, net worth, earnings, dividends, and the related information for the
		last two years --------------------------------------------------------------------------------------------	88
	VI.	Dividend policy and implementation status ---------------------------------------------------------	90
	VII.	The effects of the stock dividends proposed by the shareholders' meeting on the Company's
		business performances and earnings per share ------------------------------------------------------	90
	VIII.	Remuneration of employees, directors and supervisors --------------------------------------------	90
	IX.	Buyback of treasury stock ------------------------------------------------------------------------------	91
	X.	Corporate bond issuance status ------------------------------------------------------------------------	91
	XI.	Issuance of preferred stocks ---------------------------------------------------------------------------	91
	XII.	Issuance of global depositary receipts (GDR) ------------------------------------------------------	91
	XIII.	Exercise of employee stock option plan (ESOP) ---------------------------------------------------	91
	XIV.	Restricted stock awards --------------------------------------------------------------------------------	91

	XV.	Mergers, acquisitions or issuance of new shares for acquisition of shares of other
		companies ------------------------------------------------------------------------------------------------	91
	XVI.	Implementation of capital allocation plan -----------------------------------------------------------	91
E.	Business Overview-------------------------------------------------------------------------------------------		92
	I.	Business activities --------------------------------------------------------------------------------------	92
	II.	Market, production and sales --------------------------------------------------------------------------	97
	III.	Employee information ----------------------------------------------------------------------------------	105
	IV.	Environmental protection expenditure information ------------------------------------------------	105
	V.	Employees-employer relations ------------------------------------------------------------------------	106
	VI.	Information Security Management--------------------------------------------------------------------	107
	VII.	Important contracts --------------------------------------------------------------------------------------	111
F.	Financial Overview-------------------------------------------------------------------------------------------		112
	I.	Condensed balance sheet and statement of income for the last five years -----------------------	112
	II.	Financial analysis for the last five year ---------------------------------------------------------------	119
	III.	Audit Committee's review report for the financial statements of the most recent year --------	124
	IV.	Financial statements of the most recent year --------------------------------------------------------	125
	V.	Parent company only financial statements of the most recent year audited by the CPA ------	218
	VI.	Financial turnover status encountered by the Company and affiliates that have material
		impact on the financial status of the Company ------------------------------------------------------	306
G.	Review, Analysis, and Risks of Financial Conditions and Performance--------------------------		307
	I.	Financial conditions -------------------------------------------------------------------------------------	307
	II.	Financial performance ----------------------------------------------------------------------------------	308
	III.	Cash flow -------------------------------------------------------------------------------------------------	309
	IV.	The effects that significant capital expenditures have on financial operations in the recent
		year --------------------------------------------------------------------------------------------------------	310
	V.	Investment policy in the past year, profit/loss analysis, improvement plan, and investment
		plan for the coming year --------------------------------------------------------------------------------	310
	VI.	Risk management and evaluation ---------------------------------------------------------------------	312
	VII.	Other important matters --------------------------------------------------------------------------------	317
H.	Special Disclosures-------------------------------------------------------------------------------------------		318
	I.	Profiles of affiliates and subsidiaries -----------------------------------------------------------------	318
	II.	Progress of private placement of securities ----------------------------------------------------------	324
	III.	Holding or disposal of stocks of the Company by subsidiaries -----------------------------------	324
	IV.	Other supplemental information -----------------------------------------------------------------------	324
Corporate events with material impact on shareholders' equity or stock prices set forth in Article
36,	Paragraph 3, Subparagraph 2 of Securities and Exchange Act---------------------------------------		325

A. Letter to Shareholders

Dear Shareholders,

As cicadas buzz in the heat of summer, the day for our annual shareholders' meeting has arrived. Three whole years have passed since the outbreak of the global COVID-19 pandemic and we can finally see hope of reopening. We are pleased to be here with shareholders today to discuss the business performance in the previous year and future prospects. 2022 was a year of the most disruptive pandemic lockdown measures and upheavals in the financial sector. Operations of the Company's production sites in Mainland China were suspended due to the pandemic lockdowns and the supply chain faced challenges in the shortage of materials, labor shortage, and customers' refusal to issue orders as a result of the lockdowns. There were significant changes in the revenue of the second and third quarter. In addition, due to the crisis of rising prices and inflation in major economies, the United States Federal Reserve quickly raised interest rates to combat inflation. It led to the rapid rise of U.S. Dollar Index, significant depreciation of Asian currencies, and a significant slump in stock markets. As a result, demand in the laptop and home appliance industries contracted significantly in the second half of the year. Despite the severe challenges, there has been abundant growth in the automotive industry, server network industry, and distributor channels. Although the revenue performance in the previous year was not particularly impressive, profitability was relatively high. Although many uncertainties persist in the economy, Sunonwealth has developed flexible response measures based on more than forty years of experience and has always regarded every challenging crisis as an opportunity. The Company has prepared response measures to meet the challenges with the aim of maintaining continuous growth of revenue and profitability.

Results of Business Operations in the Previous Year

The Company's business plan achievement status in 2022 is as follows:

Comparison of the 2022 Business Plan and actual achievements

	Business Plan	Actual Results	Difference	Completion Rate	2021	Growth Rate
Quantityshipped	146.5 million units	133.1 million units	-13.4 million units	90.9%	142.2 million units	-6.4%
Consolidated total revenue	NT$14.240 billion	NT$14.063 billion	-NT$177 million	98.8%	NT$13.562 billion	3.7%
Consolidated EPS beforetax	NT$2.63	NT$5.68	NT$3.05	216%	NT$2.33	244%
Consolidated EPSafter tax	NT$2.00	NT$4.34	NT$2.34	217%	NT$1.71	254%

Note: The 2022 Business Plan figure was not audited by the CPA.

In terms of the achievement rate of the Company's 2022 business plan, the impact of the slow growth in China's economy has resulted in a decline in the applications of industrial and medical equipment. The laptop computer industry and the home appliance industry experienced negative growth due to continuous interest rate hikes and customers' inventory adjustments. However, there has been significant growth in the cloud server network communications equipment, automotive industry, and distributor channels. Therefore, the consolidated annual revenue grew by 3.7% from the previous year, and the targets in the annual business plan were 98.8% met. However, profitability increased due to higher average unit prices and an improved product portfolio, which increased the gross margin and net profit. The significant depreciation of the USD against the NTD and RMB also increased sales prices, reduced costs and expenses, and created conversion benefits. It doubled the profitability target

and we achieved a 2.5-fold increase compared to the previous year. In terms of income and expenditures, the net cash outflow in the fiscal year amounted to NT$99.38 million and the closing cash and cash equivalents amounted to NT$400 million. The cash flow on the consolidated financial statements showed a net cash inflow of NT$545 million and closing cash and cash equivalents of NT$2.457 billion. The Company's funding status remains healthy. The Company invested NT$448 million in research and development expenditures in the fiscal year and invested NT$781 million in R&D based on the consolidated financial statements. The Company has completed high-efficiency design projects for customers in six major sectors (IT and office equipment, servers and network, industrial and medical equipment, appliances, automobiles, and LED) as well as the development of the next-generation passive heat dissipation components, water-cooled heat dissipation modules, and important components sufficient for meeting the demand for the future evolution heat dissipation technologies.

2023 Business Plan Overview

In response to the environmental factors of 2023, the Company has formulated the following important business plans. 1. Focus on the growth in AI high-speed computing, cloud networking, green energy storage, and automotive industries: Technology development drives the demand for computing power, which drives the demand for heat dissipation and provides excellent opportunities for growth. 2. Expanding the number of customers that recognize the use of cooling modules and liquid cooling: After obtaining the self-production certification for passive cooling components, we have been able to expand cooling modules to customers who produce servers, network communication equipment, and automobiles to actively expand growth in revenue. 3. Independent production of modules and key components for liquid cooling: To strengthen the competitiveness of heat dissipation modules, we plan to enhance our capabilities for the independent production of key components with interactive application of independent development and collaboration in strategic alliances. 4. Set up a capacity for producing 3 million units per month in the Philippines Plant: To disperse the risks of concentrated production and reduce production costs, the Company must continuously increase the capacity of the Philippines plant. 5. Continue to increase smart manufacturing coverage rate: It is the main strategy adopted to reduce the cost for ensuring stable quality and reducing defect rates. 6. Improve inventory turnover efficiency and reduce overall inventories: We need to exercise greater caution in material preparation, increase flexibility in production, and ship products whenever necessary to avoid rising inventory levels. 7. Promote ESG activities: Complete the launch of carbon inventory system, obtain certification from professional institutions, and promote measures for energy conservation, emission reduction, and recycling and reuse. 8. Actively cultivate talents for sustainable development: Employees are the foundation for sustainable development. We plan to provide more flexible benefits to attract, cultivate, and retain talents. After adjustments for production and sales and changes implemented in response to the market, products, customers, and sales strategy, the Company plans to ship 134 million units this year.

Future Development Strategy

The Company's future development strategy will be focused on technology and product development, global production development, and continuous cost reduction. Technology and product development: Due to technology development trends, CPUs will generate higher power consumption and operating temperature. The corresponding heat dissipation solutions must include a more diverse range of active and passive heat dissipation components. We have also developed liquid-cooled heat dissipation solutions based on air-cooled heat dissipation technologies. The Company has achieved preliminary results in its active investments in passive heat dissipation components and liquid-cooled heat dissipation solutions. They will invariably provide more comprehensive heat dissipation solutions for customers and create value for customers. Global production plan: Since the start of the trade war between China and the United States, the Company has transferred the production of products affected by high import tariffs back to Taiwan. However, customers continue to demand greater dispersion of

production to different sites to mitigate concentrated production risks. The Company will use the new plant as an opportunity for the transition. It will address the risks of concentrated production based on customer demand, and reduce production costs. We will continue to pay close attention to changes in the global economy for creating future production plans. Continue to lower costs: The Company must use simplified product architecture, reduce component specifications, and introduce automated production to achieve streamline designs and production and reduce product production costs. We will also implement performance measurement of inputs and outputs to strengthen the cost efficiency and increase the value of production. We shall adopt a diverse range of development strategies and continue to improve our business development and profitability.

Impact of the Competitive Environment, Regulatory Environment, and Overall Business Environment

In terms of the competitive environment, the Company faces price competition from competitors in Greater China, as well as competition in products and technologies from major Japanese and European companies. With over 40 years of experience in technology development, the Company has obtained a leading position in IT and cloud server products in recent years. We will focus on new products in the automotive, industrial, and home appliance industries to enhance our competitive strength. Total solutions for heat dissipation have become key to competition. The Company must integrate active and passive cooling components and expand from air cooling to liquid cooling to maintain its competitive advantages. In terms of the legal environment, the Environmental Protection Administration has proposed the draft amendment of the "Climate Change Response Act" and expressly incorporated "net zero emissions by 2050" into the legislation. The Financial Supervisory Commission also specified the timetable for the completion of carbon inventory by public companies. The changes in these environmental regulations will encourage companies to invest in activities for attaining net-zero emissions, and companies will also set up sustainability organizations in response. The overall business environment has been affected by the Russo-Ukrainian War, inflation, and rising interest rate which exacerbated uncertainties in the market and supply chain. These factors have affected the Company's revenue and operating costs. However, the Company has developed various countermeasures to meet the challenges to minimize the impact of these unfavorable factors.

With your support in the past 40 years, Sunonwealth has achieved stable growth in both revenue and profitability. In the future, we shall continue to dedicate our efforts to make the world a better place with Sunonwealth and fill it with endless hope. Finally, on behalf of all employees of the Company, I wish to thank the shareholders for your support. I also look forward to your continuous support and let us work together for another forty years.

I wish you all health and prosperity.

Chairman of the Board Ching-Shen Hong President Ching-Shen Hong

Chief Accounting Officer William Li

June 9, 2023

B. Company Profile

I. Date of establishment

Date of establishment and registration: October 25, 1980

II. Company history

1. 1980

The Company was established with a capital of NT$1,000,000. It focused on the R&D, product, and sales of small precision motors and cooling fans.

2. 1981

The Company obtained the SUNON trademark certificate issued by the Bureau of Standards, Metrology and Inspection and established the Taipei Factory.

3. 1983

Obtained UL certification in the United States, increased capital to NT$5,000,000, and reorganized into a company limited by shares.

1984

Established the Kaohsiung Factory.

1986

Increased capital to NT$10,000,000.

1987

Obtained the first patent certificate.

1988

Increased capital to NT$21,000,000.

1989

Purchased office building in Kaohsiung City. Increased capital to NT$149,530,000.

1990

Completed the construction of the Gangshan Factory.

1991

Successfully developed the DC brushless cooling fan and increased capital to NT$171,959,500.

11. 1993

Conducted capital increase by converting earnings to capital in September and increased the capital to NT$201,200,000.

1994

Purchased Kaohsiung Factory and increased capital to NT$300,000,000 in December.

13. 1995

Passed ISO 9002 certification in July. Established Hong Kong Office. Conducted capital increase by converting earnings to capital in August. The capital is increased to NT$360,000,000. Purchased office building in Taipei in November.

14. 1996

Officially established the Singapore Office in January and passed ISO 9001 certification in February. Established the Europe Office in the Netherlands in August. Conducted capital increase by converting earnings to capital in September and increased the capital to NT$470,300,000.

15. 1997

Successfully developed the spindle motor for the 12X and 16X-speed CD drive in March; Won the Taiwan Excellence Award in April; Conducted capital increase by converting earnings to capital in May and increased the paid-in capital to NT$565,559,000. Established the Tainan Factory in June; Established the US Office in November.

16. 1998

Conducted capital increase by converting earnings to capital in June and increased the paid-in capital to NT$ 699,700,000. Company stocks are listed on the OTC market in September; Company products won the 6th Taiwan Excellence Award and the Company passed ISO 14001 certification; Conducted capital increase in December and increased the paid-in capital to NT$ 800,000,000.

17. 1999

The new green motor series was launched in January; Kaohsiung Second Plant was completed in February and the R&D Building was officially launched; Established a subsidiary company in the United States in March; Invested in Sunon Motor Co., Ltd. which focused on the research, development, and production of DVD spindle motors; the Company received the Magnetism Prize for contribution to the industry and research results from Taiwan Association for Magnetic Technology; Conducted capital increase by converting earnings to capital in July and increased the paid-in capital to NT$ 964,000,000.

18. 2000

The Company was awarded the bronze prize in the corporate division in 9th National Invention and Creation Award and the Golden Award in the Outstanding Enterprise Category and Product Design Category; Established subsidiary companies in France and Japan; Company stocks became listed on TWSE in September; issuance of the first unsecured corporate bonds totaling NT$400 million. Increased capital to NT$ 1,209,820,000.

19. 2001

Awarded the bronze prize in the corporate division in 10th National Invention and Creation Award; launched the world's first brushless DC vibration motor. Increased capital to NT$ 1,611,187,190.

20. 2002

Began the expansion of the phase 2 plant of Sunon Electronic (Kunshan) Co., Ltd.; launched the Power Motor series; won the Silver Award and Industrial Technology Development Excellence Award in the 10th Taiwan Excellence Award. Increased capital to NT$ 1,809,005,170.

21. 2003

Completed the expansion of the phase 2 plant of Sunon Electronic (Kunshan) Co., Ltd.; Awarded the Enterprise Role Model Award for "Root in Taiwan for Global Development" in the first Golden Root Award; awarded Sony Certificate of SONY Green Partner; awarded "Contribution to the Magnetic Technology Industry" in the 16th Magnetism Prize for from Taiwan Association for Magnetic Technology; Awarded the fourth Industrial Sustainable Excellence Award (machinery and transportation industries) by the Ministry of Economic Affairs; Global Operation Head Office application approved by the Ministry of Economic Affairs; Invention and Innovation Center application approved by the Ministry of Economic Affairs; issuance of the first unsecured international convertible corporate bonds valued at US$10 million. Increased capital to NT$ 1,960,000,610 and elected the 10th-term Directors and Supervisors.

22. 2004

Inauguration ceremony of the Operation Head Office and the phase 2 plant of Sunon Electronic (Kunshan) Co., Ltd.; Chairman Yin-Su Hong received an honorary PhD degree for management from Sun Yat-sen University; Awarded the silver prize in the First National Invention and Creation Award of the Ministry of Economic Affairs; awarded the 2004 Technology Management Prize (enterprise and group category) from the Chinese Society for Management of Technology; Ranked 48th in the world and 4th in Taiwan in terms of technical strength by the MIT Technology Review ; launched the magnetic levitating motor AC fans. Capital was maintained at NT$ 1,960,000,610.

23. 2005

The Company passed OHSAS18001 certification and provides products that fully comply with the RoHS directive; completed the development of the PMD 4028 high air volume fans and magnetic levitating motor fans 7020 series; received the 13th Taiwan Excellence Award and the "2005 Taiwan Good Brands" from the Ministry of Economic Affairs; received awards including SAMSUNG Eco-Partner certification and Inventec's 2005 Diamond Supplier Award; Ranked 4th in the Top 100 Companies in Taiwan in the components category by Business Weekly in 2005. Increased capital to NT$ 1,998,600,620.

24. 2006

Passed ISO/TS 16949 quality assurance system certification; received the 14th Taiwan Excellence Award and the "2006 Taiwan Good Brands" from the Ministry of Economic Affairs; received the Best Innovation and Business Management Award in the third Taiwanese Enterprise Awards presented by China Times; received Canon Green Activity environmental protection certification; launched the Waturbo cooling module; issuance of the second unsecured corporate bonds totaling NT$400 million. Increased capital to NT$ 2,057,658,640 and elected the 11th-term Directors and Supervisors. Established "Sunon Electronic (Foshan) Co., Ltd." in China.

25. 2007

Launched the world's smallest/slimmest nano-tech fans and drum fans; received the Silver Award in the 15th Taiwan Excellence Award and Taiwan Excellence Award from the Ministry of Economic Affairs; "Ministry of Economic Affairs Pilot Information Application Development Program - Sunonwealth Smart Patented Value-Added System Project" passed the review by the Ministry of Economic Affairs and was recommended as an "outstanding pilot company"; Won recognition as the best supplier of Emerson in 2007; Ranked 1st in the Top 100 Companies in Taiwan in the power/transportation equipment category by Business Weekly in 2007. Completed the relocation and production line expansion of Sunon Electronic (Foshan) Co., Ltd.; Increased capital to NT$ 2,313,064,460. Merged the wholly owned "Chien Heng Precision Co., Ltd." and the Board of Directors resolved to liquidate the investee "Pingnan Sunonwealth Electrical Product Factory" in China.

26. 2008

The Company's innovative invention "Mighty Mini Fan", the smallest in the world, was exhibited at the "Taiwan Number One Special Exhibition" organized by the Taiwan Historica of Academia Historia; The innovative technology used in the Mighty Mini Fan was awarded the "Industrial Innovation Award" organized by the Industrial Development Bureau of the Ministry of Economic Affairs and it won the 17th Taiwan Excellence Award; launched the new product ultra-quiet fan, next-generation magnetic levitating motor fan ME series, and indoor LED light bulb cooling module; passed IECQ QC080000 certification; entered the new Netbook products supply chain; Increased

capital for the two plants in China; increased the registered capital of Sunon Electronic (Kunshan) Co., Ltd. to US$28,500,000 and increased the registered capital of Sunon Electronic (Foshan) Co., Ltd. to US$19,420,000; increased the Company's capital to NT$2,457,986,300.

27. 2009

The world's slimmest 1cm nano-tech fans and drum fans received the Silver Award in the 18th Taiwan Excellence Award and Taiwan Excellence Award from the Ministry of Economic Affairs; awarded the contribution prize in the 2009 National Invention and Creation Award; "Slim fan" invention patent awarded the Silver Prize for Invention in the 2009 National Invention and Creation; ranked 75th in the 2008 "Top 100 Domestic Institutions in Total Number of Patent Certificates" by the Intellectual Property Office and ranked 73rd in the "Top 100 Domestic Institutions in Number of Invention Patent Certificates"; SUNON ranked first in terms of market share in the global AC/DC axial fans in the market research report published by Fuji Keizai. Election of the Company's 12th-term Directors and Supervisors; Sunon Electronic (Foshan) Co., Ltd. merged Nanhai Guangyuan Electronic (Foshan) Co., Ltd. and increased its capital to US$20,620,000; the Company merged its wholly-owned subsidiary "Sunon Motor Co., Ltd."; increased the Company's capital to NT$2,579,297,320.

28. 2010

Environmental-friendly Energy-saving Cooling Fans for LED MR16 and LED Street Lamp both received the 19th Taiwan Excellence Award; The Company was ranked 347th in the 2009 "Top 1000 manufacturing companies in Taiwan" in the 446th issue of Commonwealth Magazine . launched the smart forward and backward-rotating dusting fan and LED lighting cooling module series; ranked 67th in the 2009 "Top 100 Domestic Institutions in Total Number of Patent Certificates", 56th in the "Top 100 Domestic Institutions in Invention Patent Applications", and 89th in the "Top 100 Domestic Institutions in Number of Invention Patent Certificates"; SUNON ranked first in terms of market share in the global AC/DC axial fans in 2010 in the market research report published by Fuji Keizai. Sunon Electronic (Kunshan) Co., Ltd. expanded the new factory and increased the registered capital to US$33,000,000.

29. 2011

Launched the IP-68 maximum protection products and LED projection light cooling modules; The Lightweight & Ultra-thin Cooling Fan received the 20th Taiwan Excellence Award from the Ministry of Economic Affairs; SUNON brand became one of the "Top 100 Brands in Taiwan"; The Company was ranked 361st in the 2010 Top 1000 Manufacturing Companies in Taiwan by Commonwealth Magazine . ranked 85th in the 2010 "Top 100 Domestic Institutions in Number of Patent Applications"; ranked 65th in the "Top 100 Domestic Institutions in Invention Patent Applications" and 75th in the "Top 100 Domestic Institutions in Number of Invention Patent Certificates"; SUNON ranked first in terms of global DC axial fans in the "Small Fan World Scale Market Research" published by Yano Research Institute in Japan in 2011. The Company established Sunon Electronic (Bei Hai) Co., Ltd. and the paid-in registered capital was US$6,000,000.

30. 2012

The Company was ranked 373rd in the 2011 Top 1000 Manufacturing Companies in Taiwan by Commonwealth Magazine ; Lightweight & Ultra-thin Cooling Fan won the Silver Award in the 20th Taiwan Excellence Award. "High-Lumen LED Spotlight active cooling module series" and "high performance cooling fan for hand-held micro projector" won the 21st Taiwan Excellence Award; the registered capital of Sunon

Electronic (Bei Hai) Co., Ltd. was increased to US$10,000,000. the Company established Sunon Electronic (He Fei) Co., Ltd. The Company reduced shares by buying back treasury stock and reduced the capital to NT$2,509,297,320.

31. 2013

The Company was ranked 361st in the 2012 Top 1000 Manufacturing Companies in Taiwan by Commonwealth Magazine . The Company launched the Ultra Micro Cooling Device Series, High-Lumen LED MR16 lamp Active Cooling Modules Series, and the Dust proof, Water proof, IP68 Cooling Fan which won the 22nd Taiwan Excellence Award.

32. 2014

The Company launched 400W high-wattage LED lighting cooling solution and ECO DC variable frequency air fan, and other new products; The mobile phone cooling case and automobile fragrance system air fan received the 23rd Taiwan Excellence Award; LED Lighting Ventilation Fan received the iF Product Design Award in Germany in 2015; The Company was ranked 348th in the 2013 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine .

33. 2015

Launched the ultra-energy-efficient DC ventilation fan; The Company was ranked 313th in the 2014 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . LED Lighting Ventilation Fan received the 24th Taiwan Excellence Award; received the 2015 TTQS Gold Prize. The Mighty Mini Fan product line was adopted in computer sticks, drones, electronic breathing masks, and virtual reality wearable devices.

34. 2016

Launched the Flow2 One-AHR Ventilation Fan, IP68 high protection fans for LED lighting, Energy Saving EC Axial Fan, and ATEX explosion prevention fans; The Company was ranked 281st in the 2015 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . LED Lighting Ventilation Fan received the Silver Award in the 24th Taiwan Excellence Award; Obtained 6,934m2 of land for the Kaohsiung Factory.

35. 2017

Launched the Type 25 side-suction ventilation fan and VF high-performance fans for commercial use; The Company was ranked 272nd in the 2016 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . The Flow2 One AHR Ventilation Fan and Energy Saving EC Axial Fan received the Silver Award in the 26th Taiwan Excellence Award.

36. 2018

Launched DC Axial Fan VF dual fan; The Company was ranked 279th in the 2017 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . The sidesuction ventilation fan received the 2018 Taiwan Excellence Award. Merged the whollyowned subsidiary Sunon SMT Co., Ltd. Sold 100% of shares in Hefei Hua Zhun Electronics Co., Ltd.

37. 2019

Launched the Flow2 One-AHR Ventilation Fan Plus+ and Powerful Energy-Saving Ceiling Fan; ranked 260th in the 2018 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine ; Powerful HVLS FAN Series1 Energy-Saving Ceiling Fan won the 2019 Taiwan Excellence Award; received Gold Medal Certification in the Talent Quality-management System (TTQS); invested in the establishment of branch companies in India and the Philippines.

38. 2020

We launched the next-generation Flow2 One-AHR ventilation fan (intake), modern HVLS home ceiling fan, and AF car seat ventilation drum fan, and was ranked 261st in the 2019 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . Sunonwealth received the Taiwan Excellence Achievement Award. The Modern HVLS home ceiling fan and the Flow2 One-AHR Ventilation Fan Plus won the 2020 Taiwan Excellence Award. Obtained 137,096m2 of land for the construction of a plant in the Philippines.

39. 2021

We launched the 1000W high-wattage water-cooled coolers with embedded tubes, highperformance CPU coolers for the Intel Whitley Platform, and anti-vibration fans. The Company was ranked 245th in the 2021 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . We ranked 28th in computer peripherals and components. Sunonwealth silent (direct discharge) ventilation fan received the 2021 Taiwan Excellence Achievement Award. The lease period for the Sunonwealth Foshan Plant expired and production ended. The production capacity was redirected to Sunon Electronic (Kunshan) and Sunon Electronic (Bei Hai). The registered capital was reduced from USD 23.66 million to USD 10 million. The company also changed its address and transformed into a sales company. The Company invested in the establishment of Beihai Li Zhun Electronics Co., Ltd.

40. 2022

We launched the Intel EST CPU cooler, XG 120x38 high air volume and high air pressure fan, and bionic impeller blade fan with bionic design; The Company was ranked 272nd in the 2022 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . Sunonwealth received Gold Medal Certification in the Talent Quality-management System (TTQS), and Flow2 One-AHR Ventilation Fan Plus+ received the 2022 Golden Pin Design Award. Mass production and shipment officially began in the Philippines plant.

C. Corporate Governance Report

I. Organization system

(I) Organization structure

==> picture [466 x 400] intentionally omitted <==

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

Shareholders' Meeting
Board of Directors
Remuneration Committee Secretariat of the Board
Audit Committee Audit Office
Sustainable Development Committee
President
President Office Quality Strategy Center
Operating Management Division GS Business Unit
Strategic Purchasing Department Global Production Unit
Global Human Resource Division Automated Intelligence Division
IT Division Finance Division
----- End of picture text -----

Note: The organization structure became effective on May 4, 2022.

10 -

(II) Major business units and their key businesses

) Majorbusines	s unitsandtheir key businesses
Department Name	Main Businesses
President	The President is responsible for the execution of the Company's operations. The President establishes business strategic goals and directs and manages subordinates in business operations to achieve the Company's goals.
President Office	The President Office assists the President in business operations, plans for the Company's medium and long-term goals and strategies, and improves the performance of execution units.; the President Office is also responsible for the management, assistance, and audit of investee businesses for strengthening the comprehensive performance of affiliated enterprises; it also manages legal and intellectual property rights.
Quality Strategy Center	The Center is responsible for managing quality/hazardous substances/environmental health and safety systems; assignment of management representatives and definitions of duties; formulation, amendment, and review of plans for the quality/hazardous substance/environmental health and safety systems; formulation of annual management strategies and communication and advancement of targets; implement regular audits on the performance of various systems, improvements for discrepancies, and effectiveness of improvements; regularly implement reviews & improvementsfor discrepancies, and effectiveness of improvements for management items; monitor the effective supervision of customer complaints; provide assistance, risk prevention, and prevent recurrence through management.
GS Business Unit	The GS Business Unit isresponsible for technical support and product development for strategic applications and strategic customers; it also follows up on customer demands in projects and provide customers with solutions. The GS Business Unit manages marketing channels across the globe and strategic customers. It formulates product and marketing strategies to expand the market, maintain customer relations, and improve customer satisfaction. It also manages overseas subsidiariesforsales.
Global Production Unit	It is responsiblefor the production of cooling fans and motors as well as comprehensive quality; it also provides customers with high-quality products and prompt delivery. The Unit oversees the Kunshan Factory, Foshan Factory,Beihai Factory,andKaohsiungFactory.
Automated Intelligence Division	It is responsible for the development of production processes for fans and motors as well as the R&D and design of various automated production equipment and tools to improve overall production efficiency.
Operating Management Division	It is responsible for formulating KPI for all departments of the Group as well as their evaluations and follow-up improvement; it is responsible for the coordination and improvement of system procedures as well as the development of the managementsystem tools.

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Strategic Purchasing Department	It is responsible for developing suppliers of materials and control of procurement prices; it also implements a qualified supplier system and priority suppliersystem.
Global Human Resource Division	It is responsible for the human resources development of all subsidiaries across the globe and the administrative affairs of the parent company;its goal istoimprove employee satisfaction.
IT Division	It is responsible for the establishment of a corporate information system and the maintenance of stability, timeliness, confidentiality, and security of the system andinformationcommunication.
Finance Division	It is responsible for maintaining records on the Company's business activities, formulating financial information and management reports, providing analytical data and suggestions for improvement in business decision-making,and controlling budgets.

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II. Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and Department Directors (I) Director information

Director information

									Director	Director	information	information
																	April 11,2023
Title (Note 1)	Nationality or place of registration	Name	Gender Age (Note 2)	Date elected (appointed)	Term	Date first elected (Note 3)	Shares held during election		Number of shares currently held		Current shares held by spouse and underage children		Shareholding by nominee arrangement		Education and work experience (Note 4)	Other current positions within the Company	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads			Remarks (Note 5)
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Title	Name	Relationship
Yo Yuan Investment Corporation Representative	Republic of China			2021.7.1	3	2009.5.27	14,802,000	5.90%	14,825,000	5.91%	-	-	-	-	-	-	-	-	-	-
	Republic of China	Chairman Ching-Shen Hong	Male 41 to 50	2021.7.1	3	2009.5.27	3,000,000	1.20%	4,870,000	1.94%	267,000	0.11%	-	-	Department of Electrical Engineering, Kun Shan University Graduated from the Department of Business Import/Export Management, Vancouver Community College	President, Sunonwealth Electric Machine Industry Co., Ltd. Chairman, Sunon Electronic (Kunshan) Co., Ltd. Chairman, Sunon Electronic (Foshan) Co., Ltd. Chairman, Sunon Electronic (Bei Hai) Co., Ltd. Chairman, Beihai Li Zhun Electronics Co., Ltd. Chairman, Sunon Inc. Chairman, Sunon SAS Director, Sunon Corporation Chairman, Sunon Electronics India Private Ltd. Director, SUNON Properties Philippines Corp. Director, SUNON Electronics Philippines Corp. Director, Suzhou Shengyixing Heat Transfer Technology Co., Ltd. Chairman,Yo Yuan Investment Corporation	Director Director	Fu-Ing Hong Chen Li-Ju Chen	Mother-son Spouse	Business succession plan. Response measures: Processed in accordance with laws for compliance
	Republic of China	Director Fu-Ing Hong Chen	Female 71 to 80	2021.7.1	3	2009.5.27	15,270,000	6.09%	12,282,000	6.49%	-	-	-	-	Graduated from Yanchao Elementary School	Senior Special Assistant, Sunonwealth Electric Machine Industry Co., Ltd. Director, Sunon Inc. Director, Sunon Electronic (Kunshan) Co., Ltd. Director, Sunon Electronic (Foshan) Co., Ltd. Director, Sunon Electronic (Bei Hai) Co., Ltd. Director, SUNON Properties Philippines Corp. Director, SUNON Electronics Philippines Corp. Chairman,GuangShengInvestment Corporation	Director Director	Ching-Shen Hong Li-Ju Chen	Mother-son Daughter- in-law	Business succession plan. Response measures: Processed in accordance with laws for compliance
	Republic of China	Director Li-Ju Chen	Female 51 to 60	2021.7.1	3	2009.5.27	267,000	0.11%	267,000	0.11%	4,870,000	1.94%	-	-	Graduated from the Department of Information Management, Queen's College (Canada)	Director of the Strategic Purchasing Department/IT Department, Sunonwealth Electric Machine Industry Co., Ltd. Director, Sunon Electronic (Kunshan) Co., Ltd. Director, Sunon Electronic (Foshan) Co., Ltd. Director, Sunon Electronic (Bei Hai) Co., Ltd. Director, Sunon Corporation Director, Sunon Electronics India Private Ltd. Director, SUNON Properties Philippines Corp. Director,SUNON Electronics Philippines Corp.	Chairman of the Board Director	Ching-Shen Hong Fu-Ing Hong Chen	Spouse Daughter- in-law	Response measures: Processed in accordance with laws for compliance
	Republic of China	Director Tseng- Cheng Lin	Male 71 to 80	2021.10.4	3	2015.6.9	-	-	-	-	-	-	-	-	Department of Business Administration, International Business College Chairman, Suman Corporation	-	-	-	-	-

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Title (Note 1)	Nationality or place of registration	Name	Gender Age (Note 2)	Date elected (appointed)	Term	Date first elected (Note 3)	Shares held during election	Shares held during election	Number of shares currently held	Number of shares currently held	Current shares held by spouse and underage children	Current shares held by spouse and underage children	Shareholding by nominee arrangement	Shareholding by nominee arrangement	Education and work experience (Note 4)	Other current positions within the Company	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Remarks (Note 5)
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Title	Name	Relationship
Representative of Nice Enterprise Co., Ltd.	Republic of China			2018.5.30	3	1997.4.3	4,506,813	1.80 %	4,006,813	1.60 %	-	-	-	-	-	-	-	-	-	-
	Republic of China	Director Ching- Liang Chen	Male 71 to 80	2018.5.30	3	1997.4.3	-	-	-	-	-	-	-	-	Graduated from the Department of Public Affairs, National Chung Hsing University	President, Nice Enterprise Co., Ltd. Supervisor, Taiwan First Biotechnology Corp. Chairman, Taiwan Food Industry Co., Ltd. Chairman, Ho Ding International Development Co., Ltd.	-	-	-	-
Independent Director	Republic of China	Chun-Hao Xin	Male 71 to 80	2021.7.1	3	2015.6.9	-	-	-	-	206,510	0.08%	-	-	Master's degree, Institute of Business Management, I-Shou University Director-General, Kaohsiung County Revenue Service Bureau Director-General, Kaohsiung County Branch, National Tax Administration of Southern Taiwan Province Director-General, Pingtung Branch, National Tax Administration of Southern Taiwan Province Independent Director, Chang Wah Electromaterials Inc. Independent Director, Thinflex Corp.	-	-	-	-	-
Independent Director	Republic of China	Mei-Hsiang Pai	Female 71 to 80	2021.7.1	3	2015.6.9	24,128	0.01%	-	-	-	-	-	-	BBA, Soochow University School of Law MBA, College of Management, National Sun Yat-sen University Master of Science, Graduate Institute of Medical Sciences, Chang Jung Christian University Senior Consultant, Lee and Li Attorneys-at-Law Supervisor, Advanced International Multitech Co.,Ltd.	Director, Rich Fountain International Corp.	-	-	-	-
Independent Director	Republic of China	Chih-Ming Chen	Male 61 to 70	2021.7.1	3	2015.6.9	-	-	-	-	-	-	-	-	BBA, Soochow University School of Law Master of Social Sciences, National Sun Yat-sen University Judge and ChiefJudge, Kaohsiung District Court Taiwan High Court Kaohsiung Branch Judge Cheng Yang Attorneys-at- Law Partner	Managing Partner, Chih-Ming Attorneys-at-Law	-	-	-	-

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Title (Note 1)	Nationality or place of registration	Name	Gender Age (Note 2)	Date elected (appointed)	Term	Date first elected (Note 3)	Shares held during election	Shares held during election	Number of shares currently held	Number of shares currently held	Current shares held by spouse and underage children	Current shares held by spouse and underage children	Shareholding by nominee arrangement	Shareholding by nominee arrangement	Education and work experience (Note 4)	Other current positions within the Company	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Remarks (Note 5)
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Title	Name	Relationship
Independent Director	Republic of China	Kuang-Chih Huang	Male 81 to 90	2021.7.1	3	2021.7.1	-	-	-	-	-	-	-	-	PhD in Physics, NYU Polytechnic School of Engineering Director of College and Dean of Academic Affairs, National Chiao Tung University Dean of the College of Engineering, National Sun Yat-sen University Founding President, National Quemoy University President, National Kaohsiung University of Applied Sciences	Honorary Professor, National Kaohsiung University of Applied Sciences Honorary Chair Professor, Cheng Shiu University	-	-	-	-

Note 1: The names and representatives of institutional shareholders shall be listed separately (those who represent institutional shareholders should indicate corporate names) and fill in Table 1 below. Note 2: Please specify the actual age. Results may be expressed in ranges such as 41 to 50 or 51 to 60.

Note 3:Fill in the time when the individual first served as the Company's Director or Supervisor. Any interruptions should be indicated.

Note 4: Work experiences of anyone in the table above that are related to their current roles, such as previous employment at CPA firms or employment in affiliated companies, should be disclosed along with job titles and responsibilities.

Note 5: Where the Chairman, President, or individual with equivalent roles are the same individual, spouses, or relatives within the first degree of kinship, the Company shall specify related information regarding the reason, reasonableness, necessity, and response measures (e.g., appointment of additional Independent Directors and requiring the appointment of more than half of the Directors from individuals who are not employees or managers).
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Table 1: Major shareholders of institutional shareholders

March 31, 2023

		March 31,2023
Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
Yo Yuan Investment Corporation	Ching-Shen Hong Li-Ju Chen Chia-Chun Hong Chia-Wei Hong Rong Jin International Development Co., Ltd. Sunonwealth CharityFoundation	16.50 3.50 6.75 6.75 6.50 60.00
Nice Enterprise Co., Ltd.	AGV Products Corp. Ho Yuan Investment Corporation Taiwan First Biotechnology Corp. Taiwan NJC Corporation Ho Ding International Development Co., Ltd. Leshan Investment Development Co., Ltd. Yu-Ying Hong Zhi-Hong Chen English International Consultancy Co., Ltd. Cunyuan Heye Co., Ltd.	28.24 20.58 10.83 6.41 4.21 3.09 3.06 2.70 2.38 3.31

Note 1: For directors and supervisors who are the representatives of institutional shareholders, the names of the institutional shareholders shall be disclosed.

Note 2: Fill in the names of main shareholders of the institutional shareholder (the top ten shareholders in terms of shareholding ratio) and their shareholding ratio. If the major shareholder is a juristic person, his/her name should be filled in Table 2 below.

Note 3: Where an institutional shareholder is not organized as a company, the name of the shareholders and shareholding ratio that must be disclosed in accordance with the above shall be the name of the funder or donor and the funding or donation ratio.

Table 2: Major shareholders in Table 1 who are institutional shareholders and their major shareholders

		March 31,2022
Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
Rong Jin International Development Co.,Ltd.	Yi Peng Co., Ltd.	100.00
Sunonwealth Charity Foundation	Ching-Shen Hong Fu-Ing Hong Chen Yin-Su Hong Sheng-Tai Hong Chia-Chun Hong Chia-Wei Hong	20.00 30.00 30.00 10.00 5.00 5.00

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Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
AGV Products Corp.	Ho Yuan Investment Corporation Nice Enterprise Co., Ltd. Kuo Pao Investment and Development Co., Ltd. Kuo Pen Investment and Development Co., Ltd. SPDR Emerging Market ETF under the custody of Standard Chartered Bank Jung-Yu Lin English International Consultancy Co., Ltd. Guan-Ru Chen Leshan Investment Development Co., Ltd. Guan-HanChen	6.30 4.20 1.63 1.47 1.60 1.73 1.66 1.36 1.22 1.15
Ho Yuan Investment Corporation	Zhi-Hong Chen English International Consultancy Co., Ltd. Yu-Ying Hong Su-Mei Yuan Zhih-Zhan Chen Zhih-Lun Chen Ching-Jen Chen Chang-Jiao Hu Wen-Na Yang Jeam-Tan Chen	23.03 19.00 8.33 10.53 5.71 5.71 4.70 4.45 2.22 2.10
Taiwan First Biotechnology Corp.	AGV Products Corp. Paolyta Co., Ltd. BHL Taipei Limited Nice Enterprise Co., Ltd. Ta Tai Investment Corporation Ho Yuan Investment Corporation Yun Gu Nice Investment Corporation Lei Ying Security Co., Ltd. Teng-Fei Lin	41.28 8.00 8.00 6.10 4.00 3.62 1.57 2.05 1.47 1.28
Ho Ding International Development Co., Ltd.	Nice Enterprise Co., Ltd. AGV Products Corp. Ho Tien International Development Co., Ltd. Chang-Jiao Hu Zhi-Hong Chen Yu-Ying Hong Su-Mei Yuan Kuo Pen Investment and Development Co., Ltd.	49.07 48.98 0.53 0.29 0.29 0.29 0.29 0.26

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Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
Leshan Investment Development Co., Ltd.	Ya-Xin Zheng Xuan-Hui Chen Lan-Xin Ye Guan-Hao Chen Su-Mei Yuan Guan-Hua Chen Bai-Ye Chen Qi-Rui Chen Xin-He Li Xin-Jia Li	24.00 24.00 16.00 8.00 4.00 4.00 4.00 4.00 4.00 4.00
English International Consultancy Co., Ltd.	Yu-Ying Hong Guan-Ru Chen Guan-Han Chen Guan-Zhou Chen Yu-Nu Hong Qiu-Wen Li	31.60 24.00 24.00 19.60 0.40 0.40
Taiwan NJC Corporation	New Japan Chemical Co., Ltd. Taiwan First Biotechnology Corp. Nice Enterprise Co., Ltd. Tai Food Industry Co., Ltd. Yi-Yan Chen Chia Ho Hsing Co., Ltd. Ho Yuan Investment Corporation Leshan Investment Development Co., Ltd. Cunyuan Heye Co., Ltd. Jia-En Zhang	43.71 19.86 15.77 7.67 3.45 0.70 0.58 0.39 0.39 0.37
Cunyuan Heye Co., Ltd.	Zhi-Hong Chen Chang-Jiao Hu Zhih-Zhan Chen Zhih-Lun Chen Yuan-Hui Wang Xiao-Ci Chen Xiao-He Chen Xiao-Wei Chen	28.00 20.00 15.00 15.00 13.50 2.84 2.83 2.83

Note 1: If the major shareholders in the preceding Table1 are institutional shareholders, the name of the institutional shareholder shall be disclosed.

Note 2: Fill in the names of main shareholders of the institutional shareholder (the top ten shareholders in terms of shareholding ratio) and their shareholding ratio.

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(II)Profile of Directors and Supervisors

I. Disclosure of information on the professional qualifications of Directors and Supervisors and independence of Independent Directors:

Criteria Name	Professional Qualifications and Experience (Note 1)	Fulfillment of Independence Criteria (Note 2)	Number of other public companies where the individual concurrently serves as an independent director
Yo Yuan Investment Corporation Representative:Ching- Shen Hong	Department of Electrical Engineering, Kun Shan University Graduated from the Department of Business Import/Export Management, Vancouver Community College President, Sunonwealth Electric Machine Industry Co., Ltd. Chairman,Yo Yuan Investment Corporation	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-
Yo Yuan Investment Corporation Representative:Fu-Ing Hong Chen	Senior Special Assistant, Sunonwealth Electric Machine Industry Co., Ltd. Chairman, Guang Sheng Investment Corporation	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-
Yo Yuan Investment Corporation Representative:Li-Ju Chen	Graduated from the Department of Information Management, Queen's College (Canada) Director of the Strategic Purchasing Department/IT Department, Sunonwealth Electric Machine Industry Co., Ltd.	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-
Yo Yuan Investment Corporation Representative:Tseng- Cheng Lin	Graduated from the Department of Business Administration, International Business College Chairman, Suman Corporation Chairman, Fu Fong International Co., Ltd. Director, Hemogen Bio-Tech Co., Ltd.	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-
Nice Enterprise Co., Ltd. Representative:Ching- Liang Chen	Graduated from the Department of Public Affairs, National Chung Hsing University President, Nice Enterprise Co., Ltd. Supervisor, Taiwan First Biotechnology Corp. Chairman, Taiwan Food Industry Co., Ltd. Chairman, Ho Ding International Development Co.,Ltd.	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-

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Criteria Name	Professional Qualifications and Experience (Note 1)	Fulfillment of Independence Criteria (Note 2)	Number of other public companies where the individual concurrently serves as an independent director
Chun-Hao Xin	MBA, I-Shou University Director-General, Kaohsiung County Revenue Service Bureau Director-General, Kaohsiung County Branch, National Tax Administration of Southern Taiwan Province Director-General, Pingtung Branch, National Tax Administration of Southern Taiwan Province Independent Director, Chang Wah Electromaterials Inc. Independent Director, Thinflex Corp. (Does not meet any of the conditions stated in the subparagraphs of Article 30 of the CompanyAct)	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-
Mei-Hsiang Pai	BBA, Soochow University School of Law MBA, College of Management, National Sun Yat-sen University Master of Science, Graduate Institute of Medical Sciences, Chang Jung Christian University Senior Consultant, Lee and Li Attorneys-at- Law Director, Rich Fountain International Corp. Supervisor, Advanced International Multitech Co., Ltd. (Does not meet any of the conditions stated in the subparagraphs of Article 30 of the CompanyAct)	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-

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Criteria Name	Professional Qualifications and Experience (Note 1)	Fulfillment of Independence Criteria (Note 2)	Number of other public companies where the individual concurrently serves as an independent director
Chih-Ming Chen	Master of Social Sciences, National Sun Yat-sen University BBA, Soochow University School of Law Judge and Chief Judge, Kaohsiung District Court Judge, Taiwan High Court Kaohsiung Branch Partner, Cheng Yang Attorneys-at-Law Managing Partner, Chih-Ming Attorneys-at- Law (Does not meet any of the conditions stated in the subparagraphs of Article 30 of the CompanyAct)	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-
Kuang-Chih Huang	PhD in Physics, NYU Polytechnic School of Engineering Director of College and Dean of Academic Affairs, National Chiao Tung University Dean of the College of Engineering, National Sun Yat-sen University President and Lifetime Honorary Professor, National Kaohsiung University of Applied Sciences Founding President, National Quemoy University Honorary Chair Professor, Cheng Shiu University (Does not meet any of the conditions stated in the subparagraphs of Article 30 of the CompanyAct)	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act.	-

II. Diversity and independence of the Board of Directors:

The Company stipulated in its "Corporate Governance Best Practice Principles" that the principle of diversity must be considered in the composition of the Board members. In addition to diversity in terms of gender, race, and nationality, Board members must have the knowledge, skills, and experience necessary to perform their duties. To ensure the attainment of corporate governance targets.

The overall expected capabilities of the board of directors must include 1. Ability to make sound business judgments. 2. Ability to perform accounting and financial analysis. 3. Ability to manage a business. 4. Ability to handle crisis management. 5. Knowledge of the industry. 6. An international market perspective. 7. Leadership ability. 8. Ability to make decisions, and members must have diverse professional backgrounds.

The Company currently has 9 Directors who are all Taiwanese nationals, including 4 Independent Directors, 3 female Directors, and 3 Directors who are employees (they account for 44.5%, 33.3%, and 33.3% of all Directors).

As of the end of 2022, 2 Directors were 50-59 years old and other Directors were over 60 years old. Independent Directors meet the requirements of the Securities and Futures Bureau, Financial Supervisory Commission for independent director.

Note 1: Professional qualifications and experience: Explain the professional qualifications and

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experience of individual Directors and Supervisors. If a Director or Supervisor has accounting or financial expertise, explain the accounting or financial background and work experience and whether he/she meets any of the conditions stated in Article 30 of the Company Act.

Note 2: Describe the independence criteria of Independent Directors, including but not limited to stating that the individual, spouse, or relative within the second degree of kinship is not a director, supervisor, or employee of the Company or any of its affiliates; the number of shares of the Company held by the individual, spouse, or relative within the second degree of kinship do not hold shares (or have shares held in names of third parties) and the shareholding ratio; whether they serve as a director, supervisor, or employee of companies that have special relations with the Company (refer to the provisions in Subparagraphs 5 to 8, Paragraph 1, Article 3 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies); Compensation for business, legal, financial, or accounting services provided for the Company or its affiliates in the last two years.
Note 3: Please refVer to the best-practice templates of the Corporate Governance Center, Taiwan Stock Exchange Corporation for the methods of disclosure.
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(II) Profile of the President, Vice Presidents, Assistant Vice Presidents, and Department Directors

April 11, 2023

Title (Note 1)	Nationality	Name	Gend er	Date elected (appointed)	Shares held	Shares held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shareholding by nominee arrangement	Shareholding by nominee arrangement	Education and work experience (Note 2)	Current job position in other companies	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Remarks (Note 3)
					Number of shares	Sharehol ding ratio	Number of shares	Sharehol ding ratio	Number of shares	Shareho lding ratio			Title	Name	Relation ship
President	Republic of China	Ching-Shen Hong	Male	2011.3.4	4,870,000	1.94%	267,000	0.11%	-	-	Department of Electrical Engineering, Kun Shan University Graduated from the Department of Business Import/Export Management, Vancouver Community College	Representative of Corporate Director, Sunonwealth Electric Machine Industry Co., Ltd. Chairman, Sunon Electronic (Kunshan) Co., Ltd. Chairman, Sunon Electronic (Foshan) Co., Ltd. Chairman, Sunon Electronic (Bei Hai) Co., Ltd. Chairman, Sunon Inc. (United States) Chairman, Sunon SAS (France) Chairman, Sunon Ltd. (India) Director, SUNON Properties Philippines Corp. Director, SUNON Electronics Philippines Corp. Director, Suzhou Shengyixing Heat Transfer Technology Co., Ltd. Chairman,Yo Yuan Investment Corporation	-	-	-	-
Vice President and Director of the Finance Division	Republic of China	William Li	Male	2006.1.1	-	-	-	-	-	-	Master of Industrial Management, National Taiwan University of Science and Technology	Supervisor, Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	-	-	-	-
Vice President of Business Unit	Republic of China	Chen- Hsueh Li	Male	2014.7.25	12,299	0.00%	-	-	-	-	Department of Mechanical Engineering, National Taipei Institute of Technology	-	-	-	-	-
Executive Vice President	Republic of China	Chin-Tzu Wu	Male	2021.2.1	-	-	-	-	-	-	EMBA, National University of Kaohsiung	-	-	-	-	-
President of Business Unit	Republic of China	Che-Lun Huang	Male	2022.11.1	-	-	-	-	-	-	Master, Institute of Nuclear Engineering and Science, National Tsing Hua University	-	-	-	-	-
Vice President of OEM Production Unit	Republic of China	Kuan-Hung Tseng	Male	2019.11.6	-	-	-	-	-	-	Master, Department of Business Administration, Southern Taiwan University of Science and Technology	-	-	-	-	-

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Title (Note 1)	Nationality	Name	Gend er	Date elected (appointed)	Shares held	Shares held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shareholding by nominee arrangement	Shareholding by nominee arrangement	Education and work experience (Note 2)	Current job position in other companies	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Remarks (Note 3)
					Number of shares	Sharehol ding ratio	Number of shares	Sharehol ding ratio	Number of shares	Shareho lding ratio			Title	Name	Relation ship
Vice President of OEM Production Unit	Republic of China	Kuo-Ching Li	Male	2022.2.1	-	-	-	-	-	-	Department of Business Administration, National Cheng Kung University	-	-	-	-	-
Plant Director	Republic of China	Yen-Wen Feng	Male	2022.2.1	-	-	-	-	-	-	Department of Labor Relations, College of Law, Chinese Culture University	-	-	-	-	-
Plant Director	Republic of China	Chao-Wang Chiu	Male	2022.2.1	5,000	0.00%	1,000	0.00%	-	-	Department of Electrical Engineering, Chin-Yi Institute of Technology	-	-	-	-	-

Note 1: Information regarding the President, Vice Presidents, Assistant Vice Presidents, Heads of Departments and Branches should be included, whereas information regarding positions equivalent to President, Vice Presidents, Assistant Vice Presidents should be disclosed regardless of job title.

Note 2: Work experiences of anyone in the table above that are related to their current roles, such as previous employment at CPA firms or employment in affiliated companies, should be disclosed along with job titles and responsibilities. Note 3: Where the Chairman, President, or individual with equivalent roles are the same individual, spouses, or relatives within the first degree of kinship, the Company shall disclose related information regarding the reason, reasonableness, necessity, and response measures (e.g., appointment of additional Independent Directors and requiring the appointment of more than half of the Directors from individuals who are not employees or managers).

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III. Remunerations to Directors (including Independent Directors), Supervisors, President, and Vice Presidents in recent years (I) Director's remuneration

Remuneration paid to Directors and Independent Directors (range of remuneration with name disclosure)

Ti	tle	Name	Director's	Director's	Director's	Director's	remuneration	remuneration	remuneration	remuneration	Ratio of total compensation (A+B+C+D) to net income (%) (Note 10)	Ratio of total compensation (A+B+C+D) to net income (%) (Note 10)	Pay received a	Pay received a	Pay received a	Pay received a	s an employee	s an employee	s an employee	s an employee	Percentage of the total sums of A, B, C, D, E, F, and G on the net profit (Note 10) A	Percentage of the total sums of A, B, C, D, E, F, and G on the net profit (Note 10) A	Compensation from investee companies other than subsidiaries or the parent company (Note 11)
			Remuneration (A) (Note 2)		Retirement pension (B)		Director's remuneration (C) (Note 3)		Fees for conducting business (D) (Note 4)				Salary, bonuses and allowances (E) (Note 5)		Retirement pension (F)		Employee's remuneration (G) (Note 6)
			The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company		All companies in the Financial Report(Note 7)		The Company	ll companies in the Financi Report
																	Cash amount	Stock amount	Cash amount	Stock amount
Director	Chairman of the Board	Yo Yuan Investment Corporation Representative: Ching-Shen Hong	2,880	2,880	-	-	8,000	8,000	250	250	1.02%	1.02%	16,009	18,366	-	-	7,281	-	7,281	-	3.16%	a 3.38%	None
	-	Yo Yuan Investment Corporation Representative: Fu-Ing Hong Chen Li-Ju Chen Tseng-ChengLin
	-	Nice Enterprise Co., Ltd. Representative: Ching-LiangChen
Independen t Director		Chun-Hao Xin	5,640	5,640	-	-	-	-	200	200	0.54%	0.54%	-	-	-	-	-	-	-	-	0.54%	0.54%	None
		Mei-HsiangPai
		Chih-MingChen
		Kuang-Chih Huang

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Please describe the policy, system, standards and structure of the remuneration packages of the Independent Directors and explain the relevance of the amount of remuneration paid to them based on factors such as responsibility, risk and time commitment:
Independent Directors receive monthly remuneration and transportation allowances that are higher than general Directors and they receive slightly lower distribution of earnings than general Directors. Their remuneration is not closely associated with business performance and future risks.
The Company established remuneration for Directors in the Articles of Incorporation to distribute no more than 5% of the profits of the current year as remuneration for Directors. However, a sum shall be set aside in advance to pay down any outstanding cumulative losses.
Except as disclosed above, remuneration received by directors in the latest year for services (e.g., acting as a non-employee consultant of the parent company/any company in the financial statements/investee) provided by the directors: None.
Please list related information on Directors (general Directors who are not Independent Directors) and Independent Directors separately.
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Range of remuneration table

	Range of remuneration table	Range of remuneration table	Range of remuneration table	Range of remuneration table
Remuneration scale applicable to the Company's Directors	Name of Director
	Total amount for the 4 preceding remunerations (A+B+C+D)		Total amount for the 7 preceding remunerations (A+B+C+D+E+F+G)
	The Company (Note 8)	All companies in the Financial Report (Note 9) H	The Company (Note 8)	All companies in the Financial Report (Note 9) I
Below NT$1,000,000	Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Li-Ju Chen Representative of Yo Yuan Investment Corporation Tseng-Cheng Lin Representative of Nice Enterprise Co., Ltd. Ching-Liang Chen Independent Director: Chun-Hao Xin, Mei-Hsiang Pai,Chih-Ming Chen, Kuang- Chih Huang	Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Li-Ju Chen Representative of Yo Yuan Investment Corporation Tseng-Cheng Lin Representative of Nice Enterprise Co., Ltd. Ching-Liang Chen Independent Director: Chun-Hao Xin, Mei- Hsiang Pai,Chih-Ming Chen, Kuang-Chih Huang	Representative of Yo Yuan Investment Corporation Tseng-Cheng Lin Representative of Nice Enterprise Co., Ltd. Ching-Liang Che Independent Director: Chun-Hao Xin, Mei- Hsiang Pai,Chih-Ming Chen, Kuang-Chih Huang	Representative of Yo Yuan Investment Corporation Tseng-Cheng Lin Representative of Nice Enterprise Co., Ltd. Ching-Liang Che Independent Director: Chun-Hao Xin, Mei- Hsiang Pai,Chih-Ming Chen, Kuang-Chih Huang
NT$1,000,000 (inclusive) to NT$2,000,000(exclusive)	Representative of Yo Yuan Investment Corporation Ching-Shen Hong	Representative of Yo Yuan Investment Corporation Ching-Shen Hong
NT$2,000,000 (inclusive) to NT$3,500,000(exclusive)
NT$3,500,000 (inclusive) to NT$5,000,000 (exclusive)			Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Li-Ju Chen	Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Li-Ju Chen
NT$5,000,000 (inclusive) to NT$10,000,000(exclusive)
NT$10,000,000 (inclusive) to NT$15,000,000(exclusive)			Representative of Yo Yuan Investment Corporation Ching-Shen Hong	Representative of Yo Yuan Investment Corporation Ching-Shen Hong
NT$15,000,000 (inclusive) to NT$30,000,000(exclusive)
NT$30,000,000 (inclusive) to NT$50,000,000(exclusive)

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NT$50,000,000 (inclusive) to NT$100,000,000(exclusive)
Greater than NT$100,000,000
Total	9 persons	9 persons	9 persons	9 persons

Note 1: The names of the Directors must be listed separately (for institutional shareholders, the names of institutional shareholders and representatives should be listed respectively) and the various payment amounts using the summary disclosure method for general Directors and Independent Directors. If a Director concurrently serves as the President or Vice President, his/her name and the amount of remuneration paid to him/her should be listed in this Table and Table (3-1) below or Tables (3-2-1) and (3-2-2).
Note 2: Remuneration to Directors in the most recent year (include Director salary, additional duty payments, severance pay, various bonuses, or incentive payments). Note 3: The amount is the proposed remuneration to directors approved by the Board of Directors for the most recent fiscal year.
Note 4: Refers to the related business expenses of Directors in the past year (including transportation allowance, special allowance, stipends, dormitory, and car). If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel cost calculated based on the actual amount or fair market value, and other payments should be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the company, excluding remuneration, in a separate note.
Note 5: All payments to Directors who are also employees of the Company (including the position of President, Vice President, other managerial officer and staff), including salary, additional pay, severance pay, bonuses, rewards, transportation allowance, special allowance, stipends, dormitory, and car. If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel cost calculated based on the actual amount or fair market value, and other payments should be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the company, excluding remuneration, in a separate note. Furthermore, any compensation recognized in the IFRS 2 Share-Based Payment section, including issuance of employee stock options, new restricted employee shares and capital increase by stock subscription, should be included in the calculation of remuneration.
Note 6: For directors concurrently serving as employees (including the president, vice presidents, other managers and employees) who receive employee rewards (including shares and cash), the amount of employee rewards that have been approved by the Board of Directors and are distributed to them in the most recent fiscal year shall be disclosed. If the amount of rewards cannot be estimated, the amount of rewards in the current fiscal year shall be calculated based on the ratio of the amount of rewards distributed in the previous fiscal year, and this amount shall also be filled in Table 1-3.

