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 21 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 6, 2022

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, No. 93, Dashun 1st Road, Zuoying District, Kaohsiung City : Department 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 CPAs’ professional fee ................................................................................. 86 3.6 Information on Replacement of CPAs .................................................................................. 86 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 ................................................................................................. 86 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 ................................................................................................................. 87 3.9 Relationship among the Top Ten Shareholders .................................................................... 89 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 ............................................................................................................................... 90 IV.Capital Overview ................................................................................................................. 91 4.1 Capital and Shares ................................................................................................................. 91 4.2 Corporate Bonds .................................................................................................................... 99 4.3 Preferred Shares .................................................................................................................... 99 4.4 Global Depositary Receipt .................................................................................................... 99 4.5 Status of Employee Share Options ........................................................................................ 99 4.6 Status of New Restricted Employee Shares .......................................................................... 99 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions .................... 99 4.8 Financing Plans and Implementation .................................................................................... 99

V.Operational Highlights ...................................................................................................... 100 5.1 Business Activities .............................................................................................................. 100 5.2 Overview of Market, Production, and Sales ....................................................................... 105 5.3 Human Resources ................................................................................................................ 111 5.4 Environmental Protection Expenditure ............................................................................... 111 5.5 Labor Relations ................................................................................................................... 111 5.6 Cyber Security Management ............................................................................................... 115 5.7 Material Contracts ............................................................................................................... 116 VI.Financial Information ....................................................................................................... 117 6.1 Financial Summary for the Past Five Fiscal Years ............................................................. 117 6.2 Financial Analysis for the Past Five Fiscal Years ............................................................... 121 6.3 Audit Committee’s Review Report on the Most Recent Fiscal Year ................................. 127 6.4 Financial Statements for the Most Recent Fiscal Year ....................................................... 128 6.5 Parent Company Only Financial Statements Audited by Independent Auditors for the Most Recent Fiscal Year. .................................................................................................... 128 6.6 The Impact of Financial Difficulties of the Company and its Affiliates ............................. 128 VII.Review and Analysis of Financial Conditions, Operating Results, and Risk Management ...................................................................................................................... 276 7.1 Review and Analysis of Financial Status ............................................................................ 276 7.2 Review and Analysis of Operating Results ......................................................................... 277 7.3 Review and Analysis of Cash Flow .................................................................................... 278 7.4 Impacts of Major Capital Expenditure for the Most Recent Fiscal Year on Financial Operation ............................................................................................................................. 278 7.5 Investment Policy for the Most Recent Fiscal Year, