Stoc k Code: 2428

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`興勤` `電` `子工業股份有限` `公司` THINKING E L ECTRONIC INDUSTRIAL C O., LTD.

2 0 20 Annual Report

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Notice to readers

This English-version annual rep o rt is a summary translation of the Chinese vers i on and is not an official document of the shareholders’ m eeting. If there is any discrepancy between t h e English and Chinese versions, the Chinese version sh a ll prevail.

Taiwan Stock Exchange Mar k et Observation Post System: http://mops.tws e .com.tw Annual Report is available at: https://www.thinking.com.tw Printed on May 14, 2021

I. Spokesperson and Acting Spokesperson

Name of spokesperson : Ho, Yi-Sheng Position : President Telephone : (07)557-7660 Email : [email protected] Name of acting spokesperson : Hung, Yu-Fang Position : Manager of Finance Department Telephone : (07)557-7660 Email : [email protected] II. Address and telephone of main office/branch office/plant Address of Main Management 8F-1, No. 93, Dashun 1st Road, Zuoying District, Kaohsiung : Department City Telephone : (07)557-7660 Address of Branch Office : No.51, Kaifa Road, Nanzi District, Kaohsiung City Telephone : (07)961-6668 Address of Factory No. 21, Lane 373, Minzu 1st Road, Sanmin District, Kaohsiung : City Telephone : (07)386-2591 III. Stock Transfer Agent Name : Registrar of President Securities Corporation Address : B1, No. 8, Dongxing Road, Songshan District, Taipei City Website : www.pscnet.com.tw Telephone : (02)2746-3797 IV. CPA for the Financial Statement of the Most Recent Year Name of CPA : Chiang Jia-Ling, Wu Chiu-Yen Name of Firm : Deloitte & Touche Website : http://www.deloitte.com.tw Address 3F, No. 88, Chenggong 2nd Road, Qianzhen District, Kaohsiung : City Telephone : (07)530-1888

V. Overseas Securities Exchange: None

VI. Company website: http://www.thinking.com.tw

I. Letter to Shareholders ............................................................................................................... 1 II.Company Profile ........................................................................................................................ 7 2.1 Date of Incorporation .............................................................................................................. 7 2.2 Company History .................................................................................................................... 7 III.Corporate Governance Report ............................................................................................. 11 3.1 Organizational ....................................................................................................................... 11 3.2 Information of Directors, President, Vice President, Associate Vice President, and Heads of Various Departments and Branches .................................................................................. 13 3.3 Remuneration Paid to Directors, President and Vice President for the Most Recent Fiscal Year ....................................................................................................................................... 19 3.4. Implementation of Corporate Governance ............................................................................ 24 3.5 Information on Public Expenditure on CPAs ........................................................................ 76 3.6 Information on Replacement of CPAs .................................................................................. 76 3.7 The Company’s Chairman, President, Officers in charge of Financial or Accounting Affairs has Served in Its Certified Public Accountant Firm or Its Affiliated Enterprise for the Most Recent Fiscal Year ................................................................................................. 76 3.8 Transfer of Equity Interests and/or Pledge of or Changes in Equity Interests by Directors, Managers or Major Shareholders with a Stake of More than 10 Percent for the Most Recent Fiscal Year and during the Current Fiscal Year up to the Date of Publication of the Annual Report ................................................................................................................. 77 3.9 Relationship among the Top Ten Shareholders .................................................................... 79 3.10 Number of Shares Held by the Company, the Company’s Directors, Managers, and Directly or Indirectly Controlled Businesses and the Consolidated General Holding Ratio as follows ............................................................................................................................... 80 IV.Capital Overview ................................................................................................................... 81 4.1 Capital and Shares ................................................................................................................. 81 4.2 Corporate Bonds .................................................................................................................... 89 4.3 Preferred Shares .................................................................................................................... 89 4.4 Global Depositary Receipt .................................................................................................... 89 4.5 Status of Employee Share Options ........................................................................................ 89 4.6 Status of New Restricted Employee Shares .......................................................................... 89 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions .................... 89 4.8 Financing Plans and Implementation .................................................................................... 89

V.Operational Highlights ............................................................................................................ 90 5.1 Business Activities ................................................................................................................ 90 5.2 Overview of Market, Production, and Sales ......................................................................... 95 5.3 Human Resources ................................................................................................................ 101 5.4 Environmental Protection Expenditure ............................................................................... 101 5.5 Labor Relations ................................................................................................................... 101 5.6 Material Contracts ............................................................................................................... 105 VI.Financial Information.......................................................................................................... 106 6.1 Financial Summary for the Past Five Fiscal Years ............................................................. 106 6.2 Financial Analysis for the Past Five Fiscal Years ............................................................... 110 6.3 Audit Committee’s Review Report on the Most Recent Fiscal Year ................................. 116 6.4 Financial Statements for the Most Recent Fiscal Year ....................................................... 117 6.5 Parent Company Only Financial Statements Audited by Independent Auditors for the Most Recent Fiscal Year. .................................................................................................... 117 6.6 The Impact of Financial Difficulties of the Company and its Affiliates ............................. 117 VII.Review and Analysis of Financial Conditions, Operating Results, and Risk Management ....................................................................................................................... 263 7.1 Review and Analysis of Financial Status ............................................................................ 263 7.2 Review and Analysis of Operating Results ......................................................................... 264 7.3 Review and Analysis of Cash Flow .................................................................................... 265 7.4 Impacts of Major Capital Expenditure for the Most Recent Fiscal Year on Financial Operation ............................................................................................................................. 265 7.5 Investment Policy for the Most Recent Fiscal Year, Reasons for Profit (Loss), Improvement Plan and the Investment Plan for the Coming Year ..................................... 266 7.6 Review and Analysis of Risk Management ........................................................................ 266 7.7 Other Material Items ........................................................................................................... 269 VIII.Special Disclosure ............................................................................................................. 270 8.1 Summary of Affiliated Companies ..................................................................................... 270 8.2 Any Private Placement of Securities for the Most Recent Fiscal Year and during the Current Fiscal Year up to the Date of Publication of the Annual Report ........................... 279 8.3 The Shares in the Company Held or Disposed of by Subsidiaries for the Most Recent Fiscal Year and during the Current Fiscal Year up to the Date of Publication of the Annual Report ..................................................................................................................... 279 8.4 Other Matters Requiring Supplementary Information ........................................................ 279 IX.Matters with Important Impacts on Shareholders’ Equity or Prices of Securities ....... 280

I. Letter to Shareholders

Dear Shareholders,

The Company always uses the best effort to manage it products and keep serving as a goalkeeper for current protection, voltage protection and temperature protection, by upholding the enterprise spirit “Prosperity, Satisfaction, Diligence and Sustainability”. Fearless of fluctuation in the global economy, the Company respond to them by improving the Group's management, diversifying the market strategies, stabilizing financial structure and adopting reasonable cause and effect, in order to seize any new opportunities.

1.1 Business report:

i. Results:

The consolidated turnover was NT$5,920,258 thousand, growing by 1.82% from the previous year. The consolidated net profit after tax was NT$1,380,603 thousand, growing by 23.79% from the previous year. The EPS was NT$10.81.

ii. Execution of budget: N/A.

iii. Analysis on financial receipts and expenditures, and profitability:

The Company's financial receipts and expenditures and profitability 2020 are analyzed as follows:

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Unit: NT$ Thousand
Year
2020 2019
Item
Operating revenue, net 5,920,258 5,814,232
Financial
receipts and Gross profit 2,714,605 2,340,329
expenditures
Current net profit 1,380,603 1,115,265
ROA 14.03% 13.17%
ROE 19.77% 17.73%
Operating income to paid-in capital ratio 143.86% 113.09%
Profitability
EBT to paid-in capital ratio 145.75% 118.15%
Net profit margin 23.31% 19.18%
EPS after tax (NT$) 10.81 8.71
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iv. Research and development:
(1) Complete the SMD 0201 small-size NTC Thermistor model development.
(2) Complete the SMD 0201 small-size PTC Thermistor model development.
(3) Complete the development of chips for high-precision medical treatment devices, including nucleic acid detection, infrared temperature sensors, and thermometers, etc.
(4) Development of high-reliability NTC Thermistor for automobile, including components for charging pile and lithium battery monitoring, etc., to expand the application of products.
(5) Complete the development of SMD TSM 0201 soft cutting process glass protective layer products.
(6) Complete LCP small-size 0402 30V high-voltage products, and implement mass production.
(7) Complete the preparation for mass production of SMD 0805 PTC Thermistor (1.0 Ω and other low-resistance series).
(8) Complete the development of PTC Thermistor SMD 0603 low-resistance series (10Ω and 6.8Ω).
(9) Complete the development of, and preparation for mass production of, certain models of TVM SMD 4B 6B series 5G high-pass Varistors.
(10) Complete the development of certain models of SMD 1206 high-pass Varistors.
(11) Complete the development of 0806 SMD high-pass Varistors for LED, acquire UL certification, and start mass production and shipment.
(12) Complete the development of 1210 SMD high-pass Varistors for LED.
(13) Complete the development of CPTC overcurrent/overvoltage-protection lead-free products.
(14) Complete the development of 48V TVR product series for automotive grade.
(15) Complete the development of CPTC high-pressure resistant product series.

1.2 Summary of 2021 business plan:

i. Business policy
(1) Continue to apply the management philosophy, “New Concept, New Management, New Technology and New Market”, to maintain the existing market, amplify the management results in the new markets including automobiles and industry, and move forward toward the new markets including 5G communication and health care.
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(2) Manage the production locations, practice the economy of scale, increase automated equipment, adjust the product portfolio, and launch into the high-end application market.
(3) Continue to boost the miniaturization of products, invest in corresponding equipment and technology, and win the market.
(4) Improve the sales activities of quality products, focus on benchmarking markets and major customers, and promote the business gross profit.

ii. Expected sales volume and basis thereof

The electric vehicles, which replace fuel vehicles, and electronization of car controls have been identified as the main force to drive the electronics industry. 5G base stations already successively activated in various countries and launch of the 5G smartphones that become the mainstream specifications in the world have become mainstream specifications have been launched all over the world boost the booming business opportunities in the communications market. The plans which are suspended due to the epidemic in the automated and intellectualized industrial application and infrastructure market must be inevitably reinstated in the coming year. COVID-19 drives certain new needs for medical electronic products. The market is rapidly expanding and growing. These factors bring an optimistic vision for the business. Notwithstanding, the Sino-US trade war is still persisting. The epidemic keeps spreading in Europe and the USA. The global economy might not be as successful as it appears to. All of these are considered negative factors affecting the Company's business development. The Company integrates major customers’ business forecast for the new year with the plan to develop new markets, and generates the sales forecast for the new year. The sales value 2021 are expected to be significantly higher than the sales in 2020. Apparently, the sales will keep growing as the major trend.

iii. Key production and sales policies

(1) Production policy:

A. Supply management:

(a)Improve the Group’s diversified and multi-point supply model and practice the Group factory’s multi-source production, hoping to mitigate the risk over shortage of materials for customers and better serve the needs in the delivery market, and generally upgrade the customer service speed as the starting point.

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(b)Improve various factories’ information system operations, connect the information flow of the production execution system, MES, and strengthen the inventory management at various factories to optimize the inventory aging and maximize the product turnover, in order to serve the purpose of “smooth flow of goods”.
B. Production management: (three improvement actions and one stabilization policy)
(a)HR: Improve HR training and expertise & stabilization requirements toward key process personnel.
(b)Machine: Continue to improve the production automation.
(c)Materials: Recognize multiple customer sources of materials to mitigate the effect to be posed by variation of related factors to the supply of goods; adopt strategic procurement policy toward major materials to control the fluctuation in costs effectively and input and output strictly.
(d)Methods:
- d-1 IT-based management and digitized management.
- d-2 Pursue lean production, eliminate low-value work, and focus on high-yield actions.
- d-3 To exercise departments’ operational effectiveness, the Group's factories and entities work together to set and promote the KPI project.
(e)Environment:
- e-1. Promote the energy conservation project, check overall energy consumed by equipment, diagnose energy consumption, and activate the energy conservation project.
- e-2. Promote reuse of water resources, and construct process waste water recycling system to achieve the feature for reuse of water resource.
C. Overview of Production and Marketing:

In response to the drastic changes in the market demand, the Company keeps holding the production and marketing meetings for teamwork to adjust the production scale to the best scale of economy. We hope that the production and marketing may keep flexible and active in order to deal with the pressure derived from changes in the market.

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(2) Sales Policy:
A. Strengthen the development in the markets of electric vehicles and automotive electronics, 5G and communications, industrial controls, and medical electronics, etc., and sale of niche-type and customized products to increase profit.
B. Aim at benchmarking customers in the advanced countries, such as European countries and the USA, to keep the development pace in line with the high-end markets; also, expand the emerging markets, such as India and South East Asia, etc., to increase the sales value and value at the same time for the balanced development.
C. Exercise the existing brand strengths, scale of economy and distribution network to practice the consolidated effects and expand the operating revenue.
D. Increase the promotional channels for digital marketing, and mitigate the interruption caused by COVID-19 to business activities.

1.3 Future development strategies:

i. Uphold the spirit of innovation and keep developing new products to satisfy the market demand.
ii. Upgrade the process technology and product automation, and control various costs effectively via data and information analysis and management.
iii. Develop the sale markets and rapid after-sale services, and provide complete protective component series to satisfy the customers’ demand for “one-stop shopping”.
1.4 Effects posed by external competitive environment, legal environment and macroeconomic environment:

As far as the external competitive environment is concerned, the industry in which the Company is engaged is expected to keep growing in response to the expanding market demand. For the competition with peer companies, the Company is expected to maintain its oligopolistic position but still struggle with the environment.

As far as the legal environment is concerned, the Company adjusts its internal rules and management regulations in a timely manner in response to the enactment of and amendments to various laws & regulations, and research and draft alternate policies. The Company is used to valuing the internal controls and corporate governance. Therefore, the enactment of/amendments to laws & regulations are expected to pose a minor impact to the Company.

As far as the macroeconomic environment is concerned, considering that the epidemic is becoming stable, the overall economy and liquidity are expected to develop positively. The Company keeps increasing its production capacity and adjusts product portfolio, and plan related capital expenditures to respond to the market demand.

Looking forward to the future, the Company will follow the management philosophy, “New Concept, New Management, New Technology and New Market”, keep focusing on the management of core business, and accelerate development of new technology, new products and new customers, in order to improve the Company's competitiveness, increase operating revenue and profit, and feed back to the permanent support from all of you. Thanks to the management team and whole employees for their dedication and efforts to pursue fruitful business growth to feed back to all of you in the past year. We also hope that each shareholder can keep his/her original intent and continue to support and encourage Thinking Electronic.

I wish you all good health and the best in all of your endeavors.

Chairman of Board: Sui, Tai-Chung

II. Company Profile

2.1 Date of Incorporation July 16, 1979

2.2 Company History

July 1979 ： Thinking Enterprise Co., Ltd. was established in Zuoying District, Kaohsiung, to be engaged with the processing, manufacturing, and distribution of electronic and electrical wiring, with a capital size of NTD 3 million only. May 1984 ： Collaborated with the well-known connector manufacturer in the US technically and the sales were expanded to turn the Company into a leader in electronic and electrical wiring assembly facility in Southern Taiwan.

	Taiwan.
January 1986	：Organized capital increase in cash worth NTD 3 million only to bring
	the capital size to NTD 6 million only.
July 1988	：The name was changed to Thinking Enterprise Corporation.
May 1989	：The negative temperature coefficient thermistor production site was
	established in Sanmin District, Kaohsiung, and the capital size was
	expanded to NTD 26 million only.
June 1989	：The name was changed to Thinking Electronic Industrial Co., Ltd.
November 1994	：The capital size was increased to NTD 126 million only.
May 1996	：The capital size was increased to NTD 189 million only.
July 1996	：Approved by the FSC to be a public offering company.
January 1997	：Reinvested in Heyi Electronic Enterprise Co., Ltd.
March 1997	：Purchases for and remodeling of the Main Management Department
	were completed; the administration unit was relocated.
April 1997	：Reinvested to establish Greenish Co., Ltd.
July 1997	：Reinvested in Yenyo Technology Co., Ltd.
September 1997	：Reinvested in Welljet Hong Kong Ltd. and promoted the ISO-14000
	Environmental Management System.
January 1998	：Indirectly reinvested in Mainland Thinking (Changzhou) Electronic Co.,
	Ltd.

August 1998	：Earnings transferred capital increase; the capital size after the increase
	reached NTD 438,480,000 only.
December 1998	：Approved to be listed at TPEx.
March 1999	：The stock began to be traded at TPEx.
June 1999	：Earnings transferred capital increase; the capital size after the increase
	reached NTD 576,024,000 only.
August 2000	：Earnings and employee bonus transferred capital increase worth NTD
	67,602,400 only and capital increase in cash worth NTD 50,000,000
	only; the capital size after the increase reached NTD 693,626,400 only.
September 2000	：Switched from being TPEx-listed to be TWSE-listed.
September 2001	：Earnings and employee bonus transferred capital increase worth NTD
	63,453,110 only; the capital size after the increase came to NTD
	757,079,510 only.
September 2002	：Earnings and employee bonus transferred capital increase worth NTD
	63,665,560 only; the capital size after the increase reached NTD
	820,745,070 only.
August 2003	：Earnings and employee bonus transferred capital increase worth NTD
	54,944,700 only; the capital size after the increase came to NTD
	875,689,770 only.
June 2004	：Reinvested in Thinking International Co., Ltd.
July 2004	：Indirectly reinvested in Thinking (Yichang) Electronic Co., Ltd.
November 2006	：Organized conversion of convertible bonds to common stock shares
	worth NTD 430,560 only; the paid-in capital size after the conversion
	reached NTD 1,016,177,360 only.
January 2007	：Reinvested in Saint East Co., Ltd.
	Organized conversion of convertible bonds to common stock shares
	worth NTD 37,298,080 only; the paid-in capital size after the
	conversion reached NTD 1,053,475,440 only.
April 2007	：Reinvested in Thinking Holding (Cayman) Co., Ltd.
	Organized conversion of convertible bonds to common stock shares
	worth NTD 7,427,330 only; the paid-in capital size after the conversion
	reached NTD 1,060,902,770 only.

July 2007	：Organized conversion of convertible bonds to common stock shares
	worth NTD 484,380 only; the paid-in capital after the conversion
	reached NTD 1,061,387,150 only.
October 2007	：Earnings and employee bonus transferred capital increase worth NTD
	108,690,930 only; the capital size after the increase reached NTD
	1,170,078,080 only.
November 2007	：Established a branch office of Thinking in Nanzi Export Processing
	Zone.
January 2008	：Organized conversion of convertible bonds to common stock shares
	worth NTD 178,030 only; the paid-in capital size after the conversion
	reached NTD 1,170,256,110 only.
June 2008	：Issued convertible corporate bonds worth NTD 300 million only.
September 2008	：Established the Thinking Education Fund.
December 2008	：Organized write-off of treasury stock shares worth NTD 31,580,000
	only; the paid-in capital size after the reduction came to NTD
	1,138,676,110 only.
February 2009	：Organized dissolution and liquidation of the reinvested company Heyi
	Electronic Enterprise Co., Ltd.
September 2009	：Reinvested in Thinking (HK) Enterprises Limited
	Reinvested in Jiang Xi Thinking Jingguang Technology Co., Ltd. (The
	name is now changed to Jiang Xi Thinking Electronic Co., Ltd.)
October 2009	：Organized conversion of convertible bonds to common stock shares
	worth NTD 32,419,590 only; the paid-in capital size after the
	conversion reached NTD 1,171,095,700 only.
December 2009	：Organized conversion of convertible bonds to common stock shares
	worth NTD 72,146,320 only; the paid-in capital size after the
	conversion reached NTD 1,275,661,610 only.
January 2011	：Issued convertible corporate bonds worth NTD 200 million only.
February 2012	：Organized write-off of treasury stock shares worth NTD 6,180,000
	only; the paid-in capital size after the reduction came to NTD
	1,269,481,610 only.
January 2013	：The convertible corporate bonds reached their second anniversary
	following initial issuance and were sold back for the first time. The
	convertible corporate bonds included in this sell-back totaled NTD
	157,100,000 only.

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January 2014 ： The convertible corporate bonds reached their third anniversary following initial issuance and were sold back for the second time. The convertible corporate bonds included in this sell-back totaled NTD 700,000 only.
April 2014 ： Reinvested in View Full (Samoa) Ltd. and Guangdong Welkin Thinking Electronic Co., Ltd.
December 2014 ： Reinvested in Thinking Electronic (Samoa) Ltd. and Guangdong Thinking Electronic Co., Ltd.
November 2016 ： Reinvested in Dong Guan Welkin Electronic Co., Ltd. Through the subsidiary Thinking (Changzhou).
December 2016 ： The second plant in Nanzi Export Processing Zone was completed. September 2017 ： Reinvested in Dong Guan Welkin Electronic Co., Ltd. through Thinking Electronic (Samoa) and acquired 25% of its shares.
December 2018 ： Organized dissolution and liquidation of the reinvested company Guangdong Thinking Electronics Co., Ltd.
September 2019 ： Organized dissolution and liquidation of the reinvested company Saint East Co., Ltd.
October 2019 ： Organized dissolution and liquidation of the reinvested company Welljet Hong Kong Ltd.
September 2020 ： Won the Kaohsiung Leading Model Enterprise Award 2020. October 2020 ： Won the bronze medal in the enterprise/institution category for its human resources development quality management system.
December 2020 ： Won prizes for “working hours” and “advancement” in the Happy Enterprise Gold Contest organized by the Labor Affairs Bureau of Kaohsiung.
December 2020 ： Receives Certificate of Appreciation December 2020 ： Indirectly reinvested in Welkin Electronic Co., Ltd. April 2021 ： Receives Award in Excellence of Employee Relaitons.
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III. Corporate Governance Report

3.1 Organizational i. Organizational Chart

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As of: December 31, 2020 截止版本： 109.12.31
Shareholders’
股東會
meeting
Audit Committee 審計委員會
Board of
directors 董事會
Compensation and 薪資報酬
Remuneration
委員會
C ommittee
Chairman 董事長
Audit Office 稽核室
President 總經理
President’s Office 總經理室
Informati on Technology
資訊部
Department
Operational Office of the R&D M ain Managem ent
營業處廠長室研發處總管理處
Department Head of Plant Department Department
Labor
勞安室
Safety
Automation Production Production Qu ality Assuran ce
自動化部生管部生產部品保部
Department Control Department Department
Department
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ii. Major Corporate Functions

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Functions
Department
President’s
Manages and plans systems and promotes and supervises projects.
Office
(1)Reviews and evaluates the internal control system to see if it is sound and
effectively enforced and provides advice following analysis and evaluation.
Audit Office
(2)Boosts the efficiency in realizing effective management control with
reasonable cost and improving the operating procedures.
Information
Is responsible for developing, programming, and maintaining IT systems and
Technology
planning and maintaining hardware equipment and network frameworks.
Department
(1)Centrally plans and runs, raises, and utilizes funds and controls over financial
affairs.
(2)Centrally plans budget, provides statements needed for decision-making,
accounting, cost calculation, and handles stock affairs, among others.
Main
(3)Plans and enforces human resources-related affairs and improves quality of
Management
manpower, takes care of applicable documentation control, general affairs,
Department
environmental protection, property management, and public relations, among
others.
(4)Centrally plans respective purchases, inquires about and negotiates prices,
and urges delivery, among others.
(1)Promotes and enhances quality awareness and promotes and controls over
Quality quality assurance system.
Assurance (2)Monitors quality of products and provides the production unit with
Department intelligence about quality.
(3)Establishes and maintains quality systems.
R&D Develops new product lines, researches and develops automation projects,
Department improves new material tests and process yield rate, among others.
Production Takes charge of production volume, production line uptime, and plans
Department production and distribution, among others.
Production
Manages related production schedules, coordinates, communicates about the
Control
progress, and warehousing and packaging, etc.
Department
Automation Is responsible for maintaining production equipment, controlling spare parts and
Department parts, and improving equipment efficiency and automation, among others.
Takes charge of domestic and international operations, production, and
distribution planning, market surveys, preparing marketing events and strategies,
Operational
promotional advertisements, market exploration, customer credit investigation,
Department
accounts collectible, after-sales service, and applying for and planning product
safety specifications, etc.
Labor Safety Plans and supervises applicable labor safety and health management matters and
Office promotes and controls the environmental safety system.
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3.2 Information of Directors, President, Vice President, Associate Vice President, and Heads of Various Departments and Branches

i. Director Information

April 27, 2021

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Shareholding by Executives, Directors or
Shareholding when Elected Current shareholding Spouse & Minor Shareholding Nominee Supervisors Who are Spouses or
Arrangement within Two Degrees of Kinship
Nationality/ Date Term Date First Experience Other
Title Place of Name Gender
Elected (Years) Elected (Education) Position
Incorporation
Shares % Shares % Shares % Shares % Title Name Relation
Boh Chin
R.O.C. Investment Co., - 6/15/2020 3 4/12/1999 27,178,247 21.21% 27,178,247 21.21% - - - -
Ltd.
Associate Vice
Representative of
R.O.C. Boh Chin: Sui, Tai-Chung Male - - - - - 4,080,862 3.19% 1,474,733 1.15% - - Department of Physics, National Taiwan Ocean Note 1 President at the Main Chen, Su-Ai Spouse
University Management
(Chairman) Department
Department of Mechanical
Engineering, National
Representative of Pingtung University of
R.O.C. Boh Chin: Male - - - - - - - - - - - Science and Technology Note 2 None None None
Ho, Yi-Sheng Manager at the Electronic
Business Department of
Thinking
Department of
Transportation and
R.O.C. Chen, Yen-Hui Male 6/15/2020 3 4/12/1999 37,443 0.03% 37,443 0.03% - - - - Communication Note 3 None None None
Management Science,
Feng Chia University
Department of Business
R.O.C. Chang, Shan-Hui Male 6/15/2020 3 4/12/1999 20,051 0.02% 20,051 0.02% - - - - Administration, National Note 4 None None None
Chengchi University
Department of Law,
R.O.C. Huang, Male 6/15/2020 3 6/20/2017 - - - - - - - - National Chengchi Note 5 None None None
Cheng-Nan
University
Department of Finance
R.O.C. Chen, Hsiu-Yen Female 6/15/2020 3 6/20/2017 - - - - - - - - and Taxation, National Note 6 None None None
Chengchi University
Master of Financial
R.O.C. Chou, Chi-Wen Male 6/15/2020 3 6/20/2017 - - - - - - - - Operation, National Note 7 None None None
Kaohsiung University of
Science and Technology
Director
Independent Director
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Note 1: Chairman of Boh Chin Investment Co., Ltd., Director of Yih Chin Investment Co., Ltd., Chairman of Yenyo Technology Co., Ltd., Chairman of Welkin Electronic Industrial Co., Ltd., Chairman of Thinking (Changzhou) Electronic Co., Ltd., Chairman of Thinking (Yichang) Electronic Co., Ltd., Chairman of Jiang Xi Thinking Electronic Co., Ltd., Chairman of Dong Guan Welkin Electronic Co., Ltd., Chairman of Welkin Electronic Co., Ltd., Director of Thinking (HK) Enterprises Limited, Chairman of Thinking International Co., Ltd., Director of View Full (Samoa) Ltd., Director of Thinking Electronic (Samoa) Ltd., and Director of Greenish Co., Ltd.
Note 2: President of Thinking Electronic Industrial Co., Ltd., Director of Thinking (Changzhou) Electronic Co., Ltd., Director of Jiang Xi Thinking Electronic Co., Ltd., Director of Guangdong Welkin Thinking Electronic Co., Ltd. and Director of Yenyo Technology Co., Ltd.
Note 3: Person in charge of Yongxin Bookkeeper and Land Administrator Firm.
Note 4: Person in charge of EnWise CPAs & Co. and Supervisor of Panbiotic Laboratories Co., Ltd.
Note 5: Attorney at Dinghe Law Firm, Independent Director, member of the Compensation and Remuneration Committee, member of the Audit Committee, member of the Nomination Committee of SanFar Property Limited, member of the Compensation and Remuneration Committee and member of the Audit Committee of Thinking Electronic Industrial Co., Ltd.
Note 6: Executive/Financial Vice President of Chen Nan Iron Wire Co., Ltd. and member of the Audit Committee of Thinking Electronic Industrial Co., Ltd.
Note 7: Member of the Compensation and Remuneration Committee and member of the Audit Committee of Thinking Electronic Industrial Co., Ltd.

Major shareholders of institutional shareholders

April 27, 2021

April 27,2021	April 27,2021
Name of institutional shareholder Major Shareholders
Boh Chin Investment Co., Ltd.	Sui, Tai-Chung (13.07%), Chen, Su-Ai (12.98%), Sui, Wan-Ni (31.38%), Sui, Chieh-Heng (42.47%).

Note: Major shareholders are those with a shareholding ratio of 10% and more or an equity ratio on the Top 10 list.

Major shareholders of the Company’s major institutional shareholders : None.

14 -

Professional qualifications and independence analysis of directors

April 27, 2021

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Meet One of the Following Professional Qualification
Independence Criteria (Note)
Criteria Requirements, Together with at Least Five Years Work Experience
An Instructor or A Judge, Public Have Work
Higher Position in a Prosecutor, Attorney, Experience in the Number of
Department of Certified Public Areas of Commerce, Other Public
Commerce, Law, Accountant, or Other Law, Finance, or Companies in
Finance, Accounting, Professional or Accounting, or Which the
or Other Academic Technical Specialist Otherwise Necessary Individual is
Department Related Who has Passed a for the Business of 1 2 3 4 5 6 7 8 9 10 11 12 Concurrently
to the Business National Examination the Company Serving as an
Needs of the and been Awarded a Independent
Name Company in a Public Certificate in a Director
or Private Junior Profession Necessary
College, College or for the Business of the
University Company
Boh Chin Investment Co., Ltd.
      -
Representative: Sui, Tai-Chung
Boh Chin Investment Co., Ltd.
         -
Representative: Ho, Yi-Sheng
Chen, Yen-Hui             -
Chang, Shan-Hui              -
Huang, Cheng-Nan               1
Chen, Hsiu-Yen               -
Chou, Chi-Wen              -
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15 -

Note: When any of the following conditions is met for each director during the two years prior to and during their tenure.

(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.
(4) Not the spouse, a relative within the second degree of kinship, or a direct blood relative within the third degree of kinship of the managers listed under (1) or those listed under (2) and (3).
(5) Not a director, supervisor, or employee of an institutional shareholder directly holding at least 5% of the circulating shares of the Company or that ranks Top 5 in shareholding ratio or that assigns a representative to serve as director or supervisor of the Company according to Article 27 Paragraph 1 or 2 of the Company Act (The same does not apply, however, to independent directors set up by the Company and its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
(6) Not a director, supervisor, or employee of another company with the number of directors in the Company or shares entitled to votes accounting for a majority that is controlled by the same person (The same does not apply, however, to independent directors set up by the Company or its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
(7) Not a director, supervisor, or employee of another company or institution whose chairman, general manager, or someone assigned with similar responsibilities is the same person or the spouse of that of the Company (The same does not apply, to independent directors set up by the Company and its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
(8) Not a director, supervisor, or manager, or shareholder holding at least 5% of shares of a specific company or institution that is financially or commercially related to the Company (The same does not apply, if the said specific company or institution holds at least 20% yet less than 50% of the circulating shares of the Company and to independent directors set up by the Company and its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
(9) Not a professional providing services or consultations on business, legal affairs, financial affairs, and accounting at the Company or its associated enterprise such as auditing that have brought about rewards accumulatively yet to exceed NTD 500 thousand, or the owner, partner, director (supervisor) manager, and his/her spouse of a sole proprietorship or collaborative company or institution. This, however, does not apply to the Compensation and Remuneration Committee, the Public Acquisition Review Committee, or the Special Mergers and Acquisitions Committee fulfilling its duties in accordance with the Securities Transaction Act or the Business Mergers and Acquisitions Act, among others.
(10) Not the spouse or a relative within the second degree of kinship to any other director of the Company.
(11) None of the conditions indicated under Article 30 of the Company Act.
(12) Not a government agency, corporation, or its representative set forth in Article 27 of the Company Act.
16 -

ii. Profile of President, Vice President, Associate Vice President, and Departmental and Branch Supervisors

April 27, 2021

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Shareholding
Spouse & Minor Managers who are Spouses or Within
Date Shareholding by Nominee Experience Other
Title Nationality Name Gender Shareholding Two Degrees of Kinship
Effective Arrangement (Education) Position
Shares % Shares % Shares % Title Name Relation
Department of
Mechanical
Engineering,
National Pingtung
University of
President R.O.C. Ho, Yi-Sheng Male 10/20/1988 - - - - - - Science and Note 1 None None None
Technology
Manager at the
Electronic Business
Department of
Thinking
Provincial Sinying
Vocational High
Associate Vice School of Home Manager at
President at the Main Economics the branch
R.O.C. Chen, Su-Ai Female 8/7/1981 1,474,733 1.15% 4,080,862 3.19% - - Note 2 Sui, Tai-Chung Spouse
Management Manager at the office in
Department Electronic Finance Nanzi
Department of
Thinking
Associate
Department of Vice
Manager at the branch R.O.C. Sui, Tai-Chung Male 4/26/2007 4,080,862 3.19% 1,474,733 1.15% - - Physics, National Note 1 President at Chen, Su-Ai Spouse
office in Nanzi Taiwan Ocean the Main
University Management
Department
Technical Vice Ph.D. National
President at the R&D R.O.C. Hsiao, Fu-Chang Male 11/1/2016 - - - - - - Cheng Kung None None None None
Department University
Providence
Head of Plant R.O.C. Chang, Mei-Hui Female 2/10/2014 - - - - - - None None None None
University
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17 -

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Shareholding
Spouse & Minor Managers who are Spouses or Within
Date Shareholding by Nominee Experience Other
Title Nationality Name Gender Shareholding Two Degrees of Kinship
Effective Arrangement (Education) Position
Shares % Shares % Shares % Title Name Relation
Associate Vice
Master of Material
President at the Second
R.O.C. Chiu, Chung-Chi Male 2/10/2014 - - - - - - Engineering, None None None None
Division of R&D
Tatung University
Department
Chung Cheng
Associate Vice Institute of
President at the Quality R.O.C. Shih, Shao-Liang Male 2/10/2014 9,000 0.01% - - - - Technology None None None None
Assurance Department Acting Chief at R
Yue Guan Co., Ltd.
Master's, National
Taiwan University
Associate Vice National Science
President at the Product R.O.C. Hou, Te-Hsin Male 7/4/2014 - - - - - - Council - Research None None None None
Marketing Department Assistant at
National Taiwan
University
Associate Vice
President at the National Kaohsiung
Domestic Market R.O.C. Su, Shu-Li Female 7/4/2014 - - - - - - University of None None None None
Division of the Applied Sciences
Operational Department
Manager of Finance R.O.C. Hung, Yu-Fang Female 3/23/2015 - - - - - - Tamkang None None None None
Department University
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Note 1: Refer to “i. Director Information” for details.

Note 2: Director of Boh Chin Investment Co., Ltd., Director of Yih Chin Investment Co., Ltd. Director of Welkin Electronic Industrial Co., Ltd. Director of Thinking (Changzhou) Electronics Co., Ltd., Director of Jiang Xi Thinking Electronic Co., Ltd. Director of Dong Guan Welkin Electronic Co., Ltd. Director of Welkin Electronic Co., Ltd. Director of Thinking (HK) Enterprises Limited Director of Thinking International Co., Ltd., Director of View Full (Samoa) Ltd. Director of Thinking Electronic (Samoa) Ltd. and Director of Thinking Holding (Cayman) Co., Ltd.

18 -

3.3 Remuneration Paid to Directors, President and Vice President for the Most Recent Fiscal Year

i. Remuneration Paid to Directors and Independent Directors

December 31, 2020 Unit: NTD thousands

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Remuneration Ratio of Total Relevant Remuneration Received by Directors Who are Also Employees Ratio of Total
Remuneration Compensation
Directors (A+B+C+D) to Net Salary, Bonuses, and (A+B+C+D+E+F+G) to
Base Compensation (A) Pension (B) Allowances (D) Income (%) Severance Pay (F) Employee Compensation (G) Net Income (%)
Compensation(C) Allowances (E) Remuneration
from ventures
Companies in the other than
Title Name consolidated
The Company financial subsidiaries or
The Companiesin the The Companies in the The Companies in the The Companies in the The Companies in the The Companies in the The Companies in the statements The Companies in the from the parent company
consolidated consolidated consolidated consolidated consolidated consolidated consolidated consolidated
company financial company financial company financial company financial company financial company financial company financial Company financial
statements statements statements statements statements statements statements Cash Stock Cash Stock statements
Boh Chin Investment Co., Ltd.
Representative of Boh Chin:
Sui, Tai-Chung (Note)
Representative of Boh Chin:
Director Chen, Su-Ai (Note)
Representative of Boh Chin:
- - - - 23,400 23,400 - - 1.69% 1.69% 25,717 25,717 44 44 10,476 - 10,476 - 4.31% 4.31% None
Ho, Yi-Sheng (Note)
Chen, Yen-Hui
Chang, Shan-Hui
Huang, Cheng-Nan
Independent
Director Chen, Hsiu-Yen
Chou, Chi-Wen
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19 -
(1) The payment policy, system, criteria, and structure of remuneration for independent directors and the association between factors such as responsibilities assigned, risks, and time spent, among others, and the value of the rewards paid:
A. The remuneration to directors of the Company is paid not only taking into consideration the overall operational performance of the Company and the developmental trends in the future but also the advice provided and contributions of each director to the Company in their respective specialized field, such as commerce, legal affairs, and finance. The Company relies on and values the professional opinions from each director. As such, the attendance of each director in each organizational meeting and periodic continuing education in the specialized field on a yearly basis completed by the director are also considered while reasonable rewards are provided to directors. The compensation legitimacy assessment is adjusted adequately depending on the actual operational status of the Company and applicable regulatory requirements and is reviewed by the Compensation and Remuneration Committee and the Board of Directors.
B. It is specified in the Articles of Incorporation that the remuneration to directors may not be more than 2% of the annual profits.
(2) Besides those disclosed in the above table, remuneration paid to directors in the most recent year for having provided services to all companies covered in the financial statement: NTD 125 thousand

Note: During the re-election of directors on June 15, 2020, the directors elected to represent Boh Chin Investment Co., Ltd. Were Sui, Tai-Chung and Ho, Yi-Sheng. Chen, Su-Ai retired as the representative on June 15, 2020.

20 -

Remuneration bracket table

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Name of Directors
Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
Range of Remuneration Companies in the Companies in the
The Company consolidated financial The Company consolidated financial
statements statements
Chen, Yen-Hui, Chen, Yen-Hui, Chen, Yen-Hui, Chen, Yen-Hui,
Chang, Shan-Hui, Chang, Shan-Hui, Chang, Shan-Hui, Chang, Shan-Hui,
Less than NT$ 1,000,000 Huang, Cheng-Nan, Huang, Cheng-Nan, Huang, Cheng-Nan, Huang, Cheng-Nan,
Chen, Hsiu-Yen, Chen, Hsiu-Yen, Chen, Hsiu-Yen, Chen, Hsiu-Yen,
Chou, Chi-Wen Chou, Chi-Wen Chou, Chi-Wen Chou, Chi-Wen
NT$1,000,000 ~ NT$1,999,999 Chen, Su-Ai Chen, Su-Ai
NT$2,000,000 ~ NT$3,499,999
NT$3,500,000 ~ NT$4,999,999 Sui, Tai-Chung Sui, Tai-Chung
NT$5,000,000 ~ NT$9,999,999
NT$10,000,000 ~ NT$14,999,999
Boh Chin Investment Boh Chin Investment Boh Chin Investment Boh Chin Investment
NT$15,000,000 ~ NT$29,999,999
Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd.
NT$30,000,000 ~ NT$49,999,999 Ho, Yi-Sheng Ho, Yi-Sheng
NT$50,000,000 ~ NT$99,999,999
Greater than or equal to NT$100,000,000
Total 6 6 9 9
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Note: The remuneration to directors approved by the Board of Directors prior to the shareholders’ meeting as part of the Earnings Distribution Proposal for 2020.

21 -

ii. Remuneration Paid to President and Vice President

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December 31, 2020 Unit: NTD thousands
Bonuses and Allowances Ratio of Total Compensation
Salary(A) Pension (B) Employee Compensation (D) (A+B+C+D) to Net Income (%) Remuneration
(C)
from ventures
Companies in other than
Companies Companies Companies
Title Name the Companies in the subsidiaries or
in the in the in the
The consolidated The consolidated The consolidated The company consolidated The company consolidated from the parent
company financial company financial company financial financial financial company
statements statements
statements statements statements
Cash Stock Cash Stock
President Ho, Yi-Sheng
Vice Hsiao, 3,708 3,708 139 139 19,901 19,901 10,600 - 10,600 - 2.48% 2.48% None
President Fu-Chang
Remuneration bracket table
Name of President and Vice President
Range of Remuneration Companies in the consolidated
The Company
financial statements (E)
Less than NT$ 1,000,000
NT$1,000,000 ~ NT$1,999,999
NT$2,000,000 ~ NT$3,499,999
NT$3,500,000 ~ NT$4,999,999 Hsiao, Fu-Chang Hsiao, Fu-Chang
NT$5,000,000 ~ NT$9,999,999
NT$10,000,000 ~ NT$14,999,999
NT$15,000,000 ~ NT$29,999,999
NT$30,000,000 ~ NT$49,999,999 Ho, Yi-Sheng Ho, Yi-Sheng
NT$50,000,000 ~ NT$99,999,999
Greater than or equal to NT$100,000,000
Total 2 2
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Note: The employee bonus approved by the Board of Directors prior to the shareholders’ meeting as part of the Earnings Distribution Proposal for 2020.

22 -

iii. Employees’ Profit Sharing Bonus Paid to Management Team

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December 31, 2020 Unit: NTD thousands
Ratio of Total
Title Name Stock Cash Total Amount to Net
Profit (%)
President Ho, Yi-Sheng
Associate Vice
President at the Main
Chen, Su-Ai
Management
Department
Manager at the branch
Sui, Tai-Chung
office in Nanzi
Technical Vice
President at the R&D Hsiao, Fu-Chang
Department
Head of Plant Chang, Mei-Hui
Associate Vice
President at the Second
Chiu, Chung-Chi
Division of R&D
Department
Manager Associate Vice - 16,636 16,636 1.20%
President at the
Shih, Shao-Liang
Quality Assurance
Department
Associate Vice
President at the
Hou, Te-Hsin
Product Marketing
Department
Associate Vice
President at the
Domestic Market
Su, Shu-Li
Division of the
Operational
Department
Manager of Finance
Hung, Yu-Fang
Department
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iv. Compare and describe separately the analysis of ratios of the total remuneration paid to directors, the president, the vice president of the Company in the past two years by the Company and all companies in the Consolidated Statement to the after-tax net profit shown in the Parent Company-only Financial Statement and describe correlation among the remuneration payment policy, standards and combination, remuneration establishment procedures, and management efficacy and risks in the future.

23 -

(1)Analysis of ratios of the total remuneration paid to directors, the president, and the vice president by the Company and all companies included in the Consolidated Statement to the after-tax net profit shown in the Parent Company-only Financial Statement in the past two years:

Statement in thepast	twoyears:	twoyears:
Title	2020		2019
	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements
Director	1.69%	1.69%	1.60%	1.60%
President and VicePresident	2.48%	2.48%	2.12%	2.12%

The difference in the ratios between the two terms is not much and no analysis has been prepared.

According to Article 16 of the Company’s Articles of Incorporation, remuneration to the Company’s directors for performance of job duties must be paid, irrelevant with profit or loss retained by the Company. The Board of Directors is authorized to determine the level of remuneration to directors based on their engagement in and contribution to the Company’s operations, and in reference to peer companies’ pay. If the Company has earnings, the remuneration is to be distributed also as required by Article 19 of the Articles of Incorporation. The remuneration to the Company’s managers is decided according to the Company’s Manager Compensation Criteria. For the time being, the remuneration paid to the President and Vice President consists of the salary, bonus, and employee bonus. The Board of Directors approves the remuneration according to the Company’s Compensation Management Guidelines and pays it according to the extent of involvement and contributions of the President and Vice President over the past year to the operations of the Company and its subsidiaries, their position, seniority in office, education and experience, and possible contributions to the Company in the future, with reference to the industrial level.

3.4. Implementation of Corporate Governance

The Audit Committee and the Compensation and Remuneration Committee under the Board of Directors of Thinking Electronic are helping the Board of Directors fulfill its duties. The Organic Rules of each of the committees are approved by the Board of Directors and the chairman of each committee periodically reports to the Board of Directors regarding its activities and decisions.

24 -

i. Operations of the Board of Directors

(1)The composition of the board members of the Company takes into consideration professionalism and prioritizes the moral behavior and reputed leadership of each individual. The Company now has 7 directors, including 3 independent directors (43%) and one female director (gender ratio of 14%). Profile of each member is provided in the table below. The members specialize in operation, management, decision-making, and leadership - Mr. Sui, Tai-Chung, sales, industrial knowledge, crisis management, and international horizon - Mr. Ho, Yi-Sheng, accounting and taxation - Mr. Chang, Shan-Hui and Ms. Chen, Hsiu-Yen, law - Mr. Huang, Cheng-Nan, land administration - Mr. Chen, Yen-Hui, and finance - Mr. Chou, Chi-Wen. With them providing diversified opinions, it helps with the overall operational development of the Company.
(2)A total of 8 (A) meetings of the Board of Directors were held in the previous period. The attendances of directors were as follows:

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Attendance Attendance
Title Name in person By Proxy Rate (%) Remarks
(B) (B/A)
Boh Chin Newly
Investment Co., Ltd. elected on
Chairman 4 - 100.00%
Representative: June 15,
Sui, Tai-Chung 2020
Boh Chin
Dismissed
Investment Co., Ltd.
Chairman 4 - 100.00% on June 15,
Representative:
2020
Chen, Su-Ai
Boh Chin
Re-elected
Investment Co., Ltd.
Director 8 - 100.00% on June 15,
Representative:
2020
Ho, Yi-Sheng
Re-elected
Director Chen, Yen-Hui 8 - 100.00% on June 15,
2020
Re-elected
Director Chang, Shan-Hui 6 2 75.00% on June 15,
2020
Re-elected
Independent
Chen, Hsiu-Yen 7 1 87.50% on June 15,
Director
2020
Re-elected
Independent
Huang, Cheng-Nan 8 - 100.00% on June 15,
Director
2020
Re-elected
Independent
Chou, Chi-Wen 8 - 100.00% on June 15,
Director
2020
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Note: The actual attendance rate (%) is calculated by the number of Board of Directors meetings held during the term in office and the attendance in person.