Note 7: Total pay to Directors from all companies in the consolidated statements (including the Company).

Note 8: The name of each Director shall be disclosed in the range of remuneration corresponding to the amount of all the remuneration paid to the Director by the Company.
Note 9: The total amount of all the remuneration paid to each Director of the Company by all the companies (including the Company) listed in its consolidated financial statements shall be disclosed. The name of each Director shall be disclosed in the range of remuneration corresponding to the total amount mentioned in the preceding sentence.
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Note 10: The after-tax net profit refers to the after-tax net profit in the parent company only or individual financial report in the most recent year.

Note 11: a. The amount of remuneration received from subsidiaries other than investee companies or the parent company by the Company's Directors shall be stated clearly in this column (please specify "none" if there is no remuneration).
b. If a Director of the Company receives remuneration from investee companies other than subsidiaries or the parent company, the amount of remuneration received by the director from investee companies other than subsidiaries or the parent company shall be combined into Column I of the table for ranges of remuneration, and this column shall be renamed as "Parent Company and All Investee Companies".
c. Remuneration refers to pay, compensation (including compensation of employees, directors and supervisors) and remuneration for conducting business received by a Director of the Company serving as a director, supervisor or managerial officer of an investee of the Company other than subsidiaries or the parent company.
＊ The content of the remuneration disclosed in this Table is different in concept from the income in the Income Tax Act, therefore the purpose of the table is to disclose information and not for taxation.
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(II) Remunerations to President and Vice President

Remunerations to President and Vice President (range of remuneration with name disclosure)

Unit: thousand NT$; %

Title	Name	Salary (A) (Note 2)	Salary (A) (Note 2)	Retirement pension (B)	Retirement pension (B)	Bonuses and allowances, etc. (C) (Note 3)	Bonuses and allowances, etc. (C) (Note 3)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Ratio of total compensation (A+B+C+D) to net income (%) (%) (Note 8)	Ratio of total compensation (A+B+C+D) to net income (%) (%) (Note 8)	Compensati on from investee companies other than subsidiaries or the parent company (Note 9)
		The Company	All companies in the Financial Report (Note 5)	The Company	All companies in the Financial Report (Note 5)	The Company	All companies in the Financial Report (Note 5)	The Company		All companies in the Financial Report (Note 5)		The Company	All companies in the Financial Report (Note 5)
								Cash amount	Stock amount	Cash amount	Stock amount
President	Ching-Shen Hong	11,819	13,409	-	-	8,860	9,628	8,267	-	8,267	-	2.66%	2.87%	None
Vice President	William Li
Executive Vice President	Chin-Tzu Wu
President of Business Unit	Che-Lun Huang

＊ Regardless of job titles, positions that are equivalent to the President or Vice President (such as General Manager, Chief Executive Officer, and Director) shall be disclosed.
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Range of remuneration table

	Range of remuneration table	Range of remuneration table
Range of remuneration paid to Presidents and Vice Presidents	Name of President and Vice Presidents
	The Company (Note 6)	All companies in the Financial Report (Note 7)E
Below NT$1,000,000
NT$1,000,000(inclusive)to NT$2,000,000(exclusive)	Che-Lun Huang	Che-Lun Huang
NT$2,000,000(inclusive)to NT$3,500,000(exclusive)
NT$3,500,000(inclusive)to NT$5,000,000(exclusive)
NT$5,000,000(inclusive)to NT$10,000,000(exclusive)	Chin-Tzu Wu, William Li	Chin-Tzu Wu, William Li
NT$10,000,000 (inclusive)toNT$15,000,000 (exclusive)	Ching-Shen Hong	Ching-Shen Hong
NT$15,000,000(inclusive)to NT$30,000,000(exclusive)
NT$30,000,000 (inclusive)toNT$50,000,000 (exclusive)
NT$50,000,000(inclusive)to NT$100,000,000(exclusive)
Greater than NT$100,000,000
Total	4persons	4persons

Note 1: The names of President and Vice Presidents shall be listed separately and the amounts paid shall be disclosed in a summary. If a Director concurrently serves as the President or Vice President, his/her name and the amount of remuneration paid to him/her should be listed in this Table and Table (1-1) above or Tables (1-2-1) and (12-2).
Note 2: Salary, additional pay, and severance pay received by the President or Vice President in the past year.
Note 3: Bonus, reward, transportation allowance, special allowance, stipends, dormitory, car and other payments received by the President or Vice President in the past year. If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel cost calculated based on the actual amount or fair market value, and other payments should be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the company, excluding remuneration, in a separate note. Furthermore, any compensation recognized in the IFRS 2 Share-Based Payment section, including issuance of employee stock options, new restricted employee shares and capital increase by stock subscription, should be included in the calculation of remuneration.
Note 4: Fill the amount of employee rewards (including shares and cash) that have been approved by the Board of Directors and are distributed to the general manager and vice president in the most recent fiscal year. If the amount of rewards cannot be estimated, the amount of rewards in the current fiscal year shall be calculated based on the ratio of the amount of rewards distributed in the previous fiscal year, and this amount shall also be filled in Table 1-3. The after-tax net profit refers to the after-tax net profit in the most recent fiscal year; for companies that have adopted IFRSs, the after-tax net profit refers to the after-tax net profit in the parent company only or individual financial report in the most recent year.
Note 5: The total pay to the President or Vice President from all companies in the consolidated statements (including the Company).
Note 6: The names and remuneration of President and Vice Presidents paid by the Company shall be disclosed in their respective remuneration range.
Note 7: The names of the President and Vice Presidents paid by all companies in the consolidated statements (including the Company) shall be disclosed in their respective remuneration range.
Note 8: The after-tax net profit refers to the after-tax net profit in the most recent fiscal year; for companies that have adopted IFRSs, the after-tax net profit refers to the after-tax
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net profit in the parent company only or individual financial report in the most recent year.

Note 9: a. The amount of remuneration received from subsidiaries other than investee companies or the parent company by the Company's President or Vice Presidents shall be stated clearly in this column (please specify "none" if there is no remuneration).
b. If the President or Vice President of the Company received remuneration from investees other than subsidiaries of the Company or the parent company, the remuneration received by the President or Vice President of the Company from investees other than subsidiaries of the Company or the parent company shall be included in E column of the Remuneration Range Table and the name of the field shall be changed to "Parent Company and All Investee Companies".
c. Remuneration refers to pay, compensation (including compensation of employees, directors and supervisors) and remuneration for conducting business received by the President and Vice Presidents of the Company serving as a director, supervisor or managerial officer of an investee of the Company other than subsidiaries or the parent company.
＊ The content of the remuneration disclosed in this Table is different in concept from the income in the Income Tax Act, therefore the purpose of the table is to disclose information and not for taxation.
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(III) Managerial officer's name and the distribution of employee bonus

(III)	Managerial officer's n	ame and the	distribution of	employee bo	nus
						April 11, 2023 Unit:thousand NT$
	Title (Note 1)	Name (Note 1)	Stock amount	Cash amount	Total	Percentage of total bonuses to net profit after tax(%)
Managerial Officer	President	Ching-Shen Hong	-	11,306	11,306	1.04 %
	Vice President and Director of the FinanceDivision	William Li
	Executive Vice President	Chin-Tzu Wu
	President of Business Unit	Che-Lun Huang
	Vice President of Business Unit	Chen-Hsueh Li
	Vice President of Business Unit	Tsui-Wen Hsiao
	Acting President of Business Unit	Kuan-Hung Tseng
	Acting President of Business Unit	Kuo-Ching Li
	Plant Director	Yen-Wen Feng
	Plant Director	Chao-Wang Chiu

Note 1: Names and positions should be listed individually, and the amount of profit distributed should be disclosed collectively.
Note 2: Fill the amount of employee rewards (including shares and cash) that have been approved by the Board of Directors and are distributed to the managerial officers in the most recent fiscal year. If this amount of rewards cannot be estimated, the amount of rewards in the current fiscal year shall be calculated based on the ratio of the amount of rewards distributed in the previous fiscal year. The after-tax net profit refers to the after-tax net profit in the most recent fiscal year; for companies that have adopted IFRSs, the after-tax net profit refers to the after-tax net profit in the parent company only or individual financial report in the most recent year.
Note 3: The scope of application for the term "managerial officer" shall be pursuant to the FSC's TaiCai-Zheng-3 No. 0920001301 Order dated March 27, 2003. Its scope of application shall be as follows:
(1) The President and those with equivalent powers
(2) Vice Presidents and those with equivalent powers
(3) Assistant Vice Presidents and those with equivalent powers
(4) Head of the Finance Department
(5) Head of the Accounting Department
(6) Other individuals with the authority of managing company affairs and signatory rights
Note 4: Directors, Presidents, and Vice Presidents who receive employee rewards (including shares and cash) should be listed not only in Table 1-2, but also in this table.
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(IV) Comparison of compensation paid by the Company and all the consolidated entities in the last two years to the company's Directors, Supervisors, President and Vice Presidents as a percentage to the net income after tax. Explanation on remuneration policies, standards and combination of the procedures in determining remuneration, and association with business performance and future risks:

The analysis of remunerations to the Company's Directors, Supervisors, President and Vice Presidents as a percentage of net profit after tax in the most recent year is provided in the table below:

Year	Total remuneration paid to Directors, Supervisors, the President, and Vice Presidents (thousand NT$)	Total remuneration paid to Directors, Supervisors, the President, and Vice Presidents (thousand NT$)	Total remuneration as a percentage of profit after tax (%)	Total remuneration as a percentage of profit after tax (%)
	The Company	All Companies in the Consolidated Financial Report	The Company	All companies in the Consolidated Financial Report
2021	39,584	41,302	9.22%	9.62%
2022	55,354	57,711	5.08%	5.30%

II. The policy, standards and packages of remuneration, procedure for making
such decision, and relation to business performance and future risks:
(I) Policies, standards, and packages of compensation:
1. The remuneration for Directors of the Company shall be determined in accordance with prevailing rates in the industry. Any profit of the Company shall be processed according to Article 29 of Articles of Incorporation, which states that when the Company makes a profit, it shall set aside no more than 5% as remuneration for Directors. However, if the Company has accumulated losses, the Company shall set aside a part of the surplus profit first for making up the losses. Independent Directors are not eligible for the distribution of remuneration for Directors.

The Company evaluates the remuneration for Directors at regular intervals in accordance with the "Rules for Performance Evaluation of Board of Directors", and the reasonableness of the remuneration is reviewed by the Remuneration Committee and the Board of Directors.

The Company's remuneration for managerial officers is based on the work allowances and bonuses in the Company's Remuneration Regulations to support and reward employees for their hard work and contributions in work. Other bonuses are also distributed based on the Company's annual business performance, financial conditions, and employees' individual performance.

If the company turns a profit, it shall be processed according to Article

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29 of Articles of Incorporation, which states that it shall set aside no less than 2% as remuneration for employees.

To encourage employees to work together and to share the results of business operations, the Company established the "Employee Remuneration Incentive Regulations" as the basis for strengthening employees' sense of solidarity and implementation of reward measures.
The Company's payment of remuneration is based on the "Rules for Performance Evaluation of Board of Directors" and the results of evaluations conducted in accordance with the "Employee Remuneration Incentive Regulations" which applies to managerial officers and employees.

The performance evaluation and the reasonableness of salary and remuneration for Directors and managerial officers is reviewed by the Remuneration Committee and the Board of Directors each year. In addition to the personal performance achievement rate and contributions to the Company, the Company reviews the remuneration system in accordance with overall business performance, future risks of the industry, and development trends, as well as actual business operations and related laws. The Company also evaluates the current corporate governance trends for providing reasonable remuneration to maintain a balance between sustainable management and risk management.

(II) Procedures for determining remuneration:
The regular evaluation of the salary and remuneration for Directors and managerial officers is conducted based on the "Rules for Performance Evaluation of Board of Directors" and the results of evaluations conducted in accordance with the "Employee Remuneration Incentive Policy" which applies to managerial officers and employees. The performance evaluation of the Chairman is based on the results of the Company's annual business performance indicators related to its business operations, governance, and financial operations. The scope of the evaluation includes net profit before tax, customer satisfaction rate, and corporate governance evaluation indicators. The scope of the performance evaluation of the President includes the performance targets for main work duties such as operation safety management, supervision of the implementation of financial plans, revenue management, enhancement of internal control, and implementation of quality assurance and management.
The results of self-evaluations of the Board of Directors, individual directors, and functional committees for 2021 were excellent. In the 2021 performance evaluation of managerial officers, despite the rampage of the COVID-19 pandemic, the Company still strived to obtain orders for production. Although the target was not achieved for the year, the profitability has gradually returned to normal levels starting from the third quarter.
The performance evaluation and the reasonableness of salary and remuneration for Directors and managerial officers is reviewed by the Remuneration Committee and the Board of Directors each year. In addition to the personal performance achievement rate and contributions to the Company, the Company reviews the remuneration system in accordance with overall business performance, future risks of the industry, and development trends, as well as actual business operations and related laws. The Company also evaluates the current
35 -

corporate governance trends for providing reasonable remuneration to maintain a balance between sustainable management and risk management.

The actual amounts distributed as remuneration for the Directors and managerial officers in 2021 were reviewed by the Remuneration Committee and filed to the Board of Directors for approval.

(III) Relation to business performance and future risks:
The review of the payment standards and systems of Company's remuneration policy is based on the Company's overall business conditions. We also set payment criteria based on the performance attainment rate and contribution to increase the overall organization performance of the Board of Directors and the management departments. We also use the remuneration standards of the industry as a reference to ensure that the remuneration of the Company's management remains competitive in the industry and retain outstanding management talents.
The performance targets of the Company's managerial officers meet the risk management requirements to ensure the management and prevention of risks within the scope of their duties. The Company also grades the results based on their actual performance and connects the results to the human resources and related salary and remuneration policies. The important decisions of the Company's management are made based on assessments of various risk factors. The performance of the relevant decisions reflects the profitability of the Company, and the remuneration of management personnel is connected to their risk management performance.

The Company's regular remuneration for Directors, President, and Vice Presidents are based on prevailing rates in the industry and do not incur future risks. The distribution of earnings and the sequence of distribution are specified in the Articles of Incorporation and the approval of the shareholders' meeting shall be required before distribution. The remuneration is tied to the business performance and the Company's long-term development factors have been considered for the payment of remuneration and included in the review of the Remuneration Committee. Therefore, they do not incur future risks.

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IV. Implementation of corporate governance

(I) Board of Directors operating status

Board of Directors operating status

A total of 5 (A) meetings of the Board of Directors were held in the most recent year (2022).

The attendance of Directors was as follows:

Title	Name (Note 1)	Attendance (voting and non-voting) in person B	Attendance by proxy	Attendance (voting and non-voting) in person rate (%) [B/A] (Note 2)	Remarks
Chairman of the Board	Yo Yuan Investment Corporation Representative: Ching-Shen Hong	5	0	100%	None
Director	Yo Yuan Investment Corporation Representative: Fu-IngHong Chen	4	1	80%	None
Director	Yo Yuan Investment Corporation Representative: Li-Ju Chen	5	0	100%	None
Director	Yo Yuan Investment Corporation Representative: Tseng-ChengLin	5	0	100%	None
Director	Nice Enterprise Co., Ltd. Representative: Ching-Liang Chen	5	0	100%	None
Independent Director	Chun-Hao Xin	5	0	100%	None
Independent Director	Mei-Hsiang Pai	5	0	100%	None
Independent Director	Chih-Ming Chen	5	0	100%	None
Independent Director	Kuang-Chih Huang	5	0	100%	None
Other matters required to be recorded: I. Should any of the following take place in a board meeting, the date and number of the meeting, the content of proposal, Independent Director's opinions and the Company's response to such opinions should be recorded: (I) Items specified in Article 14-3 of the Securities and Exchange Act: Not applicable as the Company has established the Audit Committee and is therefore exempted from requirements in Article 14-5 of the Securities and Exchange Act. (II) Aside from the above matters, other resolutions adopted by the Board of Directors to which an Independent Director has adissenting or qualified opinion that is on record or stated in a written statement: None. II. The Directors' avoidance of interest motion should indicate the names of the Directors, content of the motion and reasons of avoidance of interest as well as the involvement in voting: 4th meeting of the 16th Board of Directors on January 24, 2022 Agenda item #4 Agenda: Discussion of theCompany's 2021year-end bonus for managerial officers.(Proposed bythe

37 -
Remuneration Committee)
Description: 1. The Company's 2021 year-end bonus for managerial officers was reviewed by members of the Remuneration Committee who found the proposal to be appropriate and passed it unanimously (refer to Attachment for details).
1. The amendment is hereby filed for resolution.
Resolution: With the exception of the Director Ching-Shen Hong, Director Fu-Ing Hong Chen, and Director Li-Ju Chen who recused themselves due to conflicts of interest, other Directors in attendance passed the proposal unanimously.
Agenda item #5

Agenda: Discussion of the Company's 2021 employee remuneration for managerial officers. (Proposed by the Remuneration Committee) Description:

  1. The Company's 2021 employee remuneration for managerial officers (refer to the Attachment 4).

  2. The proposal was reviewed by all members of the Remuneration Committee who found it to be appropriate and passed it unanimously.

The amendment is hereby filed for resolution.

Resolution: With the exception of the Director Ching-Shen Hong, Director Fu-Ing Hong Chen, and Director Li-Ju Chen who recused themselves due to conflicts of interest, other Directors in attendance passed the proposal unanimously.

III. The company listed on TWSE/TPEx shall disclose the evaluation cycle and duration, scope of evaluation, methodology, and evaluation contents of the evaluation of the Board of Directors. Refer to the Board of Directors evaluation status in Table 2(2). Board of Directors evaluation status: Refer to the Appendix.

IV. Programs this year and in the most recent year in strengthening the functionality of the Board (for example, set up an auditing committee, improve transparency, etc.) and execution evaluation. The Company converted the supervisor system to the Audit Committee system on June 9, 2015. The audit and finance managers report the operations of audits and financial status to the Audit Committee each quarter. They maintain smooth communication and operations. In order to implement corporate governance and enhance the functions of the Company's Board of Directors as well as to establish performance targets so as to enhance the operational efficiency of the Board of Directors, the Company has established the Rules for Performance Evaluation of Board of Directors on May 7, 2020. The Company implements one internal performance evaluation each year and submits results to the Board of Directors before the end of the first quarter of the following year. The performance evaluation results are used as the basis for review and improvements as well as reference for remuneration, nomination, and continued appointment. The results of the 2022 board performance evaluation were reported to the Board of Directors on March 9, 2023.

Note 1: For Directors and Supervisors who are institutions, the name of institutional shareholders and their representatives shall be disclosed.
Note 2: (1) Where a Director resigns before the end of the fiscal year, the "remark" column should be filled with the Director's resignation date, whereas his/her percentage of attendance in person (%) should be calculated based on the number of Board of Directors' meetings held and the actual attendance in person during the period during his/her term of office.
(2) If Directors or Supervisors are re-elected before the end of the fiscal year, incoming and outgoing Directors or Supervisors shall be listed accordingly, and the Remark column shall indicate whether the status of a Director is "outgoing", "incoming" or "re-elected", and the date of re-election. The Director's percentage of attendance in person (%) should be calculated based on the number of Board of Directors' Meetings held and the actual attendance in person during his/her term of office.
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Board of Directors evaluation status

Evaluation cycle (Note1)	Evaluation period (Note2)	Evaluation scope (Note 3)	Evaluation method (Note4)	Evaluation contents (Note 5)
Once every year	From January 1 to December 31, 2022	Board of Directors and members of the Board of Directors	Self- evaluation of the Board of Directors and self- evaluation of Directors	1. The performance evaluation items of the Board of Directors include the following five categories: A. Participation in the operation of the Company. B. Improvement of the quality of the Board of Directors' decision making. C. Composition and structure of the Board of Directors. D. Election and continuing education of the Directors. E. Internal control. 2. The performance evaluation items of the Board of Directors (self- evaluation or peer evaluation) include the following six categories: A. Familiarity with the goals and missions of the Company. B. Knowledge of the duties of Directors. C. Participation in the operation of the Company. D. Management of internal relationship and communication. E. The Director's professionalism and continuing education. F. Internal control.

Note 1: Fill out the evaluation cycle for the evaluation of the Board of Directors such as: Once every year. Note 2: Fill out the evaluated period for the evaluation of the Board of Directors such as: Evaluation of the performance of the Board of Directors from January 1, 2019 to December 31, 2019.

Note 3: The scope of evaluation covers the evaluation of the performance of the Board of Directors, individual directors, and functional committees.

Note 4: The performance evaluation methods include self-evaluation of the Board of Directors, selfevaluation of the Directors, peer evaluation, appointment of external professional institutions or experts, or other appropriate methods.
Note 5: The contents of the evaluation shall include at least the following items:
(1) Board performance evaluation: The evaluation shall include at least the "participation in the operations of the Company", "improvement of the quality of the Board of Directors' decision making", "composition and structure of the Board of Directors", "election and continuing education of the Directors", "and "internal control".
(2) Performance evaluation of individual Directors: The evaluation shall include at least the "familiarity with the goals and missions of the Company", "knowledge of the duties of Directors", "degree of participation in the Company's operations", "management of internal relations and communication", "professional and continuous education of Directors", and "internal control".
(3) Performance evaluation of functional committees: Degree of participation in the Company's operations, knowledge of the duties of the functional committee, improvement in the quality of functional committee decisions, functional committee composition and election of members, and internal control.
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(II) Audit Committee operating status

Audit Committee operating status

The Audit Committee convened a total of 4 meetings (A) in the most recent year (2022). The attendance of Independent Directors was as follows:

Title	Name	Attendance in person(B)	Attendance by proxy	Attendance rate(%) (B/A) (Note1,Note2)	Remarks
Independent Director	Chun-Hao Xin	4	0	100%	None
Independent Director	Mei-Hsiang Pai	4	0	100%	None
Independent Director	Chih-Ming Chen	4	0	100%	None
Independent Director	Kuang-chih Huang	4	0	100%	None
Other matters required to be recorded: I. The date of the meeting of the Audit Committee, the term, contents of the proposals, objections, qualified opinions, and important recommendations of independent directors, resolutions of the Audit Committee, and the Company's handling of the resolutions of the Audit Committee shall be specified under any of the following circumstances in the operations of the Audit Committee: (I) Items specified in Article 14-5 of the Securities and Exchange Act: None. Audit Committee Details of the proposal and subsequent developments Matters stated in Article 14-5 of the Securities and Exchange Act Any resolution not approved by the Audit Committee but approved by two thirds or more of all Directors 3nd Committee 3th meeting March 10, 2022 1. Review of the Company's 2021 Business Report, financial statements, and consolidated financial statements. v None 2. The Company's 2021 earnings distributionproposal. v None 3. Discussion of the Company's report on the self-evaluation results of internal controls in 2021 and the Internal Control System Statement. v None 4. Discussion of the amendment of the Procedures for Acquisition and Disposal of Assets. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. 3nd Committee 4th meeting May 5, 2022 1. Review of the consolidated financial statements for the first quarter of 2022. v None 2. Approval of the change of the certifying CPA due to internal adjustment of the certifying accountingfirm. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. 3nd Committee 5th meeting 1. Review of the consolidated financial statements for the second v None

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August 5, 2022 quarter of 2022. 2. Discussion of technical cooperation in MainlandChina. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. 3nd Committee 6th meeting November 3, 2022 1. Review of the consolidated financial statements for the third quarter of 2022. v None 2. Discussion of the Procedures for Handling Material Inside Information. v None 3. Discussion of additional items in the "Audit of the Handling of Material Inside Information" in the implementation regulations for internal audit. v None 4. Discussion of the Company's 2023 Audit Plan. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. (II) In addition to matters above, other resolutions that have not been approved by the Audit Committee but have been passed by a vote of two-thirds or more of the entire Board of Directors: None. II. The Independent Directors' avoidance of interest motion should indicate the names of the Independent Directors, content of the motion and reasons of avoidance of interest as well as the involvement in voting: None. III. Independent Directors' communication with internal auditors and CPAs (including communication over the Company's financial and business status and the methods and results, etc.) Communication between Independent Directors and internal auditors: (I) Communication policy between Independent Directors and internal auditors and accountants: 1. The Audit Plan for the following year shall be approved by the Audit Committee at the end of each fiscal year and filed to the Board of Directors for resolution. 2. The audit progress shall be reported to Audit Committee each quarter. 3. After the conclusion of an audit, the internal audit report shall be submitted to the Audit Committee (Independent Directors) for review before the end of the following month. 4. The Audit Office and internal units shall track and reevaluate items that require improvements as proposed in the audit opinions, discovered discrepancies, and Statement on Internal Control and submit a written report on the improvement status to the Audit Committee. 5. The evaluation of the effectiveness of the Company's internal control system and the Internal Contro System Statement are submitted to the Audit Committee for review. (II) Communication between Independent Directors and internal auditors and accountants in 2022: Date Communication status March 10, 2022 Preparation meeting for the meeting of the Audit Committee Attendees Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the accountantChing-Lin Li Communication items Report on communication with governance units in 2021. Communication results No opinions in this meeting. March 10, 2022 Preparation Attendees Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the internal auditor Tai-HsiungMao	August 5, 2022 quarter of 2022. 2. Discussion of technical cooperation in MainlandChina. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. 3nd Committee 6th meeting November 3, 2022 1. Review of the consolidated financial statements for the third quarter of 2022. v None 2. Discussion of the Procedures for Handling Material Inside Information. v None 3. Discussion of additional items in the "Audit of the Handling of Material Inside Information" in the implementation regulations for internal audit. v None 4. Discussion of the Company's 2023 Audit Plan. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. (II) In addition to matters above, other resolutions that have not been approved by the Audit Committee but have been passed by a vote of two-thirds or more of the entire Board of Directors: None. II. The Independent Directors' avoidance of interest motion should indicate the names of the Independent Directors, content of the motion and reasons of avoidance of interest as well as the involvement in voting: None. III. Independent Directors' communication with internal auditors and CPAs (including communication over the Company's financial and business status and the methods and results, etc.) Communication between Independent Directors and internal auditors: (I) Communication policy between Independent Directors and internal auditors and accountants: 1. The Audit Plan for the following year shall be approved by the Audit Committee at the end of each fiscal year and filed to the Board of Directors for resolution. 2. The audit progress shall be reported to Audit Committee each quarter. 3. After the conclusion of an audit, the internal audit report shall be submitted to the Audit Committee (Independent Directors) for review before the end of the following month. 4. The Audit Office and internal units shall track and reevaluate items that require improvements as proposed in the audit opinions, discovered discrepancies, and Statement on Internal Control and submit a written report on the improvement status to the Audit Committee. 5. The evaluation of the effectiveness of the Company's internal control system and the Internal Contro System Statement are submitted to the Audit Committee for review. (II) Communication between Independent Directors and internal auditors and accountants in 2022: Date Communication status March 10, 2022 Preparation meeting for the meeting of the Audit Committee Attendees Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the accountantChing-Lin Li Communication items Report on communication with governance units in 2021. Communication results No opinions in this meeting. March 10, 2022 Preparation Attendees Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the internal auditor Tai-HsiungMao	August 5, 2022 quarter of 2022. 2. Discussion of technical cooperation in MainlandChina. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. 3nd Committee 6th meeting November 3, 2022 1. Review of the consolidated financial statements for the third quarter of 2022. v None 2. Discussion of the Procedures for Handling Material Inside Information. v None 3. Discussion of additional items in the "Audit of the Handling of Material Inside Information" in the implementation regulations for internal audit. v None 4. Discussion of the Company's 2023 Audit Plan. v None Results of Audit Committee resolutions: Passed by all members of the Audit Committee. The Company's response to Audit Committee opinions: Passed unanimously by all Directors in attendance. (II) In addition to matters above, other resolutions that have not been approved by the Audit Committee but have been passed by a vote of two-thirds or more of the entire Board of Directors: None. II. The Independent Directors' avoidance of interest motion should indicate the names of the Independent Directors, content of the motion and reasons of avoidance of interest as well as the involvement in voting: None. III. Independent Directors' communication with internal auditors and CPAs (including communication over the Company's financial and business status and the methods and results, etc.) Communication between Independent Directors and internal auditors: (I) Communication policy between Independent Directors and internal auditors and accountants: 1. The Audit Plan for the following year shall be approved by the Audit Committee at the end of each fiscal year and filed to the Board of Directors for resolution. 2. The audit progress shall be reported to Audit Committee each quarter. 3. After the conclusion of an audit, the internal audit report shall be submitted to the Audit Committee (Independent Directors) for review before the end of the following month. 4. The Audit Office and internal units shall track and reevaluate items that require improvements as proposed in the audit opinions, discovered discrepancies, and Statement on Internal Control and submit a written report on the improvement status to the Audit Committee. 5. The evaluation of the effectiveness of the Company's internal control system and the Internal Contro System Statement are submitted to the Audit Committee for review. (II) Communication between Independent Directors and internal auditors and accountants in 2022: Date Communication status March 10, 2022 Preparation meeting for the meeting of the Audit Committee Attendees Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the accountantChing-Lin Li Communication items Report on communication with governance units in 2021. Communication results No opinions in this meeting. March 10, 2022 Preparation Attendees Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the internal auditor Tai-HsiungMao
Date		Communication status
March 10, 2022 Preparation meeting for the meeting of the Audit Committee	Attendees	Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the accountantChing-Lin Li
	Communication items	Report on communication with governance units in 2021.
	Communication results	No opinions in this meeting.
March 10, 2022 Preparation	Attendees	Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the internal auditor Tai-HsiungMao

The evaluation of the effectiveness of the Company's internal control system and the Internal Contro System Statement are submitted to the Audit Committee for review.
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meeting for the meeting of the Audit Committee	Communication items	1. Audit execution report for November 2021 to February 2022. 2. 2021 InternalControlSystemStatement.
	Communication results	No opinions in this meeting
May 05, 2022 Preparation meeting for the meeting of the Audit Committee	Attendees	Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the internal auditor Tai-HsiungMao
	Communication items	Audit execution report for March to April 2022.
	Communication results	No opinions in this meeting
August 05, 2022 Preparation meeting for the meeting of the Audit Committee	Attendees	Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the internal auditor Tai-HsiungMao
	Communication items	Audit execution report for May to June 2022.
	Communication results	No opinions in this meeting.
November 03, 2022 Preparation meeting for the meeting of the Audit Committee	Attendees	Independent Directors Chun-Hao Xin, Mei-Hsiang Pai, Chih-Ming Chen, and Kuang-Chih Huang, and the internal auditor Tai-HsiungMao
	Communication items	1. Audit execution report for July to September 2022. 2. Additional items in the "Audit of the Handling of Material Inside Information" in the implementation regulations for internal audit. 3. The2023annual auditplan.
	Communication results	No opinions in this meeting.

Note1: Where an Independent Director resigns before the end of the fiscal year, the "remark" column should be filled with the Independent Director's resignation date, whereas his/her percentage of attendance in person (%) should be calculated based on the number of meetings held by the Audit Committee and the actual number of meetings attended during his/her term of office.

Note2: If Independent Directors are re-elected before the end of the fiscal year, incoming and outgoing Independent Directors should be listed accordingly, and the "remark" column should indicate whether the status of an independent director is "outgoing", "incoming" or "re-elected", and the date of re-election. The actual attendance rate (%) is calculated based on the number of meetings held by the Audit Committee and the actual number of meetings attended during his/her term of office.
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(III) Corporate governance implementation status and deviation from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and reasons

Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
I. Has the Company set and disclosed principles for practicing corporate governance according to the Corporate Governance Best Practice Principles for TWSE/TPEx ListedCompanies?	�		The Company has established the "Corporate Governance Best Practice Principles" and disclosed them on the Market Observation Post System and Company's website.	No deviation.
II. The Company's shareholding structure and shareholders' rights and interests (I) Has the Company set internal operations procedures for dealing with shareholder proposals, doubts, disputes, and litigation as well as implemented those procedures through the proper procedures? (II) Does the Company have a list of major shareholders of companies over which the Company has actual control and the list of ultimate owners of those major shareholders? (III) Has the Company established and implemented risk control/management and firewall mechanisms between it and affiliated companies? (IV) Does the Company have internal regulations in place to prevent its internal staff from trading securities based on information yet to be public on the market?	� � � �		(I) The Company has established a spokesperson and acting spokesperson system and set up the [email protected] to effectively process shareholder suggestions or disputes. (II) The Company uses the shareholder register provided by the stock transfer agency as the source of information. The Company also pays attention to market information and changes in the shareholding status of insiders and regularly discloses information on major shareholders and the ultimate controllers of major shareholders. (III) The Company's internal controls include corporate-level risk management and operational-level business activities. We established the "Regulations for the Supervision and Management of Subsidiaries" to implement risk management mechanisms for subsidiary companies. In addition, the Company's Board of Directors established regulations for purchases and sales, acquisition or disposal of assets, endorsements and guarantees, and loans with affiliated enterprises. (IV) The Company established the Ethical Corporate Management Operating Procedures and Code of Conduct to require employees to avoid conflicts of interest that involve their duties and prevent them from taking advantage of undisclosed information or disclosing information to others to engage in insider trading.	No deviation.

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Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
III. Composition and responsibilities of the Board of Directors (I) Has the Board of Directors developed and implemented a diversity policy for the composition of its members and specific management targets?	�		(I) According to Article 20 of the Company's "Corporate Governance Best Practice Principles" (Overall Expected Capabilities of the Board of Directors), the composition of the Board of Directors shall be determined by taking diversity into consideration and formulating an appropriate policy on diversity based on the Company's business operations, operating dynamics, and development needs. It is advisable that the policy include but not be limited to the following two general standards: I. Basic requirements and values: Gender, age, nationality, and culture. Female Directors should account for at least one third of the Directors. II. Professional knowledge and expertise: A professional background (e.g., law, accounting, industry, finance, marketing, or technology), professional skills, and industry experience. The overall expected capabilities of the board of directors are as follows: I. Ability to make sound business judgments. II. Ability to perform accounting and financial analysis. III. Ability to manage a business. IV. Ability to handle crisis management. V. Knowledge of the industry. VI. An international market perspective. VII. Leadership ability. VIII. Decision-making ability. The implementation of the diversityof the Board of Directors: Item Director Independent Director Age 51 to 60 2 0 61 to 70 0 1 70 and above 3 3 Gender Male 3 3 Female 2 1 Nationality Republic of China 5 4 Status as employee 3 0	No material discrepancy.

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Assessed areas				Implementation status(Note)	Implementation status(Note)		Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No		Summary
(II) In addition to establishing a Remuneration Committee and an Audit Committee, which are required by law, is the company willing to also voluntarily establish other types of functional committees? (III) Has the company established and implemented methods for assessing the performance of the Board of Directors and conducted performance evaluation annually? Does the Company submit results of assessments to the Board of directors and use results as the basis for the salary, remuneration, nomination and reappointment of individual Directors? (IV) Does the company periodically evaluate the level of independence of the CPA?	� �	�	(concurrent roles as employee of the Company and subsidiaries) The members of the Board of Directors have different professional backgrounds and have the knowledge, skills, and training (e.g., law, finance, industry technology, marketing, academic expertise) necessary for their duties and helpful for the Company's business plan. The academic records and professional experience of the members of the Board of Directors have been disclosed on the Company's website. (II) In addition to establishing four Independent Directors and the Remuneration Committee, the Company also established the Sustainable Development Committee, Information Risk Management Committee, Occupational Safety and Health Committee and the Employee Welfare Committee. The Company shall establish other functional committees in the future based on requirements. (III) The Company has established the "Rules for Performance Evaluation of Board of Directors" which have been disclosed on the Market Observation Post System (MOPS) and the Company's website. According to Article 2 and Article 3 of the Company's "Rules for Performance Evaluation of Board of Directors", the Board of Directors shall conduct an internal performance evaluation of the Board of Directors based on the evaluation procedures and evaluation indicators specified in the Rules. The scope of evaluation includes the evaluation of the performance of the Board of Directors as a whole, individual directors, and functional committees. The evaluation is conducted through a questionnaire. The 2022 evaluation results were compiled by the Secretary of the Board and reported to the Board of Directors on March 9, 2023 as the basis for review and improvements. The results of the performance evaluation of the Board of Directors shall be used as the basis for the selection or nomination of Directors. The performance evaluation results for individual directors shall be used as the basis for their individual salary and remuneration. (IV) The Company appointed certifying CPAs who are not stakeholders of the Company. The CPA is required to recuse him/herself if his/her	(concurrent roles as employee of the Company and subsidiaries)

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Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
			service or him/herself has a direct or material indirect relationship with or interest in the matter concerned. The replacement of CPAs is also in compliance with related regulations.
IV. Has the publicly-listed company appointed qualified and suitable number ofcorporate governance personnel and appointed a Corporate Governance Officer to handle governance related affairs (including but not limited to providing information necessary for Directors and Supervisors to perform their duties, aiding Directors and Supervisors in complying with the laws, organizing board meetings and annual general meetings as required by law, and compiling minutes of board meetings and annual general meetings)?	�		The Company's Board of Directors passed a resolution on May 6, 2021 to appoint the Vice President William Li as the Corporate Governance Officer. I. Main duties of the Corporate Governance Officer: 1. Handling of matters relating to Board of Directors meetings and shareholders’ meetingss in compliance with law; 2. Preparation of minutes of the Board of Directors meetings and shareholders’ meetingss; 3. Assistance in onboarding and continuing education of the Directors; 4. Provision of information required for performance of duties by the Directors; 5. Assistance in the Directors' compliance of law; and 6. Other matters described or established in the Articles of Incorporation or under contract. II. The corporate governance implementation in 2022 was as follows: 1. Establishment/amendment of related internal regulations based on the latest amendments and developments in regulations on legal compliance and corporate governance. 2. Assist Independent Directors and general Directors in performing their duties by providing the necessary information and arranging continuing education. 3. Responsible for matters related to the rules of procedures of Board of Directors and shareholders' meeting as well as legal compliance of resolutions. (1) Confirmation that shareholders’ meetingss and board meetings are convened in compliance with the applicable corporate governance regulations. (2) Prepare agendas for meetings of the Board of Directors and notify Directors of the agendas seven days before the meeting, convene meetings and provide information about the meetings, send out reminders regarding agendas that require recusal of Directors and complete the minutes of the Board of Directors' meetingwithin 20 days after the	No deviation.

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Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
			meeting. (3) Handle prior registration for shareholders’ meetingss, prepare meeting notices, agenda handbook, meeting minutes within the statutory period, as well as handle registration of changes due to amendment of regulations and election of Directors. (4) Review whether material announcements are required for the resolutions of board meetings. 4. Implement corporate governance affairs. 5. Assistance for the preparation of the Company's Annual Report and Sustainability Report. 6. Purchase liability insurance for Directors and managerial officers. III. Continuingeducation of theCorporateGovernanceOfficer: Date of Training Institution Course Name Course Hours 2022.03.16 Securities & Futures Institute Human Resources in the Process of Mergers and Acquisitions 3 2022.03.17 Risks and Opportunities of Climate Change and Energy Policy Development on Business Management 3 2022.05.14 Taiwan Stock Exchange Corporation Twin-Summit Forum Online Forum 2 2022.07.20 Organized jointly by Taiwan Stock Exchange and Taipei Exchange Sustainable Development Guidemap Industry Seminar 2 The appointment, duties, and operations of the Corporate Governance Officer have been disclosed on the Company's website.

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Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
V. Has the Company established channels for communicating with stakeholders (including but not limited to shareholders, employees, customers and suppliers), set up a dedicated stakeholder area on the company website, as well as appropriately responded to important corporate and social responsibility issues of concern to stakeholders?	�		The Company has assigned different departments to establish communication channels with different entities (including stakeholders) and we have established a stakeholders' area on the Company's website (https://www.sunon.com/sta.aspx) and appropriately responded to important corporate and social responsibility issues of concern to stakeholders.	No deviation.
VI. Has the Company hired a professional agency to handle tasks and issues related to holding the shareholder's meeting?	�		The Company has appointed the Transfer Agency Department of Grand Fortune Securities to handle tasks and issues related to organizing shareholder's meetings.	No deviation.
VII. Information disclosure (I) Has the Company established a corporate website to disclose information regarding the Company's financial, business and corporate governance status? (II) Has the Company adopted other means of information disclosure (such as establishing a website in English, appointing specific personnel to collect and disclose company information, implementing a spokesperson system, and disclosing the process of investor conferences on the Company's website)? (III) Does the Company publish and report its annual financial report within two months after the end of a fiscal year, and publish and report its financial reports for the first, second and third quarters as well as its operating status for each month ahead of schedule before the specified deadline?	� �	�	(I) The Company has set up a website (www.sunon.com) to disclose the Company's finance, business, and corporate governance information. Information is regularly maintained and updated. (II) The Company has set up an English website and assigned a unit to take charge of collecting the Company's information and disclosing related information on the corporate governance section of the "Market Observation Post System". Information on investor seminars has been established on the Company's website. The Company has established a spokesperson system and implemented the system in accordance with relevant regulations. (III) The financial report shall be passed by the Board of Directors or submitted to the Board of Directors 7 days before the prescribed deadline for publication and published within one day after the date of passage or submission. The Company has published the operation status before the prescribed deadline each month.	No material discrepancy.
VIII. Does the Company have other information that is helpful for understanding its status of corporate governance (including but not limited to employee rights and interests, employee well-being, investor relations, supplier relations, rights of interested parties, further education sought by Directors and Supervisors, implementation of risk management policies and risk evaluation standards, implementation of customerpolicies,the takingout of liability	�		(I) Employee rights, interests and well-being: The Company has always valued the protection of employee rights and benefits and we maintain communication with employees as well as smooth complaint channels. We respect and protect employees' interests. The Company established the Employee Welfare Committee and the Sexual Harassment Complaint Processing Committee. We implement a pension system and provide group insurance, employee travel subsidies, bonuses for birthdays, childbirth, marriage, funeral, and performance,	No deviation.

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Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
insurance for Directors and Supervisors)?			year-end bonus, and organize outdoor activities. We provide diverse education and training for employees and we have established an online learning platform, internal education and training, and subsidies for external training programs to encourage employees to study on the job. (II) Employee relations: To protect employees' health, the Company selects a qualified hospital each year to provide employees with health examinations and organize physical and mental health seminars. The Company organizes family day events to relieve work pressure and let employees' family members learn more about the Company and build cohesiveness. (III) Investor relations: The Company provides full information disclosure on the Market Observation Post System and the "Investor Services" section on the Company's website. We also provide contact information of the Company's spokesperson and investor mailbox to maintain harmonious relations with shareholders. (IV) Supplier relations: The Company has established the "Supplier Management Regulations" and established an online supplier platform to build solid partnerships with suppliers based on the principles of equality and reciprocity. (V) Stakeholder interests: The Company maintains smooth communication channels with employees, investors, Directors, customers, and suppliers and respect and protect their due interests. We also established a spokesperson system to respond to investors' questions with the aim of protecting the interests of stakeholders. (VI) Implementation of customer relations policies: The Company's business departments provide customers with solutions for products and other issues and maintain smooth communication channels with customers. (VII) Continuing education of Directors and Supervisors: The Company's Directors and Independent Directors are required to attend continuing education courses and meet requirements for courses on corporate governance. The Company continue to arrange appropriate continuous training courses for Directors and Independent Directors. (Please refer to the followingtable for the status of continuing

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Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)
	Yes	No	Summary
			education) (VIII) Implementation of risk management policies and risk assessment standards: The Company has established the "Procedures for Acquisition or Disposal of Assets", "Procedures for Making Endorsements and Guarantees", and "Procedures for Loaning of Funds to Others" as the basis for risk management and assessment for the Company's operating units and auditing units in their execution of related businesses. (IX) Status of purchase of liability insurance for Directors and Supervisors: The Company has purchased liability insurance for Directors, Independent Directors, and key managerial officers, and reported the insurance purchase information to the Board of Directors on November 3,2022.
IX. Please described improvements in terms of the results of the Corporate Governance Evaluation System in recent years and propose areas and measures to be given priority where improvement will be needed. (Leave this section blank if the company is not included in the evaluation process) The Company participated in the ninth Corporate Governance Evaluation in 2022 and received a total score of 69.32 points. Ranking among public listed companies: 51%~65% Industry: Public electronics companies with a market value of more than NT$10 billion: 61%~100%

Note: Regardless of whether "Yes" or "No" was selected, explanation shall be provided in the Summary column.

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(1) Status of continuing education of the Company's Directors in 2022

Title	Name	Date of course	Organizer	Course name	Duration of the course
Representative of institutional director	Ching- Liang Chen	2022/11/10	Taiwan Corporate Governance Association	Preparation of the ESG Report and How to Review ESG Information Disclosure for Independent Directors	3 hours	3 hours
Independent Director	Chun- Hao Xin	2022/10/07	Taiwan Stock Exchange Corporation	Publication and Communication Seminar of Directors and Supervisors for the Guidelines for Independent Directors and Audit Committee in the Exercise of Their Duties	3 hours	3 hours
Independent Director	Mei- Hsiang Pai	2022/10/19	Securities & Futures Institute	2022 Insider Equity Transaction Legal Compliance Awareness Briefing	3 hours	3 hours
Independent Director	Chih- Ming Chen	2022/10/19	Securities & Futures Institute	2022 Insider Equity Transaction Legal Compliance Awareness Briefing	3 hours	3 hours
Independent Director	Kuang- chih Huang	2022/10/19	Securities & Futures Institute	2022 Insider Equity Transaction Legal Compliance Awareness Briefing	3 hours	3 hours

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(IV) If the Company has a Remuneration Committee, the composition and operation of the Committee shall be disclosed

Information on members of the Remuneration Committee

April 11, 2023

Identity Type (Note 1)	Criteria Name	Professional Qualifications and Experience (Note 2)	Fulfillment of Independence Criteria (Note 3)	Number of other public companies in which the member also serves as a member of their compensation committee
Independent Director (Convener)	Chih-Ming Chen	Master of Social Sciences, National Sun Yat-sen University BBA, Soochow University School of Law Judge and Chief Judge, Kaohsiung District Court Judge, Taiwan High Court Kaohsiung Branch Partner, Cheng Yang Attorneys-at- Law Managing Partner, Chih-Ming Attorneys-at-Law Independent Director, Sunonwealth Electric Machine Industry Co.,Ltd.	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act, and meet the requirements in the Regulations Governing Appointment of Independent Directors and Compliance Matters for PublicCompanies.	-
Independent Director	Chun-Hao Xin	MBA, I-Shou University Director-General, Kaohsiung County Revenue Service Bureau Director-General, Kaohsiung County Branch, National Tax Administration of Southern Taiwan Province Director-General, Pingtung Branch, National Tax Administration of Southern Taiwan Province Independent Director, Chang Wah Electromaterials Inc. Independent Director, Thinflex Corp. (Does not meet any of the conditions stated in the subparagraphs of Article 30 of theCompanyAct)	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act, and meet the requirements in the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.	-
Independent Director	Mei-Hsiang Pai	MBA, College of Management, National Sun Yat-sen University Master of Science, Graduate Institute of Medical Sciences, Chang Jung Christian University BBA, Soochow University School of Law Senior Consultant, Lee and Li Attorneys-at-Law Director, Rich Fountain International Corp. Supervisor, Advanced International Multitech Co., Ltd.	The individual, spouse, and relatives within the second degree of kinship do not violate the terms in Paragraph 3 and Paragraph 4, Article 26-3 of the Securities and Exchange Act, and meet the requirements in the Regulations Governing Appointment of Independent Directors and Compliance Matters for PublicCompanies.	-

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Note 1: Please specify the relevant years of service, professional qualifications and experience, and independence of each member of the Remuneration Committee in the table. If the individual is an Independent Director, a note may be added that the information is provided in Table 1 Profile of Directors and Supervisors (1) on page OO. Identity type shall be filled-out as Independent Director or others (if the individual is the convener, please specify).
Note 2: Professional qualifications and experience: Specify the professional qualifications and experience of the members of the Remuneration Committee.
Note 3: Compliance of independence: Describe the independence criteria of the members of the Remuneration Committee, including but not limited to stating that the individual, spouse, or relative within the second degree of kinship is not a director, supervisor, or employee of the Company or any of its affiliates; the number of shares of the Company held by the individual, spouse, or relative within the second degree of kinship do not hold shares (or have shares held in names of third parties) and the shareholding ratio; whether they serve as a director, supervisor, or employee of companies that have special relations with the Company (refer to the provisions in Subparagraphs 5 to 8, Paragraph 1, Article 6 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange); Compensation for business, legal, financial, or accounting services provided for the Company or its affiliates in the last two years.
Note 4: Please refer to the best-practice templates of the Corporate Governance Center, Taiwan Stock Exchange Corporation for the methods of disclosure.
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Operation of Remuneration Committee

I. The Company's Remuneration Committee is comprised of three members.
II. Current term for the members: July 1, 2021 – June 30, 2024; a total of 3 (A) meetings of the Remuneration Committee were held in the most recent year (2022). The members' qualifications and attendance were as follows:


Title		Name	Attendance in person (B)	Attendance by proxy	Attendance rate (%) (B/A) (Note)	Remarks
Convener		Mei-Hsiang Pai	2	0	100%	None
Committee member		Chun-Hao Xin	2	0	100%	None
Committee member		Chih-Ming Chen	2	0	100%	None
Other I. II. III. IV.	matters required to be recorded: In the event the Board of Directors does not adopt or wishes to amend the proposals of the Remuneration Committee, please state the date and number of the Board meeting, the content of the proposals, resolution fromthe Board of Directors, and the method the opinion from the Remuneration Committee was handled (e.g., if the salaries and compensations approved by the Board was higher than the suggested levels from the Remuneration Committee, please state the differences and reasons): None. If a member opposes a resolution the Committee has adopted or has reservations with a written record or a statement, the date and session of the meeting, the resolution, opinions of all the members, and the handling of their opinions shall be indicated: None. Discussions and resolutions made by the Remuneration Committee and the Company's handling ofopinions of the Committeemembers: Date Discussion items Resolutions The Company's response to opinions of the members January 24, 2022 1. The 2021 year-end bonus for managerial officers 2. The 2021 employee remuneration for managerial officers Passed by all members of the Committee in attendance Submitted to the Board meeting and passed unanimously by all Directors in attendance March 10, 2022 1. The 2021 remuneration distribution proposal for Directors and employees. 2. Amendment of Employee Remuneration Regulations Passed by all members of the Committee in attendance Submitted to the Board meeting and passed unanimously by all Directors in attendance The Company's Remuneration Committee shall consist of no fewer than three members appointed by resolution of the Board of Directors. One shall serve as the convener. The term of the members of the Remuneration Committee shall be the same as that of the Board of Directors by whom they were appointed. If the size of the Remuneration Committee is reduced below three due to the dismissal of one of themembers,theBoard of Directors shallconvenea meetingandappoint additional

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Committee members within three months after the shortfall occurs.

V. Roles and Responsibilities of the Remuneration Committee
(I) Stipulate and review regularly the compensation policies, systems, standards and structures, and performance of directors and managers.
(II) Regularly review and adjust directors' and managers' remuneration.

Note:

(1) When a member of the Remuneration Committee resigns before the end of the year, the remark column shall be annotated with the date of resignation. Actual attendance rate (%) shall be calculated based on the number of meetings held by the Remuneration Committee and the number of actual attendances during the term of service.
(2) When an election is held for the Remuneration Committee before end of the year, members of both the incoming and outgoing committee members shall be listed in separate columns and noted as incoming, outgoing or reelected members, along with the elected date, in the "Remarks" column. Actual attendance percentage (%) is calculated based on the number of meetings held by the Remuneration Committee and the actual number of meetings attended during his/her term of office.

Information on Members of the Nominating Committee and Operations: The Company does not have a Nominating Committee.

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(V)

Implementation status of sustainable development, deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies, and reasons thereof

Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
I. Has the company established a governance structure for sustainable development, established an exclusively (or concurrently) dedicated unit to implement sustainable development, and have senior executives appointed by the Board of Directors to be in charge of corporate social responsibility and to report the implementation status to the Board of Directors?	�		The Company established the "Sustainable Development Committee" in April 2022 to take charge of promoting the Company's sustainable development tasks. The Chairman serves as the chair and the Corporate Governance Officer serves as the Chairman of the Committee. They jointly review the Company's core business capabilities with senior managers of different fields and establish medium to long-term sustainable development plans. The work progress is regularly reported to the Board of Directors each year. The Sustainable Development Committee serves as an inter- departmental communication platform integrating top and bottom and connecting horizontally. It is responsible for the establishment and amendment of related systems and regulations for sustainable development, supervision of the Company's sustainable development strategies and plans, regular follow-up and evaluation of the sustainable development progress and effectiveness, and ensuring the full implementation of the sustainable development strategy in the Company's day-to-day operations. The Sustainable Development Committee convened 3 meetings in 2022 and reported to the Board of Directors on August 5, 2022 and November 3, 2022. The agenda items included (1) the organization and responsibilities of the Sustainable Development Committee, (2) the functions of each task force, (3) the collection of questionnaires and analysis of the results of the material issues for stakeholders, and (4) the schedule and plans for ESG sustainability projects in 2023. The Board of Directors receives reports on sustainable development from the management team, evaluates the progress of the sustainable development strategies, and provides necessary guidance.	No deviation.

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Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
II. Does the Company have a unit that specializes (or is involved) in CSR practices? Is the CSR unit run by senior managerial officers and reports its progress to the Board of Directors? (Note 2)	�		The Company's Board of Directors clearly defined four principles in the Sustainable Development Best Practice Principles to implement corporate governance, develop a sustainable environment, safeguard public welfare, and enhance the disclosure of sustainable development information. Environmental: "Energy conservation, carbon emissions reduction, environmental protection, and loving the earth" are the Company's goals for protecting the earth's environment. We focus on the R&D, innovation, quality assurance, production, procurement, business, and management of green products and we encourage all employees to participate in the plans to achieve full implementation. We identify the potential risks and impacts of climate change on operations and develop adaptation and mitigation strategies and implementation plans, including actions for the reduction of greenhouse gas emissions, energy and water conservation, and waste reduction. Social: The Company implements actions for talent recruitment and retention, career development and education, and occupational safety and health. We attach importance to the balanced development of employees and strive to provide them with a safe and healthy work environment. We identify possible risks in the daily operations of each unit, and control them by continuously strengthening the prevention mechanisms such as operation management and regular hazard identification and risk assessments of operations and processes. In terms of the use of products, we strive to develop and produce products that meet environmental protection regulations. Corporate governance: We established a governance organization and implement internal control mechanisms to ensure that all employees and operations of the Company comply with relevant laws and regulations.	No deviation.
III. Environmental issues (I) Has the Company established a proper environmental management system based on the characteristics of the industry?	�		(I) The Company has established the "Environmental Health and Safety Policy" to effectively maintain safety in the environment and achieve energy conservation and carbon emissions reduction goals. Our plants in Taiwan and overseas have established environmental management	No deviation.