25 -

III. Information about the evaluation cycle and duration, and scope, approach, and content of the evaluation, among other information, of the reviews performed independently by the Board of Directors: Evaluation cycle Evaluated period Scope of evaluation Evaluation method Evaluation Content Once a year 1/1/2020- 12/31/2020 Evaluation of the performance of Board of Directors and that of individual directors Self-evaluati on of the performance of Board of Directors and that of directors (I) Measures for the self-performance evaluation of the Board of Directors cover the following dimensions: 1. Involvement in corporate operations 2. Improved decision-making quality of the Board of Directors 3. Composition and structure of the Board of Directors 4. Election of its directors and continuing education for them. 5. Internal control (II) Measures for the self-performance evaluation of the board directors cover the following dimensions: 1. Keeping track of corporate goals and missions. 2. Awareness of the duties of a director. 3. Involvement in corporate operations 4. Management of internal relations and communication 5. Director's professionalism and continuing education 6. Internal control IV. Reinforced assessments of functional objectives of the Board of Directors and implementation status of the objectives of the specific year and the most recent year: The Company has set up the Compensation and Remuneration Committee and the Audit Committee to effectively make the best off and consolidate the governance system, normalize its supervisory function, improve information transparency, and reinforce the management feature.	III. Information about the evaluation cycle and duration, and scope, approach, and content of the evaluation, among other information, of the reviews performed independently by the Board of Directors: Evaluation cycle Evaluated period Scope of evaluation Evaluation method Evaluation Content Once a year 1/1/2020- 12/31/2020 Evaluation of the performance of Board of Directors and that of individual directors Self-evaluati on of the performance of Board of Directors and that of directors (I) Measures for the self-performance evaluation of the Board of Directors cover the following dimensions: 1. Involvement in corporate operations 2. Improved decision-making quality of the Board of Directors 3. Composition and structure of the Board of Directors 4. Election of its directors and continuing education for them. 5. Internal control (II) Measures for the self-performance evaluation of the board directors cover the following dimensions: 1. Keeping track of corporate goals and missions. 2. Awareness of the duties of a director. 3. Involvement in corporate operations 4. Management of internal relations and communication 5. Director's professionalism and continuing education 6. Internal control IV. Reinforced assessments of functional objectives of the Board of Directors and implementation status of the objectives of the specific year and the most recent year: The Company has set up the Compensation and Remuneration Committee and the Audit Committee to effectively make the best off and consolidate the governance system, normalize its supervisory function, improve information transparency, and reinforce the management feature.	III. Information about the evaluation cycle and duration, and scope, approach, and content of the evaluation, among other information, of the reviews performed independently by the Board of Directors: Evaluation cycle Evaluated period Scope of evaluation Evaluation method Evaluation Content Once a year 1/1/2020- 12/31/2020 Evaluation of the performance of Board of Directors and that of individual directors Self-evaluati on of the performance of Board of Directors and that of directors (I) Measures for the self-performance evaluation of the Board of Directors cover the following dimensions: 1. Involvement in corporate operations 2. Improved decision-making quality of the Board of Directors 3. Composition and structure of the Board of Directors 4. Election of its directors and continuing education for them. 5. Internal control (II) Measures for the self-performance evaluation of the board directors cover the following dimensions: 1. Keeping track of corporate goals and missions. 2. Awareness of the duties of a director. 3. Involvement in corporate operations 4. Management of internal relations and communication 5. Director's professionalism and continuing education 6. Internal control IV. Reinforced assessments of functional objectives of the Board of Directors and implementation status of the objectives of the specific year and the most recent year: The Company has set up the Compensation and Remuneration Committee and the Audit Committee to effectively make the best off and consolidate the governance system, normalize its supervisory function, improve information transparency, and reinforce the management feature.	III. Information about the evaluation cycle and duration, and scope, approach, and content of the evaluation, among other information, of the reviews performed independently by the Board of Directors: Evaluation cycle Evaluated period Scope of evaluation Evaluation method Evaluation Content Once a year 1/1/2020- 12/31/2020 Evaluation of the performance of Board of Directors and that of individual directors Self-evaluati on of the performance of Board of Directors and that of directors (I) Measures for the self-performance evaluation of the Board of Directors cover the following dimensions: 1. Involvement in corporate operations 2. Improved decision-making quality of the Board of Directors 3. Composition and structure of the Board of Directors 4. Election of its directors and continuing education for them. 5. Internal control (II) Measures for the self-performance evaluation of the board directors cover the following dimensions: 1. Keeping track of corporate goals and missions. 2. Awareness of the duties of a director. 3. Involvement in corporate operations 4. Management of internal relations and communication 5. Director's professionalism and continuing education 6. Internal control IV. Reinforced assessments of functional objectives of the Board of Directors and implementation status of the objectives of the specific year and the most recent year: The Company has set up the Compensation and Remuneration Committee and the Audit Committee to effectively make the best off and consolidate the governance system, normalize its supervisory function, improve information transparency, and reinforce the management feature.	III. Information about the evaluation cycle and duration, and scope, approach, and content of the evaluation, among other information, of the reviews performed independently by the Board of Directors: Evaluation cycle Evaluated period Scope of evaluation Evaluation method Evaluation Content Once a year 1/1/2020- 12/31/2020 Evaluation of the performance of Board of Directors and that of individual directors Self-evaluati on of the performance of Board of Directors and that of directors (I) Measures for the self-performance evaluation of the Board of Directors cover the following dimensions: 1. Involvement in corporate operations 2. Improved decision-making quality of the Board of Directors 3. Composition and structure of the Board of Directors 4. Election of its directors and continuing education for them. 5. Internal control (II) Measures for the self-performance evaluation of the board directors cover the following dimensions: 1. Keeping track of corporate goals and missions. 2. Awareness of the duties of a director. 3. Involvement in corporate operations 4. Management of internal relations and communication 5. Director's professionalism and continuing education 6. Internal control IV. Reinforced assessments of functional objectives of the Board of Directors and implementation status of the objectives of the specific year and the most recent year: The Company has set up the Compensation and Remuneration Committee and the Audit Committee to effectively make the best off and consolidate the governance system, normalize its supervisory function, improve information transparency, and reinforce the management feature.
Evaluation cycle	Evaluated period	Scope of evaluation	Evaluation method	Evaluation Content
Once a year	1/1/2020- 12/31/2020	Evaluation of the performance of Board of Directors and that of individual directors	Self-evaluati on of the performance of Board of Directors and that of directors	(I) Measures for the self-performance evaluation of the Board of Directors cover the following dimensions: 1. Involvement in corporate operations 2. Improved decision-making quality of the Board of Directors 3. Composition and structure of the Board of Directors 4. Election of its directors and continuing education for them. 5. Internal control
				(II) Measures for the self-performance evaluation of the board directors cover the following dimensions: 1. Keeping track of corporate goals and missions. 2. Awareness of the duties of a director. 3. Involvement in corporate operations 4. Management of internal relations and communication 5. Director's professionalism and continuing education 6. Internal control
IV. Reinforced assessments of functional objectives of the Board of Directors and implementation status of the objectives of the specific year and the most recent year: The Company has set up the Compensation and Remuneration Committee and the Audit Committee to effectively make the best off and consolidate the governance system, normalize its supervisory function, improve information transparency, and reinforce the management feature.

ii. Operations of the Audit Committee:

(1)The Company’s Audit Committee consists of all independent directors and aims to help the Board of Directors fulfill its duties in supervising the quality and integrity of the Company in accounting, auditing, the financial reporting procedure, and financial control. The Committee is in charge of the following:
A. Preparation or revision of the internal control system as required by Article 14-1 of the Securities and Exchange Act.
B. Evaluation of the effectiveness of the internal control system.
C. Revision or amendment of the procedures for acquiring or disposing of assets, trading derivatives, lending funds to others, providing endorsements or guarantees to others, among other major financial operations as required by Article 36-1 of the Securities and Exchange Act.
D. Matters involving the interests of the Board directors.
E. Trading of major assets or derivatives.
F. Major lending of assets, endorsements, or guarantees.
G. Raising, issuance, or private placement of equity securities.
H. Delegation, dismissal of CPAs or their compensation.
I. Appointment or dismissal of the head of finance, accounting, or internal audit.
J. Annual Financial Statements signed or sealed by the Chairman, managers, and head of accounting and the Financial Statement for the second quarter that needs to be audited and certified by CPAs.
K. Other important matters as specified by the Company or the competent authority.
(2)Highlights of Tasks Performed by the Committee throughout the year:
A. Review of financial statements: The 2019 Business Report, Financial Statements, and Distribution of Earnings. The Financial Statements, in particular, were completely audited by Deloitte Taiwan. The above-mentioned Business Report, Financial Statements, and Proposal on Distribution of Earnings have been reviewed by the Audit Committee.
B. Evaluation of the effectiveness of the internal control system: The Audit Committee reviewed the internal audits of the Company and the periodic reports from the delegated CPAs and the management that cover internal control policies and measures regarding finance, operation, risk management, and compliance for their effectiveness. It is believed that the Company has established and enforced the effective control mechanism for supervision and correction.
C. Appointment and compensation of CPAs: The Committee reviewed the independence, suitability, and professionalism of CPAs according to applicable laws and regulations such as the Certified Public Accountant Act to make sure absence of other financial interests and business relationships between the CPAs and the Company except for the fees paid for certification and finance and taxation assignments.
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(3)Operation of Audit Committee:

A total of 8 (A) Audit Committee meetings were held in the previous period. The attendances of the independent directors were as follows:

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Attendance Attendance
Title Name in person By Proxy Rate (%) Remarks
(B) (B/A)
Re-elected
Independent
Chen, Hsiu-Yen 8 - 100.00% on June 15,
Director
2020
Re-elected
Independent
Huang, Cheng-Nan 8 - 100.00% on June 15,
Director
2020
Re-elected
Independent
Chou, Chi-Wen 7 1 87.50% on June 15,
Director
2020
Note: The actual attendance rate (%), on the other hand, is calculated by the number of Audit Committee meetings
held during the term in office and the attendance in person.
Other details to be documented:
I. Matters listed under Article 14-5 of the Securities and Exchange Act and other resolutions
with approval by two-thirds and more of all directors despite the failure to be approved by
the Audit Committee and how the Company addressed opinions from the Audit Committee:
Resolutions with
Items listed
approval by 2/3 and
under §14-5 of
Audit Board of Contents of the proposal and more of all directors
the Securities
Committee directors subsequent management despite the failure to be
and Exchange
approved by the Audit
Act
Committee
1. Implementation of the Internal 
Audit Plan during September and
First meeting First meeting November 2019 by the Audit
of 2020 of 2020 Office.
1/13/2020 1/13/2020 2. Revision of the Operating 
Procedure for Preparing Financial
Statements.
Second Second 1. Implementation of the Internal 
meeting of meeting of Audit Plan during December 2019
2020 2020 and January 2020 by the Audit
3/23/2020 3/23/2020 Office.
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Resolutions with
Items listed
approval by 2/3 and
under §14-5 of
Audit Board of Contents of the proposal and more of all directors
the Securities
Committee directors subsequent management despite the failure to be
and Exchange
approved by the Audit
Act
Committee
2. 2019 Internal Control System 
Declaration.
3. 2019 Financial Statements. 
4. 2019 Business Report. 
5. 2019 Earnings Distribution Table. 
6. Revision of the Rules of Procedure 
for Board of Directors’ Meetings.
7. Revision of the Audit Committee 
Organic Rules.
8. Revision of the Ethical Corporate 
Management Best-Practice
Second Second Principles.
9. Revision of the Operational 
meeting of meeting of
Procedures and Behavioral Guide
2020 2020
3/23/2020 3/23/2020 of Ethical Corporate Management.
10. Revision of the Articles of 
Incorporation.
11. Revision of the Internal Control 
System and Internal Audit
Enforcement Rules.
12. Independence and suitability 
assessment of CPAs and
delegation and rewards of CPAs
for 2020 financial statements and
tax reporting.
13. The Operating Procedure for 
Lending to Others.
Third meeting Third meeting
1. Buyback of corporate shares by
of 2020 of 2020 
acquiring the treasury stock shares.
3/27/2020 3/27/2020
1. Implementation of the Internal 
Fourth Fourth Audit Plan during February and
meeting of meeting of March 2020 by the Audit Office.
2020 2020 2. Presentation on lending of funds 
5/5/2020 5/5/2020 for reinvestments and the
implementation status.
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Resolutions with
Items listed
approval by 2/3 and
under §14-5 of
Audit Board of Contents of the proposal and more of all directors
the Securities
Committee directors subsequent management despite the failure to be
and Exchange
approved by the Audit
Act
Committee
1. Implementation of the Internal 
Audit Plan during April and May
2020 by the Audit Office.
2. Referral of the convener and 
Chairman the Audit Committee of
the current intake.
3. Revision of the Guidelines for 
Buying Back Shares and Assigning
Fifth meeting Fifth meeting
Them to Employees.
of 2020 of 2020
4. Revision of the Operating 
7/13/2020 7/13/2020
Procedure for Buying Back
Treasury Stock Shares.
5. Revision of the Corporate 
Governance Best-Practice
Principles.
6. Revision of the 
Short-and-Long-Term Investment
Management Guidelines.
1. Implementation of the Internal 
Audit Plan in June 2020 by the
Sixth meeting Sixth meeting
Audit Office.
of 2020 of 2020
2. Revision of the internal control 
8/10/2020 8/10/2020
system and Internal Audit
Enforcement Rules.
Seventh Seventh 
1. Shareholders’ request for
meeting of meeting of
independent directors to exercise
2020 2020
their power.
10/19/2020 10/19/2020
1. Implementation of the Internal 
Audit Plan during July and August
Eighth Eighth 2020 by the Audit Office.
meeting of meeting of 2. Shareholders’ request for 
2020 2020 independent directors to exercise
11/9/2020 11/9/2020 their power update and
endorsement.
3. 2021 Audit Plan. 
(I) Decisions made by the Audit Committee (1/13/2020, 3/23/2020, 3/27/2020, 5/5/2020, 7/13/2020, 8/10/2020,
10/19/2020, and 11/9/2020): Approved unanimously by the Audit Committee.
(II) How the Company addressed opinions from the Audit Committee (1/13/2020, 3/23/2020, 3/27/2020,
5/5/2020, 7/13/2020, 8/10/2020, 10/19/2020, and 11/9/2020): Approved unanimously by all attending Board
directors.
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	II. Recusal of independent directors upon conflicts of interest in proposals being discussed: statement: No such situation. III. Communication between independent directors and internal audit heads and CPAs: (I) Communication policies between independent directors and internal audit heads and CPAs: 1. For communication between the independent directors of the Company and the head of internal audit and CPAs, they take place at least once a year through workshops, Audit Committee meetings, or any other meetings. Communication also takes place regularly through emails, over the phone, or by ordinary meetings directly. 2. Between independent directors and the head of internal audit, through periodic Audit Committee’s meetings, the head of internal audit reports to the independent director implementation of internal audits and internal control operations of the Company and communicates to the members audit findings and their follow-up reports. In cases of significant abnormalities, meetings can be called at any time. 3. CPAs communicate with independent directors regularly prior to meetings and in accordance with the Statement of Audit Standards “Communication with the Auditee’s Governance Unit” and the SFB Tai-Cai-Zheng Liu Zi No. 0930105373 letter. CPAs report on the financial standing of the Company, the finance of its subsidiaries overseas, the overall operating condition and the internal control and audit status with regard to the governance over the auditing or review and approval of the Company’s Consolidated/Parent Company-only Financial Statements during the planning and completion stages and communicate on significant adjustment or separation or revisions to laws or regulations, if any, that affect line items. (II) Summary of Communications between Independent Directors and Head of Internal Audit in 2020: Implementation of audits by independent directors: The communications went well. Primary matters communicated are summarized as follows: Date Communicationpoints 1/13/2020 1. Implementation of the Internal Audit Plan during September and November 2019. 3/23/2020 1. Implementation of the Internal Audit Plan during December 2019 and January 2020. 2. 2019 Internal Control System Declaration. 3. Revision of some provisions of the Internal Control System and Internal Audit Enforcement Rules.	II. Recusal of independent directors upon conflicts of interest in proposals being discussed: statement: No such situation. III. Communication between independent directors and internal audit heads and CPAs: (I) Communication policies between independent directors and internal audit heads and CPAs: 1. For communication between the independent directors of the Company and the head of internal audit and CPAs, they take place at least once a year through workshops, Audit Committee meetings, or any other meetings. Communication also takes place regularly through emails, over the phone, or by ordinary meetings directly. 2. Between independent directors and the head of internal audit, through periodic Audit Committee’s meetings, the head of internal audit reports to the independent director implementation of internal audits and internal control operations of the Company and communicates to the members audit findings and their follow-up reports. In cases of significant abnormalities, meetings can be called at any time. 3. CPAs communicate with independent directors regularly prior to meetings and in accordance with the Statement of Audit Standards “Communication with the Auditee’s Governance Unit” and the SFB Tai-Cai-Zheng Liu Zi No. 0930105373 letter. CPAs report on the financial standing of the Company, the finance of its subsidiaries overseas, the overall operating condition and the internal control and audit status with regard to the governance over the auditing or review and approval of the Company’s Consolidated/Parent Company-only Financial Statements during the planning and completion stages and communicate on significant adjustment or separation or revisions to laws or regulations, if any, that affect line items. (II) Summary of Communications between Independent Directors and Head of Internal Audit in 2020: Implementation of audits by independent directors: The communications went well. Primary matters communicated are summarized as follows: Date Communicationpoints 1/13/2020 1. Implementation of the Internal Audit Plan during September and November 2019. 3/23/2020 1. Implementation of the Internal Audit Plan during December 2019 and January 2020. 2. 2019 Internal Control System Declaration. 3. Revision of some provisions of the Internal Control System and Internal Audit Enforcement Rules.
	Date	Communicationpoints
	1/13/2020	1. Implementation of the Internal Audit Plan during September and November 2019.
	3/23/2020	1. Implementation of the Internal Audit Plan during December 2019 and January 2020. 2. 2019 Internal Control System Declaration. 3. Revision of some provisions of the Internal Control System and Internal Audit Enforcement Rules.

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Date Communication points
5/5/2020 1. Implementation of the Internal Audit Plan during February and March 2020.
7/13/2020 1. Implementation of the Internal Audit Plan during April and May 2020.
1. Implementation of the Internal Audit Plan in June 2020.
8/10/2020 2. Revision of some provisions of the Internal Control System and Internal Audit
Enforcement Rules.
1. Implementation of the Internal Audit Plan during July and August 2020.
11/9/2020
2. 2021 Audit Plan.
(III) Summary of Communications between Independent Directors and Certified Public
Accountants in 2020:
Communication between independent directors and CPAs: The communications
went well. Primary matters communicated are summarized as follows:
Date Communication points
1. The CPAs briefed on the 2019 Financial Statement and Consolidated Financial
Statement audit findings and discussed audit findings.
3/20/2020 2. The CPAs explained important operational results and financial ratios.
3. The CPAs clarified the latest update of laws and regulations governing futures
and securities.
1. The CPAs communicated preliminarily on key matters being audited with
independent directors.
12/22/2020
2. The CPAs communicated preliminarily on the expected audit items and the
schedule with independent directors.
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iii. Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

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Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
I. Does the company establish and disclose the  The Company, in compliance with the Corporate Governance Best Practice No major difference
Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, had its Corporate
Principles based on “Corporate Governance Governance Best-Practice Principles approved by the Board of Directors
Best-Practice Principles for TWSE/TPEx on April 16, 2018 and disclosed them in the Market Observation Post
Listed Companies”? System and the Company’s website - Stakeholders.
II. Shareholding structure & shareholders’ rights
(I)Does the company establish an internal  (I) The Company has established the Procedure for Handling Material No major difference
operating procedure to deal with Internal Information and has the spokesperson, acting spokesperson, and
shareholders’ suggestions, doubts, disputes shareholder affairs units to address advice from and concerns of, and
and litigations, and implement based on the disputes among shareholders; in cases of lawsuits, an attorney will be
procedure? authorized to handle them.
(II) Does Company possess a list of major  (II) The Company confirms on a monthly basis changes to the shares held
shareholders and beneficial owners of these and pledged by major shareholders of its Board directors in order to
major shareholders? keep track of their shareholding status.
(III)Does the company establish and execute the  (III)The Company has established the Operating Procedure for Transactions
risk management and firewall system within with Related Parties and Affiliates to control the risks associated with
its conglomerate structure? affiliates.
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	ImplementationStatus	ImplementationStatus	Deviations from “the
Evaluation Item	Yes No Abstract Explanation		Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
(IV) Does the company establish internal rules against insiders trading with undisclosed information?	 (IV) The Company has established the Anti-insider Trading Management Regulations. At least once a year, current directors, managers, and employees are educated on the Anti-insider Trading Management Regulations and applicable laws and regulations. The Company’s directors and managers are educated within 2 months following inauguration and newly hired employees are educated prior to the pre-service training by the Personnel Department. In 2020, the Company already arranged directors and managers of the current intake to attend related programs on the Money Laundering Control Act and insider equity trading, etc. and such information has been declared through the Market Observation Post System as required. Employees are educated according to the RBA policy goal and were tested randomly on May 11, 2020 to help know the communication and implementation results.		No major difference
III. Composition and Responsibilities of the Board of Directors (I) Does the Board develop and implement a diversified policy for the composition of its members?		(I)1. Diversification Policy Regarding Composition of Board of Directors: According to 5.1 of the Company's Corporate Governance Best-Practice Principles, members of the Board of Directors shall possess the required knowledge, skills, and attainment for them to perform their duties. Besides professionalism, moral behavior and leadership reputation are equally valued in order to fulfill the ideal goals in corporategovernance.	No major difference

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Evaluation Item	Yes	No	Abstract Explanation	Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

			2. Substantial Management Goals: In light of the operational framework, business development of the Company and to respond to future trends, the composition of the Company’s Board of Directors takes into consideration the fundamentals (at least one seat for each gender and each age group), professionalism (administration and management, leadership and decision-making, industrial knowledge, or law and finance/accounting) so that the board directors can provide diversified opinions and help the Company with sustainable operation and development. 3. Implementation: The Company has 7 directors, including 3 independent directors (43%) and one female director (gender ratio of 14%). Profile of each member is provided in the table below. The members specialize in operation, management, decision-making, and leadership - Mr. Sui, Tai-Chung, sales, industrial knowledge, crisis management, and international horizon - Mr. Ho, Yi-Sheng, accounting and taxation - Mr. Chang, Shan-Hui and Ms. Chen, Hsiu-Yen, law - Mr. Huang, Cheng-Nan, land administration - Mr. Chen, Yen-Hui, and finance - Mr. Chou, Chi-Wen.	No major difference

36 -

		ImplementationStatus	Deviations from “the
Evaluation Item	Yes No	Abstract Explanation	Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
(II)Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?		Director Gender Age Nationality Also an employee of the Company Tenure of and years served as independent director	In the future, it will be handled as needed for the developments of the Company and as required by applicable laws and regulations.
		Sui, Tai-Chung Male 70-79 R.O.C. Manager at the branch office in Nanzi -
		Ho, Yi-Sheng Male 60-69 R.O.C. President -
		Chen, Yen-Hui Male 60-69 R.O.C. - -
		Chang, Shan-Hui Male 60-69 R.O.C. - -
		Huang, Cheng-Nan Male 50-59 R.O.C. - Shorter than 6 years
		Chou, Chi-Wen Male 50-59 R.O.C. - Shorter than 6 years
		Chen, Hsiu-Yen Female 40-49 R.O.C. - Shorter than 6 years

37 -

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Evaluation Item	Yes	No	Abstract Explanation	Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

(III) Does the company establish a standard to measure the performance of the Board and implement it annually, and are performance evaluation results submitted to the Board of Directors and referenced when determining the remuneration of individual directors and nominations for reelection? (IV) Does the company regularly evaluate the independence of CPAs?	 		(III)On March 23, 2020, the Company approved its “Board of Directors Performance Evaluation Guidelines” through the Board of Directors and the annual performance evaluation was conducted in compliance with the evaluation procedure and evaluation criteria in 6.0 and 8.0. The Company conducted the evaluation in January 2021 and the report was submitted to the Board of Directors on March 22, 2021 for discussions and improvements and to serve as reference in the screening or nomination of directors. Meanwhile, findings from the performance evaluation were adopted as reference while their individual compensation and rewards were being decided. (IV)The Board of Directors, based on the requirements about independence in applicable laws and regulations such as the Certified Public Accountant Act, evaluates the independence, suitability, and professionalism of CPAs each year and obtains the Independence Declaration issued by each CPA (for not violating 10 of the Code of Ethics for Professional Accountants) to confirm that besides the fees paid for certification and finance and taxation assignments, the CPAs do not have other financial interests and business relationships with the Company so that the Board of Directors can discuss their independence. The CPA independence evaluation has been done this year and it was submitted to the Board of Directors on March 22, 2021 to be finalized.	No major difference No major difference

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Evaluation Item	Yes	No	Abstract Explanation	Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

IV. Does the Company appoint competent and appropriate corporate governance personnel and corporate governance officer to be in charge of corporate governance affairs (including but not limited to furnishing information required for business execution by directors, assisting directors’compliance of law, handling matters related to board meetings and shareholders’ meetings according to law, and recording minutes of board meetings and shareholders’ meetings)?			On January 14, 2019, the Board of Directors approved that the financial manager would serve also as the head of corporate governance and related staff within the department would help with corporate governance-related affairs. The responsibilities primarily include maintaining investor relations, providing directors with needed data for them to perform duties and arranging continuing education for them, organizing meetings of the Board of Directors, respective functional committees, and shareholders’ meetings, among others. Highlights of the implementation and continuing education completed by governance staff this year are as follows: (I) Help independent directors and general directors perform their function and arrange continuing education for them: 1. Periodically notify members of the Board of Directors of the latest revisions made to laws and regulations relevant to the scope of operation of the Company and corporate governance and keep the communications and exchanges between directors and respective heads smooth and clear. 2. Help arrange related meetings when it is necessary for the independent directors to separately meet with the head of internal audit or the CPAs in compliance with the Corporate Governance Best-Practice Principles. 3. Help independent directors and general directors prepare the annual continuing education program and arrange courses reflective of the characteristics of the industry that the Company is in and the education and experience of the directors.	No major difference.

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Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
(II) Help prepare Board of Directors’ meetings and shareholders’ meetings:
1. Confirm that the shareholders’ meeting and Board of Directors’
meeting are called for in compliance with the requirements of
applicable laws and the Corporate Governance Best-Practice
Principles.
2. Enclose the resolutions made and release news after the meetings to
ensure the legitimacy and accuracy of important information and to
protect equal access of investors to trading information.
3. Help and remind directors of the laws and regulations that they
should follow while performing duties or making official resolutions
of the Board of Directors.
(III) Continuing education completed by corporate governance staff this
year is as follows:
Provider Course title Duration Hours involved
Highlights of Revisions Made to
Accounting Research Applicable Regulations for the
7/14/2020-
and Development Preparation of IFRS Financial 3.0
7/14/2020
Foundation Statements and Common
Deficiencies
Case Study of How to Trace
Accounting Research
Whereabouts of Funds in Financial 7/17/2020-
and Development 3.0
Statement Frauds and Applicable 7/17/2020
Foundation
Legal Liabilities
Improving Ability to Independently
Accounting Research
Prepare Financial Statements: 7/28/2020-
and Development 3.0
Internal Control, Internal Audit, 7/28/2020
Foundation
and Information Technology
Insights about Common Corporate
Accounting Research
Governance Deficiencies of 8/20/2020
and Development 3.0
Enterprises and Applicable Laws 8/20/2020
Foundation
and Regulations
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Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
V. Does the company establish a communication  On the basis of fulfilling its corporate social responsibility and in respect No major difference
channel and build a designated section on its of the interests of stakeholders, the Company communicates with
website for stakeholders (including but not stakeholders in a variety of ways, knows the issues that concern them and
limited to shareholders, employees, their needs, and adequately addresses and releases important CSR issues
customers, and suppliers), as well as handle that concern them in order to enrich the information disclosed. For the
all the issues they care for in terms of issues about communications of the Company with stakeholders and the
corporate social responsibilities? channels of communications, the details are provided in the table below:
Communication method
Stakeholder Issue involved Response method
or channel
1. Employee Welfare 1. Compensation and 1. Periodic meetings of the
Committee Member benefits Compensation and
2.Labor-Management 2. Employee health Remuneration Committee
Meeting and workplace 2. Announcement of annual
3. Employee feedback safety educational training schedule
mailbox on the 3. Employee 3. Periodic labor-management
Intranet continuing meetings and announcement of
4. Announcement on the education and meeting minutes
Intranet training 4. Annual employee satisfaction
4. Labor rights survey
1. Customer satisfaction 1. Product quality and 1. Cooperation in customer audit
survey certification and response to questionnaires
2. Customer visit and 2. Delivery, quotation, 2. Response to supplier
audit and after-sales satisfaction survey
3. Company website service of products 3. Management of related
1. Supplier site audit 3. Management of systems according to
and questionnaire hazardous international regulations
2. Supplier meeting substances banned
3. Company website under the RoHS
Employees
Customers
Suppliers
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Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
Communication method
Stakeholder Issue involved Response method
or channel
1. Annual Report and 1. Corporate 1. Calling for the general
Company website governance and shareholders’ meeting and
2. Release of important operational status distribution of the Annual
news 2. Management Report
3. Visits by performance 2. (Acting) Spokesperson
institutional 3. Future development available to speak to the public
shareholders strategy 3. Cooperation for visits by
4. Shareholders’ institutional shareholders
meeting and investor 4. Press release
conference
1. Annual Report and 1. Environmental 1. Compliance with laws and
Company website protection and regulations and international
2. Foundation sustainable standards
development 2. Acquisition of related
2. Donations to certifications
minority groups and 3. Acceptance and periodic
educational announcement of donations
institutions 4. Communication on
3. Charity sale jointly volunteering campaigns and
organized by the involvement
plant and the
respective
department and the
collaborative unit
The Company has a section devoted to stakeholders on its website
(http://www.thinking.com.tw) to facilitate communications with stakeholders.
Investors
Other
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Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
VI. Does the company appoint a professional  The Company authorizes the Registrar of President Securities Corporation No major difference
shareholder service agency to deal with to be its professional shareholder service agency.
shareholder affairs?
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Evaluation Item Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation	Evaluation Item Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation	Evaluation Item Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation	Evaluation Item Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation	Evaluation Item Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation
VI. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?  The Company authorizes the Registrar of President Securities Corporation to be its professional shareholder service agency. No major difference
VII. Information Disclosure (I) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (II)Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (III) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed timelimit?	  		(I) Related information on the finance, operations, and corporate governance of the Company is disclosed at all times on the Company’s website http://www.thinking.com.tw). (II) Disclosure of information by the Company to the public: 1. Market Observation Post System There is someone at the Finance Department to take charge of disclosing information and announcing declaration matters through the Market Observation Post System. 2. There is an exclusive section on the Company website for investors. Staff at the Finance Department works with one another in this regard. Some of the corporate governance operations and financial information are already available on the English website for the general public’s reference. 3. The spokesperson and acting spokesperson system is in place and a contact window is available on the website. (III) The Company’s financial statements, once approved by the Board of Directors are announced and declared by the given deadline. For related information, refer to the Market Observation Post System. For the operational status of each month, on the other hand, it is announced and declared before the tenth day of the coming month as required and important news is released through the Market Observation Post System andthe Company website.	No major difference

43 -

	ImplementationStatus Deviations from “the
Evaluation Item	Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation
VIII. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?	 (I) Risk management policy and risk measurement criteria: Refer to the descriptions provided in “Risk Matters Discussion and Analysis” of this Annual Report. (II) Employee rights and employee wellness: Refer to the descriptions provided in “Labor-Management Relations” and “Fulfillment of Social Responsibilities” of this Annual Report. (III)For the policy to protect customers, contracts are signed with customers and the needs of customers are understood through satisfaction survey and related services and assurance are provided accordingly. For supplier relations, in order to ensure long-term steady supply and to meet the demand of customers for product quality and their environmental protection requirements, supplier evaluations are performed periodically. Suppliers are asked to provide product quality materials in order to keep track of the supply status at all times. (IV) The Company’s important information is exclusively based on applicable requirements of the TWSE Procedures for Verification and Disclosure of Material Information of TWSE-listed Companies in order toprotect the rights of shareholders,stakeholders,and investors. No major difference
IX. Explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures. (I) Reinforced scope for “fulfillment of corporate social responsibilities” in the corporate governance evaluation The Company’s social responsibility system and non-financial information are explained through the optimized company website, Annual Report, or other external online platforms, including business ethics, environmental and social issues, human rights, and other policies promised as part of public policies and their implementation efficacy. They will be the indicators for fulfillment of corporate social responsibilities and the implementation efficacyis discussed at all times for constant improvements to make sure that the CSRpolicyispreciselyenforced.

44 -

Evaluation Item	ImplementationStatus Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation
(II) Improved English information disclosure ratio In order to improve the quality of information disclosure and transparency of corporate information so that foreign investors or institutions may have access to information about the Company and the relations between the Company and its investors may be reinforced. The Company plans corporate governance evaluation items and compiles English information in stages. English meeting notification has been available since 2019 and the English financial statements were prepared in 2020. In the future, efforts will be made to release important news and information about shareholders’ meetings (such as the meeting handbook, supplementary materials for the meeting, and the Annual Report)

Evaluation Item

ImplementationStatus
Deviations from “the
Corporate Governance
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation

(II) Improved English information disclosure ratio
In order to improve the quality of information disclosure and transparency of corporate information so that foreign investors or institutions may
have access to information about the Company and the relations between the Company and its investors may be reinforced. The Company plans
corporate governance evaluation items and compiles English information in stages. English meeting notification has been available since 2019 and the
English financial statements were prepared in 2020. In the future, efforts will be made to release important news and information about shareholders’
meetings (such as the meeting handbook, supplementary materials for the meeting, and the Annual Report)

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iv. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Membership of Compensation and Remuneration Committee:

==> picture [546 x 424] intentionally omitted <==

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

Criteria Meets One of the Following Professional
Qualification Requirements, Together with Independence Criteria (Note)
at Least Five Years’ Work Experience
An instructor A judge, Has work
or higher public experience
position in a prosecutor, in the areas
department of attorney, of
commerce, Certified commerce, Number of
law, finance, Public law, finance, Other Public
accounting, or Accountant, or or Companies
other academic other accounting, in Which the
department professional or or otherwise Individual is
Title Remarks
related to the technical necessary Concurrently
business needs specialist who for the 1 2 3 4 5 6 7 8 9 10 Serving as an
of the has passed a business of Remuneratio
Company in a national the n Committee
public or examination Company Member
private junior and been
college, awarded a
college or certificate in a
university profession
necessary for
the business of
Name the Company
Tseng,
Other   -
Su-Hui
Independent Chou,
Director Chi-Wen   -
Independent Huang,
   1
Director Cheng-Nan
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Note : When any of the following conditions is met for each member during the two years prior to and during their tenure.
A. Not an employee of the Company or any of its affiliates.
B. Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
C. Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.
D. Not the spouse, a relative within the second degree of kinship, or a direct blood relative within the third degree of kinship of the managers listed under (1) or those listed under (2) and (3).
E. Not a director, supervisor, or employee of an institutional shareholder directly holding at least 5% of the circulating shares of the Company or that ranks Top 5 in shareholding ratio or that assigns a representative to serve as director or supervisor of the Company according to Article 27 Paragraph 1 or 2 of the Company Act (The same does not apply, however, to independent directors set up by the Company and its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
46 -
F. Not a director, supervisor, or employee of another company with the number of directors in the Company or shares entitled to votes accounting for a majority that is controlled by the same person (The same does not apply, however, to independent directors set up by the Company or its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
G. Not a director, supervisor, or employee of another company or institution whose chairman, general manager, or someone assigned with similar responsibilities is the same person or the spouse of that of the Company (The same does not apply, to independent directors set up by the Company and its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
H. Not a director, supervisor, or manager, or shareholder holding at least 5% of shares of a specific company or institution that is financially or commercially related to the Company (The same does not apply, if the said specific company or institution holds at least 20% yet less than 50% of the circulating shares of the Company and to independent directors set up by the Company and its parent company or subsidiary or a subsidiary that shares the same parent company according to the Act or the local laws and regulations.)
I. Not a professional providing services or consultations on business, legal affairs, financial affairs, and accounting at the Company or its associated enterprise such as auditing that have brought about rewards accumulatively yet to exceed NTD 500 thousand, or the owner, partner, director (supervisor), manager, and his/her spouse of a sole proprietorship or collaborative company or institution. This, however, does not apply to the Compensation and Remuneration Committee, the Public Acquisition Review Committee, or the Special Mergers and Acquisitions Committee fulfilling its duties in accordance with the Securities Transaction Act or the Business Mergers and Acquisitions Act, among others.
J. None of the conditions indicated under Article 30 of the Company Act.
(2) Compensation and Remuneration Committee Responsibilities:

The Committee shall pay due attention as good-will manager and truthfully fulfills its function as follows. It is to be reported to the Board of Directors and submit its suggestions for discussions in the Board of Directors’ meeting:

A. Periodically discuss the Organic Rules of the Committee and provide advice on their revisions if necessary.
B. Establish and periodically reflect on the policy, system, criteria, and structure of performance evaluations and the compensation and rewards of directors and managers.
C. Periodically evaluate and define the compensation and rewards for directors and managers. While performing the functions mentioned in the preceding article, the following
principles shall be followed:
A. Director and managerial performance evaluation and compensation and remuneration shall take reference of the general criteria for the payment in the industry and take into consideration the legitimate correlation with personal performance, operational performance of the Company, and risks in the future.
B. Directors and managers shall not be misled to engage in behavior that exceeds the risk appetite of the Company for the pursuit of their compensation and remuneration.
C. The ratio of the bonus issued to directors and senior managers for their short-term performance and the payment schedule of some of the variable compensation and remuneration shall take into consideration the characteristics of the industry and the nature of operation of the Company before a decision is made.
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(3) Information on the Operational Status of the Compensation and Remuneration Committee:
A. Company's Compensation and Remuneration Committee has 3 members in total.
B. Term in office of members of the current intake: 7/13/2020-6/14/2023

Qualifications of members and their attendance in the 3 meetings of the Compensation and Remuneration Committee in 2020 are as follows:

Title	Name	Attendance in person (B)	By Proxy	Expected attendance (A)	Attendance Rate (%) (B/A)	Remarks
Chairperson	Huang, Cheng-Nan	3	-	3	100.00%	Re-elected on July13,2020
Member	Tseng, Su-Hui	3	-	3	100.00%	Re-elected on July13,2020
Member	Chou, Chi-Wen	3	-	3	100.00%	Re-elected on July13,2020

Note: The actual attendance rate (%) is calculated by the number of Compensation and Remuneration Committee meetings held during the term in office and the attendance in person.

(4) Matters being discussed by the Compensation and Remuneration Committee and the decisions made and how the Company addressed opinions from the members are provided below:

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How the Company
addressed opinions
Compensation and
from the
Remuneration Contents of the proposal Decisions made
Compensation and
Committee
Remuneration
Committee
Eighth meeting of 1. Discussion of regulations relevant to the It was approved It was submitted to
the third intake compensation and rewards policy, system, as is all attending the Board of
1/13/2020 criteria, and structure of 2020. members. Directors and was
2. The amount of the year-end-bonus for managers approved by all
for 2019. attending directors.
3. 2020 Compensation and Rewards Proposal for
managers.
Ninth meeting of 1. 2019 remuneration to directors and that to It was approved It was submitted to
the third intake employees. as is all attending the Board of
3/23/2020 2. Revision of the Compensation and members. Directors and was
Remuneration Committee Organic Rules. approved by all
3. Addition of the Regulations for the attending directors.
Establishment and Exercise of Function of the
Compensation and Remuneration Committee.
First meeting of 1. Referral and election of the convener of the It was approved It was submitted to
the fourth intake Compensation and Remuneration Committee of as is all attending the Board of
8/10/2020 the fourth intake. members. Directors and was
2. Distribution of the remuneration to directors for approved by all
2019. attending directors.
3. Monthly salary structure, amount paid, and
expected pension appropriation following the
transfer of high-ranking officials.
4. Distribution of employee remuneration to
managers for 2019.
Other details to be documented:
I. The Board of Directors does not adopt or modifies the advice provided by the Compensation and Remuneration
Committee: None.
II. For decisions made by the Compensation and Remuneration Committee, there are members who object to or
have their reservations that are recorded or stated in writing: None.
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Corporate Social Responsibility Organizational Structure

The Company’s Corporate Social Responsibility Committee is chaired by the President and underneath are eight groups, namely, the Corporate Governance Group primarily formed by the financial unit, the Green Product Design Group primarily formed by the R&D and design unit, the Supplier Management Group primarily formed by the procurement and supply chain management center, the Labor-Management Committee primarily formed by the human resources unit, the Risk Management Group primarily formed by the quality assurance unit, the Energy Conservation Group primarily formed by the factory affairs unit, the Labor Safety and Health Group primarily formed by the environmental safety unit, and the Public Interest Promotion Group formed by employees. Each of the groups mentioned above includes issues raised by respective stakeholders in their routine or annual plan and promote related activities relevant to corporate social responsibilities.

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Corporate Social
企業社會
Responsibility
Committee 委員會
Supplier Energy
公司治理 Corporate 綠色產品設計 Green Product 供應商管理節能
Management Conservation
Governance Group 小組 Design Group 小組小組小組
Group Group
Risk Management 風險管理 Labor-Management Labor Safety and 勞工安全衛生 Public Interest 社會公益
勞資委員會
Group 小組 Committee Health Group 小組 Group 小組
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Responsibilities of the Corporate Social Responsibility Committee:

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Corporate The Company’s head of corporate governance is responsible for promoting corporate governance in order to escalate the
Governance Group concerns to a higher level of management and to integrate related resources internally for ensuring that respective requirements
for the corporate governance evaluation can be precisely enforced while at the same time ensuring that all operations meet
regulatory requirements.
Risk Management Operational risks increase with the rapidly changing environment. Therefore, how to deal with systematic risks that are beyond
Group control and to prevent non-systematic risks that may be avoided is a daunting task. In light of this, the Group consists of the
head of finance and his/her staff to take charge of analyzing related risks to avoid financial risks as much as possible. As for the
quality management system, the head of the Quality Assurance Center is in charge of preventing against respective emergency
situations and responding quickly.
Green Product Green products free of environmental protection concerns is a universal value. The Group is under the charge of the head of
Design Group research and development, who also leads the R&D team in ensuring that all the materials used in products under development
meet respective environmental protection regulations.
Labor-Management The Labor-Management Committee, on the other hand, is headed by the Management Department so that it serves as the direct
Committee bridge between the employer and the employees. The Management Department also serves as the employer’s representative
during the labor-management meeting that is held periodically with the representative(s) of the employees to ensure fulfillment
-
of necessary decision making duties.
Supplier The Company is part of the electronic industrial chain and hence needs to follow applicable RBA regulations. This Group is
Management therefore under the charge of the head of the supply chain management center. It educates collaborative downstream contractors
Group and performs necessary audits in order to ensure that both upstream and downstream contractors comply with applicable RBA
regulations as well. In addition, for the other standards or regulatory requirements that shall be followed by the industry, such as
AEO, OHSAS, FCPA, etc., the Group shall communicate them to contractors, too.
Labor Safety and The Chairman of occupational safety and health joins hands with factory affairs, general affairs, medical affairs, and human
Health Group resources, among other units and related resources at the same time and serves as a representative of the employer that holds the
labor safety meeting periodically with representatives of the employees in order to take care of the overall environmental safety
and health-related affairs throughout the Company.
Energy Creating an energy-saving low-carbon society is one of the missions of the industry nowadays, too. How to conserve energy and
Conservation reduce carbon emissions and meet the requirements of the domestic Greenhouse Gas Reduction and Management Act has hence
Group become a priority for domestic industries. Therefore, the Group is led by the head of the plant, who is responsible for respective
energy conservation efforts throughout the Company in order to ensure compliance with regulatory requirements and to jointly
work for a low-carbon environment.
Public Interest What the Public Interest Group does is part of external corporate social responsibilities. The head of the management center is in
Group charge and, with assistance from the head of each of the other centers, utilizes resources given by the Company and makes the
best use of them to hopefully improve the corporate image and to take care of units or individuals in need of help.
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v. Fulfillment of Social Responsibilities and Deviation from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and reasons:

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I. Does the Company perform risk assessments when dealing with environmental, social, and corporate governance-related issues that concern the Company’s operations according to the materiality principle and define related risk management policies or strategies?			(I) The Company has established its Corporate Social Responsibility Best-Practice Principles and disclosed them on the company website. It is specified that the corporate social responsibility policy is meant to enforce and consolidate corporate governance, develop a sustainable environment, take part in promoting public interests, and reinforce the disclosure of corporate social responsibility-related information. In addition, the Company received the RBA Code of Conduct medal in 2019 and called for the management review meeting on January 20, 2021 to discuss the implementation of achievements in 2020. (II) The Company has established the “Procedure for Identifying Environmental Considerations” and the “Regulations Governing the Identification and Evaluation of Labor and Ethical Risks” to help identify risks in the environment, associated with health and safety and labor practice relevant to its operation and to confirm the level of each risk and implement an appropriate procedure and substantial control for ensuringcompliance and control over identified risks.	No major difference

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	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate
Evaluation Item	Yes No Abstract Explanation		Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
II. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?	 The Company has the Corporate Social Responsibility Committee to take charge of also promoting and integrating contents concerning respective issues such as corporate governance, environmental protection, green products, energy management, employee wellness, and public interests and reporting them to the Board of Directors once a year. The Company already reported the 2020 implementation status to the Board of Directors on March 22,2021.		No major difference
III. Environmental Issues (I) Does the company establish proper environmental management systems based on the characteristics of their industries? (II) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?	 	(I) The Company has established a complete environmental management system reflective of the characteristics of the netcom industry and the operational demand of the Company and has been ISO 14001 (latest effective period: 2/4/2019~2/4/2022) and IECQ QC080000 (latest effective period: 2/25/2021~2/24/2024) certified. (II) The Company is devoted to eradicating inefficiency and waste of resources in production and manufacturing and improving reutilization of resources. Developing green energy products is a comprehensive movement. From technical R&D, design, manufacturing, and transport to recycling and reutilization, environmental protection regulations and requirements are strictly followed for each of the said stages. In addition,the Companybans	No major difference

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Implementation Status Deviations from “the Corporate
Social Responsibility
Evaluation Item Best-Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed Companies”
and Reasons
the use of hazardous substances in its products. Product
development meets the EU RoHS, REACH, and WEEE
regulations, the EuP Directive, and the halogen-free
requirement, among other international laws and
regulations. Business waste that is generated is strictly
managed and processed and cleared periodically to
reduce environmental impacts to a minimum.
(III) Does the company evaluate the potential  (III) The Company has evaluated the potential risks and No major difference
risk and oppertunities of climate change on opportunities now and in the future brought about by
its operations and take actions? climate change for enterprises. For related information,
refer to (VII) Current Response to Climate-related
Risks and Opportunities under VII. Other Important
Information to Help Understand Utilization of
Corporate Social Responsibilities.
(IV) Does the company conduct inspections  (IV)
about greenhouse gas, water consumption,
Item 2020 2019
and total weight of waste for last two years,
Greenhouse gas 5,542.39 CO2e 6,223.32 CO2e
as well as establish company strategies for
emissions
energy conservation, carbon reduction,
Water consumption 46,329 kWh 40,311 kWh
management of water consumption, and
Electricity 11,792,200 kWh 10,490,357 kWh
total weight of waste?
consumption
Total weight of waste 20,800 tons 18,683 tons
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Note:The Company follows ISO 14064-1 and enforces the greenhouse gas emissions baseline for an inventory check of greenhouse gas emissions and plans an inventory check of greenhouse gas emissions of the preceding year in September of each year. The Company, in compliance with the Ministry of Economic Affairs’ “Requirements for Energy Users to Set Energy Conservation Goals and Implementation Plans," promotes the energy conservation project to fulfill the goal of at least 1% energy or electricity saved on average each year. The Company has added the variable frequency drive to equipment, modified air pressure pipes, and replaced the hydraulic press, packaged air conditioners, and illumination equipment to contribute to a mean energy/electricity conservation rate of 1.98% in 2020, that is, 51,274 kWh was saved. Besides purchasing related pollution prevention equipment to reduce environmental impacts brought about operations in the factory, the Company continues to educate its people on turning off light when not in use and categorizing, recycling, and reducing trash for the purpose of conserving energy and reducing carbon emissions.