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Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
(II) Does the company endeavor to utilize energy more efficiently and use renewable materials that have low impact on the environment? (III) Does the company evaluate the potential risks and opportunities in climate change with regard to the present and future of its business, and take appropriate action to address issues?	� �		systems in accordance with ISO14001 and hazardous substance management in accordance with IECQ QC 080000, and they continue to pass third-party certification. We conduct annual greenhouse gas inventories to track the effectiveness of emission reduction and disclose the information in the Sustainability Report and the Company's website.(https://www.sunon.com/csr.aspx) Kaohsiung Plant, Kunshan Plant, Sunon Electronic (Bei Hai), and Lizhun Electronic (Bei Hai) have passed ISO 14001: 2015 (the effective period is January 30, 2023 to January 14, 2026) and IECQ QC080000 (the effective period is May 17, 2022 to April 4, 2023). (II) "Energy conservation, carbon emissions reduction, environmental protection, and loving the earth" are the Company's goals for protecting the earth's environment. We are committed to developing green environmentally friendly products with low-power consumption and zero toxicity to reduce the impact of the use of various resources on the environment. In terms of quality assurance (promotion of environmental management system verification) and production/procurement (establishment of green supply chain system/energy saving and carbon reduction at production sites), we use raw materials that comply with RoHS, REACH, and halogen-free regulations of the European Union. We recycle materials and reduce pollution during the manufacturing process to reduce the impact on the environment. We implement operation management (establish digital management processes/utilize global video conference and other network tools) to achieve full implementation. (III) The Company's Corporate Sustainable Development Committee is the highest-ranking organization for climate change management. The Chairman serves as the chair and the Vice President serves as the chairman. They review the Company's climate change strategies and goals, manage climate change risks and opportunities, and examine the

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Assessed areas			Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)
	Yes	No	Summary
(IV) Does the company take inventory of its greenhouse gas emissions, water consumption, and total weight of waste in the last two years, and implement policies on greenhouse gas reduction, water use reduction, or waste management?	�		implementation status and discusses future plans each year. They lead the four major functional organizations for environmental protection, governance, supply chain, and HR in implementing climate change management tasks and regularly report to the Board of Directors. The Company identifies short, medium, and long-term climate risks and opportunities in accordance with the Recommendations of the TCFD published by the Financial Stability Board (FSB). We also identify feasible opportunities and develop countermeasures at the same time. The detailed descriptions of the Company's climate change risks and opportunities have been disclosed in the Company's Sustainability Report. (https://www.sunon.com/csr.aspx) (IV) The Company fully implements energy conservation, environmental protection, recycling of resources, and cost reduction. We reduce the emissions of CO2 and other greenhouse gases and continue to promote energy conservation and carbon reduction of the Company. We increase the efficiency of the use of energy and resources and reduce waste. The details are disclosed in the Company's Sustainability Report. All plants and subsidiaries of the Company completed the 2022 greenhouse gas inventory and product carbon footprint inventory and verification. We actively strengthen our policies, tools, and capabilities for responding to climate change to monitor and manage greenhouse gas emissions. 2021 and 2022 greenhouse gas emissions were as follows: Unit: metric tons
			Year	Scope 1	Scope 2	Total
			110	1147.2	29,239.7	30,386.9
			111	2,137.3	22,281.1	27,378.4
			The Company set up a dedicated unit responsible for the management, disposal, and reporting of the industrial wastegenerated in the Company's operations. We also

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Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
			comply with the Waste Disposal Act and dispose of waste in accordance with local regulations. The Company produced a total of 110.684 tons of waste in 2022 including 43.444 tons of hazardous waste and 67.240 tons of non-hazardous industrial waste. The industrial waste recycling rate of plants in Taiwan in 2022 increased by 73% compared to 2021. In terms of water resource management, the Company actively promotes water conservation and waste reduction policies in all plants to reduce the impact of its operations on the environment and respond to climate anomalies caused by climate change. The Company's water consumption was 330.55 million liters in 2021 and 311.181 million liters in 2022. The changes show that we have fully implemented the water and waste reduction policies.
IV. Social issues (I) Has the Company formulated appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (II) Has the Company established and implemented reasonable employee benefits (including remuneration, leave, and other benefits), and ensured business performance or results are reflected adequately in employee remuneration?	� �		(I) The Company complies with related labor laws and regulations as well as the Universal Declaration of Human Rights, UN Guiding Principles on Business and Human Rights, Declaration on Fundamental Principles and Rights at Work of the International Labor Organization, and other international human rights conventions. We also implement the Code of Conduct of the Responsible Business Alliance (RBA) and established human rights policies for non-discrimination, freedom of association of employees, ban on child labor, and ban on forced labor to protect the basic rights of employees and stakeholders. (II) Sunonwealth provides fair, reasonable, and competitive salary systems and regularly establishes employee performance evaluations to provide opportunities and channels for promotion and salary increase to employees with outstanding performance. At the end of each year, the Company distributes a diverse range of bonuses including the year-end bonus, performance bonus, and employee bonuses based on the results of Company's operations and the employees'performance in the currentyear.	No deviation.

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Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
(III) Does the Company provide a safe and healthy working environment and provide employees with regular safety and health training?	�		Sunonwealth complies with related labor regulations and provides employees with leave and comprehensive welfare system. We also value the importance of creating a healthy and friendly workplace. We have continuously advanced health promotion activities and regularly organize health examinations and health seminars, and set up medical service offices, aerobics classrooms, and bodybuilding equipment, and various health promotion facilities to provide employees with comprehensive care. The Company established the Employee Welfare Committee and allocates 0.01% of the Company's revenue to the welfare fund to plan and provide employees with high quality benefits. They include employee travel subsidies, wedding gifts, childbirth gift money, bereavement subsidies, injury and illness subsidies, house purchase gifts, birthday gift money, dinner party subsidies, family days, children education scholarships, and other benefits. Diversity and equality in workplace: The Company pays close attention to maintaining gender equality and equal pay and promotion opportunities. In 2022, female employees accounted for 54% and female executives accounted for 47%. (III) 1. The Company pays close attention to the physical health of all employees and safety in the work environment. In addition to regular health examination for employees each year, the Company also works with hospitals to provide employees with consultation and care services for their physical and mental health to create a healthy workplace. We implement inspections through management by wandering about in the workplace and propose improvement plans for areas with potential risks or individual cases with the aim of improving safety in the workplace environment. 2. In 2022, the disabling injury frequency rate (FR) in Taiwan was 0 and the disabling severity rate (SR) was 0. The Company conducts individual reviews of occupational injuries in the workplace and implements

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Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
(IV) Has the Company established an effective career development and capability training program for employees?	�		solutions across the board to implement improvements and prevent recurrence of similar incidents. 3. The Company organized an emergency escape drill in the first half and the second half of 2022. The drills included personnel evacuation, explanation of the operation of fire safety facilities, guidance for personnel evacuation meeting points in response to extreme weather, and functional drills of the emergency response teams. 4. Each work site in Taiwan conducts CO2 gas concentration measurements every six months in accordance with local regulations to monitor the air quality in the workplace and to maintain a comfortable workplace environment for employees. 5. Each work site in Taiwan conducts measurements of hazardous factors (hazardous gas and noise) every six months in accordance with local regulations to monitor the air quality in the workplace and to ensure safety and health in the workplace environment for employees. 6. The Company's Kaohsiung Plant, Kunshan Plant, Sunon Electronic (Bei Hai), and Lizhun Electronic (Bei Hai) have passed obtained ISO 45001 certification. 7. In 2022, 19,450 people participated in the environmental protection and safety training courses with a total of 278,055 hours. (IV) The Company develops training system courses in four major categories including new employees, professional functions, management functions, and self-development. We also promote training courses and projects in different areas based on the Company's annual objectives to continuously improve organizational competitiveness and employee functions. The talent development quality management system received the Gold Medal Certification in the Talent Quality-management System (TTQS) from the Workforce Development Agency, Ministry of Labor. In 2022,weprovided career trainingfor 41,516

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Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
(V) Do the company’s products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer or customer protection and grievance procedure policies implemented? (VI) Does the Company establish supplier management policies, which require suppliers to observe relevant regulations on environmental protection, occupational safety and hygiene, or labor and human rights? If so, describe the implementation results.	� �		participants totaling 458,818 hours. The Company has established a digital online learning platform and continues to develop digital courses for employees to learn at anytime from anywhere. The online platform was used 12,159 times in 2022. (V) The Company has followed relevant laws, regulations, and international norms in terms of the marketing and labeling of products and services. The international norms include compliance with CE, UL, QC080000, ITAF16949, the EU's REACH and RoHS regulations, and ban on conflict minerals. The Company has met all regulatory requirements. The Company fully respects customers' privacy and abides by confidentiality agreements and the Personal Data Protection Act. We use the refined designs and applications of the information security system and emphasize data/information confidentiality and unlinkability of the purpose of use to ensure the confidentiality of the data/information. We set up a customer service section and provide a channel for dedicated personnel to process complaints. We also conduct customer satisfaction surveys to protect the rights and interests of our customers. (VI) The Company has established comprehensive supply chain management regulations and measures including supplier management, Supplier Management Operating Procedures, new supplier evaluations, supplier audit, and supplier assistance to ensure that materials we purchase meet requirements for quality assurance and substances of concern to the environment. IN addition to compliance with environmental protection and safety and health regulations, we also comply with related operating regulations for labor safety. Evaluation mechanisms for qualified suppliers: We select suppliers that meet ISO system requirements and conduct supplier quality system audits (QSA), risk control self- assessments(RSCA)of suppliers' substances of concern,

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Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof
	Yes	No	Summary
			and the Code of Conduct of the Responsible Business Alliance (RBA). Supplier audit and guidance: We implement annual supplier evaluations and continuous monthly assessment of suppliers for their quality, delivery, service, and technology. We strengthen the guidance for suppliers with deficiencies to improve the overall competitiveness of the supply chain. According to the 2022 supplier evaluation results, there were no disqualified suppliers. Green supply chain management: The Company has implemented the hazardous material management system IECQ QC 080000, established a hazardous substance management system, and implemented the green product management system. Please refer to the Company’s Sustainability Report for more information on sustainable supply chain management and implementation.
V. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as sustainability reports? Does the company obtain third-party assurance or guarantees for the reports above?	�		The Company has prepared the Sustainability Report since 2020 (not yet obtained third-party assurance or guarantees) and disclosed it on the Company's website. The Company plans to obtain a third-party verification statement and verification report for the 2022 Sustainability Report is expected before June 30, 2023. The Company's Sustainability Report discloses related information in accordance with the Global Reporting Initiative (GRI) Standards and the latest Sustainability Accounting Standards Board(SASB)Standardspublished in 2022.	No deviation.
VI. If the company has established sustainable development best-practice principles based on the "Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies," describe the implementation and any deviations from such principles: The Board of Directors approved the establishment of the "Corporate Social Responsibility Best Practice Principles" in November 2015 and revised the Principles in March 2017 and January 2022. The Principles were renamed the Sustainable Development Best Practice Principles to strengthen the implementation of corporate social responsibility. The Companyregularlyreviews the implementation of the Principles and makes improvements accordingly. There have been no major deviations.
VII. Other key information useful for explaining status of the Company's sustainable development practices: The former Chairman of the Company founded the "Shehng-Yuan Children Development and Adult Support Services Center" to take care of children with severe disabilities and founded the "Sunonwealth Charity Foundation" to organize various charity events (donations to the disadvantaged, regular care for low-income households and children's welfare) to contribute to social welfare. He alsopromoted the_Liao-Fan's Four Lessons_topurify people's minds. Our employees are also dedicated to charityactivities.

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Note 1: If "Yes" is selected in the implementation status, please explain the important policies, strategies, and measures adopted, and the implementation status; If "No" is selected in the implementation status, please explain the deviations and reasons in the "Deviations from the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies and reasons thereof" field and explain related policies, strategies, and measures to be adopted in the future. Note 2: The materiality principle refers to related environmental, social, and governance issues that may cause material impact on the Company's investors and other stakeholders. Note 3: Please refer to the best-practice templates of the Corporate Governance Center, Taiwan Stock Exchange Corporation for the methods of disclosure.

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Climate information of public companies

1 Implementation status of climate-related information

Climate information of public companies 1 Implementationstatus ofclimate-relatedinformation
Item	Implementation status
1. Describe the supervision and governance of climate-related risks and opportunities by the Board of Directors and the management. 2. Describe how the identified climate risks and opportunities affect the business, strategy, and finances (short, medium, and long-term) of the Company. 3. Describe the financial impact of extreme climate events and actions for transformation. 4. Describe how climate risk identification, assessment, and management processes are integrated into the overall risk management system. 5. If scenario analysis is used to assess the resilience to climate change risks, describe the scenarios, parameters, assumptions, analysis factors, and main financial impacts used in the analysis. 6. If the Company has a transformation plan for managing climate-related risks, describe the contents of the plan and the metrics and targets used to identify and manage the physical and transformation risks. 7. If internal carbon pricing is used as a tool for planning, describe the basis of the pricing. 8. If climate-related targets are set, describe the activities they cover, the scope of greenhouse gas emissions, planned schedule, and the annual progress. If carbon offsets or renewable energy certificates (RECs) are used to achieve the target, describe the source and quantity of carbon credits to be used for the offsetting or the quantity of renewable energy certificates (RECs). 9. Greenhouse gasinventoryandassurance conditions (providedin 1-1).	The plans of the greenhouse gas inventory and verification schedule were reported to the Board of Directors on May 5, 2022. The work progress was reported to the Board of Directors on August 5, 2022 and March 9, 2023. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable. Not applicable.

Climate information of public companies
1
Implementationstatus ofclimate-relatedinformation

Item

Implementation status

1.
Describe the supervision and governance of climate-related risks and opportunities by the Board of Directors and
the management.
2. Describe how the identified climate risks and opportunities affect the business, strategy, and finances (short,
medium, and long-term) of the Company.
3. Describe the financial impact of extreme climate events and actions for transformation.
4. Describe how climate risk identification, assessment, and management processes are integrated into the overall
risk management system.
5. If scenario analysis is used to assess the resilience to climate change risks, describe the scenarios, parameters,
assumptions, analysis factors, and main financial impacts used in the analysis.
6. If the Company has a transformation plan for managing climate-related risks, describe the contents of the plan
and the metrics and targets used to identify and manage the physical and transformation risks.
7. If internal carbon pricing is used as a tool for planning, describe the basis of the pricing.
8. If climate-related targets are set, describe the activities they cover, the scope of greenhouse gas emissions, planned
schedule, and the annual progress. If carbon offsets or renewable energy certificates (RECs) are used to achieve
the target, describe the source and quantity of carbon credits to be used for the offsetting or the quantity of
renewable energy certificates (RECs).
9. Greenhouse gasinventoryandassurance conditions (providedin 1-1).

The plans of the greenhouse gas inventory
and verification schedule were reported to
the Board of Directors on May 5, 2022. The
work progress was reported to the Board of
Directors on August 5, 2022 and March 9,
2023.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.
Not applicable.

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1-1 Greenhouse gas inventory and assurance conditions

The Company's basic information � Companies with a capital of more than NT$10 billion, steel and iron industry, or cement industry � Companies with a capital of more than NT$5 billion but less than NT$10 billion � Companies with acapitalof lessthan NT$5 billion	According to the Sustainable Development Guidemap for TWSE- and TPEx-Listed Companies, the Company at least must disclose � Individual inventories by the parent company � Inventory by subsidiaries in the consolidated financial statements � Individual assurance by the parent company � Inventory by subsidiaries in the consolidated financial statements

Scope 1	Total emissions (tons CO2e)	Intensity (tons CO2e/NT$ millions) (Note 2)	Assurance institution	Description of assurance (Note 3)
Sunonwealth Electric Machine Industry Co., Ltd. (Kaohsiung Head Office and KaohsiungFactory)	119.1226	0.011	-	As of the publication date of the annual report, the assurance institution continues to review data from 2022. After the data are confirmed by the assurance institution, they shall be disclosed in the Company's Sustainability Report.
Sunonwealth Electric Machine Industry Co., Ltd. (Taipei Office)	8.3086
Sunon Electronic (Bei Hai) Co., Ltd.	835.3419	0.135	-
Lizhun Electronic (Bei Hai) Co., Ltd.	123.7746	0.166	-
Sunon Electronic (Kunshan) Co., Ltd.	1,004.2303	0.161	-
Sunon Electronics Philippines Corp.	22.1522	11.194	-
Sunonwealth Electric Machine Industry Co., Ltd. (USA,France,India)	24.3764	0.017	-
Total	2,137.3066	11.684

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Scope 2	Total emissions (tons CO2e)	Intensity (tons CO2e/NT$ millions) (Note2)	Assurance institution	Description of assurance (Note 3)
Sunonwealth Electric Machine Industry Co., Ltd. (Kaohsiung Head Office and KaohsiungFactory)	2,480.6687	0.217	-	As of the publication date of the annual report, the assurance institution continues to review data from 2022. After the data are confirmed by the assurance institution, they shall be disclosed in the Company's Sustainability Report.
Sunonwealth Electric Machine Industry Co., Ltd. (TaipeiOffice)	67.5156
Sunon Electronic (Bei Hai) Co., Ltd.	8,269.3498	1.341	-
Lizhun Electronic (Bei Hai) Co., Ltd.	1,416.5803	1.897	-
Sunon Electronic (Kunshan) Co., Ltd.	9,925.6843	1.593	-
Sunon Electronics Philippines Corp.	89.4927	45.221	-
Sunonwealth Electric Machine Industry Co., Ltd. (USA,France,India)	31.8578	0.022	-
Total	22,281.1492	50.291
Scope 3	Not applicable	-	-	-

Instructions:

1 The information in Scope 1 and Scope 2 of this table shall be processed in accordance with the schedule set forth in Article 10, Paragraph 2 of the Standards. The Company may voluntarily disclose the information for Scope 3.
2 The Company may conduct a greenhouse gas inventory in accordance with the following standards: (1) Greenhouse Gas Protocol (GHG Protocol).
(2) ISO 14064-1 published by International Organization for Standardization (ISO).
3 The assurance institution must meet the regulations for assurance in Taiwan Stock Exchange Corporation Rules Governing the Preparation and Filing of Sustainability Reports by TWSE Listed Companies and Taipei Exchange Rules Governing the Preparation and Filing of Sustainability Reports by TPEx Listed Companies.
4 Subsidiaries may file individually or consolidated reports (e.g., by country, by region, or in a consolidated report (Note 1).
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5 The intensity of greenhouse gas emissions may be calculated based on the unit of product/service or revenue. However, the Company must at least disclose the data calculated based on the revenue (NT$ million) (Note 2).
6 The percentage of total emissions from the location of operations or subsidiaries not included in the inventory calculations shall not exceed 5%. The total emissions disclosed shall be based on the emissions calculated in accordance with Instruction 1 and the mandatory scope of the inventory.
7 The assurance statement must contain a summary of the assurance report of the assurance institution and the complete assurance opinion shall be provided in the annual report (Note 3).
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(VI) Implementation of ethical corporate management, deviation from "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", and reasons for deviation

Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
I. Establishment of ethical corporate management policy and approaches (I) Has the Company established the ethical corporate management policies approved by the Board of Directors and stated its policies and practices in its Memorandum or external correspondence to maintain business integrity? Are the Board of Directors and the senior management committed to fulfilling this commitment? (II) Does the Company have mechanisms in place to assess the risk of unethical conduct and perform regular analysis and assessment of business activities with a higher risk of unethical conduct within the scope of business? Does the Company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Article 7, Paragraph 2 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? (III) Does the Company have any measures against dishonest conducts? Are these measures supported by proper procedures, behavioral guidelines,disciplinaryactions and complaint systems? Does the	� � �		(I) The Board of Directors of the Company has established the "Ethical Corporate Management Best Practice Principles" and "Ethical Corporate Management Operating Procedures and Code of Conduct" to specify the Company's ethical management policies and measures. The Board of Directors and management are committed to the effective implementation of ethical corporate management policies and enforcement during internal management activities and business activities. (II) The applicable scope of the "Ethical Corporate Management Operating Procedures and Code of Conduct" established by the Company includes the subsidiaries of the Company. It expressly prohibits bribery, provision of illegal political donations, inappropriate charity donations or sponsorship, providing or accepting unreasonable presents, hospitality or other improper benefits. The Company also regularly analyzes and evaluates business activities with greater risks of unethical conduct for amendments of the "Ethical Corporate Management Operating Procedures and Code of Conduct" and related internal control systems. The Company strictly follows the preventive measures specified in all subparagraphs under Article 7, Paragraph 2 of the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies" to prevent unethical conduct. (III) The Company has established the "Ethical Corporate Management Operating Procedures and Code of Conduct" to require Directors,managerial officers,and employee	No deviation.

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Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
Company review the policies on a regular basis?			from engaging in unethical conduct and actively increases their awareness of such requirements. The Company and subsidiaries have established rigorous accounting systems, internal control systems, and audit systems to prevent unethical conduct. They encourage internal and external personnel to report illegal and unethical conduct. The Companyalso continues to review and amend the systems.
II. Full implementation of ethical management principles (I) Does the Company evaluate the integrity of all counterparties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners? (II) Does the Company have a unit responsible for business integrity on a full-time basis under the Board of Directors, which will report the business integrity policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations? (III) Has the Company established policies to prevent conflicts of interests, implemented such policies, and provided adequate channels of communications?	� �	�	(I) The Company stipulates related ethical clauses in contracts signed with customers and suppliers to prevent the Company and its employees, customers, suppliers, and stakeholders from engaging in bribery, provision of illegal political donations, inappropriate charity donations or sponsorship, providing or accepting unreasonable presents, hospitality or other improper benefits. (II) Although the Company has not set up a unit that specializes (or is involved) in promoting ethical corporate management and reports to the Board of Directors, the Company's professional managerial officers perform their duties in accordance with the authorization and we have established Employee Work Rules and related regulations to meet ethical management requirements. (III) The Company's "Ethical Corporate Management Best Practice Principles" and the "Ethical Corporate Management Operating Procedures and Code of Conduct" specify regulations for avoidance of conflicts of interest including procedures to be implemented when there is a conflict of interest involving a Director, managerial officer, or other stakeholders attending a meeting of the Board of Directors on a voting or non-voting basis, or the legal entity they represent. The Company's "Code of Ethical Conduct" specifies that employees may not take advantage of their positions in the Company to obtain improper benefits for themselves, their spouses, parents,children,or anyother relative within the	No material discrepancy.

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Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
(IV) Does the Company have effective accounting and internal control systems in place to implement business integrity? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct, or engage CPAs to perform the audits? (V) Did the Company periodically provide internal and external training programs on integrity management?	� �		second degree of kinship. (IV) The Company has established effective accounting and internal control systems to implement business integrity. Before formulating annual audit plans, the Company evaluates the risks of audit operations and assigns weights (risks of unethical conduct are evaluated and assigned weighted scores in accordance with the two risk indicators including the degree of internal control and the financial exposure). The Company compiles all weighted scores for risks and the Audit Office formulates the audit work items and audit frequencies based on the risks. It also submits audit plans (including risk assessments) to the Audit Committee and the Board of Directors for review in accordance with regulations. The Audit Office conducts audits after obtaining approval. (V) To guide help each location of operations and the Company's stakeholders understand and implement the Company's Ethical Corporate Management Policy, the Company has continuously implemented a series of measures and management mechanisms, including the signature of relevant documents and organization of relevant training courses (6 sessions in 2022) on a regular basis. We also conduct due diligence on suppliers to facilitate review and selection.
III. Implementation of the Company's whistleblowing system (I) Has the Company established concrete whistleblowing and reward system and have a convenient reporting channel in place, and assign an appropriate person to communicate with the accused? (II) Has the Company established standard operating procedures for investigating reported issues, follow-up measures to be adopted after the investigation, as well as relevant confidential mechanisms? (III) Has the Company adopted measures for protecting the whistleblower against improper treatment or retaliation?	� � �		(I) The Company has established the whistleblowing and reward system to actively prevent unethical conduct. We provide reporting channels on the Company's website assigned appropriate employees to process reports. (II) The Company has established comprehensive procedures and confidentiality mechanisms for case acceptance investigation processes, investigation results, and relevan documents. (III) The Company's protection measures for whistleblowers shall include maintainingthe confidentialityof the identity	, t No deviation.

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Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
			of the whistleblowers and the contents of their reports. The Company must also protect whistleblowers from inappropriate disciplinary actions due to their whistleblowing.
IV. Enhancing information disclosure Has the Company disclosed its integrity principles and progress onto its website and Market Observation Post System?	�		The Company has established the "Ethical Corporate Management Best Practice Principles" and "Ethical Corporate Management Operating Procedures and Code of Conduct" and disclosed the results in the Sustainability Report each year. The information is also disclosed on the Market Observation Post System and Company's website.	No material discrepancy.
V. If the Company has established Ethical Corporate Management Principles in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", describe difference with the principles and implementation status: No material discrepancy.
VI. Other important information to facilitate a better understanding of the Company's implementation of ethical corporate management: (Such as the status of the Company's efforts to review and correct its Principles for Honest Business Practices): 1. The Company strictly complies with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, regulations for listed companies, and other related regulations for business operations which are used as the basis for ethical corporate management. 2. Please refer to the https://www.sunon.com"Ethical Corporate Management Best Practice Principles, Ethical Corporate Management Operating Procedures and Code of Conduct, and SustainabilityReport on the Company's official website.

V. If the Company has established Ethical Corporate Management Principles in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", describe difference with the principles and implementation status: No material discrepancy.
VI. Other important information to facilitate a better understanding of the Company's implementation of ethical corporate management: (Such as the status of the Company's efforts to review and correct its Principles for Honest Business Practices):
The Company strictly complies with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, regulations for listed companies, and other related regulations for business operations which are used as the basis for ethical corporate management.
Please refer to the https://www.sunon.com"Ethical Corporate Management Best Practice Principles, Ethical Corporate Management Operating Procedures and Code of Conduct, and Sustainability Report on the Company's official website.

Note: Regardless of whether "Yes" or "No" was selected, explanation shall be provided in the Summary column.

(VII) If the Company has established corporate governance principles and related bylaws, their query methods shall be disclosed: The Company has established the Corporate Governance Best Practice Principles and related regulations. Please refer to the Company's website at www.sunon.com.
(VIII) Critical information that can enhance the understanding of the Company's corporate governance practices shall also be disclosed: Please refer to page 37 of the Annual Report (IV. Implementation of corporate governance).
73 -
(IX) Status of implementation of internal control system
Internal Control System Statement

Sunonwealth Electric Machine Industry Co., Ltd. Internal Control System Statement

Date: March 9, 2023

The Company states the following with regard to its internal control system during fiscal year 2022, based on the findings of a self-evaluation:

I. The Company is fully aware that the establishment, implementation and maintenance of its internal control system is the responsibility of the Board of Directors and managerial officers. In this regard the Company has already established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability of reporting, and compliance with applicable laws and regulations.
II. There are inherent limitations to even the most well-designed internal control system. As such, an effective internal control system can only reasonably ensure the achievement of the aforementioned goals. Moreover, the operating environment and situation may change and impact the effectiveness of the internal control system. However, self-supervision measures were implemented within the Company's internal control policies to facilitate immediate rectification once procedural flaws have been identified.
III. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the "Regulations"). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. Control environment, 2. Risk assessment, 3. Control operation, 4. Information and communication, and 5. Monitoring. Each element further contains several items. For more information on the abovementioned items, please refer to the Regulations.
IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
V. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that as of December 31, 2022 its internal control system (including its supervision and management of subsidiaries), encompassing internal controls for knowledge of the degree of achievement of operational effectiveness and efficiency objectives, reliability of reporting, and compliance with applicable laws and regulations, is effectively designed and operating, and reasonably assures the achievement of the above-stated objectives.
VI. This Statement will become a major part of the content 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.
74 -
VII. This Statement has been passed by the Board of Directors Meeting of the Company held on China March 9, 2023, where 0 of the 9 attending Directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement.

Sunonwealth Electric Machine Industry Co., Ltd. Chairman of the Board: Ching-Shen Hong President: Ching-Shen Hong

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If the Company engages an accountant to examine its internal control system, disclose the CPA audit report: None.
(X) Penalties imposed upon the Company or internal personnel by laws, or punishment imposed by the Company on internal personnel for violation of the Company's internal control system regulations, detailed information on the punishment if it may have significant impact on the shareholders' equity or securities prices, major defects and corrective action thereof in the most recent fiscal year and as of the date of this annual report: None.
(XI) Important resolutions adopted in shareholders' meeting and Board of Directors' meeting in the past year and up to the date of report
Resolutions of all shareholders in attendance in the general shareholders' meeting on June

10, 2022 and the status of implementation

Resolution	Implementation status
Passed the 2021 Business Report and FinancialStatements.	-
Passed the Company's 2021 earnings distribution proposal.	Established July 4,2022 as the ex-dividend date and completed all earnings distribution on the issuance date on July 21, 2022. (Cash dividendper share was NT$1.2)
Passed the amendment of the "Procedures for Acquisition or Disposal of Assets".	They were uploaded to the Market Observation Post System and Company's website on June 10,2022.

Important resolutions adopted by the Board of Directors in 2022 and up to the publication of the Annual Report on April 11, 2023

publication	of the Annual Report on April 11, 2023
Date of meeting	Resolution
January 24, 2022	I. Passed the Company's 2022 Business Plan. II. Approval of the amendment to Company's "Corporate Social Responsibility Best Practice Principles". III. Passed the amendment of the "Corporate Governance Best Practice Principles". IV. Passed the Company's 2021 year-end bonus for managerial officers. V. Passed the Company's 2021 employee remuneration for managerial officers.
March 10, 2022	I. Passed this Company's 2021 Business Report, financial statements, and consolidated financial statements. II. Passed the Company’s 2021 remuneration distribution proposal for board members and employees. III. Passed the Company's 2021 earnings distribution proposal. IV. Passed the amendment of the "Procedures for Acquisition or Disposal of Assets".

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Date of meeting	Resolution
	V. Passed the proposal for the time and location of the 2022 general shareholders' meeting. VI. Passed the Company’s 2021 Internal Control System Statement. VII. Passed the amendment of the Company's "Employee Remuneration Regulations".
May 5, 2022	I. Passed the Consolidated Financial Report of the Company for Q1 2022. II. Approval of the change of the certifying CPA due to internal adjustmentof the certifyingaccountingfirm.
August 5, 2022	I. Passed the Consolidated Financial Report of the Company for Q2 2022. II. Passed the Company's technical cooperation in Mainland China.
November 3, 2022	I. Passed the Consolidated Financial Report of the Company for Q3 2022. II. Passed the establishment of the Procedures for Handling Material Inside Information. III. Passed the Additional items in the "Audit of the Handling of Material Inside Information" in the implementation regulations for internal audit. IV. Passed the Company's 2023 Audit Plan. V. Passed the proposal for promotions. VI.Passedthe proposal for appointments.
January 16, 2023	I. Passed the Company's 2023 Business Plan. II. Passed the proposal for applying for a medium-term loan with land as collateral from the bank. III. Passed the Company's 2022 year-end bonus for managerial officers.
March 9, 2022	I. Passed this Company's 2022 Business Report, financial statements, and consolidated financial statements. II. Passed the Company’s 2022 remuneration distribution proposal for board members and employees. III. Passed the Company's 2022 earnings distribution proposal. IV. Passed the amendment of the "Articles of Incorporation". V. Passed the proposal for the time and location of the 2023 general shareholders' meeting. VI. Passed the Company's third issuance of domestic unsecured convertible bonds. VII. Passed the amendment of the "Regulations for Election of Directors". VIII. Passed the amendment of the "Standard Operating Procedures for Requests Filed by Directors". IX. Passed the amendment of the "Sustainable Development Best Practice Principles".

77 -

Date of meeting	Resolution
	X. Passed the Company’s 2022 Internal Control System Statement. XI. Passed the proposal for endorsement and guarantee for the subsidiary Sunon Electronic (Bei Hai) Co., Ltd. XII. Passed the Company's 2022 employee remuneration for managerial officers.

(XII) Dissenting or qualified opinion of Directors or Supervisors against an important resolution passed by the Board of Directors that is on record or stated in a written statement in the past year and up to the date of report: None.
(XIII) Resignation and dismissal of professional managerial officers related to the financial report including Chairman, President, Chief Accounting Officer, Chief Financial Officer, Chief R&D Officer, Chief Internal Auditor, Corporate Governance Officer, R&D Officer, and Information Security Officer in the past year and up to the date of report: None.
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V. Information on fees to CPA

(I) Audit fees and non-audit fees paid to certifying accountants, the firm of the certifying accountants, and its affiliates and the nature of the non-audit services:

Information on CPA fees

Unit: thousand NT$

Name of the CPA Firm	Name of CPAs	Duration of audit	Audit fees	Non- audit fees	Total	Remarks
Crowe Horwath (TW)	Ching-Lin Li	2022.01.01- 2022.03.31	3,250	1103	3,353	Non-audit fees included typing fees and seal certification fees for financial reports.
	Shu-Man Tsai
	Ching-Lin Li	2022.04.01- 2022.12.31
	Kuo-Ming Li

Please provide a detailed description of the services provided in exchange for non-audit fees: (e.g., tax certification, assurance, or other financial consulting services)

(II) If the Company changes accounting firm and the amount of audit fee paid in the year of change is less than that in the year before, information shall be disclosed: None.
(III) If the audit fee is more than 10% less than that paid in the previous year, information shall be disclosed: None.
VI. Information on Replacement of CPAs: Change of certifying accountants starting Q2 2022 due to internal adjustment of the certifying accounting firm .
VII. The Chairman, President and Financial or Accounting Managerial Officer of the Company who had worked for the Independent CPA or the affiliate in the past year: None.
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VIII.Share transfer by Directors, Supervisors, Managerial Officers, and shareholders holding more than 10% interests and changes to share pledging by them

(I) Change in the shares held by the Directors, Supervisors, managerial officers, and major shareholders

Title (Note 1)	Name	2022	2022	2023 up to April 11	2023 up to April 11
		Increase (decrease) in shares held	Increase (decrease) in pledged shares	Increase (decrease) in shares held	Increase (decrease) in pledged shares
Director	Yo Yuan Investment Corporation Institutional shareholder representative: Ching-Shen Hong Fu-Ing Hong Chen Li-Ju Chen Tseng-ChengLin	-	-	-	-
Director	Nice Enterprise Co., Ltd. Institutional shareholder representative: Ching-LiangChen	-	-	-	-
Independent Director	Chun-Hao Xin	-	-	-	-
Independent Director	Mei-Hsiang Pai	-	-	-	-
Independent Director	Chih-Ming Chen	-	-	-	-
Chairman of the Board And President	Ching-Shen Hong	1,258,000	-	-	-
Vice President and Director of the Finance Division	William Li	-	-	-	-
Vice President of the Business Division	Chen-Hsueh Li	-	-	-	-
Executive Vice President	Chin-Tzu Wu	-	-	-	-
Acting President of Business Unit	Kuan-Hung Tseng	-	-	-	-
President of Business Unit	Che-Lun Huang	-	-	-	-
Plant Director	Chao-Wang Chiu	-	-	-	-
Acting Plant Director	Chieh-Hung Lin	-	-	-	-

Note 1: Shareholders with over 10% of the Company's total share shall be classified as major shareholders and listed separately.

Note 2: Information regarding the transfer of shares or shares pledged to the counterparty being the related party shall be filled in the following Table.

(II) Share transfer information: None.

(III) Share pledge information: None.

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IX. Information on the relationship between any of the top ten shareholders

Date: April 11, 2023

Name (note 1)	Shares held by the person	Shares held by the person	Shares held by spouse and underage children	Shares held by spouse and underage children	Total shareholding by nominee arrangement	Total shareholding by nominee arrangement	Titles, names and relationships between top 10 shareholders (related party, spouse, or kinship within the second degree).(note 3)	Titles, names and relationships between top 10 shareholders (related party, spouse, or kinship within the second degree).(note 3)	Remarks
	Number of shares	Shareholdi ng ratio	Number of shares	Shareholdi ng ratio	Number of shares	Shareholding ratio	Title (or name)	Relatio nship
Fu-Ing Hong Chen	16,282,000	6.49%	-	-	-	-	Representative of Guang Sheng Investment Corporation	Shareh older	-
							Yo Yuan Investment Corporation	Shareh older	-
							Ching-Shen Hong	Mother -son	-
Yo Yuan Investment Corporation Representative: Ching-Shen Hong	14,825,000	5.91%	-	-	-	-	Representative of Guang Sheng Investment Corporation	Mother -son	-
							Ching-Shen Hong	Shareh older	-
Guang Sheng Investment Corporation Chairman of the Board: Fu-Ing Hong Chen	12,613,000	5.03%	-	-	-	-	Yo Yuan Investment Corporation	Mother -son	-
							Ching-Shen Hong	Mother -son	-
Aberdeen Standard SICAV I - Asian Smaller Companies Fund investment account under the custody of HSBC Bank Taiwan	8,612,000	3.43%	-	-	-	-	-	-	-
Sunonwealth Charity Foundation	5,970,000	2.38%	-	-	-	-	-	-	-
Ching-Shen Hong	4,870,000	1.94%	-	-	-	-	Representative of Guang Sheng Investment Corporation	Moth er-son	-
							Yo Yuan Investment Corporation	Share holder	-
							Fu-Ing Hong Chen	Moth er-son	-
JPMorgan Securities investment account under the custody of JPMorgan Chase Bank	4,486,415	1.79%	-	-	-	-	-	-	-
Aberdeen Asia Income Fund investment account under the custody of HSBC Bank Taiwan	4,301,000	1.71%	-	-	-	-	-	-	-

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Yi Peng Co., Ltd. Chairman of the Board: Chin-Hua Wang	4,280,000	1.71%	-	-	-	-	-	-	-
Mitsubishi UFJ Morgan Stanley Securities - Product Sponsorship Unit Transaction Platform investment account under the custodyof HSBC Taiwan	4,266,000	1.70%	-	-	-	-	-	-	-

Note 1: All the top 10 shareholders should be listed. For institutional shareholders, their names and the name of their representatives should be listed separately.
Note 2: Shareholding percentage is calculated separately based on the number of shares held in the name of the person, his/her spouse and minors, and others.
Note 3: Relationships between the aforementioned shareholders, including institutional and natural person shareholders should be disclosed based on the financial reporting standards used by the issuer.
82 -
X. The shareholding of the Company, Director, Supervisor, Managerial Officers and an enterprise that is directly or indirectly controlled by the Company in the invested company and the calculation of the consolidated shareholding percentage

Consolidated shareholding percentage

	March 31,2023;Unit: share;%	March 31,2023;Unit: share;%	March 31,2023;Unit: share;%	March 31,2023;Unit: share;%	March 31,2023;Unit: share;%	March 31,2023;Unit: share;%
Investee (Note)	Investment by the Company		Investments by Directors, Supervisors, managerial officers and directly or indirectly controlled enterprises		Comprehensive investment
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio
Sunon INC.	150,000	100.00	-	-	150,000	100.00
Sunon SAS.	50,000	100.00	-	-	50,000	100.00
Sunon Deutschland GmbH	-	-	-	100.00	-	100.00
Sunon Corporation	4,400	100.00	-	-	4,400	100.00
Sunonwealth Electric Machine Ind.(H.K.)Ltd.	799,999	99.99	1	0.01	800,000	100.00
BVI Successful Century Co., Ltd.	33,880,000	100.00	-	-	33,880,000	100.00
Sunon Electronic (Kunshan) Co.,Ltd.	-	-	-	100.00	-	100.00
BVI Sunon International Ltd.	19,180,000	100.00	-	-	19,180,000	100.00
Sunon Electronic (Foshan) Co.,Ltd.	-	-	-	100.00	-	100.00
Sunon Electronic (Bei Hai) Co.,Ltd.	-	-	-	100.00	-	100.00
Beihai Li Zhun Electronics Co.,Ltd.	-	-	-	100.00	-	100.00
Sunon Electronics India Private Limited	1,099,999	99.99	1	0.01	1,100,000	100.00
Sunon Properties Philippines Corp.	7,067,896	99.99	3	0.01	7,067,899	100.00
Sunon Electronics Philippines Corp.	3,583,177	99.99	3	0.01	3,583,180	100.00
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	-	-	-	35.00	-	35.00

Note: Long-term investment calculated by equity method.

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D. Funding Status

I. Source of Capital Shares

(I) Capital Formulation Process

Unit: Share, NTD

						Unit: Share,NTD	Unit: Share,NTD	Unit: Share,NTD
Year/ month	Issuance price	Authorized capital		Paid-up capital		Remarks
		Number of shares	Amount	Number of shares	Amount	Source of Capital Shares	Subscriptions paid with property other than cash	Others
2003.03	10	200,000,000	2,000,000,000	180,909,906	1,809,099,060	Converted from corporate bonds	None	Note 1
2003.08	10	240,000,000	2,400,000,000	197,443,061	1,974,430,610	Recapitalizati on of retained earnings	None	Note 2
2003.08	10	240,000,000	2,400,000,000	196,000,061	1,960,000,610	Treasury stock liquidation	None	Note 3
2005.10	10	240,000,000	2,400,000,000	199,860,062	1,998,600,620	Recapitalizati on of retained earnings	None	Note 4
2006.08	10	300,000,000	3,000,000,000	205,765,864	2,057,658,640	Recapitalizati on of retained earnings	None	Note 5
2007.04	10	300,000,000	3,000,000,000	206,990,989	2,069,909,890	Converted from corporate bonds	None	Note 6
2007.07	10	300,000,000	3,000,000,000	210,011,908	2,100,119,080	Converted from corporate bonds	None	Note 7
2007.09	10	300,000,000	3,000,000,000	223,006,342	2,230,063,420	Recapitalizati on of retained earnings	None	Note 8
2007.10	10	300,000,000	3,000,000,000	228,854,472	2,288,544,720	Converted from corporate bonds	None	Note 9
2008.01	10	300,000,000	3,000,000,000	231,306,446	2,313,064,460	Converted from corporate bonds	None	Note 10
2008.04	10	300,000,000	3,000,000,000	230,283,446	2,302,834,460	Treasury stock liquidation	None	Note 11
2008.09	10	300,000,000	3,000,000,000	245,123,935	2,451,239,350	Recapitalizati on of retained earnings	None	Note 12
2008.10	10	300,000,000	3,000,000,000	245,798,630	2,457,986,300	Converted from corporate bonds	None	Note 13

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2009.02	10	300,000,000	3,000,000,000	241,265,630	2,412,656,300	Treasury stock liquidation	None	Note 14
2009.02	10	300,000,000	3,000,000,000	244,337,901	2,443,379,010	Converted from corporate bonds	None	Note 15
2009.03	10	300,000,000	3,000,000,000	245,006,573	2,450,065,730	Converted from corporate bonds	None	Note 16
2009.07	10	300,000,000	3,000,000,000	245,307,776	2,453,077,760	Converted from corporate bonds	None	Note 17
2009.08	10	300,000,000	3,000,000,000	257,524,671	2,575,246,710	Recapitalizati on of retained earnings	None	Note 18
2009.10	10	300,000,000	3,000,000,000	257,847,455	2,578,474,455	Converted from corporate bonds	None	Note 19
2010.01	10	300,000,000	3,000,000,000	257,929,732	2,579,297,320	Converted from corporate bonds	None	Note 20
2012.08	10	300,000,000	3,000,000,000	250,929,732	2,509,297,320	Treasury stock liquidation	None	Note 21

Note 1: Approved in the Jing-Shou-Shang No. 09201090890 Letter from the Ministry of Economic Affairs dated March 28, 2003.
Note 2: Approved in the Jing-Shou-Shang No. 09201259550 Letter from the Ministry of Economic Affairs dated August 29, 2003.
Note 3: Approved in the Jing-Shou-Shang No. 09201259550 Letter from the Ministry of Economic Affairs dated August 29, 2003.
Note 4: Approved in the Jing-Shou-Shang No. 09401206610 Letter from the Ministry of Economic Affairs dated October 26, 2005.
Note 5: Approved in the Jing-Shou-Shang No. 09501191390 Letter from the Ministry of Economic Affairs dated August 28, 2006.
Note 6: Approved in the Jing-Shou-Shang No. 09601086420 Letter from the Ministry of Economic Affairs dated April 24, 2007.
Note 7: Approved in the Jing-Shou-Shang No. 09601151490 Letter from the Ministry of Economic Affairs dated July 4, 2007.
Note 8: Approved in the Jing-Shou-Shang No. 09601230910 Letter from the Ministry of Economic Affairs dated September 19, 2007.
Note 9: Approved in the Jing-Shou-Shang No. 09601251720 Letter from the Ministry of Economic Affairs dated October 16, 2007.
Note 10: Approved in the Jing-Shou-Shang No. 09601321820 Letter from the Ministry of Economic Affairs dated January 4, 2008.
Note 11: Approved in the Jing-Shou-Shang No. 09701084940 Letter from the Ministry of Economic Affairs dated April 11, 2008.
Note 12: Approved in the Jing-Shou-Shang No. 09701226650 Letter from the Ministry of Economic Affairs dated September 5, 2008.
Note 13: Approved in the Jing-Shou-Shang No. 09701262270 Letter from the Ministry of Economic Affairs dated October 17, 2008.
Note 14: Approved in the Jing-Shou-Shang No. 09801016130 Letter from the Ministry of Economic Affairs dated February 4, 2009.
Note 15: Approved in the Jing-Shou-Shang No. 09801016130 Letter from the Ministry of Economic Affairs dated February 4, 2009.
85 -
Note 16: Approved in the Jing-Shou-Shang No. 09801052300 Letter from the Ministry of Economic Affairs dated March 18, 2009.
Note 17: Approved in the Jing-Shou-Shang No. 09801161450 Letter from the Ministry of Economic Affairs dated July 24, 2009.
Note 18: Approved in the Jing-Shou-Shang No. 09801183550 Letter from the Ministry of Economic Affairs dated August 13, 2009.
Note 19: Approved in the Jing-Shou-Shang No. 09801244400 Letter from the Ministry of Economic Affairs dated October 21, 2009.
Note 20: Approved in the Jing-Shou-Shang No. 09901001160 Letter from the Ministry of Economic Affairs dated January 8, 2010.
Note 21: Approved in the Jing-Shou-Shang No. 10101182680 Letter from the Ministry of Economic Affairs dated August 31, 2012.
Note 1: Information of the current year up to the publication date of the Annual Report shall be provided.
Note 2: For any capital increase, the effective (approval) date and the document number shall be added.
Note 3: Shares traded below par value shall be indicated in a clear manner.
Note 4: Capital increase by currency debts or technology shall be stated and the type and amount of assets involved in such capital increase shall be noted.

Note 5: Private fundraising shall be specified in a clear manner.

(II) Categories of outstanding shares

II) Categories of	outstanding shares
			April	11,2023
Category of shares		Authorized capital		Remarks
	Outstanding shares (listed)	Unissued shares	Total
Registered common shares	250,929,732	249,070,268	500,000,000	-

Note: Please indicate whether the shares are issued by a company listed on the Taiwan Stock Exchange (TWSE) or the Taipei Exchange (TPEx) (Shares with restrictions on trading on the TWSE or those traded on TPEx shall be noted).

(III) Information on shelf registration: Not applicable.

II. Shareholders

					April 11,2023	April 11,2023
Shareholders Quantity	Government institutions	Financial institutions	Other corporations	Foreign institutions and foreigners	Individuals	Total
Persons	4	16	209	162	36,385	36,776
Shares held (shares)	1,485,009	8,788,462	55,048,835	71,351,982	114,255,444	250,929,732
Shareholding ratio(%)	0.59	3.50	21.94	28.44	45.53	100.00

Note: Companies primarily listed on the TWSE or the TPEx shall disclose the proportion of their shares held by investors from Mainland China. Investors from Mainland China refer to natural persons, legal persons, organizations, institutions or companies in areas other than Taiwan and Mainland China that are invested by persons of such identity as defined in Article 3 of the Regulations Governing Investment of Mainland Chinese in Taiwan.

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III. Shareholding distribution status

			April 11,2023
Shareholding classification	Number of shareholders	Shares held (shares)	Shareholding ratio
1 to 999	19,115	1,131,774	0.45 %
1,000 to 5,000	14,482	28,659,963	11.42 %
5,001 to 10,000	1,708	13,572,099	5.41 %
10,001 to 15,000	476	6,067,215	2.42 %
15,001 to 20,000	297	5,537,165	2.21 %
20,001 to 30,000	215	5,576,843	2.22 %
30,001 to 40,000	108	3,840,085	1.53 %
40,001 to 50,000	81	3,744,032	1.49 %
50,001 to 100,000	131	9,516,086	3.79 %
100,001 to 200,000	54	7,444,742	2.97 %
200,001 to 400,000	40	10,986,533	4.38 %
400,001 to 600,000	23	10,978,070	4.38 %
600,001 to 800,000	6	4,340,000	1.73 %
800,001 to 1,000,000	5	4,471,000	1.78 %
More than 1,000,001	35	135,064,125	53.82 %
Total	36,776	250,929,732	100.00%

Preferred shares: None.

IV. List of major shareholders

List of major shareholders	List of major shareholders
		April 11,2023
Shares Name of major shareholder	Shares held (shares)	Shareholding ratio
Fu-IngHongChen	16,282,000	6.49%
Yo Yuan Investment Corporation	14,825,000	5.91%
KuangShengInvestment Development Co.,Ltd.	12,613,000	5.03%
Aberdeen Standard SICAV I - Asian Smaller Companies Fund investment account under the custodyof HSBC Bank Taiwan	8,612,000	3.43%
Sunonwealth CharityFoundation	5,970,000	2.38%
Ching-Shen Hong	4,870,000	1.94%
JPMorgan Securities investment account under the custodyof JPMorgan Chase Bank	4,486,415	1.79%
Aberdeen Asia Income Fund investment account under the custodyof HSBC Bank Taiwan	4,301,000	1.71%
Yi PengCo.,Ltd.	4,280,000	1.71%
Mitsubishi UFJ Morgan Stanley Securities -Product Sponsorship Unit Transaction Platform investment account under the custodyof HSBC Taiwan	4,266,000	1.70%

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V. Market Price, Net Worth, Earnings, and Dividends per Share in the Last Two Years

Item	Year	Year	2021	2022	As of March 31, 2023 (Note 8)
Market price per share(Note 1)	Highest		57.40	49.70	53.90
	Lowest		35.20	30.45	41.05
	Average		47.83	43.35	47.71
Net value per share (Note 2)	Before distribution		17.40	20.73	-
	After distribution		16.20	-	-
Earnings per share	Weighted average number of shares(in thousands)		250,930	250,930	250,930
	Earnings per share(Note 3)		1.71	4.34	1.11
Dividends per share (NT$)	Cash dividends		1.20	(Note 9)2.60	-
	Stock dividen ds	-	-	-	-
		-	-	-	-
	Cumulative unpaid dividends(Note 4)		-	-	-
Return on investment analysis	PE ratio(Note 5)		26.39	9.46	-
	Price-dividend ratio(Note 6)		37.61	15.79	-
	Cash dividend yield(Note 7)		2.66%	6.33%	-

＊ If retained earnings or capital reserves were used for capital increase, the Company shall disclose market prices and cash dividends that were retroactively adjusted based on the number of shares after distribution.
Note 1: List the highest and lowest market price of common shares for each fiscal year and calculate the average market price for each fiscal year based on trading value and volume in each fiscal year.
Note 2: Please fill these rows based on the number of shares that have been issued at the end of the fiscal year and the distribution plan approved by the Board of Directors or at the shareholders' meeting in the subsequent fiscal year.
Note 3: If retroactive adjustments are required due to stock grants, the Company shall list the earnings per share before and after the adjustment.
Note 4: If there are any conditions in issuing equity securities that allow for unpaid out dividend for the year to be accumulated to subsequent years in which there is profit, the Company shall separately disclose the accumulated unpaid out dividend up to that year.
Note 5: P/E Ratio = Average closing price for each share for the year/earnings per share
Note 6: P/D Ratio = Average closing price for each share for the year/cash dividend per share
Note 7: Cash dividend yield = cash dividends / average closing price per share for the year.
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Note 8: Data on net asset value per share and earnings per share from the latest quarter that has been verified by CPAs up to the date of publication of this annual report shall be filled. For all other columns, the Company shall fill information for the current fiscal year until the publication date of this annual report.
The earnings per share for the first quarter of 2023 are provided by the Company.
Note 9: The 2022 earning distribution case is to be approved by the shareholders' meeting.
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VI. Dividend policy and implementation status

(I) Dividend policy established in the Articles of Incorporation
The Board of Directors shall, pursuant to Article 29 of the Articles of Incorporation,
determine the distribution of dividends and formulate appropriate ratios of cash and stock dividends based on requirements for operations and capital expenditures. It shall file a proposal to the shareholders' meeting for approval. However, cash dividends shall not be lower than 20% of the distributed amount in the year.
(II) Proposed dividend distribution in the shareholders' meeting this year
The Company's 2022 earnings distribution proposal was approved by the Board of
Directors on March 9, 2023. The Company shall issue cash dividends of NT$2.6 per share. The Board of Directors shall be authorized to establish an ex-dividend date.
(III) Any expected material changes to the dividend policy shall be explained. There are no material changes to the Company's dividend policy.

VII. The effects of the stock dividends proposed by the shareholders' meeting on the Company's business performances and earnings per share

The Company has no plans for granting stocks in this shareholders' meeting and it is not required to compile a financial forecast for 2023. Therefore, it does not have related estimates on the profit or loss, estimated earnings per share, or other mandatory items with which to evaluate the impact on the Company's business performance and earnings per share.

VIII. Remuneration of employees, directors and supervisors

(I) Quantity or scope of compensation for employees, Directors, And Supervisors as prescribed by the Articles of Incorporation
In the event the Company makes a profit during the fiscal year, it shall set aside no less than 2% of the profits as employee remuneration and no more than 5% as remuneration for Directors. However, a sum shall be set aside in advance to pay down any outstanding cumulative losses.
The employee, director and supervisor remuneration shall be distributed in the form of stock or cash. The distribution shall be approved with a majority vote at a meeting attended by more than two thirds of the Directors and shall be reported at the shareholders' meeting.
The distribution of employee remuneration in stocks or cash shall include employees of affiliated companies that meet the criteria specified in the Company Act.
(II) The basis for estimating the amount of employee, director, and supervisor remuneration, for calculating the number of shares to be distributed as employee remuneration, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:
The Company appropriates remuneration for employees and Directors proportionally
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based on the profitability. As the remuneration for employees and Directors are distributed in cash, the calculation of the number of shares is not required. In addition, there is no difference between the actual number of distributed funds and the estimated amount.

(III) Information on the distribution of employees' remuneration passed by the Board of Directors
The distribution of remuneration for employees and Directors passed by the Board of Directors on March 9, 2023 is as follows: (no discrepancy with the estimated amount)

Remuneration for employees - cash NT$ 32,000,000 Remuneration for employees - stocks NT$ 0 Director's remuneration NT$8,000,000

The proposed employee stock remuneration allocation as a ratio of the net income for the period and the total employee remuneration: 0.
(IV) Actual appropriation of remuneration for employees, Directors and Supervisors in the previous year

The actual remuneration for employees - cash of NT$13,000,000 distributed in the previous year was the same as the estimated amount in the proposal passed by the Board of Directors. The actual remuneration for Directors in cash of NT$4,000,000 distributed in the previous year was the same as the estimated amount in the proposal passed by the Board of Directors.

IX. Buyback of treasury stock None.
X. Corporate bond issuance status:

The Company's Board of Directors passed the Company's third issuance of domestic unsecured convertible bonds on March 9, 2023 and reported to the Securities and Futures Bureau of the FSC on March 31. As of the publication date of the annual report, the case remained under review. It shall be announced and reported in accordance with regulations after it is registered and approved by the competent authority.

XI. Issuance of preferred stocks: None.

XII. Issuance of global depositary receipts (GDR): None.

XIII. Exercise of employee stock option plan (ESOP): None.

XIV. Restricted stock awards: None.
XV. Mergers, acquisitions or issuance of new shares for acquisition of shares of other companies: None.
XVI. Implementation of capital allocation plan: None.
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E. Business Overview

I. Business activities

(I) Business scope
Main businesses
- (1) Cooling fans, cooling modules, and drum fans
- (2) Related components for fans
- (3) Materials and components
Proportion of major business activities

Proportion of major business activities
Business category	Proportion of 2022 revenue
DC cooling fans, cooling modules, and drum fans	73.4%
AC cooling fans	6.3%
Materials and components	20.3%
Total	100.0%

The Company's current products
(1) Fans

DC cooling fans, drum fans

AC cooling fans, drum fans

EC fans

Mighty Mini Fan

High-grade IP protection fan

Explosion prevention fans

(2) Motors
DC automotive brushless motor
EC high-efficiency motor
(3) Fan Tray products
(4) Cooling module

Water-cooled heat dissipation panel

Heat pipe

Vapor chamber

(5) Green building ventilation fan/Flow2 One-AHR ventilation fan
(6) High-volume low-speed (HVLS) large industrial ceiling fans
New products under development
(1) Development of fan products with higher energy efficiency and longer life
(2) Development of weather-resistant energy-saving protection fans
(3) Development of low-noise high-performance blades
(4) Development of ultra-slim fan module products
(5) Development of high-efficiency and reliable water-cooling systems
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- (6) Development of heat dissipation modules for high-end applications
- (7) Development of lightweight and durable products
(II) Industry Overview
Current trends and outlook of the industry

As the computing and networking functions of electronic, communication, and portable products continue to increase, the temperature of these products during use also continues to increase. Under such trends, products have become increasingly compact and equipped with powerful display and processing capacity. The consumers' demand and product development trends have set the stage for the greatest opportunities in the heat dissipation application industry. In addition, the rise of social network websites, e- commerce, communication software, and virtual reality devices in recent years has brought forth strong demand for servers, communication, cloud computing, and cloud storage equipment and micro cooling fans and contributed to substantial growth in the cooling components market. The hardware components of cooling solutions mainly include cooling fans, cooling fins, heat pipes, and thermal pads. The diverse applications for various cooling components include computers, servers, communication, consumer electronics, automotive electronics, industrial equipment, and optoelectronic industry. As Taiwan manufacturers hold most of the global OEM orders for computer and electronic equipment, they retain the advantages for the development of the cooling product industry. They have become the largest buyers and suppliers of cooling components.

The continuous updates of electronics products have fueled the growth of heat dissipation products as demand continued from computer, communication, servers, and consumer electronics as well as new applications such as automotive electronics, handheld electronics products, virtual reality, IoT, artificial intelligence, and highperformance computing. Heat dissipation component manufacturers therefore actively increase their production scale to expand their market share. In addition, the increase in the speed and performance of electronic products means increased demand for heat dissipation and also pushes companies to continue to enhance R&D capacity and launch high-level heat dissipation products to satisfy functional demands of new applications and products. They also work hard to develop niche products and increase profitability. 2. Relationships with suppliers in the industry's supply chain

Cooling fans and cooling modules are built with complicated components. Related upstream industries include plastic materials, axles, steel, copper materials, metal stamping, aluminum casting, molds (stamping, die casting, and plastic injection and forming), copper wires, semiconductors, IC, PCBs, and passive components. Downstream applications are also diverse. All spaces that require ventilation would require cooling fans and sectors include the IT industry, network communications equipment, optoelectronics, home video equipment, industrial and commercial equipment, and automotive electronics industries.

Cooling fans are widely used in upstream and downstream industries and there are

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no strong relations between cooling fans and any singular industry.

Product development trends and competition
(1) Product development trends
A. Ongoing expansion of applications

The heat dissipation market started with applications for personal computers (including desktop and notebook computers) and network communications equipment. As technology progresses and electronic products continue to improve, applications were expanded to consumer electronic products such as handheld projectors, tablet computers, and virtual reality devices. In automotive electronics applications, the requirements for heat dissipation expanded from the vehicle media entertainment system to the cockpit, power system, headlights, wireless charging board, ADAS, and autonomous driving control systems. As building laws are updated and the air quality issue in Mainland China and nearby areas became the focus of attention, applications in related products for green building and air cleaning began to rise.

B. Enhanced functions and high cooling efficiency

As each generation of CPUs are replaced at ever higher speed, cooling component manufacturers must use design improvements and R&D in materials to develop cooling solutions that can dissipate heat at high watts quickly and provide high efficiency, long durability, low noise, low vibration, low energy consumption, low starting voltage, high torque, high temperature resistance, and dust-proof capabilities to resolve product cooling issues.

C. Slim designs

The product design of cooling components continues pursue the goals of "light, slim, short, and small" and the thickness of mainstream specifications continues to become slimmer. For instance, the thickness of cooling fans for laptop computers has progressed from 10mm to 5.2mm. New models even require less than 3mm and we continue to develop even slimmer cooling components for virtual reality devices.

D. Environmental protection and energy conservation

As global warming exacerbates, the future of energy transformation will be focused on green and low-carbon energy. According to the IEA report, the share of renewable energy in global electricity supply is expected to grow from 25% in 2018 to 32% in 2024. A good heat dissipation system is a key element for maintaining stable operations of energy storage systems. Sunonwealth provides comprehensive cooling fan and cooling module products with high protection ratings. They provide high-performance heat dissipation as well as IP68, the highest dust and waterproof rating, and GR-487-rated protection against salt fog. We offer customized watercooled modules and comprehensive technical evaluation services to quickly satisfy customer demand for optimal thermal solutions for storage systems. They meet the requirements for renewable energy systems such as energy storage systems (ESS)

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and PV inverters that operate in harsh environments.