54 -

	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate
Evaluation Item	Yes No Abstract Explanation		Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	In order to improve effective utilization of resources, the Company continues to adopt waste reduction management measures and will continue to reduce hazardous business waste and improve reutilization of waste that can be recycled. The reutilization rate was up to 90% in 2020 and it is expected that the reutilization rate from recycling ethanol will grow by at least 1% in 2021. The Company recycles purified water discharged through the RO system to the air-conditioning cooling water tower to be used further and collect RO water discharged from the manufacturing process, reprocesses it, and reuses it. Water consumption dropped by 20,165 tons in 2019 and waste water discharge was reduced to 45%. In 2020, the savings were 23,934 tons and 46.1%,respectively.
IV. Social Issues (I) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?		(I) The Company received the RBA Code of Conduct medal in 2019 and followed applicable labor laws and regulations and the RBA and international human rights convention. The Company has established related management policies and procedures, including the Corporate Social Responsibility Best-Practice Principles, the RBA Code of Conduct Handbook, the Regulations to Prevent and Control Sexual Harassment Prevention and to Ensure Gender Equity at Work, the Anti-Discrimination Regulations, the Child Labor and Underage Workers Regulations," and the “Freedom of Association and Collective Bargaining Regulations” and enforces RBA practices and periodically holds the labor-managementmeeting ona quarterly basis.	No major difference

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(II) Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries? (III) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?	 		(II) The Company has established the Work Rules and related personnel management regulations that cover the basic wage, working hours, leave, pension, Labor Insurance and National Health Insurance coverage, occupational hazard compensation, etc. All meet the applicable requirements of the Labor Standards Act. The Employee Welfare Committee is in place. It is operated by the Welfare Committee elected by employees and takes care of respective benefits. The Company’s remuneration policy is based on personal capabilities, contribution to the Company, and performance; it is positively correlated with the operational performance. (III) Work Environment: 1. It is specified that employees shall take related required protective measures for the environment where they are working in order to protect their personal safety. 2. It is ISO 45001-certified and two fire prevention educational drills are organized each year to familiarize employees with fire prevention equipment and to improve their responsiveness for ensuring their personal safety. 3. Employee health check-ups are conducted periodically each year to help employees properly manage their own health. Safety and health educational trainingare implementedperiodically.	No major difference

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(IV) Does the company provide its employees with career development and training sessions? (V) Does the company comply with relevant regulations and international standards about customers’ health, safty, privacy, advertise and label of goods and services and establish consumer protection policy?	 		4. Air-conditioning equipment is cleaned periodically each year and trash is categorized to ensure a quality work environment. 5. Contract healthcare professionals are based on site to enforce employee health management. (IV) Each department in the Company submits its annual training plan according to the training operating procedure that focuses on occupational gaps and future development plans. (V) The Company markets and labels its products and services in compliance with applicable laws and regulations and international standards and will provide the Self-Declaration Letter as requested by customers for sold products indicating compliance with UL/cUL,VDE,TUV,CQC…., among other electronic part safety certifications in respective countries and the EU REACH, RoSH, and WEEE regulations, the EuP Directive, and the halogen-free requirement, among other international laws and regulations. Customers’ privacy is protected in honor of the Confidentiality Agreement and the Personal Data Protection Act and there is an exclusive section for stakeholders and complaint-filingaccess isprovided.	No major difference

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Implementation Status Deviations from “the Corporate
Social Responsibility
Evaluation Item Best-Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed Companies”
and Reasons
(VI) Does the company implement supplier  (VI) Supplier Relations: No major difference
management policies, requiring suppliers to The Company performs supplier evaluations
observe relevant regulations on periodically and requires that suppliers sign the Social
environmental protection, occupational Responsibility Survey and the Supplier Social
health and safety, or labor and human Responsibility (SA8000)/RBA/Integrity Commitment
rights? If so, describe the results. to facilitate joint efforts to promote corporate social
responsibilities. In the event that major suppliers of the
Company violate its corporate social responsibility
policy and it significantly impacts the environment and
the society, contracts may be terminated or dismissed
at any time. Related persons in charge were inquired
about this and None in 2020.
V. Does the company reference internationally  The Company is currently not within the scope of No major difference
accepted reporting standards or guidelines, application for preparing the Corporate Social
and prepare reports that disclose Responsibility Report defined in laws and regulations and
non-financial information of the company, hence has not prepared such a report.
such as corporate social responsibility
reports? Do the reports above obtain
assurance from a third party verification
unit?
VI. If the Company has established its own CSR principles according to the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx
Listed Companies, how are operations different from the established principles?
Enforce and consolidate corporate governance, develop a sustainable environment, take part in promoting public interests, and reinforce the
disclosure of corporate social responsibility-related information. For further information about the operations, refer to the descriptions provided
under each of the items mentioned above. No deviation from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx-Listed
Companies.
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VII. Other Important Information to Help Understand Utilization of Corporate Social Responsibilities:

(I) Environmental Protection:

Besides strictly following international environmental protection standards in its research and development of RoHS-compliant products, the Company authorizes a waste processing service provider approved by the Environmental Protection Administration to clear waste and follows the Waste Disposal Act, Noise Control Act, Air Pollution Control Act, among others, to prevent against pollution and to protect environmental hygiene.

(II) Community involvement, contributions to society, community service, and public interest:

Since the “Thinking Education Foundation” was founded, the Company has been reaching out to areas throughout Taiwan to express its care, such as adopting schooling children and sponsoring minority groups. Meanwhile, it has been working with respective units in organizing charity sales. Substantial action is taken for the Company to proactively get involved in boosting public interests and in fulfilling its social responsibilities.

Charity events organized by the Thinking Education Foundation in 2020: Sponsorship to help build the Fuzhi Educational Institute and adopting students with vision impairment at Huei-Ming School For Blind Children to provide schools and students with the resources truly needed; sponsoring multiple charity concerts, such as the Weiwuying Concert, the Baroque Camerata, and other indoor bands in addition to the Teacher Chang Youth Guidance Center in Kaohsiung that has been making contributions to Kaohsiung for over 40 years by promoting the importance of mental health, calling upon colleagues throughout the Company to proactively take part in each charity sale fair organized by the Genesis Social Welfare Foundation, the Chuen Yang Association, and the Taiwan Fund for Children and Families and to donate all earnings to the said organizers as well as various other public interest events.

(III) Consumer rights:

Despite the fact that the Company is a parts supplier, with customers primarily being assembly plants, without directly selling to consumers, for the sake of protecting the rights of customers, the Company has a responsible department and email box devoted to addressing related issues filed concerning the rights of customers.

(IV) Human rights:

The Company's employees are treated equal in terms of employment, regardless of their gender, religion, or partisanship. The Company also shapes an optimal workplace to ensure free of discrimination and harassment for its employees. In addition, the Company received the RBA Code of Conduct medal and continues to protect labor rights in honor of the medal.

(V) Safety and health:

The Company follows the requirements of governmental occupational safety and health laws and regulations in each of its safety and health tasks.

59 -

(VI) Certification:

Certifications that have been acquired by the Company include ISO 14001, ISO 45001 and ISO 14064-1 for greenhouse gas emissions inventory check, ISO/TS 16949 for its quality management criteria, and IECQ QC 080000 for its hazardous substance management system.

(VII) Response to Climate-related Risks and Opportunities:

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

Potential financial
Climate risks Climate opportunities Potential financial impacts Response in 2020
impacts
Construction of green To reduce the operating Green buildings planned for
buildings water and electricity costs new plants
Production was
Unstable water and To reinforce climate
impacted and the To improve water Recycling of process
electricity supply resilience and to reduce
operating cost increased resource efficiency wastewater, with a recovery
impacts of a disaster on the
and utilization rate of >50%
production
To reduce the cost of
Cost of developing Increased cost of operational water resource Investment in the
Reduced use of water
water-saving developing and to streamline the development of water-saving
resource
processes water-saving processes manufacturing procedure processes
for increased profits
To reinforce climate Foundation for new plants
Typhoons, floods Production suffering
To improve resistance resilience and to reduce elevated by 50 cm
impacts to result in
against natural chances of interrupted Rainwater recycling and water
financial losses and a
Drought disasters operations and possible status monitoring mechanism
decline in revenue
losses for new plants
Increased electricity Promoting green, Mean electricity saving rate of
To conserve electricity and
Rising temperature consumption, costs, and energy conservation, >1% a year for the energy
reduce cost
carbon emissions and carbon reduction conservation project
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60 -

Major issue	Risk assessment item	Risk managementpolicy orstrategy
Environment	Environmental protection and ecological conservation	The Company has been ISO 14001 certified for its environmental management system and is proactively devoted to environmental protection. All production and manufacturing processes are strictly compliant with applicable environmental protection laws and regulations. For contaminated water, waste reduction is a constant goal to be fulfilled before it is discharged. Current environmental protection equipment are improved and maintained so that environmental protection may last over the long term. The action plan and solution are defined on a yearly basis and the status of each goal is followed up and reflected upon periodically to ensure fulfillment of goals.
Society	Occupational safety	The Company has been ISO 45001 certified for its occupational safety and health management system. A safe and healthy workplace is provided, with the safety and health unit in place to proactively carry out related operations. Besides respective periodic disaster prevention drills and related educational trainings, equipment checks are reinforced to ensure safety and the work environment and safety protection facilitiesare proactivelyimproved.
	Product safety	The Company has been QC 080000 certified for its hazardous substance procedure management system. Respective products are in compliance with government regulations and service laws and regulations and meet the international EU RoHS standards. Meanwhile, through the rigid quality system and by sending products for SGS testing periodically, customers are provided with products of steady quality. To ensure quality of service provided to customers and enhance customer satisfaction, on the other hand, there are the customer service department and website in place that spontaneously perform the customer satisfaction survey regularly once every year to reinforce the collaboration with customers. The reciprocal and co-prospering relationship forms the cornerstoneforsustainable business development.
Corporate governance	Socioeconomic and compliance	By forming the governance organization and consolidating the internal control mechanism, compliance with applicable regulatory requirements by all staff and in operations of the Company is ensured.

61 -

Ethical Corporate Management Structure

In order to enforce its ethical corporate management policy and sound and integral operations, the Main Management Department also takes care of ethical corporate management. The head of the center is in charge of preparing the policy and subsequent preventive solutions and enforcing them and periodically reporting to the Board of Directors. Its responsibilities mainly include the following:

To help combine honesty and moral values as part of the Company’s operational strategy and to prepare related preventive measures to ensure ethical corporate management as required by law.
To plan internal organization, configuration, and job responsibilities and to have mutual check and balance mechanisms in place for operational activities at relatively high risks of dishonest behaviors within the scope of operation.
To promote and coordinate initiative training on the integrity policy.
To plan a reporting system that helps ensure effective implementation.
To help the Board of Directors and the management inspect and evaluate whether preventive measures established to ensure ethical corporate management have been working effectively and to evaluate related operating procedures periodically for compliance, with a report produced.

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Board of
董事會
directors
Audit Office
稽核室
Audit
審計委員會
Committee
Main
總管理處
Management
Department
Ethical Corporate 誠信經營 Corporate 公司治理風險管理 Risk 利害關係人諮詢 Stakeholder
Management 小組 Governance 小組 Management 小組 Advisory 小組
Group Group Group Group
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vi. Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies" and Reasons

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Evaluation Item	Yes	No	Abstract Explanation	Corporate Management Best-Practice Principles for TWSE/TPExListed Companies” andReasons

I. Establishment of ethical corporate management policies and programs (I) Does the company have a Board-approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy? (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 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 Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies?	 		(I) The Company’s addition and revision to the Ethical Corporate Management Best-Practice Principles and the Operational Procedures and Behavioral Guide of Ethical Corporate Management were approved on March 23, 2020 by the Board of Directors. The solution to prevent against unethical behavior, the discipline, and complaint-filing system are defined in the Operational Procedures. To precisely enforce ethical corporate management, the Main Management Department is also assigned to be a unit subordinate to the Board of Directors to take charge of related systems and supervising their implementation and to report to the Board of Directors once a year. (II) The Ethical Corporate Management Best-Practice Principles and the Operational Procedures and Behavioral Guide of Ethical Corporate Management established by the Company already clearly stipulate that directors, managers, and all employees of the Company are prohibited to engage themselves in operational activities at relatively high risk of unethical behavior as set forth in each sub-paragraph under Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies.	No major difference

	Implementation Status	Implementation Status	Deviations from “the Ethical
Evaluation Item	Yes No Abstract Explanation		Corporate Management Best-Practice Principles for TWSE/TPExListed Companies” andReasons
(III)Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular reviews and amendments?	 (III) The Company has established the Ethical Corporate Management Best-Practice Principles where the operating procedures, behavioral guide, penalties for violations, and complaint filing system are defined and have been enforced. Meanwhile, at the end of each year, when the Board of Directors presents the implementation report of ethical corporate management for the year, the Company’s Ethical Corporate Management Best-Practice Principles (latest version dated March 23, 2020) are re-examined for whether revisions are required.		No major difference
II. Fulfill operations integrity policy (I) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (II) Does the company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations?	 	(I) When the Company signs a contract with others, it shall cover compliance with the ethical corporate management policy and include the clause that in case of any unethical behavior of the counterparty, the Company may terminate or dismiss the contract at any time. (II) The Company has the Main Management Department to also take care of the revision, implementation, interpretation, and advisory service for the operating procedures and information to be included in the report, among others, and to report to the Board of Directors at least once a year as required. The Main Management Department already reported the 2020 implementation status on March 22,2021.	No major difference

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Implementation Status Deviations from “the Ethical
Corporate Management
Evaluation Item Best-Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed Companies”
and Reasons
(III) Does the company establish policies to  (III) The recusal system in case of conflicting interests No major difference
----- End of picture text -----

Evaluation Item	Yes	No	Abstract Explanation	Corporate Management Best-Practice Principles for TWSE/TPExListed Companies” andReasons
(III) Does the company establish policies to			(III) The recusal system in case of conflicting interests	No major difference
prevent conflicts of interest and provide appropriate communication channels, and implement it? (IV) Does the company have effective accounting and internal control systems in place to implement ethical corporate management? 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 hire outside accountants to perform the audits? (V) Does the company regularly hold internal and external educational trainings on operational integrity?	 		for board directors is defined in the Company’s Ethical Corporate Management Best-Practice Principles and Rules of Procedure for the Board of Directors’ Meetings. In cases of conflicting interests for the director or the corporation represented by the director in any proposal included in the Board of Directors’ meeting agenda that are likely to harm the interests of the Company, the proposer may state opinions and answer questions but may not take part in the discussions or cast a vote and shall be excused during discussion and voting and the director may not exercise voting rights on behalf of any other director. (IV) The Company has established a valid accounting system and internal control system and the Company’s Internal Audit Unit performs regular and irregular inspections according to the Annual Audit Plan or a project-based plan and reports it to the Audit Committee and the Board of Directors on a quarterly basis. In addition, the Company follows the requirements of applicable laws and regulations to have the CPA to take charge of auditing and certifying accounting books. (V) To ensure that ethical corporate management covers the RBA Code of Conduct Handbook, compliance with laws and regulations, the accounting system, and internal control, etc., the Company held related courses, 35 sessions in total, in 2020 and 1,397 of its people attended self-organized or outsourced educational trainings totaling 4,165 hours.

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Evaluation Item	Yes	No	Abstract Explanation	Corporate Management Best-Practice Principles for TWSE/TPExListed Companies” andReasons

III. Operation of the integrity channel (I) Does the Company have substantial reporting and incentive systems in place, provide convenient reporting channels, and assign appropriate specialists to investigate reported matters? (II) Does the company have in place standard operating procedures for investigating accusation cases, as well as follow-up actions and relevant post-investigation confidentiality measures? (III) Does the company provide proper whistleblower protection?	  		(I) The Company has the measures in place to handle and manage opinions, advice, and complaints from employees and there is the exclusive section for stakeholders on the company website where the email box and telephone are provided for employees to express themselves. The Company has also set up the Complaint Committee to take charge of addressing complaints. (II) The Complaint Committee is chaired by the President and consists members who are heads of respective departments or higher-ranking officials. Upon receipt of a complaint, the Chairman assigns at least three members to form a task force that will conduct an investigation and finish the evaluation process within 60 days. The task force shall release the evaluation decision on the bulletin board yet may not disclose related personal information. (III) While filing a report, the Company’s staff may choose to do so anonymously yet the Company encourages them to identify themselves to facilitate communications and investigations. Upon receipt of a report, the recipient shall take reasonable preventive and protective measures to ensure quality of investigation and to prevent the reporter against unfair retaliation or treatment.	No major difference

Evaluation Item	Implementation Status Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPExListed Companies” andReasons Yes No Abstract Explanation
IV. Strengthening information disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?	 The Company discloses details about the established Ethical Corporate Management Best-Practice Principles and the implementation efficacy in the exclusive section for Corporate Social Responsibility on the company website. No major difference
V. If the company has its own Ethical Management Principles established according to the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, the differences between its implementation and theprinciples: No major difference.
VI. Other important information to help understand the implementation of the ethical corporate management of the company: The Company insists on engaging itself in all business activities in honor of the ethical corporate management principle: When signing a contract with others, the Company shall include compliance with the ethical corporate management policy and contain the clause that the contract may be terminated or dismissed at any time if a counterpart is found with any unethical behavior. For investments made by shareholders, the Company manages them professionally and diligently to ensure fair, sustainable, and competitive returns for the best interest of the shareholders. Working conditions to protect the health and safety of each employee are provided. Employees are listened to and their complaints and issues are dealt with sincerely. Employees are encouraged and helped to develop related skills and knowledge and avoid illegal activities. Employees are offered sustainable employment. The Companyvalues the rights of each stakeholder for the sake ofpromotingsustainable corporate developments.

vii. Inquires about the Corporate Governance Best-Practice Principles and related regulations

established by the Company:

The Company has established related regulations such as the Corporate Governance Best-Practice Principles, the Corporate Social Responsibility Best-Practice Principles, and the Ethical Corporate Management Best-Practice Principles, among others. To make inquiries, visit the exclusive section for “corporate governance and operation” on the company website (http://www.thinking.com.tw).

viii. Other important information that is sufficient to boost knowledge of corporate governance: None.

69 -
ix. Implementation of Internal Control System: The following information shall be disclosed.
(1) Statement of Internal Control System

Thinking Electronic Industrial Co., Ltd.

Statement of Internal Control System

Date: March 22, 2021

For the Company's internal control system of 2020, it is hereby declared as follows according to the self-assessment findings:

I. The Company knows that establishing, enforcing, and maintaining an internal control system is the responsibility of the Company's Board of Directors and managers and has such a system in place already. It is meant to reasonably ensure fulfillment of the operational efficacy and efficiency (including profits, performance, and protection of asset security), reporting reliability, timeliness, transparency, and compliance with applicable regulations and laws and regulatory requirements, among other goals.
II. The internal control system has its inherited restrictions that cannot be overcome with improved design. An effective internal control system can also only reasonably ensure the fulfillment of the three goals stated above and its effectiveness may change as the environment
or situation changes. There is a self-surveillance mechanism, however, built inside the internal control system of the Company that helps the Company take a corrective action against deficiencies confirmed.

III. The Company determines the effectiveness of the design and implementation of its internal control system in accordance with the items in "Governing Regulations for Public Company's Establishment of Internal Control System" (hereinafter called "Governing Regulations") that are related to the effectiveness of internal control systems. The items adopted in the Governing Regulations for determining the internal control system are the five constitutional elements of the internal control system divided according to the management and control process: 1. control environment, 2. risk assessment, 3. control process, 4. information and communication, and 5. supervision. Each element further encompasses several items. For the above-mentioned items, refer to the requirements in the “Governing Regulations." IV. The Company has already adopted the aforesaid items to evaluate the effectiveness in the design and implementation of its internal control system.

V. Pursuant to the results of the above-mentioned evaluations, the Company is of the view that the design and implementation of its internal control system as of
70 -

December 31, 2020 (including its supervision and management of subsidiaries), including its awareness of the extent by which the operating effects and efficiency goals are fulfilled, reliability of reports, and compliance with relevant laws and regulations, are such that it is effective and capable of reasonably ensuring that the aforementioned goals can be achieved.

VI. This declaration constitutes a major part of the Company's Annual Report and the Company's Prospectus that are made available to the public. In case of falsification or concealment, among other illegal conditions, with the above-mentioned released contents, liabilities under Articles 20, 32, 171, and 174 of the Securities and Exchange Act will be sought.
VII. This Declaration was approved at the meeting of the Company's Board of Directors on March 22, 2021 with no directors expressing dissent out of the 7 Directors in attendance.

Thinking Electronic Industrial Co., Ltd.

Chairman of Board: Sui, Tai-Chung

President: Ho, Yi-Sheng

(2) If review of the internal audit system is outsourced to CPAs as an exception, the CPA Review Report shall be disclosed: None.
x. For the Most Recent Fiscal Year and during the Current Fiscal Year up to the date of Publication of the Annual Report, facts about penalties imposed upon the Company and its internal personnel for their violation of the internal control system, major defects and the corrective actions taken: None.
71 -
xi. Important resolutions of shareholders meeting and board meeting in the most recent year

and during the current fiscal year up to the date of publication of the annual report:

(1) Decisions made through the General Shareholders’ Meeting by attending shareholders on June 15, 2020 and their implementation status:
A. Approval of 2019 Business Report and Financial Statements.
B. Approval of distribution of earnings for 2019.
- Implementation: September 2, 2020 was set to be the ex-dividend record date and September 18, 2020 the payment date. (NTD 4.2 as cash dividends per share)
C. Approval of the revision to the Articles of Incorporation.
- Implementation: Registration was approved by the Ministry of Economic Affairs on June 30, 2020 and it was announced on the company website.
D. Approval of the revision to the Rules of Procedure for Shareholders’ Meetings. Implementation: Related procedures have been enforced according to the post-revised Rules.
E. Re-election of Directors.
- Director: Representative of Boh Chin Investment Co., Ltd.: Sui, Tai-Chung Representative of Boh Chin Investment Co., Ltd.: Ho, Yi-Sheng Chen, Yen-Hui Chang, Shan-Hui

Independent directors: Huang, Cheng-Nan, Chen, Hsiu-Yen, Chou, Chi-Wen Implementation: Registration was approved by the Ministry of Economic Affairs on June 30, 2020 and it was announced on the company website.

F. Approval of lifting of the non-competition pledge obligations upon the newly elected directors.

Implementation: It has been enforced according to the decision made in the shareholders’ meeting.

(2) Important decisions of the Board of Directors:

Item No. 1	Date 1/13/2020	Important decision
		1. Assignment of directors and supervisors for the subsidiary, Guangdong Welkin Thinking Electronic Co., Ltd. 2. Assignment of directors and supervisors for the subsidiary, Dong Guan Welkin Electronic Co., Ltd.

Assignment of directors and supervisors for the subsidiary, Thinking (Changzhou) Electronic Co., Ltd.
Discussion of regulations relevant to the compensation and rewards policy, system, criteria, and structure of 2020.
The amount of the year-end-bonus for managers for 2019.
72 -

Important decision

Item No. Date

Monthly salary structure, amount paid, and expected pension appropriation for managers for 2020.
Extension of liability insurance coverage for directors (including independent directors).
Revision of the Operating Procedure for Preparing Financial Statements.
2 3/23/2020 1. 2019 Internal Control System Declaration.
2019 remuneration to employees and that to directors.
2019 Financial Statements.
2019 Business Report.
2019 Earnings Distribution Table.
Revision of the Rules of Procedure for Board of Directors’ Meetings.
Revision of the Audit Committee Organic Rules.
Establishment of the Regulations for the Establishment of Independent Directors and Requirements to Be Followed and the Board of Directors Performance Evaluation Guidelines.
Revision of the Rules of Procedure for Shareholders’ Meetings.
Revision of the Ethical Corporate Management Best-Practice Principles.
Revision of the Operational Procedures and Behavioral Guide of Ethical Corporate Management.
Establishment of the Regulations for the Establishment and Exercise of Function of the Compensation and Remuneration Committee.
Revision of the Compensation and Remuneration Committee Organic Rules.
Revision of the Articles of Incorporation.
2020 Operational Plan.
Revision of the Internal Control System and Internal Audit Enforcement Rules.
Independence and suitability assessment of CPAs and delegation and rewards of CPAs for 2020 financial statements and tax reporting.
The Operating Procedure for Lending to Others.
Comprehensive re-election of Board directors through 2020 shareholders’ meeting.
Deadline for nominating independent director candidates, the number of openings, and the venue to do so.
73 -

Important decision

Item No. Date

Lifting of the Company’s business strife limitation clause for newly elected directors and corporations and their representatives.
Convening of shareholders’ meeting.

3 3/27/2020 1. Buyback of corporate shares by acquiring the treasury stock shares.

4 5/5/2020 1. Extension of lines of credit for bank financing and trading of derivatives.

Capital increase in cash organized by the subsidiary, Thinking Holding (Cayman) Co., Ltd. for the reinvested company, Thinking International Co., Ltd.
Board of Directors’ review of the list of independent director candidates.
Change in the cause for convening the shareholders’ meeting.

5 6/15/2020 1. Election of Chairman. 6 7/13/2020 1. Hiring of members of the Compensation and Remuneration Committee.

Revision of the Guidelines for Buying Back Shares and Assigning Them to Employees.
Revision of the Operating Procedure for Buying Back Treasury Stock Shares.
Revision of the Corporate Governance Best-Practice Principles.
Revision of the Short-and-Long-Term Investment Management Guidelines.
7 8/10/2020 1. Extension of lines of credit for bank financing and trading of derivatives.
Revision of the internal control system and Internal Audit Enforcement Rules.
Distribution of dividends in cash.
Distribution of remuneration to directors (including independent directors) for 2019.
Distribution of employee remuneration to managers for 2019.
Proposal from the Compensation and Remuneration Committee.

8 11/9/2020 1. Extension of lines of credit for bank financing and trading of derivatives.

2021 Audit Plan.
Remuneration to members of the Compensation and Remuneration Committee for 2020.
Intended investment to set up a company in Mainland China by the subsidiary, Dong Guan Welkin Electronic Co., Ltd.
74 -

Important decision portant decision ortant decision

Item No. Date Important decision portant decision ortant decision 9 1/18/2021 1. Assignment of directors and supervisors for the subsidiary, Jiang Xi Thinking Electronic Co., Ltd..
Extension of lines of credit for financing with financial institutions and trading of derivatives.
Discussion of regulations relevant to the compensation and rewards policy, system, criteria, and structure of 2021.
The amount of the year-end-bonus for managers for 2020.
Monthly salary structure, amount paid, and expected pension appropriation for managers for 2021.
Extension of liability insurance coverage for directors (including independent directors).
Amendment to the budget for the investment in building new facilities in Nanzi Export Processing Zone.
Revision of the Rules of Procedure for Board of Directors’ Meetings.
Revision of the Scope of Responsibilities and Rules for Independent Directors, Audit Committee Organic Rules, and Board of Directors Performance Evaluation Guidelines.

10 3/22/2021 1. 2020 Internal Control System Declaration.

2020 remuneration to employees and that to directors.
2020 Financial Statements.
2020 Business Report.
2020 Earnings Distribution Table.
2021 Operational Plan.
Independence and suitability assessment of CPAs and delegation and rewards of CPAs for 2021 financial statements and tax reporting.
Revision of the Articles of Incorporation.
Convening of shareholders’ meeting.
xii. In recent fiscal year and as of the date of this Annual Report, major contents of the record or written statements made by any director dissenting to important resolutions adopted by the Board of Directors: None.
xiii. In recent fiscal year and as of the date of this Annual Report, facts regarding resignation and dismissal of the Chairman, President, and Heads of Accounting, Finance, Internal Audit, Corporate Governance and R&D:None.
75 -

3.5 Information on Public Expenditure on CPAs:

Accounting Firm	Name of CPA	Name of CPA	Period Covered by CPA’sAudit	Remarks
Deloitte & Touche	Chiang Jia-Ling	Wu Chiu-Yen	1/1/2020-12/31/2020

Unit: NT$

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Fee Items
Audit Fee Non-audit Fee Total
Fee Range
1 Less than NT$ 2,000,000 
2 NT$2,000,000 ~ NT$3,999,999
3 NT$4,000,000 ~ NT$5,999,999 
4 NT$6,000,000 ~ NT$7,999,999
5 NT$8,000,000 ~ NT$9,999,999
6 Over NT$100,000,000
Unit: NT$ thousands
Non-audit Fee Period
Accounting Name of Audit
System of Company Human Others Covered by Remarks
Firm CPA Fee
Design Registration Resource (Note) [Subtotal] CPA’s Audit
Chiang
Deloitte & Jia-Ling 1/1/2020
4,500 - - - 798 798
Touche Wu -12/31/2020
Chiu-Yen
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Note: The scope of service includes the transfer of pricing worth NTD 410 thousand, disbursement fees worth NTD 198 thousand, direct deductions worth NTD 65 thousand, salaries for those who are no heads of departments worth NTD 60 thousand, assistance in Investment Commission affairs worth NTD 45 thousand, and regulatory charge for scrappage of inventories worth NTD 20 thousand.
- i. Non-audit public expenditure paid to CPAs, their firms, and their affiliates that accounts for more than one-fourth of the audit public expenditure: None.
- ii. The accounting firm is changed and the audit public expenditure in the year of replacement is reduced compared to that in the preceding year: None.
- iii. The audit public expenditure is reduced by more than 10% from the preceding year: None.
3.6 Information on Replacement of CPAs: None.
3.7 The Company’s Chairman, President, Officers in charge of Financial or Accounting Affairs has Served in Its Certified Public Accountant Firm or Its Affiliated Enterprise for the Most Recent Fiscal Year: None.
76 -
3.8 Transfer of Equity Interests and/or Pledge of or Changes in Equity Interests by Directors, Managers or Major Shareholders with a Stake of More than 10 Percent for the Most Recent Fiscal Year and during the Current Fiscal Year up to the Date of Publication of the Annual Report:
i. Changes in Equity of Directors, Managers, and Major Shareholders

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

2020 2021 (as of April 27)
Pledged Pledged
Holding Holding
Title Name Holding Holding
Increase Increase
Increase Increase
(Decrease) (Decrease)
(Decrease) (Decrease)
Chairman Boh Chin
Director Investment Co., Ltd.
Major Representative: - - - -
Shareholders Sui, Tai-Chung
(Note 1) Ho, Yi-Sheng
Representative of
Director and
Manager at the Sui, Tai-Chung - - - -
branch office in
Nanzi
Representative of
Director and Ho, Yi-Sheng - - - -
President
Director Chen, Yen-Hui - - - -
Director Chang, Shan-Hui - - - -
Independent
Huang, Cheng-Nan - - - -
Director
Independent
Chen, Hsiu-Yen - - - -
Director
Independent
Chou, Chi-Wen - - - -
Director
Major
Yih Chin
Shareholders - - - -
Investment Co., Ltd.
(Note 1)
Associate Vice
President at the
Main Chen, Su-Ai - - - -
Management
Department
Technical Vice
President at the Hsiao, Fu-Chang - - - -
R&D Department
Head of Plant Chang, Mei-Hui - - - -
Head of Plant
Lu, Shih-Quan - - - -
(Note 2)
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77 -

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2020 2021 (as of April 27)
Pledged Pledged
Holding Holding
Title Name Holding Holding
Increase Increase
Increase Increase
(Decrease) (Decrease)
(Decrease) (Decrease)
Associate Vice
President at the
Second Division Chiu, Chung-Chi - - - -
of R&D
Department
Associate Vice
President at the
Third Division of Lu, Yi-Mu - - - -
R&D Department
(Note 3)
Associate Vice
President at the
Quality Shih, Shao-Liang - - - -
Assurance
Department
Associate Vice
President at the
Product and Hou, Te-Hsin - - - -
Marketing
Department
Associate Vice
President at the
Domestic Market
Su, Shu-Li - - - -
Division of the
Operational
Department
Manager of
Finance Hung, Yu-Fang - - - -
Department
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Note 1: Major shareholders are those holding more than 10% of the overall shares of the Company.

Note 2: Dismissed on April 30, 2020

Note 3: Dismissed on March 31, 2021

Note 4: The table above does not include the situation where the counterparty of the equity transfer or equity pledge is a related party.

ii. Information on Transfer of Equity: None

iii. Information on Pledge of Equity: None

78 -

3.9 Relationship among the Top Ten Shareholders

April 27, 2021

							April 27, 2021	April 27, 2021
Name	Current Shareholding Spouse’s/minor’s Shareholding Shareholding by Nominee Arrangement						Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees Remarks
	Shares % Shares % Shares %						Name Relation
Boh Chin							Yih Chin Investment Co.,Ltd. Relatives within second deree of
Investment Co., Ltd. Representative: Sui, Tai-Chung	27,178,247 21.21% - - - -						g kinship of the representative of Boh Chin Investment Co., Ltd. Sui,Tai-Chung Sui,Wan-Ni Sui, Chieh-Heng Sui, Chung-Hua
Yih Chin Itt C							Boh Chin Investment Co.,Ltd. Relatives within second degree of
nvesmen o., Ltd. Person in charge: Sui, Chung-Hua	15,871,153 12.39% - - - -						kinship of the Chairman of Yih Chin Investment Co.,Ltd. Sui, Tai-Chung Sui, Chung-Hua
Chang, Jui-Min	8,417,000 6.57% - - - -						None None
							Boh Chin Investment Co.,Ltd.
Sui, Tai-Chung	4,080,862 3.19% 1,474,733 1.15% - -						Relatives within second degree of kinship Yih Chin Investment Co.,Ltd. Sui, Wan-Ni Sui, Chieh-Heng Sui, Chung-Hua
Sui, Wan-Ni	3,465,829 2.71% - - - -						Boh Chin Investment Co., Ltd. Relatives within second degree of
							kinship Sui,Tai-Chung Sui, Chieh-Heng
Sui, Chieh-Heng	2,484,469 1.94% - - - -						Boh Chin Investment Co., Ltd. Relatives within second degree of
							kinship Sui,Tai-Chung Sui, Wan-Ni
FPA Global Opportunity Fund Investment Account in the trusteeship of CitiBank	2,460,000 1.92% - - - -						None None
							Boh Chin Investment Co.,Ltd. Relatives within
Sui, Chung-Hua	1,763,719 1.38% - - - -						second degree of kinship Yih Chin Investment Co.,Ltd. Sui, Tai-Chung
LGT in the trusteeship of Standard Chartered Bank	1,640,000 1.28% - - - -						None None
Robur Global Emerging Market Fund Investment Account in the trusteeship of the Business Operation Department of Standard Chartered Bank	1,619,000	1.26%	-	-	-	-	None	None

79 -

3.10 Number of Shares Held by the Company, the Company’s Directors, Managers, and Directly or Indirectly Controlled Businesses and the Consolidated General Holding Ratio as follows:

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Date: December 31, 2020 Unit: Share; %
Ownership by the Company’s
Directors, Managers, and
Affiliated Ownership by the Company Total Ownership
Directly or Indirectly
Enterprises
Controlled Businesses
Shares % Shares % Shares %
Yenyo Technology
21,232,508 52.61 647,012 1.60 21,879,520 54.21
Co., Ltd.
Greenish Co., Ltd. 7,374,997 100.00 - - 7,374,997 100.00
Thinking Holding
24,728,858 100.00 - - 24,728,858 100.00
(Cayman) Co., Ltd.
Thinking International
- - 6,075,000 100.00 6,075,000 100.00
Co., Ltd.
Thinking (HK)
- - 10,020,000 100.00 10,020,000 100.00
Enterprises Limited
View Full (Samoa)
- - 5,055,000 100.00 5,055,000 100.00
Ltd.
Thinking Electronic
- - 2,598,858 100.00 2,598,858 100.00
(Samoa) Ltd.
Thinking (Changzhou)
- 47.39 - 52.61 - 100.00
Electronic Co., Ltd.
Thinking (Yichang)
- - - 100.00 - 100.00
Electronic Co., Ltd.
Jiang Xi Thinking
- - - 100.00 - 100.00
Electronic Co., Ltd.
Guangdong Welkin
Thinking Electronic - - - 100.00 - 100.00
Co., Ltd.
Dong Guan Welkin
- - - 100.00 - 100.00
Electronic Co., Ltd.
Welkin Electronic Co.,
- - - 100.00 - 100.00
Ltd.
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80 -

IV. Capital Overview

4.1 Capital and Shares

i. Source of Capital

Unit: Share; NTD

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Authorized Capital Paid-in Capital Remarks
Capital
Increased
Month/ Issued
by
Year Price Shares Amount Shares Amount Sources of Capital Other
Assets
Other
than Cash
7/1979 10,000 300 3,000,000 300 3,000,000 Establishment (cash) None
Capital increase in
1/1986 10,000 600 6,000,000 600 6,000,000 None
cash NTD 3,000,000
Capital increase in
5/1989 10,000 2,600 26,000,000 2,600 26,000,000 cash NTD None
20,000,000
Capital increase in
cash NTD
50,000,000
11/1994 10 12,600,000 126,000,000 12,600,000 126,000,000 None
Earnings transferred
capital increase
NTD 50,000,000
Capital increase in
cash NTD
25,200,000
5/1996 10 18,900,000 189,000,000 18,900,000 189,000,000 None
Earnings transferred
capital increase
NTD 37,800,000
Earnings transferred 5/15/1997 (1997)
5/1997 10 30,240,000 302,400,000 30,240,000 302,400,000 capital increase None Tai-Cai-Zheng (I) No.
NTD 113,400,000 39314
Earnings transferred 7/22/1998 (1998)
7/1998 10 43,848,000 438,480,000 43,848,000 438,480,000 capital increase None Tai-Cai-Zheng (I) No.
NTD 136,080,000 59845
Earnings transferred 5/24/1999 (1999)
5/1999 10 90,000,000 900,000,000 57,602,400 576,024,000 capital increase None Tai-Cai-Zheng (I) No.
NTD 137,544,000 48165
Capital increase in (1) 7/12/2000 (2000)
cash NTD Tai-Cai-Zheng (I) No.
50,000,000 58119
7/2000 10 90,000,000 900,000,000 69,362,640 693,626,400 None
Earnings transferred (2) 7/6/2000 (2000)
capital increase Tai-Cai-Zheng (I) No.
NTD 67,602,400 58129
Earnings transferred 7/10/2001 (2001)
7/2001 10 90,000,000 900,000,000 75,707,951 757,079,510 capital increase None Tai-Cai-Zheng (I)
NTD 63,453,110 No. 144251
Earnings transferred 7/9/2002
7/2002 10 120,000,000 1,200,000,000 82,075,000 820,745,000 capital increase None Tai-Cai-Zheng (I)
NTD 63,665,490 No. 0910137524
Earnings transferred 6/27/2003
7/2003 10 120,000,000 1,200,000,000 87,568,977 875,689,770 capital increase None Tai-Cai-Zheng (I)
NTD 54,944,770 No. 0920128599
Earnings transferred 7/7/2004
9/2004 10 120,000,000 1,200,000,000 95,399,495 953,994,950 capital increase None SFB (I)
NTD 78,305,180 No. 0930129935
----- End of picture text -----

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

Authorized Capital Paid-in Capital Remarks
Capital
Increased
Month/ Issued
by
Year Price Shares Amount Shares Amount Sources of Capital Other
Assets
Other
than Cash
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
11/2004 10 120,000,000 1,200,000,000 95,447,433 954,474,330 corporate None No. 0930118845
bonds-converted
NTD 479,380
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I) No.
2/2005 10 120,000,000 1,200,000,000 95,487,548 954,875,480 corporate None No. 0930118845
bonds-converted
NTD 401,150
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
5/2005 10 120,000,000 1,200,000,000 97,667,290 976,672,900 corporate None No. 0930118845
bonds-converted
NTD 21,797,420
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
1/2006 10 120,000,000 1,200,000,000 97,748,021 977,480,210 corporate None No. 0930118845
bonds-converted
NTD 807,310
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
5/2006 10 120,000,000 1,200,000,000 101,257,137 1,012,571,370 corporate None No. 0930118845
bonds-converted
NTD 35,091,160
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
7/2006 10 120,000,000 1,200,000,000 101,574,680 1,015,746,800 corporate None No. 0930118845
bonds-converted
NTD 3,175,430
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
11/2006 10 120,000,000 1,200,000,000 101,617,736 1,016,177,360 corporate None No. 0930118845
bonds-converted
NTD 430,560
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
1/2007 10 120,000,000 1,200,000,000 105,347,544 1,053,475,440 corporate None No. 0930118845
bonds-converted
NTD 37,298,080
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
4/2007 10 120,000,000 1,200,000,000 106,090,277 1,060,902,770 corporate None No. 0930118845
bonds-converted
NTD 7,427,330
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
7/2007 10 120,000,000 1,200,000,000 106,138,715 1,061,387,150 corporate None No. 0930118845
bonds-converted
NTD 484,380
Earnings transferred 7/5/2007
9/2007 10 140,000,000 1,400,000,000 117,007,808 1,170,078,080 capital increase None FSC (I)
NTD 108,690,930 No. 0960034307
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
1/2008 10 140,000,000 1,400,000,000 117,025,611 1,170,256,110 corporate None No. 0930118845
bonds-converted
NTD 178,030
9/26/2008
FSC (III)
Write-off of treasury
No. 0970051455
12/2008 10 140,000,000 1,400,000,000 113,867,611 1,138,676,110 stock shares None
11/26/2008
NTD 31,580,000
FSC (III)
No. 0970064758
----- End of picture text -----

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83 -

Unit: Share

				Unit: Share
Share Type		Authorized Capital		Remarks
	Issued Shares	Un-issued Shares	Total Shares
Common shares	128,112,726	11,887,274	140,000,000	TWSE-listed

Information for shelf registration: None.

ii. Status of Shareholders

April 27,2021	April 27,2021	April 27,2021	April 27,2021	April 27,2021	April 27,2021	April 27,2021
Item Government Agencies Financial Institutions Other Juridical Persons Natural Persons Foreign Institutions & Natural Persons Total
Number of Shareholders - - 56 10,186 129 10,371
Shareholding (shares) - - 45,826,224 62,022,049 20,264,453 128,112,726
Ratio (%)	-	-	35.77	48.41	15.82	100.00

iii. Shareholding Distribution Status

(1) Common shares:

Denomination per share: NTD 10; April 27, 2021

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

Number of Shareholding
Class of Shareholding Ratio (%)
Shareholders (Shares)
1 ～ 999 2,522 394,869 0.31
1,000 ～ 5,000 6,751 11,944,834 9.32
5,001 ～ 10,000 546 4,359,576 3.40
10,001 ～ 15,000 151 1,898,527 1.48
15,001 ～ 20,000 91 1,694,331 1.32
20,001 ～ 30,000 92 2,383,967 1.86
30,001 ～ 50,000 52 2,085,818 1.63
50,001 ～ 100,000 67 4,829,177 3.77
100,001 ～ 200,000 35 4,937,163 3.85
200,001 ～ 400,000 33 8,974,194 7.01
400,001 ～ 600,000 9 4,518,365 3.53
600,001 ～ 800,000 6 4,111,792 3.21
800,001 ～ 1,000,000 2 1,667,101 1.30
1,000,001 or over 14 74,313,012 58.01
Total 10,371 128,112,726 100.00
----- End of picture text -----

(2) Preferred shares: None.

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iv. List of Major Shareholders:

iv. List of Major Shareholders:	iv. List of Major Shareholders:	iv. List of Major Shareholders:
April 27, 2021
Shareholding
Shareholder's Name Shares Percentage
Boh Chin Investment Co.,Ltd. 27,178,247 21.21
Yih Chin Investment Co.,Ltd. 15,871,153 12.39
Chang,Jui-Min 8,417,000 6.57
Sui,Tai-Chung 4,080,862 3.19
Sui,Wan-Ni 3,465,829 2.71
Sui,Chieh-Heng 2,484,469 1.94
FPA Global Opportunity Fund Investment Account in the trusteeshipof CitiBank 2,460,000 1.92
Sui,Chung-Hua 1,763,719 1.38
LGT in the trusteeship of Standard Chartered Bank 1,640,000 1.28
Robur Global Emerging Market Fund Investment Account in the trusteeship of the Business Operation Department of Standard Chartered Bank	1,619,000	1.26

Note: Major shareholders are those holding 5% or more of the Company’s equity or Top 10 shareholders.

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v. Market Price, Net Worth, Earnings, and Dividends per Common Share for the last two fiscal years

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

Unit: NTD$
2021
Items 2019 2020 (as of
March 31)
Highest 99.70 164.50 219.50
Market Price per
Lowest 71.00 59.30 160.00
Share (Note 1)
Average 83.08 101.56 187.00
Net Worth per Before Distribution 49.73 57.02 60.02
Share (Note 2) After Distribution 45.53 Undistributed Undistributed
Weighted Average Shares
Earnings per 128,113 128,113 128,113
(thousand shares)
Share
Earnings Per Share 8.71 10.81 3.18
Cash Dividends 4.20 5.50 (Note 6) -
Dividends per Earning Distribution - - -
Share Dividends
Share Capital Distribution - - -
Accumulated Undistributed Dividends - - -
Price / Earnings Ratio (Note3) 9.54 9.40 -
Return on
Price / Dividend Ratio (Note 4) 19.78 18.47 -
Investment
Cash Dividend Yield (Note 5) 5.06 5.42 -
----- End of picture text -----

Note 1: The annual mean market price of each year is calculated by the trading value and trading volume each year.

Note 2: Based on the number of shares already issued at the end of the year and information provided according to the distribution decided through the shareholders’ meeting in year that followed. Note 3: Price/Earnings Ratio = Average Market Price/Earnings Per Share.

Note 4: Price/Dividend Ratio = Average Market Price/Cash Dividends Per Share.

Note 5: Cash Dividends Yield = Cash Dividends Per Share / Average Market Price..

Note 6: It has been approved by the Board of Directors that the dividends to be distributed for 2020 are NTD 5.50 per share in cash yet it is pending approval through the 2021 General Shareholders’ Meeting.

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vi. Dividend Policy and Implementation Status
(1) The Company’s dividend distribution policy is as follows:
A. Criteria for issuing dividends: The dividends ratio expected to be set aside by the Company takes into consideration the current and future development plans of the Company, the investment environment, the demand for funds, and domestic and international competition as well as shareholders’ interests. It is not less than 30% after the legal reserve is subtracted from the after-tax earnings for the year.
B. Timing of distribution of dividends: According to the Company Act, the Board of Directors will prepare the Earnings Distribution Proposal at the end of each operational year after financial statements have been audited and certified by CPAs and submits it for ratification during the shareholders’ meeting prior to distribution.
C. Value and type of dividends to be distributed: Cash dividends may not be less than 20% in the dividends distributed by the Company.
(2) Distribution of dividends intended to be proposed and discussed during the current shareholders’ meeting:

NTD 704,619,993 is intended to be set aside as shareholder bonus from the distributable earnings of 2020, that is, NTD 5.50 per share as cash dividends will be distributed. Once it is approved and finalized through the General Shareholders’ meeting, distribution will take place according to applicable requirements.

vii. Impacts of free share assignment intended through the current shareholders’ meeting on the Company's operational performance and earnings per share: Not applicable.

viii. Employees’ and Directors’ Compensation:

(1) Percentage or range of remuneration to employees and that to the directors as stated in the Company’s Articles of Incorporation:

If the Company retains earnings at the end of the fiscal year, it is required to allocate 2% thereof as the remuneration to employees. The Board of Directors shall resolve to pay the remuneration in the form of stock or in cash. The recipients entitled to receive the remuneration include the employees of subsidiaries of the Company meeting certain specific requirements. The Company may allocate no more than 2% of said earnings as the remuneration to directors per resolution by the Board of Directors. The motion for distribution of remuneration to employees and directors shall be reported to a shareholders’ meeting.

However, when the Company still has accumulated losses, an amount equivalent to said losses shall be reserved to make up for the loss in advance. The remainder, if any, shall be allocated as the remuneration to employees and that to directors according to the ratio mentioned in the preceding paragraph.

87 -
(2) The remuneration to directors of the Company is paid not only taking into consideration the overall operational performance of the Company and the developmental trends in the future but also the advice provided and contributions of each director to the Company in their respective specialized field, such as commerce, legal affairs, and finance. The Company relies on and values the professional opinions from each director. As such, the attendance of each director in each organizational meeting and periodic continuing education in the specialized field on a yearly basis completed by the director are also considered while reasonable rewards are provided to directors. The compensation legitimacy assessment is adjusted adequately depending on the actual operational status of the Company and applicable regulatory requirements and is reviewed by the Compensation and Remuneration Committee and the Board of Directors for the sake of sustainable operation and development of the Company.
(3) Accounting measures adopted in case of any difference between the basis for estimating the amount of remuneration to employees and that to directors, basis for calculating the number of shares included in the distribution of remuneration for employees, and the actual value distributed and their estimates of the current term:
A. After the end of the year, in case of major changes to the value to be distributed as decided by the Board of Directors, such changes shall be listed under annual expenditure.
B. On the date a decision is made by the shareholders’ meeting, if the value remains changed, on the other hand, it shall be handled as changes to accounting estimates and the adjustment will be book-kept for the year of the shareholders’ meeting where the decision is made.
(4) Approval of distribution of remuneration by the Board of Directors:
A.The proposals approved by the Board of Directors regarding 2020 earnings are as follows:
- (a) Distribution of the remuneration to employees in cash worth NTD 64,300 thousand.
- (b) Distribution of the remuneration to directors worth NTD 23,400 thousand.
B. Ratio of the value of remuneration for employees distributed in stock and the sum of after-tax income and total value of remuneration for employees in the entity or individual financial statement of the current term:
- It was approved by the Company’s Board of Directors on March 22, 2021
- that only remuneration to employees would be distributed in cash.
(5) Actual distribution of the remuneration to employees and that to directors in the preceding year:

The actual distribution was consistent with the proposal approved by the Board of Directors. Refer to “VI. Financial Information - Notes to 2020 Financial Statements."