Energy conservation and carbon reduction trends and more rigorous environmental protection laws in the future will drive customers to adopt more energy efficient components and these trends will power new growth of the Company's products.

(2) Product competition

The competition of heat dissipation components in various application industries is divided into standard products and project products. Competition for standard products is governed by the highest guiding principles of "reliability", "price", and "channel penetration". Standards products have no material differences in terms of performance and customer choose suitable products based on prices and requirements for reliability. The Company maintains a good brand image and product reliability and our products are usually those with the highest customer demand. In terms of channel operations, the Company has more than one thousand sales representatives and distributors across the world to achieve the highest market penetration rate. In terms of project products, "coordinated design capacity", "technical intensification level", and "customer satisfaction" are the highest guiding principles. The Company must design solutions with customers during the initial stages of product design. We usually face unprecedented specifications and technical demands for cooling and our design capabilities and technology intensification have become our best advantages. After products receive customer certification, the key to competition is determined by the Company's production and operation capacity, scale of mass production, and our ability to lower cost and serve customers.

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(III) Overview of technology and R&D

Year Item	2022	January 1 to March 31, 2023
Research spending (thousand NT$)	781,334	186,199
Proportion of R&D expenses in business revenue (%)	5.6%	6.1%
Successfully developed technologies and products	1. Intel EST CPU cooler 2. XG 120x38 high air volume and high air pressure fan 3. Bionic impeller blade fan with bionic design 4. High-performance/low- noise/low-temperature- resistant/high-protection fans 5. Next-generation ultra-energy- efficient/energy- efficiency- compliant/safety-complaint Maglev EC 60x25/70x25/80x25/92x25mm fans 6. Launch of several automatic fans with high production efficiency	1. AMD Genoa CPU cooler 2.AF40x20 vehicle fans with low noise and high air volume

(IV) Long- and short-term business plans

Short-term business plan

The development of AI technology and 5G high-speed networks makes it possible to achieve smart connections between all devices. Different devices have been converted into smart and connected electronic products, and they have rapidly expanded into industries and daily life, while increasing the demand for heat dissipation technology. We shall use the Company's technology advantages and market share in this sector for more active expansion. By leveraging Sunonwealth's technological advantages and global market share in this field, we have maintained operations in the laptop and server markets and actively expanded our market share in communications equipment, electric vehicles, industrial energy storage and emerging industries. We have already achieved significant results with purchase orders from major global brands. In terms of operations in regional markets, the Company shall focus on the deployment of sales resources in Europe, India, and China to expand sales and improve sales performance.

Long-term business development plans
(1) The Company shall replenish human resources for sales in all channels and end customers and intensify the development of global channels and target customers. We shall also implement KPI and project management for sales personnel and markets to improve project success rates and sales performance.
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(2) We shall enhance the development of cooling modules and water-cooled products, and integrate air-cooled and water-cooled technologies. The corresponding heat dissipation solutions must include more diverse applications of active and passive heat dissipation components. We have also developed liquid-cooled heat dissipation solutions. We shall expand products on a greater level to improve overall competitiveness.
(3) The rapid growth in 5G communications equipment, high-performance AI cloud computing, and industrial energy storage has created development opportunities in different sectors for new products and new applications. The Company shall expand investment in R&D in these sectors and enhance plans for energy storage products to maintain lead in technologies and products and consolidate our leading position in the market.
(4) In response to global energy conservation and carbon reduction trends, the Company shall support the plans of major international customers for attaining net zero emissions, and ESG sustainable development goals. We shall help customers improve ventilation and heat dissipation and recommend solutions. We shall also pursue market opportunities in green buildings and air cleaning and expand the applications for technologies and products.
(5) The Company shall respond to future environmental and energy conservation regulations to demonstrate the superior technologies and advantages of the energy efficiency of the Company's motors and develop new products and new markets.

II. Market, production and sales

(I) Market analysis
Sales regions of main products

Year Region	2022	2021
Asia	69.8%	77.5%
Europe	20.6%	16.4%
America	8.5%	5.4%
Others	1.1%	0.7%
Total	100.0%	100.0%

2. Market share and future supply, demand, and growth

(1) Market share

According to the latest "Comprehensive Precision Small Motor Market Survey" published by the Fuji Keizai, the Company ranks among the top three leading brands of all surveyed companies across the world in terms of shipment and market share. In 2022, the international economy was affected by the war, lockdowns, and inflation, which increased the price of raw materials and reduced the demand in the consumer markets of major economies. Sunonwealth has

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expanded across a wide range of industries and was thus less affected by the decrease in the demand for consumer laptop and home appliance market. Instead, the Company achieved spectacular performance in the mainstream high-end commercial markets such as servers, communications, and automotive, energy, and industrial applications. We expect continuous growth in the revenue in 2023.

The electric vehicles and autonomous vehicles rapidly penetrate global markets with technology upgrades in recent years, which continues to increase the demand for heat dissipation in automotive applications. In 2022, several Sunonwealth automobile heat dissipation products have been adopted in the infotainment system, air quality sensors, and advanced driver assistance systems of cars made by major automobile manufacturers. As a result, revenue from automotive products in 2022 continued to grow and now account for 8% of overall profits. We expect them to make long-term contributions to the growth of Sunonwealth's revenue.

Sunonwealth attained approximately 20% of global market share for products for server applications and we ranked among the top three manufacturers. Sunonwealth is the main supplier the largest server manufacturers in the world such as Dell and HPE as well as cloud computing service providers such as Google, Amazon AWS, Meta, and Microsoft. In terms of the cooling applications for 5G telecommunication equipment such as routers and switches, Sunonwealth is the main supplier of the world's largest communication equipment manufacturer. Network communication equipment has grown with the advent of 5G FWA and WiFi 6 upgrades. Coupled with the increase in the thermal design power output of new Intel and AMD server platforms, these developments will increase the average price of heat dissipation products in the network communication industry and sustain growth in the server and network businesses.

(2) Future market supply, demand, and future growth

Due to the advancement and rapid commercialization of 5G and AI technologies and the rapid growth in data centers and base stations, the demand for servers and communications equipment will continue to grow. Artificial intelligence fueled growth in high-speed computing and new energy vehicles and ADAS and autonomous driving in various stages have increased the demand for cooling applications. In addition, Sunonwealth has developed the new energy application markets for years. The heat dissipation technologies of certain high-end energy storage products create high entry barriers. Once a company becomes a part of the supply chain, it is not easily replaced. The Company's advantages in this respect increases the impetus for medium to long-term growth.

On the other hand, in the more mature IT market, the growth in demand from PC and consumer laptops has slowed and the prices and profitability remain low. The Company has shifted its focus from such markets to high-end, ultra-thin,

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business, and gaming laptops with high-end heat dissipation requirements. As the heat dissipation technologies for laptop computers require ultra-thin, ultralight, and ultra-low power consumption, they meet the heat dissipation requirements for the next wave of Metaverse devices. Sunonwealth will continue to provide the most advanced heat dissipation solutions for new technologies and accelerate the penetration rate of new technologies into the market to maintain optimal performance for long-term operations.

Competitive niches
(1) Our own brand "SUNON" retains leading market positions and an excellent brand image.
(2) The Company retains the most patents and intellectual properties in the industry which increases the entry barriers of the industry.
(3) We have strong capacity for coordinated design with system manufacturers, rapid response speed, and strong customized manufacturing capabilities.
(4) Our diverse range of products satisfy different demands of different customers.
(5) Products have simple structures and are easy to assemble. We have large production scale with high production efficiency and low production costs.
(6) Highest level of vertical integration and comprehensive key components and technologies.
(7) Dense network of distribution channels to provide the broadest and fastest response to customer demands.
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Favorable and unfavorable factors to long-term development and response measures

Favorable factors

CPU computing performance and energy consumption improvement increase the operating temperature and fuel the demand for high-density high-end cooling products.
Demand for computing and cooling continues to increase and market demand remains stable and strong.
Customers begin to demand slimmer and high-performance cooling products and the development favors those with leading technologies.
More rigorous environmental protection and energy conservation laws encourage customers to switch to more energy-efficient high-performance motors and fans.
Development in IoT, AI, 5G communication equipment, and high-performance computing generate more demand.
Update of server platforms to the new Eagle Stream architecture requires more sophisticated cooling solutions.
The depreciation of the NTD and RMB help increase the sales price and gross profit margin.

margin.	margin.
Unfavorable factors			Response measures
1.Lockdowns imposed	for	the	1-1. Increase inventory of materials to reduce the
pandemic cause supply chain			risks of supply chain interruptions
interruptions and suspension of			1-2.Develop production sites in other regions to
operations			reduce the risks of concentration of product
			regions
2. Increase in labor costs	in China		2-1. Speed up the introduction of automated
and high labor turnover	increase		production equipment and fixture tools and
production costs			reduce demand for human labor
			2-2. Streamline the production line organization
			and layout to reduce use of manpower
			2-3. Initiate research on actions, time, and
			methodology to improve the balance,
			efficiency, and productivity on the
			production line
3. Increase in prices of raw	materials		3-1. Reduce the number of suppliers and
			introduce prioritized supplier name list
			system to increase the transaction volume
			with suppliers and use quantity to control
			prices
			3-2.Increase the materials delivery schedules for
			suppliers
			3-3. Reduce the number of purchase orders and
			increase the volume inpurchase orders

100 -

(II) Application and production of main products 1. Important applications of main products

Applications	Applicationproducts
Computer and office equipment industry	Mining machines, gaming CPU coolers, DT/AIO CPU coolers, graphics card/IC coolers, notebook computer coolers, hard disk boxes, uninterruptible power supply systems, (micro) projectors, workstations, photocopiers,mini computers
Server and communication industry	Server system/power supply, workstation system/power supply, telecommunication equipment, network communication equipment,switches,routers,storage disc arrays
Industrial and medical equipment industry	Industrial equipment, freezing equipment, measurement equipment, vending machines, ATMs, public information stations, cash registers, security surveillance equipment, drones, industrial automation equipment, industrial computers, solar power generation equipment, wind power generation equipment, energy storage equipment, industrial drives, industrial inverters, inverters
Household electrical appliance industry	Game consoles, video streaming devices, STB video converters, digital video recorders, LED TVs, stereo equipment, kitchen equipment, air-conditioning, refrigerators, microwave ovens, induction cookers,dish washers
Automotive electronics industry	LED lights, car chiller and air-conditioning systems, car air- conditioning sensors, car seat ventilation systems, car information, communication, and entertainment equipment, DC/DC converters in car battery boxes, camera systems, ADAS, ECU, HUD

101 -

2. Production process of main products

Production process chart of cooling fans and cooling modules

==> picture [512 x 536] intentionally omitted <==

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

Frame and cable- Assembly of frame and coils
winding sleeve
Rivet and cabling
Fan blade forming
Metal tube drilling
SMT and PCB
combination
Installation of the positioning ring Magnetization of fan blades
Electrical conductor
Assembly of fan blades and frame Fan blade balancing
Assembly of fan blade
finished products Installation of the bearing, clamping
ring, and centering lid
Cooling fan
finished
products
Heat pipes
Cooling fins
Thermal pads
Cooling module
finished
products
----- End of picture text -----

102 -

(III) Supply status of primary raw materials

Supplystatus ofprimary	raw materials
Main materials	Supplystatus
Plastic materials	Stablesource with supply price fluctuations tied to crude oil prices
IC	The Company must increase inventory in response to the shortages or increased supply lead time of certain types of IC.
Passive components	Prices have stabilized and the supplyis stable.
Bearings	Stable source with supply price fluctuations tied to steel prices
Enameled wire	Stable source with supply price fluctuations tied to copper prices
Stamping parts	Stable source with supply price fluctuations tied to steel prices
Machining equipment parts	Stable source with supply price fluctuations tied to steel prices
Heat pipes	Stable source with supply price fluctuations tied to copper prices
Aluminum casting boards	Stable source with supply price fluctuations tied to aluminumprices

103 -
(IV) Customers who accounted for more than 10% of the purchase (sales) in any of the last two year
Suppliers who accounted for more than 10% of the total purchases in any of the last two years: None
Customers who accounted for more than 10% of the total sales in any of the last two years: None
(V) Production volume and value for the last two years

Table of production volume and value for the last two years

Unit: thousand units/thousand NT$

				Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$
Year Production volume and value Main product (or department)	2021			2022
	Production capacity	Production volume	Production value	Production capacity	Production volume	Production value
AC fans	8,400	6,282	735,008	8,760	5,758	742,592
DC fans	214,250	150,204	10,106,771	214,000	136,825	9,955,785
Total	222,650	156,486	10,841,779	222,760	142,583	10,698,377

Note 1: Production capacity refers to the volume of product that can be produced by the Company using existing production equipment and under normal operation, after taking into consideration factors such as necessary downtime, holiday, etc. Note 2: Substitutable production capacity may be included in the production capacity and be stated in the note.

(VI) Sales volume and value for the last two years

Table of sales volume and value for the last two years

Unit: thousand units/thousand NT$

					Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$
Year Sales volume and value Mainproduct	2021				2022
	Domestic sales		Exports		Domestic sales		Exports
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
AC fans	373	50,196	5,981	844,416	366	54,032	5,517	877,944
DC fans	27,189	2,231,970	108,962	10,358,133	30,865	2,453,720	94,524	10,632,447
Sale of materials	-	1,072	-	76,017	-	570	-	44,595
Total	27,562	2,283,238	114,943	11,278,566	31,231	2,508,322	100,041	11,554,986

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III. Employee information

Employee information for the last two years till the publication date of the Annual Report

Report
	Year	2021	2022	As of March 31, 2023 (Note)
Number of employees	Direct employees	7,248	4,578	4,695
	Indirect employees	2,493	2,388	2,278
	Other employees	12	9	10
	Total	9,753	6,975	6,983
Average age (year)		31	31	32
Average	years of service	1.78	2.56	2.67
Academic qualifications	PhD	0.1%	0.5%	0.3%
	MA	1.8%	2.5%	2.5%
	University/College	8.6%	12.9%	14.6%
	Senior high school	9.7%	12.8%	10.4%
	Below high school	79.8%	71.3%	72.2%

Note: Information of the current year up to the publication date of the Annual Report shall be provided.

IV. Environmental protection expenditure information

The Company has not incurred losses, compensation, or penalties as a result of environmental pollution. The Company places great emphasis on environmental protection and energy conservation in product design and R&D and we adopt green designs that reduce consumption of components and save energy and electricity. The production process requires complete compliance of suppliers with the related substance control declaration standard for the environment in RoHS directive in terms of the production process and raw materials. We expressly specify regulations on prohibited substances and we the product R&D process must also meet environmental protection requirements.

The Company received ISO 14001, ISO 9001, ISO45001, IECQ QC080000, IATF 16949, and RBA certification for environmental management system and quality systems. We also served as green environmental protection partners for major companies such as Sony, Canon, and Samsung. These records demonstrate the Company's commitment to environmental protection.

The results of environmental protection inspections and labor inspections did not show any violation of environmental protection laws and regulations or the Labor Standards Act.

105 -

V. Employees-employer relations

(I) Employee welfare measures, continuing education, training, retirement system and their status of implementation, as well as agreements between the employer and employees and measures for protecting employee rights and interests
Employee benefits
- A. Employee bonuses: Bonuses for the three traditional holidays, performance bonus, business bonus, R&D bonus, patent and creation bonus, etc.
- B. The Company provides allowances for employees' weddings and funerals, childbirth bonuses, consolation for injuries and illnesses, scholarships for children, and other general subsidies. We also provide regular health examinations for employees and organize health promotion activities such as health seminars, consultation by doctors, sports clubs, and family day events.
- C. The Company provides employees with labor insurance and health insurance in accordance with related regulations and we also have group insurance and travel insurance for employees on business trips.
- D. We established the "Employee Welfare Committee" to organize events such as the year-end party, employee travel, travel subsidies, department dinner parties, and subsidies for festivals.
Employee continuing education and training The Company provides comprehensive training for new recruits to enhance their understanding of company products and related regulations and increase their understanding of the corporate culture. We also organize professional training courses and management training in accordance with the Company's annual plans to encourage employees and increase their sense of solidarity so that they can grow with the Company and achieve goals together.
Retirement system With regard to the retirement system and implementation status, the Company follows related regulations in the Labor Standards Act and established the Employee Retirement Regulations. For employees who opt for the old pension system, the Company appropriates pension reserves within 2% of the actual salary and deposit it into the dedicated account in the Central Trust of China. Pension is paid from this account and the Company provides supplementary payment for any shortfall when the pension is paid. For employees who opt for the new pension system, the Company sets aside 6% of the salary as pension. The parts proposed by employees are deposited in accordance with their wishes within the legal specified scope.
Labor-management relations and employee rights maintenance measures: The Company values employee feedback and provides several communication channels (e.g., employee opinion box and online communication platform) to facilitate communication and coordination between employees and the employer. We seek to learn truly understand employees' opinions and ideas on the management and benefit system, and we emphasize bilateral communication with employees to achieve a harmonious relationship between employees and the employer.
(II) Losses arising as a result of labor disputes in the recent year up until the publication date of this annual report: None.
106 -

VI. Information Security Management

(I) Information Security Policy
Ensure the continuous operations of the Company's operations and ensure the stability of information services.
Ensure the confidentiality, integrity, and availability of the Company's information assets.
(II) Information security risk management framework
Sunonwealth established the "Information Risk Management Committee" and the Company's President serves as the chief convener. It oversees the employees of the IT units who are assigned to the Information Security Setup Team, Information Security Technical Team, and Information Security Audit Team, and processes the establishment and implementation of information security and protection policies and compliance audits. The managers of administration and business units serve as members of the committee to review and make decisions on information security and information protection policies and ensure the effectiveness of information security management measures.
The Committee convenes regular (quarterly) meetings to review the implementation status and report to the Board of Directors.
The Company’s information security framework is as follows.

==> picture [430 x 337] intentionally omitted <==

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

Board of Directors
Information Risk Management
Committee Convener:
President
Administrative Unit IT Unit Business Unit
Managers
Audit Team Technical Team Setup Team
Internal information Network Information security
security audit administrator management
External information System personnel Data center
security audit management
----- End of picture text -----

107 -

(III) Specific management measures:

In addition to the access control and access authorization mechanisms, we added a multi-factor authentication function for the system login identity authentication.
The Company regularly organizes information security awareness programs to strengthen employees' awareness of information security risks.
All employee computers must be equipped with information security software. Files cannot be brought out of the Company unless an application is filed and approved.
Websites without security authentication will be blocked to reduce the risks of computer virus infection and file leaks.
Private laptops and mobile phones cannot be used to connect to the internal network to prevent data leak.
Prevent the use of unlicensed software through a positive whitelist of applications. Software cannot be installed unless an application is filed and approved.
All internal systems must be equipped with anti-virus software, updated with security patches of the original manufacturer, and regularly checked by the IT unit with vulnerability scanning, engineering exercises, system protection, and other inspections for the effectiveness of protection.
Important information systems or equipment are equipped with cluster infrastructure and monitoring and control mechanisms to ensure their availability.
Take snapshots and create backup copies of contents in accordance with the hard drive data protection regulations, and conduct exercises to verify the availability of backup data every quarter.
Create a dual backup system with local and remote backups to prevent losses due to system damage as a result of natural disasters or other threats, and ensure the integrity of the system and data.
Prioritize the use of automated scripts to detect, analyze, and respond to irregularities and report to the person in charge for related procedures.
Conduct regular inventories of information assets and implement risk management based on information security risks for risk management.
Set information security collective defense mechanisms, improve information security protection, train information security talents, and ensure the continuous operations of the Company.
Examine information security measures and regulations each year, pay attention to information security issues, and formulate response plans to ensure their appropriateness and effectiveness.
(IV) Plan implementation status for 2022
The Company convened the 4th meeting of the Information Security Management Committee in 2022 to review the implementation status of information security policies. There were no information security incidents or related hazards this year.
The Company organized 1 remote backup exercise this year to ensure the availability and integrity of data.
The Company complies with the Information Security Management Guidelines for Public Companies published by the FSC and has joined the Taiwan Computer Emergency Response Team (TWCERT) information security alliance to effectively receive and communicate information security information.
The Company's Information Security Policy has been included as a mandatory online course and the completion rate is 100%.
The IT unit shares information on actual information security cases at the end of each quarter to remind employees and ensure that all employees fully understand the risks.
(V) Information security risks and response measures
To maximize the interest of the Company, employees, shareholders, and stakeholders, Sunonwealth established risk management regulations to identify different types of risks.
108 -

We identify, evaluate, and quantify the risk management procedures in the response measures to reduce potential risks to a tolerable level.

Sunonwealth takes the following risk management measures to avoid potential crises and possible losses.

Information System Risks

Implementation method

(1) Prioritize the use of automated scripts to detect, analyze, and respond automatically.
(2) If normal operations cannot be restored, the issue shall be processed in accordance with the backup recovery management regulations.
(3) Network equipment is designed with a stacked redundancy framework so that a single point of failure does not cause interruption of services.
(4) All known anomalies and detections are processed with automated scripts.
(5) When receiving an alert warning, the person in charge shall implement corresponding measures within the specified deadline.
(6) Major physical servers in the Group consist mainly of those with cluster infrastructure and single-point failures do not occur.
(7) Take system snapshots and create backup copies of contents in accordance with the hard drive data protection regulations, and activate remote server room backup mechanisms.
Network and information security management mechanisms during the pandemic

Importanceto Operations

Control andManagement Mechanisms

I.
In an environment
with constantly
evolving external
information security
threats,
Sunonwealth uses
information security
governance and
high-tech protection
to protect the data
and interests of all
stakeholders.
II. In response to the
rising information
security threats in
the wake of the
pandemic,
Sunonwealth seeks
to protect the
corporate website
and operations by
adopting a defense-
in-depth approach,
strengthening
information security,
and expanding the
scope of
international

1. Readiness level assessment: We adopted the
readiness indicators used by the industry to set
targets and assess the progress.
2. Long-term investment plans: We formulate five-
year (2023-2028) long-term plans for information
security with gradual implementation and
optimization.
3. Focus on key risks: Identify and establish key
indicators and focus on protection against key risks.
1.
External enhancement (zero trust):
(1) We adopted a defense-in-depth approach (packet
cleaning) and collective defense (anti-virus +
firewall + information security equipment)
mechanisms to improve the protection and
security in all aspects of information security.
(2) We use whitelist control and management
mechanisms to require approval before
operations to control access to external websites,
activation of applications, mail list, and content
review.
(3) We use two-factor authentication to verify the
identity of the user logging into the system.
(4) Recover the user's access rights for installing
software and restore devices to the original
default settings after log out.
(5) Use programmable security response
mechanisms to implement visualized and
automatedmanagementofexternal risks.

109 -

certification for
information security
and personal data
protection. We aim
to increase overall
operation security
and personal data
protection to avoid
major contingencies
and penalties and do
our best to protect
the information
security reputation
and image of the
Company.

(6) Centralized management and retention shall be
implemented for all operation records and
system logs.
(7) Use the detection network alarm mechanism to
immediately forward notifications regarding
anomalies to the mobile device of the person in
charge.
2.
Internal enhancement (zero contact/zero loss):
(1) Use information security awareness campaigns,
social engineering exercises, and information
security equipment to reduce the risks of attacks
on internal computers.
(2) Use an integrated virtual and real terminal
environment to achieve physical isolation and
data security protection.
(3) Use mobile extension to create a remote work
environment and reduce clustering infection.
(4) Take snapshots and create backup copies in
accordance with the hard drive data protection
regulations to ensure the integrity of the data
and system.
(5) Establish dual-layer insurance mechanisms for
remote servers to ensure the security of the data
and system.
3.
Management regulations:
The Company decided to obtain ISO/IEC
27001:2022 international information security
management system certification in 2023 Q4 to
ensure the security of internal and external data.
We shall improve the Company's overall
information security and take steps to maintain
the market competitiveness of Sunonwealth and
protect the interests of customers andpartners.

(VI) Significant information security incidents: No significant information security incidents occurred this year.
(VII) Reported the specific information security operations for 2022 and 2023 Q1 to the Board of Directors on March 10, 2022, November 3, 2022, and March 9, 2023 and disclosed the information security risk management information on the Company's website (https://www.sunon.com/inv38.aspx).
110 -

VII. Important contracts

Nature of the contract	Contracting parties	Commencement date/expiration date	Main contents	Restriction clauses
Land use rights assignment contract	Kunshan Economic and Technological Development Zone Agriculture, Industry, and Business Corporation	2000.10.27~ 2050.09.14	Land use rights to 48,688 square meters of land to the north of Nanbin Road in Kunshan Economic and Technological Development Zone for the construction of plants and employee dormitory.	None
Land use rights assignment contract	Hermosa Ecozone Development Corporation	2020.06.30~ 2095.06.29	Land use rights for 137,096 square meters of land in Lot 1 Block 12, Hermosa Ecozone Industrial Park for constructionofplants.	None

111 -

F. Financial Overview

I. Condensed balance sheet and statement of income for the last five years

(I) Condensed balance sheet and statements of income
Condensed balance sheet - International Financial Reporting Standards (consolidated financial report)

Unit: thousand NT$

Year Item	Year Item	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Current year up to March 31, 2023 Financial information (Note 3) (self- assessed)
		2018	2019	2020	2021	2022
Current assets		6,378,539	6,611,713	7,392,164	8,390,570	9,025,590	8,290,004
Property, plant and equipment (Note2)		2,377,611	2,277,290	2,105,535	2,059,278	2,273,414	2,220,302
Intangible assets		23,506	18,954	25,781	24,486	27,053	26,596
Other assets (Note 2)		2,968	2,433	11,902	96,445	48,765	32,316
Total assets		8,971,556	9,439,298	10,419,061	11,517,320	12,191,969	11,413,194
Current liabilities	Before distribution	4,477,209	4,632,633	4,933,346	6,239,237	6,322,715	5,174,784
	After distribution	4,979,068	5,134,492	5,535,577	6,540,353	Note 4	-
Non-current liabilities		354,976	577,887	891,586	911,298	666,777	740,598
Total liabilities	Before distribution	4,832,185	5,210,520	5,824,932	7,150,535	6,989,492	5,915,382
	After distribution	5,334,044	5,712,379	6,427,163	7,451,651	Note 4	-
Equity attributable to owners of parent company		4,139,371	4,228,778	4,594,129	4,366,785	5,202,477	5,497,812
Capital stock		2,509,297	2,509,297	2,509,297	2,509,297	2,509,297	2,509,297
Capital surplus		366,903	366,903	366,903	366,903	366,903	366,903
Retained earnings	Before distribution	1,427,880	1,612,853	1,960,024	1,785,943	2,584,034	2,862,023
	After distribution	926,021	1,110,994	1,357,793	1,484,827	Note 4	-
Other equity		-164,709	-260,275	-242,095	-295,358	-257,757	-240,411
Treasury stock		-	-	-	-	-	-
Non-controlling interests		-	-	-	-	-	-
Total equity	Before distribution	4,139,371	4,228,778	4,594,129	4,366,785	5,202,477	5,497,812
	After distribution	3,637,512	3,726,919	3,991,898	4,065,669	Note 4	-

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.

＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below. Note 1: All years that have not been certified by a CPA shall be indicated.

The financial data from 2018 to 2022 have been audited by CPAs. The financial information from the first quarter of 2023 is provided by the Company.

Note 2: The implementation date and reappraised value of assets that have been reappraised in the current year shall be

112 -

disclosed.

Note 3: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.
Note 4: Please fill in the numbers after distribution based on the circumstances of the shareholders' meetings for the following year.
The 2022 earning distribution case is to be approved by the shareholders' meeting. Therefore, the amounts for after the distribution have not been established.
Note 5: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.
113 -
Condensed balance sheet - International Financial Reporting Standards (parent company only financial report)

Unit: thousand NT$

							Unit: thousand NT$
Year Item		Financial information for the most recent five years (Note 1)					Financial data in the current year up to March 31, 2023 (Note 3)
		2018	2019	2020	2021	2022
Current assets		3,512,269	3,520,758	3,504,269	4,313,965	4,994,454	Not applicable.
Property, plant and equipment (Note2)		1,062,632	1,062,832	1,039,525	1,042,050	1,047,782
Intangible assets		12,904	9,853	17,792	15,386	18,038
Other assets (Note 2)		-	-	-	-	-
Total	assets	7,385,451	7,630,039	8,103,396	8,156,646	9,389,022
Current liabilities	Before distribution	2,893,410	3,038,815	2,809,130	3,175,201	3,750,059
	After distribution	3,395,269	3,540,674	3,411,361	3,476,317	Note 4
Non-current liabilities		352,670	362,446	700,137	614,660	436,486
Total liabilities	Before distribution	3,246,080	3,401,261	3,509,267	3,789,861	4,186,545
	After distribution	3,747,939	3,903,120	4,444,498	4,090,977	Note 4
Equity attributable to owners of parent company		4,139,371	4,228,778	4,594,129	4,366,785	5,202,477
Capital stock		2,509,297	2,509,297	2,509,297	2,509,297	2,509,297
Capital surplus		366,903	366,903	366,903	366,903	366,903
Retained earnings	Before distribution	1,427,880	1,612,853	1,960,024	1,785,943	2,584,034
	After distribution	926,021	1,110,994	1,357,793	1,484,827	Note 4
Other	equity	-164,709	-260,275	-242,095	-295,358	-257,757
Treasury stock		-	-	-	-	-
Non-controlling interests		-	-	-	-	-
Total equity	Before distribution	4,139,371	4,228,778	4,594,129	4,366,785	5,202,477
	After distribution	3,637,512	3,726,919	3,391,898	4,065,669	Note 4

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.

The financial data from 2018 to 2022 have been audited by CPAs.

Note 2: The implementation date and reappraised value of assets that have been reappraised in the current year shall be disclosed. Note 3: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.

114 -
Note 4: Please fill in the numbers after distribution based on the circumstances of the shareholders' meetings for the following year.
The 2022 earning distribution case is to be approved by the shareholders' meeting. Therefore, the amounts for after the distribution have not been established.
Note 5: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.
115 -

3. Condensed consolidated income statement - International Financial Reporting Standards (Consolidated Financial Report)

Unit: thousand NT$

Year Item	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial data in the current year up to March 31, 2023 (Note 2)
	2018	2019	2020	2021	2022
Operating revenue	11,965,298	11,659,915	12,781,281	13,561,804	14,063,308	3,075,327
Gross profit	2,401,535	2,578,613	2,998,042	2,536,255	3,170,958	813,537
Operating income/loss	601,549	787,252	1,114,211	463,667	1,121,884	347,895
Non-operating income and expenses	182,276	122,472	-25,808	121,563	303,993	16,198
Net income before tax	783,825	909,724	1,088,403	585,230	1,425,877	364,093
Net income from continuing operations	607,683	680,801	851,650	429,253	1,089,095	277,989
Loss from discontinued operations	-	-	-	-	-	-
Net profit of the term (loss)	607,683	680,801	851,650	429,253	1,089,095	277,989
Other comprehensive income of the period (netincome aftertax)	-32,557	-89,534	15,561	-54,366	47,713	17,346
Total comprehensive income ofthe period	575,126	591,267	867,211	374,887	1,136,808	295,335
Net income attributable to owners of the parent company	605,120	680,801	851,650	429,253	1,089,095	277,989
Net income (loss) attributable to non- controlling interests Equity	2,563	-	-	-	-	-
Total comprehensive income attributable to owners of the parent company	572,736	591,267	867,211	374,887	1,136,808	295,335
Total comprehensive income attributable to non-controlling interests	2,390	-	-	-	-	-
Earnings per share	2.41	2.71	3.39	1.71	4.34	1.11

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.

Note 1: All years that have not been certified by a CPA shall be indicated.

The financial data from 2018 to 2022 have been audited by CPAs. The financial information from the first quarter of 2023 is provided by the Company.

Note 2: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.

Note 3: The losses of discontinued operations shall be represented by the net value after deducting income tax.

Note 4: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.

116 -
Condensed consolidated income statement - International Financial Reporting Standards (Parent Company Only Financial Report)

Unit: thousand NT$

Year Item	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial data in the current year up to March 31, 2023 (Note 2)
	2018	2019	2020	2021	2022
Operating revenue	8,186,530	7,831,346	8,611,750	9,894,052	11,762,491	Not applicable.
Gross profit	1,234,664	1,224,266	1,335,048	1,263,275	1,741,530
Operating income/loss	283,490	241,351	299,270	265,930	592,089
Non-operating income and expenses	453,147	581,173	736,645	288,250	762,162
Net income before tax	736,637	822,524	1,035,915	554,180	1,354,251
Net income from continuing operations	605,120	680,801	851,650	429,253	1,089,095
Loss from discontinued operations	-	-	-	-	-
Net profit of the term (loss)	605,120	680,801	851,650	429,253	1,089,095
Other comprehensive income of the period (netincome aftertax)	-32,384	-89,534	15,561	-54,366	47,713
Total comprehensive income ofthe period	572,736	591,267	867,211	374,887	1,136,808
Net income attributable to owners of the parent company	-	-	-	-	-
Net income (loss) attributable to non- controllinginterests	-	-	-	-	-
Total comprehensive income attributable to owners of the parent company	-	-	-	-	-
Total comprehensive income attributable to non-controlling interests	-	-	-	-	-
Earnings per share	2.41	2.71	3.39	1.71	4.34

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.
＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below.

Note 1: All years that have not been certified by a CPA shall be indicated.

The financial data from 2018 to 2022 have been audited by CPAs.

Note 2: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.

Note 3: The losses of discontinued operations shall be represented by the net value after deducting income tax.

Note 4: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.
117 -

(II) Names of certifying CPAs of the most recent five years and their audit opinions:

Opinions of the CPAs Year	Certifying CPA	Audit opinion
2018	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai, CPA	Unqualified opinion
2019	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai, CPA	Unqualified opinion
2020	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai, CPA	Unqualified opinion
2021	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai, CPA	Unqualified opinion and other supplementary matters
2022	Crowe Horwath (TW) Ching-Lin Li, CPA Kuo-MingLi,CPA	Unqualified opinion and other supplementary matters

118 -

II. Financial analysis for the last five year

(I) Financial analysis- International Financial Reporting Standards (Consolidated Financial Report)

Year (Note 1) Analysis item(Note 3)	Year (Note 1) Analysis item(Note 3)	Financial analysis for the last five year	Financial analysis for the last five year	Financial analysis for the last five year	Financial analysis for the last five year	Financial analysis for the last five year	Current year up to March 31, 2023 (Note 2) (self-assessed)
		2018	2019	2020	2021	2022
Financial structure(%)	Debt-to-assets ratio	53.86	55.20	55.91	62.09	57.33	51.83
	Long-term capital to property, plant, and equipment ratio	189.03	211.07	260.54	256.31	258.17	280.97
Solvency %	Current ratio	142.47	142.72	149.84	134.48	142.75	160.20
	Quick ratio	101.32	109.10	112.65	91.64	98.47	110.20
	Times interest earned	44.10	32.54	46.80	21.78	33.11	31.69
Operating ability	Average collection turnover (times)	4.12	3.64	3.90	4.06	4.09	3.91
	Days sales outstanding	88.59	100.27	93.58	89.90	89.24	93.39
	Average inventory turnover (times)	5.40	5.48	5.98	5.18	4.22	3.56
	Average payment turnover (times)	3.66	3.38	3.54	3.84	3.49	3.13
	Average inventoryturnover days	67.59	66.61	61.03	70.46	86.49	102.46
	Property, plant and equipment turnover(times)	5.12	5.01	5.83	6.51	6.49	5.47
	Total assets turnover(times)	4.12	3.64	1.29		1.19	1.04
Profitability	Return on assets(%)	6.99	7.63	8.76	4.10	9.47	9.73
	Return on equity (%)	14.62	16.27	19.31	9.58	22.76	20.78
	Pre-tax income to paid-in capital ratio(%) (Note 7)	31.24	36.25	43.37	23.32	56.82	58.04
	Netprofit ratio(%)	5.08	5.84	6.66	3.17	7.74	9.04
	Earningsper share(NT$)	2.41	2.71	3.39	1.71	4.34	1.11
Cash flow	Cash flow ratio (%)	17.12	19.57	30.01	3.06	34.13	-
	Cash flow adequacy ratio (%)	77.46	86.30	90.09	67.53	96.74	-
	Cash reinvestment ratio (%)	2.94	6.23	15.98	-8.02	30.60	-
Leverage	Operating leverage	5.14	4.13	3.58	8.29	3.93	-
	Financial leverage	1.03	1.04	1.02	1.06	1.04	1.04
Please explain reasons for changes in financial ratios in the last two years. (Analysis can be omitted for the change is less than 20%) 1.Solvency The increase in times interest earned was caused by the increase in operating revenue which increased the pre-tax profit. 2. Operating ability The increase in average days of sales is caused by the decrease in inventory turnover. 3. Profitability The increase in return on assets, return on equity, pre-tax profit to paid-in capital ratio, net profit ratio and earnings per share was caused by the increase in operating revenue, sales of products with high unit prices and high margins, and improved production efficiency.

Please explain reasons for changes in financial ratios in the last two years. (Analysis can be omitted for the change is less than 20%) 1. Solvency The increase in times interest earned was caused by the increase in operating revenue which increased the pre-tax profit. 2. Operating ability

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4. Cash flow

The increase in cash flow ratio, cash flow adequacy ratio, and cash reinvestment ratio was caused by the increase in operating revenue which increased the net cash flows from operating activities and the decrease of dividends compared to the previous year.

Leverage

The decrease in the degree of operating leverage was caused by the increase in operating revenue, sales products with high unit prices and high margins, and improved production efficiency.

＊ If the Company has prepared a parent company only financial report, an analysis of the Company's individual financial ratios shall be prepared.
＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below.
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Financial analysis- International Financial Reporting Standards (Parent Company Only Financial

Report)

Report)	Report)
Year (Note 1) Analysis item(Note 3)		Financial analysis for the last fiveyear					Current year up to March 31, 2023 (Note 2)
		2018	2019	2020	2021	2022
Financial structure(%)	Debt-to-assets ratio	43.95	44.58	43.31	46.46	44.59	Not applicable.
	Long-term capital to property, plant, and equipment ratio	422.73	431.57	509.30	478.04	538.18
Solve ncy	Current ratio	121.39	115.86	124.75	135.86	133.18
	Quick ratio	90.82	90.02	102.69	107.09	108.18
	Times interest earned	94.56	106.79	137.00	67.19	100.87
Operating ability	Average collection turnover (times)	3.89	3.56	3.76	3.81	3.66
	Days sales outstanding	93.83	102.53	97.07	95.80	99.73
	Average inventory turnover (times)	8.53	8.04	10.53	11.44	10.98
	Average payment turnover (times)	3.67	3.24	3.63	4.31	4.81
	Average inventoryturnover days	42.79	45.40	34.66	31.90	33.24
	Property, plant and equipment turnover(times)	7.83	7.37	8.19	9.51	11.26
	Total assets turnover(times)	1.13	1.04	1.09	1.22	1.34
Profitability	Return on assets(%)	8.45	9.15	10.91	5.36	12.54
	Return on equity (%)	14.62	16.27	19.31	9.58	22.76
	Pre-tax income to paid-in capital ratio(%) (Note 7)	29.36	32.78	41.28	22.09	53.97
	Net margin(%)	7.39	8.69	9.89	4.34	9.26
	Earningsper share(NT$)	2. 41	2.71	3.39	1.71	4.34
Cash flow	Cash flow ratio(%)	19.51	16.45	36.32	1.16	10.65
	Cash flow adequacyratio(%)	72.69	74.26	77.76	62.57	63.07
	Cash reinvestment ratio	-0.67	-0.11	26.17	-23.25	-3.81
Leverage	Operatingleverage	3.20	3.72	3.38	3.52	2.43
	Financial leverage	1.03	1.03	1.03	1.03	1.02
Please explain reasons for changes in financial ratios in the last two years. (Analysis can be omitted for the change is less than 20%) 1. Solvency The increase in times interest earned was caused by the increase in operating revenue which increased the pre-tax profit. 2. Profitability The increase in return on assets, return on equity, pre-tax profit to paid-in capital ratio, net profit ratio and earnings per share was caused by the increase in operating revenue and improved production efficiency. 3. Cash flow The increase in cash flow ratio and cash reinvestment ratio was caused by the increase in operating revenue which increased the net cash flows from operating activities and the decrease of dividends compared to the previous year. 4. Leverage The decrease in the degree of operating leverage was caused by the increase in operating revenue and improvedproduction efficiencywhich increased operating profits.

＊ If the Company has prepared a parent company only financial report, an analysis of the Company's individual financial ratios shall be prepared.
＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below.
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Note 1: All years that have not been certified by a CPA shall be indicated.
The financial data from 2018 to 2022 have been audited by CPAs. The financial information from the first quarter of 2023 is provided by the Company.
Note 2: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be analyzed.
Note 3: The end of Annual Report shall include the following formulas:
Financial structure
(1) Debt-to-asset ratio = total liabilities / total assets.
(2) Long-term fund to property, plant and equipment ratio = (total equity + non-current liabilities) / net amount of real estate properties, plants and equipment.
Solvency
(1) Current ratio = current assets / current liabilities.
(2) Quick ratio = (current assets - inventory - prepaid expense) / current liabilities.
(3) Time interest earned = net income before income tax and interest expense / current interest expense.
Operating ability
(1) Receivables (including accounts receivable arising from operation notes receivable) turnover ratio = net sales
- / average receivables (including accounts receivable arising from operation notes receivable) balances.
(2) Average collection period = 365 / receivables turnover.
(3) Inventory turnover ratio = cost of goods sold / average amount of inventory.
(4) Payable (including accounts payable arising from operation notes payable) turnover ratio = cost of goods sold / average payables (including accounts payable arising from operation notes payable) balances.
(5) Average days of sales = 365 / inventory turnover.
(6) Real estate, plant, and equipment turnover ratio = net sales / average net for real estate, plant, and equipment.
(7) Fixed assets turnover = net sales / average gross assets.
Profitability
(1) Return on assets = [net income + interest expense (1 – tax rate)] / average total assets.
(2) Return on equity = income after tax/net average equity.
(3) Net margin = net income / net sales.
(4) Earnings per share = (income belonging to owner of parent company - stock dividend of preferred stocks)/weighted average number of issued shares. (Note 4)
Cash flow
(1) Cash flow ratio = new cash flows from operating activities / current liabilities.
(2) Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend) for the most recent five years.
(3) Cash reinvestment ratio = (net cash flows from operating activities –cash dividend) / (gross margin of property, plant and equipment + long-term investment + other non-current assets + working capital). (Note 5)
Leverage:
(1) Operating leverage = (net operating revenues - current operating cost and expense) / operating profit (Note 6).
(2) Financial leverage = operating profit / (operating profit - interest expenses).
Note 4: The following items should be noted for the calculation of earnings per share using the above-mentioned formula:
The calculations shall be based on the average number of the weighted common shares rather than shares issued at the end of the year.
The circulation period shall be considered for cash capital increase or treasury stock traders when calculating the weighted average number of shares.
When calculating annual or semi-annual earnings per share for those with capitalization of retained earnings or capital reserves, capital ratio shall be adjusted retrospectively and the replenishment period issues need not be considered.
If the preferred stock is non-convertible cumulative preferred stock, the dividend of the current year (whether it is distributed) should be deducted from net income or added to net loss. If the preferred shares are not cumulative in nature, the preferred stock dividends shall be deducted from the net income under after-tax net profit conditions. If it is a loss, no adjustment is needed.
Note 5: Special attention shall be paid to the following items during cash flow analysis measurements:
Net cash flow from operating activities shall refer to the net cash inflow from operating activities listed in the cash flow statement.
Capital expenditure shall refer to the annual capital investment cash outflow.
If the inventory increase during the closing is greater than that during the opening and the inventory decreased at the end of the year, it should be calculated as zero.
Cash dividends include common stock and preferred stock cash dividends.
Gross profit for real estate, plant, and equipment shall refer to the total amount for real estate, plant, and equipment before accumulated depreciation is deducted.
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Note 6: The issuer shall divide the various operating costs and expenses as fixed or changeable based on their natures. If such costs are subject to estimates or subjective judgments, the issuer shall ensure that the methods of deriving those costs are rational and consistent.
Note 7: For companies whose stock has no par value or a par value other than NT$10, the calculation for paid-in capital as prescribed above shall be calculated instead as the equity ratio attributable to the asset balance sheet of the owners of the parent company.
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III. Audit Committee's review report for the financial statements of the most recent year

Audit Committee's Audit Report

The Board of Directors has prepared and submitted the 2022 business report, financial statements, and earnings distribution proposal. The financial statements have been audited by Crowe Horwath (TW) CPAs and they have submitted an audit report. The Audit Committee has reviewed the business report, financial statements, and the earnings distribution proposal and did not find any instances of noncompliance. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, it is hereby submitted for your review and perusal.

Sunonwealth Electric Machine Industry Co., Ltd. Convener of the Audit Committee: Chun-Hao Xin

March 9, 2023

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IV. Financial statements of the most recent year

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128 -
129 -
130 -
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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

December 31,	December 31,	2021
Amount $2,457,337 211,827 30,095 3,384,057 140,678 1,668 2,651,498 148,430 9,025,590 5,800 2,273,414 593,877 85,106 27,053 112,591 19,773 48,765 3,166,379 $12,191,969 $1,287,516 176,164 136,355 3,179,288 1,078,747 208,679 54,643 80,951 - 120,372 6,322,715	Amount $1,912,018 255,236 32,577 3,426,718 86,756 4,620 2,508,162 164,483 8,390,570 7,081 2,059,278 762,447 85,489 24,486 60,141 31,383 96,445 3,126,750 $11,517,320 $1,949,632 110,411 17 2,925,973 925,704 157,744 40,942 93,590 2 35,222 6,239,237	%
		16.6 2.2 0.3 29.8 0.8 - 21.8 1.4
		72.9
		0.1 17.9 6.6 0.7 0.2 0.5 0.3 0.8
		27.1
		100.0
		16.9 1.0 - 25.4 8.0 1.4 0.4 0.8 - 0.3
		54.2

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December 31,	December 31,	2021
Amount $286,701 190,955 150,425 35,667 3,029 666,777 6,989,492 2,509,297 366,903 885,799 295,358 1,402,877 (257,757) 5,202,477 - 5,202,477 $12,191,969	Amount $524,344 36,498 294,383 55,047 1,026 911,298 7,150,535 2,509,297 366,903 842,984 242,095 700,864 (295,358) 4,366,785 - 4,366,785 $11,517,320	%
		4.6 0.3 2.5 0.5 -
		7.9
		62.1
		21.8 3.2 7.3 2.1 6.1 (2.6)
		37.9 -
		37.9
		100.0

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	Year Ended December 31	Year Ended December 31
2022	% 100.0 (77.5) 22.5 (4.6) (4.4) (5.6) - (14.6) 7.9 0.1 1.1 1.3 (0.3) - 2.2 10.1 (2.4) 7.7 0.1 - 0.1 0.3 - 0.3 0.3 8.1 7.7 - 7.7 8.1 - 8.1	2021
Amount $14,063,308 (10,892,350) 3,170,958 (655,431) (614,623) (781,334) 2,314 (2,049,074) 1,121,884 14,592 155,312 179,890 (44,400) (1,401) 303,993 1,425,877 (336,782) 1,089,095 12,640 (2,528) 10,112 47,000 (9,399) 37,601 47,713 1,136,808 $ 1,089,095 $ - 1,089,095 $ 1,136,808 $ - 1,136,808 $ $4.34 $4.33		Amount $13,561,804 (11,025,549) 2,536,255 (571,870) (686,907) (814,188) 377 (2,072,588) 463,667 13,952 167,336 (27,434) (28,158) (4,133) 121,563 585,230 (155,977) 429,253 (1,379) 276 (1,103) (66,578) 13,315 (53,263) (54,366) 374,887 429,253 $ - 429,253 $ 374,887 $ - 374,887 $ $1.71 $1.71	%
			100.0 (81.3)
			18.7 (4.2) (5.1) (6.0) -
			(15.3)
			3.4
			0.1 1.2 (0.2) (0.2) -
			0.9
			4.3 (1.1)
			3.2
			- -
			-
			(0.5) 0.1
			(0.4)
			(0.4)
			2.8
			3.2 -
			3.2
			2.8 -
			2.8

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

		EquityAttributable to Shareholders of the Parent	EquityAttributable to Shareholders of the Parent	Total Equity
OdinaryShares $2,509,297 - - - - - - - 2,509,297 - - - - - - - $2,509,297	Capital Surplus $366,903 - - - - - - - 366,903 - - - - - - - $366,903		Unappropriated Special Reserve Earnings $260,275 $941,668 - (84,903) (18,180) 18,180 - (602,231) - 429,253 - (1,103) - 428,150 - - 242,095 700,864 - (42,815) 53,263 (53,263) - (301,116) - 1,089,095 - 10,112 - 1,099,207 - - $295,358 $1,402,877 Retained Earnings
		Legal Reserve $758,081 84,903 - - - - - - 842,984 42,815 - - - - - - $885,799	Special Reserve $260,275 - (18,180) - - - - - 242,095 - 53,263 - - - - - $295,358
				$4,594,129 - - (602,231) 429,253 (54,366)
				374,887 -
				4,366,785 - - (301,116) 1,089,095 47,713
				1,136,808 -
				$5,202,477

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments : Adjustments to reconcile profit (loss) Depreciation Amortization Expected credit loss Net Gain or loss on financial assets (liabilities) at fair value through profit or loss Interest expense Interest income Share of profits of subsidiaries, associates and joint ventures accounted for using equity method Loss on disposal and retirement of property, plant and equipment Transfer of property, plant and equipment to expenses Loss (gain) on disposals of intangible assets Gain on disposal of investments Gain on reversal of impairment loss on non-financial assets Other Total adjustments to reconcile profit (loss) Net changes in operating assets and liabilities Decerase (increase) in financial assets mandatorily classified as at fair value through profit or loss Decerase (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivables Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other financial assets Total changes in operating assets Net changes in operating liabilities Increase (decrease) in contract liabilities Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in other payables Increase (decrease) in provisions Increase (decrease) in advance receipts Increase (decrease) in net defined benefit liabilities Total changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments	Year Ended December 31	Year Ended December 31
	2022 1,425,877 $ 365,578 147,087 (2,314) (78) 44,400 (14,592) 1,401 2,195 1,715 - (2,566) - (223) 542,603 50,350 2,482 44,889 (53,249) (144,791) (28,799) - (129,118) 65,753 136,338 253,315 78,022 13,060 (2) (6,740) 539,746 410,628 953,231	2021
		585,230 $ 381,799 135,374 (377) 108 28,158 (13,952) 4,133 12,416 1,316 565 (4,001) (4,906) -
		540,633
		158,760 (16,256) (217,048) 56,877 (743,518) (159,355) 196,417
		(724,123)
		4,920 - 103,254 (154,090) (3,565) (324) (5,723)
		(55,528)
		(779,651)
		(239,018)

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Cash generated from (used in) operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Increase in other receivables Acquisition of intangible assets Decrease in other financial assets Increase in other non-current assets Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Proceeds from long-term loans Repayment of long-term loans Increase in guarantee deposits Decrase in guarantee deposits Repayments of lease principal Cash dividends paid Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR	Year Ended December 31	Year Ended December 31
	2022 $2,379,108 14,123 (42,287) (192,815) 2,158,129 (393,988) 114 - 11,610 (204) (15,540) - (39,887) (437,895) - (662,116) - (152,493) 2,003 - (75,441) (301,116) (1,189,163) 14,248 545,319 1,912,018 2,457,337 $	2021
		$346,212 14,596 (27,598) (142,357)
		190,853
		(443,828) 178,017 (8,580) - (13,025) (14,736) 12,313 (190,578)
		(480,417)
		1,278,969 - 39,566 - - (3,068) (127,747) (602,231)
		585,489
		41,174
		337,099 1,574,919
		1,912,018 $

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Stated Otherwise)

1. GENERAL INFORMATION

Sunonwealth Electric Machine Industry Co., Ltd. (collectively as the “Company”) was incorporated in October 1980. The Company engages mainly in the manufacturing and selling of AC/DC brushless fans, electric fans, motors and related components, and microcooling fans. The principal operating activities of the Company and its subsidiaries (collectively as the “Group”) are described in Note 4(3). In addition, the Company has no ultimate parent company.
The consolidated financial statements are presented in the Company’s functional currency, New Taiwan Dollars.

2. THE AUTHORIZATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved and authorized for issue by the Board of Directors on March 9, 2023.

3. APPLICATION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS

(1) Effect of adoption of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

New standards, interpretations and amendments endorsed by the FSC and effective from 2022 are as follows:

Effective Date Announced
New IFRSs by IASB (Note 1) January 1, 2022 (Note 2)
Amendments to IAS 16 “Property, Plant and Equipment: Proceeds Before Intended Use”
Amendments to IAS 37 “Onerous Contract - Cost of Fulfilling a Contract”
January 1, 2022 (Note 3)
Amendments to IFRS 3 “Reference to the Conceptual Framework”
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)

Annual Improvements to IFRSs 2018-2020

Note 1: Unless stated otherwise, the New IFRSs above are effective for annual periods beginning on or after their respective effective dates.
Note 2:The Group should apply these amendments retrospectively. However, the amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
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Note 3: This amendment applies to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 4: This amendment applies to business combinations whose acquisition date starts in the annual reporting period after January 1, 2022.
Note 5: The amendments to IFRS 9 are applicable to swap or modification of terms of financial liabilities incurred during the annual reporting period beginning on January 1, 2022. The amendment to IAS 41 is applicable to fair value measurement during the annual reporting period beginning after January 1, 2022. The amendments to IFRS 1 are retrospectively applied to the annual reporting period beginning after January 1, 2022.
A. Amendment to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”
The amendment stipulates that the sales price of the project produced in order to make property, plant and equipment reach the necessary location and state that can meet the expected operation mode of the management is not suitable as a cost reduction of the asset. The aforementioned items should be measured in accordance with IAS 2 “Inventory”, and the sales price and cost should be recognized in profit and loss in accordance with the applicable standards.
This amendment is applicable to factories, property and equipment that reach the necessary locations and conditions for the management's expected operation mode after January 1, 2021 (the beginning of the earliest expression period). When the Group initially applies the amendments, it will recognize the cumulative effect of the amendments applied initially as an adjustment to the opening balance of the retained earnings (or other components of equity, as appropriate) at the beginning of the earliest expression period , and re-edit the information during the comparison period.
B. Amendment to IAS 37 “Onerous Contract - Cost of Fulfilling a Contract”
The amendment stipulates that when assessing whether the contract is onerous, “Cost of Fulfilling a Contract” should include the incremental cost of fulfilling a contract (for example, direct labor and raw materials) and the allocation of other costs directly related to fulfilling a contract (for example, the depreciation expenses of property, plant and equipment items used in fulfilling a contract are allocated).
C. Amendment to IFRS 3“Reference to the Conceptual Framework”
The amendment is to update the index of the conceptual framework and add the requirement that the acquirer shall apply IFRIC 21“Levies”to determine whether there is an obligation to pay levies on the acquisition date.
D. Annual Improvements to IFRS Standards 2018-2020
The annual improvement in the IFRS 2018-2020 includes amendments to certain standards. Among them, the amendment of IFRS 9 “Expenses included in the “10%” test for the purpose of derecognize financial liabilities” is to assess whether there is a
139 -

significant difference between the swap of financial liabilities or the modification of terms, When comparing cash flow projections of the new and old contract terms (including the net amount of fees charged for signing a new contract or modifying the contract), whether there is a 10% difference, the aforesaid fees collected should only include the payment between the borrower and the lender paid for.

The Group has evaluated the aforementioned standards and interpretations, and there’s no significant effect to the Group’s financial position and performance.

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

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

New IFRSs

Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates”

Effective Date Announced by IASB January 1, 2023 (Note 1) January 1, 2023 (Note 2)

Amendment to IAS 12 “Deferred Tax Related to Assets January 1, 2023 (Note 3) and Liabilities Arising from a Single Transaction”
Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 3: Except for otherwise specified with for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.
A.Amendments to IAS 1 “Disclosure of Accounting Policies”
- This amendment clarifies that when the scale or nature of a transaction, other event or situation is material, and the relevant accounting policy information is also material to the financial report, the relevant material accounting policy information should be disclosed. Conversely, if the enterprise determines that the scale or nature of a transaction, other event or situation is not significant or the relevant accounting policy information is not significant although it is significant, it does not need to disclose non-significant accounting policy information, but the enterprise prepares accounting the conclusion that the policy information is insignificant does not affect the relevant disclosures required by other IFRS standards.
B. Amendments to IAS 8 “Definition of Accounting Estimates”
- This amendment defines accounting estimates as the monetary amount of financial
140 -

statements subject to measurement uncertainty, and provides further explanations, except for corrections due to errors in the previous period, the impact of changes in input values or measurement techniques on accounting estimates is a change in accounting estimates.

C. Amendment to IAS 12 “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”

The amendments narrow the scope of the recognition exemption in paragraphs 15 and 24 of IAS 12 so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. When the Group initially applies the amendments, it will recognize the cumulative effect of the amendments applied initially as an adjustment to the opening balance of the retained earnings (or other components of equity, as appropriate) at the beginning of the earliest expression period, and re-edit the information during the comparison period.

As of the date the accompany consolidated financial statements are authorized for issue, the Group is still evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Group completes the evaluation.