88 -

ix. Buy-back of Treasury Share

May 29, 2020

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

Instance Sixth
To protect the Company’s credit and the
Purpose
shareholder equity
Type of shares bought back Common shares
Upper limit of total value of shares to be 4,552,192,896
bought back (NTD)
Expected buyback duration 2020.03.30~2020.05.29
Expected quantity to be bought back 1,200,000
(share)
51.10~80.00
Buyback to be continued if the Company’s share
Buyback price range (NTD)
price is below the lower limit of the range
Type and quantity of shares already -
bought back
Value of shares already bought back -
Number of shares bought back/Number -
of shares expected to be bought back (%)
----- End of picture text -----

4.2 Corporate Bonds: None.

4.3 Preferred Shares: None.

4.4 Global Depositary Receipt: None.

4.5 Status of Employee Share Options: None.

4.6 Status of New Restricted Employee Shares: None.

4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.

4.8 Financing Plans and Implementation:

The Company does not issue or raise in private marketable securities for the sake of acquiring funds and hence there is no such capital utilization plan.

89 -

V. Operational Highlights

5.1 Business Activities

i. Business Scope
(1) The Company’s business lines are stated as follows:
A. C901010 Ceramic and Ceramic Products Manufacturing
B. CB01010 Machinery and Equipment Manufacturing
C. CC01020 Electric Wires and Cables Manufacturing
D. CC01030 Electrical Appliances and Audiovisual Electronic Products Manufacturing
F. CC01080 Electronic Parts and Components Manufacturing
G. CC01110 Computer and Peripheral Equipment Manufacturing
H. CC01990 Other Electrical Engineering and Electronic Machinery Equipment Manufacturing
I. CD01030 Motor Vehicles and Parts Manufacturing
J. CE01010 General Instrument Manufacturing
K. F401010 International Trade
(2) Revenue Distribution:

evenue Distribution:	evenue Distribution:	evenue Distribution:
December 31,2020
Major Divisions Total Sales in Year (%)of Total Sales
Protection Element 5,742,106 96.99
Other 178,152 3.01
Total	5,920,258	100.00

(3) Main products:
A. Thermistor
B.Varistor
C. Temperature sensor
(4) New products and services planned to be developed:
A. Automobile SMD thermistors and varistors in varying specifications.
B. Certain models of SMD high-pass varistors for 5G applications.
C. SMD 1206 and SMD 1210 high-voltage and high-pass varistors.
D. SMD 0603 ultra-low capacity electrostatic discharge protector specifications for automobiles
E. SMD 0402 ultra-low capacity electrostatic discharge protector 30KV electrostatic model
F. SMD 0201 small-size NTC thermistors
G. High-temp glass seal type NTC thermistors for automobiles resistant to temperatures up to 300°C
H. Anti-vulcanization and anti-metal migration SMD thermistors
I. Thermistors with special temperature points 100°C ~150°C
J. High-B and low-resistance NTC thermistors
K. Certain models of SMD high-frequency thermistors for 5G applications.
L. Highly reliable protective coatings for SMD thermistors
90 -
M. Micro high-responding speed glass seal type NTC thermistors
N. Micro, highly stable, high-precision medical NTC thermistors
O. NTC thermistors resistant to temperatures up to 500°C
P. Automobile sensors
Q. SMD PTC ultra-low resistance thermistors
R. SMD PTC thermistor over-current protectors for automobiles
S. SMD 0201 PTC thermistor over-current protectors
T. Large (1210) SMD PTC thermistors for automobiles
U. Chip-type PTC thermistors
V. Glass seal type PTC thermistors resistant to temperatures up to 350°C for automobiles
W. Nano materials for SMD varistors of special specifications
X. Protective coatings for nano materials of SMD thermistors

ii. Industrial Overview

(1) Current Status and Developments

Thermistors, varistors, and temperature sensors produced and distributed by the Company are resistance-related elements as part of passive components. They are known for their unique features and applications in the population of passive electronic components and may be also classified as “protective components.”

Protective components are widely applied to a variety of electronic products and provide adequate protection against risks that may arise during the operation of electronic products. As far as the function is concerned, they may be divided into over-current protection, over-voltage protection, temperature compensation, temperature detector and control. In terms of the installation method, on the other hand, there are products that vary in their appearance and dimension, such as plug-ins, surface mount devices, and integrated modules, etc.

The Company’s products are quite widely applied in IT products (power supply devices, monitors, chargers, computer motherboards, notebook computers, netcom equipment, etc.), telecommunications equipment (mobile phones and telephone sets, machine room equipment, telecommunications base stations, optic fiber networks, etc.), large home appliances (TV sets, washers/dryers, refrigerators, dishwashers, air-conditioners, heaters, etc.), small home appliances (microwaves, water heaters, electronic pots, coffee makers, etc.), consumer electronics (smart speakers, Bluetooth earphones, music players, AV equipment, etc.), illumination equipment (LED indoor/outdoor and roadside illumination, energy-saving light stabilizers, etc.), industrial products (lightning protection products, inverters, servomotors, industrial controllers, contactors, actuators, digital meters, etc.), automobiles (carbody control such as engine temperature control and discharge feedback, reservoir temperature control and thermostatic air-conditioning, central locks/skylight/powered windows and automobile electronics such as travel information and instruments, and emerging EV battery packs, mechanical/electrical motors, car chargers, etc.), medicine (temperatures, glucose meters, drug cabinets, biochemistry test equipment, etc.), among others.

The Company is a specialist with an extended range of protective component product lines. With the flourishing market for electronic products, the business in the future is infinite.

91 -

(2) Correlation among Upstream, Mid-stream, and Downstream of the Industry

Primary products of the Company include NTC thermistors, PTC varistors, and zinc oxide varistors (MOV and MLV). The correlation among the upstream, mid-stream, and downstream formed for related raw materials and products is as follows:

Upstream Midstream Downstream

==> picture [436 x 400] intentionally omitted <==

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

Metal oxide IT industry
suppliers,
coating → → Telecommunications
Traders
suppliers, → industry
electrode
Resistor
suppliers, Consumer
manufacturers
additive electronics
suppliers, metal
guide wire
suppliers
Home appliance
industry
Illumination,
industrial control,
automobile,
medicine, etc.
----- End of picture text -----

(3) Developmental trends for a variety of products

Being light, thin, short, and small, digital, and high-speed transmission are the primary developmental trends of electronic products. Under such trends, it is also required to research and develop corresponding SMD (or surface mount device) products to meet the demand. The Company’s SMD products include NTC thermistors, PTC varistors, and zinc oxide varistors (MLV) as well as ESD protectors. Given the effort to constantly reinforce product specifications, the demand of a majority of customers can be fulfilled. Examples include the low-voltage/low-capacitance surface mount surge absorbers that can meet the ESD needs of a variety of high-speed AV transmission electronic products, the SMD NTC thermistors that feature gradually reduced resistance as the temperature climbs and can quickly and precisely respond to

92 -

temperature changes within the system in electronic products for which heat sink process is getting more and more important, and the SMD PTC varistors that feature drastic resistance difference as the temperature climbs to ensure more effective circuit control for the circuit design of customers.

Meanwhile, as the safety standards get stricter and stricter for electronic products and the demand of electronic products for temperature detection and control climbs each day, it is even more important to develop customized assembled temperature sensors with a thermistor at their core plus the sealing enclosure and various types of wires. High precision, high temperature resistance, high insulation/water-proof/dust-proof are the main trends in the development of temperature sensors.

In addition, given a changing global environment, where humans suffer more and more impacts from natural disasters and outdoor equipment or infrastructure electronic equipment such as outdoor street lights, telecommunication base stations and weather observatories, smart power grids, track traffic, solar power and wind power stations are under the threat of natural thunder strikes. As such, varistors and thermistors used in related equipment are being developed to have higher capacity, be smaller in size, and include composite features.

The exemplary shift from fueled vehicles to electric vehicles in a history of a hundred years further leads the Company’s products into another brand new field. Under the regulations imposed by IATF-16949, AEC-Q, and VDA, among others, for the automobile industry regarding the quality system, product reliability, development and manufacturing process control, higher reliability and a longer life cycle are the major trends in the development of high-end products.

(4) Competition on the market

There are many manufacturers of thermistors and varistors around the world that vary in their business scale and also technical platform and market segmentation. As part of its long-term plan, the Company looks up to counterparts in Europe, America, and Japan such as Murata, TDK-Epocs, and Vishay in terms of technicality as they specialize differently in terms of product coverage and market segmentation.

As far as safety standards are concerned, besides safety certification of the passive components (such as UL, CSA, VDE, TUV, CQC, SGCC … etc) in respective countries, the models of machines where protective components are used need to be certified for their safety, too. Once certified, it is costly and time-consuming to replace passive components for the specific model. In other words, passive components are an industry with entry barriers. The Company, however, owns the competitive advantages with its long-term existence in the industry and thorough product safety specifications and quality to cover the comprehensive application needs of customers.

iii. Research and Development

(1) R&D expenses

R&D expenses spent in 2020: NTD 225,072 thousand.

R&D expenses spent as of the first quarter of 2021: NTD 67,924 thousand.

93 -
(2)Successfully developed technologies or products
A. SMD 0201 small-size NTC thermistors
B. SMD 0201 small-size PTC thermistors
C. Chips for high-precision medical treatment devices, including nucleic acid detection, infrared temperature sensors, and thermometers, etc.
D. High-reliability NTC Thermistor for automobile, including components for charging pile and lithium battery monitoring, etc., to expand the application of products.
E. SMD TSM 0201 soft cutting process glass protective layer products.
F. LCP small-size 0402 30V high-voltage products and their mass production
G. Preparations for mass production of SMD PTC thermistors (1.0 Ω and other low-resistance series)
H. PTC thermistors SMD 0603 low-resistance series (6.8Ω)
I. Preparations for development and mass production of certain TVM SMD 4B 6B series 5G high-pass varistors
J. Certain models of SMD 1206 high-pass varistors.
K. SMD 0806 high-pass varistors for LED, for which UL certification and mass production and shipment are also completed.
L. SMD 1210 high-pass varistors for LED illumination.
M. 2220 varistors resistant to 4500V and 125°C and their mass production

iv. Long-term and Short-term Development

(1) Short-term Development

To make the best of the economic scale and product advantages while securing the existing market; to adjust the portfolio and increase the weight of advantageous products in sales and to focus on benchmark markets and heavyweight customers to promote gross profits and business profits.

For the overseas market, besides direct service provided Grade A customers, continuous efforts are made to sign dealership or distribution contracts with partners and to utilize resources and connections available in respective geographical regions to provide products and services to regional Grade B customers and to broaden the overseas sales landscape of the Company.

(2) Mid-to-long-term Development

To deploy around the world with the complete portfolio, outstanding quality and service, and created brand image through the sound distribution network; to reach out to benchmark customers in developed countries in Europe, the US, and Japan and remain consistent in the developmental pace with that on the high-end market; to invest more business resources in new fields of application and keep the Company profitable; and to form a long-term supply-chain relationship with major customers to continue to maximize the market share of the Company’s products.

94 -

5.2 Overview of Market, Production, and Sales

i. Market Analysis

(1)Sales Area

The areas where the Company sells to and the net sales are provided below:

==> picture [383 x 208] intentionally omitted <==

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

Unit: NTD Thousand
Year
2020
Net sales %
Sales Area
Asia 4,481,839 75.70
Europe 610,590 10.31
Export
sales
Other 355,609 6.01
Subtotal 5,448,038 92.02
Domestic sales 472,220 7.98
Total 5,920,258 100.00
----- End of picture text -----

(2)Market share

According to the market survey findings released by the US passive component market information analysis authority Paumanok, comparison of such findings versus the NTC shipment size of Thinking, it is inferred that the power NTC products of Thinking are definitely leading on the global market. By the same estimation, the plug-in varistors of Thinking also secure its Top 3 ranking on the global market. As far as the Asia is concerned, the Company is a steady leader on the market.

(3)Future supply and demand and growth on the market

The Company is one of the few specialists with a wide range of products that cover PTC and NTC thermistors, varistors, temperature sensors, and over-voltage protective components, among others. Its products are widely applied. As the electronic industry continues to boom, the future for the Company is promising in terms of prospective growths.

The following are descriptions about future growth potentials as far as the new markets targeted by the Company are concerned:

A. Automotive

As people get more and more aware about environmental protection and the attention of governments and the general public drawn to the air pollution caused by fueled vehicles, governments are adopting policies in favor of electric vehicles/banning fueled vehicles; this, accordingly, is driving the demand for electric vehicles. According to the estimates made by Morgan Stanley, by 2030, the sales of battery-powered (electric vehicles) will reach above 30% on the global market.

95 -

Deloitte has also clearly indicated in its market forecast that with a composite growth rate of 29% for the coming ten years, the sales of electric vehicles around the world will reach 31 million units in 2030. All of the above show the powerful and persistent growth potentials on the market for electric vehicles.

In addition, under the trends of automobile control turning electronic and self-driving, the number of electronic parts used in each electric vehicle will be higher than that in a vehicle by multiple folds. The dual driving force is pushing growths on the market. Generally speaking, the growths and prospects of automobile electronics and electric vehicles are both superior to traditional IT equipment, consumer electronics, and home appliances, among others, definitely making them the fastest-growing and long-lasting markets for the electronic industry at present. B. Telecommunications

The telecommunications industry begins with the end-user equipment (mobile phones) and covers the access network’s base transceiver station (BTS), the bearer network for optic communication, the machine rooms within the core network, marginal computing, and even satellite communication, among other equipment. While mainstream 5G mobile phones are being introduced to the market one after another and 5G service stations are being opened and operative in countries around the world, in addition to the O-RNA fad among operators for self-autonomy or for self-construction at the user end to realize IoT, the future is promising. According to the data from the 5G Industry and 5G Telecommunications Service Forum of the Market Intelligence & Consulting Institute (MIC), the number of 5G users around the world will grow from 190 million in 2020 to 330 million in 2021, showing a surge. Over the long term, developed industrial countries or underdeveloped regions, the demand for telecommunications will only grow; it never dies. This is a new market that requires excessive devotion given the slow growths in IT electronic equipment, consumer electronics, and home appliances over the long term. Moreover, according to the Company’s experience in the power industry, 5G telecommunications, with features such as high frequency and short wavelength and their rigid demand for enhanced power density and efficiency, offer the best battlefield for the application of short, small, light, and thin products developed applying advanced technologies and for them to make the best of their performance.

C. Industrial and Medical/Health-care Electronics

Despite the slowed pace of the manufacturing industry caused by COVID-19, the trends for introduction of smart corporate manufacturing are not stopping. The market for smart manufacturing will accordingly resume its original growing pace. In addition, the pandemic has driven a surge in the demand for medical/health-care electronics, from temperature detection, respiration, and treatment and even biochemistry testing. All have shown explosive growths.

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(4)Competitive niche and advantageous and disadvantageous factors for future developments and countermeasures

A. Favorable factors:

(a) Thorough products and extensive scope of application

The Company owns complete product lines that are non-comparable by a majority of counterparts, making the Company a trustworthy partner of all customers with their full support. Both the number of customers and the trading value are constantly growing.

(b) Steady long-term collaborators to maintain the most cost-effective economic scale

Due to the fact that the quality of the Company's products and services is highly trusted by customers, accumulatively, the Company has had many long-term partners, which is accordingly driving its production volumes to new heights constantly. Currently, NTC thermistors of the disc type already have the largest sales in the world. Varistors of the disc type, by the same token, are leading in the Greater China Region, too. The economic scale and cost advantages are sufficient to cope with competition.

(c) Sound Financial Standing

The Company is superior to counterparts in its financial structure, solvency, profitability, and cash flows, showing that the Company's financial standing is sound, which helps cope with the economic cycle and competition. In addition, the Company continues to introduce automated production equipment in order to bring down the production cost and constantly improves its competitively advantages on the market to keep its leading position in the industry.

B. Unfavorable factors:

(a) Price-cutting race remains

Despite the remaining differences in products and technologies of counterparts in the Greater China Region, the rise of the red supply chain has obviously impacted the legitimacy of prices on the market. In addition, internationally, to access the Mainland China market, quotation policies meant exclusively for Mainland China are being proactively adjusted, which is posing pressure on the Company, too.

(b) For the international market, due to the fact that counterparts in Europe, the US, and Japan have entered the local market earlier and built a relatively sound network for localized services, the Company is in an undesirable position now. Markets for automobiles, telecommunications, and healthcare have been spearheaded by the western world traditionally. Compared to counterparts in Europe, the US, and Japan, the Company is affected by its low publicity, which makes it relatively difficult for the Company to enter these markets.
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C. Countermeasures:

(a) Reinforce automated product and enhance product yield rate to bring down the cost.
(b) Decentralize the market and explore new sources of customers to minimize the impacts on revenue from the Red Sea Market.
(c) Focus on high value-added products to bring up profits.
(d) Establish overseas dispatching warehouses and maximize collaboration with local dealers/distributors to be on par with international counterparts in terms of serviceability.
(e) Increase new products and take advantage of synergistic operational effects to maximize the scope of operation available for each customer and to increase the revenue.
ii. Production Procedures of Main Products
(1) Major Products and Their Main Uses

Main product	Item
Thermistor	A. Surge inhibition: Switching power supply, electric motors, transformers, among other electric equipment, create short-circuit current (surge) at the instant they are turned on and an NTC thermistor can effectively inhibit it. B. Temperature detection: A thermistor, known for its resistance value that will change obviously with temperature, can turn on the control loop; it is applied in electrical equipment such as air-conditioners, automobiles, refrigerators, and home appliances, PC products and mobile phones, mobile phone chargers, among other telecommunications equipment. C. Temperature compensation: The features of many electronic parts and components change with temperature. Therefore, a thermistor is needed for compensation purpose. It is applied to products such as dashboards, TV sets, radios, and transistors, among other products. D. Over-current protection: If excessive current occurs in a circuit, the circuit will be overheated. The resistance of a thermistor will be increased to inhibit the pass-through of such large current in order to protect the back-end circuit. It is applied in products such as home appliances, transformers, automobile powered windows, and mobile phone chargers, etc.
Varistor	A. Surge absorption: The resistance of a varistor will change according to the voltage applied onto it to absorb the surge current. It is applied to protect the IC, diode, transistor, relay, solenoid, and electronic devices such as consumer electronics, telecommunications, measurement, and electric controls. B. Static absorption: The resistance of a varistor will change according to the voltage applied onto it to guide the static out of vulnerable electronic loops. It is applied to electronic products such as mobile phones, wireless phones,chargers,notebook computers,and receivers,amongothers.

Main
product

Item

Thermistor

A. Surge inhibition: Switching power supply, electric motors, transformers,
among other electric equipment, create short-circuit current (surge) at the
instant they are turned on and an NTC thermistor can effectively inhibit
it.
B. Temperature detection: A thermistor, known for its resistance value that
will change obviously with temperature, can turn on the control loop; it is
applied in electrical equipment such as air-conditioners, automobiles,
refrigerators, and home appliances, PC products and mobile phones,
mobile phone chargers, among other telecommunications equipment.
C. Temperature compensation: The features of many electronic parts and
components change with temperature. Therefore, a thermistor is needed
for compensation purpose. It is applied to products such as dashboards,
TV sets, radios, and transistors, among other products.
D. Over-current protection: If excessive current occurs in a circuit, the
circuit will be overheated. The resistance of a thermistor will be increased
to inhibit the pass-through of such large current in order to protect the
back-end circuit. It is applied in products such as home appliances,
transformers, automobile powered windows, and mobile phone chargers,
etc.

Varistor

A. Surge absorption: The resistance of a varistor will change according to
the voltage applied onto it to absorb the surge current. It is applied to
protect the IC, diode, transistor, relay, solenoid, and electronic devices
such as consumer electronics, telecommunications, measurement, and
electric controls.
B. Static absorption: The resistance of a varistor will change according to the
voltage applied onto it to guide the static out of vulnerable electronic
loops. It is applied to electronic products such as mobile phones, wireless
phones,chargers,notebook computers,and receivers,amongothers.

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(2) Major Products and Their Production Processes

Manufacturing process flowchart for plug-in resistors

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Powder
Batching Forming Sintering
blending
Testing and Encapsulation External
stamping and coating Wire bonding electrode
Packaging
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Manufacturing process flowchart for SMD resistors

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Tape casting
Rolling Sintering Cutting
Terminal
electrode Plating Testing Packaging
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iii. Supply Status of Main Materials

Primary raw materials for the Company are silver, manganese, cobalt, nickel, and copper, etc. All the partners are long-term collaborators and have been working closely under optimal partnerships. The quality of supply and lead time remain steady. Shortage or interruption is not a concern.

iv. List of main purchases and sales customers over the past two years
(1) Information of suppliers accounting for 10% or more of the overall purchases in any of the past two years: None.
(2) Information of customers accounting for 10% or more of the overall sales in any of the past two years: None.

v. Production in the Last Two Years

Unit: Thousand particles/NTD thousand

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2019 2020
Year
Output
Capacity Quantity Amount Capacity Quantity Amount
Major Products
Protection Element 11,469,236 9,557,124 4,729,887 12,293,874 11,111,634 4,607,417
Other 73,202 64,232 185,522 73,202 65,827 152,809
Total 11,542,438 9,621,356 4,915,409 12,367,076 11,177,461 4,760,226
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Note 1: For the other self-made equipment, it is measured by the unit.

Note 2: The throughput means the quantity that the Company may produce under normal operations after necessary downtime and holidays or days off, among other factors, are taken into consideration with the existing production equipment.

vi. Shipments and Sales in the Last Two Years

Unit: Thousand particles/NTD thousand

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2019 2020
Year
Local Export Local Export
Shipments
& Sales
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Major Products
Protection Element 192,534 392,971 5,604,595 5,203,886 708,049 398,028 6,472,953 5,344,078
Other 38,339 70,552 62,592 146,823 50,262 74,192 63,163 103,960
Total 230,873 463,523 5,667,187 5,350,709 758,311 472,220 6,536,116 5,448,038
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5.3 Human Resources

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2021
Year 2019 2020
(as of March 31)
Direct employees 2,165 2,504 2,699
Number of
Indirect employees 1,360 1,651 1,584
Employees
Total 3,525 4,155 4,283
Average Age 32.37 35.27 35.73
Average Years of Service 4.12 4.54 4.53
Masters 2.16% 2.02% 2.03%
University and College 24.85% 23.45% 22.28%
Education Senior High School 30.16% 27.66% 27.39%
Below Senior High
42.83% 46.87% 48.30%
School
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5.4 Environmental Protection Expenditure

i. Total Losses

The Company did not suffer losses or punishments by the environmental protection authority due to environmental pollution incidents.

ii. Countermeasures

Under the respective environmental protection requirements and self-control requirements of the government, expenditure on safety and environmental protection includes operational maintenance of pollution prevention and control equipment, related treatment of waste, environmental monitoring, and educational training, among other fixed entries. In addition, technically capable, the Company gradually sets aside budget to add or improve related equipment and update its permits for waste water, waste, and air pollution adequately as needed in order to be compliant with regulatory requirements. In 2020, the budget devoted for related improvements came to NTD 5,884 thousand and in 2021, the expected budget to be devoted will be NTD 5,500 thousand for continued improvements such as recycling, re-processing, and reutilization of process waste water, reduced consumption of water resource, and reduction of waste water and waste, among others.

5.5 Labor Relations

i. Employee Welfare

The Company has set up the Employee Welfare Committee to hold various cultural and entertainment events frequently and to address respective benefits. Primary welfare measures for employees and their implementation status are provided below.

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(1) Distribution of year-end bonus and dividends as bonus to employees.
(2) Mandatory enrollment in Labor Insurance and National Health Insurance coverage for all employees and group insurance coverage for employees (paid by the Company).
(3) Enforcement of employee pension regulations to ensure appropriation of funds for the pension under new or old system.
(4) Uniforms, personal locker rooms, and pantry room equipped with food steamers, refrigerators, among others, for employees.
(5) Adequate condolences upon occupational injuries or casualties and emergency aids.
(6) Leave for weddings, funerals, and celebrations as required by the Labor Standards Act plus gift money, among other benefits.
(7) Periodic annual employee health check-ups.
(8) Festival gift certificates (Chinese New Year, Labor Day, Dragon Boat Festival, Moon Festival, and birthday) and employee gatherings over meals from time to time and year-end lot-drawing party.
(9) Domestic and international travels for employees plus various networking events from time to time (mountain climbing, hiking, BBQ, movie watching, etc.).
The welfare measures mentioned above are being implemented desirably now and
in the future, will be adequately modified reflective of changes made to laws and regulations, social condition, and the operational status of the Company.
ii. Continuing education and training for employees:

To meet the operational needs of the Company, employees involved in tasks with an effect on the quality are provided with adequate training to reinforce their environmental safety awareness and related skills in order to improve their awareness of high quality, environmental protection, and professional skills and to fulfill the purpose of inter-coordination for enhanced efficiency at work so that the overall operational goals of the Company may be accomplished. For the Company’s educational training, depending on the organizer, there are internal and external ones. They are categorized as follows:

(1) Training for new hires: The pre-service professional training covers an overview of the Company and the department they are working for.
(2) Departmental internal training: Departments hold educational training to communicate revisions made to applicable regulations and environmental protection requirements and the operating procedures.
(3) External professional training: When practically needed, departments may assign people to receive external training to help advance their professionalism at work or to help them acquire the second skill and get certified.
(4) In-service training: For training that is closely related to the current task at work or to the developments of the Company in the future, once approved by the Company, the costs will be reimbursed according to the years in service.
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iii. Retirement System and Its Implementation

The Company has established Labor Pension Regulations in accordance with applicable requirements of the Labor Standards Act and sets aside 2% from the salary each month following actuarial calculations to be the pension fund that is deposited in a designated account. For the payment of the pension fund, the calculations are based on the requirements of the foregoing Labor Pension Regulations.

The Company has been inquiring employees for their inclination under the Labor Pension Act of the Labor Insurance Bureau of the Executive Yuan since July 2005. Those who chose to apply the retirement system under the Labor Pension Act, 6% of their salary is set aside on a monthly basis to their personal pension account with the Labor Insurance Bureau.

iv. Policy on employees’ behavior, ethical principles, and occupational ethics

In order to improve the behavior, attainment, and professional ethics of all employees, the Company has established the Work Rules and employees need to sign the “Employment Contract” and the “Ethical Corporate Management and Integrity Letter of Undertaking” upon reporting to work to govern against violations of laws and regulations or occupation, theft, destruction of the Company’s properties or disclosure of the Company's secrets, incomplete handover, acceptance of briberies, and other behavior that results on losses borne by the Company during employment. Examples include:

(1) R&D staff, depending on the confidentiality of their tasks, sign the Employee Confidentiality Agreement.
(2) The Computer Data Processing Guidelines are established to ensure control over the flows and security of information of the Company.
(3) The Gift Management Regulations are established to facilitate centralized utilization of the gifts given to the Company by contractors and customers; acceptance of such gifts by individual employees is prohibited.
(4) The Regulations to Prevent and Control Sexual Harassment Prevention and to Ensure Gender Equity at Work are established to protect the Company and its affiliated workplaces against sexual harassment.
(5) Policy on professional ethics:
A. Ethical corporate management.
B. Insider trading banned.
C. No engagement in activities against the Company’s interests.
D. Honest and thorough documentation.
E. Proper giveaways or receptions; no bribery or corruption is allowed.
F. Confidentiality required for each of the materials whose ownership belongs to the Company.
G. Respect for intellectual property rights.
103 -
v. Labor policy as part of corporate social responsibilities
(1) No hiring of someone less than 16 years old or forcing of employees to perform tasks against their will.
(2) No discrimination against or differential treatment of any employee or job seeker because of his/her race, class, language, thought, religion, partisanship, nationality, birthplace, gender, sexual orientation, age, marriage, appearance, five senses, disability, constellation, blood type, or prior union membership.
(3) Respect and protection of employees’ basic human rights protected by the Constitution such as freedom of speech, assembly, and association, etc.
(4) Compliance with applicable labor laws and regulations and applicable customer regulations.

vi. Rewards and penalties for employees

To ensure that its employees act properly and with discipline and to inspire them to make the best of what they have learned and their skills, the Company has established related rewards and penalties systems governing their conduct. They are meant to protect the rights of employees at work, make sure that they fulfill their duties at work, and promote efficiency and morale at work. Examples include:

(1) The Regulations Governing Rewards for Employees with Outstanding Annual Performance are established to help screen workers who are role models and those with outstanding performance and recognize their achievements.
(2) The Proposal Submission Regulations are established and prizes are issued reflective of the efficacy of the submitted proposals.

vii. Labor-management agreement:

The Company has always believed in “Labor and Management as One” and “Co-existence and Co-prosperity” and has been instilling the belief in its employees so that they share the same consensus on corporate sustainability and long-term development. Meanwhile, difficulties and problems facing the Company are adequately clarified and the Company’s stance and decision are conveyed so that both employees and the employer are treated equally. In addition, there are the labor-management meeting, email, and employee feedback box in place to maintain optimal communications and interactions at all times for steady and harmonious labor-management relations.

viii. Losses suffered by the Company due to labor-management disputes in the past year up to the date the Annual Report was printed and estimated values now and likely incurred in the future and countermeasures: None.
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5.6 Material Contracts

Contract Type	Counterparty	Period	Major Contents	Restrictions
Lease	Administration of Export Processing Zones under the Ministryof Economic Affairs	6/1/2016- 5/31/2026	Lease of land	-
Lease	Administration of Export Processing Zones under the Ministryof Economic Affairs	8/1/2016- 7/31/2025	Lease of land	-
Lease	Administration of Export Processing Zones under the Ministryof Economic Affairs	11/1/2020- 10/31/2030	Lease of land	-

105 -

VI. Financial Information

6.1 Financial Summary for the Past Five Fiscal Years
i. Condensed Balance Sheet and Comprehensive Income Statement - Based on IFRS
(1) Consolidated Financial Information
A. Condensed Balance Sheet

Unit: NTD Thousand

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Year
Financial Summary for the Past Five Fiscal Years Financial
summary as of
Item
2016 2017 2018 2019 2020 March 31,2020
Current assets 5,167,701 5,414,274 5,699,845 6,067,809 8,084,389 8,372,775
Property, plant and
1,690,634 1,790,075 2,023,901 2,031,402 2,174,967 2,182,250
equipment
Intangible assets 1,140 19,183 34,354 44,884 43,982 46,060
Other assets 471,280 433,685 487,847 606,420 727,322 787,328
Total assets 7,330,755 7,657,217 8,245,947 8,750,515 11,030,660 11,388,413
Before
1,678,455 1,329,133 1,341,602 1,254,736 2,051,426 1,943,892
Current distribution
liabilities After
2,101,227 1,841,584 1,828,430 1,792,809 (Note) Undistributed
distribution
Non-current liabilities 616,376 672,611 844,587 980,796 1,534,447 1,615,600
Before
2,294,831 2,001,744 2,186,189 2,235,532 3,585,873 3,559,492
Total distribution
liabilities After
2,717,603 2,514,195 2,673,017 2,773,605 (Note) Undistributed
distribution
Equity attributable
4,891,898 5,515,746 5,915,834 6,371,393 7,305,365 7,689,227
owners of the company
Ordinary shares 1,281,127 1,281,127 1,281,127 1,281,127 1,281,127 1,281,127
Capital surplus 348,263 348,263 348,263 348,263 348,263 348,263
Before
3,264,691 3,924,721 4,394,071 5,026,658 5,877,411 6,284,485
Retained distribution
earnings After
2,841,919 3,412,270 3,907,243 4,488,585 (Note) Undistributed
distribution
Other equities (2,183) (38,365) (107,627) (284,655) (201,436) (224,648)
Treasury shares - - - - - -
Non-controlling
144,026 139,727 143,924 143,590 139,422 139,694
interests
Before
5,035,924 5,655,473 6,059,758 6,514,983 7,444,787 7,828,921
Total distribution
equity After
4,613,152 5,143,022 5,572,930 5,976,910 (Note) Undistributed
distribution
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Note: The distribution of earnings from 2020 is yet to be decided during the shareholders’ meeting.

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B. Condensed Statements of Comprehensive Income

Unit: NTD Thousand

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Year Financial Summary for the Past Five Fiscal Years Financial
summary as of
Item 2016 2017 2018 2019 2020 March 31,2020
Operating revenue,
5,408,161 5,826,763 6,019,949 5,814,232 5,920,258 1,758,867
net
Gross profit 1,678,739 2,052,348 2,241,160 2,340,329 2,714,605 779,741
Profit from
994,295 1,238,998 1,385,035 1,448,901 1,843,142 527,905
operations
Non-operating
income and 224,727 247,988 124,043 64,786 24,191 24,016
expenses
Profit before
1,219,022 1,486,986 1,509,078 1,513,687 1,867,333 551,921
income tax
Net profit 892,315 1,080,491 988,628 1,115,265 1,380,603 407,346
Other
comprehensive
(273,930) (38,170) (70,745) (173,212) 87,274 (23,212)
income (loss),
net of tax
Total
comprehensive 618,385 1,042,321 917,883 942,053 1,467,877 384,134
income
Net profit
attributable to:
Owners of the
900,553 1,084,535 982,766 1,115,990 1,385,016 407,074
company
Non-controlling
(8,238) (4,044) 5,862 (725) (4,413) 272
interests
Total
comprehensive
income (loss)
attributable to:
Owners of the
626,540 1,046,620 912,539 942,387 1,472,045 383,862
company
Non-controlling
(8,155) (4,299) 5,344 (334) (4,168) 272
interests
Earnings per Share 7.03 8.47 7.67 8.71 10.81 3.18
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(2) Parent company only financial information

A. Condensed Balance Sheet

Unit: NTD Thousand

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Year Financial Summary for the Past Five Fiscal Years
2016 2017 2018 2019 2020
Item
Current assets 1,921,626 2,044,408 2,375,389 2,202,968 2,943,972
Investments accounted
for using the equity 3,991,563 4,288,588 4,920,689 5,397,746 6,434,738
method
Property, plant and
394,833 470,524 527,117 544,596 613,528
equipment
Intangible Assets 601 18,566 33,924 30,795 28,359
Other assets 99,506 74,124 103,441 240,433 286,537
Total assets 6,408,129 6,896,210 7,960,560 8,416,538 10,307,134
Before
925,224 735,244 1,231,766 1,134,157 1,555,581
Current distribution
liabilities After
1,347,996 1,247,695 1,718,594 1,672,230 (Note)
distribution
Non-current liabilities 591,007 645,220 812,960 910,988 1,446,188
Before
1,516,231 1,380,464 2,044,726 2,045,145 3,001,769
Total distribution
liabilities After
1,939,003 1,892,915 2,531,554 2,583,218 (Note)
distribution
Ordinary shares 1,281,127 1,281,127 1,281,127 1,281,127 1,281,127
Capital surplus 348,263 348,263 348,263 348,263 348,263
Before
3,264,691 3,924,721 4,394,071 5,026,658 5,877,411
Retained distribution
earnings After
2,841,919 3,412,270 3,907,243 4,488,585 (Note)
distribution
Other equities (2,183) (38,365) (107,627) (284,655) (201,436)
Treasury shares - - - - -
Before
4,891,898 5,515,746 5,915,834 6,371,393 7,305,365
Total distribution
equity After
4,469,126 5,003,295 5,429,006 5,833,320 (Note)
distribution
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Note: The distribution of earnings from 2020 is yet to be decided during the shareholders’ meeting.

108 -

B. Condensed Statements of Comprehensive Income

Unit: NTD Thousand

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Year
Financial Summary for the Past Five Fiscal Years
2016 2017 2018 2019 2020
Item
Operating revenue, net 3,136,433 3,322,054 3,356,678 3,137,848 3,219,942
Gross profit (Note) 765,592 963,437 1,040,704 1,052,791 1,178,182
Profit from operations 446,001 630,077 687,231 703,425 789,521
Non-operating income
663,252 707,914 687,936 697,022 933,245
and expenses
Profit before income tax 1,109,253 1,337,991 1,375,167 1,400,447 1,722,766
Net profit 900,553 1,084,535 982,766 1,115,990 1,385,016
Other comprehensive
(274,013) (37,915) (70,227) (173,603) 87,029
income (loss), net of tax
Total comprehensive
626,540 1,046,620 912,539 942,387 1,472,045
income
Earnings per Share 7.03 8.47 7.67 8.71 10.81
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Note: The operating gross profit does not include realized (unrealized) gross profit from sales.

ii. Auditors’ Opinions from 2016 to 2020

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Year Accounting Firm CPA Audit Opinion
Gong Chun-Chi (Note),
2016 Deloitte & Touche Unqualified opinion
Chen Chen-Li
2017 Deloitte & Touche Gong Chun-Chi, Chen Chen-Li Unqualified opinion
2018 Deloitte & Touche Gong Chun-Chi, Chen Chen-Li Unqualified opinion
Unqualified opinion plus
Chiang Jia-Ling (Note),
2019 Deloitte & Touche the paragraph containing
Wu Chiu-Yen (Note)
matters to be emphasized
2020 Deloitte & Touche Chiang Jia-Ling, Wu Chiu-Yen Unqualified opinion
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Note: The CPAs were replaced to go with the internal adjustment of the accounting firm to meet business demand.

109 -

6.2 Financial Analysis for the Past Five Fiscal Years i. Consolidated Financial Analysis – Based on IFRS

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Financial Analysis for the Past Five Fiscal Years
Year As of
March
Analytical item (Note 1) 2016 2017 2018 2019 2020 31,2020
Debt Ratio 31.30 26.14 26.51 25.54 32.50 31.25
Financial
structure (%) Ratio of long-term funds to 334.33 353.50 340.98 368.99 412.84 432.78
property, plant and equipment
Current ratio 307.88 407.35 423.83 483.59 394.08 430.72
Solvency (%) Quick ratio 241.48 325.90 345.05 412.38 328.68 356.91
Time interest earned 608.38 523.85 383.33 300.14 206.17 168.35
Accounts receivable turnover
3.11 3.02 2.93 2.82 2.64 2.89
(times)
Average collection period 117.36 120.86 124.57 129.43 138.25 126.29
Inventory turnover (times) 3.75 3.78 3.89 3.89 3.06 3.00
Accounts payable turnover
Operating 6.10 6.08 6.01 5.94 5.43 6.28
(times)
performance
Average sales days 97.33 96.56 93.83 93.83 119.28 121.66
Property, plant and equipment
3.59 3.34 3.15 2.86 2.81 3.22
turnover (times)
Total assets turnover (times) 0.78 0.77 0.75 0.68 0.59 0.62
Return on assets (%) 12.99 14.44 12.47 13.17 14.03 14.62
Return on equity (%) 18.25 20.21 16.87 17.73 19.77 21.33
Profit before income tax to
Profitability 95.15 116.06 117.79 118.15 145.75 172.32
paid-in capital (%)
Net profit ratio (%) 16.49 18.54 16.42 19.18 23.31 23.15
Earnings per share ($) 7.03 8.47 7.67 8.71 10.81 3.18
Cash flow ratio (%) 58.68 82.78 99.93 131.23 65.46 61.58
Cash flows Cash flow adequacy ratio (%) 122.12 114.74 111.12 126.22 114.99 124.44
Cash flow reinvestment ratio
9.26 7.61 10.01 12.88 7.53 2.67
(%)
Operating leverage 1.78 1.82 1.76 1.78 1.59 1.67
Leverage
Financial leverage 1.00 1.00 1.00 1.00 1.00 1.00
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110 -

Reasons for the changes in respective financial ratios over the past two years (with a change rate of 20% and above)

The debt ratio increased, the quick ratio dropped, and the cash flow ratio dropped mainly because of the increased borrowings for the year.
Time interest earned dropped mainly because of the additional borrowings for the current term; the expenses on interest hence increased.
The inventory turnover ratio decreased, the average sales days increased mainly because of the user-end demand remaining high and the increase in the inventories due to materials prepared by the Company.
The profit before income tax to paid-in capital increased, the net profit ratio increased, and the earnings per share increased mainly because of the growths in profitability for the current term.
The cash flow reinvestment ratio dropped mainly because of the increase in the working capital.

Note 1: Calculations for this table are provided below

Financial structure
(1) Debt ratio = total liabilities / total assets
(2) Ratio of long-term funds to property, plant and equipment = (total equities + non-current liabilities) / net value of property, plant and equipment
Solvency
(1) Current ratio = current assets / current liabilities
(2) Quick ratio = (current assets-inventory-prepaid expense) / current liabilities
(3) Time interest earned = profit before interest and tax / interest expenses
Operating performance
(1) Accounts receivable (including accounts receivable and receivable notes from operations) turnover = net sales / average receivables (including accounts receivable and receivable notes from operations)
(2) Average collection period = 365 / accounts receivable turnover
(3) Inventory turnover = cost of goods sold / average inventory
(4) Accounts payables (including accounts payable and payable notes from operations) turnover = cost of goods sold / average payables (including accounts payable and payable notes from operations)
(5) Average sales days = 365 / inventory turnover
(6) Property, plant and equipment turnover = net sales / average net property, plant and equipment
(7) Total asset turnover = net sales / average total assets
Profitability
(1) Return on assets = [net profit + interest expenses (1- tax rate)] / average total assets
(2) Return on equity = net profit / average net shareholder's equity
(3) Net profit ratio = net profit / net sales
－
(4) Earnings per share = (profits or losses that belong to the owner of the parent company Preferred stock dividend)/weighted average number of issued shares (Note 2)
Cash flow
(1) Cash flow ratio = net cash flow from operating activities / current liabilities
(2) Cash flow adequacy ratio = net cash flow from operating activities over the past five years / (capital expenditure + increase in inventory + cash dividend) over the past five years.
(3) Cash flow reinvestment ratio = (net cash flow from operating activities - cash dividends)/(gross value of property, plant, and equipment + long-term investment + other non-current assets + working capital) (Note 3)
Leverage
(1) Operating leverage = (net operating revenue - variable operating costs and expenses)/Operating profit (Note 4)
(2) Financial leverage = operating profit/(operating profit - interest expenses)
111 -
Note 2: Special attention shall be paid to the following while weighing over the equation used to calculate the earnings per share:
The basis is the weighted average number of common stock shares, not the number of shares already issued as of the end of the year.
In case of capital increase in cash or trading of treasury stock shares, the circulation period shall be taken into consideration while the weighted average number of shares is being calculated.
In case of earnings transferred capital increase or capital surplus transferred capital increase, in the calculation of the earnings per share for prior years and the half-year earnings per share, adjustments shall be made retroactively according to the capital increase ratio; there is no need to consider the duration of issuance for the said capital increase.
If the preferred stock is a non-convertible accumulated preferred stock, the dividends for the year (distributed or not) shall be subtracted from the after-tax net profit or the after-tax net loss shall be increased. If the preferred stock is not accumulated in nature, with after-tax net profit, the dividends of the preferred stock shall be subtracted from the after-tax net profit; no such adjustment is needed in cases of deficits.
Note 3: Special attention shall be paid to the following while weighing over the cash flow analysis:
Net cash flows of operating activities refer to the net cash inflows from operating activities as shown in the Cash Flow Statement.
Capital expenditure refers to the cash out-flows for capital investment each year.
Increased inventories are only counted when the balance at end of term is greater than that at start of term; if inventories drop at the end of the year, they shall count as 0.
Cash dividends include those of common stock and preferred stock combined.
Gross value of property, plant, and equipment refers to the total value of property, plant, and equipment before accumulated depreciation is subtracted.
Note 4: Issuers shall divide each operating cost and operating expenditure into fixed and variable. If estimation or subjective judgment is involved, attention shall be paid to the legitimacy and remain consistent.
112 -

ii. Parent Company only Financial Analysis – Based on IFRS

==> picture [499 x 613] intentionally omitted <==

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

Year Financial Analysis for the Past Five Fiscal Years
2016 2017 2018 2019 2020
Analytical item (Note 1)
Debt Ratio 23.66 20.01 25.68 24.29 29.12
Financial
structure (%) Ratio of long-term funds to
1,388.66 1,309.38 1,276.50 1,337.20 1,426.43
property, plant and equipment
Current ratio 207.69 278.05 192.82 194.23 189.25
Solvency (%) Quick ratio 167.96 242.21 158.58 163.08 174.75
Time interest earned 604.83 513.05 770.10 810.97 793.44
Accounts receivable turnover
3.28 3.27 3.27 3.18 3.12
(times)
Average collection period 111.28 111.62 111.62 114.77 116.98
Inventory turnover (times) 6.46 8.12 7.21 5.72 7.71
Operating Accounts payable turnover
5.11 5.60 5.15 4.41 4.00
performance (times)
Average sales days 56.50 44.95 50.62 63.81 47.34
Property, plant and equipment
8.83 7.67 6.72 5.85 5.56
turnover (times)
Total assets turnover (times) 0.51 0.49 0.45 0.38 0.34
Return on assets (%) 14.70 16.33 13.24 13.64 14.81
Return on equity (%) 19.00 20.84 17.19 18.16 20.25
Profit before income tax to
Profitability 86.58 104.43 107.34 109.31 134.47
paid-in capital (%)
Net profit ratio (%) 28.71 32.64 29.27 35.56 43.01
Earnings per share ($) 7.03 8.47 7.67 8.71 10.81
Cash flow ratio (%) 52.87 66.34 75.21 50.29 52.08
Cash flow adequacy ratio (%) 122.51 98.21 111.14 106.02 108.09
Cash flows
Cash flow reinvestment ratio
2.85 0.98 5.72 1.06 2.90
(%)
Operating leverage 1.47 1.37 1.46 1.43 1.34
Leverage
Financial leverage 1.00 1.00 1.00 1.00 1.00
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113 -

Reasons for the changes in respective financial ratios over the past two years (with a change rate of 20% and above)

The inventory turnover increased, the average sales days dropped mainly because of the decrease in the mean inventory for the current term.
The profit before income tax to paid-in capital increased, the net profit ratio increased, and the earnings per share increased mainly because of the growths in profitability for the current term.
Cash flow reinvestment ratio increased mainly because of the growth in profitability for the current term and the increase net cash inflows from operating activities.

Note 1: Calculations for this table are provided below

Financial structure
(1) Debt ratio = total liabilities / total assets
(2) Ratio of long-term funds to property, plant and equipment = (total equities + non-current liabilities) / net value of property, plant and equipment
Solvency
(1) Current ratio = current assets / current liabilities
(2) Quick ratio = (current assets-inventory-prepaid expense) / current liabilities
(3) Time interest earned = profit before interest and tax / interest expenses
Operating performance
(1) Accounts receivable (including accounts receivable and receivable notes from operations) turnover = net sales / average receivables (including accounts receivable and receivable notes from operations)
(2) Average collection period = 365 / accounts receivable turnover
(3) Inventory turnover = cost of goods sold / average inventory
(4) Accounts payables (including accounts payable and payable notes from operations) turnover = cost of goods sold / average payables (including accounts payable and payable notes from operations)
(5) Average sales days = 365 / inventory turnover
(6) Property, plant and equipment turnover = net sales / average net property, plant and equipment
(7) Total asset turnover = net sales / average total assets
Profitability
(1) Return on assets = [net profit + interest expenses (1- tax rate)] / average total assets
(2) Return on equity = net profit / average net shareholder's equity
(3) Net profit ratio = net profit / net sales
－
(4) Earnings per share = (profits or losses that belong to the owner of the parent company Preferred stock dividend)/weighted average number of issued shares (Note 2)
Cash flow
(1) Cash flow ratio = net cash flow from operating activities / current liabilities
(2) Cash flow adequacy ratio = net cash flow from operating activities over the past five years / (capital expenditure + increase in inventory + cash dividend) over the past five years.
(3) Cash flow reinvestment ratio = (net cash flow from operating activities - cash dividends)/(gross value of property, plant, and equipment + long-term investment + other non-current assets + working capital) (Note 3)
Leverage
(1) Operating leverage = (net operating revenue - variable operating costs and expenses)/Operating profit (Note 4)
(2) Financial leverage = operating profit/(operating profit - interest expenses)
114 -
Note 2: Special attention shall be paid to the following while weighing over the equation used to calculate the earnings per share:
The basis is the weighted average number of common stock shares, not the number of shares already issued as of the end of the year.
In case of capital increase in cash or trading of treasury stock shares, the circulation period shall be taken into consideration while the weighted average number of shares is being calculated.
In case of earnings transferred capital increase or capital surplus transferred capital increase, in the calculation of the earnings per share for prior years and the half-year earnings per share, adjustments shall be made retroactively according to the capital increase ratio; there is no need to consider the duration of issuance for the said capital increase.
If the preferred stock is a non-convertible accumulated preferred stock, the dividends for the year (distributed or not) shall be subtracted from the after-tax net profit or the after-tax net loss shall be increased. If the preferred stock is not accumulated in nature, with after-tax net profit, the dividends of the preferred stock shall be subtracted from the after-tax net profit; no such adjustment is needed in cases of deficits.
Note 3: Special attention shall be paid to the following while weighing over the cash flow analysis:
Net cash flows of operating activities refer to the net cash inflows from operating activities as shown in the Cash Flow Statement.
Capital expenditure refers to the cash out-flows for capital investment each year.
Increased inventories are only counted when the balance at end of term is greater than that at start of term; if inventories drop at the end of the year, they shall count as 0.
Cash dividends include those of common stock and preferred stock combined.
Gross value of property, plant, and equipment refers to the total value of property, plant, and equipment before accumulated depreciation is subtracted.
Note 4: Issuers shall divide each operating cost and operating expenditure into fixed and variable. If estimation or subjective judgment is involved, attention shall be paid to the legitimacy and remain consistent.
115 -

6.3 Audit Committee’s Review Report on the Most Recent Fiscal Year:

Audit Committee’s Review Report

The Board of Directors was approved to

prepare the Company's 2020 business report, financial statements (including parent company only and consolidated financial statements) and earnings distribution plan, in which the financial statements have been audited by Chiang Jia-Ling, CPA and Wu Chiu-Yen, CPA of Deloitte & Touche, who also issued the audit report accordingly. After reviewing said business report, financial statements, and earnings distribution plan, we consider that they comply with relevant statutes or regulations in all respects. Therefore, we issue this report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Please review it accordingly..

General Annual Meeting 2021

Thinking Electronic Industrial Co., Ltd.

Convener of Audit Committee: Chen, Hsiu-Yen

==> picture [108 x 67] intentionally omitted <==

March 22, 2021

116

6.4 Financial Statements for the Most Recent Fiscal Year: Refer to Pages 118-184 through for details.
6.5 Parent Company Only Financial Statements Audited by Independent Auditors for the Most Recent Fiscal Year: Refer to Pages 185-262 through for details.
6.6 The Impact of Financial Difficulties of the Company and its Affiliates: None.

117

Thinking Electronic Industrial Company Limited and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

118 -

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The entities that are required to be included in the consolidated financial statements of affiliates as of and for the year ended December 31, 2020, under the “Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are all the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards 10 “Consolidated Financial Statements”. In addition, the information required to be disclosed in the consolidated financial statements has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Consequently, Thinking Electronic Industrial Co., Ltd. and subsidiaries do not prepare a separate set of consolidated financial statements.

Very truly yours,

Thinking Electronic Industrial Co., Ltd.

Sui Tai-Chung Chairman March 22, 2021

119 -

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Thinking Electronic Industrial Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Thinking Electronic Industrial Co., Ltd. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2020 is discussed as follows:

120 -

Recognition of revenue from specific product

The Group’s principal business is manufacturing and selling of passive components. The Group recognized net sales of NT$5,920,085 thousand for the year ended December 31, 2020, and revenue from specific product had significantly increased than previous year. Therefore, the occurrence of sales of specific product is considered as a key audit matter. For the accounting policy on revenue recognition, refer to Note 4 (l) to the parent company only financial statements .

Our main audit procedures performed in response to the above key audit matter included the following:

We obtained an understanding of the design of the internal control on revenue recognition and tested the operating effectiveness of the control.
We selected samples from the sales ledger and inspected the delivery documents and receipt vouchers and validated the occurrence of sales of specific product.
We verified that the revenue amounts recognized in the sales ledger were the same as those data recorded in the accounts receivable ledger.

Other Matter

We have also audited the parent company only financial statements of the Company for the years ended December 31, 2020 and 2019 on which we have issued an unmodified opinion and unmodified opinion with emphasis of matter paragraph, respectively.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the FSC, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

121 -

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

122 -

The engagement partners on the audits resulting in this independent auditors’ report are Jia-Ling Chiang and Chiu-Yen Wu.

Deloitte & Touche Taipei, Taiwan Republic of China

March 22, 2021

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

123 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at amortized cost - current (Notes 4 and 8) Notes receivable (Notes 10 and 31) Accounts receivable, net (Notes 4, 5 and 10) Other receivables Current tax assets (Notes 4 and 25) Inventories (Notes 4, 5 and 11) Other financial assets - current (Notes 12 and 31) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 9) Financial assets measured at amortized cost - non-current (Notes 4 and 8) Property, plant and equipment (Notes 4, 14, 31 and 32) Right-of-use assets (Notes 4 and 15) Investment properties (Notes 4 and 16) Other intangible assets (Note 4) Deferred tax assets (Notes 4 and 25) Prepayments for equipment Net defined benefit assets (Notes 4 and 21) Other financial assets - non-current (Notes 12 and 31) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 4, 17 and 31) Notes payable (Note 18) Accounts payable (Note 18) Other payables (Note 19) Other payables to related parties (Note 30) Current tax liabilities (Notes 4 and 25) Lease liabilities - current (Notes 4 and 15) Refund liabilities (Notes 4 and 20) Other current liabilities (Notes 4 and 27) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 4 and 17) Deferred tax liabilities (Notes 4 and 25) Lease liabilities - non-current (Notes 4 and 15) Deferred revenue (Notes 4 and 27) Guarantee deposits received Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 22) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable owners of the Company NON-CONTROLLING INTERESTS (Notes 4 and 22) Total equity TOTAL		December 31, 2020 Amount % $ 2,505,348 23 1,582,073 14 - - 588,283 5 1,844,020 17 32,870 - 24,136 - 1,266,112 12 158,349 1 83,198 1 8,084,389 73 39,481 - 87,206 1 2,174,967 20 253,744 2 52,910 1 43,982 1 137,992 1 92,947 1 7,930 - 38,092 - 17,020 - 2,946,271 27 $ 11,030,660 100 $ 505,809 5 195,865 2 449,921 4 550,358 5 485 - 135,401 1 31,487 - 170,979 2 11,121 - 2,051,426 19 339,671 3 1,074,907 10 92,661 1 20,942 - 1,091 - 5,175 - 1,534,447 14 3,585,873 33 1,281,127 12 348,263 3 1,020,206 9 284,655 3 4,572,550 41 5,877,411 53 (201,436 ) (2 ) 7,305,365 66 139,422 1 7,444,787 67 $ 11,030,660 100		December 31, 2019	December 31, 2019
		Amount $ 2,505,348 1,582,073 - 588,283 1,844,020 32,870 24,136 1,266,112 158,349 83,198 8,084,389 39,481 87,206 2,174,967 253,744 52,910 43,982 137,992 92,947 7,930 38,092 17,020 2,946,271 $ 11,030,660 $ 505,809 195,865 449,921 550,358 485 135,401 31,487 170,979 11,121 2,051,426 339,671 1,074,907 92,661 20,942 1,091 5,175 1,534,447 3,585,873 1,281,127 348,263 1,020,206 284,655 4,572,550 5,877,411 (201,436 ) 7,305,365 139,422 7,444,787 $ 11,030,660		Amount $ 1,774,594 1,239,151 55,029 387,839 1,658,714 22,530 580 822,298 28,196 78,878 6,067,809 26,918 - 2,031,402 259,781 58,804 44,884 132,248 75,731 1,515 34,628 16,795 2,682,706 $ 8,750,515 $ 104,302 158,479 375,274 427,248 142 106,565 24,851 47,717 10,158 1,254,736 - 870,579 88,198 14,341 2,503 5,175 980,796 2,235,532 1,281,127 348,263 908,264 107,627 4,010,767 5,026,658 (284,655 ) 6,371,393 143,590 6,514,983 $ 8,750,515	% 20 14 1 5 19 - - 9 - 1 69 - - 23 3 1 1 2 1 - - - 31 100 1 2 5 5 - 1 - 1 - 15 - 10 1 - - - 11 26 15 4 10 1 46 57 (3 ) 73 1 74 100

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

124 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4 and 23) Sales Less: Sales returns and allowances Operating revenue, net OPERATING COSTS (Notes 11, 24 and 30) GROSS PROFIT OPERATING EXPENSES (Notes 4, 10, 24 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 24, 27 and 30) Interest income Other income Other gains and losses Finance costs Total non-operating income and expenses CONSOLIDATED PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 22 and 25) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans		2020 Amount % $ 6,080,461 103 160,203 3 5,920,258 100 3,205,653 54 2,714,605 46 223,193 4 421,329 7 225,072 4 1,869 - 871,463 15 1,843,142 31 78,714 2 69,261 1 (114,683) (2) (9,101 ) - 24,191 1 1,867,333 32 486,730 8 1,380,603 24 5,070 -		2019
				Amount % $ 5,887,253 101 73,021 1 5,814,232 100 3,473,903 60 2,340,329 40 233,549 4 455,203 8 199,013 3 3,663 - 891,428 15 1,448,901 25 63,610 1 44,902 1 (38,666) (1) (5,060 ) - 64,786 1 1,513,687 26 398,422 7 1,115,265 19 4,770 - (Continued)

125 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Income tax related to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations Income tax related to items that may be reclassified subsequently to profit or loss Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 26) Basic Diluted			2020 Amount % 12,563 - (1,015 ) - 16,618 - 88,320 1 (17,664 ) - 70,656 1 87,274 1 1,467,877 25 1,385,016 24 (4,413 ) - 1,380,603 24 1,472,045 25 (4,168 ) - 1,467,877 25 $ 10.81 $ 10.78		2019
		$			Amount % $ (260) - (954 ) - 3,556 - (220,960) (4) 44,192 1 (176,768 ) (3 ) (173,212 ) (3 ) $ 942,053 16 $ 1,115,990 19 (725 ) - $ 1,115,265 19 $ 942,387 16 (334 ) - $ 942,053 16 $ 8.71 $ 8.61




		$
		$
		$
		$			$
		$			$

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

(Concluded)

126 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

	Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company
Ordinary Shares Capital Surplus $ 1,281,127 $ 348,263 - - - - - - - - - - - - - - 1,281,127 348,263 - - - - - - - - - - - - - - $ 1,281,127 $ 348,263	Retained Earnings	Total Retained Earnings $ 4,394,071 - - (486,828 ) (486,828 ) 1,115,990 3,425 1,119,415 5,026,658 - - (538,073 ) (538,073 ) 1,385,016 3,810 1,388,826 $ 5,877,411	Other Equity	Total Other Equity $ (107,627 ) - - - - - (177,028 ) (177,028 ) (284,655 ) - - - - - 83,219 83,219 $ (201,436 )
			Exchange Differences on Translation of the Financial Statements of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (100,863 ) $ (6,764 ) - - - - - - - - - - (176,768 ) (260 ) (176,768 ) (260 ) (277,631 ) (7,024 ) - - - - - - - - - - 70,656 12,563 70,656 12,563 $ (206,975 ) $ 5,539
	Legal Reserve Special Reserve Unappropriated Earnings $ 809,987 $ 38,365 $ 3,545,719 98,277 - (98,277) - 69,262 (69,262) - - (486,828 ) 98,277 69,262 (654,367 ) - - 1,115,990 - - 3,425 - - 1,119,415 908,264 107,627 4,010,767 111,942 - (111,942) - 177,028 (177,028) - - (538,073 ) 111,942 177,028 (827,043 ) - - 1,385,016 - - 3,810 - - 1,388,826 $ 1,020,206 $ 284,655 $ 4,572,550

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit loss Finance costs Interest income Loss on disposal of property, plant and equipment, net Loss on inventories Recognition of provisions Amortization of grants income Other non-cash items Changes in operating assets and liabilities Notes receivable Accounts receivable Other receivables Inventories Other current assets Net defined benefit asset Notes payable Accounts payable Other payables Other payables to related parties Other current liabilities Refund liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at amortized cost Proceeds from disposal of financial assets at amortized cost Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Payments for intangible assets Increase in other financial assets Decrease in other financial assets Increase in other non-current assets Net cash used in investing activities	2020 $ 1,867,333 277,583 6,393 1,869 9,101 (78,714) 3,221 70,486 125,250 (449) (248) (200,444) (187,335) (10,524) (516,087) (4,320) (1,345) 37,386 74,647 101,769 343 211 (1,988 ) 1,574,138 78,898 (8,651) (301,389 ) 1,342,996 (84,553) 54,685 (5,577,389) 5,257,442 (368,531) 4,493 (2,143) (133,617) - (225 ) (849,838 )	2019 $ 1,513,687 264,576 8,800 3,663 5,060 (63,610) 4,700 52,777 24,000 - (2,810) (15,056) 39,448 (504) 94,610 48,620 (3,457) (87,785) (14,132) (31,375) (39) 930 (9,119 ) 1,832,984 52,577 (5,177) (233,686 ) 1,646,698 (55,029) - (7,815,959) 7,097,561 (274,891) 11,571 (18,861) - 56,442 (5,455 ) (1,004,621 ) (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Refund of guarantee deposits received Repayments of the principal portion of lease liabilities Cash dividends paid Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT THE END OF YEAR	2020 $ 1,838,328 (1,438,337) 347,000 - (1,412) (14,013) (538,073 ) 193,493 44,103 730,754 1,774,594 $ 2,505,348	2019 $ 314,302 (235,000) - (150,000) (737) (24,125) (486,828 ) (582,388 ) (117,998 ) (58,309) 1,832,903 $ 1,774,594

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

(Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Thinking Electronic Industrial Co., Ltd. (the “Company”) was incorporated in July 1979. The Company mainly manufactures, processes and sells electric devices, thermistors, varistors and wires.

The Company’s shares have been listed on the Taiwan Stock Exchange since September 2000.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 22, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and 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)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the accounting policies of the Company and its subsidiaries (collectively referred to as the “Group”):

Amendment to IFRS 16 “Covid-19-Related Rent Concessions”

The Group elected to apply the practical expedient provided in the amendment to IFRS 16 with respect to rent concessions negotiated with the lessor as a direct consequence of the COVID-19. The related accounting policies are stated in Note 4. Prior to the application of the amendment, the Group shall determine whether the abovementioned rent concessions need to be accounted for as lease modifications.

The Group applied the amendment from January 1, 2020. Because the above-mentioned rent concessions happened only in 2020, the amendment has no impact on the retained earnings as of January 1, 2020.

b. The IFRSs endorsed by the FSC for application starting from 2021

Effective Date New IFRSs Announced by IASB Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon Applying IFRS 9” promulgation by the IASB (Continued)

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New IFRSs Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2”	Effective Date Announced by IASB
	January 1, 2021 (Concluded)

As of the date the consolidated financial statements were authorized for issue, the Group assessed there was no significant impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

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Effective Date
New IFRSs Announced by IASB (Note 1)
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New IFRSs	Effective Date Announced by IASB (Note 1)
“Annual Improvements to IFRS Standards 2018-2020”	January 1, 2022 (Note 2)
Amendments to IFRS 3 “Reference to the Conceptual Framework”	January 1, 2022 (Note 3)
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets	To be determined by IASB
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 IAS 1 “Classification of Liabilities as Current or	January 1, 2023
Non-current”
Amendments to IAS 1 “Disclosure of Accounting Policies”	January 1, 2023 (Note 4)
Amendments to IAS 8 “Definition of Accounting Estimates”	January 1, 2023 (Note 5)
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds	January 1, 2022 (Note 6)
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a	January 1, 2022 (Note 7)
Contract”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 5: 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 6: 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.
Note 7: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
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Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Group should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

1) Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
2) The Group may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and
3) Not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

1) The Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;
2) The Group chose the accounting policy from options permitted by the standards;
3) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;
4) The accounting policy relates to an area for which the Group is required to make significant judgments or assumptions in applying an accounting policy, and the Group discloses those judgments or assumptions; or
5) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

Except for the above impact, as of the date the consolidated financial statements were reported to the board of directors, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of Compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value and net defined assets which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e., its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. 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 and

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attributed to the owners of the Company.

See Note 13, Table 6 and 7 for detailed information on subsidiaries (including percentages of ownership and main businesses).

e. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e., 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. Exchange differences on monetary items arising from settlement or translation 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 fair value is determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

For the purposes of presenting consolidated financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income attributed to the owners of the company and non-controlling interests.

On the disposal of a foreign operation (i.e., a disposal of the Company’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

f. Inventories

Inventories consist of finished goods, work-in-process, raw materials and supplies and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost.

g. Property, plant, and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment

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when completed and ready for intended use.

Freehold land is not depreciated.

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting year, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

h. Investment properties

Investment properties are properties held to earn rental and/or for capital appreciation.

Investment properties are initially measured 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.

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

i. Intangible assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

Expenditures on research activities are recognized as expenses in the period in which they are incurred.

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.

j. Impairment of property, plant and equipment, right-of-use asset and intangible assets

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets to determine whether there is any indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to individual cash-generating units or the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit

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or loss.

k. Financial instruments

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement category

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost, and investments in equity instruments at FVTOCI.

i Financial asset at FVTPL

Financial asset is classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL, which are not designated as debt instruments that do not meet the amortized cost criteria or the FVOTCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement gains or losses on such financial assets are recognized in profit or loss. Fair value is determined in the manner described in Note 29.

ii 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 asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable, accounts receivable, other receivables and other financial assets are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset.

A financial asset is credit impaired when one or more of the following events have occurred:

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i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

iii Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable).

The Group always recognizes lifetime expected credit losses (ECLs) for accounts receivable. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Group considers the following situations as indication that a financial asset is in default (without taking into account any collateral held by the Group):

i Internal or external information show that the debtor is unlikely to pay its creditors.
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ii When a financial asset is more than 180 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Financial liabilities

a) Subsequent measurement

The Group’s financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

l. Revenue recognition

The Group identifies contracts with the customers, allocates the transaction price to the performance obligations, and recognizes revenue when performance obligations are satisfied.

Revenue from sale of goods comes from sales of thermistors and varistors. Sales of thermistors and varistors are recognized as revenue when the goods are shipped or delivered to the customer’s specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers, and bears the risks of obsolescence. Accounts receivable are recognized simultaneously.

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

Refund liabilities are based on the historical experience and different contract items to estimate the probable sales returns and allowance.

m. Leases

When the Group is lessee, the Group assesses whether the contract is, or contains, a lease at the inception of a contract.

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease

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terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, lessee’s incremental borrowing rate will be used.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

The Group negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 to change the lease payments that results in the revised consideration for the lease less than the consideration for the lease immediately preceding the change. There is no substantive change to other terms and conditions. The Group elects to apply the practical expedient to all of these rent concessions, and therefore, does not assess whether the rent concessions are lease modifications. Instead, the Group recognizes the reduction in lease payment in profit or loss as a deduction of expenses of variable lease payments, in the period in which the events or conditions that trigger the concession occurs, and makes a corresponding adjustment to the lease liability.

n. Borrowing costs

Borrowing costs directly attributable to an 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.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

o. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grant will be received.

Government grants related to income are recognized in other income on a systematic basis over the period in which the group recognized as expense the related cost that the grants intend to compensate. Specifically, government grants whose primary condition is that the group should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

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Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the group with no future related costs are recognized in profit or loss in the period in which they are received.

The benefit of a government loan received at a below-market rate of interest in treated as a government grant measured as the difference between the proceeds received and the fair value of the loan base on prevailing market interest rate.

p. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit assets are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit assets represent the actual surplus in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

q. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and such temporary differences are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

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

3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future years if the revisions affect both current and future period.

Key Sources of Estimation Uncertainty

a. Estimated impairment of financial assets

The provision for impairment of accounts receivable is based on assumptions about risk of default and expected loss rates. The Group uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 10. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

b. Write-down of inventories

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estimation of net realizable value is based on current market conditions and historical experience in the sales of product of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts Demand deposits Cash equivalents Time deposits with original maturities less than 3 months		December 31	December 31
		2020 $ 1,086 74 1,333,420 1,170,768 $ 2,505,348	2019 $ 1,520 74 1,116,116 656,884 $ 1,774,594

a. The market rate intervals of cash equivalents at the end of the years were as follows:

Time deposits (%)	December 31
	2020 2019 0.41-2.85 2.59-3.30

b. The Group transacted with variety of financial institutions which are high credit quality to disperse credit risk, hence, there was no expected credit loss.

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT

Financial assets mandatorily classified as at FVTPL Hybrid financial assets - structured deposits		December 31	December 31
		2020 $ 1,582,073	2019 $ 1,239,151

Structured deposits combined with embedded derivatives which have no direct connection to major contract. Because of the major contract include in above financial assets should be measured under IFRS 9, based on this reason, the entire contract should mandatorily classified as at FVTPL.

8. FINANCIAL ASSETS AT AMORTIZED COST

Time deposits with original maturities of more than 3 months Current Non-current Interest rate (%)		December	31
		2020 $ 87,206 $ - 87,206 $ 87,206 4.13	2019 $ 55,029 $ 55,029 - $ 55,029 0.65-3.60

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9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2020 $ 39,481	2019 $ 26,918

These investments in equity instruments are not held for trading or for short-term gains. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI.

10. NOTES AND ACCOUNTS RECEIVABLE

Notes receivable At amortized cost Gross carrying amount - operating Accountsreceivable- non-related parties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss		December 31	December 31
		2020 $ 588,283 $ 1,870,615 26,595 $ 1,844,020	2019 $ 387,839 $ 1,683,612 24,898 $ 1,658,714

Refer to Note 31 for information related to notes receivable pledged as security.

The Company’s notes receivable and accounts receivable have been measured by amortized cost. Refer to Note 29 for information related to credit management policy.

The Group measures the loss allowance for accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix prepared by reference to the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date.

The Group writes off accounts receivable when there is evidence indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

There were no notes receivable that were past due and not impaired at the end of the reporting years.

The following table details the loss allowance of accounts receivable based on the Group’s provision matrix.

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December 31, 2020

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2019 Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0-0.05 $ 1,728,022 (1,111 ) $ 1,726,911 Not Past Due 0-0.05 $ 1,540,020 (717 ) $ 1,539,303	Past Due 1to 30 Days 0.5 $ 58,604 (293 ) $ 58,311 Past Due 1to 30 Days 0.5 $ 62,823 (314 ) $ 62,509	Past Due 31 to 60 Days 1 $ 50,298 (503 ) $ 49,795 Past Due 31 to 60 Days 1 $ 50,747 (507 ) $ 50,240	Past Due 61 to 90 Days 30 $ 5,205 (1,562 ) $ 3,643 Past Due 61 to 90 Days 30 $ 3,311 (993 ) $ 2,318	Past Due 91 to 180 Days 50 $ 10,721 (5,361 ) $ 5,360 Past Due 91 to 180 Days 50 $ 8,688 (4,344 ) $ 4,344	Past Due Over 180 Days 100 $ 17,765 (17,765 ) $ - Past Due Over 180 Days 100 $ 18,023 (18,023 ) $ -	Total $ 1,870,615 (26,595 ) $ 1,844,020 Total $ 1,683,612 (24,898 ) $ 1,658,714

The movements of the loss allowance of accounts receivable were as follows:

Balance at January 1 Add: Net remeasurement of loss allowance Less: Amounts written off Foreign exchange gains and losses Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 24,898 1,869 (332) 160 $ 26,595	2019 $ 22,666 3,663 (1,083) (348 ) $ 24,898

11. INVENTORIES

Finished goods Work-in-process Raw materials Supplies Inventory in transit		December 31	December 31
		2020 $ 579,429 384,948 276,612 18,955 6,168 $ 1,266,112	2019 $ 529,374 40,331 228,877 15,602 8,114 $ 822,298

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $3,205,653 thousand and $3,473,903 thousand, respectively, which included the following items:

Write-off obsolete inventories Inventory write-downs (reversed) Unallocated manufacturing overhead	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 68,061 2,425 25,436 $ 95,922	2019 $ 83,133 (30,356) - $ 52,777

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Unallocated manufacturing overhead are those expenditures of subsidiaries in China that halted production in the first quarter of 2020, due to the impact of COVID-19.

12. OTHER FINANCIAL ASSETS

Pledge time deposits Deposits of banker’s acceptance Refundable deposits Current Non-current Interest rate of pledge time deposits (%)		December 31	December 31
		2020 $ 163,969 23,180 9,292 $ 196,441 $ 158,349 38,092 $ 196,441 0.57-3.15	2019 $ 33,102 22,818 6,904 $ 62,824 $ 28,196 34,628 $ 62,824 0.30-2.25

For other financial assets pledged information please refer to Note 31.

13. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements were as follows:

Name of Investor
Name of Investee
Main Businesses and
Products
The Company
Yenyo Technology Co., Ltd.
(Yenyo)
Note 1
Greenish Co., Ltd.
(Greenish)
Note 2
Thinking (Changzhou) Electronic Co., Ltd.
(Thinking Changzhou)
Note 3
Welljet Hong Kong Ltd.
(Welljet)
Notes 2 and 7
Saint East Co., Ltd.
(Saint East)
Notes 2 and 7
Thinking Holding (Cayman) Co., Ltd.
(Thinking Holding)
Note 2
Greenish
Thinking Changzhou
Note 3
Welljet
Notes 2 and 7
Thinking Holding
Thinking International Co., Ltd.
(Thinking International)
Note 2
Thinking (HK) Enterprises Limited
(Thinking HK)
Note 2
View Full (Samoa) Ltd.
(View Full Samoa)
Note 2
Thinking Electronic (Samoa) Ltd.
(Thinking Samoa)
Note 2
Thinking International
Thinking (Yichang) Electronic Co., Ltd.
(Thinking Yichang)
Note 3
Thinking HK
Jiang Xi Thinking Electronic Co., Ltd.
(Jiangxi Thinking)
Note 4
View Full Samoa
Guangdong Welkin Thinking Electronic Co., Ltd.
(Guangdong Welkin Thinking)
Note 5

Percentage of Ownership (%)

December 31,
2020
December 31,
2019
52.61
52.61
100.00
100.00
47.39
47.39
-
-
-
-
100.00
100.00
52.61
52.61
-
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
(Continued)

145 -

Name of Investor Name of Investee Main Businesses and Products Dong Guan Welkin Electronic Co., Ltd. (Dongguan Welkin) Notes 6 and 8 Thinking Samoa Dongguan Welkin Notes 6 and 8 Thinking Changzhou Dongguan Welkin Notes 6 and 8 Dongguan Welkin Welkin Electronic Co., Ltd. (Zhongshan Welkin) Notes 3 and 9	Percentage of Ownership (%)
	December 31, 2020 December 31, 2019 58.34 - 10.42 25.00 31.24 75.00 100.00 -

Note 1: Processing, selling and manufacturing diodes.
Note 2: International trading and investment.
Note 3: Manufacturing and selling thermistors, varistors and sensors.
Note 4: Manufacturing and selling thermistors and varistors.
Note 5: Wholesale of thermistors, varistors, sensors and equipment.
Note 6: Manufacturing and processing thermistors, varistors, sensors and equipment.
Note 7: The Company’s board of directors resolved in its meeting in May 2019 to liquidate and dissolve Saint East and Welljet for coordination of marketing supply and reintegration of the Company. The Group completed the liquidation process in September 2019 and October 2019, respectively.
Note 8: For long-term operating need, View Full Samoa decided to invest in Dongguan Welkin RMB49,037 thousand in November 2019 through the distributed earnings of Guangdong Welkin Thinking on December 31, 2018 and mark June 1, 2020 as the capital increase issued date. The percentage of ownership of View Full Samoa, Thinking Samoa and Thinking Changzhou was 58.34%, 10.42% and 31.24%, respectively, at June 1, 2020.
Note 9: In order to combine manufacturing and sales in the factory, the board of directors of Dongguan Welkin had decided to establish Zhongshan Welkin, which had been registered in December 2020. As of December 31, 2020, Zhongshan Welkin has not been invested.

14. PROPERTY, PLANT, AND EQUIPMENT

For the Year ended December 31, 2020

Cost Balance at January 1, 2020 Additions Disposals Reclassified Effect of foreign currency exchange differences Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Disposals Depreciation expense Reclassified Effect of foreign currency exchange differences Balance at December 31, 2020 Carrying amounts at December 31, 2020	Land $ 193,054 2,665 - - - $ 195,719 $ - - - - - $ - $ 195,719	Buildings Machinery and Equipment Leasehold Improvements $ 867,054 $ 1,872,434 $ 131,404 82,861 149,097 8,234 (10,961 ) (31,612 ) - - - - 4,671 19,818 1,865 $ 943,625 $ 2,009,737 $ 141,503 $ 248,544 $ 984,057 $ 49,294 (10,961 ) (25,133 ) - 35,456 134,551 27,258 - - - (1,292 ) 10,059 1,164 $ 271,747 $ 1,103,534 $ 77,716 $ 671,878 $ 906,203 $ 63,787	Others $ 376,584 18,133 (8,814 ) (3,939 ) 2,304 $ 384,268 $ 223,196 (7,579 ) 41,095 (858 ) 1,344 $ 257,198 $ 127,070	Property under Construction $ 95,963 112,078 - - 2,269 $ 210,310 $ - - - - - $ - $ 210,310	Total $ 3,536,493 373,068 (51,387 ) (3,939 ) 30,927 $ 3,885,162 $ 1,505,091 (43,673 ) 238,360 (858 ) 11,275 $ 1,710,195 $ 2,174,967

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For the Year ended December 31, 2019

Cost Balance at January 1, 2019 Additions Disposals Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Disposals Depreciation expense Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amount at December 31, 2019	Land $ 193,054 - - - $ 193,054 $ - - - - $ - $ 193,054	Buildings Machinery and Equipment Leasehold Improvements $ 870,661 $ 1,842,470 $ 125,914 20,415 178,435 10,599 (893 ) (95,194 ) - (23,129 ) (53,277 ) (5,109 ) $ 867,054 $ 1,872,434 $ 131,404 $ 219,775 $ 965,486 $ 25,510 (803 ) (79,992 ) - 34,641 127,467 25,745 (5,069 ) (28,904 ) (1,961 ) $ 248,544 $ 984,057 $ 49,294 $ 618,510 $ 888,377 $ 82,110	Others $ 344,272 47,450 (8,773 ) (6,365 ) $ 376,584 $ 193,480 (7,794 ) 42,232 (4,722 ) $ 223,196 $ 153,388	Property under Construction $ 51,781 46,313 - (2,131 ) $ 95,963 $ - - - - $ - $ 95,963	Total $ 3,428,152 303,212 (104,860 ) (90,011 ) $ 3,536,493 $ 1,404,251 (88,589 ) 230,085 (40,656 ) $ 1,505,091 $ 2,031,402

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Main plants	13-60 years
Improvement engineering	2-60 years
Machinery and equipment	1-12 years
Leasehold improvements	3-10 years
Others	2-10 years

Refer to Note 31 for the carrying amount of property, plant and equipment pledged as collateral for bank borrowings.

15. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Buildings Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings		December 31	December 31
	2020 $ 188,773 64,971 $ 253,744 For the Year Ended		2019 $ 193,284 66,497 $ 259,781 December 31
		2020 $ 38,588 $ 5,065 28,172 $ 33,237	2019 $ 33,885 $ 4,648 24,711 $ 29,359

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Except for the recognized depreciation and additions, the Group did not have impairment or subleasing of right-of-use assets for the years ended December 31, 2020 and 2019.

b. Lease liabilities

Carrying amount Current Non-current Range of discount rate for lease liabilities was as follows: Land Buildings		December	31
		2020 $ 31,487 $ 92,661 December	2019 $ 24,851 $ 88,198 31
		2020 0.75-1.38 5.13-6.04	2019 0.75-1.38 6.04

c. Material leasing activities and terms

The Group leases land and buildings for the use of plants and offices.

1) Land

The land is located in Nanzih Export Processing Zone with lease terms of 9 to 10 years. The government reserves the right to adjust rent according to the assessed land value.

2) Buildings

The building is located in mainland China with lease terms of 4 to 50 years. The lease payments will be adjusted every 3 years on the basis of changes in market rental rates.

The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease periods. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 453 $ 452 $ 20,099	2019 $ 751 $ 456 $ 29,909

Lease arrangements under operating leases for the leasing out of investment properties are presented in Note 16.

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16. INVESTMENT PROPERTIES

Cost Balance at January 1 Effect of foreign currency exchange differences Balance at December 31 Accumulated depreciation Balance at January 1 Depreciation expense Effect of foreign currency exchange differences Balance at December 31 Carrying amount at December 31	For the Year Ended	For the Year Ended	December 31
		2020 $ 112,544 1,533 $ 114,077 $ 53,740 6,572 855 $ 61,167 $ 52,910	2019 $ 117,365 (4,821 ) $ 112,544 $ 48,353 5,231 156 $ 53,740 $ 58,804

Depreciation is provided on a straight-line basis over the estimated useful lives of 12-22 years.

The Group acquired a building located in Beijing, China on November 1, 2016, the carrying amount depended on the report in 2017 of fair value released by independent appraisal company.

In addition, the Group also holds buildings located in Suzhou and Nanchang, China. The market for comparable properties is inactive and alternative reliable measurements of fair value are not available; therefore, the Group determined that the fair value of the investment property is not reliably measurable.

17. BORROWINGS

a. Short-term borrowings

Secured borrowings (Note 31) Unsecured borrowings		December 31	December 31
		2020 $ 130,809 375,000 $ 505,809	2019 $ 4,302 100,000 $ 104,302

The annual interest rates of short-term borrowings were as follows:

Secured borrowings (%) Unsecured borrowings (%)	December 31
	2020 2019 2.6 Interest exemption 0.75-0.77 0.90

The above rate with interest exemption of secured borrowings was the incentive policy provided by the local government to the subsidiary - Thinking Yichang.

149 -

b. Long-term borrowings

			December	31,
		Contract Content	2020
Credit	loans	Effective from October 2020 to October 2027.	$ 347,000
		Principal is repaid in 48 monthly payments from
		November 2023.
Less:	Government grants		7,329
	discount
Less:	Due within one year			-
			$ 339,671

Borrowings under the “Welcome Taiwanese Companies Abroad to Invest in Taiwan Action Plan” have interest at prime rate and are used for capital expenditures and operating turnovers. The Company calculated its fair value with annual interest rate of 0.845% based on general condition. At December 31, 2020, the annual interest rate of prime rate loan was 0.35%.

18. NOTES PAYABLE AND ACCOUNTS PAYABLE

The Group’s notes payable and accounts payable were from operating activities and were not secured by collaterals.

The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms; therefore, no interest was charged on the outstanding accounts payable.

19. OTHER PAYABLES

Payable for salaries and bonuses Payable for employees’ compensation Payable for purchase of equipment Payable for remuneration of directors Others		December 31	December 31
		2020 $ 279,432 64,300 45,370 23,400 137,856 $ 550,358	2019 $ 228,706 44,100 24,203 17,900 112,339 $ 427,248

20. REFUND LIABILITIES

Balance at January 1 Recognized Usage Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2020 $ 47,717 125,250 (1,988 ) $ 170,979	2019 $ 32,836 24,000 (9,119 ) $ 47,717

The discount on refund liabilities was based on historical experience, management’s judgments and other known reasons to estimate sales compensation and offset refund liability when compensation actually

150 -

occurs.

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans
1) The Company and Yenyo of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.
2) Thinking Changzhou, Dongguan Welkin, Thinking Yichang, Jiangxi Thinking and Guangdong Welkin Thinking of the Group make contributions in accordance with the local regulations. The subsidiaries are required to contribute a specified percentage of salaries to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan are to make the specified contributions.

b. Defined benefit plans

The defined benefit plan adopted by the Company and Yenyo of the Group in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company and Yenyo of the Group contribute specific percentage of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets		December 31	December 31
		2020 $ 97,584 (105,514) $ (7,930 )	2019 $ 103,109 (104,624 ) $ (1,515 )
		$ (7,930

Movements in net defined benefit assets were as follows:

	Present Value
	of the Defined
	Benefit	Fair Value of	Net Defined
	Obligation	the Plan Assets	Benefit Assets
Balance at January 1, 2019 (including $378
thousand of other payables)	$ 106,772	$ (99,682 )	$	7,090
Service cost
Current service cost	191	-		191
				(Continued)

151 -

	Present Value	Present Value
	of the Defined
		Benefit	Fair Value of		Net	Defined
	Obligation		the	Plan Assets	Benefit Assets
Net interest expense (income)	$	1,107	$	(1,045 )	$	62
Recognized in profit or loss		1,298		(1,045 )		253
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(3,420)		(3,420)
Actuarial loss - changes in financial
assumptions		486		-		486
Actuarial gain - experience adjustments		(1,836 )		-		(1,836 )
Recognized in other comprehensive income		(1,350 )		(3,420 )		(4,770 )
Contributions from the employer		-		(4,088 )		(4,088 )
Benefits paid		(3,611 )		3,611		-
Balance at December 31, 2019		103,109		(104,624 )		(1,515 )
Service cost
Current service cost		136		-		136
Net interest expense (income)		1,033		(1,062 )		(29 )
Recognized in profit or loss		1,169		(1,062 )		107
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(3,129)		(3,129)
Actuarial loss - changes in financial
assumptions		1,435		-		1,435
Actuarial gain - experience adjustments		(3,376 )		-		(3,376 )
Recognized in other comprehensive income		(1,941 )		(3,129 )		(5,070 )
Contributions from the employer		-		(1,452 )		(1,452 )
Benefits paid		(4,753 )		4,753		-
Balance at December 31, 2020	$	97,584	$	(105,514 )	$	(7,930 )

Through the defined benefit plans under the Labor Standards Law, the Company and Yenyo of the Group are exposed to the following risks:

1) Investment risk

The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets shall not be below the interest rate for a 2-year time deposit with local banks.

152 -

2) 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 plans’ debt investments.

3) Salary risk

The present value of the defined benefit obligation is calculated using the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations are as follows:

Discount rate (%) Expected rate of salary increase (%)	December 31
	2020 2019 0.80-0.85 1.00-1.10 2.00-3.00 2.00-3.00

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 1% increase 1% decrease		December	31
		2020 $ (1,665 ) $ 1,723 $ 7,098 $ (6,324 )	2019 $ (1,886 ) $ 1,957 $ 8,111 $ (7,158 )

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

The expected contributions to the plans for the next year Average duration of the defined benefit obligation (years)		December	31
		2020 $ 1,440 9-13	2019 $ 3,783 10-16

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22. EQUITY

a. Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2020 140,000 $ 1,400,000 128,113 $ 1,281,127	2019 140,000 $ 1,400,000 128,113 $ 1,281,127

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends,or transferred to ordinaryshares(Note) Conversion of bonds Issuance of ordinary shares Treasury share transactions		December 31	December 31
		2020 $ 265,446 59,168 23,649 $ 348,263	2019 $ 265,446 59,168 23,649 $ 348,263

Note: Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to ordinary shares (limited to a certain percentage of the Company’s capital surplus and to once a year).

c. Retained earnings and dividend policy

Under the dividends policy in the Articles, 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 a legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonuses to stockholders.

The Company’s dividend policy is also designed to meet the current and future development plans and takes into consideration the investment environment, capital needs, domestic or international competitive conditions while simultaneously meeting shareholders’ interests. The Company shall distribute the dividends at no less than 30% of the distributable earnings of the current year. The way to distribute dividends could be either through cash or shares, and cash dividends shall not be less than 20% of total dividends.

Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate to or reverse from a special reserve amounts of certain items. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and thereafter

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distributed.

The legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of earnings for 2019 and 2018 were approved in the shareholders’ meeting on June 15, 2020 and June 21, 2019, respectively. The appropriations of earnings for 2019 and 2018 were as follows:

Legal reserve Special reserve Cash dividends		Appropriation of Earnings For the Year Ended 2019 2018 $ 111,942 $ 98,277 177,028 69,262 538,073 486,828 $ 827,043 $ 654,367	Dividend Per Share (NT$)
		For the Year	For the Year Ended
		2019 $ 111,942 177,028 538,073 $ 827,043	2019 2018 $ 4.2 $ 3.8

The appropriations of earnings for 2020 had been proposed by the Company’s board of directors on March 22, 2021. The appropriation and dividends per share were as follows:

	Appropriation	Dividend Per
	of Earnings	Share (NT$)
Legal reserve	$ 138,883
Special reserve	(83,219)
Cash dividends	704,620	$ 5.5
	$ 760,284

The appropriations of earnings for 2020 are subject to the resolution of the shareholders’ meeting to be held on June 25, 2021.

d. Other equity items
1) Exchange differences on translation of foreign operations

Balance at January 1 Recognized for the year Exchange differences on translation of the financial statements of foreign operations Income tax benefit (expenses) relating to exchange differences arising on translation of foreign operations Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (277,631) 88,320 (17,664 ) $ (206,975 )	2019 $ (100,863) (220,960) 44,192 $ (277,631 )

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2) Unrealized gain/loss on financial assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized gain (loss) on financial assets at FVTOCI Balance at December 31 e. Non-controlling interests Balance at January 1 Share in loss for the year Other comprehensive income during the year Balance at December 31 23. OPERATING REVENUE	For the Year Ended	For the Year Ended	December 31
	2020 $ (7,024) 12,563 $ 5,539 For the Year Ended		2019 $ (6,764) (260 ) $ (7,024 ) December 31
		2020 $ 143,590 (4,413) 245 $ 139,422	2019 $ 143,924 (725) 391 $ 143,590

Revenue from contracts with customers Revenue from sale of goods Service revenue	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 5,920,085 173 $ 5,920,258	2019 $ 5,814,054 178 $ 5,814,232

Refer to Note 4 (l) for information related to contracts with customers. Contract balances December 31, 2020 December 31, 2019 Notes and accounts receivable (Note 10) $ 2,432,303 $ 2,046,553 Disaggregation of revenue For the year ended December 31, 2020 Reportable Segments The Company Yenyo Thinking Changzhou Others Type of revenue Revenue from sale of passive components $ 2,691,961 $ 177,979 $ 1,334,599 $ 1,715,546 Service revenue 173 - - - $ 2,692,134 $ 177,979 $ 1,334,599 $ 1,715,546	Refer to Note 4 (l) for information related to contracts with customers. Contract balances December 31, 2020 December 31, 2019 Notes and accounts receivable (Note 10) $ 2,432,303 $ 2,046,553 Disaggregation of revenue For the year ended December 31, 2020 Reportable Segments The Company Yenyo Thinking Changzhou Others Type of revenue Revenue from sale of passive components $ 2,691,961 $ 177,979 $ 1,334,599 $ 1,715,546 Service revenue 173 - - - $ 2,692,134 $ 177,979 $ 1,334,599 $ 1,715,546	Refer to Note 4 (l) for information related to contracts with customers. Contract balances December 31, 2020 December 31, 2019 Notes and accounts receivable (Note 10) $ 2,432,303 $ 2,046,553 Disaggregation of revenue For the year ended December 31, 2020 Reportable Segments The Company Yenyo Thinking Changzhou Others Type of revenue Revenue from sale of passive components $ 2,691,961 $ 177,979 $ 1,334,599 $ 1,715,546 Service revenue 173 - - - $ 2,692,134 $ 177,979 $ 1,334,599 $ 1,715,546	Refer to Note 4 (l) for information related to contracts with customers. Contract balances December 31, 2020 December 31, 2019 Notes and accounts receivable (Note 10) $ 2,432,303 $ 2,046,553 Disaggregation of revenue For the year ended December 31, 2020 Reportable Segments The Company Yenyo Thinking Changzhou Others Type of revenue Revenue from sale of passive components $ 2,691,961 $ 177,979 $ 1,334,599 $ 1,715,546 Service revenue 173 - - - $ 2,692,134 $ 177,979 $ 1,334,599 $ 1,715,546	Refer to Note 4 (l) for information related to contracts with customers. Contract balances December 31, 2020 December 31, 2019 Notes and accounts receivable (Note 10) $ 2,432,303 $ 2,046,553 Disaggregation of revenue For the year ended December 31, 2020 Reportable Segments The Company Yenyo Thinking Changzhou Others Type of revenue Revenue from sale of passive components $ 2,691,961 $ 177,979 $ 1,334,599 $ 1,715,546 Service revenue 173 - - - $ 2,692,134 $ 177,979 $ 1,334,599 $ 1,715,546	January 1, 2019 $ 2,074,260

Type of revenue Revenue from sale of passive components Service revenue
	The Company $ 2,691,961 173 $ 2,692,134	Yenyo $ 177,979 - $ 177,979	Thinking Changzhou $ 1,334,599 - $ 1,334,599	Others $ 1,715,546 -	Total $ 5,920,085 173 $ 5,920,258
				$ 1,715,546

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For the year ended December 31, 2019

Type of revenue Passive components Service revenue			Reportable Segments	Reportable Segments
		The Company $ 2,818,637 178 $ 2,818,815	Yenyo $ 217,197 - $ 217,197	Thinking Changzhou $ 1,257,467 - $ 1,257,467	Others $ 1,520,753 - $ 1,520,753	Total $ 5,814,054 178 $ 5,814,232

24. CONSOLIDATED NET PROFIT

Consolidated net profit included following items:

a. Interest income

For the Year Ended	For the Year Ended	December 31
2020 $ 48,464 19,288 4,017 6,945 $ 78,714 For the Year Ended		2019 $ 39,632 22,161 627 1,190 $ 63,610 December 31
2020 $ 33,231 - 36,030 $ 69,261 For the Year Ended		2019 $ 2,936 2,472 39,494 $ 44,902 December 31
	2020 $ (99,940) (3,221) (11,522 ) $ (114,683 )	2019 $ (16,126) (4,700) (17,840 ) $ (38,666 )

b. Other income

c. Other gains and losses

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d. Finance costs

For the Year Ended	For the Year Ended	December 31
2020 $ 5,181 4,441 9,622 (521 ) $ 9,101 For the Year Ended		2019 $ 4,577 547 5,124 (64 ) $ 5,060 December 31
2020 $ 521 0.35-1.23 For the Year Ended		2019 $ 64 1.23 December 31
	2020 $ 238,360 33,237 6,572 6,393 - 284,562 (586 ) $ 283,976 $ 214,678 56,333 6,572 $ 277,583 $ 2,599 3,794 $ 6,393	2019 $ 230,085 29,359 5,231 8,374 426 273,475 (99 ) $ 273,376 $ 205,635 53,710 5,231 $ 264,576 $ 2,072 6,728 $ 8,800

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f. Employee benefits expense

Short-term employee benefits Salary Others Retirement benefits Defined contribution plans Defined benefit plans (Note 21) An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,220,699 154,774 1,375,473 19,804 107 19,911 $ 1,395,384 $ 882,549 512,835 $ 1,395,384	2019 $ 1,225,798 165,743 1,391,541 $ 71,238 253 71,491 $ 1,463,032 $ 951,006 512,026 $ 1,463,032

g. Compensation of employees and remuneration of directors

The Company accrues compensation of employees and remuneration of directors at rates of no less than 2% and no higher than 2%, respectively, of net profit before income tax, compensation of employees and remuneration of directors. The appropriations of employees’ compensation and remuneration of directors for the years ended December 31, 2020 and 2019, which were approved by the Company’s board of directors on March 22, 2021 and March 23, 2020, respectively, were as follows:

Accrual rate Employees’ compensation (%) Remuneration of directors (%) Amounts Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2020 2019 3.6 3.0 1.3 1.2 $ 64,300 $ 44,100 23,400 17,900

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of compensation of Employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2019 and 2018.

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

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25. INCOME TAX

a. Major components of income tax expense are as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Effect of change in tax rate Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2020 $ 335,263 8,319 (36,913 ) 306,669 180,967 (906 ) 180,061 $ 486,730	2019 $ 250,070 14,017 (32,545 ) 231,542 166,880 - 166,880 $ 398,422

A reconciliation of accounting profit and income tax expense is as follows:

Profit before income tax Income tax expense calculated at the statutory rate Nondeductible expenses and tax-exempt income Income tax on unappropriated earnings Unrecognized deductible temporary differences Effect of change in tax rate Usage of investment credit Foreign currency exchange differences Adjustments for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,867,333 $ 557,705 (20,403) 8,319 20,403 (906) (41,475) - (36,913 ) $ 486,730	2019 $ 1,513,687 $ 415,195 (3,340) 14,017 16,479 - (11,225) (159) (32,545 ) $ 398,422

The tax rate applicable to income generated in the Republic of China is 20%, and the tax rate applicable to income generated in mainland China is 25%. However, Thinking Changzhou, Thinking Yichang and Jiangxi Thinking qualified as high technology enterprises and were entitled to the applicable tax rate of 15%. Dongguan Welkin qualified as high technology enterprises in 2020, and the corporate income tax rate was adjusted from 25% to 15%.