(3) Effect of the IFRSs issued by IASB but not yet endorsed	and issued into effect by FSC:
	Effective Date Announced
New IFRSs	by IASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution	To be determined by IASB
of Assets between an Investor and its Associate or Joint
Venture”
IFRS 17 “Insurance Contracts”	January 1, 2023
Amendments to IFRS 17	January 1, 2023
Amendments to IFRS 17 “Initial application IFRS 17 and	January 1, 2023
IFRS 9 – Compare Information”
Amendments to IFRS 16 "Lease liabilities in sale and	January 1, 2024
leaseback"
Amendments to IAS 1 “Classification of Liabilities as	January 1, 2024
Current or Noncurrent”
Amendments to IAS 1 “Non-current Liabilities with	January 1, 2024
Covenants "

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4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the IFRSs, IASs, interpretations as well as related guidance endorsed by the FSC with the effective dates.
(2) Basis of preparation
A.Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:
- a. Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- b. Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B.The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- a. All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- b. Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- c. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
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d. Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
e.When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss or transferred directly to retained earnings as appropriate, on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
B. The consolidated entities were as follows:

Percentage of Ownership

Investee / Subsidiary Main Businesses 1.Sunonwealth Electric Machine Industry Co., Ltd. Sunon INC. Manufacturing and selling of fans Sunon SAS. Manufacturing and selling of fans Sunon Corporation Manufacturing and selling of fans Sunonwealth Electric Machine Ind.(H.K.)Ltd. Manufacturing and selling of fans Successful Century Co., Ltd. Investments BVI Sunon International Limited Investments Sunon Electronics India Private Limited Manufacturing and selling of fans Sunon Electronics Philippines Corp. Manufacturing and selling of fans Sunon Properties Philippines Corp. Real estate development 2.BVI Sunon International Limited Sunon Electronic (Foshan) Co., Ltd. General investment and trade	December 31, 2022	December 31, 2021
	100.00% 100.00% 100.00% 99.99% 100.00% 100.00% 99.99% 99.99% 99.99% 100.00%	100.00% 100.00% 100.00% 99.99% 100.00% 100.00% 99.99% 99.99% 99.99% 100.00%

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Percentage of Ownership

Investee / Subsidiary Main Businesses Sunon Electronic (Bei Hai) Co., Ltd. Manufacturing and selling of new type electronic parts 3.Sunon Electronic (Foshan) Co., Ltd. Beihai Li Zhun Electronics Co., Ltd. Manufacturing and selling of fans 4.Successful Century Co., Ltd. Sunon Electronic (Kunshan) Co., Ltd. Manufacturing and selling of fans 5.Sunon Electronic (Kunshan) Co., Ltd. Beihai Li Zhun Electronics Co., Ltd. Manufacturing and selling of fans 6.Sunon SAS Sunon Deutschland GmbH Selling of fans	December 31, 2022	December 31, 2021
	100.00% 66.67% (Refer to B.(b).II) 100.00% 33.33% (Refer to B.(b).II) 100.00%	100.00% 66.67% (Refer to B.(b).I) 100.00% 33.33% (Refer to B.(b).I) 100.00%

a. Some subsidiaries’ financial statements contained in the above consolidated financial statements were audited by the other auditors. These subsidiaries’ total assets amounted to $1,422,090 thousand and $593,783 thousand, representing 11.66% and 5.16% of the consolidated assets, and their total liabilities amounted to $692,641 thousand and $414,210 thousand, representing 9.91% and 5.79% of the consolidated liabilities as of December 31, 2022 and 2021, respectively; their total operating revenues amounted $1,435,265 thousand and $1,067,673 thousand, representing 10.21% and 7.87% and their total comprehensive income amounted to $52,377 thousand and $204 thousand, representing 4.61% and 0.05% of the total comprehensive income for the years ended December 31, 2022 and 2021, respectively.
b. Changes in subsidiaries:
- I. The Group established Beihai Li Zhun Electronics Co., Ltd., which was invested by Sunon Electronic (Foshan) Co., Ltd. and Sunon Electronic (Kunshan) Co., Ltd. in December 2021 with 66.67% and 33.33% shareholding, respectively.
- II. As of December 31, 2022, the investment of Sunon Electronic (Kunshan) Co.Ltd.has been invested, and the actual capital contribution is the shareholding ratio.
C. Subsidiaries not included in the consolidated financial reports: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Material restrictions: None.
F. Contents of the parent company’s securities held by subsidiaries: None.
G. Subsidiaries that have non-controlling interest that are material to the Group: None.
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(4) Foreign currency translation
A. Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.
B. In preparing the financial statements of each individual consolidated entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Such exchange differences are recognized in profit or loss in the year in which they arise. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the year except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.
C. For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into New Taiwan Dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to noncontrolling interests as appropriate).
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- a. Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- b. Assets held mainly for trading purposes;
- c. Assets that are expected to be realised within twelve months from the balance sheet date;
- d. Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
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B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- a. Liabilities that are expected to be paid off within the normal operating cycle;
- b. Liabilities held mainly for trading purposes;
- c. Liabilities that are to be paid off within twelve months from the balance sheet date (Even if a long-term refinancing or re-arrangement of payment agreements is completed after the balance sheet date and before the issuance of the financial report is approved, it is classified as current liabilities).
- d. Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(6) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including the original maturity of the time deposits within three months.)
(7) Financial instruments
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities 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. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
A. Financial assets
- a. Category of financial assets
  - Financial assets are recognized on a trade date basis.

Financial assets are classified into the following categories: financial assets at FVTPL and financial assets at amortized cost.

(a) Financial asset at FVTPL

For certain financial assets are classified as at FVTPL when such a financial asset is mandatorily and designated classified. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

When the financial assets meet one of the following conditions, the Group designates them as measured at fair value through profit and loss at the time of initial recognition:

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i. It is a mixed (combined) contract; or
ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or
iii. It is an investment that manages and evaluates its performance on a fair

value basis based on written risk management or investment strategies.

Financial assets at fair value through profit or loss are measured at fair value, dividends generated are recognised in other income, and interest income and gains or losses arising from remeasurement are recognised in other gains and losses. For the determination of fair value, please refer to Note 12.

(b) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

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 assets give rise on specified date to cash flow that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Expect for the following two cases, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset.

  - a. Purchased or originated credit-impaired financial assets: for those financial assets, the Group 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 Group shall apply the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

b. Impairment of financial assets
(a) At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable), investments in debt instruments that are measured at FVTOCI, lease receivable and contract assets.
(b) The Group always recognize lifetime Expected Credit Loss (i.e. ECL) for accounts receivables. For other financial assets, the Group recognize lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equaling to 12-month ECL.
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(c) Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. In contrast, lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
(d) The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.
c. Derecognition of financial assets
The Group derecognises a financial asset when one of the following conditions is meet:
(a) The contractual rights to receive cash flows from the financial asset expire.
(b) The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
(c) The Group neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.

On derecognition of financial asset at amortized cost in its entirety, the difference between the financial asset’s carrying amount and the sum of the consideration received is recognized in profit or loss. On derecognition of debt instrument measured at fair value through other comprehensive income, the difference between the financial asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss. On derecognition of equity instruments at fair value through other comprehensive income in its entirety, the cumulative profit and loss will be transferred directly to retained earning without reclassified into profit and loss.

B. Equity instruments

The Group 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. 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.

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C. Financial liabilities
a. Subsequent measurement

Except for the following conditions, all financial liabilities are measured at amortized cost in accordance with the effective interest method:

(a) Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or is designated as at fair value through profit or loss. Financial liabilities classified as held for trading are mainly for repurchasing in the short term when they occur, and derivatives other than financial guarantee contracts or designated and effective hedging instruments. Financial assets meet one of the following conditions, the Group designates them as measured at fair value through profit and loss at the time of initial recognition:
- i. It is a mixed (combined) contract; or
- ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or
- iii. It is an instrument that manages and evaluates its performance on a fair value basis based on written risk management or investment strategies.
b. Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

D. Modification of Financial Instruments

When the contractual cash flows of a financial instrument are renegotiated or modified and the renegotiation or modification does not result in the derecognition of that financial instrument, the Group recalculates the gross carrying amount of the financial asset or the amortized cost of the financial liabilities using the original effective interest rate and recognises a modification gain or loss in profit or loss. Any costs or fees incurred adjust the carrying amount of the modified financial instrument and are amortised over the remaining term of the modified financial instrument. If the renegotiation or modification results in that the derecognition of that financial instrument is required, then the financial instrument is derecognized accordingly.

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required by interest rate benchmark reform, the Group first applies the practical expedient aforementioned to the changes required by interest rate benchmark reform, and then applies the applicable requirements to any additional changes to which that practical expedient does not apply.

(8) Inventories

Inventories are stated at the lower of cost and net realisable value, accounted for on a perpetual basis. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and costs necessary to make the sale.

(9) Investments accounted for using equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for under equity method and are initially recognized at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses of its associate equals or exceeds its interest in the associate, including the carrying amount of the investment in the associate determined using the equity method plus the long – term interests that, in substance, from part of the Group’s net investment in the associate. the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
D. In the case where an associate issues new shares and the Group does not subscribe or proportionately acquire the new shares, which results in a change in the Group’s ownership percentage of the associate while maintains significant influence on the associate, then “Capital surplus” and “Investments accounted for using under the equity method” shall be adjusted for the increase or decrease of its share of equity
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interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

E. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.
F. When the Group disposes of its investment in an associate, if it loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
G. When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(10)Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. For property, plant and equipment under construction, sample produced from testing whether the asset is functioning properly before its intended use are measured at lower of the costs or net realizable value. Proceeds from selling such an item and the cost of the item are recognized in profit or loss.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous
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estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in accounting estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change.

The estimated useful lives as follows:

Buildings:

Main building, 20 to 57 years; Others, 2 to 39 years; Machinery and equipment, 2 to 15 years; Other equipment, 1 to 24 years; Leasehold improvement, 1 to 22 years;

D. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

(11)Leases/The Group as a lessee

The Group assesses whether the contract is (or includes) a lease at the date of the contract. For a contract that includes a lease component and one or more additional lease or non-lease components, the Group will allocate the consideration to the lease component base on the individual price of each lease component and the aggregated individual price of the non-lease component.

Except for payments for low-value asset and short-term leases which will be recognized as expenses on a straight-line basis, the Group will recognize right-of-use assets and lease liabilities for all leases at the inception of lease.

Right-of-use asset

The right-of-use asset is initially measured at cost (including the initial measurement amount of the lease liability, the payments less incentives, initial direct costs and the estimated recover cost), the subsequent measurement is based on the cost less accumulated depreciation and accumulated impairment loss, and adjusting the amount of re-measures of lease liabilities.

The right-of-use asset recognized depreciation is using the straight-line basis from the date of the lease until the expiration of the useful life or the expiration of the lease term, the depreciation is provided that the title of the underlying asset will be acquired at the end of the lease period or, if the cost of the right-of-use asset reflects the execution of the purchase option.

Lease liability

The lease liability is initially measured by the present value of the lease payment (including fixed payment, substantive fixed payment, change in lease payment

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depending on the index or rate, etc.). If the implied interest rate on the lease is easy to determine, the lease payment is discounted using that interest rate. If the interest rate is not easy to determine, the lessee's increase borrowing rate is used.

Subsequently , lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. If the lease period, the evaluation of the purchase choice, the amount of expected to be paid under the residual value guarantee or the change in the index or rate used to determine the lease payment result in a change in the future lease payment, the Group will measure the lease liability and adjust the right to use assets relatively. If the carrying amount has been reduced to zero, the remaining amount will recognize in the profit and loss. Lease liabilities are presented in a single-line project on the consolidated balance sheet.

(12)Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes), also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

Investment properties in the course of construction are stated at cost less accumulated impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Depreciation of these assets commences when the assets are ready for their intended use.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

(13)Intangible assets

Intangible assets with finite useful lives that are acquired separately are measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis over the following estimated lives: computer software - 2 to 15 years; trademarks are the economic benefit or contract period. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets are derecognized when disposed of or expected to have no future economic benefits generated through usage or disposal. On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

(14)Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for

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the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognised in profit or loss.

(15)Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(16)Employee benefits

A.Short-term employee benefits

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

B.Pensions

a. Defined contribution plans

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

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

  - (b) Actuarial gains and losses arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

  - (c) Past service costs are recognised immediately in profit or loss.

C. Employees’ bonus and directors’ remuneration
- Employees’ bonus and directors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ remuneration are different from the actual distributed amounts as resolved by the shareholders at their shareholders’ meeting subsequently, the differences should be recognised based on the accounting for changes in estimates.
D. Termination benefits
- Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense when it can no longer withdraw an offer of termination benefits or it recognises related restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.
(17)Share capital and treasury shares
A.Share capital
- Ordinary share is classified as equity. The classification of the preferred stock depends on the essence of the agreement. If the preferred stock matches the definition of the financial liability, it is classified as a liability. Otherwise, it is classified as equity. Incremental cost that can be attributed to the issuance of stocks or options is deducted from the capital issued.
B.Treasury Shares
- When the Group acquires its outstanding shares, the repurchase considerations (including all directly accountable costs) are recognized under treasury shares and shown as a deduction in equity. Gains on disposal of treasury shares should be recognized under “capital surplus - treasury stock transactions”; losses on disposal of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there is insufficient capital surplus to offset the losses, then such losses should be accounted for under retained earnings. The carrying amount of treasury shares should be calculated using the weighted-average method for the
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purpose of repurchased shares.

When the Group’s treasury shares are retired, the treasury share account should be credited, and the capital surplus - premium on stock account and capital stock account should be debited proportionately according to the share ratio. The carrying value of treasury shares in excess of the sum of its par value and premium on stock should first be offset against capital surplus from similar types of treasury share transactions, and the remainder, if any, debited to retained earnings. The sum of the par value and premium on treasury shares in excess of its carrying value should be credited to capital surplus from similar types of treasury share transactions.

(18)Share-based payment transactions
A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.
B.Cash-settle share-based payment arrangements are the fair value of liabilities undertaken recognized in remuneration costs and liabilities in the vesting period and measured by the fair value of equity instruments offered at each balance sheet date and the settlement date. Any changes are recognized in profit or loss.
(19)Income tax
A.The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity, respectively.
B.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the subsequent year when the stockholders resolve to distribute retain the earnings.
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C.Deferred income tax is recognised, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
D.Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.
E.Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F.Tax preference given for expenditures incurred on acquisitions of equipment or technology, research and development, employees training and equity investments is recorded using the income tax credits accounting.

(20)Revenue Recognition

The Group recognizes revenues based on the following steps:

Identifying the contracts;
Identifying obligations in the contracts;
Determining prices;
Allocating prices into the obligations in the contracts;
Recognizing revenues while fulfilling the obligations.

The Group identify the contract with the customers, allocate the transaction price to the performance obligations, and recognize revenue when performance obligations are satisfied.

The Group does not adjust the promised amount of consideration for the effects of a significant financing component if the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or

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service will be one year or less.

1. Goods sales

The Group sells fans and other relevant products. Sales revenues are recognized while the control of goods is transferred to the customers since the customers already have the rights to use, set price, take the major responsibility to resell the good and bear the risk of obsoleteness. The Group recognizes revenues and accounts receivable at the point and presents it in net term after deducting sales return, quantity discount and sales allowance.

The Group does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

Service revenue

Revenue from technical services is recognized when services are provided that in accordance with the relevant agreements.

(21)Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All borrowing costs other than those stated above are recognized in profit or loss in the period in which they are incurred.

(22)Government Subsidy

Government subsidies are recognized at fair value when it is reasonably certain that the Group will comply with the conditions attached to the government subsidies and will receive such subsidies.

Government subsidies are recognized in profit and loss on a systematic basis during the period when the relevant costs that they intend to compensate are recognized as expenses by the company. If government subsidy is used to compensate for expenses or losses that have occurred, or for the purpose of providing the Company with immediate financial support and there is no future related cost, it is recognized in the profit and loss during the period when it can be received. Government subsidies related to property, plant and equipment are recognized as non-current liabilities, and recognized as profits and losses on a straight-line basis based on the estimated useful life of the relevant assets.

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

The preparation of the Group’s consolidated financial statements is adopting accounting policies based on the following significant judgements, significant accounting estimates and assumptions:

(1) Critical judgements in applying accounting policies
A. Judgment of financial asset classification

The Group assesses the business model of financial assets based on the hierarchy that reflects the Group of financial assets that are jointly managed for specific business purposes. This assessment requires consideration of all relevant evidence, including measures of asset performance, risks affecting performance, and the manner in which the relevant managers are determined, and judgments are required. The Group continues to assess the adequacy of its business model and monitors the financial assets measured by the amortized cost before the maturity date and the debt instrument investments measured at fair value through other comprehensive income. Evaluate whether the disciplinary action has the same goal of business model. If the business model has been changed, the Group delays the adjustment of the subsequent classification of financial assets. The Group reclassifies financial assets in accordance with IFRS 9, and the application will be postponed from the date of reclassification, if the business model has changed.

B. Revenue recognition

The Group follows IFRS 15 to determine if it controls the specified good or service before that good or service is transferred to the customer, and the Group is acting as a principal or an agent in that transaction. When the Group acts as an agent, revenue is recognized on a net basis.

The Group acts as a principal as that it meets one the of following situations:

a. The Group gains control over the goods from the other party before transferring goods to customers.
b. The Group controls the right of providing service by the other party in order to control the ability of the party to provide service to customers.
c. The Group gain control over goods or service from the other party in order to combine with other goods or services to provide specific goods or services to customers.

The indicators (not limited to) which assist making judgment on whether the Group controls the goods or services before transferring goods or services to customers:

a. The Group has primary responsibilities for the goods or services it provides;
b. The Group bears inventory risk before transferring the specific goods or services to customer, or after transferring the control to customer.
c. The Group has the discretion to set prices.
159 -
C. Lease term

In determining the lease term, the Group considers all the facts and circumstances that create an economic incentive to exercise (or not exercise) the option, including any expected change in facts and circumstances from the commencement date until the exercise date of the option. Main Factors considered include the contractual terms and conditions for the period covered by the option, the significant leasehold improvements made (or expected) during the contract period, and the importance of the underlying assets to the Group’s operations, etc. The lease term is reassessed if a significant change in circumstance that are within the control of the Group occurs.

(2) Critical accounting estimates and assumptions
A. Revenue Recognition

The Group recognizes records a refund for estimated future returns and other allowances in the same period the related revenue is recorded. Refund for estimated sales returns and other allowances is generally made and adjusted at a specific percentage based on historical experience and any known factors that would significantly affect the allowance, and our management periodically reviews the adequacy of the percentage used.

B. Estimated impairment of financial assets
The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Where the actual future cash inflows are less than expected, a material impairment loss may arise.
C. Process of fair value measurement and evaluation
When the assets and liabilities at fair value with no active market, the Group determines whether to use outside appraisal and using proper evaluation techniques based on related regulation or its own judgment. If the Level 1 input value is not available while evaluating, the Group refers to the analysis of the investee’s financial position and operating outcome, recent trading price, quotes on non-active market of same equity instrument, quotes on active market of similar equity instrument and evaluation multiples of comparable companies. If the future input value is different from expectation, the fair value might change. The Group updates input values quarterly according to the market status in order to monitor if the measurement of fair value is appropriate.
D. Impairment assessment of tangible and intangible assets

The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are

160 -

utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future.

E. Impairment assessment on investment using equity method

The Group assesses the impairment of investments accounted for using the equity method whenever triggering events or changes in circumstances indicate that an investment may be impaired and carrying value cannot be recoverable. The Group assesses the recoverable amount based on a projected future cash flow and receivable cash dividend of the investees, and disposal-generating future cash flow to ensure the reasonableness of such assumptions.

F. Realisability of deferred income tax assets
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, laws, and regulations might cause material adjustments to deferred income tax assets.
G. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value.

H. Calculation of accrued pension obligations

When calculating the present value of defined pension obligations, the Group must apply judgments and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and future salary growth rate. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

I. Lessees’ incremental borrowing rates
At the time of the decision to increase the borrowing rate of the lessee used in the lease payment, the risk-free interest rate and the same currency is used as the reference rate, and the estimated lessee’s credit risk sticker and lease specific adjustments (such as asset-specific and secured factors) are taken into account.
161 -

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Item Cash on hand Cash in banks Total	December 31
	2022	2021
	$909 2,456,428	$512 1,911,506
	$2,457,337	$1,912,018

A. The financial institutions dealing with the Group are credit worthy, and the Group does transactions with a number of financial institutions to diversify credit risk that are unlikely to be expected to default.
B. The Group had no cash and cash equivalents pledged to others.

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

Item Non-derivative financial assets Beneficiary certificates	December 31	December 31
	2022	2021
	$211,827	$255,236

A. The Group recognized net gain of financial assets at fair value through profit or loss of $2,644 thousand and $3,893 thousand for the years ended December 31, 2022 and 2021, respectively.
B. The Group had no financial assets at fair value through profit or loss pledged to others.

(3) Notes receivable, net

Item At amortized cost Notes receivable Less: Loss allowance Net	December 31	December 31
	2022	2021
	$30,119 (24)	$32,601 (24)
	$30,095	$32,577

A. The Group had no notes receivable pledged to others.
B. Please refer to Note 6(4) for the relevant disclosure of loss allowance for notes receivable.
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(4) Accounts receivable, net

December 31

Item At amortized cost Accounts receivable Less: Loss allowance Net	2022	2021
	$3,393,039 (8,982)	$3,437,928 (11,210)
	$3,384,057	$3,426,718

A. The accounts receivable that were neither past due nor impaired was following the Group’s credit policy determined by reference to the industry characteristics, operation scale and current financial position of the counterparties. The average credit period on sales of goods was 3-4 months.
B. The Group had no account receivable pledged to others.
C. To reduce major credit risk, the Group bought credit guarantee insurance.
D. The Group applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for trade receivables (including other receivables). The expected credit losses on trade receivables are estimated by reference to past account aging records of the debtor, an analysis of the debtor’s current financial position, and industrial trend. The group recognizes loss allowance based on the expected credit loss ratio of customers by different risk levels with consideration of factors of historical loss ratios and customers’ financial conditions, competitiveness and business outlook.
E. The Group measures the loss allowance for notes receivable and accounts receivable (including other receivables) according to the preparation matrix:

December 31, 2022	Expected Credit Loss Rate	Gross Carrying Amount	Loss Allowance (Lifetime ECL)
Not past due Past due within 30 days Past due 31-90 days Past due over 91 days Total December 31, 2021	0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5% Expected Credit Loss Rate	$3,254,881 274,092 33,162 1,701	($8,236) (669) (8) (93)
		$3,563,836	($9,006)
		Gross Carrying Amount	Loss Allowance (Lifetime ECL)
Not past due Past due within 30 days Past due 31-90 days Past due over 91 days Total	0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5%	$3,355,315 181,077 20,868 25	($10,196) (830) (183) (25)
		$3,557,285	($11,234)

163 -

F. Movements of the loss allowance for notes and accounts receivable were as follows:

Beginning balance Add: Provision for impairment Less: Reversal of impairment Less: Write-offs Less: Foreign exchange differences Ending balance	Year Ended December 31	Year Ended December 31
	2022 $11,234 - (2,314) - 86 $9,006	2021
		$13,142 - (377) (1,506) (25)
		$11,234

The above provision has already taken into consideration of collateral or other credit enhancement. The other credit enhancement possessed by above receivables were $1,200,416 thousand, $963,266 thousand as of December 31, 2022 and 2021, respectively.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery of the receivable. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables which are due. Where recoveries are made, these are recognized in profit or loss. The Group’s trade receivables for offsetting the contract amount are $0 thousand and $1,506 thousand for the years ended December 31, 2022 and 2021, respectively.

G. Please refer to Note 12 for the relevant credit risk management and assessment method.

(5) Inventories and operating costs

		December 31
	Item	2022	2021
Raw materials		$887,795	$1,100,675
Supplies		30,910	34,978
Work in process		373,313	404,052
Finished goods		1,359,480	968,457
Net		$2,651,498	$2,508,162

164 -

A. The related inventory gain (loss) recoginzed as operating cost for the years ended December 31, 2022 and 2021 were as follows:

	Year Ended December 31	Year Ended December 31
Item	2022	2021
Cost of goods sold	$10,591,822	$10,923,547
Unallocated overheads and labor cost	79,353	52,405
Loss (Gain) on inventory valuation	124,174	20,364
Others	97,001	29,233
Total	$10,892,350	$11,025,549

B. The Group recognized inventory valuation loss (gain) $124,174 thousand and $20,364 thousand for the years ended December 31, 2022 and 2021, respectively, as a result of some product prices fluctuation and reducing some inventory.
C. The Group had no inventories pledged to others.

(6) Investments accounted for using equity method

December 31 Item 2022 2021 Associates: Associates without significance $5,800 $7,081 A. Associates: Shares of individually insignificant associates of the Group are summarized as follows: Year Ended December 31 2022 2021 Share of: Net loss ($1,401) ($4,133) Other comprehensive income (loss) (net after tax) - - Total comprehensive loss ($1,401) ($4,133)	December 31	December 31
	2022	2021
	$5,800	$7,081
	2022	2021 ($4,133) - ($4,133)
	($1,401) -
	($1,401)

A. Associates:
B. All the investments accounted for using equity method and the Group’s share of profit or loss and other comprehensive income in the investees are calculated based on the unaudited financial statements.
165 -

(7) Property, plant and equipment

Property, plant and equipment
	December 31
Item	2022	2021
Land	$820,335	$802,249
Buildings	474,211	455,152
Machinery and equipment	1,103,363	925,039
Miscellaneous equipment	478,998	417,203
Leasehold improvements	304,607	204,397
Equipment to be inspected	135,597	77,374
and construction in progress
Total cost	$3,317,111	$2,881,414
Less: Accumulated depreciation and impairment	(1,043,697)	(822,136)
Carrying amount	$2,273,414	$2,059,278

Cost	Land	Buildings	Machinery and Equipment	Miscellaneous equipment	Leasehold improvement	Equipment to be Inspected and Construction in Progress	Total
	$802,249 - - 18,086 - - -	$455,152 1,435 (4,031) 17,587 - - 4,068	$925,039 34,012 (38,489) 155,250 - - 27,551	$417,203 28,203 (22,146) 48,459 - - 7,279	$204,397 82,232 - 16,030 - - 1,948	$77,374 319,150 - (255,412) (1,715) (4,216) 416	$2,881,414 465,032 (64,666) - (1,715) (4,216) 41,262
Balance at January 1, 2022 Additions Disposals Reclassification Transfer to expenses Transferred to other noncurrent assts Effect of foreign currency exchange difference Balance at December 31, 2022 Accumulated depreciation and impairment
	$820,335	$474,211	$1,103,363	$478,998	$304,607	$135,597	$3,317,111
	$ - - - - - -	$242,547 15,166 (3,628) - - 2,281	$224,741 176,929 (37,424) (595) (223) 6,231	$216,904 53,760 (21,305) 595 - 5,430	$137,944 22,873 - - - 1,471	$ - - - - - -	$822,136 268,728 (62,357) - (223) 15,413
Balance at January 1, 2022 Depreciation Disposals Reclassification Decrease in this period Effect of foreign currency exchange difference Balance at December 31, 2022
	$ -	$256,366	$369,659	$255,384	$162,288	$ -	$1,043,697

166 -

Cost	Land	Buildings	Machinery and Equipment	Miscellaneous Equipment	Leasehold Improvement	Equipment to be Inspected and Construction in Progress	Total
	$804,381 - - - - - 70,977 (73,109) -	$466,169 4,687 (2,326) 2,015 - - 15,387 (29,379) (1,401)	$926,715 61,583 (277,782) 220,648 - - - - (6,125)	$1,028,149 47,493 (690,235) 37,549 - - - - (5,753)	$348,399 15,090 (179,982) 22,593 - - - - (1,703)	$79,485 294,529 - (282,805) (1,316) (11,628) - - (891)	$3,653,298 423,382 (1,150,325) - (1,316) (11,628) 86,364 (102,488) (15,873)
Balance at January 1, 2021 Additions Disposals Reclassification Transfer to expenses Transfer to inventories Transfer from investment properties Transfer to investment properties Effect of foreign currency exchange difference Balance at December 31, 2021 Accumulated Depreciation and Impairment
	$802,249	$455,152	$925,039	$417,203	$204,397	$77,374	$2,881,414
	$ - - - - - -	$246,287 15,179 (1,921) 7,677 (23,922) (753)	$331,016 145,425 (248,352) - - (3,348)	$667,856 82,564 (529,637) - - (3,879)	$302,604 16,828 (179,982) - - (1,506)	$ - - - - - -	$1,547,763 259,996 (959,892) 7,677 (23,922) (9,486)
Balance at January 1, 2021 Depreciation Disposals Transfer from investment properties Transfer to investment properties Effect of foreign currency exchange difference Balance at December 31, 2021
	$ -	$242,547	$224,741	$216,904	$137,944	$ -	$822,136

A. The details of interest capitalized: None.
B. The Group did not assess the impairment because there is no sign of impairment for the year ended December 31, 2022.
C. Property, plant and equipment pledged for the borrowings: Please refer to Note 8.
D. Reconciliations of current additions and the acquisition of property, plant and equipment in statement of cash flows were as follows:

Item	Year Ended December 31	Year Ended December 31
	2022	2021
Acquisition of property, plant and equipment Decrease (increase) in equipment payable Cash paid for acquisition of property, plant and equipment	$465,032 (71,044)	$423,382 20,446
	$393,988	$443,828

167 -

(8) Lease agreement

A. Right-of-use assets

ease agreement . Right-of-use assets
Item Land use right Land and building Machinery and equipment Other equipment Total cost Less: Accumulated depreciation and impairment Net	December 31
	2022 $393,707 397,582 - 29,663 $820,952 (227,075) $593,877	2021
		$392,043 474,757 53,390 24,437
		$944,627 (182,180)
		$762,447

Cost Balance at January 1, 2022 Additions Disposals Derecognition Effect of foreign currency exchange difference Balance at December 31, 2022 Accumulated Depreciation andImpairment Balance at January 1, 2022 Depreciation Derecognition Effect of foreign currency exchange difference Balance at December 31, 2022 Cost Balance at January 1, 2021 Additions Disposals Derecognition Effect of foreign currency exchange difference Balance at December 31, 2021	Land UseRight $392,043 - - - 1,664 $393,707 $8,432 5,619 - 42 $14,093 Land UseRight $424,796 - - - (32,753) $392,043	Land and Buildings $474,757 37,452 (88,683) (36,415) 10,471 $397,582 $146,853 81,525 (36,415) 4,097 $196,060 Land and Buildings $368,669 225,344 (20,985) (93,111) (5,160) $474,757	Machinery and Equipment $53,390 - (36,017) (18,557) 1,184 $ - $15,523 2,691 (18,557) 343 $ - Machinery and Equipment $57,909 - (3,092) (1,116) (311) $53,390	Other Equipment $24,437 6,092 - (1,244) 378 $29,663 $11,372 6,632 (1,244) 162 $16,922 Other Equipment $21,562 10,880 (2,966) (4,714) (325) $24,437	Total
					$944,627 43,544 (124,700) (56,216) 13,697
					$820,952
					$182,180 96,467 (56,216) 4,644
					$227,075
					Total
					$872,936 236,224 (27,043) (98,941) (38,549)
					$944,627

168 -

Accumulated Depreciation andImpairment Balance at January 1, 2021 Depreciation Derecognition Effect of foreign currency exchange difference Balance at December 31, 2021	$3,002 5,792 - (362) $8,432	$138,973 102,960 (93,111) (1,969) $146,853	$10,582 6,112 (1,116) (55) $15,523	$9,505 6,754 (4,714) (173) $11,372	$162,062 121,618 (98,941) (2,559)
					$182,180

B. Lease liabilities

. Lease liabilities
Item	December 31
	2022	2021
Carrying amount of lease liabilities - current - noncurrent	$80,951	$93,590
	$150,425	$294,383

Ranges of discount rates for lease liabilities are as follows:

Item	December 31	December 31
	2022	2021
Land and buildings Machinery and equipment Other equipment	0.63%-6.87% 3.13%-3.65% 0.66%-4.60%	0.63%-4.16% 3.13%-3.65% 0.61%-4.05%

Please refer to Note 12(2) for lease liabilities with repayment periods.

C. Material lease-in activities and terms

The Group leased some land and buildings, etc. as factory, with the lease terms of 1 to 75 years. There is no sign of impairment of right-of-use assets as of December 31, 2022. Therefore, the Group didn’t assess the impairment.

D. Sublet: None.

E. Other lease information:

a. Please refer to Note 6(9) for the agreement to lease investment properties under operating lease.
b. The current lease relevant expense information is as follows:

he current lease relevant expense inform	ation is as follows:	ation is as follows:
Item	Years Ended December 31
	2022 $17,214 $266 $ - ($92,921)	2021
Short-term lease expense Low-value asset lease expense Variable lease payments that excluded in the measurement of lease liabilities Total cash outflow for leases (Note)		$25,051
		$287
		$ -
		($153,085)

169 -

(Note): Including principle paid for current lease liabilities.

(9) Investment properties, net


	2022
	$77,109 40,062
	$117,171 (32,065)
	$85,106
	Buildings
$77,109 -	$40,062 -	$117,171 -
$77,109	$40,062	$117,171
$ - -	$31,682 383	$31,682 383
$ -	$32,065	$32,065
Land	Buildings	Total
$89,384 - (85,384) 73,109	$26,070 - (15,387) 29,379	$115,454 - (100,771) 102,488
$77,109	$40,062	$117,171
$19,313 - (4,906) (14,407) -	$15,252 185 (7,677) 23,922	$34,565 185 (4,906) (22,084) 23,922

170 -
A. Above mentioned investment properties were land and fixtures located at No. 1609, Wu Kuai Cuo Section, Kaohsiung and No. 307, Zheng Chang Section, Kaohsiung and No.93 Anxi Section, Kaohsiung. The land located at No. 1609, Wu Kuai Cuo Section was reclassified to property, plant and equipment in February 2021, No.93 Anxi Section was transferred from real estate, plant and equipment in December 2021.
B. Rental income and direct operating expenses of investment properties:

Item Rental income of investment properties Direct operating expense incurred for the investment properties with current rent income	Year Ended December 31
	2022 2021 $1,791 $331 $654 $361

C. The maturity analysis of operating lease payments receivable for investment properties is as follows:

rties is as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 years Total	December 31
	2022	2021
	$1,921 1,921 1,921 1,750 1,750 -	$1,792 171 171 171 - -
	$9,263	$2,305

D. Investment properties are depreciated on a straight-line basis over their estimated useful life of 10 to 57 years.
E. The fair values of investment properties held by the Group were $160,060 thousand as of December 31, 2022 and 2021, respectively. The fair value determination was performed by independent qualified professional appraisers. The valuation was based on the comparison method, and the fair value was measured by using Level 3 inputs. Please refer to Note 12(3).
F. The accumulated impairment of investment properties were $0 thousand as of December 31, 2022 and 2021, respectively.
G. The Group had no investment properties pledged to others.
171 -

(10) Intangible assets

(10) Intangible assets
			December 31
Item			2022	2021
Trademark			$8,448	$7,923
Computer software			37,465	30,507
Total cost			$45,913	$38,430
Less: Accumulated amortization			(18,860)	(13,944)
Net			$27,053	$24,486
Cost	Trademark		Computer Software	Total
Balance at January 1, 2022	$7,923		$30,507	$38,430
Additions		-	17,404	17,404
Derecognition		-	(10,567)	(10,567)
Effect of foreign exchange	525		121	646
difference
Balance at December 31, 2022	$8,448		$37,465	$45,913
Accumulated amortization
and impairment
Balance at January 1, 2022	$	-	$13,944	$13,944
Amortization		-	15,444	15,444
Derecognition		-	(10,567)	(10,567)
Effect of foreign exchange		-	39	39
difference
Balance at December 31, 2022	$	-	$18,860	$18,860
Cost	Trademark		Computer Software	Total
Balance on January 1, 2021	$8,062		$33,874	$41,936
Additions		-	15,497	15,497
Disposals		-	(2,266)	(2,266)
Derecognition		-	(16,512)	(16,512)
Effect of foreign exchange	(139)		(86)	(225)
difference
Balance on December 31, 2021	$7,923		$30,507	$38,430

172 -

Accumulated amortization

$	$16,155 $16,155 16,060 16,060 (1,701) (1,701) (16,512) (16,512) (58) (58) $13,944 $13,944 December 31, 2022 Amount Interest $1,287,516 0.75%-5.03% December 31, 2021 Amount Interest $1,949,632 0.63%-1.14% December 31	$16,155 $16,155 16,060 16,060 (1,701) (1,701) (16,512) (16,512) (58) (58) $13,944 $13,944 December 31, 2022 Amount Interest $1,287,516 0.75%-5.03% December 31, 2021 Amount Interest $1,949,632 0.63%-1.14% December 31
$
	Amount
	$1,287,516

	Amount
	$1,949,632

	2022 2021 $362,131 $341,924 10,384 13,923 59,479 40,918 40,087 17,086 97,777 26,733 508,889 485,120 $1,078,747 $925,704 December 31	2021
		$341,924 13,923 40,918 17,086 26,733 485,120
		$925,704

	2022 $54,643	2021
		$40,942

173 -

Item Beginning balance Provisions recognized Reversing balances Effect of foreign exchange difference Ending balance	Year Ended December 31	Year Ended December 31
	2022 $40,942 13,060 - 641 $54,643	2021
		$45,064 7,884 (11,449) (557)
		$40,942

Provision for employee benefits represents vested short-term service leave entitlements accrued.

(14) Long-term loans and current portion of long-term loans

Item Secured loans Unsecarud loans Less: portion due within one year Long-term loans Interest rates	December 31	December 31
	2022 $ - 407,073 (120,372) $286,701 0.75%-5.70%	2021
		$220,000 339,566 (35,222)
		$524,344
		0.81%-1.80%

A. Refer to Note 8 for assets pledged as collateral for long-term loans.
B. Under the loan agreement, the Group should maintain specific current ratio, debt ratio, interest coverage and net tangible value based on the Group’s audited semi-annual and annual consolidated financial statements. As of December 31, 2022, the Group had no irregularities.

(15)Pension

A. Defined contribution plans
a.The plan under the Labor Pension Act (the “Act”) is deemed a defined contribution plan. Pursuant to the Group has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts.
b.The employees of the Group’s subsidiaries are members of a state-managed retirement benefit plan operated by local government. The subsidiary is required to contribute amounts calculated at a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions to the fund.
c.The total expenses recognized in the consolidated statement of comprehensive income were $189,674 thousand and $127,165 thousand, representing the contributions payable to these plans by the Group at the rates specified in the plans for the years ended December 31, 2022 and 2021, respectively.
174 -
B. Defined benefit plans
a.The Company have defined benefit plans under the Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The aforementioned companies contribute an amount equal to 2% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. Before the end of each year, the Company assesses the balance in the Funds. If the amount of the balance in the Funds is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the companies are required to fund the difference in one appropriation that should be made before the end of March of the next year. The Funds are operated and managed by the government’s designated authorities; as such, the Group does not have any right to intervene in the investments of the Funds.
b.The amounts arising from the defined benefit obligation of the Group in the consolidated balance sheets were as follows:

Funds are operated and managed by the government’s designated authorities; as such, the Group does not have any right to intervene in the investments of the Funds. b.The amounts arising from the defined benefit obligation of the Group in the consolidated balance sheets were as follows:	Funds are operated and managed by the government’s designated authorities; as such, the Group does not have any right to intervene in the investments of the Funds. b.The amounts arising from the defined benefit obligation of the Group in the consolidated balance sheets were as follows:	by the government’s designated authorities; as ny right to intervene in the investments of the efined benefit obligation of the Group in the s follows:	by the government’s designated authorities; as ny right to intervene in the investments of the efined benefit obligation of the Group in the s follows:	by the government’s designated authorities; as ny right to intervene in the investments of the efined benefit obligation of the Group in the s follows:	by the government’s designated authorities; as ny right to intervene in the investments of the efined benefit obligation of the Group in the s follows:
December 31 Item 2022 2021 Present value of defined benefit obligation $73,143 $83,090 Fair value of plan assets (37,476) (28,043) Net defined benefit liabilities $35,667 $55,047 C. Movements of the net defined benefit liabilities were as follows: Year Ended December 31, 2022 Item Present Value of Defined Benefit Obligation Fair Value of Plan Assets Net Defined Benefit Liabilities Balance at January 1 $83,090 ($28,043) $55,047 Service cost Current service cost - - - Interest expense (income) 415 (155) 260 Past service cost - - - Settlement loss (income) - - - Recognized in profit or loss $415 ($155) $260		December 31
				2021
				$83,090 (28,043)
				$55,047
	Present Value of Defined Benefit Obligation		Fair Value of Plan Assets		Net Defined Benefit Liabilities
	$83,090 - 415 - -		($28,043) - (155) - -		$55,047 - 260 - -
	$415		($155)		$260

175 -

$ - - (8,081) (2,281)	($2,278) - - -	($2,278) - (8,081) (2,281)
($10,362)	($2,278)	($12,640)
$ - -	($7,000) -	($7,000) -
$73,143	$37,476	$35,667
Year Ended December 31, 2021
Present Value of Defined Benefit Obligation	Fair Value of Plan Assets	Net Defined Benefit Liabilities
$85,430 - 427 - -	($26,039) - (145) - -	$59,391 - 282 - -
$427	($145)	$282
$ - 2,292 - (617)	($296) - - -	($296) 2,292 - (617)
$1,675	($296)	$1,379
($5) (4,437)	($6,000) 4,437	($6,005) -
$83,090	($28,043)	$55,047

176 -
D. Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:
a. Investment risk

The pension funds are invested in equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the government’s designated authorities or under the mandated management. However, under the Labor Standards Law, the rate of return on assets shall not be less than the average interest rate on a two-year time deposit published by the local banks and the government is responsible for any shortfall in the event that the rate of return is less than the required rate of return.

b.Interest risk
- A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.
c.Salary risk
- The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
E. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

valuation were as follows:
Discount rate Future salary increase rate The weighted average duration of the defined benefit obligation	Measurement Date
	December 31, 2022	December 31, 2021
	1.375%	0.500%
	2%	2%
	11.7 years	12.9 years

(a) Assumptions regarding future mortality experience are set based on actuarial valuation in accordance with the 6th version of Taiwan Standard Ordinary Experience Mortality Tables.
(b) If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:
177 -

Item Discount Rate 0.25% higher 0.25% lower Expected rates of salary increase 0.25% higher 0.25% lower	December 31	December 31
	2022	2021
	($2,110)	($2,659)
	$2,195	$2,773
	$2,140	$2,685
	($2,068)	($2,588)

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

F. The Group expects to make contributions of $8,040 thousand to the defined benefit plans for the year ended December 31, 2023.

(16) Share capital

A. Movements in the number of the Group’s ordinary shares outstanding were as follows:

Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31 Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31	Year Ended December 31, 2022 Shares(in thousands) Amount 250,930 $2,509,297 - - - - 250,930 $2,509,297 Year Ended December 31, 2021 Shares(in thousands) Amount 250,930 $2,509,297 - - - - 250,930 $2,509,297
	Shares(in thousands) 250,930 - - 250,930

B. As of December 31, 2022, the authorized capital are $5,000,000 thousand, consisting of 500,000 thousand shares.
178 -

(17) Capital surplus

Capital surplus
Item From merger From convertible bonds Treasury share transactions Reorganization Differences between considerations and carrying amounts of subsidiaries acquired or disposed Total	December 31
	2022 $18,227 326,015 21,464 1,050 147 $366,903	2021
		$18,227 326,015 21,464 1,050 147
		$366,903

Under the Company Act, the capital surplus generated from the excess of the issuance price over the par value of capital stock and donations can be used to offset deficit or may be distributed as stock dividends or in cash. Under the regulations of the Security Exchange Law, the maximum amount transferred from the foregoing capital surplus to the Company’s capital per year shall not be over 10% of the Company’s paid-in capital. Capital surplus can’t be used to offset deficit unless legal reserve is insufficient. The capital surplus from long-term investments may not be used for any purpose.

(18)Retained earnings and dividend policy

(1) In accordance with the dividend policy as set forth in the Company’s Articles of Incorporation, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the regulations, and the remainder plus prior year’s unappropriated earnings will be recommended by the board of directors and approved through the shareholders’ meeting.
In consideration of its operation and capital expenditure demands, the Company stipulates appropriate dividend distribution ratio, and proposes for approval in the shareholders’ meeting. However, at least 20% of total dividends should be distributed in cash.
(2) Legal reserve may be used to offset a deficit, and be transferred to capital or distributed in cash. However, legal reserve can be transferred to capital or distributed in cash only when the legal reserve has exceeded 25% of the Company’s paid-in capital.

(3) Special reserve

paid-in capital. (3) Special reserve
Item Reserve for the debit balance of other equities Reserve for first-time adoption of IFRS Total	December 31, 2022 $216,203 79,155 $295,358	December 31, 2021
		$162,940 79,155
		$242,095

179 -
A. While earning distribution, the earnings can be distributed after appropriation of the equivalent amount of the debit balance of the other equities of the balance sheet.
B. Under Rule No.1010012865 issued by the FSC for first-time adoption of IFRS, the special reserve can be reversed while usage, disposal and reclassification of related assets.
(4) The appropriation of 2021 and 2020 earnings have been approved by at the shareholders’ meeting held in June 2022 and July 2021, respectively. Details were summarized below:

Item Legal reserve Special reserve Cash dividends Total	Amount 2021 2020 $42,815 $84,903 53,263 (18,180) 301,116 602,231 $397,194 $668,954	Dividends Per Share	Dividends Per Share
	2021 $42,815 53,263 301,116 $397,194	2021 1.2	2020
			2.4

(5) The appropriation of 2022 earnings had been proposed by the board of directors on March 9, 2023. Details were summarized below:

Item Legal reserve Special reserve Cash dividends	Amount $109,921 (37,601) 652,417	Dividends Per Share
		2.6

A. The appropriation of earnings for 2022 are to be presented for approval in the shareholders’ meeting to be held in June 2023.
B. In the event of repurchase of the Company’s shares, transfer, conversion or annulment of treasury stocks, and exercise of employees’ stock options, leading to a change in the number of outstanding shares and a consequent change in dividend yield, it is proposed that the chairman is authorized by the Board of Directors to duly adjust stocks and cash payout rates.
(6) Information on the earnings appropriation proposed by the Company’s Board of Directors and approved by the Company’s shareholders is available on the Market Observation Post System website of the Taiwan Stock Exchange.

(19)Others equity

(19)Others equity
Item Balance at January 1 Exchange differences arising on translation of foreign operations Balance at December 31	Exchange Differences on Translating Foreign Operations
	2022 ($295,358) 37,601 ($257,757)	2021
		($242,095) (53,263)
		($295,358)

180 -

(20)Operating revenues

(20)Operating revenues
Item Revenue from contracts with customers Total revenues Sales returns Sales discount Net	Year Ended December 31
	2022 $14,148,315 (45,501) (39,506) $14,063,308	2021
		$13,688,873 (74,511) (52,558)
		$13,561,804

A. Explain of contract revenue

Sales of fans and other related goods are mainly to system manufacturers and distributors. Please refer to Note 14 for the main sale areas.

B. The Group’s timing of revenue recognition is goods transferred at a certain point of time.
C. Contract balances

The Group recognizes the receivables, contract assets and contract liabilities related to contract revenue as follows:

to contract revenue as follows:
Item Receivables Contract assets Total Contract liabilities - current	Year Ended December 31 2022 2021 $3,414,152 $3,459,295 - - $3,414,152 $3,459,295 $176,164 $110,411
		2021
		$3,459,295 -
		$3,459,295
		$110,411

a. Significant changes in contract assets and contract liabilities

The changes in the contract assets and contract liabilities primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment, and there is no other significant change.

b. Amount from previous period’s satisfied performance obligations and beginning contract liabilities recognized in the current period as income were as follows:

Year Ended December 31

Revenue in the currentperiod	2022	2021
From beginning contract liabilities From previous period’s satisfied performance obligations	$110,411	$105,491
	$ -	$ -

181 -

(21)Labor cost, depreciation and amortization

Year Ended December 31, 2022

Item Labor cost Salaries Insurance Pension Others Depreciation Amortization Total	Operatingcost $1,439,609 119,947 147,703 841,383 269,566 103,102 $2,921,310	Operatingexpenses $822,618 72,793 42,231 73,771 96,012 43,985 $1,151,410	Total
			$2,262,227 192,740 189,934 915,154 365,578 147,087
			$4,072,720

Year Ended December 31, 2021	Year Ended December 31, 2021	Year Ended December 31, 2021
Operatingcost $1,641,763 72,343 88,205 970,234 259,418 86,112 $3,118,075	Operatingexpenses $676,362 133,783 39,242 168,212 122,381 49,262 $1,189,242	Total
		$2,318,125 206,126 127,447 1,138,446 381,799 135,374
		$4,307,317

The Company accrued employees’ compensation and remuneration to directors at the rates not less than 2% and not higher than 5% of net income before income tax, employees’ compensation and remuneration to directors during the period. If there is a change in the amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.
The employees’ compensation and remuneration to directors for the years ended December 31, 2022 and 2021 had been approved by the Company’s Board of Directors meeting held on March 9, 2023 and March 10, 2022, respectively, and the relevant amounts recognized in the consolidated financial statements were as follows:
182 -

Year ended December 31

2022	2022	2021	2021
Employees’ compensation	Remuneration to directors	Employees’ compensation $13,000 13,000 $ -	Remuneration to directors
$32,000 32,000	$8,000 8,000		$4,000 4,000
$ -	$ -		$ -

The above mentioned employees’ compensation will be paid by cash.

Information about the appropriation of employees’ compensation and directors’ remuneration by the Company as proposed by the Board of Directors and resolved by the shareholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(22)Interest income

Item Interest on bank deposits Interest on early payment Others Total (23)Other income Item Rental income Others - sample sales, etc. Others - subsidy Others Total	Year ended December 31	Year ended December 31
	2022 2021 $8,723 $7,329 5,386 6,307 483 316 $14,592 $13,952 Year ended December 31	2021
		$7,329 6,307 316
		$13,952
	2022 $1,839 42,798 34,063 76,612 $155,312	2021
		$1,974 56,750 36,759 71,853
		$167,336

183 -

(24)Other gains and losses

(24)Other gains and losses
	Year ended	December 31
Item	2022	2021
Net loss on financial instruments at FVTPL	$78	($108)
Loss on disposal of property, plant and equipment	(2,195)	(12,416)
Net currency exchange loss	175,794	(14,976)
Gain on disposal of investments	2,566	4,001
Reversal of impairment loss recognized in profit or loss, non-financial assets	-	4,906
Others	3,647	(8,841)
Total	$179,890	($27,434)
(25)Finance costs
	Year ended	December 31
Item	2022	2021
Interest on loans	$36,389	$15,879
Interest on lease liabilities	8,011	12,263
Others	-	16
Less: capitalized amount for qualified assets	-	-
Carrying amount	$44,400	$28,158

(26)Income tax

A. The major components of tax expense were as follows:

Current income tax Current tax expense Additional tax on unappropriated earnings Adjustments in tax of prior periods Total Deferred income tax The origination and reversal of temporary differences Total Income tax expense	Year ended December 31	Year ended December 31
	2022 $291,119 - (45,370) $245,749 $91,033 $91,033 $336,782	2021
		$227,804 6,547 (35,607)
		$198,744
		($42,767)
		($42,767)
		$155,977

184 -

B. Income tax expense recognized in other comprehensive income was as follows:

Item Exchange differences on translation of foreign operations Remeasurement of defined benefit plans Total	Year ended December 31	Year ended December 31
	2022 $9,399 2,528 $11,927	2021
		($13,315) (276)
		($13,591)

C. Reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

profit or loss was as follows:
Item Income before income tax Income tax expense at the statutory rate Tax effect of adjusting items: Other adjustments Additional tax on unappropriated earnings Adjustments for prior year’s tax adjustments Deferred income tax expense Temporary differences Income tax expense recognized in profit or loss	Year Ended December 31
	2022	2021
	$1,425,877	$585,230
	$463,329 (172,210) - (45,370) 91,033	$140,799 87,005 6,547 (35,607) (42,767)
	$336,782	$155,977

The applicable tax rate used by the Group is 20%. In addition, the tax rate applicable to unappropriated earning is 5%. Tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

According to the amendments to the Statute for Industrial Innovation announced in July 2019, the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the tax on unappropriated earnings, the Group has already deducted the amount of the unappropriated earnings that has been reinvested as capital expenditures. When calculating the tax on unappropriated earnings by the Group in 2022, already deducted the unappropriated earnings in 2021 amount that has been reinvested in capital expenditure.

185 -

D. Amounts of deferred tax assets or liabilities as a result of temporary difference, loss carryforward and investment tax credit were as follows:

	Year Ended December 31,2022	Year Ended December 31,2022	Year Ended December 31,2022
Balance, Beginning of Year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Effect of Exchange Rate Changes	Balance, End of Year
$11,010 12,121 2,854 - 29,792 4,364	($1,348) 27,489 722 6,507 25,564 (4,461)	($2,528) - - - - -	$ - 17 - - 391 97	$7,134 39,627 3,576 6,507 55,747 -
$60,141	$54,473	($2,528)	$505	$112,591
$34,476 2,022 -	$77,440 (2,022) 70,088	$9,399 - -	$ - - (448)	$121,315 - 69,640
$36,498	$145,506	$9,399	($448)	$190,955
$23,643	($91,033)	($11,927)	$953	($78,364)
	Year Ended December 31,2021
Balance, Beginning of Year	Effect of Tax Rate Change	Recognized in Other Comprehensive Income	Effect of Exchange Rate Changes	Balance, End of Year
$11,879 7,848 2,751 28,683 6,676 -	($1,145) 4,303 103 1,197 (6,638) 4,363	$276 - - - - -	$ - (30) - (88) (38) 1	$11,010 12,121 2,854 29,792 - 4,364
$57,837	$2,183	$276	($155)	$60,141
$81,134 9,263	($33,343) (7,241)	($13,315) -	$ - -	$34,476 2,022
$90,397	($40,584)	($13,315)	$ -	$36,498
($32,560)	$42,767	$13,591	($155)	$23,643

186 -

E. Items with no deferred tax assets recognized:

Item Deductible temporary differences	December 31	December 31
	2022 $85,223	2021
		$49,000

F. The tax authorities have ratified Company’s income tax returns through Year 2020.

(27)Other comprehensive income (loss)

Year Ended December 31, 2022

Other Comprehensive Income (Loss), Before Tax Income Tax Benefit (Expense) $12,640 ($2,528) $12,640 ($2,528) $47,000 ($9,399) $47,000 ($9,399) $59,640 ($11,927) Year Ended December 31,	Other Comprehensive Income (Loss), Before Tax Income Tax Benefit (Expense) $12,640 ($2,528) $12,640 ($2,528) $47,000 ($9,399) $47,000 ($9,399) $59,640 ($11,927) Year Ended December 31,	Other Comprehensive Income (Loss), Net of Tax
		$10,112
		$10,112
		$37,601
		$37,601
		$47,713
		2021
Other Comprehensive Income (Loss), Before Tax ($1,379) ($1,379) ($66,578) ($66,578) ($67,957)	Income Tax Benefit (Expense) $276 $276 $13,315 $13,315 $13,591	Other Comprehensive Income (Loss), Net of Tax
		($1,103)
		($1,103)
		($53,263)
		($53,263)
		($54,366)

187 -

(28)Earnings per share

Item Net income attributable to owners of the parent Weighted average shares outstanding (in thousands) Basic earnings per share (after tax) Net income attributable to owners of the parent Effect of potential dilutive ordinary shares Net income used in computation of diluted earnings per share Weighted average shares outstanding (in thousands) Impact on employees’ compensation (Note) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earnings per share (after tax)	Year Ended December 31	Year Ended December 31
	2022 $1,089,095 250,930 $4.34 $1,089,095 - $1,089,095 $250,930 749 $251,679 $4.33	2021
		$429,253 250,930
		$1.71
		$429,253 -
		$429,253
		$250,930 293
		$251,223
		$1.71

(Note) Since the Group offered to settle compensation paid to employees in cash or shares, the Group assumed the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party:

The Group has no parent and ultimate controlling party.

(2) Related party name and category:

Related Party Name Related Party Category Guang Sheng Investment Corporation Other related party Shehng-Yuan Children Development and Other related party Adult Support Services Center Yo Yuan Investment Corporation Other related party Suzhou Shengyixing Heat Transfer Technology Associates Co., Ltd.

188 -

(3) Significant transactions with related parties:

A. Sales:

A. Sales:
Related PartyCategory Associates	Year Ended December 31
	2022 2021 $1,686 $ -

Selling prices with the related parties are set by the Company and are equivalent to those with ordinary customers. Collection period was 2 to 4 months. Collection can be delayed when agreed on by both parties.

B. Purchase:

B. Purchase:
Related PartyCategory Associates	Year Ended December 31
	2022 $95,764	2021
		$12,803

Above mentioned Purchase prices of the related parties are equivalent to those of those of other manufacturer. Payment term was 3 to 4 months. However, both parties can agree to advance the payment.

C. Contract assets: None.
D. Contract liabilities: None.
E. Balance of receivables (excluding lending to related parties):

Item Account receivable Other receivable	Related PartyCategory Associates Associates	December 31
		2022 2021 $1,893 $ - $49 $49

F. Balance of payables (excluding borrowing from related parties):

Item Account payable Other payables G. Prepayments: Item Prepayments	Related PartyCategory Associates Associates Related PartyCategory Associates	December 31	December 31
		2022 2021 $13,420 $13,909 $246 $296 December 31	2021
			$13,909
			$296
		2022 $ -	2021
			$144

H. Property transactions: None.
189 -

I. Lessee arrangements:

December 31

		December 31	December 31
Item Refundable deposits Lease liabilities - current Lease liabilities - noncurrent Item Interest expense	Related PartyCategory Other related parties Other related parties Other related parties Related PartyCategory Other related parties	2022 2021 $26 $26 $154 $91 $91 $ - Year Ended December 31
		2022 $1	2021
			$1

Above lease terms are based on the contract, and rent is paid monthly.

J. Rent arrangements: None.
K. Financing activities - lending to related parties:

K. Financing activities - lending to related	vities - lending to related	rties:	rties:
Item Related PartyCategory Other receivable Associates a. Interest income Related PartyCategory Associates Interest rates	Related PartyCategory	Year Ended December 31 2022 2021 $13,229 $13,025 Year Ended December 31
		2022 $468 4.35%	2021
			$304
			4.35%

L. Financing activities - borrowing from related parties : None.

M. Guarantee for related parties: None.

N. Others:

a. Guarantee deposits:

L. Financing activities - borrowing from related M. Guarantee for related parties: None. N. Others: a. Guarantee deposits:	parties : None.	parties : None.
Related PartyCategory Other related parties b. Miscellaneous income: Related PartyCategory Other related parties	December 31
	2022 2021 $55 $55 Year Ended December 31	2021
		$55
	2022 $194	2021
		$194

Miscellaneous income is mainly rent income. Rent prices are according to the contract agreement and received monthly.

190 -

c. Miscellaneous expenses:

c. Miscellaneous expenses:
Related PartyCategory Associates	Year Ended December 31
	2022 $1,142	2021
		$378

Miscellaneous expenses are R&D.

(4) Key management compensation

(4) Key management compensation
Related PartyCategory Salaries and other short-term employee benefits Post-employment benefits Other long-term employee benefits Termination benefits Share-based payments Total	Year Ended December 31
	2022 $75,775 - - - - $75,775	2021
		$58,848 - - - -
		$58,848

8. PLEDGED ASSETS

PLEDGED ASSETS
Item Property, plant and equipment (net)	Year Ended December 31
	2022	2021
	$496,858	$496,858

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) As of December 31, 2022 and 2021, the Group issued guarantee notes for bank loans amounting to $3,247,560 thousand and $3,579,200 thousand, respectively.
(2) The unused letter of credit as of December 31, 2022 and 2021 consisted of the following:

(In thousands)

	(In thousands)	(In thousands)
Item L/C Amount	December 31
	2022	2021
	USD 3,906	USD 1,603

(3) As of December 31, 2022 and 2021, the note endorsement for material purchase were as follows:

(In thousands)

ollows:	(In thousands)	(In thousands)
Item Bank acceptance	December 31
	2022	2021
	USD 2,114	USD 1,343

(4) As of December 31, 2022 and 2021, the Group endorsed guarantees for others. Please refer to Note 13 for the information.
(5) Statement of lawsuit
191 -

SIAE Microelettronica S.P.A. filed a lawsuit against the Group for the infringement on April 8, 2020. The Group has appointed the attorney to proceed with the litigation, and the result of the first-instance judgment declared by Kaohsiung District Court in Taiwan on June 30, 2022 is that “The plaintiff’s claim and the application of provisional execution are both dismissed. The litigation expenses shall be borne by the plaintiff”. Moreover, the plaintiff did not file an appeal within the statutory period, and the judgment of first instance of this case was determined on August 3, 2022.

(6) Significant contract
A. The Group entered into the land usage right transfer contract with Hermosa Ecozone Development Corporation in Year 2020. The main contents are as below:
- (A) Transfer object: land usage right of 137,096 square meters at Lot 1 Block 12 in Hermosa Ecozone Industrial Park for the construction of the plant.
- (B) Land usage right period: 75 years.
- (C) Transfer price of land usage right: $410,992 thousand (PHP 685,480 thousand).
B. The Group entered into the land usage right transfer contract with Farms Agribusiness Corporation in Kunshan Economic and Technological Development Zone in Year 2000. The contents of the contract were as below:
- (A) Transfer object: land usage right of 48,688 square meters at Kunshan Economic and Technological Development Zone for the construction of the plant and dormitory.
- (B) Land usage right period: 50 years.
- (C) Transfer price of land usage right: US$828 thousand (RMB 6,842 thousand).

10. SIGNIFICANT DISASTER LOSS: NONE.

11. SIGNIFICANT SUBSEQUENT EVENTS:

The group issuance of the third time of unsecured overseas convertible bonds with par value at an aggregate principal amount at upper limit of 1,200,000 thousand, The issuance period is five years and the coupon rate is 0% have been set on March 9, 2023.

12. OTHERS

(1) Capital risk management

The Group should maintain an adequate capital structure to enable the expansion and enhancement of equipment. Therefore, the Group manages its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, capital asset purchases and debt service requirements associated with its existing operations over the next 12 months.

(2) Financial instruments

A. Financial risk of financial instruments

Financial risk management policies

The Group’s activities expose to a variety of financial risks: market risk (including

192 -

foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To lower down the related financial risk, the Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.

The plans for material treasury activities are reviewed by board of directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Group Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

Significant financial risks and degrees of financial risks

a. Market risk
(a) Foreign exchange rate risk
- The Group’s functional currency is New Taiwan dollars. Many of the Group’s operating activities are denominated in foreign currencies. Consequently, the Group is exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Group raises loans denominated in foreign currency and derivative financial instruments to hedge the currency exposure. These instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements. The derivative financial instruments the Group held with maturities less than 3 months are not qualified for hedge accounting. The net investment in foreign operation is strategic investment. Therefore, the Group does no hedge for it.
(b) Foreign currency risk and sensitivity analysis (including consolidated elimination items and incompletely write-off of exchange rate risk)

December 31, 2022

				December 31, 2022	December 31, 2022	December 31, 2022
Financial assets Monetary item USD:NTD EUR:NTD USD:RMB USD:EUR USD:PHP	Foreign Currency 107,717 13,666 94,832 1,953 1,456	Exchange Rate 30.7100 32.7200 6.9646 0.9386 56.1221	Carrying Value(NTD) 3,307,974 447,161 2,912,276 59,969 44,712	Sensitivity Analysis
				Variation Increase 1% Increase 1% Increase 1% Increase 1% Increase 1%	Profit and Loss Impact 33,080 4,472 29,123 600 447	Equity Impact
						- - - - -

193 -

Financial liabilities

Financial liabilities
Monetary item
USD:NTD	69,369	30.7100	2,130,318	Increase	1%	(21,303)	-
EUR:NTD	636	32.7200	20,804	Increase	1%	(208)	-
USD:RMB	72,180	6.9646	2,216,650	Increase	1%	(22,167)	-
USD:EUR	5,497	0.9386	168,810	Increase	1%	(1,688)	-
USD:PHP	590	56.1221	18,131	Increase	1%	(181)	-

Foreign Currency		December 31, 2021	December 31, 2021	December 31, 2021
	Carrying Value(NTD) 2,858,645 308,348 2,717,882 40,768 2,011,980 16,266 2,852,210 92,242	Sensitivity Analysis Variation Profit and Loss Impact Equity Impact Increase 1% 28,586 - Increase 1% 3,083 - Increase 1% 27,179 - Increase 1% 408 - Increase 1% (20,120) - Increase 1% (163) - Increase 1% (28,522) - Increase 1% (922) -
			Profit and Loss Impact 28,586 3,083 27,179 408 (20,120) (163) (28,522) (922)	Equity Impact
103,275 9,845 98,187 1,473 72,687 519 103,042 3,332				- - - - - - - -

When New Taiwan dollar appreciates and other variation factors stay unchanged, there will be the same but opposite amount of influence as of December 31, 2022 and 2021.

The details of unrealized exchange gain (loss) for monetary items due to material exchange rate fluctuation were as follow:

Year Ended December 31, 2022	Year Ended December 31, 2022	Year Ended December 31, 2022	Year Ended December 31, 2021	Year Ended December 31, 2021	Year Ended December 31, 2021
Foreign Exchange Gain (Loss)			Foreign Exchange Gain (Loss)
Foreign Currency (In thousands)	Exchange Rate	Carrying Value	Foreign Currency (In thousands)	Exchange Rate	Carrying Value
- - (17,505) (94) (1,552)	29.8490 31.3500 6.7261 0.9521 54.4820	(47,841) 14,196 (77,683) (2,939) (850)	- - (2,407) 23 222	27.9980 33.1100 6.4515 0.8456 49.2730	(8,112) (1,844) (10,446) 746 126

194 -

Financial Liabilities

Financial Liabilities
Monetary Item
USD: NTD	-	29.8490	862	-	27.9980	20,186
EUR: NTD	-	31.3500	(208)	-	33.1100	102
USD: RMB	3,090	6.7261	13,713	3,969	6.4515	17,224
USD: EUR	316	0.9521	9,898	(71)	0.8456	(2,365)
USD: PHP	488	54.4820	267	(465)	49.2730	(176)

b. Price risk

The Group is exposed to equity instrument price risk because the investments held by the Group are classified on the consolidated balance sheet as at fair value through profit or loss.

The Group is exposed to beneficiary certificates. If the price of the Group’s equity investments rises (or falls) 1%, the net income resulting from equity instruments at fair value through profit and loss will increase (or decrease) $2,118 thousand and $2,552 thousand for the years ended December 31, 2022 and 2021, respectively.

c. Interest rate risk

The carrying amount of the financial assets and liabilities that exposed to interest rate risk as reporting date was as follow:

Item Fair value interest rate risk: Financial assets Financial liabilities Net Cash flow interest rate risk: Financial assets Financial liabilities Net	CarryingValue	CarryingValue
	December 31,2022	December 31,2021
	$ - (231,376)	$ - (387,973)
	($231,376)	($387,973)
	$2,386,482 (1,694,589)	$1,925,267 (2,509,198)
	$691,893	($583,931)

(a) Sensitivity analysis of fair value interest rate risk instrument

The Group does not classify any fixed-rate instruments as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. In addition, the Group does not designate derivatives (interest rate swap) as hedge instruments under hedge accounting. Therefore, the change of interest rate at reporting date does not have influence on net income and other comprehensive income.

(b) Sensitivity analysis of cash flow interest rate risk instrument
The Group’s financial assets (liabilities) with variable interest rate are those with floating-rate. If interest rate increases 1%, the net income will increase (decrease) $6,919 thousand and ($5,839) thousand for the years ended December 31, 2022 and 2021, respectively.
195 -
B. Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a contract leading to a financial loss to the Group. The Group is exposed to credit risk from operating activities, primarily accounts receivables, and from investing activities, primarily deposit and other financial instruments. Credit risk is managed separately for business related and financial related exposures.
a. Business related credit risk

In order to maintain the credit quality of accounts receivables, the Group has established procedures to monitor and limit exposure to credit risk on trade receivables. Credit evaluation is performed in the consideration of the relevant factors which may affects the customer’s paying ability such as financial condition, external and internal credit scoring, historical experience, and economic conditions.

b. Financial credit risk

The Group’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Group Treasury function. The Group only deals with creditworthy counterparties, banks, and government so that no significant credit risk was identified. In addition, the Group has no financial assets at amortized and investments in debt instruments at fair value through other comprehensive income.

(a) Credit concentration risk
- As of December 31, 2022 and 2021, the Group’s ten largest customers accounted for 36.55% and 33.34% of accounts receivable, respectively. The Group believes the concentration of credit risk is insignificant for the remaining accounts receivable.
- The Group continuously evaluated customers' financial situation. To reduce major credit risk, the Group bought credit guarantee insurance, and asked customers to make payment in advance.
(b) Expected credit loss measurement
- i. Account receivables adopts a simplified approach, please prefer to Note 6(4).
- ii. Identification basis for whether credit risk is significantly increased: None (the Group didn’t hold debt instruments at amortized cost or at FVTOCI).
c. Collaterals and other credit enhancement held to avoid credit risks from financial assets.

The following table shows the maximum exposure to credit risk regarding financial assets recognized in the consolidated balance sheets, pledged collateral, master netting arrangements and other credit enhancement held by the Group:

196 -

Decrease Amount of Credit Risk Maximum	Decrease Amount of Credit Risk Maximum	Decrease Amount of Credit Risk Maximum	Exposure
Collateral Net Settlement Agreement Other Credit Strengthening $ - $ - $ - - - - $ - $ - $ - Decrease Amount of Credit Risk Maximum			Total
			$ - -
			$ -
			Exposure
Collateral $ - - $ -	Net Settlement Agreement $ - - $ -	Other Credit Strengthening $ - - $ -	Total
			$ - -
			$ -

C. Liquidity risk

a. Liquidity risk management:

The objective of liquidity risk management is to ensure the Group has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

b. Financial liabilities with repayment periods:

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.

December 31, 2022

Non-derivative Financial liabilities Within 1 year Short-term loans $1,287,516 Notes payable 136,355 Accounts payable 3,179,265 Other payables 1,077,293 Long-term loans 120,372 (Inclusive of current portion) Lease liabilities 86,658 Guarantee deposits 3,029 Total $5,890,488	Within 1 year	1-2 years	2-5 years	Over 5 years	Contract Cash Flow	Carrying Value
		$ - - 23 989 102,720 67,974 -	$ - - - 465 183,981 87,823 -	$ - - - - - - -	$1,287,516 136,355 3,179,288 1,078,747 407,073 242,455 3,029	$1,287,516 136,355 3,179,288 1,078,747 407,073 231,376 3,029
	$5,890,488	$171,706	$272,269	$ -	$6,334,463	$6,323,384

197 -

Further information for lease liabilities with repayment periods was as follows:

Within 1 year	1-5 years	1-5 years	5-10 years	5-10 years	10-15 years	10-15 years	15-20 years	15-20 years	Over 20 years	Over 20 years	Undiscounted payments
$86,658	$155,797		$	-	$ -		$ -		$	-	$242,455
					December 31, 2021
Within 1	year	1-2 years		2-5 years		Over 5 years		Contract Cash Flow			Carrying Value
		$ - - - 92 70,444 109,358 -		$ - - 1 538 431,333 188,924 -		$ - - - - - 10,886 -		$1,949,632 17 2,925,973 925,704 559,566 412,632 1,026			$1,949,632 17 2,925,973 925,704 559,566 387,973 1,026
$5,962,974		$179,894		$620,796		$10,886		$6,774,550			$6,749,891

Further information for lease liabilities with repayment periods was as follows:

Item Lease liabilities	Within 1 year	1-5 years	5-10 years	10-15 years	15-20 years	Over 20 years	Undiscounted payments
	$103,464	$298,282	$10,886	$ -	$ -	$ -	$412,632

The Group does not expect a maturity analysis of which the cash flows timing would be significantly earlier, or the actual amount would be significantly different.

2. Categories of financial instruments

The carrying value of financial assets and liabilities of the Group as of December 31, 2022 and 2021 was as follow:

2022 and 2021 was as follow:
Financial assets	December 31
	2022	2021
Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Refundable deposits Financial asset at fair value through profit or loss	$2,457,337 3,414,152 140,678 19,773 211,827	$1,912,018 3,459,295 86,756 31,383 255,236

198 -

Financial liabilities

Financial liabilities
Financial liabilities measured at amortized cost
Short-term loans	1,287,516	1,949,632
Notes and accounts payable (including related parties)	3,315,643	2,925,990
Other payables (including related parties)	1,078,747	925,704
Lease liabilities (including current and noncurrent)	231,376	387,973
Long-term loans	407,073	559,566
Guarantee deposits	3,029	1,026

(3) Fair value information
A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3)C. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(10).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
- Level 1: Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices is included in Level 1.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investments in government bonds, corporate bonds, financial debentures, convertible bonds, and most derivative instruments is included in Level 2.
- Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investments in some derivative instruments and equity instruments without active market is included in Level 3.
C. Financial instruments that are not measured at fair value
- The Group considers that the carrying amounts of financial instruments including cash and cash equivalents, receivables, other financial assets, refundable deposits, short-term loans, payables, long-term loans and guarantee deposits that are not measured at fair value approximate their fair values.
D. The related information of fair value by leve1
- The related information of financial instruments measured at fair value on a recurring basis by level is as follows:
199 -

	December 31, 2022	December 31, 2022
Level 1	Level 2	Level 3	Total
$211,827	$ -	$ -	$211,827
	December 31, 2021
Level 1	Level 2	Level 3	Total
$255,236	$ -	$ -	$255,236

E. Valuation techniques of financial instruments valued at fair value
(a) The fair value of financial assets and liabilities traded in an active market is based on the quoted market prices. The quotation, which is published by the main exchange center or that which was deemed to be a public bond by the Treasury Bureau of Center Bank, is included in the fair value of the listed securities instruments and the debt instruments in active markets with open bid.
- A financial instrument is regarded as the quoted price in an active market if the quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency; and if those prices represent the actual and regularly occurring market transactions on an arm’s length basis. Otherwise, the market is deemed to be inactive. Normally, a market is considered to be inactive when the bid-ask spread is increasing; or the bid-ask spread varies significantly; or there has been a significant decline in trading volume.
(b) Except for the above-mentioned financial instruments traded in an active market, the fair value is based on the valuation techniques or the quotation from the counterparty. The fair value refers to the current fair value of the other financial instruments with similar conditions and characteristics, using a discounted cash flow analysis or other valuation techniques, such as calculations of using models (for example, applicable yield curve from Taipei Exchange, or average quoted price on interest rate of commercial paper from Reuters), based on the information acquired from the market at the balance sheet date.
- When the financial instrument of the Group is not traded in an active market, the fair value is determined based on the ratio of the quoted market price of the
200 -

comparative company, its book value per share and its operating situation. Also, the fair value is discounted for its lack of liquidity in the market.

F. There was no transfer between Level 1 and Level 2 for the years ended December 31, 2022 and 2021.
G. Changes in Level 3 instruments: None.
H. Valuation process for Level 3 fair value measurement:
- Valuation process regarding fair value Level 3 is conducted by the Group’s finance department, by which the independence of fair value of financial instruments is verified though use of independent data source in order to make the valuation results close to market conditions. Such valuation results are regularly reviewed so as to ensure their reasonableness.
(4) Transfer of financial assets: None.
(5) Offset of financial assets and liabilities: None.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information
A. Financings provided: Table 1.
B. Endorsement/guarantee provided: Table 2.
C. Marketable securities held: Table 3.
D. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4.
E. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None.
F. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None.
G. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Table 5.
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6.
I. Information about the derivative financial instruments transaction: None.
J. The business relationship between the parent and the subsidiaries and significant transactions between them: Table 7.
(2) Information on investees (before consolidated elimination): Table 8.
(3) Information on investments in Mainland China (before consolidated elimination): Table 9.
(4) Information on major shareholders (including name of the shareholders with shareholding above 5%, shares held and shareholding ratio): Table 10.
201 -

Table 1

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

LOANS PROVIDED TO OTHER PARTIES

DECEMBER 31, 2022

										(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)
No.	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance (Note 4)	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 3)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company (Note 1)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
1	Sunon Electronic (Kunshan) Co.,Ltd.	Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Other receivables - related parties	Yes	13,228 (RMB3,000)	13,228 (RMB3,000)	13,228 (RMB3,000)	4.35%	2	-	Operating capital	-	-	-	164,344	328,688
2	Sunon Electronic (Foshan) Co.,Ltd	Beihai Li Zhun Electronics Co., Ltd.	Other receivables - related parties	Yes	13,228 (RMB3,000)	-	-	-	2	-	Operating capital	-	-	-	28,044	56,088

Note 1: Financing limits for each borrowing company:

(1) For trading partner:

Shall not be higher than the purchase or sales amount of the most recent year.

(2) For short-term financing:

Shall not exceed 10% of the Company’s net worth.

Note 2: The maximum balance of financing activities:

(1) For trading partner:

Shall not exceed 20% of the Company’s net worth

(2) For short-term financing:

Shall not exceed 20% of the Company’s net worth

(3) The policy for loans granted mutually between overseas subsidiaries of which the Company directly or indirectly holds 100% of their voting shares is as follows:

。 The maximum amount for total loan for individual enterprise shall not exceed 50% of its net worth.

Note 3: The code represents the nature of financing activities as follows:
(1) Related to trading partner is “1”.
(2) Short-term financing is “2”.

Note 4: The maximum amount was approved by the Board of Directors’ meeting.

Note 5: The above-mentioned parent-subsidiary transactions have been eliminated.

202 -

Table 2

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

No. (Note 1)	Endorsers	Endorsees	Endorsees	Endorsement Limit for a Single Entity (Note 3)	Highest Balance During the Period	Ending Balance	Actual Amount Drawn	Balance Secured by Collaterals	Ratio of Accumulated Amount to net Worth of the Company	Maximum Amount of Endorsement (Note 4)	Provision of Endorsements by Parent Company to Subsidiary	Provision of Endorsements by Subsidiary to Parent Company	Provision of Endorsements to the Party in Mainland China
		Name of endorsees	Relationship (Note 2)
０	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd	2	1,560,743	NTD 368,520 (USD 12,000)	NTD 184,260 (USD 6,000)	NTD 92,130 (USD 3,000)	-	3.54%	2,601,238	Y	N	Y
０	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Bei Hai) Co., Ltd	2	1,560,743	NTD 644,910 (USD 21,000)	NTD 522,070 (USD 17,000)	NTD245,680 (USD 8,000)	-	10.04%	2,601,238	Y	N	Y
1	Sunon Electronic (Bei Hai) Co., Ltd.	Beihai Li Zhun Electronics Co., Ltd.	1	144,875	NTD 44,094 (RMB10,000)	NTD 44,094 (RMB10,000)	NTD 44,094 (RMB10,000)	-	6.09%	362,187	N	N	Y

Note 1: The description of the number column is as follows:

(1) The issuer is represented in 0.

(2) The investee company is numbered sequentially from Arabic numeral 1.

203 -

Note 2: The following code represents the relationship with the Company :

Trading partner.
Majority owned subsidiary
The Company direct and indirect owns over 50% ownership of the investee company.
A subsidiary jointly owned over 90% by the Company.
Guaranteed by the Company according to the construction contract.
An investee company. The guarantees were provided based on the Company's proportionate share in the investee company.
Joint and several guaranteed by the Company according to the pre-construction contract under Consumer protection Act.

Note 3: Endorsements/guarantees provided by the Company to a single enterprise and a single foreign affiliate shall not exceed 20% and 30% of the Company’s net worth, respectively.

Note 4: The maximum amount of the endorsements/guarantees provided by the Company shall not exceed 50% of the Company’s net worth.

204 -

Table 3

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

DECEMBER 31, 2022

DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022
				(Amounts in Thousands of New Taiwan Dollars)
Investor	Type and Name of Securities	Relationship with the Issuer	General Ledger Account	Ending balance				Remarks
				Number of Shares (inthousands)	Carrying Value	Percentage of Ownership	Fair Value
Sunon Electronic (Bei Hai) Co., Ltd.	Fund - AMHQLXTT	None	Financial assets at fair value through profit or loss	－	176,426	－	176,426
Beihai Li Zhun Electronics Co., Ltd.	Fund - AMHQLXTT	None	Financial assets at fair value through profit or loss	－	35,401	－	35,401

205 -

Table 4

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Relationship with the Investor	Beginning Balance	Beginning Balance	Addition (Note)	Addition (Note)	Disposal	Disposal	Disposal	Disposal	Ending Balance	Ending Balance
					Shares	Amount	Shares	Amount	Shares	Selling Price	Carrying Value	Gain (loss) on Disposal	Shares	Amount
Sunon Electronic (Foshan) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	－	108,899 (RMB25,083)	－	51,158 (RMB10,983)	－	160,783 (RMB36,230)	160,057 (RMB36,066)	726 (RMB164)	－	－
Sunon Electronic (Bei Hai) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	－	146,337 (RMB33,707)	－	868,591 (RMB194,993)	－	1,015,771 (RMB228,890)	1,014,928 (RMB228,700)	843 (RMB190)	－	－
	AMHQLXTT	Financial assets at fair value through profit or loss	Bank of China	None	－	－	－	855,409 (RMB193,011)	－	679,691 (RMB153,159)	678,983 (RMB153,000)	708 (RMB159)		176,426 (RMB40,011)
Beihai Li Zhun Electronics Co., Ltd.	AMHQLXTT	Financial assets at fair value through profit or loss	Bank of China	None	－	－	－	337,172 (RMB76,029)	－	302,060 (RMB68,065)	301,771 (RMB68,000)	289 (RMB65)		35,401 (RMB8,029)

(Note): Including current purchase of $2,107,955 thousand, net profit of financial assets at fair value through profit or loss of $78 thousand and the exchange rate impact of $4,297 thousand.

206 -

Table 5

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST

NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars)

Company Name Related Party	Company Name Related Party	Nature of Relationships	Transaction Details	Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	(Notes/Accounts Payable) Or Receivable	(Notes/Accounts Payable) Or Receivable
			Purchases/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Bei Hai) Co., Ltd.	Subsidiary	Sales	1,053,162	8.95%	3 to 4 months	-	-	665,291	18.71%
	Sunon SAS	Subsidiary	Sales	578,156	4.92%	2 to 3 months	-	-	241,828	6.80%
	Sunon INC	Subsidiary	Sales	677,870	5.76%	2 to 3 months	-	-	182,233	5.12%
Sunon Electronic (Kunshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	Sales	2,975,877	47.75%	2 to 3 months	-	-	740,762	48.50%
Sunon Electronics (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co.,Ltd.	Parent	Sales	5,847,511	94.84%	2 to 3 months	(Note 1)	(Note 1)	479,033	95.08%
	Sunon Electronic (Kunshan) Co., Ltd.	The ultimate parent company	Sales	225,711	3.66%	2 to 3 months	-	-	5,831	1.16%
Beihai Li Zhun Electronics Co., Ltd.	Sunon Electronic Machine Industry Co.,Ltd.	Parent	Sales	145,053	19.42%	2 to 3 months	-	-	7,027	2.44%
	Sunon Electronic (Kunshan) Co.,Ltd.	The ultimate parent company	Sales	415,829	55.68%	2 to 3 months			198,579	68.85%

Note 1: It is the transaction that undertakes the transfer of the Company, so it is based on the order price of the Company, and the payment period is 2-3 months.

Note 2: The above-mentioned parent-subsidiary transactions have been eliminated.

207 -

Table 6

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2022

	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022
	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)
Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover	Overdue		Amounts Received in Subsequent Period(Note1)	Allowance for Bad Debts
					Amount	Action Taken
Sunonwealth Electric Machine Industry Co., Ltd.	SUNON SAS	Subsidiary	241,828	2.95	-	-	NTD 81,900	-
	SUNON INC	Subsidiary	182,233	4.69	-	-	NTD 155,766	-
	Sunson Electronic (Bei Hai) Co., Ltd.	Subsidiary	665,291	3.98	-	-	NTD 408,993	-
Sunon Electronic (Kunshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	NTD 740,762 (RMB 167,994)	4.14	-	-	NTD 522,173 (RMB 118,443)	-
Sunon Electronic (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	NTD 479,033 (RMB 108,639)	11.9	-	-	NTD 811,209 (RMB 183,973)	-
Beihai Li Zhun Electronics Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd.	The ultimate parent company	NTD 198,579 (RMB 45,035)	4.19	-	-	NTD 133,645 (RMB 30,309)	-

Note 1: Amounts collected as of March 9, 2023.

Note 2: The above-mentioned parent-subsidiary transactions have been eliminated.

208 -

Table 7

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Company Name	Counterparty	Nature of Relationship (Note 2)		Intercompany Transactions	Intercompany Transactions
				Account	Amount	Terms (Note 4)	Percentage of Consolidated Net Revenue or Total Assets (Note 3)
0	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon SAS	1	Sales revenues Accounts receivable	578,156 241,828	(Note 4)	4.11% 1.98%
		Sunon INC	1	Sales revenues Accounts receivable	677,870 182,233	(Note 4)	4.82% 1.49%
		Sunon Electronic (Bei Hai) Co., Ltd.	1	Sales revenues Accounts receivable	1,053,162 665,291	(Note 4)	7.49% 5.46%
		Sunon Electronic (Kunshan) Co., Ltd.	1	Sales revenues	91,369	(Note 4)	0.65%
		Bei hai Li Zhun Electronic Co., Ltd.	1	Sales revenues Accounts receivable	68,368 56,230	(Note 4)	0.49% 0.46%
1	Sunon Electronic (Kunshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	2	Sales revenues Accounts receivable	2,975,877 740,762	(Note 4)	21.16% 6.08%
2	Sunon Electronic (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	2	Sales revenues Accounts receivable	5,847,511 479,033	(Note 4)	41.58% 3.93%
		Sunon Electronic (Kunshan) Co., Ltd.	3	Sales revenues	225,711	(Note 4)	1.60%
		Bei hai Li Zhun Electronic Co., Ltd.	3	Sales revenues	92,292	(Note 4)	0.66%

209 -

No. (Note 1)	Company Name	Counterparty	Nature of Relationship (Note 2)		Intercompany Transactions	Intercompany Transactions
				Account	Amount	Terms (Note 4)	Percentage of Consolidated Net Revenue or Total Assets (Note 3)
3	Bei hai Li Zhun Electronic Co., Ltd.	Sunonwealth Electric Machine Industry Co.,Ltd.	2	Sales revenues	145,053	(Note 4)	1.03%
		Sunon Electronic (Kunshan) Co., Ltd.	3	Sales revenues Accounts receivable	415,829 198,579	(Note 4)	2.96% 1.63%
4	SUNON SAS	Sunonwealth Electric Machine Industry Co.,Ltd.	2	Other income	88,361	(Note 5)	0.63%

Note 1: The description of the number column is as follows:

(1) The issuer is represented in 0.
。
(2) The investee company is numbered sequentially from Arabic numeral 1.

Note 2: There are three types of relationships with traders. The type of mark is as follows:

(1) No. 1 represents the transactions from parent company to subsidiary.
(2) No. 2 represents the transactions from subsidiary to parent company.
(3) No. 3 represents the transactions between subsidiaries.

Note 3: The ratio of transaction amount to consolidated revenues or total assets is calculated as follows:

(1) asset/liability items: ending balance to total assets;
(2) profit and loss items: accumulated amount to consolidated revenues.

Note 4: (1) The sales terms between the parent and the subsidiary are equivalent to those of other clients. The collection period is 3-4 months.

(2) The trading terms of the parent-subsidiary processing fee are equivalent to those of other processing companies. The payment period is 2-3 months.
(3) The purchase price between the Company and Beihai Jianzhun is based on the order price of the Company due to the nature of transference trading. The rest transactions are equivalent to other suppliers. The payment term is average 2-4 months for ordinary suppliers and 2-3 months for related parties..
(4) The remaining transactions between the parent and subsidiaries are with no similar transactions. The trading conditions are negotiated by engaging parties.
(5) The terms between subsidiaries are equivalent to those of the parent company.

Note 5: Other income is commission income, ets.

Note 6: The above-mentioned parent-subsidiary transactions have been eliminated.

210 -

Table 8

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS AND OTHER INFORMATION OF INVESTEE COMPANIES (EXCLUDING INVESTEE IN MAINLAND)

DECEMBER 31, 2022

				DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022
				(Amounts in Thousands of New					Taiwan Dollars	and Foreign Currencies)
Investor Company	Investee Company	Location	Main Businesses and Products	Original InvestmentAmount		Balance a	s of December31,2022		Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2022	As of December 31, 2021	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Sunonwealth Electric Machine Industry Co., Ltd.	Successful Century Co., Ltd.	British Virgin Islands	Investments	1,136,933	1,136,933	33,880	100.00%	1,593,644	318,445	304,828	-
	BVI Sunon International Limited	British Virgin Islands	Investments	654,017	654,017	-	100.00%	906,609	351,747	336,724	-
	Sunon INC	USA	Manufacturing and sales of fans	49,140	49,140	150	100.00%	167,976	63,994	70,092	-
	Sunon SAS	France	Manufacturing and sales of fans	16,127	16,127	50	100.00%	57,156	11,798	16,284	-
	Sunonwealth Electric Machine Ind.(H.K.) Ltd.	Hong Kong	Manufacturing and sales of fans	3,428	3,428	800	99.99%	1,903	(37)	(37)	-
	Sunon Corporation	Japan	Manufacturing and sales of fans	4,470	4,470	4	100.00%	1,834	(66)	(66)	-
	Sunon Electronics IndiaPrivateLimited	India	Manufacturing and sales of fans	4,880	4,880	1,100	99.99%	3,820	949	949	-
	Sunon Electronics Philippines Corp.	Philippines	Manufacturing and sales of fans	139,338	34,072	2,494	99.99%	95,236	(34,895)	(34,895)	-
	Sunon Properties Philippines Corp.	Philippines	Real estate development and investment	430,000	430,000	7,068	99.99%	369,937	(5,976)	(5,976)	-
			Total					3,198,115	705,959	687,903

211 -

Investor Company	Investee Company	Location	Main Businesses and Products	Original InvestmentAmount	Original InvestmentAmount	Balance	as of December31,2022	as of December31,2022	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2022	As of December 31, 2021	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Successful Century Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd.	China	Manufacturing and selling of fans	USD 34,431	USD 34,431	-	100.00%	USD 53,515	USD 10,669	USD 10,669	-
Sunon Electronic (Kunshan) Co., Ltd.	Suzhou Shengyixing Heat Transfer Technology Co.,Ltd.	China	Manufacturing and selling of cooling equipment	RMB 3,000	RMB 3,000	-	35.00%	RMB 1,315	RMB (902)	RMB (316)	-
	Beihai Li Zhun Electronics Co.,Ltd.	China	Manufacturing and selling of fans	RMB 20,000	-	-	33.33%	RMB 26,607	RMB 20,046	RMB 5,910	-
BVI Sunon International Limited	Sunon Electronic (Foshan) Co.,Ltd.	China	General investment and trade	RMB 35,911	RMB 78,067	-	100.00%	RMB 63,600	RMB 13,343	RMB 13,343	-
	Sunon Electronic (Bei Hai) Co., Ltd.	China	Manufacturing and selling of new type electronic parts	RMB 63,732	RMB 63,732	-	100.00%	RMB164,279	RMB 65,935	RMB 65,935	-
Sunon Electronic (Foshan) Co., Ltd.	Beihai Li Zhun Electronics Co., Ltd.	China	Manufacturing and selling of fans	RMB 40,000	-	-	66.67%	RMB53,214	RMB 20,046	RMB 14,136	-
Sunon SAS	Sunon Deutschland GmbH	Germany	Sales of fans	EUR 25	EUR 25	-	100.00%	EUR 16	EUR 10	EUR 10	-

Note：The above-mentioned parent-subsidiary transactions have been eliminated.

212 -

Table 9

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA

DECEMBER 31, 2022

(1) Mainland Investment Information:

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Net Income (Loss) of the Investee Company	Percentage of Ownership	Share of Profit/Loss (Note 2)	Carrying Amount as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31, 2022
					Outflow	Inflow
Sunon Electronic (Kunshan) Co., Ltd.	Manufacturing and selling of fans	NTD1,148,456 (USD 34,431) (Note 6)	(2)	NTD1,136,673 (USD 33,880)	-	-	NTD1,136,673 (USD 33,880)	NTD 318,452 (USD 10,669)	100%	NTD 318,452 (USD 10,669) (2).B	NTD 1,643,454 (USD 53,515)	NTD 564,783 (USD 19,454)
Sunon Electronic (Foshan) Co., Ltd.	General investment and trade	NTD 148,772 (USD 4,600) (Note 7)	(2)	NTD 298,898 (USD 9,180)	-	-	NTD 298,898 (USD 9,180)	NTD 59,214 (RMB 13,343)	100%	NTD 59,214 (RMB 13,343) (2).B	NTD 280,440 (RMB 63,600)	NTD 751,056 (USD 25,095)
Sunon Electronic (Bei Hai) Co., Ltd.	Manufacturing and selling of new type electronic parts	NTD 293,115 (USD 10,000)	(2)	NTD 293,115 (USD 10,000)	-	-	NTD 293,115 (USD 10,000)	NTD 292,606 (RMB 65,935)	100%	NTD 292,606 (RMB 65,935) (2).B	NTD 724,374 (RMB 164,279)	NTD 881,343 (USD 29,294)
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Manufacturing and selling of cooling equipment	NTD 32,870 (RMB 7,692)	(3)	- (Note 5)	-	-	- (Note 5)	NTD -4,003 (RMB -902)	35%	NTD -1,401 (RMB -316) (2).A	NTD 5,800 (RMB 1,315)	-
Beihai Li Zhun Electronics Co., Ltd.	Manufacturing and selling of fans	NTD 265,311 (RMB 60,000)	(3)	- (Note 8)	-	-	- (Note 8)	NTD 88,961 (RMB 20,046)	100%	NTD 88,961 (RMB 20,046) (2).B	NTD 351,963 (RMB 79,821)	-

Accumulated Investment in Mainland China as of December 31, 2022			Investment Amounts Authorized by Investment Commission, MOEA				Upper Limit on Investment
NTD 1,136,673 (USD 33,880) NTD 298,898 (USD 9,180) NTD 293,115(USD 10,000)			USD 34,000 USD 10,000 USD 10,000				(Note 4)

213 -
Note : Gain and loss on investment are translated using average exchange rates for the year ended December 31, 2022 (USD:NTD 1:29.849; CYN:NTD
1:4.4378). Additions and ending balance are translated using the exchange rates as at December 31, 2022 (USD:NTD 1:30.71; CYN:NTD 1:4.4094)
Note 1: The investment methods are divided into the following three types:
(1) Investing directly to the Mainland China;
(2) Reinvesting in the Mainland China through third-region companies (please refer to Table 8);
(3) Others.

Note 2: In the current period, the investment profit and loss column is recognized:

(1) If during incorporation with no investment income or loss, it should be indicated;
(2) The basis for recognition of investment gains and losses divided into the following three types, which should be indicated:
A. Audited financial statements by international accounting firms with cooperation relationship with accounting firms in the Republic of China.
B. Audited financial statements by parent company’s auditors.
C. Others.

Note 3: The relevant figures in this form should be listed in New Taiwan Dollars.

(2)The Company’s major transactions during year 2022 directly or indirectly through the third place and the mainland invested company are listed as follows: 1. Loans provided with mainland investment company: refer to Table 1 attached in Note 13.
Endorsements / guarantees with mainland investment company: refer to Table 2 attached in Note 13.
Significant transactions with mainland investment company: refer to Table 5 ~ Table 7 attached in Note 13.
Note 4: Enterprises approved by the Ministry of Economic Affairs as the operational headquarters are not subject to the amount or proportion. Note 5: It is invested by Sunon Electronic (Kunshan) Co., Ltd.

Note 6:The Board of Directors of Sunon Electronic (Kunshan) Co., Ltd., resolved on March 15, 2021 to increase capital out of retained earnings for USD 431 thousand, and completed registration on March 25, 2021.

Note 7: The Board’s of directors of Sunon Electronic (Foshan) Co., Ltd. approved in January 2021 to reduce capital by cash return for USD 13,660 thousand. Issued capital after capital reduction was USD 10,000 thousand. Company registration was completed. The Board of directors of Sunon Electronic (Foshan) Co., Ltd. approved in March 9, 2022 to reduce capital to offset accumulated deficits for USD 5,400 thousand. Issued capital after capital reduction was USD 4,600 thousand. Company registration was completed.
Note 8: It is invested by Sunon Electronic (Foshan) Co., Ltd. and Sunon Electronic (Kunshan) Co., Ltd.
Note 9: The above-mentioned parent-subsidiary transactions have been eliminated.
214 -

Table 10

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

INFORMATION ON MAJOR SHAREHOLDERS

DECEMBER 31, 2022

DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022
(Unit: share)
Shares Name of MajorShareholder	Number of Shares	Percentage of Ownership (%)
Fu-Ing Hong Chen	16,786,000	6.68%
Yo Yuan Investment Corporation	14,825,000	5.90%
Guang Sheng Investment Corporation	12,882,000	5.13%

Note: The information of major shareholders is based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (included treasury shares) by the Company as of December 31, 2022. The share capital in consolidated financial report may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

215 -

14.SEGMENT INFORMATION

(1) General information

For management purpose, the Group’s reportable segments are listed as follows:

A. Great China: Mainly engaging business in Taiwan and China.
B. Europe and North America: Mainly engaging business in America and Europe.
C. Other: Other areas.
(2) Measurement basis
The Group uses profit before income tax as the measurement for segment profit and the basis of performance assessment. There was no material inconsistency between the accounting policies of the operating segment and the accounting policies described in Note 4.

(3) Segment financial information

(In thousands)

Year 2022 Sales from external customers Sales among inter-segment Total sales Operating profit (loss) Segment assets Segment liabilities	Great China $12,630,295 12,277,228 $24,907,523 $2,104,304 $ - $ -	Europe and North America $1,433,013 273 $1,433,286 $103,512 $ - $ -	Other Areas $ - 1,979 $1,979 ($39,985) $ - $ -	Elimination $ - (12,279,480) ($12,279,480) ($741,954) $ - $ -	Total
					$14,063,308 -
					$14,063,308
					$1,425,877
					$12,191,969
					$6,989,492

a. Total reporting segment sales should eliminate inter-segment sales of $12,279,480 thousand.

b. Income tax expense of $336,782 thousand is not included in segment profit (loss).

(In thousands)

		Europe and North
Year 2021	Great China	America	Other Areas		Elimination	Total
Sales from external customers	$12,494,131	$1,067,673	$	-	$ -	$13,561,804
Sales among inter-segment	9,740,189	-		-	(9,740,189)	-
Total sales	$22,234,320	$1,067,673	$	-	($9,740,189)	$13,561,804
Operating profit (loss)	$705,118	$19,390	($12,471)		($126,807)	$585,230
Segment assets	$ -	$ -	$	-	$ -	$11,517,320
Segment liabilities	$ -	$ -	$	-	$ -	$7,150,535

a. Total reporting segment sales should eliminate inter-segment sales of $9,740,189 thousand.

b. Income tax expense of $155,977 thousand is excluded in segment profit (loss).

216 -

(4) Production and service information: No disclosure required for only single industry in the Group.

(5) Geographic information:

the Group. Geographic information:
Asia Europe America Others Total	Year ended December 31
	2022	2021
	$9,821,786 2,893,112 1,191,922 156,488	$10,515,961 2,220,711 729,659 95,473
	$14,063,308	$13,561,804

(6) Major customers: No revenue from any individual customer exceeds 10% of the Group’s total revenues. Therefore, the disclosure is not required.
217 -

V. Parent company only financial statements of the most recent year audited by the CPA

218 -
219 -
220 -
221 -
222 -
223 -

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

December 31,	December 31,	2021
Amount $400,593 23,347 2,367,582 1,182,181 36,310 46,674 925,080 12,687 4,994,454 3,198,115 1,047,782 22,087 85,106 18,038 19,735 3,705 - 4,394,568 $9,389,022 $795,000 131,201 910,989 1,228,537 364,564 26,579 176,251 17,879 10,170 - 88,889 3,750,059	Amount $499,970 32,577 2,072,727 744,501 23,079 27,420 900,370 13,321 4,313,965 2,650,469 1,042,050 31,809 85,489 15,386 14,476 2,714 288 3,842,681 $8,156,646 $620,000 67,046 824,330 1,198,579 240,968 21,677 141,711 14,273 11,393 2 35,222 3,175,201	%
		6.1 0.4 25.5 9.1 0.3 0.3 11.0 0.2
		52.9
		32.5 12.8 0.4 1.0 0.2 0.2 - -
		47.1
		100.0
		7.6 0.8 10.1 14.7 3.0 0.3 1.7 0.2 0.1 - 0.4
		38.9

224 -

December 31,	December 31,	2021
Amount $266,667 121,315 12,410 35,667 427 436,486 4,186,545 2,509,297 366,903 885,799 295,358 1,402,877 (257,757) 5,202,477 $9,389,022	Amount $501,778 36,498 20,912 55,047 425 614,660 3,789,861 2,509,297 366,903 842,984 242,095 700,864 (295,358) 4,366,785 $8,156,646	%
		6.2 0.4 0.3 0.7 -
		7.6
		46.5
		30.7 4.5 10.3 3.0 8.6 (3.6)
		53.5
		100.0

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

225 -

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PANENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	Year Ended December 31	Year Ended December 31
2022	% 100.0 (85.2) 14.8 (0.8) 0.4 (2.9) (2.6) (3.8) - (9.3) 5.1 0.1 1.3 (0.6) (0.1) 5.8 6.5 11.6 (2.3) 9.3 0.1 - 0.1 0.4 (0.1) 0.3 0.4 9.7	2021
Amount $11,762,491 (10,020,961) 1,741,530 (93,389) 41,344 (343,972) (305,386) (448,231) 193 (1,097,396) 592,089 6,824 153,464 (72,469) (13,560) 687,903 762,162 1,354,251 (265,156) 1,089,095 12,640 (2,528) 10,112 47,000 (9,399) 37,601 47,713 1,136,808 $4.34 $4.33		Amount $9,894,052 (8,630,777) 1,263,275 (41,344) 38,932 (289,196) (253,288) (452,699) 250 (994,933) 265,930 2,260 135,210 52,027 (8,372) 107,125 288,250 554,180 (124,927) 429,253 (1,379) 276 (1,103) (66,578) 13,315 (53,263) (54,366) 374,887 $1.71 $1.71	%
			100.0 (87.2)
			12.8 (0.4) 0.4 (2.9) (2.6) (4.6) -
			(10.1)
			2.7
			- 1.4 0.5 (0.1) 1.1
			2.9
			5.6 (1.3)
			4.3
			- -
			-
			(0.7) 0.2
			(0.5)
			(0.5)
			3.8

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

226 -

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

	Unappropriated Special Reserve Earnings 260,275 $ 941,668 $ - (84,903) (18,180) 18,180 - (602,231) - 429,253 - (1,103) - 428,150 242,095 700,864 - (42,815) 53,263 (53,263) - (301,116) - 1,089,095 - 10,112 - 1,099,207 295,358 $ 1,402,877 $ Retained Earnings	Other	Total Equity
		Exchange Differences on Translating Foreign Operations $ (242,095) - - - - (53,263) (53,263) (295,358) - - - - 37,601 37,601 $ (257,757)
Legal Reserve 758,081 $ 84,903 - - - - - 842,984 42,815 - - - - - 885,799 $	Special Reserve 260,275 $ - (18,180) - - - - 242,095 - 53,263 - - - - 295,358 $
			4,594,129 $ - - (602,231) 429,253 (54,366)
			374,887
			4,366,785 - - (301,116) 1,089,095 47,713
			1,136,808
			5,202,477 $

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

227 -

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments : Adjustments to reconcile profit (loss) Depreciation Amortization Expected credit loss Interest expense Interest income Share of profits of subsidiaries, associates and joint ventures Gain on disposal and retirement of property, plant and equipment Transfer of property, plant and equipment to expenses Gain on reversal of impairment loss on non-financial assets Unrealized gross profit on sales to subsidiaries and associates Realized gross profit on sales to subsidiaries and associates Other Total adjustments to reconcile profit (loss) Net changes in operating assets and liabilities Decerase (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in accounts receivable - related parties Decrease (increase) in other receivables Decrease (increase) in other receivables - related parties Decrease (increase) in inventories Decrease (increase) in prepayments Total changes in operating assets Net changes in operating liabilities Increase (decrease) in contract liabilities Increase (decrease) in accounts payable Increase (decrease) in accounts payable - related parties Increase (decrease) in other payables Increase (decrease) in other payables - related parties Increase (decrease) in provisions Increase (decrease) in advance receipts Increase (decrease) in net defined benefit liabilities Total changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments	Year Ended December 31	Year Ended December 31
	2022 1,354,251 $ 64,680 12,514 (193) 13,560 (6,824) (687,903) (1,105) - - 93,389 (41,344) 8,430 (544,796) 9,230 (294,662) (437,680) (12,764) (19,254) (24,710) 429 (779,411) 64,155 86,659 29,958 127,240 4,902 3,606 (2) (6,740) 309,778 (469,633) (1,014,429)	2021
		554,180 $ 65,637 13,818 (250) 8,372 (2,260) (107,125) (16) 47 (4,906) 41,344 (38,932) 14,031
		(10,240)
		(16,257) (276,387) (213,946) (4,327) (8,034) (292,362) (1,367)
		(812,680)
		29,270 51,228 (11,384) (72,328) 6,770 514 (324) (5,723)
		(1,977)
		(814,657)
		(824,897)

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Cash generated from (used in) operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Acquisition of intangible assets Decrease in other financial assets Increase in other non-current assets Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Proceeds from long-term loans Repayment of long-term loans Increase in guarantee deposits Decrase in guarantee deposits Repayments of lease principal Cash dividends paid Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR	Year Ended December 31	Year Ended December 31
	2022 $339,822 6,357 229,245 (13,199) (162,985) 399,240 (105,266) - (68,569) 8,315 (991) (12,809) - - (179,320) 175,000 - (181,444) 2 - (11,739) (301,116) (319,297) (99,377) 499,970 400,593 $	2021
		($270,717) 2,260 420,136 (8,312) (106,561)
		36,806
		(27,962) 381,660 (55,003) 207 (266) (10,445) 12,313 (987)
		299,517
		270,000 17,000 - - (24) (12,482) (602,231)
		(327,737)
		8,586 491,384
		499,970 $

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Stated Otherwise)

1. GENERAL INFORMATION

Sunonwealth Electric Machine Industry Co., Ltd. (collectively as the “Company”) was incorporated in October 1980. The Company engages mainly in the manufacturing and selling of AC/DC brushless fans, electric fans, motors and related components, and micro cooling fans.

The parent company only financial statements are presented in the Company’s functional currency, New Taiwan Dollars.

2. THE AUTHORIZATION OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS

The parent company only financial statements were approved and authorized for issue by the Board of Directors on March 9, 2023.

3. APPLICATION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS

(1) Effect of adoption of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

New standards, interpretations and amendments endorsed by the FSC and effective from 2022 are as follows:

Effective Date Announced New IFRSs by IASB (Note 1) Amendments to IAS 16 “Property, Plant and Equipment: January 1, 2022 (Note 2) Proceeds Before Intended Use”

Amendments to IAS 37 “Onerous Contract - Cost of Fulfilling a Contract”
January 1, 2022 (Note 3)
Amendments to IFRS 3 “Reference to the Conceptual January 1, 2022 (Note 4) Framework”

Annual Improvements to IFRSs 2018-2020

January 1, 2022 (Note 5)

Note 1: Unless stated otherwise, the New IFRSs above are effective for annual periods beginning on or after their respective effective dates.
Note 2: The Group should apply these amendments retrospectively. However, the amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
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Note 3: This amendment applies to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 4: This amendment applies to business combinations whose acquisition date starts in the annual reporting period after January 1, 2022.
Note 5: The amendments to IFRS 9 are applicable to swap or modification of terms of financial liabilities incurred during the annual reporting period beginning on January 1, 2022. The amendment to IAS 41 is applicable to fair value measurement during the annual reporting period beginning after January 1, 2022. The amendments to IFRS 1 are retrospectively applied to the annual reporting period beginning after January 1, 2022.
A. Amendment to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”
The amendment stipulates that the sales price of the project produced in order to make property, plant and equipment reach the necessary location and state that can meet the expected operation mode of the management is not suitable as a cost reduction of the asset. The aforementioned items should be measured in accordance with IAS 2 “Inventory”, and the sales price and cost should be recognized in profit and loss in accordance with the applicable standards.
This amendment is applicable to factories, property and equipment that reach the necessary locations and conditions for the management's expected operation mode after January 1, 2021 (the beginning of the earliest expression period). When the Group initially applies the amendments, it will recognize the cumulative effect of the amendments applied initially as an adjustment to the opening balance of the retained earnings (or other components of equity, as appropriate) at the beginning of the earliest expression period , and re-edit the information during the comparison period.
B. Amendment to IAS 37 “Onerous Contract - Cost of Fulfilling a Contract”
The amendment stipulates that when assessing whether the contract is onerous, “Cost of Fulfilling a Contract” should include the incremental cost of fulfilling a contract (for example, direct labor and raw materials) and the allocation of other costs directly related to fulfilling a contract (for example, the depreciation expenses of property, plant and equipment items used in fulfilling a contract are allocated).
C. Amendment to IFRS 3“Reference to the Conceptual Framework”
The amendment is to update the index of the conceptual framework and add the requirement that the acquirer shall apply IFRIC 21“Levies”to determine whether there is an obligation to pay levies on the acquisition date.
D. Annual Improvements to IFRS Standards 2018-2020
The annual improvement in the IFRS 2018-2020 includes amendments to certain standards. Among them, the amendment of IFRS 9 “Expenses included in the “10%” test for the purpose of derecognize financial liabilities” is to assess whether there is a
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The Company has evaluated the aforementioned standards and interpretations, and there’s no significant effect to the Company’s financial position and performance.

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

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

Effective Date Announced by IASB January 1, 2023 (Note 1) January 1, 2023 (Note 2)

New IFRSs

Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 1) Amendments to IAS 8 “Definition of Accounting January 1, 2023 (Note 2) Estimates”
Amendment to IAS 12 “Deferred Tax Related to Assets January 1, 2023 (Note 3) and Liabilities Arising from a Single Transaction”
Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 3: Except for otherwise specified with for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.
A.Amendments to IAS 1 “Disclosure of Accounting Policies”
- This amendment clarifies that when the scale or nature of a transaction, other event or situation is material, and the relevant accounting policy information is also material to the financial report, the relevant material accounting policy information should be disclosed. Conversely, if the enterprise determines that the scale or nature of a transaction, other event or situation is not significant or the relevant accounting policy information is not significant although it is significant, it does not need to disclose non-significant accounting policy information, but the enterprise prepares accounting the conclusion that the policy information is insignificant does not affect the relevant disclosures required by other IFRS standards.
B. Amendments to IAS 8 “Definition of Accounting Estimates”

This amendment defines accounting estimates as the monetary amount of financial

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C. Amendment to IAS 12 “Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction”

As of the date the accompany consolidated financial statements are authorized for issue, the Company is still evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.

evaluation.
(3) Effect of the IFRSs issued by IASB but not yet endorsed	and issued into effect by FSC:
	Effective Date Announced
NewIFRSs	byIASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution	To be determined by IASB
of Assets between an Investor and its Associate or Joint
Venture”
IFRS 17“Insurance Contracts”	January 1, 2023
Amendments to IFRS 17	January 1, 2023
Amendments to IFRS 17 “Initial application IFRS 17 and	January 1, 2023
IFRS 9– Compare Information”
Amendments to IFRS 16 "Lease liabilities in sale and	January 1, 2024
leaseback"
Amendments toIAS 1 “Classification of Liabilities as	January 1, 2024
Current or Noncurrent”
Amendments to IAS 1 “Non-current Liabilities with	January 1, 2024
Covenants "

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The accompanying parent company only financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation
A.Except for the following items, the accompany parent company only financial statements have been prepared under the historical cost convention:
- a. Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- b. Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B.The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.
C.When preparing the parent company only financial statements, the Company accounts for subsidiaries and associates by using the equity method. In order to agree with the amount of net income, other comprehensive income and equity attributable to shareholders of the parent in the consolidated financial statements, the differences of the accounting treatment between the parent company only basis and the consolidated basis are adjusted under the heading of investments accounted for using equity method, share of profits of subsidiaries and associates and share of other comprehensive income of subsidiaries and associates in the parent company only financial statements.
(3) Foreign currency translation
A. Foreign currency transactions and balance
- a.Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
- b.Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange
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differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

  - c.Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the year except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.

B. Translation of foreign operations
- a.The operating results and financial position of all the Company’s subsidiaries, associates and joint ventures that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- (a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- (b) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- (c) All resulting exchange differences are recognized in other comprehensive income.
- b.When the foreign operation partially disposed of or sold is an associate or a joint venture, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Company retains partial interest in the former foreign associate or joint venture after losing significant influence over the former foreign associate or joint venture, such transactions should be accounted for as disposal of all interest in these foreign operations.
- c.When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Company retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(4) Classification of current and non-current items
A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- a. Assets arising from operating activities that are expected to be realized, or intended to be sold or consumed within the normal operating cycle;
- b. Assets held mainly for trading purposes;
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- c. Assets that are expected to be realized within twelve months from the balance sheet date;
- d. Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- a. Liabilities that are expected to be paid off within the normal operating cycle;
- b. Liabilities held mainly for trading purposes;
- c. Liabilities that are to be paid off within twelve months from the balance sheet date (Even if a long-term refinancing or re-arrangement of payment agreements is completed after the balance sheet date and before the issuance of the financial report is approved, it is classified as current liabilities).
- d. Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(5) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including the original maturity of the time deposits within three months.)
(6) 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 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. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

A. Financial assets

a. Category of financial assets

Financial assets are recognized on a trade date basis.

Financial assets are classified into the following categories: financial assets at FVTPL and financial assets at amortized cost.

(a) Financial asset at FVTPL

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designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

When the financial assets meet one of the following conditions, the Company designates them as measured at fair value through profit and loss at the time of initial recognition:

i. It is a mixed (combined) contract; or
ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or
iii. It is an investment that manages and evaluates its performance on a fair value basis based on written risk management or investment strategies.

(b) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii. The contractual terms of the financial assets give rise on specified date to cash flow that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Expect for the following two cases, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset:

  - 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 shall apply the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

b. Impairment of financial assets
(a) At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable), investments in debt instruments that are measured at FVTOCI, lease receivable and contract assets.
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(b) The Company always recognize lifetime Expected Credit Loss (i.e. ECL) for accounts receivables. For other financial assets, the Company recognize lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equaling to 12-month ECL.
(c) Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. In contrast, lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
(d) The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.
c. Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is meet:

(a) The contractual rights to receive cash flows from the financial asset expire.
(b) The contractual rights to receive cash flows from the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
(c) The Company neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.

On derecognition of financial assets at amortized cost in its entirety, the difference between the financial asset’s carrying amount and the sum of the consideration received is recognized in profit or loss. On derecognition of debt instrument measured at fair value through other comprehensive income, the difference between the financial asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss. On derecognition of equity instruments at fair value through other comprehensive income in its entirety, the cumulative profit and loss will be transferred directly to retained earning without reclassified into profit and loss.

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B. Equity instruments
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. 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.
C. Financial liabilities
a. Subsequent measurement
- Except for the following conditions, all financial liabilities are measured at amortized cost in accordance with the effective interest method:
- (a) Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or is designated as at fair value through profit or loss. Financial liabilities classified as held for trading are mainly for repurchasing in the short term when they occur, and derivatives other than financial guarantee contracts or designated and effective hedging instruments. Financial assets meet one of the following conditions, the Company designates them as measured at fair value through profit and loss at the time of initial recognition:
  - i. It is a mixed (combined) contract; or
  - ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or
  - iii. It is an instrument that manages and evaluates its performance on a fair value basis based on written risk management or investment strategies.

b. Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.
D. Modification of Financial Instruments

When the contractual cash flows of a financial instrument are renegotiated or modified and the renegotiation or modification does not result in the derecognition of that financial instrument, the Company recalculates the gross carrying amount of the financial asset or the amortized cost of the financial liabilities using the original effective interest rate and recognises a modification gain or loss in profit or loss. Any costs or fees incurred adjust the carrying amount of the modified financial instrument and are amortised over the remaining term of the modified financial instrument. If the

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renegotiation or modification results in that the derecognition of that financial instrument is required, then the financial instrument is derecognized accordingly.

If the basis for determining the contractual cash flows of a financial asset or financial liability changes resulting from interest rate benchmark reform and the change is necessary as a direct consequence of interest rate benchmark reform and the new basis for determining the contractual cash flows is economically equivalent to the previous basis, the Company applies the practical expedient to account for that change as a change in effective interest rate. If changes are made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Company first applies the practical expedient aforementioned to the changes required by interest rate benchmark reform, and then applies the applicable requirements to any additional changes to which that practical expedient does not apply.

(7) Inventories

(8) Investments accounted for using the equity method / subsidiaries
A.Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
B.Unrealized gains or losses resulting from inter-company transactions with subsidiaries are eliminated. Necessary adjustments are made to the accounting policies of subsidiaries, to be consistent with the accounting policies of the Company.
C.After acquisition of subsidiaries, the Company recognizes proportionately the share of profit and loss and other comprehensive income in the income statement as part of the Company’s profit and loss and other comprehensive income, respectively. When the share of loss from a subsidiary exceeds the carrying amount of Company’s interest in that subsidiary, the Company continues to recognize its share in the subsidiary’s loss proportionately.
D.As long as the change in shareholding in the subsidiaries does not lead to loss of control, it is to be treated as equity transaction that is to be treated as transactions
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between the owners. The difference between non-controlling equity adjustment amount and the fair value of payment and receipt is to be recognized as equity.

E.When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities. It should reclassify the amount previously recognized in other comprehensive income to profit or loss. When the Company loses control of a subsidiary, gain or loss previously recognized in equity should be reclassified to profit or loss.
F. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements.
(9) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized. For property, plant and equipment under construction, sample produced from testing whether the asset is functioning properly before its intended use are measured at lower of the costs or net realizable value. Proceeds from selling such an item and the cost of the item are recognized in profit or loss.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits
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embodied in the assets have changed significantly, any change is accounted for as a change in accounting estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change.