In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that 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 only deducts the amount of the unappropriated earnings that has been reinvested in capital expenditure.

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b. Income tax recognized in other comprehensive income (loss)

Deferred tax Translation of foreign operations Remeasurement on defined benefit plans Income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 17,664 1,015 $ 18,679	2019 $ (44,192) 954 $ (43,238 )

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2020 $ 24,136 $ 135,401	2019 $ 580 $ 106,565

d. Deferred tax assets and liabilities

The movements of net of deferred tax assets and liabilities are as follows:

For the Year ended December 31, 2020

Deferred Tax Assets Temporary differences Unrealized loss on inventories Unrealized gross profits Unrealized refund liabilities Exchange differences on translation of the financial statements of foreign operations Others Deferred Tax Liabilities Temporary differences Foreign investment income Others	Balance, Beginning of Year $ 32,871 3,863 9,543 69,407 16,564 $ 132,248 Balance, Beginning of Year $ 850,691 19,888 $ 870,579	Recognized in Profit or Loss Recognized in Other Comprehensive Income Exchange Differences Balance, End of Year $ (3,885 ) $ - $ 319 $ 29,305 205 - - 4,068 24,653 - - 34,196 - (17,664 ) - 51,743 3,058 (1,015 ) 73 18,680 $ 24,031 $ (18,679 ) $ 392 $ 137,992 Recognized in Profit or Loss Exchange Differences Balance, End of Year $ 190,854 $ - $1,041,545 13,238 236 33,362 $ 204,092 $ 236 $1,074,907

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For the Year ended December 31, 2019

Deferred Tax Assets Temporary differences Unrealized loss on inventories Unrealized gross profits Unrealized refund liabilities Exchange differences on translation of the financial statements of foreign operations Others Deferred Tax Liabilities Temporary differences Foreign investment income Others	Balance, Beginning of Year $ 42,393 6,356 6,567 25,215 19,238 $ 99,769 Balance, Beginning of Year $ 705,127 9,038 $ 714,165	Recognized in Profit or Loss Recognized in Other Comprehensive Income Exchange Differences Balance, End of Year $ (8,648 ) $ - $ (874 ) $ 32,871 (2,493 ) - - 3,863 2,976 - - 9,543 - 44,192 - 69,407 (1,646 ) (954 ) (74 ) 16,564 $ (9,811 ) $ 43,238 $ (948 ) $ 132,248 Recognized in Profit or Loss Exchange Differences Balance, End of Year $ 145,564 $ - $ 850,691 11,505 (655 ) 19,888 $ 157,069 $ (655 ) $ 870,579	Balance, End of Year $ 32,871 3,863 9,543 69,407 16,564
			$ 132,248

e. Unused loss carryforwards and deductible temporary differences of Yenyo for which no deferred tax assets were recognized in the balance sheet are as follows:

Loss carryforwards Expiry in 2023 Expiry in 2025 Expiry in 2026 Expiry in 2027 Expiry in 2030 Deductible temporary differences		December	31
		2020 $ 15,282 7,333 13,252 4,987 13,330 $ 54,184 $ 39,357	2019 $ 17,269 7,333 13,252 4,987 - $ 42,841 $ 42,295

f. Information about unused loss carryforwards of Yenyo as of December 31, 2020:

Fiscal Year	Expiry Year	Unused Amount	Unused Amount
2013	2023	$	3,057
2015	2025		1,467
2016	2026		2,650
2017	2027		997
2020	2030		2,666
		$	10,837

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According to the Income Tax Act, loss carryforwards shall be used within the next 10 years. The Group did not recognize deferred tax assets because of the low possibility of realization in the future.

g. Income tax assessments

The tax returns of the Company and Yenyo through 2018 have been assessed by the tax authorities.

26. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding used in the computation of EPS are as follows:

Net profit for the year

Profit for the year attributable to owners of the Company	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,385,016	2019 $ 1,115,990

Weighted average number of ordinary shares outstanding (in thousands of shares)

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Compensation of Employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2020 128,113 402 128,515	2019 128,113 553 128,666

The Group may settle the compensation of employees in cash or shares; therefore, the Group assumed that the entire amount of the compensation will be settled in shares, and the resulting potential shares are 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.

27. GOVERNMENT GRANTS

The Company obtained government loans of $347,000 thousand under the “Welcome Taiwanese Companies Abroad to Invest in Taiwan Action Plan” which have interest at prime rate and are used for capital expenditures and operating turnovers. The Company calculated its fair value at $339,395 thousand as of December 31, 2020 with annual interest rate 0.845% based on general condition. The difference amount of $7,605 thousand between acquisition amount and the fair valued at December 31, 2020 had been classified as government’s low interest grants and recognized as deferred revenue.

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	For the Year	For the Year
		Ended
	December 31,
		2020
Balance at January 1	$	14,341
Deferred revenue in the reporting period		7,605
Realized revenue in the reporting period (in other income)		(449)
Effect of foreign currency exchange differences		197
Balance at December 31
	$	21,694
	December 31,
		2020
Carryingamountofdeferredrevenue
Current (in other current liabilities)	$	752
Non-current		20,942
	$	21,694

28. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Group’s overall strategy remains unchanged from the last 2 years.

The Group is not subject to any externally imposed capital requirements.

29. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

The Group’s management considers that the carrying amounts of financial assets and financial liabilities which are not measured at fair value approximate their fair values.

b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2020

Financial assets at FVTPL Structured deposit Financial assetsat FVTOCI Domestic unlisted shares	Level 1 $ - - $ -	Level 2 $ - - $ -	Level 3 $ 1,582,073 39,481 $ 1,621,554	Total $ 1,582,073 39,481
				$ 1,621,554

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December 31, 2019

Financial assetsat FVTPL Structured deposit Financial assetsat FVTOCI Domestic unlisted shares	Level 1 $ - - $ -	Level 2 $ - - $ -	Level 3 $ 1,239,151 26,918 $ 1,266,069	Total $ 1,239,151 26,918 $ 1,266,069

There were no transfers between Level 1 and Level 2 in 2020 and 2019.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2020

Financial assets Balance at January 1, 2020 Purchases Sales Recognized in other comprehensive income Foreign currency exchange differences Balanced at December 31, 2020 For the year ended December 31, 2019	Debt Instruments Financial Assets at FVTPL $ 1,239,151 5,577,389 (5,257,442) - 22,975 $ 1,582,073	Equity Instruments Financial Assets at FVTOCI $ 26,918 - - 12,563 - $ 39,481	Total $ 1,266,069 5,577,389 (5,257,442) 12,563 22,975 $ 1,621,554

Financial assets Balance at January 1, 2019 Purchases Sales Recognized in other comprehensive loss Foreign currency exchange differences Balanced at December 31, 2019	Debt Instruments Financial Assets at FVTPL $ 575,197 7,815,959 (7,097,561) - (54,444 ) $ 1,239,151	Equity Instruments Financial Assets at FVTOCI $ 27,178 - - (260) - $ 26,918	Total $ 602,375 7,815,959 (7,097,561) (260) (54,444 ) $ 1,266,069

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3) Valuation techniques and inputs applied for Level 3 fair value measurement
- a) The fair values of domestic unlisted shares are determined using the market approach where the inputs are categories of business, values of same type of company and operation of company.
- b) The fair values of structured deposits mined using discounted cash flow method.
c. Categories of financial instruments

Financial assets FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Equity instruments Financial liabilities Amortized cost (Note 2)	December 31
	2020 2019 $ 1,582,073 $ 1,239,151 5,251,058 3,959,141 39,481 26,918 2,043,200 1,067,948

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable, accounts receivable, other receivables (excluding income tax refund receivable) and other financial assets.
2) The balances include financial liabilities at amortized cost, which comprise short-term loans, notes payable, accounts payable, other payables (including related parties), long-term borrowings (including current portion) and guarantee deposits received.
d. Financial risk management objectives and policies

The Group’s corporate treasury function provides services to the business, coordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The treasury function reports monthly to the Group’s management.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rate risks.

a) Foreign currency risk

The Group has foreign currency denominated sales and purchases, which exposes the Group to foreign currency risk. Exchange rate exposures are managed within approved policy parameters utilizing foreign exchange forward contracts.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities and derivatives exposed to foreign currency risk at the end of the year are set out in Note 33.

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Sensitivity analysis

The Group is mainly exposed to the risk from the fluctuation of USD and RMB.

The following table details the Group’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (the functional currency) against the relevant foreign currencies.

The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the reporting period for a 1% change in foreign currency rates. A positive (negative) number below indicates an increase (decrease) in pre-tax profit associated with the functional currency.

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USD Impact RMB Impact
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	USD Impact	RMB Impact
Profit or loss	For the Year Ended December 31 2020 2019 $ 21,265 $ 13,844	For the Year Ended December 31
		2020 2019 $ 7,908 $ (678)

b) Interest rate risk

The interest rate risk of the Group is primarily related to its fixed interest rates of bank loans. The Group manages its interest rate risk by using interest rate swap contracts and forward interest rate contracts. Furthermore, total amount of the Group’s cash and cash equivalents are considerably greater than the amount of bank loans which can process repayment procedure spontaneously. Therefore, interest rate risk does not have significant impact to the Group.

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the year were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31
	2020 2019 $ 1,454,415 $ 774,737 629,957 213,049 2,915,493 2,355,267 339,671 -

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2020 and 2019 would have been higher/lower by $25,758 thousand and by $23,553 thousand, respectively, which was mainly a result of the changes in the floating interest rate financial instrument.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which would cause a financial loss to the Group due to the failure of the counterparty to discharge its obligation provided due to the financial guarantees provided by the Group, could be the carrying amount of the respective recognized financial assets as stated in the consolidated balance sheets.

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The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group uses other publicly available financial information and its own trading records to rate its major customers. The Group is continuously monitoring and spreading the aggregate transactions to each credit-qualified counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the Group annually.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

Given that the Group’s current assets are considerably higher than current liabilities, the Group has no liquidity risk.

e. Transfers of financial assets

The Group transferred a portion of its banker’s acceptance bills in mainland China to some of its suppliers in order to settle the trade payables to these suppliers. As the Group has transferred substantially all risks and rewards relating to these bills receivable, it derecognized the full carrying amount of the bills receivable and the associated trade payables. However, if the derecognized bills receivable are not paid at maturity, the suppliers have the right to request that the Group pay the unsettled balance; therefore, the Group still has continuing involvement in these bills receivable.

The maximum exposure to loss from the Group’s continuing involvement in the derecognized bills receivable is equal to the face amounts of the transferred but unsettled bills receivable, and as of December 31, 2020 and 2019, the face amounts of these unsettled bills receivable were $185,181 thousand and $149,800 thousand, respectively. The unsettled bills receivable will be due in 9 months and 9 months, respectively after December 31, 2020 and 2019. Taking into consideration the credit risk of these derecognized bills receivable, the Group estimates that the fair values of its continuing involvement are not significant.

During the years ended December 31, 2020 and 2019, the Group did not recognize any gains or losses upon the transfer of the banker’s acceptance bills. No gains or losses were recognized from the continuing involvement, both during the current year or cumulatively.

30. TRANSACTIONS WITH RELATED PARTIES

Balances, transactions and revenues and expenses among the Group have been eliminated on consolidation and are not disclosed in this note. Details of transaction between the Group and other related parties were as follows:

a. Related party name and its relationship with the Group

Related Party Name Relationship with the Group Welkin Electronic Industrial Co., Ltd. (Pingtung Welkin) Related party in substance Boh Chin Investment Co., Ltd. (Boh Chin Investment) Related party in substance

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b. Other transactions with related parties
1) Consigned processing

Related Party Category Line Item /Name Processing expense Related party in substance - Pingtung Welkin		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 731	2019 $ 355

The price and payment terms with substance related parties were not be compared due to the Group have no other consigned processing business with non-related parties. The payment term was 60 days from the end of the month of when invoice is issued.

2) Lease arrangements

Related Party Category For the Year Ended December 31 Line Item /Name 2020 2019 Lease expense Related party in substance - Boh Chin Investment $ 480 $ 480 The lease contract between the Group and related parties in substance is based on the market rental agreement under the general payment terms. Ending balance December 31 2020 2019 Other payables Related party in substance - Pingtung Welkin $ 485 $ 142 Remuneration of key management personnel For the Year Ended December 31 2020 2019 Short-term employee benefits $ 91,696 $ 71,216 Post-employment benefits 1,240 1,343 $ 92,936 $ 72,559	Related Party Category For the Year Ended December 31 Line Item /Name 2020 2019 Lease expense Related party in substance - Boh Chin Investment $ 480 $ 480 The lease contract between the Group and related parties in substance is based on the market rental agreement under the general payment terms. Ending balance December 31 2020 2019 Other payables Related party in substance - Pingtung Welkin $ 485 $ 142 Remuneration of key management personnel For the Year Ended December 31 2020 2019 Short-term employee benefits $ 91,696 $ 71,216 Post-employment benefits 1,240 1,343 $ 92,936 $ 72,559				For the Year Ended December 31	For the Year Ended December 31
	For			2020 2019 $ 485 $ 142 the Year Ended December 31
			2020 $ 91,696 1,240 $ 92,936			2019 $ 71,216 1,343 $ 72,559

The lease contract between the Group and related parties in substance is based on the market rental agreement under the general payment terms.

c. Ending balance
d. Remuneration of key management personnel

The remuneration of directors and other members of key management is determined by the remuneration committee based on the performance of individuals and market trends.

e. Others

The Company’s audit committee had authorized the independent director that represents the Company to lodge a claim for refund of the tax penalty in the amount of $21,185 thousand (including interest). Such tax penalty resulted from the chairman who violated tax regulations in the past year. The refund had been received on October 19, 2020, and recognized $3,844 thousand and $17,341 thousand as interest income and other income, respectively.

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31. ASSETS PLEDGED AS COLLATERAL FOR SECURITY

The Group provided the following assets as collateral for bank borrowings, tariff guarantee for imported and exported, deposits for construction contract and payment:

Pledged deposits (classified as other financial assets) Deposits of banker’s acceptance (classified as financial assets) Notes receivable Properties, plant and equipment Land Buildings		December 31	December 31
		2020 $ 163,969 23,180 184,340 51,034 47,995 $ 470,518	2019 $ 33,102 22,818 153,710 51,034 51,951 $ 312,615

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The Group’s unrecognized commitments due to the plants under construction and equipment were as follows:

Acquisition of property, plant and equipment		December 31	December 31
		2020 $ 114,874	2019 $ 55,472

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

Foreign Currencies (In Thousand) Exchange Rate December 31,2020 Financial assets Monetary items USD $ 30,304 6.5325 (USD:RMB) USD 65,646 28.4800 (USD:NTD) USD 10 7.7516 (USD:HKD) RMB 165,948 4.3597 (RMB:NTD) RMB 19,610 0.1531 (RMB:USD)	Carrying Amounts (In Thousand) $ 863,058 1,869,598 285 723,483 85,494 $ 3,541,918

(Continued)

170 -

Foreign
Currencies (In
Thousand)
Exchange Rate
Financial liabilities
Monetary items
USD
$ 621
6.5325
(USD:RMB)

USD
20,673
28.4800
(USD:NTD)
RMB
4,173
4.3597
(RMB:NTD)

December 31,2019
Financial assets
Monetary items
USD
24,442
6.9805
(USD:RMB)

USD
36,145
30.0200
(USD:NTD)

USD
11
7.7873
(USD:HKD)
RMB
58,339
4.3006
(RMB:NTD)
RMB
16,020
0.1433
(RMB:USD)

Financial liabilities
Monetary items
USD
1,289
6.9805
(USD:RMB)

USD
13,192
30.0200
(USD:NTD)
RMB
90,130
4.3006
(RMB:NTD)

Carrying
Amounts (In
Thousand)
$ 17,686
588,767

18,193
$ 624,646
$ 733,740
1,085,081
321
250,894

68,894
$ 2,138,930
$ 38,688
396,014

387,612
$ 822,314
(Concluded)

Realized and unrealized net foreign exchange loss. Refers to Note 24 (c). It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the Group’s entities.

34. ADDITIONAL DISCLOSURES

a. Information about significant transactions and investees
1) Financing provided to others: Table 1.
2) Endorsement/guarantee provided: None.
3) Marketable securities held (excluding investment in subsidiaries): Table 2.
4) Marketable securities acquired or disposed of at cost or price of at least NT$300 million or 20% of the paid-in capital: Table 3.
5) Acquisition of individual real estate at cost of at least NT$300 million or 20% of the paid-in capital: None.
171 -
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5.
9) Information on investees: Table 6.
10) Trading in derivative instruments: None.
11) Intercompany relationships and significant intercompany transaction: Table 8.
b. Information on investments in Mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the year, repatriations of investment income, and limit on the amount of investment in the mainland China areas: Table 7.
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year: Table 4.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year: Table 4.
- c) The amount of property transactions and the amount of the resultant gains or losses: None.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes: None.
- e) The highest balance, the end of year balance, the interest rates range, and total current year interest with respect to financing of funds: Table 1.
- f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receiving of services: None.
c. Information of major shareholder: List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: Table 9.

35. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on type of goods or services delivered or provided. The Group’s reportable segments were as follows:

172 -
a. Thinking Electronic Industrial Co., Ltd. (Thinking): Manufacturing, processing and selling of electric devices, thermistors, varistors and wines.
b. Yenyo: Processing, selling and manufacturing diodes as principle business.
c. Thinking Changzhou: Manufacturing, processing and selling thermistors, varistors, sensors and equipment as principle business.

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segment:

For the Year ended December 31,2020 Revenues from external customers Inter-segment revenue Segment revenue Segment income (loss) Interest income Other income Other gains and losses Finance costs Consolidated profit before income tax Income tax Consolidated net income December 31,2020 Total segment assets Total segment liabilities For the Year ended December 31,2019 Revenues from external customers Inter-segment revenue Segment revenue Segment income (loss) Interest income Other income Other gains and losses Finance costs Consolidated profit before income tax Income tax Consolidated net income December 31,2019 Total segment assets Total segment liabilities	Thinking $ 2,692,134 527,808 $ 3,219,942 $ 789,521 $ 3,872,396 $ 3,001,769 $ 2,818,815 319,033 $ 3,137,848 $ 703,425 $ 3,018,792 $ 2,045,145	Yenyo $ 177,979 2,373 $ 180,352 $ (12,418 ) $ 325,886 $ 31,539 $ 217,197 217 $ 217,414 $ (1,848 ) $ 329,255 $ 26,114	Thinking Changzhou $ 1,334,599 1,271,144 $ 2,605,743 $ 362,628 $ 4,055,374 $ 586,433 $ 1,257,467 1,896,932 $ 3,154,399 $ 342,310 $ 4,249,562 $ 692,438	Others $ 1,715,546 2,668,057 $ 4,383,603 $ 769,908 $ 4,915,938 $ 1,962,586 $ 1,520,753 1,225,562 $ 2,746,315 $ 355,726 $ 2,585,643 $ 811,475	Adjustment and Elimination $ - (4,469,382 ) $ (4,469,382 ) $ (66,497 ) $ (2,138,934 ) $ (1,996,454 ) $ - (3,441,744 ) $ (3,441,744 ) $ 49,288 $ (1,432,737 ) $ (1,339,640 )	Consolidated Amount $ 5,920,258 - $ 5,920,258 $ 1,843,142 78,714 69,261 (114,683 ) (9,101 ) 1,867,333 486,730 $ 1,380,603 $ 11,030,660 $ 3,585,873 $ 5,814,232 - $ 5,814,232 $ 1,448,901 63,610 44,902 (38,666 ) (5,060 ) 1,513,687 398,422 $ 1,115,265 $ 8,750,515 $ 2,235,532

Segment profit represents the profit before tax earned by each segment without interest income, other income, other gains and finance costs. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

173 -
a. Revenue from major products

The following is an analysis of the Group’s revenue from its major products.

Passive components Others	For the Year Ended December 31 2020 2019 $ 5,742,106 $ 5,596,857 178,152 217,375 $ 5,920,258 $ 5,814,232	For the Year Ended December 31 2020 2019 $ 5,742,106 $ 5,596,857 178,152 217,375 $ 5,920,258 $ 5,814,232	For the Year Ended December 31 2020 2019 $ 5,742,106 $ 5,596,857 178,152 217,375 $ 5,920,258 $ 5,814,232
		2020 $ 5,742,106 178,152 $ 5,920,258	2019 $ 5,596,857 217,375 $ 5,814,232

b. Geographical information
1) The Group operates in two principal geographical areas - China and Taiwan.
2) The Group’s revenue from external customers by location of operations and information about its non-current assets by location of assets are detailed below.

Asia Europe Taiwan Others	Revenue from External Customers	Revenue from External Customers	Revenue from External Customers
	For the Year Ended December 31
		2020 $ 4,481,839 610,590 472,220 355,609 $ 5,920,258	2019 $ 4,435,509 574,284 463,523 340,916 $ 5,814,232

3) The location of Group’s non-current assets are detailed below

China Taiwan		Non-current Assets	Non-current Assets
		December 31
		2020 $ 1,728,295 867,275 $ 2,635,570	2019 $ 1,709,436 777,961 $ 2,487,397

Non-current assets exclude financial instruments, deferred tax assets and net defined benefit assets.

c. Information about major customers

No single customer contributed over 10% of the Group’s consolidated operating revenue.

174 -

TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Financial Highest Actual Amount Interest Nature of Business Reason for Allowance for Collateral Financing Limit Aggregate
No. Lender Borrower Statement Related Parties Balance for the Ending Balance Rate Transaction Short-term for Each Financing Limit Note
Account Year Borrowing (%) Financing Amount Financing Impairment Loss Item Value Borrower (Note 2) (Note 2)
1 Thinking Changzhou Guangdong Welkin Other receivables Y $ 108,994 $ 108,994 $ 63,615 4.35 Note 1 $ - Operating $ - - $ - $ 1,120,143 $ 1,493,525
Thinking - related (CNY 25,000 (CNY 25,000 (CNY 15,000 capital
parties thousand ) thousand ) thousand )
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Note 1: Short-term financing.

Note 2: The total amounts of financing provided should not exceed 40% of the shareholders’ equity of Thinking Changzhou and financing provided to any single entity should not exceed 30% of the shareholders’ equity of Thinking Changzhou. For foreign companies of which Thinking Changzhou holds, directly and indirectly 100% of the voting share, the financing provided to any single entity should not exceed 100% of the net equity worth of Thinking Changzhou.

175 -

TABLE 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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December 31, 2020
Holding Company Name Type and Name of Marketable Securities Relationship with the Financial Statement Account Percentage of Note
Holding Company Number of shares Carrying Amount Ownership Fair Value
(%)
The Company Stock
ACPA TECHNOLOGY CO., LTD. - Financial assets at FVTOCI - non-current 2,469,130 $ 39,481 11 $ 39,481
Thinking Changzhou RMB financial products
“E-Lingtong” net worth type - Industrial and - Financial assets at FVTPL - current - CNY 26,223 thousand - CNY 26,223 thousand
Commercial Bank of China
Wishful Life V - Industrial and Commercial Bank - Financial assets at FVTPL - current - CNY 120,000 thousand - CNY 120,000 thousand
of China
Yuntong Wealth Long-lasting pension - Bank of - Financial assets at FVTPL - current - CNY 500 thousand - CNY 500 thousand
Communications
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 80,000 thousand - CNY 80,000 thousand
(China)
Thinking Yichang RMB financial products
“Qianyuan-Hengying” (90 days) periodic open net - Financial assets at FVTPL - current - CNY 15,000 thousand - CNY 15,000 thousand
worth type - China Construction Bank
“Xpress E” Special Account Customization - - Financial assets at FVTPL - current - CNY 25,000 thousand - CNY 25,000 thousand
Industrial and Commercial Bank of China
“Tian Libao” Net Worth Type - Industrial and - Financial assets at FVTPL - current - CNY 6,000 thousand - CNY 6,000 thousand
Commercial Bank of China
Stable Financial Plan-Wisdom Series - Bank of - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
China
Jiangxi Thinking RMB financial products
Juyishengjin - China Merchants Bank - Financial assets at FVTPL - current - CNY 11,750 thousand - CNY 11,750 thousand
Stable Financial Management Plan-Wisdom Series - Financial assets at FVTPL - current - CNY 11,000 thousand - CNY 11,000 thousand
- Bank of China
Accumulate every day-daily plan - Bank of China - Financial assets at FVTPL - current - CNY 1,360 thousand - CNY 1,360 thousand
Guangdong Welkin Thinking RMB financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 15,000 thousand - CNY 15,000 thousand
Merchants Bank
People add profit - E. Sun Commercial Bank - Financial assets at FVTPL - current - CNY 1,000 thousand - CNY 1,000 thousand
Dongguan Welkin RMB financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 15,000 thousand - CNY 15,000 thousand
Merchants Bank
Increase profit B - China Merchants Banks - Financial assets at FVTPL - current - CNY 20,000 thousand - CNY 20,000 thousand
People add profit - E. Sun Commercial Bank - Financial assets at FVTPL - current - CNY 5,000 thousand - CNY 5,000 thousand
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176 -

TABLE 3

THINKING ELECTRONIC INDUSTRIAL 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 FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Company Name Marketable Securities Type and Name Financial Statement Account Counterparty Relationship Number of sBhareginnines g BalanAmceount Number of sharAescquisition Amount Number of shares Amount DisposCarral ying Amount Gain/Loss on Disposal Number of sharEndesing BalanAmce ount
Thinking Changzhou RMB financial products
Qian Yuan Tianfu Financial assets at FVTPL - China - CNY 55,000 thousand - CNY 40,000 thousand - CNY 97,455 thousand CNY 95,000 thousand CNY 2,455 thousand - -
current Construction
Bank
E-Lingtong” net worth type Financial assets at FVTPL - Industrial and - CNY 12,239 thousand - CNY 316,484 thousand - CNY 303,844 thousand CNY 302,500 thousand CNY 1,344 thousand - CNY 26,223 thousand
current Commercial
Bank of
China
Wishful Life V Financial assets at FVTPL - Industrial and - CNY 28,000 thousand - CNY 160,000 thousand - CNY 69,225 thousand CNY 68,000 thousand CNY 1,225 thousand - CNY 120,000 thousand
current Commercial
Bank of
China
Accumulate every day-daily plan Financial assets at FVTPL - Bank of China - CNY 3,500 thousand - CNY 85,000 thousand - CNY 88,613 thousand CNY 88,500 thousand CNY 113 thousand - -
current
Stable Financial Plan-Wisdom Financial assets at FVTPL - Bank of China - CNY 50,000 thousand - CNY 20,000 thousand - CNY 71,338 thousand CNY 70,000 thousand CNY 1,338 thousand - -
Series current
Structured Deposit Monthly Profit Financial assets at FVTPL - Fubon Bank - - - CNY 80,000 thousand - - - - - CNY 80,000 thousand
current (China)
Thinking Yichang RMB financial products
“Xpress E” Special Account Financial assets at FVTPL - Industrial and - CNY 5,000 thousand - CNY 65,000 thousand - CNY 45,415 thousand CNY 45,000 thousand CNY 415 thousand - CNY 25,000 thousand
Customization current Commercial
Bank of
China
Jiangxi Thinking RMB financial products
Juyishengjin Financial assets at FVTPL - China - CNY 20,500 thousand - CNY 61,910 thousand - CNY 71,059 thousand CNY 70,660 thousand CNY 399 thousand - CNY 11,750 thousand
current Merchants
Bank
Accumulate every day-daily plan Financial assets at FVTPL - Bank of China - - - CNY 62,790 thousand - CNY 61,496 thousand CNY 61,430 thousand CNY 66 thousand - CNY 1,360 thousand
current
Dongguan Welkin RMB financial products
Point Gold Series Structured Financial assets at FVTPL - China - - - CNY 150,000 thousand - CNY 135,692 thousand CNY 135,000 thousand CNY 692 thousand - CNY 15,000 thousand
Deposit current Merchants
Bank
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TABLE 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Notes/Accounts (Receivable)
Transaction Details Abnormal Transaction
Payable
Buyer Related Party Relationship
Payment
Purchases/Sales Amount % of Total Payment Terms Unit Price Ending Balance % of Total Note
Term
The Company Thinking Changzhou Subsidiary Sales $ (289,174 ) (9 ) 90 days from the end of $ - - $ (155,073 ) (14 )
the month
Thinking Changzhou Subsidiary Purchases 821,846 45 90 days from the end of - - 221,925 25
the month
Dongguan Welkin Subsidiary Sales (195,989 ) (6 ) 90 days from the end of - - (129,816 ) (12 )
the month
Dongguan Welkin Subsidiary Purchases 403,759 22 90 days from the end of - - 337,910 38
the month
Dongguan Welkin Subsidiary Processing 169,718 9 From the end of the - - - -
month when invoice
is issued by T/T
Jiangxi Thinking Subsidiary Purchases 132,300 7 90 days from the end of - - - -
the month
Thinking Yichang Subsidiary Purchases 109,801 6 90 days from the end of - - 31,937 4
the month
Thinking Changzhou Jiangxi Thinking Associate Sales (156,407 ) (6 ) 90 days from the end of - - (76,675 ) (7 )
the month
Guangdong Welkin Thinking Associate Sales (197,795 ) (8 ) 90 days from the end of - - (36,927 ) (3 )
the month
Thinking Yichang Guangdong Welkin Thinking Associate Sales (481,387 ) (52 ) 90 days from the end of - - (164,519 ) (42 )
the month
Jiangxi Thinking Associate Purchases 179,872 33 90 days from the end of - - 82,242 38
the month
Guangdong Welkin Dongguan Welkin Associate Processing 158,362 13 From the end of the - - - -
Thinking month when invoice
is issued by T/T
Dongguan Welkin Associate Purchases 318,119 25 90 days from the end of - - 315,570 44
the month
Jiangxi Thinking Dongguan Welkin Associate Sales (162,192 ) (28 ) 90 days from the end of - - (160,095 ) (59 )
the month
----- End of picture text -----

Note: All the above transactions were eliminated on consolidation.

178 -

TABLE 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Overdue Amounts Received in Allowance for
Company Name Related Party Relationship Ending Balance Turnover Rate
Amount Actions Taken Subsequent Period Doubtful Accounts
The Company Thinking Changzhou Subsidiary $ 155,073 1.75 $ - - $ 68,481 $ -
Dongguan Welkin Subsidiary 129,816 3.02 - - 23,971 -
Thinking Changzhou The Company Parent company 221,925 3.38 - - 115,773 -
Thinking Yichang Guangdong Welkin Thinking Associate 164,519 3.23 - - 118,537 -
Dongguan Welkin The Company Parent company 337,910 1.28 - - 212,663 -
Guangdong Welkin Thinking Associate 315,570 1.72 - - 141,732 -
Jiangxi Thinking Dongguan Welkin Associate 160,095 2.03 - - 21,706 -
----- End of picture text -----

Note: All the above transactions were eliminated on consolidation.

179 -

TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

Original Investment Amount Balance as of December 31, 2020
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, Number of Percentage Net Income Note
2020 2019 Shares of ownership Carrying Amount (Loss) of the Investee Share of profit (Loss)
(%)
The Company Yenyo Yilan Processing, sales and manufacturing of diodes $ 275,160 $ 275,160 21,232,508 52.61 $ 149,749 $ (9,312 ) $ (4,900 ) Note 1
Greenish British Virgin Investment holding and international trading 242,300 242,300 7,374,997 100 1,918,837 234,076 232,338 Note 1
Island ( US$ 7,375 thousand ) ( US$ 7,375 thousand )
Thinking Holding Cayman Investment holding and international trading 770,212 770,212 24,728,858 100 2,552,063 568,755 505,755 Note 1
( US$ 24,729 thousand ) ( US$ 24,729 thousand )
Thinking Holding Thinking International Mauritius Investment holding and international trading 196,512 195,017 6,075,000 100 954,972 155,840 155,840
( US$ 6,075 thousand ) ( US$ 6,025 thousand )
Thinking HK Hong Kong Investment holding and international trading 311,109 311,109 10,020,000 100 625,927 85,350 85,350
( US$ 10,020 thousand ) ( US$ 10,020 thousand )
View Full Samoa Samoa Investment holding and international trading 155,108 155,108 5,055,000 100 946,158 288,150 288,150
( US$ 5,055 thousand ) ( US$ 5,055 thousand )
Thinking Samoa Samoa Investment holding and international trading 76,294 76,294 2,598,858 100 100,197 38,266 38,266
( US$ 2,599 thousand ) ( US$ 2,599 thousand )
----- End of picture text -----

Note 1: The share of profits or losses of investee includes the effect of unrealized gross profit on intercompany transaction.

Note 2: Information of investees which located in mainland China, refer to Table 7.

180 -

TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Outward Remittance of Funds Accumulated Outward Percentage of Accumulated
Remittance for Remittance for Ownership Carrying Amount as of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital Method of Investment Investment from Taiwan as of Outward Inward Investment from Taiwan as of Net Income (Loss)of the Investee Direct or Indirect Investment Gain (Loss)(Note 7) December 31, 2020(Note 7) Income as of Investment Note
January 1, 2020 December 31, 2020 Investment December 31, 2020
Thinking Changzhou Manufacturing and selling thermistors, US$ 21,260 thousand Note 1 $ 452,725 $ - $ - $ 452,725 $ 459,452 100 $ 456,149 $3,681,581 $ 739,210 Notes 10 and 11
varistors and sensors ( US$ 24,148 )
Thinking Yichang Manufacturing and selling thermistors, US$ 6,000 thousand Note 2 194,170 - - 194,170 155,909 100 155,909 953,392 - Note 11
varistors and sensors
Jiangxi Thinking Manufacturing and selling thermistors US$ 10,000 thousand Note 3 310,330 - - 310,330 85,381 100 85,381 625,650 - Note 11
and varistors
Guangdong Welkin Thinking Manufacturing and selling thermistors, US$ 5,000 thousand Note 4 153,547 - - 153,547 163,790 100 163,790 386,840 - Note 11
varistors and sensors
Dongguan Welkin Selling thermistors, varistors, sensors CNY$ 84,050 thousand Note 5 75,535 - - 75,535 277,401 100 277,401 974,197 - Note 11
and equipment
Zhongshan Welkin Manufacturing and selling thermistors, - Note 6 - - - - - - - - - -
varistors
Accumulated Outward Remittance for Investment Investment Amounts Authorized by the Upper Limit on the Amount of Investments
in Mainland China as of December 31, 2020 Investment Commission, MOEA Stipulated by the Investment Commission, MOEA
$1,186,307 $797,355 $4,383,219
(US$37,209 thousand) (US$27,997 thousand) (Note 9)
(Note 8)
----- End of picture text -----

Note 1: Indirectly investment in mainland China through Greenish which was registered in the third area. The Company increased the amount of indirect investments in mainland China through Greenish since 2003.
Note 2: Indirectly investment in mainland China through companies registered in the third area (Thinking International).
Note 3: Indirectly investment in mainland China through companies registered in the third area (Thinking HK).
Note 4: Indirectly investment in mainland China through companies registered in the third area (View Full Samoa).
Note 5: Indirectly investment in mainland China through companies registered in the third area, View Full Samoa and Thinking Samoa and the subsidiary Thinking Changzhou.
Note 6: The board of directors had decided to establish the Company through the subsidiary (Dongguan Welkin), and has been registered at December, 2020. At the end of December 31, 2020, the Company has no outward remittance for investment.
Note 7: Financial report had been audited by ultimate parent company’s certified public accountant.
Note 8: Indirectly investment in mainland China through companies registered in the third area. The investment amount approved by MOEA was US$39,478 thousand. The remaining amount had deducted earnings repatriation which was approximately US$11,481 thousand. The balance amount at December 31, 2020 was based on US to TWD exchange rate of 28.48.
Note 9: The upper limit on investment in main land China is determined by 60% of the Company’s consolidated net worth.
Note 10: The Company recognized share of profits of Thinking Changzhou was $216,182 thousand, and Greenish recognized share of profits of Thinking Changzhou was $239,967 thousand. Total amount of share of profits was $456,149 thousand. The difference between total amount of share of profits and the net income of Thinking Changzhou resulted from unrealized gross profit on intercompany transactions.
Note 11: All the above transactions were eliminated on consolidation.
181 -

TABLE 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INTERCOMPANY BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

Intercompany Transactions
Percentage of
Nature of Relationship
No. Company Name Counterparty Amount Consolidated
(Note 1) Financial Statement Item Terms
Total Sales or
Total Assets
0 The Company Thinking Changzhou 1 Sales $ 289,174 Pricing by cost-plus practice 5
Thinking Changzhou 1 Purchases 821,846 Pricing by cost-plus practice 14
Thinking Changzhou 1 Accounts receivable 155,073 90 days from the end of the month 1
Thinking Changzhou 1 Accounts payable 221,925 90 days from the end of the month 2
Thinking Yichang 1 Sales 42,645 Pricing by cost-plus practice 1
Thinking Yichang 1 Purchases 109,801 Pricing by cost-plus practice 2
Thinking Yichang 1 Accounts receivable 838 90 days from the end of the month -
Thinking Yichang 1 Accounts payable 31,937 90 days from the end of the month -
Dongguan Welkin 1 Sales 195,989 Pricing by cost-plus practice 3
Dongguan Welkin 1 Purchases 403,759 Pricing by cost-plus practice 7
Dongguan Welkin 1 Processing expense 169,718 Note 2 3
Dongguan Welkin 1 Accounts receivable 129,816 90 days from the end of the month 1
Dongguan Welkin 1 Accounts payable 337,910 90 days from the end of the month 3
Dongguan Welkin 1 Prepayment 1,139 90 days from the end of the month -
Jiangxi Thinking 1 Purchases 132,300 Pricing by cost-plus practice 2
Yenyo 1 Purchases 2,373 Pricing by cost-plus practice -
1 Thinking Changzhou Thinking Yichang 2 Sales 43,563 Pricing by cost-plus practice 1
Thinking Yichang 2 Purchases 93,012 Pricing by cost-plus practice 2
Thinking Yichang 2 Accounts receivable 19,754 90 days from the end of the month -
Thinking Yichang 2 Accounts payable 46,217 90 days from the end of the month -
Jiangxi Thinking 2 Sales 156,407 Pricing by cost-plus practice 3
Jiangxi Thinking 2 Purchases 36,701 Pricing by cost-plus practice 1
Jiangxi Thinking 2 Accounts receivable 76,675 90 days from the end of the month 1
Jiangxi Thinking 2 Accounts payable 9,676 90 days from the end of the month -
Guangdong Welkin Thinking 2 Sales 197,795 Pricing by cost-plus practice 3
Guangdong Welkin Thinking 2 Purchases 4,832 Pricing by cost-plus practice -
Guangdong Welkin Thinking 2 Interest income 1,918 For one year financing provided -
Guangdong Welkin Thinking 2 Accounts receivable 36,927 90 days from the end of the month -
Guangdong Welkin Thinking 2 Other accounts receivable 67,361 For one year financing provided 1
Dongguan Welkin 2 Sales 48,941 Pricing by cost-plus practice 1
Dongguan Welkin 2 Purchases 33,913 Pricing by cost-plus practice 1
Dongguan Welkin 2 Accounts receivable 50,926 90 days from the end of the month -
Dongguan Welkin 2 Accounts payable 31,787 90 days from the end of the month -
Dongguan Welkin 2 Prepayment 535 90 days from the end of the month -
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(Continued)

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(Concluded)

Note 1: Transactions are categorized as follows:

1) Transactions from parent company to subsidiaries.
2) Transactions between subsidiaries.

Note 2: Transaction amounts were not comparable due to the Company had no other consigned processing business with non-related parties.

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TABLE 9

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2020

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Shares
Shareholder Percentage of
Number of Shares
Ownership (%)
Boh Chin Investment Co., Ltd. 27,178,247 21.21
Yih Chin Investment Co., Ltd. 15,871,153 12.38
Zhang, Rui-Min 7,576,000 5.91
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Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration by the Group as of the last business day for the current quarter. The share capital in the parent company only financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

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Thinking Electronic Industrial Company Limited

Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders Thinking Electronic Industrial Co., Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Thinking Electronic Industrial Co., Ltd. (the “Company”), which comprise the parent company only balance sheets as of December 31, 2020 and 2019, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies (collectively referred to as the “parent company only financial statement”).

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter of the Company’s parent company only financial statements for the year ended December 31, 2020 is discussed as follows:

Recognition of revenue from specific product

The Company’s principal business is manufacturing and selling of passive components. The Company recognized net sales of NT$3,219,769 thousand for the year ended December 31, 2020, and revenue from specific product had significantly increased than previous year. Therefore, the occurrence of sales of specific productis considered as a key audit matter. For the accounting policy on revenue recognition, refer to Note 4 (k) to the parent company only financial statements.

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Our main audit procedures performed in response to the above key audit matter included the following:

We obtained an understanding of the design of the internal control on revenue recognition and tested the operating effectiveness of the control.
We selected samples from the sales ledger and inspected the delivery documents and receipt bouchers and validated the occurrence of sales of specific product.
We verified that the revenue amounts recognized in the sales ledger were the same as those data recorded in the accounts receivable ledger.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

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

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

Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors’ report are Jia-Ling Chiang and Chiu-Yen Wu.

Deloitte & Touche Taipei, Taiwan Republic of China

March 22, 2021

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at amortized cost - current (Notes 4 and 7) Notes receivable (Note 9) Accounts receivable, net (Notes 4, 5 and 9) Accounts receivable - related parties (Notes 9 and 28) Other receivables Other receivables - related parties (Note 28) Inventories (Notes 4, 5 and 10) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8) Investments accounted for using the equity method (Notes 4 and 12) Property, plant and equipment (Notes 4, 13, 28 and 30) Right-of-use assets (Notes 4 and 14) Other intangible assets (Note 4) Deferred tax assets (Notes 4 and 23) Prepayments for equipment Net defined benefit assets - non-current (Notes 4 and 19) Other financial assets - non-current (Notes 11 and 29) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 4 and 15) Accounts payable (Note 16) Accounts payable - related parties (Notes 16 and 28) Other payables (Note 17) Other payables - related parties (Note 28) Current tax liabilities (Notes 4 and 23) Lease liabilities - current (Notes 4 and 14) Refund liabilities (Notes 4 and 18) Other current liabilities (Notes 4 and 25) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 4 and 15) Deferred tax liabilities (Notes 4 and 23) Lease liabilities - non-current (Notes 4 and 14) Deferred revenue non-current (Notes 4 and 25) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 and 20) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		December 31, 2020 Amount % $ 1,622,395 16 - - 5,324 - 800,840 8 285,727 3 3,112 - 97 - 207,713 2 18,764 - 2,943,972 29 39,481 - 6,434,738 63 613,528 6 55,105 1 28,359 - 109,789 1 39,640 - 11,407 - 31,115 - 7,363,162 71 $ 10,307,134 100 $ 375,000 3 20,348 - 591,993 6 286,293 3 434 - 107,146 1 929 - 170,979 2 2,459 - 1,555,581 15 339,671 3 1,044,936 10 54,723 1 6,728 - 130 - 1,446,188 14 3,001,769 29 1,281,127 13 348,263 3 1,020,206 10 284,655 3 4,572,550 44 5,877,411 57 (201,436 ) (2 ) 7,305,365 71 $ 10,307,134 100		December 31, 2019	December 31, 2019
		Amount $ 1,622,395 - 5,324 800,840 285,727 3,112 97 207,713 18,764 2,943,972 39,481 6,434,738 613,528 55,105 28,359 109,789 39,640 11,407 31,115 7,363,162 $ 10,307,134 $ 375,000 20,348 591,993 286,293 434 107,146 929 170,979 2,459 1,555,581 339,671 1,044,936 54,723 6,728 130 1,446,188 3,001,769 1,281,127 348,263 1,020,206 284,655 4,572,550 5,877,411 (201,436 ) 7,305,365 $ 10,307,134		Amount $ 851,095 25,000 4,966 779,439 184,885 2,999 426 321,261 32,897 2,202,968 26,918 5,397,746 544,596 58,351 30,795 103,763 16,664 5,884 28,853 6,213,570 $ 8,416,538 $ 100,000 57,279 351,066 209,269 293,409 71,912 1,525 47,717 1,980 1,134,157 - 853,862 56,996 - 130 910,988 2,045,145 1,281,127 348,263 908,264 107,627 4,010,767 5,026,658 (284,655 ) 6,371,393 $ 8,416,538	% 10 - - 9 2 - - 4 1 26 - 64 7 1 1 1 - - - 74 100 1 1 4 2 3 1 - 1 - 13 - 10 1 - - 11 24 15 4 11 1 48 60 (3 ) 76 100

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 21 and 28) Sales Less: Sales returns and allowances Operating revenue, net OPERATING COSTS (Notes 10, 22 and 28) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES (Notes 4 and 28) REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES (Note 4) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4, 9, 22 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss (gain) Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 12, 22, 25 and 28) Interest income Other income Other gains and losses Finance costs Share of profit of subsidiaries Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET PROFIT FOR THE YEAR		2020 Amount % $ 3,373,313 105 153,371 5 3,219,942 100 2,041,760 63 1,178,182 37 (4,773) - 3,748 - 1,177,157 37 103,836 3 180,239 6 105,417 3 (1,856 ) - 387,636 12 789,521 25 11,287 - 30,405 1 (55,647) (2) (2,174) - 949,374 30 933,245 29 1,722,766 54 337,750 11 1,385,016 43		2019
				Amount % $ 3,187,620 102 49,772 2 3,137,848 100 2,085,057 67 1,052,791 33 (3,748) - 17,477 1 1,066,520 34 104,074 3 155,502 5 103,092 3 427 - 363,095 11 703,425 23 11,846 1 9,478 - (19,425) (1) (1,729) - 696,852 22 697,022 22 1,400,447 45 284,457 9 1,115,990 36 (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 20 and 23) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income of subsidiaries accounted for using the equity method Income tax related to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of the financial statements of foreign operations Share of the other comprehensive income (loss) of subsidiaries accounted for using the equity method Income tax related to items that may be reclassified subsequently to profit or loss Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 24) Basic Diluted			2020 Amount % 4,423 - 12,563 1 272 - (885 ) - 16,373 1 (200,966) (6) 289,286 9 (17,664 ) (1 ) 70,656 2 87,029 3 1,472,045 46 $ 10.81 $ 10.78		2019
		$			Amount % $ 3,737 - (260) - 435 - (747 ) - 3,165 - (166,285) (5) (54,675) (2) 44,192 1 (176,768 ) (6 ) (173,603 ) (6 ) $ 942,387 30 $ 8.71 $ 8.67




		$			$

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2019 Appropriation of 2018 earnings (Note 20) Legal reserve Special reserve Cash dividends distributed by the Company Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 BALANCE AT DECEMBER 31, 2019 Appropriation of 2019 earnings (Note 20) Legal reserve Special reserve Cash dividends distributed by the Company Net profit for the year ended December 31, 2020 Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax Total comprehensive income (loss) for the year ended December 31, 2020 BALANCE AT DECEMBER 31, 2020	Share Capital Capital Surplus $ 1,281,127 $ 348,263 - - - - - - - - - - - - - - 1,281,127 348,263 - - - - - - - - - - - - - - $ 1,281,127 $ 348,263		Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings Total Retained Earnings $ 809,987 $ 38,365 $ 3,545,719 $ 4,394,071 98,277 - (98,277) - - 69,262 (69,262) - - - (486,828 ) (486,828 ) 98,277 69,262 (654,367 ) (486,828 ) - - 1,115,990 1,115,990 - - 3,425 3,425 - - 1,119,415 1,119,415 908,264 107,627 4,010,767 5,026,658 111,942 - (111,942) - - 177,028 (177,028) - - - (538,073 ) (538,073 ) 111,942 177,028 (827,043 ) (538,073 ) - - 1,385,016 1,385,016 - - 3,810 3,810 - - 1,388,826 1,388,826 $ 1,020,206 $ 284,655 $ 4,572,550 $ 5,877,411	Other Equity	Total Other Equity $ (107,627 ) - - - - - (177,028 ) (177,028 ) (284,655 ) - - - - - 83,219 83,219 $ (201,436 )	Total Equity $ 5,915,834 - - (486,828 ) (486,828 ) 1,115,990 (173,603 ) 942,387 6,371,393 - - (538,073 ) (538,073 ) 1,385,016 87,029 1,472,045 $ 7,305,365
				Exchange Differences on Translation of the Financial Statements of Unrealized Valuation Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (100,863 ) $ (6,764 ) - - - - - - - - - - (176,768 ) (260 ) (176,768 ) (260 ) (277,631 ) (7,024 ) - - - - - - - - - - 70,656 12,563 70,656 12,563 $ (206,975 ) $ 5,539

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit (reversed) loss Finance costs Interest income Share of profit of subsidiaries Loss on disposal of property, plant and equipment, net Loss on inventories Unrealized gain on transactions with subsidiaries Realized gain on transactions with subsidiaries Recognition of provisions Amortization of grants income Other non-cash items Changes in operating assets and liabilities Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Other receivables - related parties Inventories Other current assets Net defined benefit assets Accounts payable Accounts payable - related parties Other payables Other payables - related parties Other current liabilities Refund liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at amortized cost Proceeds from disposal of financial assets at amortized cost Proceeds from disposal of investment accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment	2020 $ 1,722,766 68,555 4,002 (1,856) 2,174 (11,287) (949,374) 649 15,220 4,773 (3,748) 125,250 (125) (299) (358) (19,545) (100,842) (261) 329 98,328 14,133 (1,100) (36,931) 240,927 60,413 (292,975) (273) (1,988 ) 936,557 11,435 (1,724) (136,017 ) 810,251 - 25,000 - (142,657) -	2019 $ 1,400,447 64,120 6,709 427 1,729 (11,846) (696,852) 86 14,922 3,748 (17,477) 24,000 - (31) 1,565 91,908 (60,399) (29) - 70,453 (16,773) (3,278) (9,516) (118,003) 484 (8,405) (1,019) (9,119 ) 727,851 11,604 (1,846) (167,167 ) 570,442 (25,000) - 13,030 (83,486) 12 (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Decrease in other receivables - related parties Payment for intangible assets Increase in other financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Refund of guarantee deposits received Repayments of the principal portion of lease liabilities Cash dividends paid Net cash generated from (used in) financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT THE END OF YEAR	2020 $ - (1,566) (2,262 ) (121,485 ) 1,709,000 (1,434,000) 347,000 - - (1,393) (538,073 ) 82,534 771,300 851,095 $ 1,622,395	2019 $ 44,814 (3,580) (28,800 ) (83,010 ) 255,000 (155,000) - (150,000) 10 (1,389) (486,828 ) (538,207 ) (50,775) 901,870 $ 851,095

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Thinking Electronic Industrial Co., Ltd. (the “Company”) was incorporated in July 1979. The Company mainly manufactures, processes and sells electric devices, thermistors, varistors and wires.

The Company’s shares have been listed on the Taiwan Stock Exchange since September 2000.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The parent company only financial statements were approved by the board of directors on March 22, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and 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)

Amendment to IFRS 16 “Covid-19-Related Rent Concessions”

The Company elected to apply the practical expedient provided in the amendment to IFRS 16 with respect to rent concessions negotiated with the lessor as a direct consequence of the COVID-19. The related accounting policies are stated in Note 4. Prior to the application of the amendment, the Company shall determine whether or not the abovementioned rent concessions need to be accounted for as lease modifications.

The Company applied the amendment from January 1, 2020. Because the above-mentioned rent concessions happened only in 2020, the amendment has no impact on the retained earnings as of January 1, 2020.

b. The IFRSs endorsed by the FSC for application starting from 2021

Effective Date New IFRSs Announced by IASB Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon Applying IFRS 9” promulgation by the IASB Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 January 1, 2021 “Interest Rate Benchmark Reform - Phase 2”

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As of the date the parent company only financial statements were authorized for issue, the Company assessed there was no significant impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1) “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB 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 IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 4) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 5) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 6) before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 7) Contract”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022.
Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 4: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 5: 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 6: 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.
Note 7: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Company should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

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1) Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
2) The Company may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and
3) Not all accounting policy information relating to material transactions, other events or conditions is itself material.

1) The Company changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;
2) The Company chose the accounting policy from options permitted by the standards;
3) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;
4) The accounting policy relates to an area for which the Company is required to make significant judgments or assumptions in applying an accounting policy, and the Company discloses those judgments or assumptions; or
5) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

Except for the above impact, as of the date the parent company only financial statements were reported to the board of directors, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of Compliance

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

b. Basis of preparation

The parent company only financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value and net defined assets which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
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3) Level 3 inputs are unobservable inputs for an asset or liability.

The subsidiaries are incorporated in the parent company only financial statements under the equity method. To make net profit for the year, other comprehensive income and equity in the parent company only financial statements equal to those attributed to owners of the Company on consolidated financial statements, the effect of the differences between the parent company only basis and consolidated basis are adjusted in the investments accounted for using the equity method, the related share of the profit or loss, the related share of other comprehensive income of subsidiaries and related equity.

c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the parent company only financial statements are authorized for issue; and
3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Foreign currencies

In preparing the parent company only financial statements, transactions in currencies other than the entity’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

Non-monetary items denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

For the purposes of presenting parent company only financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the

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New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

e. Inventories

f. Investments accounted for using the equity method

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are accounted for as equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of loss of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further loss, if any.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

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

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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 this, 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 had the Company directly disposed of the related assets or liabilities.

Profit or loss resulting from downstream transactions is eliminated in full only in the parent company only financial statements. Profit and loss resulting from upstream transactions and transactions between subsidiaries is recognized only in the parent company only financial statements and only to the extent of interests in the subsidiaries that are not related to the Company.

g. Property, plant, and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Freehold land is not depreciated.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

h. Intangible assets

Expenditures on research activities are recognized as expenses in the period in which they are incurred.

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.

i. Impairment of property, plant and equipment, right-of-use asset and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets to determine whether there is any indication that those assets have suffered impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to individual cash-generating units or the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

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When an impairment loss is subsequently reversed, the carrying amount of corresponding the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

j. Financial instruments

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

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement category

Financial assets are classified into the following categories: Financial assets at amortized cost, and investments in equity instruments at FVTOCI.

i 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 asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable, accounts receivable, other receivables, and other financial assets are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset.

A financial asset is credit impaired when one or more of the following events have occurred:

i) Significant financial difficulty of the issuer or the borrower;
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ii) Breach of contract, such as a default;

iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.

ii Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable).

The Company always recognizes lifetime expected credit losses (ECLs) for accounts receivable. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

For internal credit risk management purposes, the Company considers the following situations as indication that a financial asset is in default (without taking into account any collateral held by the Company):

i Internal or external information show that the debtor is unlikely to pay its creditors.
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ii When a financial asset is more than 180 days past due unless the Company has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

2) Financial liabilities
a) Subsequent measurement

The Company’s financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities

k. Revenue recognition

The Company identifies contracts with the customers, allocates the transaction price to the performance obligations, and recognizes revenue when performance obligations are satisfied.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

Refund liabilities are based on the historical experience and different contract items to estimate the probable sales returns and allowance.

l. Leases

When the Company is lessee, the Company assesses whether the contract is, or contains, a lease at the inception of a contract.

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over

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the lease terms.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, in-substance fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate will be used.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the parent company only balance sheets.

The Company negotiates with the lessor for rent concessions as a direct consequence of the Covid-19 to change the lease payments that results in the revised consideration for the lease less than the consideration for the lease immediately preceding the change. There is no substantive change to other terms and conditions. The Company elects to apply the practical expedient to all of these rent concessions, and therefore, does not assess whether the rent concessions are lease modifications. Instead, the Company recognizes the reduction in lease payment in profit or loss as a deduction of expenses of variable lease payments, in the period in which the events or conditions that trigger the concession occurs, and makes a corresponding adjustment to the lease liability.

m. 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.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

n. Government grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grant will be received.

Government grants related to income are recognized in other income on a systematic basis over the period in which the Company recognized as expense the related cost that the grants intend to compensate. Specifically, government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

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Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss in the period in which they are received.

The benefit of a government loan received at a below-market rate of interest is treated as a government grant measured as the difference between the proceeds received and the fair value of the loan base on prevailing market interest rate.

o. Employee benefits
1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Net defined benefit assets represent the actual surplus in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

p. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

According to the Income Tax Law, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

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control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and such temporary differences are expected to reverse in the foreseeable future.

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

3) Current and deferred taxes

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

Key Sources of Estimation Uncertainty

a. Estimated impairment of financial assets

The provision for impairment of accounts receivable is based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 9. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

b. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience in the sales of product of a similar nature. Changes in market conditions may have a material impact on the

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estimation of the net realizable value.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts Demand deposits Cash equivalents Time deposits with original maturities less than 3 months		December 31	December 31
		2020 $ 578 74 999,525 622,218 $ 1,622,395	2019 $ 573 75 525,652 324,795 $ 851,095

a. The market rate intervals of cash equivalents at the end of the years were as follows:

Time deposits (%)	December 31
	2020 2019 0.41-2.85 3.00-3.30

b. The Company transacted with variety of financial institutions which are high credit quality to disperse credit risk, hence, there was no expected credit loss.

7. FINANCIAL ASSETS AT AMORTIZED COST - CURRENT - ONLY FOR DECEMBER 31, 2019

The market rate interval of time deposits with original maturities of more than 3 months was 0.65% per annum as of December 31, 2019.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2020 $ 39,481	2019 $ 26,918

These investments in equity instruments are not held for trading or for short-term gains. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI.

9. NOTES AND ACCOUNTS RECEIVABLE

Notes receivable At amortized cost Gross carrying amount - operating		December 31	December 31
		2020 $ 5,324	2019 $ 4,966 (Continued)

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Accountsreceivable- non-related parties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss Accountsreceivable- related parties At amortized cost Gross carrying amount - operating (Note 28)		December 31	December 31
		2020 $ 815,862 15,022 $ 800,840 $ 285,727	2019 $ 796,373 16,934 $ 779,439 $ 184,885 (Concluded)

The Company’s notes receivable and accounts receivable have been measured by amortized cost. Refer to Note 27 for information related to credit management policy.

The Company measures the loss allowance for accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix prepared by reference to the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date.

The Company writes off accounts receivable when there is evidence indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

There were no notes receivable that were past due and not impaired at the end of the reporting years.

The following table details the loss allowance of accounts receivable (including related parties) based on the Company’s provision matrix.

December 31, 2020

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0-0.05 $ 1,072,111 (422 ) $ 1,071,689	Past Due 1to 30 Days 0.5 $ 1,411 (7 ) $ 1,404	Past Due 31 to 60 Days 1 $ 12,071 (121 ) $ 11,950	Past Due 61 to 90 Days 30 $ 2,162 (648 ) $ 1,514	Past Due 91 to 180 Days 50 $ 20 (10 ) $ 10	Past Due Over 180 Days 100 $ 13,814 (13,814 ) $ -	Total $ 1,101,589 (15,022 ) $ 1,086,567

December 31, 2019

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0-0.05 $ 935,421 (406 ) $ 935,015	Past Due 1to 30 Days 0.5 $ 14,014 (70 ) $ 13,944	Past Due 31 to 60 Days 1 $ 12,992 (130 ) $ 12,862	Past Due 61 to 90 Days 30 $ 115 (35 ) $ 80	Past Due 91 to 180 Days 50 $ 4,845 (2,422 ) $ 2,423	Past Due Over 180 Days 100 $ 13,871 (13,871 ) $ -	Total $ 981,258 (16,934 ) $ 964,324

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The movements of the loss allowance of accounts receivable were as follows:

Balance at January 1 Add: Net remeasurement (reversal) of loss allowance Less: mounts written off Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 16,934 (1,856) (56 ) $ 15,022	2019 $ 16,507 427 - $ 16,934

10. INVENTORIES

Finished goods Work-in-process Raw materials Supplies Inventory in transit		December 31	December 31
		2020 $ 118,656 37,102 42,734 3,053 6,168 $ 207,713	2019 $ 195,640 69,105 45,582 2,821 8,113 $ 321,261

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $2,041,760 thousand and $2,085,057 thousand, respectively, which included the following items:

Write-off obsolete inventories Inventory reversed	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 27,658 (12,438 ) $ 15,220	2019 $ 25,123 (10,201 ) $ 14,922

11. OTHER FINANCIAL ASSETS

Pledged time deposits Refundable deposits Non-current Interest rate (%)		December	31
		2020 $ 28,800 2,315 $ 31,115 $ 31,115 0.57	2019 $ 28,800 53 $ 28,853 $ 28,853 0.82

For information on other financial assets pledged, refer to Note 29.

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12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Not listed company Thinking (Changzhou) Electronic Co., Ltd. (Thinking Changzhou) Greenish Co., Ltd. (Greenish) Thinking Holding (Cayman) Co., Ltd. (Thinking Holding) Yenyo Technology Co., Ltd. (Yenyo) Thinking Changzhou Greenish Thinking Holding Welljet Hong Kong Ltd. (Welljet) Saint East Co., Ltd (Saint East) Yenyo		December 31
		2020 2019 $ 1,814,089 $ 1,652,969 1,918,837 1,742,627 2,552,063 1,847,773 149,749 154,377 $ 6,434,738 $ 5,397,746 Proportion of Ownership and Voting Rights
		December 31
		2020 2019 47.39% 47.39% 100.00% 100.00% 100.00% 100.00% - - - - 52.61% 52.61%

Information of investments is in Table 6 “Information on Investees” and Table 7 “Information on Investments in Mainland China”. The Company’s board of directors resolved in its meeting in May 2019 to liquidate and dissolve Saint East and Welljet for coordination of marketing supply and reintegration of the Company. The Company completed the liquidation process in September 2019 and October 2019, respectively, and recovering funds from investment (including capital gain) of NT$13,030 thousand.

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2020 and 2019 were recognized based on the subsidiaries’ financial statements which have been audited.

13. PROPERTY, PLANT, AND EQUIPMENT

For the Year ended December 31, 2020

Cost Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Disposals Balance at December 31, 2020 Carrying amount at December 31, 2020	Land $ 142,020 2,665 - $ 144,685 $ - - - $ - $ 144,685	Buildings Machinery and Equipment Leasehold Improvements $ 208,378 $ 528,752 $ 1,514 286 46,086 - - (6,349 ) - $ 208,664 $ 568,489 $ 1,514 $ 78,177 $ 340,791 $ 1,395 5,417 39,450 26 - (5,700 ) - $ 83,594 $ 374,541 $ 1,421 $ 125,070 $ 193,948 $ 93	Others $ 191,567 6,339 (143 ) $ 197,763 $ 129,957 22,230 (143 ) $ 152,044 $ 45,719	Property under Construction $ 22,685 81,328 - $ 104,013 $ - - - $ - $ 104,013	Total $ 1,094,916 136,704 (6,492 ) $ 1,225,128 $ 550,320 67,123 (5,843 ) $ 611,600 $ 613,528

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For the Year ended December 31, 2019

Cost Balance at January 1, 2019 Additions Disposals Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expenses Disposals Balance at December 31, 2019 Carrying amounts at December 31, 2019	Land $ 142,020 - - $ 142,020 $ - - - $ - $ 142,020	Buildings Machinery and Equipment Leasehold Improvements $ 206,681 $ 499,870 $ 1,514 1,697 43,363 - - (14,481 ) - $ 208,378 $ 528,752 $ 1,514 $ 72,654 $ 319,852 $ 1,368 5,523 35,322 27 - (14,383 ) - $ 78,177 $ 340,791 $ 1,395 $ 130,201 $ 187,961 $ 119	Others $ 179,462 12,492 (387 ) $ 191,567 $ 108,556 21,788 (387 ) $ 129,957 $ 61,610	Property under Construction $ - 22,685 - $ 22,685 $ - - - $ - $ 22,685	Total $ 1,029,547 80,237 (14,868 ) $ 1,094,916 $ 502,430 62,660 (14,770 ) $ 550,320 $ 544,596

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings Main plants 60 years Improvement engineering 60 years Machinery and equipment 8 years Leasehold improvement 10 years Others 5-6 years

14. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Additions to right-of-use assets - land Depreciation charge for right-of-use assets - land		December	31
	2020 2019 $ 55,105 $ 58,351 For the Year Ended December 31
		2020 $ - $ 2,018	2019 $ 31,199 $ 1,559

Except for the recognized depreciation and additions, the Company did not have impairment or subleasing of right-of-use assets for the year ended December 31, 2020 and 2019.

b. Lease liabilities

Carrying amount Current Non-current		December	31
		2020 $ 929 $ 54,723	2019 $ 1,525 $ 56,996

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Range of discount rate for lease liabilities was as follows:

Land	December 31
	2020 2019 0.75-1.38 0.75-1.38

c. Material leasing activities and terms

The Company leases land and buildings located at Nanzih Export Processing Zone, for the use of plants with lease terms of 9 to 10 years. The government reserves the right to adjust the rent according to the assessed land value. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease periods. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 442 $ 412 $ 2,947	2019 $ 559 $ 438 $ 2,795

15. BORROWINGS

a. Short - term borrowings

December 31 2020 2019 Credit loans $ 375,000 $ 100,000 Interest rate (%) 0.75-0.77 0.9 b. Long - term borrowings Contracts December 31, 2020 Credit Loans Effective from October 2020 to October 2027. Principal is repaid in 48 monthly payments from November, 2023 $ 347,000 Less: Government grants discount 7,329 Less: Due within one year - $ 339,671		December 31

Borrowings under the “Welcome Taiwanese Companies Abroad to Invest in Taiwan Action Plan” have interest at prime rate and are used for capital expenditures and operating turnovers. The Company calculated its fair value with annual interest rate of 0.845% based on general condition. At the end of December 31, 2020, the annual interest rate of prime rate loan was 0.35%.

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16. ACCOUNTS PAYABLE

The Company’s accounts payable were from operating activities and were not secured by collaterals.

The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms; therefore, no interest was charged on the outstanding accounts payable.

17. OTHER PAYABLES

Payable for salaries and bonuses Payable for employees’ compensation Payable for purchase of equipment Payable for remuneration of directors Others		December 31	December 31
		2020 $ 128,237 64,300 27,730 23,400 42,626 $ 286,293	2019 $ 101,877 44,100 11,293 17,900 34,099 $ 209,269

18. REFUND LIABILITIES

Balance at January 1 Recognized Usage Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 47,717 125,250 (1,988 ) $ 170,979	2019 $ 32,836 24,000 (9,119 ) $ 47,717

19. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute specific percentage of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund 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

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appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the parent company only balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets Movements in net defined benefit assets were as follows: Present Value of the Defined Benefit Obligation Balance at January 1, 2019 $ 88,339 Service cost Current service cost 137 Net interest expense (income) 879 Recognized in profit or loss 1,016 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial gain - experience adjustments (729 ) Recognized in other comprehensive income (729 ) Contributions from the employer - Benefits paid (1,945 ) Balance at December 31, 2019 86,681 Service cost Current service cost 136 Net interest expense (income) 857 Recognized in profit or loss 993 Remeasurement Return on plan assets (excluding amounts included in net interest) - Actuarial loss-change in financial assumptions 935 Actuarial gain - experience adjustments (2,594 ) Recognized in other comprehensive income (1,659 )		December	31
	2020 2019 $ 81,262 $ 86,681 (92,669 ) (92,565 ) $ (11,407 ) $ (5,884 ) Fair Value of the Plan Assets Net Defined Benefit Assets $ (86,830 ) $ 1,509 - 137 (887 ) (8 ) (887 ) 129 (3,008) (3,008) - (729 ) (3,008 ) (3,737 ) (3,785 ) (3,785 ) 1,945 - (92,565 ) (5,884 ) - 136 (933 ) (76 ) (933 ) 60 (2,764) (2,764) - 935 - (2,594 ) (2,764 ) (4,423 )

(Continued)

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	Present Value
	of the Defined
	Benefit	Fair Value of	Net Defined
	Obligation	the Plan Assets	Benefit Assets
Contributions from the employer	$ -	$ (1,160 )	$ (1,160 )
Benefits paid	(4,753 )	4,753	-
Balance at December 31, 2020	$ 81,262	$ (92,669 )	$ (11,407 )

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

1) Investment risk

2) Interest risk

3) Salary risk

Discount rate (%) Expected rate of salary increase (%)	December 31
	2020 2019 0.80 1.00 2.00 2.00

Discount rate 0.25% increase 0.25% decrease		December	31
		2020 $ (1,165 ) $ 1,203	2019 $ (1,281 ) $ 1,324 (Continued)

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Expected rate of salary increase 1% increase 1% decrease		December	31
		2020 $ 4,941 $ (4,440 )	2019 $ 5,450 $ (4,892 ) (Concluded)

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

The expected contributions to the plans for the next year Average duration of the defined benefit obligation (years)		December	31
		2020 $ 1,150 9	2019 $ 3,500 10

20. EQUITY

a. Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2020 140,000 $ 1,400,000 128,113 $ 1,281,127	2019 140,000 $ 1,400,000 128,113 $ 1,281,127

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends,or transferred to ordinaryshares(Note) Conversion of bonds Issuance of ordinary shares Treasury share transactions		December 31	December 31
		2020 $ 265,446 59,168 23,649 $ 348,263	2019 $ 265,446 59,168 23,649 $ 348,263

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c. Retained earnings and dividend policy

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended 2019 2018 $ 111,942 $ 98,277 177,028 69,262 538,073 486,828 $ 827,043 $ 654,367	Appropriation of Earnings For the Year Ended 2019 2018 $ 111,942 $ 98,277 177,028 69,262 538,073 486,828 $ 827,043 $ 654,367	Dividend Per Share (NT$)
		For the Year	For the Year Ended
		2019 $ 111,942 177,028 538,073 $ 827,043	2019 2018 $ 4.2 $ 3.8

The appropriations of earnings for 2020 had been proposed by the Company’s board of directors on March 22, 2021. The appropriation and dividends per share were as follows:

	Appropriation	Dividend Per
	of Earnings	Share (NT$)
Legal reserve	$ 138,883
Special reserve	(83,219)
Cash dividends	704,620	$ 5.5
	$ 760,284

The appropriations of earnings for 2020 are subject to the resolution of the shareholders’ meeting to be held on June 25, 2021.

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d. Other equity items

1) Exchange differences on translation of foreign operations

Balance at January 1 Recognized for the year Exchange differences on translation of the financial statements of foreign operations Income tax benefit relating to exchange differences arising on translation of foreign operations Share from subsidiaries accounted for using the equity method Income tax benefit (expenses) relating to share from subsidiaries accounted for using the equity method Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (277,631) (200,966) 40,193 289,286 (57,857 ) $ (206,975 )	2019 $ (100,863) (166,285) 33,257 (54,675) 10,935 $ (277,631 )

2) Unrealized gain/loss on financial assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized gain (loss) on financial assets at FVTOCI Balance at December 31 21. OPERATING REVENUE	For the Year Ended	For the Year Ended	December 31
		2020 $ (7,024) 12,563 $ 5,539	2019 $ (6,764) (260 ) $ (7,024 )

		For	the Year Ended December 31	the Year Ended December 31
			2020	2019
Revenue from contracts with customers
Revenue from sale of goods		$	3,219,769	$ 3,137,670
Service revenue			173	178
		$	3,219,942	$ 3,137,848
a. Refer to Note 4 (k) for information related to contracts with customers.
b. Contract balances
	December 31,	December 31,		January 1,
	2020		2019	2019
Notes and accounts receivable (Note 9)	$ 1,091,891	$	969,290	$ 1,002,791

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c. Disaggregation of revenue

Type of revenue Passive components Service revenue	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,219,769 173 $ 3,219,942	2019 $ 3,137,670 178 $ 3,137,848

22. NET PROFIT

Net profit included following items:

a. Interest income

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2020 2019 $ 7,260 $ 11,600 97 92 3,930 154 $ 11,287 $ 11,846 For the Year Ended December 31
2020 2019 $ 12,024 $ 3,257 18,381 6,221 $ 30,405 $ 9,478 For the Year Ended December 31
	2020 $ (55,013) (634 ) $ (55,647 )	2019 $ (19,197) (228 ) $ (19,425 )

b. Other income

c. Other gains and losses

d. Finance costs

Interest expense of borrowings	For the Year Ended December 31
	2020 2019 $ 1,995 $ 1,384 (Continued)

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For the Year Ended	For the Year Ended	December 31
2020 $ 700 2,695 (521 ) $ 2,174 For the Year Ended		2019 $ 409 1,793 (64 ) $ 1,729 (Concluded) December 31
2020 $ 521 0.35-1.23 For the Year Ended		2019 $ 64 1.23 December 31
2020 $ 67,123 2,018 4,002 73,143 (586 ) $ 72,557 $ 54,063 14,492 $ 68,555 $ 1,647 2,355 $ 4,002 For the Year Ended		2019 $ 62,660 1,559 6,709 70,928 (99 ) $ 70,829 $ 48,610 15,510 $ 64,120 $ 1,566 5,143 $ 6,709 December 31
	2020 $ 369,734 70,090 439,824	2019 $ 316,837 62,902 379,739

(Continued)

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Retirement benefits Defined contribution plans Defined benefit plans (Note 19) An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2020 $ 12,723 60 12,783 $ 452,607 $ 172,891 279,716 $ 452,607	2019 $ 12,352 129 12,481 $ 392,220 $ 152,554 239,666 $ 392,220 (Concluded)

g. Compensation of employees and remuneration of directors

Accrual rate Employees’ compensation (%) Remuneration of directors (%) Amounts Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2020 2019 3.6 3.0 1.3 1.2 $ 64,300 $ 44,100 23,400 17,900

If there is a change in the amounts after the annual parent company only financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the parent company only financial statements for the years ended December 31, 2019 and 2018.

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23. INCOME TAX

a. Major components of income tax expense are as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2020 $ 168,716 8,319 (5,784 ) 171,251 166,499 $ 337,750	2019 $ 131,742 14,017 543 146,302 138,155 $ 284,457

A reconciliation of accounting profit and income tax expense is as follows:

Profit before income tax Income tax expense calculated at the statutory rate Nondeductible expenses and tax-exempt income Income tax on unappropriated earnings Usage of investment credit Unrecognized deductible temporary differences Adjustments for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,722,766 $ 344,553 (3,190) 8,319 (9,865) 3,717 (5,784 ) $ 337,750	2019 $ 1,400,447 $ 280,090 161 14,017 (11,225) 871 543 $ 284,457

The applicable tax rate of the Company is 20%.

In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that 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 only deducts the amount of the unappropriated earnings that has been reinvested in capital expenditure.

b. Income tax recognized in other comprehensive income (loss)

Deferred tax Translation of foreign operations Remeasurement on defined benefit plans Share of other comprehensive income (loss) of subsidiaries by using equity method Income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (40,193) 885 57,857 $ 18,549	2019 $ (33,257) 747 (10,935 ) $ (43,445 )

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c. Current tax assets and liabilities

Current tax liabilities Income tax payable		December 31	December 31
		2020 $ 107,146	2019 $ 71,912

d. Deferred tax assets and liabilities

The movements of net of deferred tax assets and liabilities are as follows:

For the Year ended December 31, 2020

					Recognized in	Recognized in
	Balance,					Other
	Beginning of		Recognized in		Comprehensive		Balance, End
		Year	Profit or Loss			Income		of Year
Deferred Tax Assets
Temporary differences
Unrealized loss on inventories	$	9,372	$	(1,743)	$	-	$	7,629
Unrealized gross profits		3,863		205		-		4,068
Unrealized refund liabilities		9,543		24,653		-		34,196
Share of other comprehensive
income (loss) of subsidiaries
for using the equity method		15,079		-		(57,857)		(42,778)
Exchange differences on
translation of the financial
statements of foreign
operations		54,328		-		40,193		94,521
Others		11,578		1,460		(885 )		12,153
	$	103,763	$	24,575	$	(18,549 )	$	109,789
Deferred Tax Liabilities
Temporary differences
Foreign investment income	$	850,691	$	190,854	$	-	$	1,041,545
Others		3,171		220		-		3,391
	$	853,862	$	191,074	$	-	$	1,044,936
For the Year ended December 31, 2019
					Recognized in
	Balance,					Other
	Beginning of		Recognized in		Comprehensive		Balance, End
		Year	Profit or Loss			Income		of Year
Deferred Tax Assets
Temporary differences
Unrealized loss on inventories	$	11,413	$	(2,041)	$	-	$	9,372
Unrealized gross profits		6,356		(2,493)		-		3,863
Unrealized refund liabilities		6,567		2,976		-		9,543
							(Continued)

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						Recognized	Recognized
	Balance,						Other
	Beginning of		Recognized		in	Comprehensive		Balance, End
		Year	Profit or Loss				Income	of Year
Share of other comprehensive
income of subsidiaries for
using the equity method	$	4,144	$	-		$	10,935	$ 15,079
Exchange differences on
translation of the financial
statements of foreign
operations		21,071		-			33,257	54,328
Others		6,769		5,556			(747 )	11,578
	$	56,320	$	3,998		$	43,445	$ 103,763
Deferred Tax Liabilities
Temporary differences
Foreign investment income	$	705,127	$	145,564		$	-	$ 850,691
Others		6,582		(3,411 )			-	3,171
	$	711,709	$	142,153		$	-	$ 853,862

e. Income tax assessments

The tax returns of the Company through 2018 have been assessed by the tax authorities.

24. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding used in the computation of EPS are as follows:

Net profit for the year

	For the Year Ended December 31	For the Year Ended December 31
	2020	2019
Net profit used in the computation of earnings per share	$ 1,385,016	$ 1,115,990
Weighted average number of ordinary shares outstanding (in thousands of shares)

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2020 128,113 402 128,515	2019 128,113 553 128,666

The Company may settle the compensation of employees in cash or shares; therefore, the Company assumed that the entire amount of the compensation will be settled in shares, and the resulting potential shares are included in the weighted average number of shares outstanding used in the computation of

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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.

25. GOVERNMENT GRANTS

The Company obtained government loans of $347,000 thousand under the “Welcome Taiwanese Companies Abroad to Invest in Taiwan Action Plan” which have interest at prime rate and are used for capital expenditures and operating turnovers. The Company calculated its fair value at $339,395 thousand as of December 31, 2020 with annual interest rate 0.845% based on general condition. The difference amount of $7,605 thousand between acquisition amount and the fair value at December 31, 2020, had been classified as government’s low interest grants and recognized as deferred revenue.

	For the Year	For the Year
		Ended
	December 31,
		2020
Balance at January 1	$	-
Deferred revenue in the reporting period		7,605
Realized revenue in the reporting period (in other income)		(125 )
Balance at December 31	$	7,480
	December 31,
		2020
Carryingamount of deferred revenue
Current (in other current liabilities)	$	752
Non-current		6,728
	$	7,480

26. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance. The Company’s overall strategy remains unchanged from the last 2 years.

The Company is not subject to any externally imposed capital requirements.

27. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

The Company’s management considers that the carrying amounts of financial assets and financial liabilities which are not measured at fair value approximate their fair values.

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b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2020

Financial assets at FVTOCI Domestic unlisted shares December 31, 2019 Financial assetsat FVTOCI Domestic unlisted shares	Level 1 $ - Level 1 $ -	Level 2 $ - Level 2 $ -	Level 3 $ 39,481 Level 3 $ 26,918	Total $ 39,481
				Total $ 26,918

There were no transfers between Level 1 and Level 2 in 2020 and 2019.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2020

Financial assets Balance at January 1, 2020 Recognized in other comprehensive income Balanced at December 31, 2020 For the year ended December 31, 2019 Financial assets Balance at January 1, 2019 Recognized in other comprehensive loss Balanced at December 31, 2019	Equity Instruments
	Financial Assets at FVTOCI $ 26,918 12,563 $ 39,481 Equity Instruments
	Financial Assets at FVTOCI $ 27,178 (260 ) $ 26,918

3) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair values of domestic unlisted shares are determined using the market approach where the inputs are categories of business, values of same type of company and operation of company.

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c. Categories of financial instruments

Financial assets Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Financial liabilities Amortized cost (Note 2)	December 31
	2020 2019 $ 2,745,949 $ 1,875,274 39,481 26,918 1,613,869 1,011,153

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable, accounts receivable (including related parties), other receivables (including related parties, but exclude income tax refund receivable), other financial assets.
2) The balances include financial liabilities at amortized cost, which comprise short-term borrowings, accounts payable (including related parties) and other payables (including related parties), long-term borrowings (including current portion) and guarantee deposits received.
d. Financial risk management objectives and policies

The Company’s corporate treasury function provides services to the business, coordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The treasury function reports monthly to the Company’s management.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rate risks.

a) Foreign currency risk

The Company has foreign currency denominated sales and purchases, which exposes the Company to foreign currency risk. Exchange rate exposures are managed within approved policy parameters utilizing foreign exchange forward contracts.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities exposed to foreign currency risk at the end of the reporting year are set out in Note 31.

Sensitivity analysis

The Company is mainly exposed to the risk from the fluctuation of USD and RMB.

The following table details the Company’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (the functional currency) against the relevant foreign currencies.

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profit associated with the functional currency.

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USD Impact RMB Impact
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	USD Impact	RMB Impact
Profit or loss	For the Year Ended December 31 2020 2019 $ 12,558 $ 7,759	For the Year Ended December 31
		2020 2019 $ 6,171 $ 961

b) Interest rate risk

The interest rate risk of the Company is primarily related to its fixed interest rates of bank loans. The Company manages its interest rate risk by using interest rate swap contracts and forward interest rate contracts. Furthermore, total amount of the Company’s cash and cash equivalents are considerably greater than the amount of bank loans which can process repayment procedure spontaneously. Therefore, interest rate risk does not have significant impact to the Company.

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the year were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2020 2019 $ 653,333 $ 324,795 430,652 158,521 999,525 579,452 339,671 -

Sensitivity analysis

If interest rates had been 1% higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would have been higher/lower by $6,599 thousand and by $5,795 thousand, respectively, which was mainly a result of the changes in the floating interest rate financial instrument.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which would cause a financial loss to the Company due to the failure of the counterparty to discharge its obligation provided due to the financial guarantees provided by the Company, could be the carrying amount of the respective recognized financial assets as stated in the parent company only balance sheets.

The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company uses other publicly available financial information and its own trading records to rate its major customers. The Company is continuously monitoring and spreading the aggregate transactions to each credit-qualified counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the Company annually.

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3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

Given that the Company’s current assets are considerably higher than current liabilities. the Company has no liquidity risk.

28. TRANSACTIONS WITH RELATED PARTIES

a. Related party name and its relationship with the Company

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Related Party Name Related Party Category
----- End of picture text -----

Related Party Name	Related Party Category
Thinking Changzhou	Subsidiaries
Thinking Yichang	Subsidiaries
Jiangxi Thinking	Subsidiaries
Yenyo	Subsidiaries
Dongguan Welkin	Subsidiaries
Welkin Electronic Industrial Co., Ltd. (Pingtung Welkin)	Related party in substance
Boh Chin Investment Co., Ltd. (Boh Chin Investment)	Related party in substance

b. Operating transactions

Apart from Notes 12 and Table 1, transaction with related parties were as follows:

Sales of goods

Related Party Category/Name Subsidiaries Thinking Changzhou Dongguan Welkin Thinking Yichang	For the Year Ended	For the Year Ended	December 31
		2020 $ 289,174 195,989 42,645 $ 527,808	2019 $ 299,024 - 20,009 $ 319,033

The sale of goods to related parties was made at the cost plus gross profit prices. The term of collection was the same as non-related parties with 90 days from the end of the month when invoice is issued.

The amounts of unrealized gain on transactions with subsidiaries were $4,773 thousand and $3,748 thousand as of December 31, 2020 and 2019, respectively, which were recognized as the deduction of investments accounted for using the equity method.

Purchases of goods

Related Party Category/Name Subsidiaries Thinking Changzhou	For the Year Ended December 31
	2020 2019 $ 821,846 $ 821,814 (Continued)

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Related Party Category/Name Dongguan Welkin Jiangxi Thinking Thinking Yichang Yenyo	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 403,759 132,300 109,801 2,373 $ 1,470,079	2019 $ - 240,406 151,188 - $ 1,213,408

The purchase price with related parties was based on cost plus gross profit. The prices were not comparable due to the Company has no other similar category of purchases with non-related parties. The term of collection was 90 days from the ended of the month when invoice is issued.

c. Other transactions with related parties
1) Consigned processing

Related Party Category/Name Subsidiaries Dongguan Welkin Related party in substance Pingtung Welkin	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 169,718 574 $ 170,292	2019 $ 443,804 215 $ 444,019

The price and payment terms with substance related parties were not comparable due to the Company has no other consigned processing business with non-related parties. The payment term was between 30 to 60 days from the end of the month when invoice is issued.

2) Consigned purchases and transaction of property

Related Party Category/Name Subsidiaries Thinking Yichang	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 193	2019 $ 1,224

The gains on consigned purchases from subsidiaries were $5 thousand and $61 thousand for the years ended December 31, 2020 and 2019, respectively, which were recognized as deduction of investments accounted for using the equity method.

The amounts of unrealized gain on consigned purchases and transaction of property with subsidiaries were $0 and $52 thousand as of December 31, 2020 and 2019, respectively, which were recognized as deduction of investments accounted for using the equity method. The unrealized gain will be amortized into gain from disposal of property, plant and equipment and other income within the following 5 to 10 years.

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3) Lease arrangements

Related Party Category Line Item /Name Lease expense Related Party in Substance - Boh Chin Investment		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 480	2019 $ 480

The lease contract between the Company and related parties in substance is based on the market rental agreement under general payment terms.

d. Ending balance

Accounts receivable - related parties Subsidiaries Thinking Changzhou Dongguan Welkin Thinking Yichang Other receivables - related parties Subsidiaries Thinking Yichang Accounts payable - related parties Subsidiaries Dongguan Welkin Thinking Changzhou Thinking Yichang Yenyo Jiangxi Thinking Other payables - related parties Subsidiaries Dongguan Welkin Thinking Changzhou Related party in substance Pingtung Welkin		December 31	December 31
		2020 $ 155,073 129,816 838 $ 285,727 $ 97 $ 337,910 221,925 31,937 221 - $ 591,993 $ - - 434 $ 434	2019 $ 176,054 - 8,831 $ 184,885 $ 426 $ - 264,050 24,985 - 62,031 $ 351,066 $ 293,345 26 38 $ 293,409

The nature of other payable - related parties (Dongguan Welkin) was processing expense.

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e. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 88,018 1,028 $ 89,046	2019 $ 67,433 1,133 $ 68,566

The remuneration of directors and other members of key management is determined by the remuneration committee based on the performance of individuals and market trends.

f. Others

The Company’s audit committee had authorized the independent director that represent the Company to lodge a claim for refund of the tax penalty in the amount of $21,185 thousand (including interest). Such tax penalty resulted from the chairman who violated tax regulations in the past year. The refund had been received on October 19, 2020, and recognized $3,844 thousand and $17,341 thousand as interest income and other income, respectively.

29. ASSETS PLEDGED AS COLLATERAL FOR SECURITY

The Company provided the following assets as collateral for deposits of construction contract:

Pledged deposits (classified as other financial assets)		December	31
		2020 $ 28,800	2019 $ 28,800

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The Company’s unrecognized commitments due to the plants under construction and equipment were as follows:

Acquisition of property, plant and equipment		December	31
		2020 $ 68,675	2019 $ 15,367

31. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant assets and liabilities denominated in foreign currencies were as follows:

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		Foreign			Carrying
	Currencies				Amounts
	(In	Thousand)	Exchange Rate		(In Thousand)
December 31,2020
Financial assets
Monetary items
USD	$	64,593	28.4800	(USD:NTD)	$ 1,839,609
RMB		145,713	4.3597	(RMB:NTD)	635,265
Non-monetary items
Investment accounted for using
the equity method
USD		156,984	28.4800	(USD:NTD)	4,470,900
RMB		416,104	4.3597	(RMB:NTD)	1,814,089
Financial liabilities
Monetary items
USD		20,499	28.4800	(USD:NTD)	583,812
RMB		4,173	4.3597	(RMB:NTD)	18,193
December31,2019
Financial assets
Monetary items
USD		35,384	30.0200	(USD:NTD)	1,062,218
RMB		114,153	4.3006	(RMB:NTD)	490,922
Non-monetary items
Investment accounted for using
the equity method
USD		119,600	30.0200	(USD:NTD)	3,590,400
RMB		384,358	4.3006	(RMB:NTD)	1,652,969
Financial liabilities
Monetary items
USD		9,515	30.0200	(USD:NTD)	286,359
RMB		90,128	4.3006	(RMB:NTD)	394,825

The significant unrealized foreign exchange gains (losses) were as follows:

					Net Foreign
					Exchange Gains
		Foreign Currency	Exchange Rate		(Losses)
December	31,	2020
USD			28.4800	(USD:NTD)	$ (19,978)
RMB			4.3597	(RMB:NTD)	2,394
					$ (17,584 )
					(Continued)

233 -

					Net Foreign
					Exchange
		Foreign Currency	Exchange Rate		Losses
December	31,	2019
USD			30.0200	(USD:NTD)	$ (17,241)
RMB			4.3006	(RMB:NTD)	(410 )
					$ (17,651 )
					(Concluded)

32. ADDITIONAL DISCLOSURES

a. Information about significant transactions and investees
1) Financing provided to others: Table 1.
2) Endorsement/guarantee provided: None.
3) Marketable securities held (excluding investment in subsidiaries): Table 2.
4) Marketable securities acquired or disposed of at cost or price of at least NT$300 million or 20% of the paid-in capital: Table 3.
5) Acquisition of individual real estate at cost of at least NT$300 million or 20% of the paid-in capital: None.
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5.
9) Trading in derivative instruments: None.
10) Information on investees: Table 6.
b. Information on investments in Mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the year, repatriations of investment income, and limit on the amount of investment in the mainland China areas: Table 7.
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year: Table 4.
234 -
b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year: Table 4.
c) The amount of property transactions and the amount of the resultant gains or losses: Refer to Note 28.
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes: None.
e) The highest balance, the end of year balance, the interest rates range, and total current year interest with respect to financing of funds: Table 1.
f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receiving of services: None.
c. Information of major shareholders

List of all shareholders with ownership of 5 percent or greater, showing the names and the number of shares and percentage of ownership held by each shareholder: Table 8

33. SEGMENT INFORMATION

The Company has provided the operating segments disclosure in the consolidated financial statements; the parent company financial statements do not need to disclose segment information.

235 -

TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Financial Highest Actual Amount Interest Nature of Business Reason for Allowance for Collateral Financing Limit Aggregate
No. Lender Borrower Statement Related Parties Balance for the Ending Balance Rate Transaction Short-term for Each Financing Limit Note
Account Year Borrowed (%) Financing Amount Financing Impairment Loss Item Value Borrower (Note 2) (Note 2)
1 Thinking Changzhou Guangdong Welkin Other receivables Y $ 108,994 $ 108,994 $ 63,615 4.35 Note 1 $ - Operating $ - - $ - $ 1,120,143 $ 1,493,525
Thinking - related (CNY 25,000 (CNY 25,000 (CNY 15,000 capital
parties thousand ) thousand ) thousand )
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Note 1: Short-term financing.

236 -

TABLE 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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December 31, 2020
Relationship with the Percentage of
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Note
Holding Company Number of shares Carrying Amount Ownership Fair Value
(%)
The Company Stock
ACPA TECHNOLOGY CO., LTD. - Financial assets at FVTOCI - non-current 2,469,130 $ 39,481 11 $ 39,481
Thinking Changzhou RMB financial products
“E-Lingtong” net worth type - Industrial and - Financial assets at FVTPL - current - CNY 26,223 thousand - CNY 26,223 thousand
Commercial Bank of China
Wishful Life V - Industrial and Commercial Bank - Financial assets at FVTPL - current - CNY 120,000 thousand - CNY 120,000 thousand
of China
Yuntong Wealth Long-lasting pension - Bank of - Financial assets at FVTPL - current - CNY 500 thousand - CNY 500 thousand
Communications
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 80,000 thousand - CNY 80,000 thousand
(China)
Thinking Yichang RMB financial products
“Qianyuan-Hengying” (90 days) periodic open net - Financial assets at FVTPL - current - CNY 15,000 thousand - CNY 15,000 thousand
worth type - China Construction Bank
“Xpress E” Special Account Customization - - Financial assets at FVTPL - current - CNY 25,000 thousand - CNY 25,000 thousand
Industrial and Commercial Bank of China
“Tian Libao” Net Worth Type - Industrial and - Financial assets at FVTPL - current - CNY 6,000 thousand - CNY 6,000 thousand
Commercial Bank of China
Stable Financial Plan-Wisdom Series - Bank of - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
China
Jiangxi Thinking RMB financial products
Juyishengjin - China Merchants Bank - Financial assets at FVTPL - current - CNY 11,750 thousand - CNY 11,750 thousand
Stable Financial Management Plan-Wisdom Series - Financial assets at FVTPL - current - CNY 11,000 thousand - CNY 11,000 thousand
- Bank of China
Accumulate every day-daily plan - Bank of China - Financial assets at FVTPL - current - CNY 1,360 thousand - CNY 1,360 thousand
Guangdong Welkin Thinking RMB financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 15,000 thousand - CNY 15,000 thousand
Merchants Bank
People add profit - E. Sun Commercial Bank - Financial assets at FVTPL - current - CNY 1,000 thousand - CNY 1,000 thousand
Dongguan Welkin RMB financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 15,000 thousand - CNY 15,000 thousand
Merchants Bank
Increase profit B - China Merchants Banks - Financial assets at FVTPL - current - CNY 20,000 thousand - CNY 20,000 thousand
People add profit - E. Sun Commercial Bank - Financial assets at FVTPL - current - CNY 5,000 thousand - CNY 5,000 thousand
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237 -

TABLE 3

THINKING ELECTRONIC INDUSTRIAL 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 FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Company Name Marketable Securities Type and Name Financial Statement Account Counterparty Relationship Number of sBhareginnines g BalanAmceount Number of sharAescquisition Amount Number of shares Amount DisposCarral ying Amount Gain/Loss on Disposal Number of sharEndesing BalanAmce ount
Thinking Changzhou RMB financial products
Qian Yuan Tianfu Financial assets at FVTPL - China - CNY 55,000 thousand - CNY 40,000 thousand - CNY 97,455 thousand CNY 95,000 thousand CNY 2,455 thousand - -
current Construction
Bank
“E-Lingtong” net worth type Financial assets at FVTPL - Industrial and - CNY 12,239 thousand - CNY 316,484 thousand - CNY 303,844 thousand CNY 302,500 thousand CNY 1,344 thousand - CNY 26,223 thousand
current Commercial
Bank of
China
Wishful Life V Financial assets at FVTPL - Industrial and - CNY 28,000 thousand - CNY 160,000 thousand - CNY 69,225 thousand CNY 68,000 thousand CNY 1,225 thousand - CNY 120,000 thousand
current Commercial
Bank of
China
Accumulate every day-daily plan Financial assets at FVTPL - Bank of China - CNY 3,500 thousand - CNY 85,000 thousand - CNY 88,613 thousand CNY 88,500 thousand CNY 113 thousand - -
current
Stable Financial Plan-Wisdom Financial assets at FVTPL - Bank of China - CNY 50,000 thousand - CNY 20,000 thousand - CNY 71,338 thousand CNY 70,000 thousand CNY 1,338 thousand - -
Series current
Structured Deposit Monthly Profit Financial assets at FVTPL - Fubon Bank - - - CNY 80,000 thousand - - - - - CNY 80,000 thousand
current (China)
Thinking Yichang RMB financial products
“Xpress E” Special Account Financial assets at FVTPL - Industrial and - CNY 5,000 thousand - CNY 65,000 thousand - CNY 45,415 thousand CNY 45,000 thousand CNY 415 thousand - CNY 25,000 thousand
Customization current Commercial
Bank of
China
Jiangxi Thinking RMB financial products
Juyishengjin Financial assets at FVTPL - China - CNY 20,500 thousand - CNY 61,910 thousand - CNY 71,059 thousand CNY 70,660 thousand CNY 399 thousand - CNY 11,750 thousand
current Merchants
Bank
Accumulate every day-daily plan Financial assets at FVTPL - Bank of China - - - CNY 62,790 thousand - CNY 61,496 thousand CNY 61,430 thousand CNY 66 thousand - CNY 1,360 thousand
current
Dongguan Welkin RMB financial products
Point Gold Series Structured Financial assets at FVTPL - China - - - CNY 150,000 thousand - CNY 135,692 thousand CNY 135,000 thousand CNY 692 thousand - CNY 15,000 thousand
Deposit current Merchants
Bank
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238 -

TABLE 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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239 -

TABLE 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Overdue Amounts Received
Allowance for
Company Name Related Party Relationship Ending Balance Turnover Rate in Subsequent
Amount Actions Taken Doubtful Accounts
Period
The Company Thinking Changzhou Subsidiary $ 155,073 1.75 $ - - $ 68,481 $ -
Dongguan Welkin Subsidiary 129,816 3.02 - - 23,971 -
Thinking Changzhou The Company Parent company 221,925 3.38 - - 115,773 -
Thinking Yichang Guangdong Welkin Associate 164,519 3.23 - - 118,537 -
Thinking
Dongguan Welkin The Company Parent company 337,910 1.28 - - 212,663 -
Guangdong Welkin Associate 315,570 1.72 - - 141,732 -
Thinking
Jiangxi Thinking Dongguan Welkin Associate 160,095 2.03 - - 21,706 -
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240 -

TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original Investment Amount Balance as of December 31, 2020
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, Number of Percentage Net Income Note
2020 2019 shares of ownership Carrying Amount (Loss) of the Investee Share of profit (Loss)
(%)
The Company Yenyo Yilan Processing, sales and manufacturing of diodes $ 275,160 $ 275,160 21,232,508 52.61 $ 149,749 $ (9,312 ) $ (4,900 ) Note 1
Greenish British Virgin Investment holding and international trading 242,300 242,300 7,374,997 100 1,918,837 234,076 232,338 Note 1
Island ( US$ 7,375 thousand ) ( US$ 7,375 thousand )
Thinking Holding Cayman Investment holding and international trading 770,212 770,212 24,728,858 100 2,552,063 568,755 505,755 Note 1
( US$ 24,729 thousand ) ( US$ 24,729 thousand )
Thinking Holding Thinking International Mauritius Investment holding and international trading 196,512 195,017 6,075,000 100 954,972 155,840 155,840
( US$ 6,075 thousand ) ( US$ 6,025 thousand )
Thinking HK Hong Kong Investment holding and international trading 311,109 311,109 10,020,000 100 625,927 85,350 85,350
( US$ 10,020 thousand ) ( US$ 10,020 thousand )
View Full Samoa Samoa Investment holding and international trading 155,108 155,108 5,055,000 100 946,158 288,150 288,150
( US$ 5,055 thousand ) ( US$ 5,055 thousand )
Thinking Samoa Samoa Investment holding and international trading 76,294 76,294 2,598,858 100 100,197 38,266 38,266
( US$ 2,599 thousand ) ( US$ 2,599 thousand )
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Note 1: The share of profits or losses of investee includes the effect of unrealized gross profit on intercompany transaction.