Service lives estimated as follows:

Buildings:

Main building, 20 to 57 years; Others, 2 to 39 years;

Machinery and equipment, 2 to 10 years; Other equipment, 2 to 24 years; Leasehold improvement, 2 to 22 years;

D. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
(10)Leases/The Company as a lessee

The Company assesses whether the contract is (or includes) a lease at the date of the contract. For a contract that includes a lease component and one or more additional lease or non-lease components, the Company will allocate the consideration to the lease component base on the individual price of each lease component and the aggregated individual price of the non-lease component.

Except for payments for low-value asset and short-term leases which will be recognized as expenses on a straight-line basis, the Company will recognize right-of-use assets and lease liabilities for all leases at the inception of lease.

Right-of-use asset

Lease liability

The lease liability is initially measured by the present value of the lease payment (including fixed payment, substantive fixed payment, change in lease payment

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Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. If the lease period, the evaluation of the purchase choice, the amount of expected to be paid under the residual value guarantee or the change in the index or rate used to determine the lease payment result in a change in the future lease payment, the Company will measure the lease liability and adjust the right to use assets relatively. If the carrying amount has been reduced to Zero, the remaining amount will recognize in the profit and loss. Lease liabilities are presented in a single-line project on the parent company only balance sheet.

(11)Investment properties

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

(12)Intangible assets

Intangible assets are derecognized when disposed of or expected to have no future economic benefits generated through usage or disposal. On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

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(13)Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognized in profit or loss.

(14)Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

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

B.Pensions

a. Defined contribution plans
For defined contribution plans, the contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.
b. Defined benefit plans
(a) Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior period. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is
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determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.

(b) Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
(c) Past service costs are recognized immediately in profit or loss.
C. Employees’ bonus and directors’ remuneration
Employees’ bonus and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ remuneration are different from the actual distributed amounts as resolved by the shareholders at their shareholders’ meeting subsequently, the differences should be recognized based on the accounting for changes in estimates.
D. Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Company recognizes expense when it can no longer withdraw an offer of termination benefits or it recognizes related restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

(16)Share capital and treasury shares

A.Share capital
Ordinary share is classified as equity. The classification of the preferred stock depends on the essence of the agreement. If the preferred stock matches the definition of the financial liability, it is classified as a liability. Otherwise, it is classified as equity. Incremental cost that can be attributed to the issuance of stocks or options is deducted from the capital issued.

B.Treasury Shares

When the Company acquires its outstanding shares, the repurchase considerations (including all directly accountable costs) are recognized under treasury shares and shown as a deduction in equity. Gains on disposal of treasury shares should be recognized under “capital surplus - treasury stock transactions”; losses on disposal of treasury shares should be offset against existing capital reserves arising from similar

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types of treasury shares. If there is insufficient capital surplus to offset the losses, then such losses should be accounted for under retained earnings. The carrying amount of treasury shares should be calculated using the weighted-average method for the purpose of repurchased shares.

When the Company’s treasury shares are retired, the treasury share account should be credited, and the capital surplus - premium on stock account and capital stock account should be debited proportionately according to the share ratio. The carrying value of treasury shares in excess of the sum of its par value and premium on stock should first be offset against capital surplus from similar types of treasury share transactions, and the remainder, if any, debited to retained earnings. The sum of the par value and premium on treasury shares in excess of its carrying value should be credited to capital surplus from similar types of treasury share transactions.

(17)Share-based payment transactions
A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.
B.Cash-settle share-based payment arrangements are the fair value of liabilities undertaken recognized in remuneration costs and liabilities in the vesting period and measured by the fair value of equity instruments offered at each balance sheet date and the settlement date. Any changes are recognized in profit or loss.

(18)Income tax

A.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity, respectively.
B.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the
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unappropriated retained earnings and is recorded as income tax expense in the subsequent year when the stockholders resolve to distribute retain the earnings.

C.Deferred income tax is recognized, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
D.Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
E.Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F.Tax preference given for expenditures incurred on acquisitions of equipment or technology, research and development, employees’ training and equity investments is recorded using the income tax credits accounting.

(19)Revenue Recognition

The Company recognizes revenues based on the following steps:

A. Identifying the contracts;
B. Identifying obligations in the contracts;
C. Determining prices;
D. Allocating prices into the obligations in the contracts;
E. Recognizing revenues while fulfilling the obligations.

The Company identify the contract with the customers, allocate the transaction price to the performance obligations, and recognize revenue when performance obligations are satisfied.

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The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

A. Goods sales

The Company sells fans and other relevant products. Sales revenues are recognized while the control of goods is transferred to the customers since the customers already have the rights to use, set price, take the major responsibility to resell the good and bear the risk of obsoleteness. The Company recognizes revenues and accounts receivable at the point and presents it in net term after deducting sales return, quantity discount and sales allowance.

The Company does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

B. Service revenue

Revenue from technical services is recognized when services are provided that in accordance with the relevant agreements.

(20)Borrowing costs

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All borrowing costs other than those stated above are recognized in profit or loss in the period in which they are incurred.

(21)Government subsidy

Government subsidies are recognized at fair value when it is reasonably certain that the Company will comply with the conditions attached to the government subsidies and will receive such subsidies.

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

The preparation of the Company’s parent company only financial statements is adopting accounting policies based on the following significant judgements, significant accounting estimates and assumptions:

(1) Critical judgements in applying accounting policies
A. Judgment of financial asset classification

The Company assesses the business model of financial assets based on the hierarchy that reflects the Company of financial assets that are jointly managed for specific business purposes. This assessment requires consideration of all relevant evidence, including measures of asset performance, risks affecting performance, and the manner in which the relevant managers are determined, and judgments are required. The Company continues to assess the adequacy of its business model and monitors the financial assets measured by the amortized cost before the maturity date and the debt instrument investments measured at fair value through other comprehensive income. Evaluate whether the disciplinary action has the same goal of business model. If the business model has been changed, the Company delays the adjustment of the subsequent classification of financial assets. The Company reclassifies financial assets in accordance with IFRS 9, and the application will be postponed from the date of reclassification, if the business model has changed.

B. Revenue recognition

The Company follows IFRS 15 to determine if it controls the specified good or service before that good or service is transferred to the customer, and the Company is acting as a principal or an agent in that transaction. When the Company acts as an agent, revenue is recognized on a net basis.

The Company acts as a principal as that it meets one the of following situations:

a. The Company gains control over the goods from the other party before transferring goods to customers.
b. The Company controls the right of providing service by the other party in order to control the ability of the party to provide service to customers.
c. The Company gain control over goods or service from the other party in order to combine with other goods or services to provide specific goods or services to customers.

The indicators (not limited to) which assist making judgment on whether the Company controls the goods or services before transferring goods or services to customers:

a. The Company has primary responsibilities for the goods or services it provides;
b. The Company bears inventory risk before transferring the specific goods or services to customer, or after transferring the control to customer.
c. The Company has the discretion to set prices.
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C. Lease term

In determining the lease term, the Company considers all the facts and circumstances that create an economic incentive to exercise (or not exercise) on option, including any expected change in facts and circumstances from the commencement date until the exercise date of the option Main. Factors considered include the contractual terms and conditions for the period covered by the option, the significant leasehold improvements made (or expected) during the contract period, and the importance of the underlying assets to the Company's operations, etc. The lease term is reassessed if a significant change in circumstance that are within the control of the Company occurs.

(2) Critical accounting estimates and assumptions
A. Revenue Recognition

The Company recognizes records a refund for estimated future returns and other allowances in the same period the related revenue is recorded. Refund for estimated sales returns and other allowances is generally made and adjusted at a specific percentage based on historical experience and any known factors that would significantly affect the allowance, and our management periodically reviews the adequacy of the percentage used.

B. Estimated impairment of financial assets
The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Where the actual future cash inflows are less than expected, a material impairment loss may arise.
C. Process of fair value measurement and evaluation
When the assets and liabilities at fair value with no active market, the Company determines whether to use outside appraisal and using proper evaluation techniques based on related regulation or its own judgment. If the Level 1 input value is not available while evaluating, the Company refers to the analysis of the investee’s financial position and operating outcome, recent trading price, quotes on non-active market of same equity instrument, quotes on active market of similar equity instrument and evaluation multiples of comparable companies. If the future input value is different from expectation, the fair value might change. The Company updates input values quarterly according to the market status in order to monitor if the measurement of fair value is appropriate.
D. Impairment assessment of tangible and intangible assets

The Company assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets

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are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Company strategy might cause material impairment on assets in the future.

E. Impairment assessment on investment using equity method
The Company assesses the impairment of investments accounted for using the equity method whenever triggering events or changes in circumstances indicate that an investment may be impaired and carrying value is not be recoverable. The Company assesses the recoverable amount based on a projected future cash flow and receivable cash dividend of the investees, and disposal-generating future cash flow to ensure the reasonableness of such assumptions.
F. Realisability of deferred income tax assets
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, laws, and regulations might cause material adjustments to deferred income tax assets.
G. Evaluation of inventories
As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value.
H. Calculation of accrued pension obligations
When calculating the present value of defined pension obligations, the Company must apply judgments and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and future salary growth rate. Any changes in these assumptions may have a significantly impact on the carrying amount of defined pension obligations.
I. Lessees’ incremental borrowing rates
At the time of the decision to increase the borrowing rate of the lessee used in the lease payment, the risk-free interest rate and the same currency is used as the reference rate, and the estimated lessee's credit risk sticker and lease specific adjustments (such as asset-specific and secured factors) are taken into account.
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6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Item	December 31
	2022	2021
Cash on hand Cash in banks Total	$489 400,104	$368 499,602
	$400,593	$499,970

A. The financial institutions dealing with the Company are credit worthy, and the Company does transactions with a number of financial institutions to diversify credit risk that are unlikely to be expected to default.
B. The Company had no cash and cash equivalents pledged to others.

(2) Notes receivable, net

Item	December 31	December 31
	2022	2021
At amortized cost Notes receivable Less: Loss allowance Net	$23,371 (24)	$32,601 (24)
	$23,347	$32,577

A. The Company had no notes receivable pledged to others.
B. Please refer to Note 6(3) for the relevant disclosure of loss allowance for notes receivable.

(3) Accounts receivable, net

Item	December 31	December 31
	2022	2021
At amortized cost Accounts receivable Less: Loss allowance Net	$3,556,655 (6,892)	$2,824,313 (7,085)
	$3,549,763	$2,817,228

A. The accounts receivable that were neither past due nor impaired was following the Company’s credit policy determined by reference to the industry characteristics, operation scale and current financial position of the counterparties. The average credit period on sales of goods was 3-4 months.
B. The Company had no account receivable pledged to others.
C. To reduce major credit risk, the Company bought credit guarantee insurance.
D. Please refer to Note 7 for accounts receivable with related parties.
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E. The Company applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for trade receivables (including other receivables). The expected credit losses on trade receivables are estimated by reference to past account aging records of the debtor, an analysis of the debtor’s current financial position, and industrial trend. The company recognizes loss allowance based on the expected credit loss ratio of customers by different risk levels with consideration of factors of historical loss ratios and customer’s financial conditions, competitiveness and business outlook.
F. The Company measures the loss allowance for notes receivable, accounts receivable and other receivables according to the preparation matrix (including related parties):

Expected Credit Loss Rate	Gross Carrying Amount	Loss Allowance (Lifetime ECL)	Amortized Cost
0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5% Expected Credit Loss Rate	$3,321,164 260,593 62,724 18,529	($6,249) (658) (8) (1)	$3,314,915 259,935 62,716 18,528
	$3,663,010	($6,916)	$3,656,094
	Gross Carrying Amount	Loss Allowance (LifetimeECL)	Amortized Cost
0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5%	$2,751,229 142,153 14,029 2	($6,162) (764) (182) (1)	$2,745,067 141,389 13,847 1
	$2,907,413	($7,109)	$2,900,304

G. Movements of the loss allowance for notes receivable and accounts receivable (include related parties) were as follows:

Item	Year Ended December 31	Year Ended December 31
	2022 $7,109 - (193) - $6,916	2021
Beginning balance Add: Provision for impairment Less: Reversal of impairment Less: Write-offs Ending balance		$8,865 - (250) (1,506)
		$7,109

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The above provision has already taken into consideration of collateral or other credit enhancement. The other credit enhancement possessed by above receivables were $807,995 thousand and $629,087 thousand as of December 31, 2022 and 2021, respectively.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery of the receivable. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables which are due. Where recoveries are made, these are recognized in profit or loss. The Company’s trade receivables for offsetting the contract amount were $0 thousand and $1,506 thousand for the years ended December 31, 2022 and 2021, respectively.

H. Please refer to Note 12 for the relevant credit risk management and assessment method.

(4) Inventories and operating costs

) Inventories and operating costs
Item Raw materials Supplies Work in process Finished goods Net	December 31 2022 2021 $284,668 $380,328 2,456 2,766 51,325 30,877 586,631 486,399 $925,080 $900,370
	2022 $284,668 2,456 51,325 586,631 $925,080

A. The related inventory (gain) loss recoginzed as operating cost for the years ended December 31, 2022 and 2021 were as follows:

Item Cost of goods sold Unallocated overheads and labor cost Loss (Gain) on inventory valuation Others Total	Year Ended December 31	Year Ended December 31
	2022 $9,930,571 79,353 9,532 1,505 $10,020,961	2021
		$8,570,227 52,405 (5,939) 14,084
		$8,630,777

B. In 2022 and 2021, the company wrote down the inventory to the net realizable value, or due to the price increase of some products and the digestion of some inventory, the inventory price reduction and sluggish loss (recovery benefit) were recognized as 9,532 thousand and (5,939) thousand respectively.
C. The Company had no inventories pledged to others.
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(5) Investments accounted for using the equity method

Item	December 31	December 31
	2022	2021
Subsidiaries: Successful Century Co., Ltd. BVI Sunon International Limited Sunon INC Sunon SAS Sunonwealth Electric Machine Ind. (H.K.) Ltd. Sunon Corporation Sunon Electronics India Private Limited Sunon Electronics Philippines Corp. Sunon Properties Philippines Corp. Total	$1,593,644 906,609 167,976 57,156 1,903 1,834 3,820 95,236 369,937	$1,272,576 806,318 112,615 51,124 1,750 1,968 2,904 26,683 374,531
	$3,198,115	$2,650,469

A. For more information regarding the subsidiaries of the Company, please refer to Note 4(3) to the Company’s consolidated financial statements of 2022.
B. The investments accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2022 and 2021 were based on the subsidiaries’ financial statements audited by auditors for the same years, except for Sunonwealth Electric Machine Ind.(H.K.) Ltd., Sunon Corporation and Sunon Electronics India Private Limited. The Company considered no material adjustments had these subsidiaries’ financial statements been audited.
C. The Company had no investments accounted for using equity method pledged to others as of December 31, 2022 and 2021.

(6) Property, plant and equipment

) Property, plant and equipment
Item Land Buildings Machinery and equipment Miscellaneous equipment Leasehold improvements Equipment to be inspected and construction in progress Total cost Less: Accumulated depreciation Net	December 31
	2022 $820,335 215,928 185,365 55,842 40,467 15,365 $1,333,302 (285,520) $1,047,782	2021
		$802,249 196,906 165,862 64,466 40,467 22,566
		$1,292,516 (250,466)
		$1,042,050

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Cost	Land	Buildings	Machinery and Equipment	Miscellaneous Equipment	Total
	$802,249 - - 18,086	$196,906 1,435 - 17,587	$165,862 2,365 (10,257) 27,395	$64,466 1,604 (11,657) 1,429	$1,292,516 62,700 (21,914) -
Balance at January 1, 2022 Additions Disposals Reclassification Balance at December 31, 2022 Accumulated depreciation and impairment
	$820,335	$215,928	$185,365	$55,842	$1,333,302
	$ - - - -	$94,971 7,024 - - -	$78,052 31,518 (5,628) (595) (223)	$41,380 12,149 (11,656) 595 -	$250,466 52,561 (17,284) - (223)
Balance at January 1, 2022 Depreciation Disposals Reclassification Disposals Balance at December 31, 2022
	$ -	$101,995	$103,124	$42,468	$285,520

Cost	Land	Buildings	Machinery and Equipment	Miscellaneous Equipment	Leasehold Improvement	Equipment to be Inspected and Construction in Progress	Total
	$804,381 - - - - 70,977 (73,109)	$204,195 4,688 - 2,015 - 15,387 (29,379)	$143,771 4,633 (8,934) 26,392 - - -	$78,796 9,239 (23,920) 351 - - -	$40,467 - - - - - -	$14,460 36,911 - (28,758) (47) - -	$1,286,070 55,471 (32,854) - (47) 86,364 (102,488)
Balance at January 1, 2021 Additions Disposals Reclassification Transfer to expenses Transfer from investment properties Transfer to investment properties Balance at December 31, 2021 Accumulated Depreciation and Impairment
	$802,249	$196,906	$165,862	$64,466	$40,467	$22,566	$1,292,516
	$ - - - - -	$104,884 6,332 - 7,677 (23,922)	$61,027 25,769 (8,744) - -	$47,413 17,886 (23,919) - -	$33,221 2,842 - - -	$ - - - - -	$246,545 52,829 (32,663) 7,677 (23,922)
Balance at January 1, 2021 Depreciation Disposals Transfer from investment properties Transfer to investment properties Balance at December 31, 2021
	$ -	$94,971	$78,052	$41,380	$36,063	$ -	$250,466

A. The details of interest capitalized: None.
B. The Company does not assess the impairment because there is no sign of impairment for the year ended December 31, 2022.
C. Property, plant and equipment pledged for the borrowings: Please refer to Note 8.
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D. Reconciliations of current additions and the acquisition of property, plant and equipment in statement of cash flows were as follows:

Item Acquisition of property, plant and equipment Decrease (increase) in equipment payable Cash paid for acquisition of property, plant and equipment	Year Ended December 31	Year Ended December 31
	2022 $62,700 5,869 $68,569	2021
		$55,471 (468)
		$55,003

(7) Lease agreement

A. Right-of-use assets

			December 31
	Item	2022		2021
Land and building			$49,189	$53,056
Other equipment			10,263	9,950
Total cost			$59,452	$63,006
Less: Accumulated depreciation and impairment			(37,365)	(31,197)
Net			$22,087	$31,809
Cost	Land and Buildings		Other Equipment	Total
Balance at January 1, 2022		$53,056	$9,950	$63,006
Additions		1,212	1,556	2,768
Disposals		(754)	-	(754)
Derecognition		(4,325)	(1,243)	(5,568)
Balance at December 31, 2022		$49,189	$10,263	$59,452
Accumulated Depreciation	and Impairment
Balance at January 1, 2022		$25,887	$5,310	$31,197
Depreciation		8,832	2,904	11,736
Derecognition		(4,325)	(1,243)	(5,568)
Balance at December 31, 2022		$30,394	$6,971	$37,365
Cost	Land and Buildings		Other Equipment	Total
Balance at January 1, 2021		$52,446	$11,020	$63,466
Additions		968	4,264	5,232
Disposals		(328)	(2,316)	(2,644)
Derecognition		(30)	(3,018)	(3,048)
Balance at December 31, 2021		$53,056	$9,950	$63,006

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Accumulated Depreciation and Impairment

Accumulated Depreciation and Impairment
Balance at January 1, 2021 Depreciation Derecognition Balance at December 31, 2021	$16,558 9,359 (30) $25,887	$5,064 3,264 (3,018) $5,310	$21,622 12,623 (3,048)
			$31,197

B. Lease liabilities

. Lease liabilities
Item Carrying amount of lease liabilities - current - noncurrent	December 31 2022 2021 $10,170 $11,393 $12,410 $20,912
		2021
		$11,393
		$20,912

Ranges of discount rates for lease liabilities were as follows:

Item Land and buildings Other equipment	December 31	December 31
	2022 0.63%-0.96% 0.66%-1.09%	2021
		0.63%-0.96% 0.66%-0.96%

Please refer to Note 12(2) for lease liabilities with repayment periods.

C. Material lease-in activities and terms

The Company leased some land and buildings, etc. as factory, with the lease terms of 1 to 8 years. There is no sign of impairment of right-of-use assets as of December 31, 2022. Therefore, the Company didn’t assess the impairment.

D. Sublet: None.

E. Other lease information:

(1) Please refer to Note 6(8) for the agreements to lease investment properties under operating lease.
(2) The current lease relevant expense information was as follows:

Item Short-term lease expense Low-value asset lease expense Variable lease payments that excluded in the measurement of lease liabilities Total cash outflow for leases (Note)	Year Ended December 31 2022 2021 $102 $147 $13 $13 $ - $ - ($11,854) ($12,642)
	2022 $102 $13 $ - ($11,854)

(Note): Including principle paid for current lease liabilities.

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(8) Investment properties, net

(8) Investment properties, net
			December 31
Item			2022	2021
Land			$77,109	$77,109
Buildings			40,062	40,062
Total cost			$117,171	$117,171
Less: Accumulated depreciation impairment	and		(32,065)	(31,682)
Net			$85,106	$85,489
Cost	Land		Buildings	Total
Balance at January 1, 2022	$77,109		$40,062	$117,171
Additions		-	-	-
Balance at December 31, 2022	$77,109		$40,062	$117,171
Accumulated depreciation and
impairment
Balance at January 1, 2022	$	-	$31,682	$31,682
Depreciation		-	383	383
Balance at December 31, 2022	$	-	$32,065	$32,065
Cost	Land		Buildings	Total
Balance at January 1, 2021	$89,384		$26,070	$115,454
Additions		-	-	-
Transfer to Property, plant and equipment	(85,384)		(15,387)	(100,771)
Transfer from property, plant and equipment	73,109		29,379	102,488
Balance at December 31, 2021	$77,109		$40,062	$117,171
Accumulated depreciation and
impairment
Balance at January 1, 2021	$19,313		$15,252	$34,565
Depreciation		-	185	185
Provision for (reversal of ) impairment loss	(4,906)		-	(4,906)
Transfer to Property, plant and equipment	(14,407)		(7,677)	(22,084)
Transfer from property, plant and equipment		-	23,922	23,922
Balance at December 31, 2021	$	-	$31,682	$31,682

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A. Above mentioned investment properties were land and fixtures located at No. 1609, Wu Kuai Cuo Section, Kaohsiung and No. 307, Zheng Chang Section, Kaohsiung and No.93 Anxi Section, Kaohsiung. The land located at No. 1609, Wu Kuai Cuo Section was reclassified to property, plant and equipment in February 2021, No.93 Anxi Section was transferred from real estate, plant and equipment in December 2021.
B. Rent income and direct operating expense of investment properties:

B. Rent income and direct operating expense of	investment properties:	investment properties:
Item Rental income of investment properties Direct operating expense incurred for the investment properties with current rental income	Year Ended December 31
	2022 $1,791 $654	2021
		$331
		$361

C.The maturity analysis of operating lease payments receivable for investment properties was as follows:

follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 years Total	December 31
	2022 $1,921 1,921 1,921 1,750 1,750 - $9,263	2021
		$1,792 171 171 171 - -
		$2,305

D. Investment properties are depreciated on a straight-line basis over their estimated useful life of 10 to 57 years.
E. The fair values of investment properties held by the Company were $160,060 thousand as of December 31, 2022 and 2021, respectively. The fair value determination was performed by independent qualified professional appraisers. The valuation was based on the comparison method, and the fair value was measured by using Level 3 inputs. Please refer to Note 12(3).
F. The accumulated impairment of investment properties were $0 thousand as of December 31, 2022 and 2021, respectively.
G. The Company had no investment properties pledged to others.
260 -

(9)Intangible assets

)Intangible assets
Item Trademark Computer software Total cost Less: Accumulated amortization Net	December 31
	2022 $3,126 28,173 $31,299 (13,261) $18,038	2021
		$3,126 22,171
		$25,297 (9,911)
		$15,386

Cost Balance at January 1, 2022 Additions Derecognition Balance at December 31, 2022 Accumulated amortization and impairment Balance at January 1, 2022 Amortization Derecognition Balance at December 31, 2022 Cost Balance at January 1, 2021 Additions Derecognition Balance at December 31, 2021 Accumulated amortization and impairment Balance at January 1, 2021 Amortization Derecognition Balance at December 31, 2021	Trademark $3,126 - - $3,126 $ - - - $ - Trademark $3,126 - - $3,126 $ - - - $ -	Computer Software $22,171 14,673 (8,671) $28,173 $9,911 12,021 (8,671) $13,261 Computer Software $23,509 11,206 (12,544) $22,171 $8,843 13,612 (12,544) $9,911	Total
			$25,297 14,673 (8,671)
			$31,299
			$9,911 12,021 (8,671)
			$13,261
			Total
			$26,635 11,206 (12,544)
			$25,297
			$8,843 13,612 (12,544)
			$9,911

261 -

(10)Short-term loans

0)Short-term loans
Borrowings Nature Unsecured loan Borrowings Nature Unsecured loan	December	31, 2022
	Amount $795,000 December	Interest
		1.43%-1.76% 31, 2021
	Amount $620,000	Interest
		0.70%-0.78%

(11)Other payables (including other payables - related parties)

Item Accrued payroll Commission payable Service fee payable R & D payable Bonus to employees and remuneration to directors Equipment payable Others Total	December 31	December 31
	2022 $200,158 23,763 8,838 27,850 40,000 4,927 85,607 $391,143	2021
		$105,740 18,583 12,393 26,394 17,000 10,796 71,739
		$262,645

Please refer to Note 7 for other payables with related parties.

(12) Provisions - current

Provisions - current
Item Employee benefits Item Beginning balance Additional provisions recognized Provisions used Ending balance	December 31
	2022 2021 $17,879 $14,273 Year Ended December 31	2021
		$14,273
	2022 $14,273 3,606 - $17,879	2021
		$13,759 514 -
		$14,273

Provision for employee benefits represents vested short-term service leave entitlements accrued.

262 -

(13)Long-term loans and current portion of long-term loans

3)Long-term loans and current portion of	long-term loans	long-term loans
Item Mortgage loans Unsecured loan Less: portion due within one year Long-term loans Interest rate range	December 31
	2022 $ - 355,556 (88,889) $266,667 1.69%	2021
		$220,000 317,000 (35,222)
		$501,778
		0.81%-1.17%

A. Refer to Note 8 for assets pledged as collateral for long-term loans.
B. Under the loan agreement, the Company should maintain specific current ratio, debt ratio, interest coverage and net tangible value based on the Company’s audited semi-annual and annual consolidated financial statements. As of December 31, 2022, the Company had no irregularities.

(14)Pension

A. Defined contribution plans
a. The plan under the Labor Pension Act (the “Act”) is deemed a defined contribution plan. Pursuant to the Company has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts.
b. The total expenses recognized in the statements of comprehensive income were $24,110 thousand and $24,404 thousand, representing the contributions payable to these plans by the Company at the rates specified in the plans for the years ended December 31, 2022 and 2021, respectively.
B. Defined benefit plans
a. The Company has defined benefit plans under the Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The aforementioned companies contribute an amount equal to 6% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. Before the end of each year, the Company assesses the balance in the Funds. If the amount of the balance in the Funds is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The Funds are operated and managed by the government’s designated authorities; as such, the Company does not have any right to intervene in the investments of the Funds.
263 -

b. The amounts arising from the defined benefit obligation of the Company in the balance sheets were as follows:

balance sheets were as follows:
	December 31
Item	2022	2021
Present value of defined benefit obligation	$73,143		$83,090
Fair value of plan assets	(37,476)		(28,043)
Net defined benefit liabilities	$35,667		$55,047

c. Movements of the net defined benefit liabilities were as follows:

Year Ended December 31, 2022	Year Ended December 31, 2022	Year Ended December 31, 2022
Present Value of Defined Benefit Obligation $83,090 - 415 - - $415 $ - - (8,081) (2,281) ($10,362) $ - - $73,143	Fair Value of Plan Assets ($28,043) - (155) - - ($155) ($2,278) - - - ($2,278) ($7,000) - $37,476	Net Defined Benefit Liabilities
		$55,047 - 260 - -
		$260
		($2,278) - (8,081) (2,281)
		$12,640
		($7,000) -
		$35,667

264 -

Year Ended December 31, 2021	Year Ended December 31, 2021	Year Ended December 31, 2021
Present Value of Defined Benefit Obligation $85,430 - 427 - - $427 $ - 2,292 - (617) $1,675 $(5) (4,437) $83,090	Fair Value of Plan Assets ($26,039) - (145) - - ($145) ($296) - - - $(296) $(6,000) 4,437 $(28,043)	Net Defined Benefit Liabilities
		$59,391 - 282 - -
		$282
		($296) 2,292 - (617)
		$1,379
		$(6,005) -
		$55,047

d. Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

(a) Investment risk

(b) Interest risk

A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.

265 -
(c) Salary risk
- The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
e. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

valuation were as follows:
Discount rate Future salary increase rate The weighted average duration of the defined benefit obligation	Measurement Date
	December 31, 2022 1.375% 2% 11.7 years	December 31, 2021
		0.500%
		2%
		12.9 years

(a) Assumptions regarding future mortality experience are set based on actuarial valuation in accordance with the 6th version of Taiwan Standard Ordinary Experience Mortality Tables.
(b) If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

December 31

Item Discount Rate 0.25% higher 0.25% lower Expected rates of salary increase 0.25% higher 0.25% lower	2022 ($2,110) $2,195 $2,140 ($2,068)	2021
		($2,659)
		$2,773
		$2,685
		($2,588)

E. The Company expects to make contributions of $8,040 thousand to the defined benefit plans for the year ended December 31, 2023.
266 -

(15)Share capital

A. Movements in the number of the Company’s ordinary shares outstanding were as follows:

(15)Share capital A. Movements in the number of follows:	the Company’s ordinary shares outstanding were as
Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31 Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31	Year Ended December 31, 2022 Shares (in thousands) Amount 250,930 $2,509,297 - - - - 250,930 $2,509,297 Year Ended December 31, 2021 Shares (in thousands) Amount 250,930 $2,509,297 - - - - 250,930 $2,509,297
	Shares (in thousands) 250,930 - - 250,930

B. As of December 31, 2022, the authorized capital is $5,000,000 thousand, consisting of 500,000 thousand shares.

(16)Capital surplus

(16)Capital surplus
Item From merger From convertible bonds Treasury share transactions Reorganization Differences between considerations and carrying amounts of subsidiaries acquired or disposed Total	December 31
	2022 $18,227 326,015 21,464 1,050 147 $366,903	2021
		$18,227 326,015 21,464 1,050 147
		$366,903

267 -

(17)Retained earnings and dividend policy

(1) In accordance with the dividend policy as set forth in the Company’s Articles of Incorporation, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside a special reserve in accordance with the laws and regulations, and the remainder plus prior year’s unappropriated earnings will be recommended by the board of directors and approved through the shareholders’ meeting.
In consideration of its operation and capital expenditure demands, the Company stipulates appropriate dividend distribution ratio, and proposes for approval in the shareholders’ meeting. However, at least 20% of total dividends should be distributed in cash.
(2) Legal reserve may be used to offset a deficit, and be transferred to capital or distributed in cash. However, legal reserve can be transferred to capital or distributed in cash only when the legal reserve has exceeded 25% of the Company’s paid-in capital.
(3) Special reserve

paid-in capital. (3) Special reserve
Item Reserve for the debit balance of other equities Reserve for first-time adoption of IFRS Total	December 31
	2022 $216,203 79,155 $295,358	2021
		$162,940 79,155
		$242,095

A. While earning distribution, the earnings can be distributed after appropriation of the equivalent amount of the debit balance of the other equities of the balance sheet.
B. Under Rule No.1010012865 issued by the FSC for first-time adoption of IFRS, the special reserve can be reversed while usage, disposal and reclassification of related assets.
(4) The appropriation of 2021 and 2020 earnings had been resolved at the shareholders’ meeting in June 2022 and July 2021, respectively. Details were summarized below:

Item Legal reserve Special reserve Cash dividends Total	Amount 2021 2020 $42,815 $84,903 53,263 (18,180) 301,116 602,231 $397,194 $668,954	Dividends Per Share	Dividends Per Share
	2021 $42,815 53,263 301,116 $397,194	2021 1.2	2020
			2.4

268 -
(5) The appropriation of 2022 earnings had been proposed by the Board of Directors on March 9, 2023. Details were summarized below:

Item Amount Dividends Per Share Legal reserve $109,921 Special reserve (37,601) Cash dividends 652,417 2.6

A. The appropriations of earnings for 2022 are to be presented for approval in the shareholders’ meeting to be held in June 2023.
B. In the event of repurchase of the Company’s shares, transfer, conversion or annulment of treasury stocks, and exercise of employees’ stock options, leading to a change in the number of outstanding shares and a consequent change in dividend yield, it is proposed that the chairman is authorized by the Board of Directors to duly adjust stocks and cash payout rates.
(6) Information on the earnings appropriation proposed by the Company’s Board of Directors and approved by the Company’s shareholders is available on the Market Observation Post System website of the Taiwan Stock Exchange.

(18)Other equity

Item		Exchange Differences on Translation of ForeignOperations Year Ended December 31 2022 2021 ($295,358) ($242,095) 37,601 (53,263) ($257,757) ($295,358) Year Ended December 31 2022 2021 $11,798,157 $9,944,679 (10,750) (27,537) (24,916) (23,090) $11,762,491 $9,894,052
		2022
Beginning balance Exchange differences arising on translation of foreign operations Ending balance )Operating revenues Item Revenue from contracts with customer Total revenues Sales returns Sales discount Net		($295,358) 37,601
		($257,757)
		2022 $11,798,157 (10,750) (24,916) $11,762,491

(19)Operating revenues

A. Explain of contract revenue

Sales of fans and other related goods are mainly to system manufacturers and distributors. Please refer to Note 14 for the main sale areas.

269 -
B. The Company’s timing of revenue recognition is transferred the goods at a certain point of time.
C. Contract balances

The Company recognizes the receivable, contract assets and contract liabilities related to contract revenue as follows:

related to contract revenue as follows:
Item Receivable Contract assets Total Contract liabilities - current	December 31 2022 2021 $3,573,110 $2,849,805 - - $3,573,110 $2,849,805 $131,201 $67,046
	2022 $3,573,110 - $3,573,110 $131,201

a. Significant changes in contract assets and contract liabilities
The changes in the contract assets and contract liabilities primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment, and there is no other significant changes.
b. Amount from previous period’s satisfied performance obligations and beginning contract liabilities recognized in the current period as income were as follows:

Revenue in the currentperiod From beginning contract liabilities From previous period’s satisfied performance obligations	Year Ended December 31 2022 2021 $67,046 $37,776 $ - $ -
	2022 $67,046 $ -

(20)Labor cost, depreciation and amortization

Year ended December 31, 2022	Year ended December 31, 2022	Year ended December 31, 2022
Operating cost	Operating expenses	Total $609,905 48,285 24,370 8,000 48,526 64,680 12,514 $816,280
$46,966 4,773 2,157 - 7,138 19,252 491	$562,939 43,512 22,213 8,000 41,388 45,428 12,023
$80,777	$735,503

270 -

Year ended December 31, 2021

Item Labor cost Salaries Insurance Pension Remuneration to directors Others Depreciation Amortization Total	Operatingcost	Operatingexpenses	Total $485,607 48,857 24,686 4,000 51,337 65,637 13,818 $693,942
	$32,061 4,044 1,888 - 5,424 16,326 360	$453,546 44,813 22,798 4,000 45,913 49,311 13,458
	$60,103	$633,839

Additional information of the number of employees and employee benefits expenses for the years ended December 31, 2022 and 2021 were as follows:

Item The number of employees The number of directors who were not adjunct employees Average employee benefits expenses Average employee salary Changes in adjusting average employee salary Remuneration of supervisors	December 31 2022 2021 602 614 6 5 $1,227 $1,002 $1,023 $797 28.36% (17.24%) - -
	2022 602 6 $1,227 $1,023 28.36% -

The Company’s salary and remuneration policy, including that for directors, managers and employees, is as follows:
(1) Directors’ remuneration:
- A. The Company’s Articles of Incorporation clearly stipulate that not higher than 5% of the annual profit shall be allocated as the director’s remuneration.
- B. The remuneration to the directors shall be determined by the Board of Directors according to their degree of participation in the operation of the Company, the value of their contribution, and the usual standards of the industry.
(2) Managers’ remuneration:

The remuneration to the managers is based on their duties, contributions, the Company’s annual operation performance and in consideration of the Company’s future risks, and is reviewed by the remuneration committee and submitted to the Board of Directors for resolution.

271 -
(3) Employees’ compensation:
- The employees’ compensation includes monthly salary and various bonuses, annual year-end and performance bonuses, as well as remuneration issued by the Company based on annual profitability.
- A. The Company’s various salary awards are issued in accordance with the Company’s various salary and bonus systems.
- B. The Company’s Articles of Incorporation clearly stipulate that not less than 2% of the annual profit is used as employees’ compensation. The distribution method is proposed by the remuneration committee to the Board of Directors and issued after the Board of Directors’ approval.
The Company accrued employees’ compensation and remuneration to directors at the rates not less than 2% and not higher than 5% of net income before income tax, employees’ compensation and remuneration to directors during the period. If there is a change in the amounts after the annual financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.
The employees’ compensation and remuneration to directors for the years ended December 31, 2022 and 2021 had been approved by the Company’s Board of Directors meeting held on March 9, 2023 and March 10, 2022, respectively, and the relevant amounts recognized in the parent company only financial statement were as follows:

Year ended December 31

2022	2022	2021	2021
Employees’ compensation	Remuneration to directors	Employees’ compensation $13,000 13,000 $ -	Remuneration to directors
$32,000 32,000	$8,000 8,000		$4,000 4,000
$ -	$ -		$ -

The above mentioned employees’ compensation will be paid by cash.

Information about the appropriation of employees’ compensation and directors’ remuneration by the Company as proposed by the Board of Directors and resolved by the shareholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.
272 -

(21)Interest income

Interest income
Item Interest on bank deposits Interest on early payment Others Total	Year Ended December 31 2022 2021 $4,522 $193 2,287 2,055 15 12 $6,824 $2,260
		2021
		$193 2,055 12
		$2,260

(22)Other income

Item Rental income Others - patent income Others–sample sales, etc. Others Total	Year Ended December 31	Year Ended December 31
	2022 $1,839 14,548 49,668 87,409 $153,464	2021
		$1,974 11,071 61,151 61,014
		$135,210

(23)Other gains and losses

Item Gain on disposal of property, plant and equipment Net currency exchange gain Gain on reversal of impairment loss of investment properties Others Total	Year Ended December 31 2022 2021 $1,105 $16 (72,482) 53,984 - 4,906 (1,092) (6,879) ($72,469) $52,027
	2022
	$1,105 (72,482) - (1,092)
	($72,469)

(24)Finance costs

Item Interest on loans Interest on lease liabilities Less: capitalized amount for qualified assets Finance costs	Year Ended December 31 2022 2021 $13,341 $8,069 219 303 - - $13,560 $8,372
	2022
	$13,341 219 -
	$13,560

273 -

(25)Income tax expense

A. The major components of tax expense were as follows:

(25)Income tax expense A. The major components of tax expense were as follows:	(25)Income tax expense A. The major components of tax expense were as follows:	(25)Income tax expense A. The major components of tax expense were as follows:
Year Ended December 31 Current income tax 2022 2021 Current tax expense $202,819 $178,302 Undistributed surplus for income tax - 6,547 Adjustments in tax of prior periods (5,294) (21,568) Total $197,525 $163,281 Deferred income tax The origination and reversal of temporary differences $67,631 ($38,354) Total $67,631 ($38,354) lncome tax expense $265,156 $124,927 B. Income tax expense recognized in other comprehensive income was as follows: Year Ended December 31 Item 2022 2021 Share of other comprehensive loss of $9,399 ($13,315) subsidiaries, associates and joint ventures Remeasurement of defined benefit plans 2,528 (276) Total $11,927 ($13,591)
	2022	2021
	$9,399 2,528	($13,315) (276)
	$11,927	($13,591)

C. Reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

profit or loss was as follows:
Item Income before income tax Income tax expense at the statutory rate Tax effect of adjusting items: Loss on investment under equity method Other adjustments Undistributed surplus for income tax Adjustments for prior year’s tax adjustments Deferred income tax expense Temporary differences Income tax expense recognized in profit or loss	Year Ended December 31
	2022	2021
	$1,354,251	$554,180
	$270,850 (137,581) 69,550 - (5,294) 67,631	$110,836 (21,425) 88,891 6,547 (21,568) (38,354)
	$265,156	$124,927

274 -

The applicable tax rate used by the Company is 20%. In addition, the tax rate applicable to unappropriated earning is 5%.

According to the amendments to the Statute for Industrial Innovation announced in July 2019, the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the tax on unappropriated earnings, the Company has already deducted the amount of the unappropriated earnings that has been reinvested as capital expenditures. When calculating the tax on unappropriated earnings by the Company in 2022, already deducted the unappropriated earnings in 2021 amount that has been reinvested in capital expenditure.

D. Deferred tax assets and liabilities from temporary differences

	Year Ended December 31, 2022	Year Ended December 31, 2022
Balance, Beginning of Year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Balance, End of Year
$11,010 612 2,854 -	($1,348) 1,906 722 6,507	($2,528) - - -	$7,134 2,518 3,576 6,507
$14,476	$7,787	($2,528)	$19,735
$34,476 2,022	$77,440 (2,022)	$9,399 -	$121,315 -
$36,498	$75,418	$9,399	$121,315
($22,022)	($67,631)	($11,927)	($101,580)

275 -

	Year Ended December 31, 2021	Year Ended December 31, 2021
Balance, Beginning of Year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Balance, End of Year
$11,879 1,800 2,751	($1,145) (1,188) 103	$276 - -	$11,010 612 2,854
$16,430	($2,230)	$276	$14,476
$81,134 9,263	($33,343) (7,241)	($13,315) -	$34,476 2,022
$90,397	($40,584)	($13,315)	$36,498
($73,967)	$38,354	$13,591	($22,022)

E. Items with no deferred tax assets recognized:

Item Loss on investment under the equity method	December 31	December 31
	2022	2021 $4,940
	$12,945

F. The tax authorities have ratified Company’s income tax returns through Year 2020.

(26)Other comprehensive income (loss)

Year Ended December 31, 2022

Item Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Subtotal	Other Comprehensive Income (Loss), Before Tax $12,640 $12,640	Income Tax Benefit (Expense) ($2,528) ($2,528)	Other Comprehensive Income (Loss), Net of Tax
			$10,112
			$10,112

276 -

$47,000 ($9,399) $37,601 $47,000 ($9,399) $37,601 $59,640 ($11,927) $47,713 Year Ended December 31, 2021	$37,601	$37,601
	$37,601
	$47,713
Income Tax Other Comprehensive Benefit (Expense) Income (Loss), Net of Tax $276 ($1,103) $276 ($1,103) $13,315 ($53,263) $13,315 ($53,263) $13,591 ($54,366) Year Ended December 31	Other Comprehensive Income (Loss), Net of Tax
	($1,103)
	($1,103)
	($53,263)
	($53,263)
	($54,366)
2022 $1,089,095 250,930 $4.34 $1,089,095 - $1,089,095		2021
		$429,253 250,930
		$1.71
		$429,253 -
		$429,253

277 -

Weighted average shares outstanding (in thousands) Impact on employees’compensation (Note) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earnings per share (after tax)	250,930 749 251,679 $4.33	250,930 293
		251,223
		$1.71

(Note) Since the Company offered to settle compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party:

The Company is the ultimate controlling party.

(2) Related party name and category:

Related Party Name Related Party Category Sunon SAS Subsidiary Sunon INC Subsidiary Sunon Electronic (Kunshan) Co., Ltd. Subsidiary Sunon Electronic (Foshan) Co., Ltd. Subsidiary Sunon Electronic (Bei Hai) Co., Ltd. Subsidiary Beihai Li Zhun Electronics Co., Ltd. Subsidiary Sunon Electronics India Private Limited Subsidiary Sunon Electronics Philippines Corp. Subsidiary Sunon Properties Philippines Corp. Subsidiary Guang Sheng Investment Corporation Other related parties Shehng-Yuan Children Development and Other related parties Adult Support Services Center Yo Yuan Investment Corporation Other related parties

(3) Significant transactions with related parties:

A. Sales:

Significant transactions with related parties: A. Sales:
Related PartyCategory Subsidiaries	Year Ended December 31 2022 2021 $2,470,303 $1,691,236
	2022 $2,470,303

278 -

B. Purchase:

B. Purchase:
Related Party Category Subsidiaries: Sunon Electronic (Kunshan) Co., Ltd. Sunon Electronic (Bei Hai) Co., Ltd. Others Total	Year Ended December 31
	2022 $2,980,221 4,456,375 149,087 $7,585,683	2021
		$2,643,036 3,978,937 16,828
		$6,638,801

The above transaction is the purchase price of the finished product which undertakes the transfer of the Company that the pricing is based on the Company’s order taking prices, the purchase prices with the related parties are equivalent to those with ordinary suppliers. Payment terms were 2 to 4 months for other suppliers and 2 to 3 months for related parties. In addition, both parties can agree to advance the payment.

C. Contract assets: None.

D. Contract liabilities: None.

E. Balance of receivables (excluding lending to related parties and contract assets):

Related PartyCategory Accounts receivable: Subsidiaries Sunon Electronics (Bei Hai) Co., Ltd. Sunon SAS Sunon INC Others Total Other receivables: Subsidiaries Sunon Electronic (Kunshan) Co., Ltd. Sunon Electronics (Bei Hai) Co., Ltd. Others Total	December 31	December 31
	2022 $665,291 241,828 182,233 92,829 $1,182,181 $21,855 17,103 7,716 $46,674	2021
		$447,832 150,511 106,991 39,167
		$744,501
		$22,962 - 4,458
		$27,420

279 -

F. Balance of payables (excluding borrowing from related parties):

Related PartyCategory Accounts payables: Subsidiaries Sunon Electronic (Kunshan) Co., Ltd. Sunon Electronic (Bei Hai) Co., Ltd. Others Total Other payables: Subsidiaries	December 31	December 31
	2022 $740,472 479,037 9,028 $1,228,537 $26,579	2021
		$694,922 503,657 -
		$1,198,579
		$21,677

G. Prepayments: None.

H. Property transactions:

a. Disposal of property, plant and equipment

Related PartyCategory Subsidiaries Related PartyCategory Subsidiaries	Disposal Price	Disposal Price
	Year Ended December 31
	2022 2021 $8,315 $207 Disposal Gain	2021
		$207
	Year Ended December 31
	2022 $1,105	2021
		$16

Above mentioned transaction prices were negotiated by both parties, and there were still 8,315 thousand and 0 thousand not received as of December 31, 2022 and 2021. Among them, the disposal (loss) gain is 3,685 thousand, the unrealized (loss) gain of 2,580 thousand has been eliminated, and the remaining 1,105 thousand is listed as Gain on disposal of property, plant and equipment

I. Lessee arrangements:

I. Lessee arrangements:
Item Refundable deposits Lease liabilities - current Lease liabilities - noncurrent	Related PartyCategory Other related parties Other related parties Other related parties	December 31
		2022 $26 $154 $91	2021
			$26
			$91
			$ -

280 -

Item Interest expense	Related PartyCategory Other related parties	Year Ended December 31	Year Ended December 31
		2022 $2	2021
			$1

Above lease terms are based on the contract, and rent is paid monthly.

J. Rent arrangements: None.

K.Financing activities - lending to related parties: None.

L. Financing activities - borrowing from related parties: None.

M. Guarantee for related parties:

M. Guarantee for related parties:
Related PartyCategory Subsidiaries	December 31
	2022 USD 23,000	2021
		USD 33,000

M. Guarantee for related parties: Related PartyCategory Subsidiaries	December 31 2022 2021 USD 23,000 USD 33,000	December 31 2022 2021 USD 23,000 USD 33,000
N. Others: a.Processing fee Related PartyCategory Subsidiaries Sunon Electronic (Foshan) Co., Ltd.	December 31
	2022 $ -	2021
		$77,405

Above mentioned pricing of the related parties are equivalent to those of other processors. Payment term was 2 to 3 months. However, both parties can agree to advance the payment.

b. Guarantee deposits:

b. Guarantee deposits:
Related PartyCategory Shehng-Yuan Children Development and Audit Support Services Centry Other related parties Total c. Miscellaneous income: Related PartyCategory Subsidiaries Sunon Electronic (Kunshan) Co., Ltd. Others Other related parties Total	December 31
	2022 2021 $45 $45 10 10 $55 $55 Year Ended December 31	2021
		$45 10
		$55
	2022 $20,204 29,353 194 $49,751	2021
		$40,021 20,162 194
		$60,377

281 -

Miscellaneous income is mainly samples, rent and patent income. Rent prices are according to the contract agreement and received monthly.

d. Miscellaneous expenses:

d. Miscellaneous expenses:
Related PartyCategory Subsidiaries Sunon SAS Sunon INC Others Total	Year Ended December 31
	2022 $89,489 26,302 12,965 $128,756	2021
		$60,846 30,237 16,484
		$107,567

Miscellaneous expenses are mainly commission fees.

e. Subscription of related parties’ capital increase

Year ended December 31, 2022:

RelatedParty Subsidiaries Sunon Electronics Philippines Corp.	Investment Increase Number of shares (thousand shares) Amount 1,888 $105,266	Investment Increase Number of shares (thousand shares) Amount 1,888 $105,266	ShareholdingRatio	ShareholdingRatio
	Number of shares (thousand shares) 1,888		Before capital increase 99.99%	After capital increase
		$105,266		99.99%

Year ended December 31, 2021:

RelatedParty Subsidiaries Sunon Electronics Philippines Corp.	Investment Increase Number of shares (thousand shares) Amount 504 $27,962	Investment Increase Number of shares (thousand shares) Amount 504 $27,962	ShareholdingRatio	ShareholdingRatio
	Number of shares (thousand shares) 504		Before capital increase 99.99%	After capital increase
		$27,962		99.99%

(4) Key management compensation

Key management compensation
Related PartyCategory Salaries and other short-term employee benefits Post-employment benefits Other long-term employee benefits Termination benefits Share-based payments Total	Year Ended December 31
	2022 $63,698 - - - - $63,698	2021
		$47,978 - - - -
		$47,978

282 -

8. PLEDGED ASSETS

PLEDGED ASSETS
Related PartyCategory Property, plant and equipment (net)	December 31
	2022 $496,858	2021
		$496,858

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

(1) As of December 31, 2022 and 2021, the Company issued guarantee notes for bank loans amounting to $3,247,560 thousand and $3,579,200 thousand, respectively.
(2) The unused letters of credit as of December 31, 2022 and 2021 consisted of the following:

ollowing:
Item L/C Amount	(In thousands) December 31
	2022 USD 3,906	2021
		USD 1,603

(3) As of December 31, 2022 and 2021, the note endorsement for material purchase were as follows:

ollows:
Item Bank acceptance	(In thousands) December 31
	2022 USD 2,114	2021
		USD 1,343

(4) As of December 31, 2022 and 2021, the Company endorsed guarantees for others. Please refer to Note 13 for the information.
(5) Statement of lawsuit

SIAE Microelectronica S.P.A. filed a lawsuit against the Company for the infringement on April 8, 2020. The Company has appointed the attorney to proceed with the litigation, and the result of the first-instance judgment declared by Kaohsiung District Court in Taiwan on June 30, 2022 is that “The plaintiff’s claim and the application of provisional execution are both dismissed. The litigation expenses shall be borne by the plaintiff”. Moreover, the plaintiff did not file an appeal within the statutory period, and the judgment of first instance of this case was determined on August 3, 2022.

10. SIGNIFICANT DISASTER LOSS: NONE.

11. SIGNIFICANT SUBSEQUENT EVENTS: NONE.

The Company issuance of the third time of unsecured overseas convertible bonds with par value at an aggregate principal amount at upper limit of 1,200,000 thousand. The issuance period is five years and the coupon rate is 0% have been set on March 9, 2023.

283 -

12. OTHERS

(1) Capital risk management

The Company should maintain an adequate capital structure to enable the expansion and enhancement of equipment. Therefore, the Company manages its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, capital asset purchases and debt service requirements associated with its existing operations over the next 12 months.

(2) Financial instruments
A. Financial risk of financial instruments

Financial risk management policies

The Company’s activities expose to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To lower down the related financial risk, the Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance.

The plans for material treasury activities are reviewed by board of directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Company Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

Significant financial risks and degrees of financial risks

a. Market risk
(a) Foreign exchange rate risk

The Company’s functional currency is New Taiwan dollars. Many of the Company’s operating activities are denominated in foreign currencies. Consequently, the Company is exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Company raises loans denominated in foreign currency and derivative financial instruments to hedge the currency exposure. These instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements. The derivative financial instruments the Company held with maturities less than 3 months are not qualified for hedge accounting. The net investment in foreign operation is strategic investment. Therefore, the Company does no hedge for it.

284 -

(b) Foreign currency risk and sensitivity analysis

Foreign Currency		December 31, 2022	December 31, 2022
	Carrying Value (NTD)	SensitivityAnalysis
		Profit and Variation Loss Impact	Equity Impact
107,717 13,666 39,427 1,839 57,363 1,747 205,608 850,097 69,369 636 435 Foreign Currency	3,307,974 447,161 9,163 8,110 1,761,620 57,156 906,609 465,173 2,130,318 20,804 101	increase 1% 33,080 increase 1% 4,472 increase 1% 92 increase 1% 81 increase 1% - increase 1% - increase 1% - increase 1% - increase 1% (21,303) increase 1% (208) increase 1% (1) December 31, 2021	- - - - 17,616 572 9,066 4,652 - - -
	Carrying Value (NTD)	SensitivityAnalysis
		Profit and Variation Loss Impact	Equity Impact
103,275 9,845 26,410 624 50,043 1,632 185,723 735,903 72,687 519 1,119	2,858,645 308,348 6,352 2,707 1,385,191 51,124 806,318 401,214 2,011,980 16,266 269	increase 1% 28,586 increase 1% 3,083 increase 1% 64 increase 1% 27 increase 1% - increase 1% - increase 1% - increase 1% - increase 1% (20,120) increase 1% (163) increase 1% (3)	- - - - 13,852 511 8,063 4,012 - - -

285 -

When New Taiwan dollar appreciates and other variation factors stay unchanged, there will be the same but opposite amount of influence as of December 31, 2022 and 2021.

The details of unrealized exchange gain (loss) for monetary items due to material exchange rate fluctuation were as follow:

Year Ended December 31, 2022	Year Ended December 31, 2022	Year Ended December 31, 2022	Year Ended December 31, 2021	Year Ended December 31, 2021	Year Ended December 31, 2021
Foreign Exchange Gain		(Loss)	Foreign Exchange Gain (Loss)
Foreign Currency (In thousands)	Exchange Rate	Carrying Value	Foreign Currency (In thousands)	Exchange Rate	Carrying Value
- - - - - -	29.8490 31.3500 0.2272 4.4378 29.8490 31.3500	(47,840) 14.196 286 123 862 (208)	- - - - - -	27.9980 33.1100 0.2550 4.3398 27.9980 33.1100	(8,112) (1,844) (320) 73 20,186 102

b. Price risk

The Company does not hold financial instrument which measured by fair value.

c. Interest rate risk

The carrying amount of the financial assets and liabilities that exposed to interest rate risk as reporting date was as follow:

Item Fair value interest rate risk: Financial assets Financial liabilities Net Cash flow interest rate risk: Financial assets Financial liabilities Net	CarryingValue	CarryingValue
	December 31, 2022	December 31, 2021
	$ - (22,580)	$ - (32,305)
	($22,580)	($32,305)
	$399,999 (1,150,556)	$499,476 (1,157,000)
	($750,557)	($657,524)

(a) Sensitivity analysis of fair value interest rate risk tools

The Company does not classify any fixed-rate instruments as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. In addition, the Company does not designate derivatives (interest rate swap) as hedge instruments under hedge accounting.

286 -

Therefore, the change of interest rate at reporting date does not have influence on net income and other comprehensive income.

(b) Sensitivity analysis of cash flow interest rate risk tools
- The Company’s financial instruments with variable interest rate are those with floating-rate. If interest rate increases 1%, the net income will decrease ($7,506) thousand and ($6,575) thousand for the years ended December 31, 2022 and 2021, respectively.
B. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a contract leading to a financial loss to the Company. The Company is exposed to credit risk from operating activities, primarily accounts receivables, and from investing activities, primarily deposit and other financial instruments. Credit risk is managed separately for business related and financial related exposures.

a. Business related credit risk
In order to maintain the credit quality of accounts receivables, the Company has established procedures to monitor and limit exposure to credit risk on trade receivables. Credit evaluation is performed in the consideration of the relevant factors which may affects the customer's paying ability such as financial condition, external and internal credit scoring, historical experience, and economic conditions.
b. Financial credit risk
The Company’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Company Treasury function. The Company only deals with creditworthy counterparties, banks, and government so that no significant credit risk was identified. In addition, the Company has no financial assets at amortized and investments in debt instruments at fair value through other comprehensive income.
(a) Credit concentration risk
- As of December 31, 2022 and 2021, the Company’s ten largest customers accounted for 60.54% and 59.06% of accounts receivable, respectively. The Company believes the concentration of credit risk is insignificant for the remaining accounts receivable.
- The Company continuously evaluated customers’ financial situation. To reduce major credit risk, the Company bought credit guarantee insurance, and asked customers to make payment in advance.
(b) Expected credit loss measurement
- i. Account receivables adopts a simplified approach, please prefer to Note 6(3).
287 -
ii. Identification basis for whether credit risk is significantly increased: None (the Company didn’t hold debt instruments at amortized cost or at FVTOCI).
c. Collaterals and other credit enhancement held to avoid credit risks from financial assets:

Related information of the maximum exposure to credit risk regarding financial assets recognized in the parent company only balance sheets, pledged collateral, master netting arrangements and other credit enhancement held by the Company as of December 31, 2022 and 2021: None.

C. Liquidity risk
a. Liquidity risk management:

The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

b. Financial liabilities with repayment periods:

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.