Note 2: Information of investees which located in mainland China, refer to Table 7.

241 -

TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Outward Remittance of Funds Accumulated Outward Percentage of Accumulated
Remittance for Remittance for Ownership Carrying Amount as of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital Method of Investment Investment from Taiwan as of Outward Inward Investment from Taiwan as of Net Income (Loss)of the Investee Direct or Indirect Investment Gain (Loss)(Note 7) December 31, 2020(Note 7) Income as of Investment Note
January 1, 2020 December 31, 2020 Investment December 31, 2020
Thinking Changzhou Manufacturing and selling thermistors, US$ 21,260 thousand Note 1 $ 452,725 $ - $ - $ 452,725 $ 459,452 100 $ 456,149 $3,681,581 $ 739,210 Notes 10
varistors and sensors ( US$ 24,148 )
Thinking Yichang Manufacturing and selling thermistors, US$ 6,000 thousand Note 2 194,170 - - 194,170 155,909 100 155,909 953,392 - -
varistors and sensors
Jiangxi Thinking Manufacturing and selling thermistors US$ 10,000 thousand Note 3 310,330 - - 310,330 85,381 100 85,381 625,650 - -
and varistors
Guangdong Welkin Thinking Selling thermistors, varistors, sensors US$ 5,000 thousand Note 4 153,547 - - 153,547 163,790 100 163,790 386,840 - -
and equipment
Dongguan Welkin Manufacturing and processing CNY$ 84,050 thousand Note 5 75,535 - - 75,535 277,401 100 277,401 974,197 - -
thermistors, varistors, sensors and
equipment
Zhongshan Welkin Manufacturing and selling thermistors, $ - Note 6 - - - - - - - - - -
varistors
Accumulated Outward Remittance for Investment Investment Amounts Authorized by the Upper Limit on the Amount of Investments
in Mainland China as of December 31, 2020 Investment Commission, MOEA Stipulated by the Investment Commission, MOEA
$1,186,307 $797,355 $4,383,219
(US$37,209 thousand) (US$27,997 thousand) (Note 9)
(Note 8)
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Note 1: Indirectly investment in mainland China through Greenish which was registered in the third area. The Company increased the amount of indirect investments in mainland China through Greenish since 2003.
Note 2: Indirectly investment in mainland China through companies registered in the third area (Thinking International).
Note 3: Indirectly investment in mainland China through companies registered in the third area (Thinking HK).
Note 4: Indirectly investment in mainland China through companies registered in the third area (View Full Samoa).
Note 5: Indirectly investment in mainland China through companies registered in the third area, View Full Samoa and Thinking Samoa and the subsidiary, Thinking Changzhou.
Note 6: The board of directors had decided to establish the Company through the subsidiary (Dongguan Welkin), and has been registered at December, 2020. At the end of December 31, 2020, the Company have no outward remittance for investments.
Note 7: Financial report had been audited by ultimate parent company’s certified public accountant.
Note 8: Indirectly investment in mainland China through companies registered in the third area. The investment amount approved by MOEA was US$39,478 thousand. The remaining amount had deducted earnings repatriation which was approximately US$11,481 thousand. The balance amount at December 31, 2020 was based on US to TWD exchange rate of 28.48.
Note 9: The upper limit on investment in main land China is determined by 60% of the Company’s consolidated net worth.
Note 10: The Company recognized share of profits of Thinking Changzhou was $216,182 thousand, and Greenish recognized share of profits of Thinking Changzhou was $239,967 thousand. Total amount of share of profits was $456,149 thousand. The difference between total amount of share of profits and the net income of Thinking Changzhou resulted from unrealized gross profit on intercompany transactions.
242 -

TABLE 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2020

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Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration by the Company as of the last business day for the current quarter. The share capital in the parent company only financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

243 -

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM STATEMENT INDEX

MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES
AND EQUITY
STATEMENT OF CASH AND CASH EQUIVALENTS	1
STATEMENT OF NOTES RECEIVABLE	2
STATEMENT OF ACCOUNTS RECEIVABLE	3
STATEMENT OF OTHER RECEIVABLES	4
STATEMENT OF INVENTORIES	5
STATEMENT OF OTHER CURRENT ASSETS	6
STATEMENT OF CHANGES IN INVESTMENTS	7
ACCOUNTED FOR USING THE EQUITY METHOD
STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE	8
THROUGH OTHER COMPREHENSIVE INCOME -
NON-CURRENT
STATEMENT OF CHANGES IN PROPERTY, PLANT AND	Note 13
EQUIPMENT
STATEMENT OF CHANGES IN ACCUMULATED	Note 13
DEPRECIATION OF PROPERTY, PLANT AND
EQUIPMENT
STATEMENT OF RIGHT-OF-USE ASSETS	9
STATEMENT OF DEFERRED INCOME TAX ASSETS	Note 23
STATEMENT OF SHORT-TERM BORROWINGS	10
STATEMENT OF LONG-TERM BORROWINGS	Note 15
STATEMENT OF ACCOUNTS PAYABLE	11
STATEMENT OF OTHER PAYABLES	Note 17
STATEMENT OF OTHER CURRENT LIABILITIES	12
STATEMENT OF LEASE LIABILITIES	13
STATEMENT OF DEFERRED TAX LIABILITIES	Note 23
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF OPERATING REVENUE	14
STATEMENT OF OPERATING COSTS	15
STATEMENT OF OPERATING EXPENSES	16
STATEMENT OF OTHER GAINS AND LOSSES	Note 22
STATEMENT OF LABOR, DEPRECIATION AND	17
AMORTIZATION BY FUNCTION

244 -

STATEMENT 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item
Description
Petty cash and cash on hand

Bank deposit
Deposit of NTD
Checking accounts
Demand deposits
Foreign currency deposits
Demand deposits
Including USD29,286
thousand, HKD3,474
thousand, JPY23,671
thousand, EUR785 thousand
and RMB89 thousand
(Note)
Cash equivalents
Time deposits with original
maturities less than 3
months
Deposit of NTD
Foreign currency deposits
Including RMB77,394
thousand and USD10,000
thousand, with annual
interest rate of 2.6%-2.85%
and 0.41% The expiry date
of foreign currency deposits
is March 2021.

Amount
$ 578
74
118,342
881,183
622,218
$ 1,622,395

Note: Foreign currency exchange rates of USD, HKD, JPY, EUR and RMB were as follows USD1=NTD28.48, HKD1=NTD3.673, JPY1=NTD0.2757, EUR1=NTD34.94 and RMB1=NTD4.3597.

245 -

STATEMENT 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Description	Amount
Company A	Sale of goods	$ 1,652
Company B	Sale of goods	552
Company C	Sale of goods	531
Company D	Sale of goods	360
Company E	Sale of goods	353
Company F	Sale of goods	306
Others (Note)	Sale of goods	1,570
		$ 5,324

Note: The amount of individual clients that are included in others does not exceed 5% of the account balance.

246 -

STATEMENT 3

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Client Name Related parties Thinking Changzhou Dongguan Welkin Thinking Yichang Non-related parties (Note) Less: Loss allowance	Amount Over a Year Remark $ 155,073 $ - Sale of goods 129,816 - Sale of goods 838 - Sale of goods 285,727 815,862 13,814 Sale of goods 15,022 $ 13,814 800,840 $ 1,086,567

Note: The amount of individual clients that are included in others does not exceed 5% of the account balance.

247 -

STATEMENT 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER RECEIVABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Amount Remark Related parties Thinking Yichang $ 97 Transaction of consigned purchases Non-related parties Income tax refund receivable 2,661 Business tax Earned revenue receivable 451 3,112 $ 3,209

248 -

STATEMENT 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Finished goods Work-in-process Raw materials Supplies Inventory in transit	Cost Net Realizable Value (Note) $ 118,656 $ 187,257 37,102 67,610 42,734 43,603 3,053 3,085 6,168 6,168 $ 207,713 $ 307,723

Note: Refer to Note 4 for accounting policy of net realizable value.

249 -

STATEMENT 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT ASSETS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Prepayment for purchases Prepaid expenses Office supplies Others	Amount $ 3,976 9,044 2,314 3,430 $ 18,764

250 -

STATEMENT 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investees Non-listed company Yenyo Greenish Thinking Changzhou Thinking Holding	Balance, January 1, 2020 Shares Amount 21,232,508 $ 154,377 7,374,997 1,742,627 10,075,514 1,652,969 24,728,858 1,847,773 $ 5,397,746	Additions in Investment Shares Amount - $ 272 - 176,210 - 161,120 - 704,290 $ 1,041,892 (Note 1)	Decrease	in Investment Amount $ 4,900 - - - $ 4,900 (Note 2)	Balance, December	31, 2020 Amount $ 149,749 1,918,837 1,814,089 2,552,063 $ 6,434,738	Market Value or Net Assets Value Unit Price Total Amount Collateral Note $ 7.29 $ 154,857 None 264.10 1,947,739 None 175.65 1,769,784 None 107.35 2,654,577 None $ 6,526,957
					% of Shares Ownership 21,232,508 52.61 7,374,997 100.00 10,075,514 47.39 24,728,858 100.00
	Shares 21,232,508 7,374,997 10,075,514 24,728,858	Shares - - - -	Shares - - - -

Note 1: Share of profits using the equity method, realized gain on transactions in the beginning of year, exchange differences on translation of the financial statements of foreign operations remeasurements of the net defined benefit liability and deduction of unrealized gain on transactions at the end of the year amounted to $954,274 thousand, $3,799 thousand, $88,320 thousand, $272 thousand and $4,773 thousand.

Note 2: Share of losses accounted for using the equity method amounted to $4,900 thousand.

251 -

STATEMENT 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, NON-CURRENT FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investees Non-listed company’s stock ACPA TECHNOLOGY CO., LTD.	Balance, January 1, 2020 Shares Fair Value 2,469,130 $ 26,918	Additions in Investment Amount Shares (Note 1) - $ 12,563	Decrease in Investment Shares Amount - $ -	MarketValue orNet AssetsValue Fair Value Accumulated Shares (Note 2) Impairment Collateral 2,469,130 $ 39,481 $ - None
		Shares -	Shares -	Shares 2,469,130
	Shares 2,469,130

Note 1: Recognized as unrealized other comprehensive gain of financial assets at fair value.

Note 2: Refer to Note 27 for fair value measurement.

252 -

STATEMENT 9

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Balance at	Balance at						Balance at	Balance at
	January 1,							December 31,
	2020		Additions			Deductions		2020
Cost
Land	$ 59,910		$	-		$ (1,228	)	$ 58,682
Accumulated depreciation
Land	(1,559	)		(2,018	)	-		(3,577	)
	$ 58,351		$	(2,018	)	$ (1,228	)	$ 55,105

253 -

STATEMENT 10

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

		Interest Rates
Type of Borrowings and		for the Year	Balance of
Bank Name	Contract Period	(%)	December 31, 2020
Credit Loans
Citibank, N.A.	2020.09.16-2021.03.15	0.75	$ 175,000
CTBC Bank	2020.09.10-2021.03.10	0.77	200,000
			$ 375,000

Note: At the end of December 31, 2020, the amount of unused short-term borrowings was approximately $1,881,000 thousand.

254 -

STATEMENT 11

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Vendor Name Related parties Dongguan Welkin Thinking Changzhou Thinking Yichang Yenyo Non-related parties Company G Company H Company I Company J Company K Others (Note)	Amount $ 337,910 221,925 31,937 221 591,993 2,842 2,657 1,793 1,734 1,201 10,121 20,348 $ 612,341

Note: The amount of individual vendor that are included in others does not exceed 5% of the account balance.

255 -

STATEMENT 12

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT LIABILITIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

	Amount	Amount
Temporary receipts	$	360
Withholding		1,347
Deferred revenue		752
	$	2,459

256 -

STATEMENT 13

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

			Discount Rate	Balance of
	Item	Lease Term	(%)	December 31, 2019
Land		2016.06-2030.10	0.75-1.38	$ 55,652
Less:	Lease liabilities -			929
	current
Lease	liabilities - non-current			$ 54,723

257 -

STATEMENT 14

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING REVENUE FOR THE YEARS ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Shipments (Thousand PCS) Revenue from sale of goods Passive components 6,247,599 Service revenue	Amount $ 3,219,769 173 $ 3,219,942

258 -

TATEMENT 15

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING COSTS FOR THE YEARS ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item
Cost of merchandise
Merchandise, beginning of year

Merchandise purchased
Merchandise, end of year
Others

Total cost of merchandise

Production cost
Raw material used
Raw material, beginning of year
Raw material purchased
Raw material, end of year
Others

Supplies used

Direct labor

Manufacturing expense

Manufacturing cost
Work-in-process, beginning of year
Work-in-process purchased
Work-in-process, end of year
Others

Cost of finish goods
Finish goods, beginning of year
Finish goods purchased

Finish goods, end of year
Others

Total of production cost

Other operating cost
Reversal of inventory write-downs
Income from sale of scraps
Loss on obsolete inventory
Others

Amount
$ 702
16,464
-
(735
)
16,431
45,582
171,742
(42,734 )
(17,691
)
156,899
23,542
116,432
366,845
663,718
69,105
154,298
(37,102 )
19,821
869,840
194,938
1,302,898
(118,656 )
(190,907
)
2,058,113
(12,438 )
(3,964 )
27,658
(44,040
)
(32,784
)
$ 2,041,760

259 -

TATEMENT 16

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING EXPENSES FOR THE YEARS ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item
Selling and
Marketing
Expenses
General and
Administrative
Expenses
Research and
Development
Expenses
Salaries
$ 43,090
$ 115,053
$ 68,162

Export expense
22,382
-
-
Professional service fees
3,822
6,517
1,239
Commission expense
5,794
-
-
Depreciation expense
838
4,581
9,073
Utilities expense
105
747
1,852
Remuneration of directors
-
23,400
-
Consumption supplies
182
55
7,049
Shipping expense
5,798
631
97
Others

21,825

29,255

17,945

$ 103,836
$ 180,239
$ 105,417

Gain on reversal of expected
credit loss

Total
$ 226,305
22,382
11,578
5,794
14,492
2,704
23,400
7,286
6,526
69,025
389,492
(1,856 )
$ 387,636

260 -

TATEMENT 17

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Labor cost Salary and bonuses Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2020	Total $ 369,734 26,872 12,783 23,400 19,818 $ 452,607 $ 68,555 4,002	2019
	Operating Costs Operating Expenses $ 143,429 $ 226,305 12,293 14,579 6,159 6,624 - 23,400 11,010 8,808 $ 172,891 $ 279,716 $ 54,063 $ 14,492 1,647 2,355		Operating Costs Operating Expenses $ 124,617 $ 192,220 11,743 14,362 5,919 6,562 - 17,900 10,275 8,622 $ 152,554 $ 239,666 $ 48,610 $ 15,510 1,566 5,143	Total $ 316,837 26,105 12,481 17,900 18,897 $ 392,220 $ 64,120 6,709

Note: a. As of December 31, 2020 and 2019, the Company had 439 and 437 employees, respectively. There were 5 non-employee director for both of the reporting period.
b. The average employee welfare expense for the years ended December 31, 2020 and 2019 was $989 thousand and $866 thousand, respectively.
c. The average employee salary and bonuses for the years ended December 31, 2020 and 2019 was $852 thousand and $733 thousand, respectively.
d. Change in the average employee salary and bonuses was 16%.
e. The Company has established an audit committee to replace the role of supervisor, so it has no remuneration for supervisor.
f. The Company’s salary and remuneration policy (including directors, supervisors, managers and employees).

1) Director

The Company’s remuneration of directors are distributed in accordance with the Articles of Incorporation. Please refer to Note 22 (g) for related regulations. The remuneration will be adjusted based on the Company’s operating conditions and the related regulations. In consideration of the Company’s sustainable development, the remuneration of directors will be submitted to the compensation committee and the board of directors for approval.

(Continued)

261 -

2) Manager

Based on the “Rules for Distribution of Compensation to Managers”, the Company’s compensation committee will take the manager’s services provided and standards of the industry into consideration.

Monthly salary: Depending on the manager’s job tenure and the value of job title. Salary movement should not exceed 150% of the industry standards.

Variable salary: Depending on the Company’s operating condition, including bonuses and employee remuneration.

3) Employee

The principle of the Company’s employee salary system stands on fairness and competitiveness. Employee salary includes monthly salary and variable salary. For the total amount of remuneration of employees, please refer to Note 22 (g). Salary of employee is distributed according to the “Regulation of Salary” and according to the employee’s duties and professional skills. Remuneration of employee is also distributed according to the “Regulation of Distribution of Cash and Shares Dividends” and according to the employee’s performance and contribution to the Company.

(Concluded)

262 -

VII. Review and Analysis of Financial Conditions, Operating Results, and Risk Management

7.1 Review and Analysis of Financial Status

Unit: NTD Thousand

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

Year Difference
2020 2019
Entry Amount %
Current asset 8,084,389 6,067,809 2,016,580 33
Property, plant and
2,174,967 2,031,402 143,565 7
equipment
Other assets 771,304 651,304 120,000 18
Total assets 11,030,660 8,750,515 2,280,145 26
Current liabilities 2,051,426 1,254,736 796,690 63
Non-current liabilities 1,534,447 980,796 553,651 56
Total liabilities 3,585,873 2,235,532 1,350,341 60
Equity attributable owners of
7,305,365 6,371,393 933,972 15
the company
Ordinary shares 1,281,127 1,281,127 - -
Capital surplus 348,263 348,263 - -
Retained earnings 5,877,411 5,026,658 850,753 17
Other equities (201,436) (284,655) 83,219 (29)
Non-controlling interest 139,422 143,590 (4,168) (3)
Total shareholders' equities 7,444,787 6,514,983 929,804 14
----- End of picture text -----

i. Analysis of increases/decreases over 20%:
(1) Current assets and total assets increased mainly because of the increase in cash and cash equivalents and Financial assets at fair value through profit or loss.
(2) Liabilities increased mainly because of the increase in borrowings for the year.
(3) Other equities increased mainly because of the difference in exchange from the conversion of financial statements of overseas operating institutions caused by fluctuating exchange rates.
263 -

7.2 Review and Analysis of Operating Results

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

Unit: NTD Thousand
Year Difference
2020 2019
Entry Amount %
Operating revenue, net 5,920,258 5,814,232 106,026 2
Gross profit 2,714,605 2,340,329 374,276 16
Profit from operations 1,843,142 1,448,901 394,241 27
Non-operating income and
24,191 64,786 (40,595) (63)
expenses
Profit before income tax 1,867,333 1,513,687 353,646 23
Income tax expense 486,730 398,422 88,308 22
Net profit 1,380,603 1,115,265 265,338 24
Other comprehensive income
87,274 (173,212) 260,486 (150)
(loss), net of tax
Total comprehensive income 1,467,877 942,053 525,824 56
----- End of picture text -----

i. Analysis of increases/decreases over 20%:
(1) Profit from operations increased mainly because of the portfolio and the reduced general and administrative expenses.
(2) Non-operating income and expenses decreased mainly because of the increase in exchange losses caused by fluctuating exchange rates.
(3) Profit before income tax increased, income tax expense increased, and net profit increased for current term mainly because of the growth in profits for the current term.
(4) Other comprehensive income or losses (after-tax net value) increased for the current term mainly because of the difference in exchange from the conversion of financial statements of overseas operating institutions caused by fluctuating exchange rates.
ii. Reason for the change to the main scope of operation of the Company: The main scope of operation of the Company did not experience major changes.
iii. Possible impacts of expected sales quantities and their bases on the future financial operations of the Company and the countermeasures: Not applicable; the Company does not prepare financial forecasts.
264 -

7.3 Review and Analysis of Cash Flow

i. Cash Flow Analysis for the Current Year

Unit: NTD Thousand

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

Cash and Leverage of Cash Deficit
Net Cash Net Cash Flow
Cash
Flow from from Investing
Equivalents, Cash Surplus Investment
Operating and Financing Financing Plans
Beginning of Plans
Activities Activities
Year
1,774,594 1,342,996 (612,242) 2,505,348 - -
----- End of picture text -----

(1) Analysis of change in cash flows of the current year:
A. Operating activities: mainly the payments received, expenses on purchases of materials, and payment for income tax as part of normal operations, etc.
B. Investing activities: mainly the expansion of production and net purchases of financial assets to meet operational demand.
C. Financing activities: mainly borrowings and distribution of cash dividends.
(2) Remedies in case of cash shortage: Not applicable.

ii. Cash Flow Analysis for the Coming Year

Unit: NTD Thousand

	Unit:NTD Thousand
Cash and Cash Equivalents, Beginning of Year Net Cash Flow from Operating Activities Net Cash Flow from Investing and Financing Activities Cash Surplus	Leverage of Cash Surplus (Deficit)
	Investment plan Financing plan
2,505,348 1,494,847 (1,071,620) 2,928,575	- -
(1) Analysis of change in cash flows: A. Operating activities: mainly the payments received, expenses on purchases of materials, and payment for income tax as part of normal operations, etc. B. Investing activities: mainly projected construction of new premises and purchase of fixed assets, etc. C. Financing activities: mainly borrowings and distribution of cash dividends etc. (2)Projected remedies in case of cash shortage: Not applicable.

7.4 Impacts of Major Capital Expenditure for the Most Recent Fiscal Year on Financial Operation: None.
265 -
7.5 Investment Policy for the Most Recent Fiscal Year, Reasons for Profit (Loss), Improvement Plan and the Investment Plan for the Coming Year:
i. Re-investment policy of the latest year:

The Company’s reinvestment policy of the latest year mainly aims to expand the operational scale, to reinforce its competitive advantages on the market, and to improve the revenue and investment gains.

ii. Main reasons for profits from reinvestments:

The Company recognized investment gains applying the equity method for 2020 is worth NTD 949,374 thousand mainly because of the operational growth and increased profits of overseas reinvested companies.

iii. Investment plan for the coming year:

The Company will carefully evaluate respective investment plans in order to cope with demand on the market and environmental changes and challenges in the future and to ensure overall steady operational growths, which will hopefully create optimal investment gains.

7.6 Review and Analysis of Risk Management

i. Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

Impacts on profits or losses

==> picture [429 x 145] intentionally omitted <==

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

Item 2020 (NTD thousand; %)
Net interest income (expenses) 69,613
Net (loss) profit from exchange (99,940)
Ratio of net interest income/ expenses to net sales 1.18%
Ratio of net interest income/ expenses to pre-tax net profit 3.73%
Ratio of net loss/profit from exchange to net sales (1.69)%
Ratio of net loss/profit from exchange to pre-tax net profit (5.35)%
----- End of picture text -----

266 -

Changes in interest rate:

The net interest income of the Company for 2020 was NTD 69,613 thousand, accounting for only 1.18% of the operating income. Therefore, impacts of changes in the interest rate impacted minimally on the Company's profitability. The Company will keep track of information about interest rates on the market at all times and adjust its deposits and borrowings in respective currencies while at the same time seeking the most preferred interest rates from banks so that fluctuating interest rates would have a minimal effect on the Company.

Changes in exchange rate:

The net losses/profits from foreign exchange incurred by assets and liabilities in foreign currencies for 2020 were NTD 99,940 thousand, accounting for 1.69% of the operating income. The Company will take the corresponding hedging measures according to existing policies for the coming year with regard to its forward foreign exchange income/expenditure.

Inflation:

A majority of the Company’s products are exported. Therefore, impacts of the domestic inflation on the Company’s profits or losses are minimal. In case of inflation on the Asian market, however, it will impact consumers’ purchasing power and willingness and the demand for consumer products will hence drop. It will impact the overall revenue and profits or losses of the Company negatively. Given the fact that impacts of international inflations are comprehensive in nature, however, the impacts will not be borne by a single company and governments around the world shall be capable of coping with them. Nevertheless, the Company will devote itself to the research and development as well as distribution of niche products and the reduction of production cost so that its revenue may be maintained with products whose prices are more capable of driving consumer demand and the negative impacts from inflations on the Company’s profits or losses may be reduced.

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 did not engage itself in high-risk or high-leverage investments in 2020 and lending of funds as well as endorsements/guarantees were done in compliance with the Company’s Procedure for Lending to Others and Regulations Governing Endorsements/Guarantees and the counterparties were all the Company’s subsidiaries. The operation of derivatives, on the other hand, was meant mainly for hedging purpose and was done in compliance with the Company’s Procedures for Engaging in Derivatives Trading.

267 -

iii. Future Research & Development Projects and Corresponding Budget

For the Company’s future R&D plans, refer to 5.1 i. (4) New Products and Services Planned to be Developed under “V. Operational Highlights.” In addition, for the sake of consolidating the Company’s competitive advantages and maintaining its strengths on the market, the Company spares no effort in research, development, and innovation. Each year, the R&D budget devoted accounts for around 3% to 5% of the revenue and is expected to remain at a comparable level in 2021.

iv. Impacts of important domestic and international policies and regulatory changes on the Company's financial performance and the countermeasures: None.
v. Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales: None.
vi. The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures: None.
vii. Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: None.
viii. Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans: None.
ix. Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration:
(1) Purchases: Individual suppliers of the Company are not monopolies that cannot be replaced. The sources of supply are sufficient, without concerns over shortage. In honor of its decentralized purchase principle, the Company inquires about prices with more than two suppliers and makes purchases accordingly most of the time for the same raw material and maintains long-term steady partnerships with them to avoid the risk of shortage in supply due to force majeure or individual factors and the purchase contracts are often signed in advance. The supply has been steady and minimally impacted by fluctuating prices internationally. The source of supply is not impacted. Since it was established, the Company has not experienced shortage in or interruption of supply.
268 -
(2) Sales: The Company’s products include positive and negative temperature coefficient thermistors and zinc oxide varistors that are widely applied and are sold mainly to power supply manufacturers, monitor manufacturers, motherboards, mobile phones, and home appliance clients. The sales are growing on a yearly basis. Despite the slight changes to the Top 10 clients over the past two years, there is no single client accounting for the overall sales by more than 10%. In other words, customers where the products are sold to are relatively decentralized and are not obviously focused.
x. Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10% None.
xi. Effects of, Risks Relating to and Response to the Changes in Management Rights: None.
xii. Litigation or Non-litigation Matters: None.

xiii. Other important risks and countermeasures:

(1) Risk and Management Measures for Information Technology Security:

Any cyber attack may be meant to steal the Company’s intellectual properties and formulation of raw materials, among other business secrets to result in undesirable impacts on the Company’s operations. The Company has set up a complete cyber and computer safety protection system to control and protect the Company’s operating system and the software and hardware equipment resources are enhanced from time to time to reinforce the Company’s cyber safety system. Throughout 2020 and up to the date the Annual Report was printed, the Company had not discovered any major cyber attack or incident that had or might significantly impact the Company’s business and operation undesirably and had not been involved in any relevant legal case or regulatory investigation.

7.7 Other Material Items: None.

269 -

VIII. Special Disclosure

8.1 Summary of Affiliated Companies

i. Consolidated Business Report of Affiliates
(1) Overview of Affiliates

==> picture [665 x 376] intentionally omitted <==

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

A. Organizational Chart of Affiliates Thinking Electronic
Industrial Co., Ltd.
Holding ratio Holding ratio Holding ratio
Holding ratio 47.39%
52.61% 100% 100%
Yenyo Technology Thinking (Changzhou) Greenish Co., Thinking Holding
Co., Ltd. Electronic Co., Ltd. (Note) Ltd. (Cayman) Co., Ltd.
Holding ratio
52.61%
Holding ratio Holding ratio Holding ratio Holding ratio
100% 100% 100% 100%
Thinking Electronic View Full (Samoa) Thinking (HK) Thinking International
(Samoa) Ltd. Ltd. Enterprises Limited Co., Ltd.
Holding ratio
Holding ratio 10.42%
31.24% Holding ratio Holding ratio Holding ratio
100% 100% 100%
Holding ratio
58.34% Guangdong Welkin
Dong Guan Welkin Jiang Xi Thinking Thinking (Yichang)
Thinking Electronic
Electronic Co., Ltd. Electronic Co., Ltd. Electronic Co., Ltd.
Co., Ltd.
Holding ratio
100%
Welkin Electronic Co.,
Ltd.
----- End of picture text -----

A. Organizational Chart of Affiliates

Note: The Company and Greenish Co., Ltd.’s joint investment, holding 100% of its interests.

270 -

B.Profile of respective affiliates:

December 31, 2020 ; Unit: Respective Currencies in Thousands

==> picture [766 x 423] intentionally omitted <==

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

Date Paid-in capital Main scope of operation or
Name of affiliate Address
established size production
Yenyo Technology Co., Ltd. 8/15/1997 No. 189, Longquan Road, Longtan Village, Jiaoxi NTD 403,580 Processing, trading, and
Township, Yilan County manufacturing of diodes
Thinking (Changzhou) 3/22/1996 No. 6, Longmen Road, Wujin National Hi-Tech USD 21,260 Manufacturing and selling
Electronic Co., Ltd. Industrial Development Zone, Changzhou City, Jiangsu thermistors, varistors and
Province sensors
Greenish Co., Ltd. 2/26/1997 Sea Meadow House, Blackburne Highway, (P.O.Box USD 7,375 International trading and
116), Road Town, Tortola, British Virgin Islands investment
Thinking Holding (Cayman) 3/30/2007 The Grand Pavilion Commercial Centre, Oleander Way, USD 24,729 International trading and
Co., Ltd. 802 West Bay Road,P.O.Box 32052,Grand Cayman, investment
KY1-1208, Cayman Islands
Thinking International Co., 6/3/2004 Suite 802, St James Court St Denis Street, USD 6,075 International trading and
Ltd. Port Louis, Mauritius investment
Thinking (HK) Enterprises 9/11/2009 Room 1204, Yu Sung Boon Bldg., 107-111 Des Voeux USD 10,020 International trading and
Limited Road Central,Hong Kong investment
View Full (Samoa) Ltd. 4/30/2013 Le Sanalele Complex, Ground Floor, Vaea Street, USD 5,055 International trading and
Saleufi, Apia, Samoa investment
Thinking Electronic (Samoa) 4/30/2013 Le Sanalele Complex, Ground Floor, Vaea Street, USD 2,599 International trading and
Ltd. Saleufi, Apia, Samoa investment
Thinking (Yichang) Electronic 7/2/2004 No. 283, Huting Boulevard, Huting District, Yichang USD 6,000 Manufacturing and selling
Co., Ltd. City, Hubei Province thermistors, varistors and
sensors
Jiang Xi Thinking Electronic 11/20/2009 Anhua Road, Tangying Boulevard, Fuliangxian USD 10,000 Manufacturing and selling
Co., Ltd. Ceramics Industrial Park, Jingdezhen City, Jiangxi thermistors and varistors
Province
Guangdong Welkin Thinking 4/11/2014 Level 7, No. 7, Lane 2, Building 1, Huaideyao Village, USD 5,000 Wholesale of thermistors,
Electronic Co., Ltd. Humen Township, Dongguan City, Guangdong Province varistors, sensors and
equipment
Dong Guan Welkin Electronic 10/19/2001 No. 45, Dongda Street, Shatou Community, Changan CNY 84,050 Manufacturing and processing
Co., Ltd. Township, Dongguan City, Guangdong Province thermistors, varistors, sensors
and equipment
Welkin Electronic Co., Ltd. 12/18/2020 B1 and B2, No. 28, Dongping Road, Tanzhou Township, Note Manufacturing and selling
Zhongshan City, Guangdong Province thermistors and varistors
----- End of picture text -----

Note: In order to combine manufacturing and sales in the factory, the board of directors of Dongguan Welkin had decided to establish Zhongshan Welkin, which had been registered in December 2020. As of December 31, 2020, Zhongshan Welkin has not been invested.

271 -

C. Data of common shareholders inferred to have control or to be in a subordinate relationship: None.

D. Industries that the scope of operation of affiliates covers and their business relationship with the Company:

==> picture [718 x 450] intentionally omitted <==

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

Business relationship with the
Name of affiliate Main scope of operation or production
Company
Yenyo Technology Co., Ltd. Processing, trading, and manufacturing of diodes -
Thinking (Changzhou) Electronic Co., Manufacturing and selling thermistors, varistors and sensors The Company purchases products and
Ltd. sells them and then sells the products
of the Company
Greenish Co., Ltd. International trading and investment It is an overseas holding company that
the Company reinvests in.
Thinking Holding (Cayman) Co., Ltd. International trading and investment It is an overseas holding company that
the Company reinvests in.
Thinking International Co., Ltd. International trading and investment It is an overseas holding company that
the Company reinvests in.
Thinking (HK) Enterprises Limited International trading and investment It is an overseas holding company that
the Company reinvests in.
View Full (Samoa) Ltd. International trading and investment It is an overseas holding company that
the Company reinvests in.
Thinking Electronic (Samoa) Ltd. International trading and investment It is an overseas holding company that
the Company reinvests in.
Thinking (Yichang) Electronic Co., Ltd. Manufacturing and selling thermistors, varistors and sensors The Company purchases its products
and sells them
Jiang Xi Thinking Electronic Co., Ltd. Manufacturing and selling thermistors and varistors The Company purchases its
semi-finished products
Guangdong Welkin Thinking Electronic Wholesale of thermistors, varistors, sensors and equipment -
Co., Ltd.
Dong Guan Welkin Electronic Co., Ltd. Manufacturing and processing thermistors, varistors, sensors The Company purchases products and
and equipment sells them and then sells the products
of the Company
Welkin Electronic Co., Ltd. Manufacturing and selling thermistors and varistors -
----- End of picture text -----

272

E. Profile of directors, supervisors, and president of each affiliate

==> picture [789 x 483] intentionally omitted <==

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

Shareholding
Name of affiliate Position Name or Representative Shares Shareholding
ratio
Chairman Sui, Tai-Chung (Representative of Thinking) 21,232,508 52.61%
Director Tseng, Lung-Ji (Representative of Thinking) 21,232,508 52.61%
Director/President Ho, Yi-Sheng (Representative of Thinking) 21,232,508 52.61%
Yenyo Technology Co., Ltd. Director Chu, You-Mei (Representative of Thinking) 21,232,508 52.61%
Director Cheng, Chien-Ming 109,432 0.27%
Supervisor Fang, Hsiao-Hua (Representative of Boh Chin) 20,518 0.05%
Supervisor Chen, Yen-Hui - -
Chairman Sui, Tai-Chung (Representative of Thinking)
Thinking (Changzhou) Director Ho, Yi-Sheng (Representative of Thinking)
USD 21,260,000 100.00%
Electronic Co., Ltd. Director Chen, Su-Ai (Representative of Thinking)
Supervisor Ting, Si-Nan (Representative of Thinking)
Greenish Co., Ltd. Director Sui, Tai-Chung (Representative of Thinking) USD 7,374,997 100.00%
Thinking Holding (Cayman) Director Chen, Su-Ai (Representative of Thinking) USD 24,728,858 100.00%
Co., Ltd.
Thinking International Co., Chairman Sui, Tai-Chung (Representative of Thinking Holding (Cayman))
USD 6,075,000 100.00%
Ltd. Director Chen, Su-Ai (Representative of Thinking Holding (Cayman))
Thinking (HK) Enterprises Director Sui, Tai-Chung (Representative of Thinking Holding (Cayman))
USD 10,020,000 100.00%
Limited Director Chen, Su-Ai (Representative of Thinking Holding (Cayman))
Director Sui, Tai-Chung (Representative of Thinking Holding (Cayman))
View Full (Samoa) Ltd. USD 5,055,000 100.00%
Director Chen, Su-Ai (Representative of Thinking Holding (Cayman))
Thinking Electronic (Samoa) Director Sui, Tai-Chung (Representative of Thinking Holding (Cayman))
USD 2,598,858 100.00%
Ltd. Director Chen, Su-Ai (Representative of Thinking Holding (Cayman))
----- End of picture text -----

273

==> picture [789 x 424] intentionally omitted <==

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

Shareholding
Name of affiliate Position Name or Representative Shares Shareholding
ratio
Chairman Sui, Tai-Chung (Representative of Thinking International)
Thinking (Yichang)
Director Sui, Chung-Hua (Representative of Thinking International) USD 6,000,000 100.00%
Electronic Co., Ltd.
Director Chung, Su-Hsin (Representative of Thinking International)
Chairman Sui, Tai-Chung (Representative of Thinking (HK))
Jiang Xi Thinking Electronic Director Chen, Su-Ai (Representative of Thinking (HK))
USD 10,000,000 100.00%
Co., Ltd. Director Ho, Yi-Sheng (Representative of Thinking (HK))
Supervisor Ting, Si-Nan (Representative of Thinking (HK))
Chairman Li, Ling-Wen (Representative of View Full Samoa)
Guangdong Welkin Thinking Director Ho, Yi-Sheng (Representative of View Full Samoa)
USD 5,000,000 100.00%
Electronic Co., Ltd. Director Ting, Si-Nan (Representative of View Full Samoa)
Supervisor Fang, Hsiao-Hua (Representative of View Full Samoa)
Chairman Sui, Tai-Chung (Representative of Thinking Changzhou and Thinking Samoa)
Dong Guan Welkin Electronic Director Chen, Su-Ai (Representative of Thinking Changzhou and Thinking Samoa)
CNY 84,050,068 100.00%
Co., Ltd. Director Sui, Chieh-Heng (Representative of Thinking Changzhou and Thinking Samoa)
Supervisor Ting, Si-Nan (Representative of Thinking Changzhou and Thinking Samoa)
Chairman Sui, Tai-Chung (Representative of Dongguan Welkin)
Director Chen, Su-Ai (Representative of Dongguan Welkin)
- -
Welkin Electronic Co., Ltd.
Director Sui, Chieh-Heng (Representative of Dongguan Welkin)
Supervisor Ting, Si-Nan (Representative of Dongguan Welkin)
----- End of picture text -----

274

(2) Operational overview of respective affiliates

==> picture [777 x 380] intentionally omitted <==

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

December 31, 2020; Unit: NTD thousands
(Loss) profit Fundamental
Total Operating Operating of current earnings per
Name of affiliate Capital size Total assets Net worth
liabilities income (loss) profit term share (NTD)
(after-tax) (after-tax)
Yenyo Technology Co., Ltd. 403,580 325,886 31,539 294,347 180,352 (12,418) (9,312) (0.23)
Thinking (Changzhou) Electronic Co., Ltd. 692,633 4,309,407 575,126 3,734,281 2,606,816 376,340 459,452 (Note 1)
-
Greenish Co., Ltd. 242,300 1,959,046 11,307 1,947,739 (13,073) 234,076 (Note 1)
- -
Thinking Holding (Cayman) Co., Ltd. 770,212 2,654,577 2,654,577 (359) 568,755 (Note 1)
- -
Thinking International Co., Ltd. 196,512 954,972 954,972 (73) 155,840 (Note 1)
- -
Thinking (HK) Enterprises Limited 311,109 625,927 625,927 (29) 85,350 (Note 1)
- -
View Full (Samoa) Ltd. 155,108 946,158 946,158 (21) 288,150 (Note 1)
- -
Thinking Electronic (Samoa) Ltd. 76,294 100,197 100,197 (21) 38,266 (Note 1)
Thinking (Yichang) Electronic Co., Ltd. 194,170 1,313,541 360,149 953,392 926,839 151,490 155,909 (Note 1)
Jiang Xi Thinking Electronic Co., Ltd. 310,330 786,547 160,897 625,650 574,619 93,300 85,381 (Note 1)
Guangdong Welkin Thinking Electronic Co., Ltd. 153,547 1,181,814 794,974 386,840 1,491,914 216,894 163,790 (Note 1)
Dong Guan Welkin Electronic Co., Ltd. 367,457 1,602,853 646,565 956,288 1,390,105 310,312 277,401 (Note 1)
Welkin Electronic Co., Ltd. - - - - - - - (Note 2)
----- End of picture text -----

Note 1: The company is a company limited.

Note 2: In order to combine manufacturing and sales in the factory, the board of directors of Dongguan Welkin had decided to establish Zhongshan Welkin, which had been registered in December 2020. As of December 31, 2020, Zhongshan Welkin has not been invested.

275

ii. Consolidated Financial Statement of Affiliates

Declaration

Very truly yours,

Thinking Electronic Industrial Co., Ltd.

By Sui, Tai-Chung Chairman

March 22, 2021

276

iii. Affiliation Report

Declaration

The Affiliation Report of the Company for 2020 (from January 1 to December 31, 2020) is prepared in accordance with the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises and the information disclosed does not show significant discrepancies from related information disclosed in the notes to financial statements during the above-mentioned period.

Thinking Electronic Industrial Co., Ltd.

By Sui, Tai-Chung Chairman

March 22, 2021

277

Thinking Electronic Industrial Co., Ltd.

Affiliation Report

2020

I. Overview of Relations between Subordinate Companies and Controlling Companies:

Unit: Share; %

		Unit: Share; %	Unit: Share; %	Unit: Share; %	Unit: Share; %
Name of controlling company	Cause of control	Shareholding and pledge status of controlling company Directors, supervisors, or managers assigned bythe controllingcompany
		Number of shares held	Shareholding ratio	Number of shares pledged	Title/Name
Boh Chin Investment Co., Ltd.	With substantial control over the Company	27,178,247	21.21%	-	Chairman/Sui, Tai-Chung Director/ Ho, Yi-Sheng

II. Current Transaction:

(I) Purchases/Sales: None

(II) Properties: None

(III) Capital financing: None

(IV) Asset lease: The Company spent NTD 480 thousand in 2020 for renting buildings and land from Boh Chin Investment Co., Ltd.

III. Endorsements/guarantees: None

278

8.2 Any Private Placement of Securities for the Most Recent Fiscal Year and during the Current Fiscal Year up to the Date of Publication of the Annual Report: None.
8.3 The Shares in the Company Held or Disposed of by Subsidiaries for the Most Recent Fiscal Year and during the Current Fiscal Year up to the Date of Publication of the Annual Report: None.
8.4 Other Matters Requiring Supplementary Information: None

279

IX. Matters with Important Impacts on Shareholders’ Equity or Prices of Securities

Matters with important impacts on shareholders’ equity or prices of securities as indicated in Article 36 Paragraph 3 Subparagraph 2 of the Securities and Exchange Act in the past year up to the date the Annual Report was printed: None.

280 -

AI assistant

THINKING — Annual Report 2020

52076_rns_2021-07-29_d12f8530-f797-46e2-a412-589e1c6c0c7e.pdf

興勤 電 子工業股份有限 公司 THINKING E L ECTRONIC INDUSTRIAL C O., LTD.

2 0 20 Annual Report

Contents

I. Letter to Shareholders

Dear Shareholders,

1.1 Business report:

i. Results:

1.2 Summary of 2021 business plan:

ii. Expected sales volume and basis thereof

iii. Key production and sales policies

A. Supply management:

1.3 Future development strategies:

Chairman of Board: Sui, Tai-Chung

II. Company Profile

2.1 Date of Incorporation July 16, 1979

III. Corporate Governance Report

3.2 Information of Directors, President, Vice President, Associate Vice President, and Heads of Various Departments and Branches

i. Director Information

Major shareholders of institutional shareholders

Major shareholders of the Company’s major institutional shareholders : None.

Professional qualifications and independence analysis of directors

ii. Profile of President, Vice President, Associate Vice President, and Departmental and Branch Supervisors

3.3 Remuneration Paid to Directors, President and Vice President for the Most Recent Fiscal Year

i. Remuneration Paid to Directors and Independent Directors

Remuneration bracket table

ii. Remuneration Paid to President and Vice President

3.4. Implementation of Corporate Governance

ii. Operations of the Audit Committee:

(3)Operation of Audit Committee:

iv. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Membership of Compensation and Remuneration Committee:

Corporate Social Responsibility Organizational Structure

(I) Environmental Protection:

(II) Community involvement, contributions to society, community service, and public interest:

(III) Consumer rights:

(IV) Human rights:

(V) Safety and health:

(VI) Certification:

(VII) Response to Climate-related Risks and Opportunities:

Ethical Corporate Management Structure

Thinking Electronic Industrial Co., Ltd.

Statement of Internal Control System

ii. Information on Transfer of Equity: None

IV. Capital Overview

4.1 Capital and Shares

Information for shelf registration: None.

ii. Status of Shareholders

iii. Shareholding Distribution Status

(1) Common shares:

iv. List of Major Shareholders:

4.3 Preferred Shares: None.

4.4 Global Depositary Receipt: None.

4.5 Status of Employee Share Options: None.

4.6 Status of New Restricted Employee Shares: None.

4.8 Financing Plans and Implementation:

V. Operational Highlights

5.1 Business Activities

ii. Industrial Overview

(2) Correlation among Upstream, Mid-stream, and Downstream of the Industry

Upstream Midstream Downstream

(3) Developmental trends for a variety of products

(4) Competition on the market

iii. Research and Development

(1) R&D expenses

iv. Long-term and Short-term Development

(2) Mid-to-long-term Development

5.2 Overview of Market, Production, and Sales

i. Market Analysis

(1)Sales Area

(2)Market share

(3)Future supply and demand and growth on the market

A. Favorable factors:

(c) Sound Financial Standing

B. Unfavorable factors:

(a) Price-cutting race remains

C. Countermeasures:

Manufacturing process flowchart for plug-in resistors

THINKING Annual Report 2020

`興勤` `電` `子工業股份有限` `公司` THINKING E L ECTRONIC INDUSTRIAL C O., LTD.