		December 31, 2022	December 31, 2022	December 31, 2022
Within 1 year	1-2 years	2-5 years	Over 5 years	Contract Cash Flow	Carrying Value
	$ - - - - - 88,889 8,173 -	$ - - - - - 177,778 4,312 -	$ - - - - - - - -	$795,000 910,989 1,228,537 364,564 26,579 355,556 22,788 427	$795,000 910,989 1,228,537 364,564 26,579 355,556 22,580 427
$3,425,288	$97,062	$182,090	$ -	$3,704,440	$3,704,232

Further information for lease liabilities with repayment periods was as follows:

Item Lease liabilities	Within 1 year	1-5 years	5-10 years	10-15 years	15-20 years	Over 20 years	Undiscounted payments $22,788
	$10,303	$12,485	$ -	$ -	$ -	$ -

288 -

December 31, 2021


Within 1 year	1-2 years	2-5 years	Over 5 years	Contract Cash Flow	Carrying Value
	$ - - - - - 70,445 9,215 -	$ - - - - - 431,333 11,893 -	$ - - - - - - - -	$620,000 824,330 1,198,579 240,968 21,677 537,000 32,709 425	$620,000 824,330 1,198,579 240,968 21,677 537,000 32,305 425
$2,952,802	$79,660	$443,226	$ -	$3,475,688	$3,475,284

Further information for lease liabilities with repayment periods was as follows:

Item Lease liabilities	Within 1 year	1-5 years	5-10 years	10-15 years	15-20 years	Over 20 years	Undiscounted payments
	$11,601	$21,108	$ -	$ -	$ -	$ -	$32,709

The Company does not expect a maturity analysis of which the cash flows timing would be significantly earlier, or the actual amount would be significantly different.

2. Categories of financial instruments

The carrying values of financial assets and liabilities of the Company as of December 31, 2022 and 2021 were as follow:

Financial assets Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables (including related parties) Refundable deposits Financial liabilities Financial liabilities measured at amortized cost Short-term loans Notes and accounts payable (including related parties) Other payables (including related parties) Lease liabilities (including current and noncurrent) Long-term loans Guarantee deposits	December 31	December 31
	2022 $400,593 3,573,110 82,984 3,705 795,000 2,139,526 391,143 22,580 355,556 427	2021
		$499,970 2,849,805 50,499 2,714 620,000 2,022,909 262,645 32,305 537,000 425

289 -
(3) Fair value information
A. Details of the fair value of the Company’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3)C. Details of the fair value of the Company's investment property measured at cost are provided in Note 6(8).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices is included in Level 1.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investments in government bonds, corporate bonds, financial debentures, convertible bonds, and most derivative instruments is included in Level 2.
- Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investments in some derivative instruments and equity instruments without active market is included in Level 3.
C. Financial instruments that are not measured at fair value
- The Company considers that the carrying amounts of financial instruments including cash and cash equivalents, receivables, other financial assets, refundable deposits, short-term loans, payables, long-term loans and guarantee deposits that are not measured at fair value approximate their fair values.
D. The related information of financial and non-financial instruments measured at fair value by level: None.
E. Valuation techniques of financial instruments valued at fair value
- (a) The fair value of financial assets and liabilities traded in an active market is based on the quoted market prices. The quotation, which is published by the main exchange center or that which was deemed to be a public bond by the Treasury Bureau of Center Bank, is included in the fair value of the listed securities instruments and the debt instruments in active markets with open bid.
  - A financial instrument is regarded as the quoted price in an active market if the quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency; and if those prices represent the actual and regularly occurring market transactions on an arm’s
290 -

length basis. Otherwise, the market is deemed to be inactive. Normally, a market is considered to be inactive when the bid-ask spread is increasing; or the bid-ask spread varies significantly; or there has been a significant decline in trading volume.

(b) Except for the above-mentioned financial instruments traded in an active market, the fair value is based on the valuation techniques or the quotation from the counterparty. The fair value refers to the current fair value of the other financial instruments with similar conditions and characteristics, using a discounted cash flow analysis or other valuation techniques, such as calculations of using models (for example, applicable yield curve from Taipei Exchange, or average quoted price on interest rate of commercial paper from Reuters), based on the information acquired from the market at the balance sheet date.

When the financial instrument of the Company is not traded in an active market, the fair value is determined based on the ratio of the quoted market price of the comparative company, its book value per share and its operating situation. Also, the fair value is discounted for its lack of liquidity in the market.

F. Transfer between Level 1 and Level 2: None.
G. Changes in Level 3 instruments: None.
H. Valuation process for Level 3 fair value measurement:
- Valuation process regarding fair value Level 3 is conducted by the Group’s finance department, by which the independence of fair value of financial instruments is verified though use of independent data source in order to make the valuation results close to market conditions. Such valuation results are regularly reviewed so as to ensure their reasonableness.
(4) Transfer of financial assets: None.
(5) Offset of financial assets and liabilities: None.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information
A. Financings provided: Table 1
B. Endorsement/guarantee provided: Table 2
C. Marketable securities held: Table 3
D. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4
E. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: None
291 -
F. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None
G. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Table 5
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6
I. Information about the derivative financial instruments transaction: None.
(2) Information on investees: Table 7
(3) Information on investments in Mainland China: Table 8
(4) Information on major shareholders (including name of the shareholders with shareholding above 5%, shares held and shareholding ratio): Table 9
292 -

Table 1

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

LOANS PROVIDED TO OTHER PARTIES

DECEMBER 31, 2022

										(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies) Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company (Note 1) Financing Company’s Total Financing Amount Limits (Note 2) Item Value - Operating capital - - - 164,344 328,688 - Operating capital - - - 28,044 56,088	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies) Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company (Note 1) Financing Company’s Total Financing Amount Limits (Note 2) Item Value - Operating capital - - - 164,344 328,688 - Operating capital - - - 28,044 56,088	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies) Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company (Note 1) Financing Company’s Total Financing Amount Limits (Note 2) Item Value - Operating capital - - - 164,344 328,688 - Operating capital - - - 28,044 56,088	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies) Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company (Note 1) Financing Company’s Total Financing Amount Limits (Note 2) Item Value - Operating capital - - - 164,344 328,688 - Operating capital - - - 28,044 56,088	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies) Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company (Note 1) Financing Company’s Total Financing Amount Limits (Note 2) Item Value - Operating capital - - - 164,344 328,688 - Operating capital - - - 28,044 56,088	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies) Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company (Note 1) Financing Company’s Total Financing Amount Limits (Note 2) Item Value - Operating capital - - - 164,344 328,688 - Operating capital - - - 28,044 56,088	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies) Transaction Amounts Reason for Financing Allowance for Bad Debt Collateral Financing Limits for Each Borrowing Company (Note 1) Financing Company’s Total Financing Amount Limits (Note 2) Item Value - Operating capital - - - 164,344 328,688 - Operating capital - - - 28,044 56,088
No.	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance (Note 4)	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 3)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company (Note 1)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
1	Sunon Electronic (Kunshan) Co.,Ltd.	Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Other receivables - related parties	Yes	13,228 (RMB3,000)	13,228 (RMB3,000)	13,228 (RMB3,000)	4.35%	2	-	Operating capital	-	-	-	164,344	328,688
2	Sunon Electronic (Foshan) Co.,Ltd	Beihai Li Zhun Electronics Co., Ltd.	Other receivables - related parties	Yes	13,228 (RMB3,000)	-	-	-	2	-	Operating capital	-	-	-	28,044	56,088

Note 1: Financing limits for each borrowing company:

(1) For trading partner:

Shall not be higher than the purchase or sales amount of the most recent year.

(2) For short-term financing:

Shall not exceed 10% of the Company’s net worth.

Note 2: The maximum balance of financing activitives:

(1) For trading partner :

Shall not exceed 20% of the Company’s net worth

(2) For short-term financing:

Shall not exceed 20% of the Company’s net worth

(3) The policy for loans granted mutually between overseas subsidiaries of which the Company directly or indirectly holds 100% of their voting shares is as follows:

。 The maximum amount for total loan for individual enterprise shall not exceed 50% of its net worth.

Note 3: The code represents the nature of financing activities as follows:

(1) Related to trading partner is “1”.
(2) Short-term financing is “2”.

Note 4: The maximum amount was approved by the Board of Directors’ meeting.

293 -

Table 2

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

ENDORSEMENTS/GUARANTEES PROVIDED

DECEMBER 31, 2022

				DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022
									(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)
No. (Note 1)	Endorsers	Endorsees		Endorsement Limit for a Single Entity (Note 3)	Highest Balance During the Period	Ending Balance	Actual Amount Drawn	Balance Secured by Collaterals	Ratio of Accumulated Amount to net Worth of the Company	Maximum Amount of Endorsement (Note 4)	Provision of Endorsements by Parent Company to Subsidiary	Provision of Endorsements by Subsidiary to Parent Company	Provision of Endorsements to the Party in Mainland China
		Name of endorsees	Relationship (Note 2)
`０`	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd	2	1,560,743	NTD 368,520 (USD 12,000)	NTD 184,260 (USD 6,000)	NTD 92,130 (USD 3,000)	-	3.54%	2,601,238	Y	N	Y
`０`	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Bei Hai) Co., Ltd	2	1,560,743	NTD 644,910 (USD 21,000)	NTD 522,070 (USD 17,000)	NTD245,680 (USD 8,000)	-	10.04%	2,601,238	Y	N	Y
1	Sunon Electronic (Bei Hai) Co., Ltd.	Beihai Li Zhun Electronic Co.,Ltd	1	144,875	NTD 44,094 (RMB10,000)	NTD 44,094 (RMB10,000)	NTD 44,094 (RMB10,000)	-	6.09%	362,187	N	N	Y

Note 1: The description of the number column is as follows:

(1) The issuer is represented in 0.

(2) The investee company is numbered sequentially from Arabic numeral 1.

294 -

Note 2: The following code represents the relationship with the Company :

Trading partner.
Majority owned subsidiary
The Company direct and indirect owns over 50% ownership of the investee company.
A subsidiary jointly owned over 90% by the Company.
Guaranteed by the Company according to the construction contract.
An investee company. The guarantees were provided based on the Company's proportionate share in the investee company.
Joint and several guaranteed by the Company according to the pre-construction contract under Consumer protection Act.

Note 3: Endorsements/guarantees provided by the Company to a single enterprise and a single foreign affiliate shall not exceed 20% and 30% of the Company’s net worth, respectively.

Note 4: The maximum amount of the endorsements/guarantees provided by the Company shall not exceed 50% of the Company’s net worth.

295 -

Table 3

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

MARKETABLE SECURITIES HELD

DECEMBER 31, 2022

					(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Investor	Type and Name of Securities	Relationship with the Issuer	General Ledger Account		Endingbalance			Remarks
				Number of Shares (in thousands)	Carrying Value	Percentage of Ownership	Fair Value
Sunon Electronic Bei Hai Co., Ltd.	Fund - AMHQLXTT	None	Financial assets at fair value through profit or loss	`－`	176,426	`－`	176,426
Beihai Li Zhun Electronics Co., Ltd.	Fund - AMHQLXTT	None	Financial assets at fair value through profit or loss	`－`	35,401	`－`	35,401

296 -

Table 4

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST

NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2022

					DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022
					(Amounts in					Thousands of New Taiwan Dollars and Foreign Currencies)
Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Relationship with the Investor	BeginningBalance		Addition(Note)			Disposal			EndingBalance
					Shares	Amount	Shares	Amount	Shares	Selling Price	Carrying Value	Gain (loss) on Disposal	Shares	Amount
Sunon Electronic (Foshan) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	`－`	108,899 (RMB 25,083)	`－`	51,158 (RMB 10,983)	`－`	160,783 (RMB 36,203)	160,057 (RMB 36,066)	726 (RMB 164)	`－`	`－`
Sunon Electronic (Bei Hai) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	`－`	146,337 (RMB 33,707)	`－`	868,591 (RMB194,993)	`－`	1,015,771 (RMB228,890)	1,014,928 (RMB228,700)	843 (RMB 190)	`－`	`－`
	AMHQLXTT	Financial assets at fair value through profit or loss	Bank of China	None	`－`	`－`	`－`	855,409 (RMB193,011)	`－`	679,691 (RMB153,159)	678,983 (RMB153,000)	708 (RMB 159)	`－`	176,426 (RMB 40,011)
Beihai Li Zhun Electronics Co., Ltd.	AMHQLXTT	Financial assets at fair value through profit or loss	Bank of China	None	`－`	`－`	`－`	337,172 (RMB 76,029)	`－`	302,060 (RMB 68,065)	301,771 (RMB 68,000)	289 (RMB 65)	`－`	35,401 (RMB 8,029)

(Note): Including current purchase of $2,107,955 thousand, net profit of financial assets at fair value through profit or loss of $78 thousand and the exchange rate impact of $4,297 thousand.

297 -

Table 5

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST

NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars)

Company Name Related Party	Company Name Related Party	Nature of Relationships		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	(Notes/Accounts Payable) Or Receivable	(Notes/Accounts Payable) Or Receivable
			Purchases/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Bei Hai)Co.,Ltd.	Subsidiary	Sales	1,053,162	8.95%	3 to 4 months	-	-	665,291	18.71%
	Sunon SAS	Subsidiary	Sales	578,156	4.92%	2 to 3 months	-	-	241,828	6.80%
	Sunon INC	Subsidiary	Sales	677,870	5.76%	2 to 3 months	-	-	182,233	5.12%
Sunon Electronic (Kunshan) Co.,Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	Sales	2,975,877	47.75%	2 to 3 months	-	-	740,762	48.50%
Sunon Electronics (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	Sales	5,847,511	94.84%	2 to 3 months	(Note )	(Note )	479,033	95.08%
	Sunon Electronic (Kunshan) Co.,Ltd.	The ultimate parent company	Sales	225,711	3.66%	2 to 3 months	-	-	5,831	1.16%
Beihai Li Zhun Electronics Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	Sales	145,053	19.42%	2 to 3 months	-	-	7,027	2.44%
	Sunon Electronic (Kunshan) Co.,Ltd.	The ultimate parent company	Sales	415,829	55.68%	2 to 3 months			198,579	68.85%

Note: It is the transaction that undertakes the transfer of the Company, so it is based on the order price of the Company, and the payment period is 2-3 months.

298 -

Table 6

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2022

				(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)
Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover	Overdue		Amounts Received in Subsequent Period (Note)	Allowance for Bad Debts
					Amount	Action Taken
Sunonwealth Electric Machine Industry Co., Ltd.	SUNON SAS	Subsidiary	241,828	2.95	-	-	NTD 81,900	-
	SUNON INC	Subsidiary	182,233	4.69	-	-	NTD 155,766	-
	Sunson Electronic (Bei Hai) Co., Ltd.	Subsidiary	665,291	3.98	-	-	NTD 408,993	-
Sunon Electronic (Kunshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	NTD 740,762 (RMB 167,994)	4.14	-	-	NTD 522,173 (RMB 118,443)	-
Sunon Electronic (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	Parent	NTD 479,033 (RMB 108,639)	11.9	-	-	NTD 811,209 (RMB 183,973)	-
Beihai Li Zhun Electronics Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd.	The ultimate parent company	NTD 198,579 (RMB 45,035)	4.19	-	-	NTD 133,645 (RMB 30,309)	-

Note: Amounts collected as of March 9, 2023.

299 -

Table 7

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

NAMES, LOCATIONS AND OTHER INFORMATION OF INVESTEE COMPANIES (EXCLUDING INVESTEE IN MAINLAND)

DECEMBER 31, 2022

				DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022	DECEMBER 31, 2022
				(Amounts in Thousands of New Taiwan Dollars						and Foreign Currencies)
Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		Balance a	s of December 31,2022		Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2022	As of December 31, 2021	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Sunonwealth Electric Machine Industry Co., Ltd.	Successful Century Co., Ltd.	British Virgin Islands	Investments	1,136,933	1,136,933	33,880	100.00%	1,593,644	318,445	304,828	-
	BVI Sunon International Limited	British Virgin Islands	Investments	654,017	654,017	-	100.00%	906,609	351,747	336,724	-
	Sunon INC	USA	Manufacturing and sales of fans	49,140	49,140	150	100.00%	167,976	63,994	70,092	-
	Sunon SAS	France	Manufacturing and sales of fans	16,127	16,127	50	100.00%	57,156	11,798	16,284	-
	Sunonwealth Electric Machine Ind.(H.K.) Ltd.	Hong Kong	Manufacturing and sales of fans	3,428	3,428	800	99.99%	1,903	(37)	(37)	-
	Sunon Corporation	Japan	Manufacturing and sales of fans	4,470	4,470	4	100.00%	1,834	(66)	(66)	-
	Sunon Electronics India Private Limited	India	Manufacturing and sales of fans	4,880	4,880	1,100	99.99%	3,820	949	949	-
	Sunon Electronics Philippines Corp.	Philippines	Manufacturing and sales of fans	139,338	34,072	2,494	99.99%	95,236	(34,895)	(34,895)	-
	Sunon Properties Philippines Corp.	Philippines	Real estate development and investment	430,000	430,000	7,068	99.99%	369,937	(5,976)	(5,976)	-
			Total					3,198,115	705,959	687,903

300 -

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance	as of December 31, 2022	as of December 31, 2022	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2022	As of December 31, 2021	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Successful Century Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd.	China	Manufacturing and selling of fans	USD 34,431	USD 34,431	-	100.00%	USD 53,515	USD 10,669	USD 10,669	-
Sunon Electronic (Kunshan) Co., Ltd.	Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	China	Manufacturing and selling of cooling equipment	RMB 3,000	RMB 3,000	-	35.00%	RMB 1,315	RMB (902)	RMB (316)	-
	Beihai Li Zhun Electronics Co., Ltd.	China	Manufacturing and selling of fans	RMB 20,000	-	-	33.33%	RMB 26,607	RMB 20,046	RMB 5,910	-
BVI Sunon International Limited	Sunon Electronic (Foshan)Co.,Ltd.	China	General investment and trade	RMB 35,911	RMB 78,067	-	100.00%	RMB 63,600	RMB 13,343	RMB 13,343	-
	Sunon Electronic (Bei Hai) Co., Ltd.	China	Manufacturing and selling of new type electronicparts	RMB 63,732	RMB 63,732	-	100.00%	RMB 164,279	RMB 65,935	RMB 65,935	-
SunonElectronic (Foshan) Co., Ltd.	Beihai Li Zhun Electronics Co., Ltd.	China	Manufacturing and selling of fans	RMB 40,000	-	-	66.67%	RMB 53,214	RMB 20,046	RMB 14,136	-
Sunon SAS	Sunon Deutschland GmbH	Germany	Sales of fans	EUR 25	EUR 25	-	100.00%	EUR 16	EUR 10	EUR 10	-

Note：The amount is the share of profits or losses using the equity method recognized as the shareholding ration in the registered capital in the articles of association of the investment company.

301 -

Table 8

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

INFORMATION ON INVESTMENT IN MAINLAND CHINA

DECEMBER 31, 2022

`(1)` Mainland Investment Information:

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2021	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Net Income (Loss) of the Investee Company	Percentage of Ownership	Share of Profit/Loss (Note 2)	Carrying Amount as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31, 2022
					Outflow	Inflow
Sunon Electronic (Kunshan) Co., Ltd.	Manufacturing and selling of fans	NTD1,148,456 (USD 34,431) (Note 6)	(2)	NTD1,136,673 (USD 33,880)	-	-	NTD1,136,673 (USD 33,880)	NTD 318,452 (USD 10,669)	100%	NTD 318,452 (USD 10,669) (2).B	NTD 1,643,454 (USD 53,515)	NTD 564,783 (USD 19,454)
Sunon Electronic (Foshan) Co., Ltd.	General investment and trade	NTD 148,772 (USD 4,600) (Note 7)	(2)	NTD 298,898 (USD 9,180)	-	-	NTD 298,898 (USD 9,180)	NTD 59,214 (RMB 13,343)	100%	NTD 59,214 (RMB 13,343) (2).B	NTD 280,440 (RMB 63,600)	NTD 751,056 (USD 25,095)
Sunon Electronic (Bei Hai) Co., Ltd.	Manufacturing and selling of new type electronic parts	NTD 293,115 (USD 10,000)	(2)	NTD 293,115 (USD 10,000)	-	-	NTD 293,115 (USD 10,000)	NTD 292,606 (RMB 65,935)	100%	NTD 292,606 (RMB 65,935) (2).B	NTD 724,374 (RMB 164,279)	NTD 881,343 (USD 29,294)
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Manufacturing and selling of cooling equipment	NTD 32,870 (RMB 7,692)	(3)	- (Note 5)	-	-	- (Note 5)	NTD -4,003 (RMB -902)	35%	NTD -1,401 (RMB -316) (2).A	NTD 5,800 (RMB 1,315)	-
Beihai Li Zhun Electronics Co., Ltd.	Manufacturing and selling of fans	NTD 265,311 (RMB 60,000)	(3)	- (Note 8)	-	-	- (Note 8)	NTD 88,961 (RMB 20,046)	100%	NTD 88,961 (RMB 20,046) (2).B	NTD 351,963 (RMB 79,821)	-

Accumulated Investment in Mainland China as of December 31, 2022			Investment Amounts Authorized by Investment Commission, MOEA				Upper Limit on Investment
NTD 1,136,673 (USD 33,880) NTD 298,898 (USD 9,180) NTD 293,115(USD 10,000)			USD 34,000 USD 10,000 USD 10,000				(Note 4)

302 -

Note : Gain and loss on investment are translated using average exchange rates for the year ended December 31, 2022 (USD:NTD 1:29.849; CYN:NTD

1:4.4378). Additions and ending balance are translated using the exchange rates as at December 31, 2022 (USD:NTD 1:30.71; CYN:NTD 1:4.4094)
Note 1: The investment methods are divided into the following three types:
(1) Investing directly to the Mainland China;
(2) Reinvesting in the Mainland China through third-region companies (please refer to Table 7);
(3) Others.

Note 2: In the current period, the investment profit and loss column is recognized:

(1) If during incorporation with no investment income or loss, it should be indicated;
(2) The basis for recognition of investment gains and losses divided into the following three types, which should be indicated:
A. Audited financial statements by international accounting firms with cooperation relationship with accounting firms in the Republic of China.
B. Audited financial statements by parent company’s auditors.
C. Others.

Note 3: The relevant figures in this form should be listed in New Taiwan Dollars.

(2)The Company’s major transactions during year 2022 directly or indirectly through the third place and the mainland invested company are listed as follows: 1. Loans provided with mainland investment company: refer to Table 1 attached in Note 13.
Endorsements / guarantees with mainland investment company: refer to Table 2 attached in Note 13.
Significant transactions with mainland investment company: refer to Table 5 and Table 6 attached in Note 13.
Note 4: Enterprises approved by the Ministry of Economic Affairs as the operational headquarters are not subject to the amount or proportion. Note 5: It is invested by Sunon Electronic (Kunshan) Co., Ltd.
Note 6: The Board of Directors of Sunon Electronic (Kunshan) Co., Ltd., resolved on March 15, 2021 to increase capital out of retained earnings for USD 431 thousand, and completed registration on March 25, 2021.
Note 7: The Board’s of directors of Sunon Electronic (Foshan) Co., Ltd. approved in January 2021 to reduce capital by cash return for USD 13,660 thousand. Issued capital after capital reduction was USD 10,000 thousand. Company registration was completed. The Board of directors of Sunon Electronic (Foshan) Co., Ltd. approved in March 9, 2022 to reduce capital to offset accumulated deficits for USD 5,400 thousand. Issued capital after capital reduction was USD 4,600 thousand. Company registration was completed.
Note 8: It is invested by Sunon Electronic (Foshan) Co., Ltd. and Sunon Electronic (Kunshan) Co., Ltd.
303 -

Table 9

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

INFORMATION ON MAJOR SHAREHOLDERS

DECEMBER 31, 2022

	(Unit: share)	(Unit: share)
Shares Name of Major Shareholder	Number of Shares	Percentage of Ownership (%)
Fu-Ing Hong Chen	16,786,000	6.68%
Yo Yuan Investment Corporation	14,825,000	5.90%
Guang Sheng Investment Corporation	12,882,000	5.13%

304 -

14. SEGMENT INFORMATION

The Company has provided the operating segments disclosure in the consolidated financial statements.

305 -
VI. Impact on the Company's financial status due to financial difficulties experienced by the company and its affiliated companies in the most recent year and as of the publication date of the Annual Report: None.
306 -

G. Review, Analysis, and Risks of Financial Conditions and Performance

I. Financial conditions

Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans

Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans
Unit:thousand NT$; %
Year Item	December 31, 2021	December 31, 2022	Change (amount)	Percentage of change %
Current assets	8,390,570	9,025,590	635,020	7.57
Property, plant and equipment	2,059,278	2,273,414	214,136	10.40
Intangible assets	24,486	27,053	2,567	10.48
Non-current assets	3,126,750	3,166,379	39,629	1.27
Total assets	11,517,320	12,191,969	674,649	5.86
Current liabilities	6,239,237	6,322,715	83,478	1.34
Non-current liabilities	911,298	666,777	-244,521	-26.83
Total liabilities	7,150,535	6,989,492	-161,043	-2.25
Share capital	2,509,297	2,509,297	0	0
Capital surplus	366,903	366,903	0	0
Retained earnings (Note)	1,785,943	2,584,034	798,091	44.69
Other equity	-295,358	-257,757	-37,601	-12.73
Total equity	4,366,785	5,202,477	835,692	19.14
Where the change is 20%, the reasons shall be analyzed as follows: 1. The decrease in non-current liabilities was caused by the repayment of long-term borrowing. 2. The increase in retained earnings was caused by the increase in operating revenue and improved production efficiency which increased operating profits.

The increase in retained earnings was caused by the increase in operating revenue and improved production efficiency which increased operating profits.

Note: Retained earnings include statutory surplus reserves, special reserve, and undistributed earnings.

307 -

II. Financial performance

Indicate the main reasons for any material changes to the operating income, net profit, and net profit before tax as well as the expected sales and its basis, and the possible impact on the Company's future financial operations and response plans

(I) Main reasons and impact of any material change in the company's operating income, net profit, and net profit before tax in the last two years

net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years
Unit: thousand NT$; %
Year Item	2021	2022	Change (amount)	Percentage of change%
Net revenue Operating costs Gross profit Operating expenses Operating net profit Non-operating income and expenses Net income before tax Income tax expenses Current period net profit Other comprehensive income Total comprehensive income of the period Comprehensive income attributable to net profit of owners of parent company	13,561,804 11,025,549 2,536,255 2,072,588 463,667 121,563 585,230 155,977 429,253 -54,366 374,887 374,887	14,063,308 10,892,350 3,170,958 2,049,074 1,121,884 303,993 1,425,877 336,782 1,089,095 47,713 1,136,808 1,136,808	501,504 -133,199 634,703 -23,514 658,217 182,430 840,647 180,805 659,842 102,079 761,921 761,921	3.70 -1.21 25.03 -1.13 141.96 150.07 143.64 115.92 153.72 187.76 203.24 203.24
Analysis and description for items with changes of over 20% are as follows: 1. The increase in gross profit and net operating revenue was caused by the increase in operating revenue, sales products with high unit prices and high margins, and improved production efficiency. 2. The increase in non-operating income and expenditure was caused by the increase in net foreign exchange gains as a result of the appreciation of the USD. 3. The increase in net profit before tax, income tax expenses, net profit for this period, other comprehensive income, total comprehensive income for this period, and total comprehensive income attributable to owners of the parent company was caused by the increase in operating revenue and improved production efficiency, which caused the increase in net profit and income tax expense.

(II) Expected sales and its basis, and the possible impact on the Company's future financial operations

For more information on expected sales and its basis, please refer to the Letter to Shareholders on page 1 for an overview of the Business Plan of this year. If the expected sales volume is reached, it would generate positive effects on the Company's finance and business.

308 -

III. Cash flow

(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity

(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity	(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity	(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity	(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity
Unit: %
Year Item	2021	2022	Change (%)
Cash flowratio	3.06	34.13	1015.36
Cash flowadequacyratio	67.53	96.74	43.25
Cash reinvestment ratio	-8.02	30.60	481.55
The analyses for items with changes of over 20% are as follows: The increase in cash flow ratio was caused by the increase in operating revenue which increased the net cash flows from operating activities. The increase in cash flow ratio was caused by the increase in operating revenue which increased the net cash flows from operating activities and the decrease of dividends compared to the previous year. The increase in cash reinvestment ratio was caused by the increase in operating revenue which increased the net cash flows from operating activities, the decrease of dividends compared to the previous year, and the increase in fixed assets.

(II) Cash flow analysis for the coming year

Unit: thousand NT$

					Unit:thousand NT$	Unit:thousand NT$
Cash balance, beginning	Cash flow from operating activities	Cash flow from investing activities	Cash flow from financing activities	Estimated cash surplus (deficit)	Estimated remedial measures for cash inadequacy
					Investment plans	Financing plans
2,457,337	600,000	-300,000	580,583	3,337,920	-	-
1. The estimated cash flow changes in 2023 are analyzed as follows: (1) Operating activities: The Company expects the net profit before tax in the following year to increase compared to the previous year and net changes in operating assets and liabilities related to business activities to generate cash inflow. We expect net cash inflow of approximately NT$600,000 thousand. (2) Investing activities: The Company plans to add production facilities in the subsidiary in the Philippines totaling NT$158,600 thousand and update certain molds and production equipment in plants in China totaling NT$141,400 thousand. We therefore expect to have a cash outflow of approximately NT$300,000 thousand. (3) Financing activities: The Company plans to distribute convertible corporate bonds to raise NT$1,200,000 thousand and repay bank loans totaling NT$1,200,000 thousand. The Company expects to receive dividends of NT$183,000 thousand from the subsidiary, pay cash dividends totaling NT$652,417 thousand, and raise NT$1,050,000 thousand in loans, which will lead to a cash inflow of approximately NT$580,583 thousand. 2. The expected cash balance is NT$3,337,920 thousand and there are no instances of cash inadequacy.

(1) Operating activities: The Company expects the net profit before tax in the following year to increase compared to the previous year and net changes in operating assets and liabilities related to business activities to generate cash inflow. We expect net cash inflow of approximately NT$600,000 thousand.
(2) Investing activities: The Company plans to add production facilities in the subsidiary in the Philippines totaling NT$158,600 thousand and update certain molds and production equipment in plants in China totaling NT$141,400 thousand. We therefore expect to have a cash outflow of approximately NT$300,000 thousand.
(3) Financing activities: The Company plans to distribute convertible corporate bonds to raise NT$1,200,000 thousand and repay bank loans totaling NT$1,200,000 thousand. The Company expects to receive dividends of NT$183,000 thousand from the subsidiary, pay cash dividends totaling NT$652,417 thousand, and raise NT$1,050,000 thousand in loans, which will lead to a cash inflow of approximately NT$580,583 thousand.
The expected cash balance is NT$3,337,920 thousand and there are no instances of cash inadequacy.
309 -

IV. The effects that significant capital expenditures have on financial operations in the recent year

To disperse the risks of concentrated production and reduce operating cost in the wake of the trade war between China and the United States, the Company's Board of Directors resolved in the meeting on November 1, 2019 to invest US$20,000,000 in the establishment of SUNON Properties Philippines Corp. and invest US$5,000,000 in the establishment of SUNON Electronics Philippines Corp. SUNON Properties Philippines Corp. will own the land and plant in the Philippines and SUNON Electronics Philippines Corp. will engage in product manufacturing. The Company shall reduce the dividends distribution ratio and obtain medium to long-term loans for the investment. The Company's financial structure remains robust after the financing. The new plant in the Philippines commenced mass production and shipments in 2022 Q4, which effectively reduced production and operating costs and generated positive effects on the Company's finance and business.

To make up for the loss of the production capacity in Foshan Plant, the Company established Sunon Electronic (Bei Hai) Co., Ltd. in 2021 with own capital of RMB 40,000,000 from Sunonwealth Foshan Plant and RMB 20,000,000 from Sunon Electronic (Kunshan). There is no material impact on the financial structure. Sunon Electronic (Bei Hai) commenced mass production and shipments in 2022, which maintained the overall production capacity of the Group, effectively reduced production costs, and generated positive effects on the Company's finance and business.

V. Investment policy in the past year, profit/loss analysis, improvement plan, and investment plan for the coming year

	Cumulative investment amount (thousand NT$)	Investment policy	Main reason for profits or losses	Improvement plans
Sunon Electronic (Kunshan) Co., Ltd.	USD 34,431	Development of cooling module products and cooperation with laptop market customers	Recognized NT$318,452 thousand in profits from investment in 2022. Profitability increased due to the optimization of the productportfolio.	Continue to develop niche new products, intensify vertical integration, and cooperate with customers in passive cooling components.
Sunon Electronic (Foshan) Co., Ltd.	USD 10,000	Provide services to customers in the Pearl Delta region and build a production base for direct exports to customers.	Recognized NT$59,214 thousand in profits from investment in 2022. Recognition of profits from the investment in Sunon Electronic (Bei Hai).	The company is transformed into a trading company to provide services to specific customers and thus reduce the scale of operations to reduce losses.

310 -

	Cumulative investment amount (thousand NT$)	Investment policy	Main reason for profits or losses	Improvement plans
Sunon Electronic (Bei Hai) Co., Ltd.	USD 10,000	Disperse investment risks and serve as the backup or alternate base for the production base in the Pearl Delta area.	Recognized NT$292,606 thousand in profits from investment in 2022. Production efficiency increased due to the success of the economy of scale.	Expand production scale and increase cost advantages.
Lizhun Electronic (Bei Hai) Co., Ltd.	RMB 60,000	It made up for the loss of the production capacity in Foshan Plant and is used as a production site for domestic customers in China.	Recognized NT$88,961 thousand in profits from investment in 2022 Production efficiency increased due to the success of the economy of scale.	Expand production scale and increase cost advantages.
SUNON PROPERTIES PHILIPPINES CORP.	NTD 430,000	Disperse risks by setting up production sites outside Greater China and holding land and plant	Recognized NT$5,976 thousand in losses from investment in 2022 due to PP&E depreciation and amortization.	Profitability can be improved after the start of production.
SUNON ELECTRONICS PHILIPPINES CORP.	NTD 139,338	Disperse risks by setting up production sites outside Greater China and engaging in product manufacturing and sales.	Recognized NT$34,895 thousand in losses from investment in 2022. Losses are attributed to the recognition of expenses for setting upoperations.	Profitability can be improved after the start of production.

Note: Cumulative investment amount that exceed 5% of paid-up capital.

The major investment plan for the following year is the construction of the new plant with investment from Sunon Properties Philippines Corp. The plant will be leased to Sunon Electronics Philippines Corp. for product manufacturing and sales.

311 -

VI. Risk management and evaluation

(I) Impact of interest rate and exchange rate changes and inflation on Company's profit and response measures
Changes in interest rates and response measures
To effectively suppress the rising inflation, the US Federal Reserve has raised
interest rates rapidly since 2022 and ended years of loose monetary policies. The European Union and Taiwan also followed raised interest rates, which resulted in a rapid increase in interest burdens as investees in Mainland China have always relied on loans in USD. To stimulate the stagnant economic growth rate, Mainland China has adopted a loose monetary policy by continuing to lower the reserve ratio and stimulate the economy. The subsidiaries in Mainland China therefore switched to borrowing in RMB to reduce interest expenses. The Company alternates between loans in NTD, USD, and EUR to reduce interest rates. When long-term changes are expected on the interest rate market, we use interest rate exchange contracts to lock in long-term interest rates and avoid material impact caused by interest rate fluctuations.
Impact of interest rates changes and response measures

In the past year, the depreciation of NTD has contributed to an increase in revenue and gross profit margin, and the depreciation of the RMB decreased operating costs and increased the gross profit margin, which benefit the Company's profitability. The Company prioritizes natural hedging policies to reduce the risks of exchange rate fluctuations. We create USD liability positions for purchases denominated in USD to automatically offset USD foreign-currency asset positions generated from sales. The natural hedging policy minimizes losses from exchange rates in the event of material foreign exchange rate fluctuations. However, we remain affected by customers' payment customs on the income end for currencies that can be used. We are affected by the place of occurrence of the costs and expenditures and we thus remain exposed to USD net assets and RMB net liabilities positions and we must continue to reduce our exposure to risks associated with these two currencies. In addition, the Company's policies also permit operations in foreign exchange derivatives to reduce risks. Where necessary, the Company can respond accordingly.

Impact of inflation and response measures

The loose monetary policies of world governments and measures taken to stimulate economic recovery have increased market concern for inflation. Countries have increased interest rates and taken austerity and other measures to prevent further deterioration of inflation. Although inflation data have improved, they have not yet returned to safe levels and we must pay closer attention than ever before to the potential impact of inflation.

(II) Policies, main causes of gain or loss and future response measures with respect to high-risk, high-leveraged investments, lending or endorsement guarantees, and derivatives transactions:

The Company strictly prohibits high-risk investment and high-risk operations in

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derivatives. Based on the transactions conducted in recent years, the investment products consisted only of investments in repurchase bills with low risks. Transactions were in compliance with the Company's policies and resulted in profits. The Company's derivatives only involved foreign exchange DF and NDF investments with low risks. Transactions were in compliance with the Company's policies and resulted in profits. The Company only organizes in loans between affiliates of the Group and completely follows related regulations in all procedures to meet corporate governance requirements. In addition, the Company assisted the sub-subsidiaries companies in China, Sunon Electronic (Kunshan) Co., Ltd., Sunon Electronic (Foshan) Co., Ltd., and Sunon Electronic (Bei Hai) Co., Ltd. in obtaining bank loan credits by providing endorsement and guarantee. As the three sub-subsidiaries are wholly-controlled companies, there are no uncontrollable risks. The Company shall maintain a low-risk operation policy to respond to future risks.

Loans provided for others, endorsements and guarantees, and transactions in derivatives are processed in accordance with the Company's "Procedures for Loaning of Funds to Others", "Procedures for Making Endorsements and Guarantees", and "Procedures for Acquisition or Disposal of Assets".

(III) Future R&D programs and expected R&D investment

Future R&Dprograms and expected R&D investment

R&D Program Contents

Estimated R&D
expenditures

1.
Development of fan products with higher energy
efficiency and longer life
2.
Development of weather-resistant energy-saving
protection fans
3.
Development of low-noise high-performance blades
4.
Development of ultra-slim fan module products
5.
Development of high-efficiency and reliable water-cooling
systems
6.
Development of heat dissipation modules for high-end
applications
7.
Developmentof lightweight and durable products

Annual R&D expenses
will be 5% to 8% of
business revenue

(IV) Major changes in government policies and laws at home and broad, the impact on Company finance and business, and response measures

In the recent trade war between China and the United States, the United States increased import tariffs on products directly produced and sold by China to the United States. As most of the Company's products are produced in Mainland China, a very low percentage (less than 3%) of products are included in the scope of increased tariffs. The Company takes measures to transfer the costs and transferred the cost of increased tariffs to customers. Other products were sold to other customers in Mainland China who assemble our products into other products for sales in the United States. This accounts for a larger portion of sales but as the Company's products account for a low percentage of materials used in the customers' products, the place of production of the Company's

313 -

products will not affect the designation of the place of production of the customers' products and we therefore do not need to relocate our production site. However, if these customers transfer production back to Taiwan or to Mexico or directly to the United States, the changes would affect the Company's logistics and warehouse storage methods and increase costs marginally. Overall, the tariffs would have little impact on the Company's finance and business and the Company has prepared response measures for all possibilities.

In addition, the Company's related units collect information on important changes to domestic and foreign policies and laws to ensure that all our finance and business activities meet local regulatory requirements and quickly adapt to changes in policies and laws.

(V)

Impact of recent technological changes (including information security risks) and market changes on finance and business of the Company, and response measures

The Company has set up dedicated units to conduct research on changes in upstream and downstream sectors of the electronics industry in Taiwan and abroad. We also participate in domestic and foreign exhibitions and seminars to obtain the latest information on industry development and provide related information to R&D, sales, and management to use as reference for technology development and business strategies. The latest technology development trends are mostly favorable to the Company's development. The new Purley server platforms will increase demand for more sophisticated cooling solutions. The rise of AI, IoT, and Industry 4.0 applications will bring forth greater and more high-end cooling demand. 5G communication devices will also increase demand for cooling products. The automobile industry's demand for cooling has progressed from luxury and optional devices to standard equipment and devices for computing heat dissipation. These technological advances have increased the sophistication of cooling products and will continue to expand the market which will help power the Company's medium and long-term development. The Company shall make full use of our advantages in these technologies and our lead in the market to accelerate market expansion and widen the gap between the Company and competitors.

(V-1) Impact of damage to the information system on the Company's business operations and the response measures

We created a system with high-availability cluster infrastructure and remote backup for the IT system to ensure uninterrupted system services. Remote backup can use high-speed Internet to backup system information to a remote server at reasonable costs. The DR faulttolerant transfer uses virtualization technology and server hardware for mutual backup. In the event of hardware damage or software system collapse, we can painlessly switch to a different server to continue operations and keep system services uninterrupted.

The Company executes various server room disaster response drills and conducts drills for disaster recovery. We restore backup data to verify the feasibility of backups and reduce the risks of system service interruptions due to unforeseen natural disasters or human errors. We also ensure that the required recovery time for system interruptions is within the set

314 -

goals.

(V-2) Risks and countermeasures for cyberattacks

As cyberattacks continue to grow in terms of the sophistication of the methodology, there are no permanent fixes in the industry. As such, the Company has established the Information Security Policy as the guiding principle for information security protection and established related information security management regulations and operating procedures. The management organize quarterly information security meetings to review the Company's current information security measures and formulate improvement plans. We provide explanation and propose response measures for the following risks that we may encounter in business operations.

Virus threats

The sources of computer viruses may be malicious websites, illegitimate attachments, or portable storage media. The Company has therefore established multiple layers of defenses and inspections and installed a reputable anti-virus system in all terminals. We adopt centralized controls for surveillance and protection to reduce the risks of infections and attacks from malicious programs.

Cyberattacks

Internet hacker attacks cause the most direct impact on the Company's operations. In addition to establishing necessary protection measures including segmentation of major networks and access authorization control, firewalls, intrusion detection, and mechanisms for blocking attacks, we will also fix the security vulnerabilities based on information security vulnerability reports to minimize loopholes and the possibilities of attacks.

Although we detected numerous external attacks in 2020, all attacks were automatically intercepted or blocked by the internal defense system. There were therefore no material information security incidents that affected the Company's operations in 2020.

(VI) Impact of corporate image change on risk management and response measures

The Company has always maintained a good reputation for high quality and advanced technologies. There were no crisis involving the change of corporate image in the most recent year up to the publication date of the Annual Report.

(VII) Expected benefits and possible risks of mergers and acquisitions as well as the responding measures

The Company resolved to implement a short-form merger of the Company and the wholly-owned subsidiary company Sunon SMT Co., Ltd. (hereinafter referred to as Sunon SMT) in a resolution of the meeting of the Board of Directors on August 8, 2018. The Company was the surviving company and Sunon SMT was the dissolved company. Sunon SMT's investee in China, Limao Electronic (Foshan) Co., Ltd. (hereinafter referred to as Limao) was merged into the Company's investee in China, Sunon Electronic (Foshan) Co., Ltd. Sunon SMT's investee in China, Guangying Electronic (Kunshan) Co., Ltd. (hereinafter referred to as Guangying) was merged into the Company's investee in China, Sunon

315 -

Electronic (Kunshan) Co., Ltd. Sunon SMT, Limao, and Guangying were responsible for the Company's outsourced SMT operations. The SMT process is an important process for fan motor activation and control. The merger of Sunon SMT streamlined the Group's investment structure, reduced human resources management costs, reduced production lead time, and reduced inventory. The parent company also organizes production resources and increased the scale and efficiency of production.

(VIII) Expected benefits and possible risks of factory expansions as well as the response measures

The Company invested in the establishment of Lizhun Electronic (Bei Hai) Co., Ltd. in 2021 to make up for the loss of production capacity due to the expiry of the lease period. Lizhun Electronic (Bei Hai) commenced mass production and shipments in 2022 which achieved the expected benefits. In response to the changes in the wake of the trade war between China and the United States, the Company's Board of Directors passed a resolution on November 1, 2019 to construct a new plant in the Philippines to disperse production concentration risks and reduce costs. The Company has financed the expansion of the plants with its own capital and bank loans, and the financial risks remained under control after the financing. The Company plans to issue convertible bonds to improve the financial structure and reduce risks.

(IX) Risks associated with over-concentration in purchase or sale and response measures The Company's suppliers and customers are dispersed and we maintain solid long-term
relationships with suppliers and customers. There are no cases of over-concentration of purchases or sales.
(X) Impact of mass transfer of equity by or change of directors, supervisors, or shareholders holding more than 10% interest on the Company, associated risks and response measures
There has been no significant transfer of company shares by Directors, Supervisors, or
major shareholders with more than 10% of shares in the most recent year and up to the publication date of this Annual Report.
(XI) Effects that changes in management have on the Company as well as risk and response measures
The Company completed the election of Directors on July 1, 2021. The Chairman serves
concurrently as the President and there are no risks of a change of management.
(XII) Litigation or non-litigation events
SIAM Microelettronica S.P.A. filed a suit against the Company to claim damages for
infringement of rights on April 8, 2020. The Company has appointed an attorney to represent the Company in the litigation and the judgment of the court of first instance was rendered by Taiwan Kaohsiung District Court on June 30, 2022. "The Plaintiff's suit and request provisional execution are both rejected. The court fees shall be borne by the Plaintiff." As the Plaintiff did not file an appeal within the statutory period, the judgment of the court of first instance was concluded on August 3, 2022.
(XIII) Other significant risks and response measures: None.
316 -

VII. Other important matters: None.

317 -

H. Special Disclosures

I. Profiles of affiliates and subsidiaries

(I) Consolidated Business Report of Affiliates
Overview of affiliates

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Sunonwealth
100% BVI SUCCESSFUL 100% BVI SUNON INT’L HK 99.99% SUNONWEALTH SUNON SAS 100% SUNON INC 100% CORPORATION 100% SUNON INDIA 99.99% SUNON ELECTRONICS Philippines 99.99% SUNON Properties Philippines 99.99% SUNON Electronics
(KUNSHAN) 100% SUNON ELECTRONIC (FOSHAN) 100% SUNON ELECTRONIC (BEI HAI) 100% SUNON ELECTRONIC SUNON GmbH 100%
Suzhou Shengyixing 35% ELECTRONICS 100% BEIHAI LI ZHUN
----- End of picture text -----

(1) Affiliate organization chart
318 -

(2) Basic information of affiliated enterprises

March 31, 2023; Unit: thousand NT$

Enterprise name	Date of establishment	Address	Paid-in capital	Main business or core products
Sunon INC.	1998.12.24	1075 W. Lambert Rd. Suite A, BREA,CA 92821	US1,500	Manufacturing and assembly of electronic components and import and wholesale of various electronic and electrical components
Sunon SAS.	1999.12.30	66, avenue des Pepinieres, 94832 FRESNES CEDEX – FRANCE	EUR500	Import andwholesale of various electronic and electrical components
Sunon Deutschland GmbH	2000.09.01	Lebacher Strabe 4 , 66113 Saarbrucken.	EUR25	Import and wholesale of various electronic and electrical components
Sunon Corporation	2000.07.07	202, Itou Bld., 1-1-20, Tsujido, Fujisawa Shi, Kanagawa Ken, 251-0047, Japan	JPY15,000	Production and sales of fans
Sunonwealth Electric Machine Ind. (H.K.) Ltd.	1992.07.30	Room 14-1402, Hong Kong and Macau Building, 156-157 Connaught Road Central,SheungWan,HongKong	HKD800	Import and wholesale of various electronic and electrical components
BVI Successful Century Co., Ltd.	2000.07.07	Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110,British Virgin Islands.	US33,880	General investment and trade
Sunon Electronic (Kunshan)Co.,Ltd.	2000.09.19	No. 168 Nanbin Road, Kunshan, Jiangsu Province,China	US34,431	Production and sales of brushless DC motors and fans
BVI Sunon International Ltd.	1997.01.15	Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110,British Virgin Islands.	US19,180	General investment and trade
Sunon Electronic (Foshan) Co., Ltd.	2006.03.20	No. 50-1, Pingnan Industrial Zone, Guicheng Street, Nanhai, Foshan , Guangdong	US4,600	General investment and trade
Sunon Electronic (Bei Hai) Co., Ltd.	2011.04.07	B6, Beihai Comprehensive Bonded Zone, Beihai Avenue West, Beihai City, Guangxi Province,China	US10,000	Production and sales of AC/DC motors and fans
Beihai Li Zhun Electronics Co., Ltd.	2021.12.20	1F,2F,3F, Building 1, Huike Science and Technology Park, B2 District, Beihai Integrated Free Trade Zone,Beihai,Guangxi	CNY60,000	Production and sales of AC/DC motors and fans
Sunon Electronics India Private Limited	2019.06.12	Spaze IT Park, Tower B, 5th Floor Unit 530. Sohana Road. Sector 49 Gurgaon. Haryana. India. Pincode: 122018	INR11,000	Import and wholesale of various electronic and electrical components
Sunon Properties Philippines Corp.	2020.01.14	Lot 1, Block 12, Hermosa Ecozone Industrial Park, Brgy. Palihan, Hermosa, Bataan, Philippines.	PHP706,790	Real estate development and investment
Sunon Electronics Philippines Corp.	2020.01.10	Lot 5, Block 8, Hermosa Ecozone Industrial Park, Brgy. Palihan, Hermosa, Bataan, Philippines.	PHP358,318	Production and sales of AC/DC motors and fans
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	2014.11.11	No. 169, Liaobang Road, Jiangling Neighborhood, Wujiang District, Suzhou, Jiangsu Province,China	CNY7,692	Production and salesof heat dissipation equipment

Note: The exchange rates for various foreign currencies in the 2022 Balance Sheet are: USD: NTD = 1: 30.71; JPY: NTD = 1: 0.2324; EUR: NTD = 1: 32.72; CNY: NTD = 1: 4.4094; HKD: NTD = 1: 3.938; INR: NTD =1:0.3711; PHP: NTD =1:0.5472

319 -
(3) Information of common shareholders who are presumed to have a relationship of control and subordination: None.
(4) Businesses covered by the affiliated enterprises' overall operations
A. Design, production, and sales of various fans, cooling modules, and motors
B. Design, production, and sales of spindle motors
C. Production of precision hardware components for fans and motors
D. SMT processing
E. Molds design and production
F. General investment and management consulting
320 -

(5) Directors, Supervisors, and Presidents of each affiliated enterprise and the number of shares they hold or the amount of capital they contributed to each enterprise

			March 31,2023	March 31,2023
Enterprise name	Title	Name or representative	Shares held
			Number of shares	Shareholding ratio (%)
Sunon INC.	Director ActingPresident	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Fu-Ing Hong Chen, Li-Ju Chen Che-Lun Huang	150,000 -	100.00% -
Sunon SAS.	Director President	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong Hao-Sheng Chu	50,000 -	100.00% -
Sunon Deutschland GmbH	Director	SUNON SAS Representative: Hao-Sheng Chu	-	100.00%
Sunon Corporation	Director Supervisor	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Chen, Li-Ju Chen Sunonwealth Electric Machine Industry Co., Ltd. Representative: Fu-IngHong Chen	4,400	100.00%
Sunonwealth Electric Machine Ind.(H.K.)Ltd.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Li-Ju Chen	799,999	99.99%
BVI Successful Century Co.,Ltd.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative:Ching-Shen Hong	33,880,000	100.00%
Sunon Electronic (Kunshan) Co., Ltd.	Director Supervisor President	SUCCESSFUL CENTURY CO., LTD Representative: Ching-Shen Hong, Fu-Ing Hong Chen, Li-Ju Chen Ling-Wen Huang Kuan-HungTseng	- - -	100.00% - -
BVI Sunon International Ltd.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative:Ching-Shen Hong	19,180,000	100.00%
Sunon Electronic (Foshan) Co., Ltd.	Director Supervisor President	SUNON INTERNATIONAL LTD. Representative: Ching-Shen Hong, Fu-Ing Hong Chen, Li-Ju Chen SUNON INTERNATIONAL LTD. Representative: Ling-Wen Huang Kuan-HungTseng	- -	100.00% -
Sunon Electronic (Bei Hai) Co., Ltd.	Director Supervisor President	SUNON INTERNATIONAL LTD. Representative: Ching-Shen Hong, Fu-Ing Hong Chen, Li-Ju Chen SUNON INTERNATIONAL LTD. Representative: Ling-Wen Huang Chao-Wang Chiu	- -	100.00% -
Beihai Li Zhun Electronics Co., Ltd.	Executive Director Supervisor	Sunon Electronic (Foshan) Co., Ltd. Representative: Ching-Shen Hong Representative: Fu-IngHong Chen	-	100.00%
Sunon Electronics India Private Limited	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Li-Ju Chen	1,099,999	99.99%
Sunon Properties Philippines Corp.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Fu-Ing Hong Chen,Li-JuChen	7,067,896	99.99%
Sunon Electronics Philippines Corp.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Fu-Ing Hong Chen,Li-JuChen	3,583,177	99.99%

321 -

Enterprise name	Title	Name or representative	Shares held	Shares held
			Number of shares	Shareholding ratio (%)
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Director Supervisor	Sunon Electronic (Kunshan) Co., Ltd. Representative: Ching-Shen Hong Representative: William Li	-	35.00%

322 -

2. Overview of business operations of affiliates

2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates
December 31,2022; Unit: thousand NT$
Enterprise name	Capital	Total value of assets	Total liabilities	Net worth	Operating revenue	Operating profits	Profit or loss for the current period (after tax)	Earnings per share (NT$) (after tax)
Sunon INC.	49,140	478,179	289,063	189,116	879,486	58,917	63,994	426.63
Sunon SAS.	16,127	417,336	342,177	75,159	553,800	(67,107)	11,798	235.96
Sunon Deutschland GmbH	1,027	4,487	1,248	3,599	15,515	152	310	-
Sunon Corporation	4,470	1,899	65	1,834	0	(25)	(66)	(15.00)
Sunonwealth Electric Machine Ind. (H.K.)Ltd.	3,428	1,903	0	1,903	0	(39)	(37)	(0.05)
BVI Successful Century Co., Ltd.	1,136,933	1,643,496	0	1,643,496	0	(7)	318,445	9.40
Sunon Electronic (Kunshan) Co., Ltd.	1,148,456	3,877,025	2,233,587	1,643,438	6,232,492	253,192	318,453	-
Suzhou Shengyixing Heat Transfer Technology Co.,Ltd.	32,870	128,551	111,874	16,677	162,088	(4,746)	(4,003)	-
BVI Sunon International Ltd.	654,017	1,005,033	20	1,005,013	0	(101)	351,747	10.71
Sunon Electronic(Foshan)Co., Ltd.	148,772	281,243	803	280,440	145	(4,744)	59,214	-
Sunon Electronic (Bei Hai) Co., Ltd.	293,115	2,768,602	2,044,228	724,374	6,165,640	370,780	292,606	-
Beihai Li Zhun Electronics Co., Ltd.	265,311	1,016,251	664,288	351,963	746,775	98,872	88,961	-
Sunon Electronics India Private Limited	4,880	4,732	913	3,819	6,182	929	949	0.86
Sunon Properties Philippines Corp.	430,000	370,109	172	369,937	0	(6,267)	(5,976)	(0.85)
Sunon Electronics Philippines Corp.	139,338	156,465	61,229	95,236	1,979	(39,133)	(34,896)	(57.54)

323 -
(II) Consolidated financial statement of affiliates For the 2022 fiscal year (from January 1 to December 31, 2022), companies that should be included in the consolidated financial statement of affiliates as provided by the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" are the same as what should be included in the consolidated financial statements of parent and subsidiary companies as provided in IFRS No. 10 which was approved by the Financial Supervisory Commission, and the relevant information that should be disclosed in the consolidated financial statements of affiliates has been disclosed in the consolidated financial statements of the parent and its subsidiaries. The Company shall not be required to prepare separate consolidated financial statements of affiliates (please refer to the 2022 Financial Report on page 125 of the Annual Report).
(III) Affiliation Report
- The Company is the controlling company of other affiliate companies and is thus not applicable to regulations regarding the disclosure of an affiliation report.
II. Progress of private placement of securities during the latest year and up to the date of annual report publication: None.
III. Holding or disposal of stocks of the Company by subsidiaries in the past year and up to the date of report: None.
IV. Other supplemental information: None.
324 -

Corporate events with material impact on shareholders' equity or stock prices set forth in Article 36, Paragraph 3, Subparagraph 2 of Securities and Exchange Act in the past year and up to the date of report shall be specified separately below: None.

325 -

Sunonwealth Electric Machine Industry Co., Ltd.

Chairman ： Ching-Shen Hong

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Sunonwealth Electric Machine Industry Co., Ltd.

TEL[: ] 886-7-8135888 FAX[ : ] 886-7-8122929 Http : //www.sunon.com E-mail : [email protected]

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AI assistant

SUNON — Annual Report 2022

52070_rns_2023-06-13_6522ce2f-5b14-4f81-90eb-23a72955f637.pdf

Sunonwealth Electric Machine Industry Co., Ltd. 2022 Annual Report

Table of Contents

A. Letter to Shareholders

Dear Shareholders,

Results of Business Operations in the Previous Year

2023 Business Plan Overview

Future Development Strategy

Impact of the Competitive Environment, Regulatory Environment, and Overall Business Environment

B. Company Profile

I. Date of establishment

II. Company history

1. 1980

2. 1981

3. 1983

11. 1993

13. 1995

14. 1996

15. 1997

16. 1998

17. 1999

18. 2000

19. 2001

20. 2002

21. 2003

22. 2004

23. 2005

24. 2006

25. 2007

26. 2008

27. 2009

28. 2010

29. 2011

30. 2012

31. 2013

32. 2014

33. 2015

34. 2016

35. 2017

36. 2018

37. 2019

38. 2020

39. 2021

40. 2022

C. Corporate Governance Report

I. Organization system

(I) Organization structure

(II) Major business units and their key businesses

II. Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and Department Directors (I) Director information

Director information

Table 2: Major shareholders in Table 1 who are institutional shareholders and their major shareholders

(II)Profile of Directors and Supervisors

I. Disclosure of information on the professional qualifications of Directors and Supervisors and independence of Independent Directors:

(II) Profile of the President, Vice Presidents, Assistant Vice Presidents, and Department Directors

III. Remunerations to Directors (including Independent Directors), Supervisors, President, and Vice Presidents in recent years (I) Director's remuneration

Range of remuneration table

(II) Remunerations to President and Vice President

Remunerations to President and Vice President (range of remuneration with name disclosure)

IV. Implementation of corporate governance

(I) Board of Directors operating status

Board of Directors evaluation status

(II) Audit Committee operating status

Audit Committee operating status

(1) Status of continuing education of the Company's Directors in 2022

(V)

Climate information of public companies

1 Implementation status of climate-related information

1-1 Greenhouse gas inventory and assurance conditions

Instructions:

Sunonwealth Electric Machine Industry Co., Ltd. Internal Control System Statement

V. Information on fees to CPA

Information on CPA fees

VIII.Share transfer by Directors, Supervisors, Managerial Officers, and shareholders holding more than 10% interests and changes to share pledging by them

IX. Information on the relationship between any of the top ten shareholders

D. Funding Status

I. Source of Capital Shares

(II) Categories of outstanding shares

II. Shareholders

SUNON Annual Report 2022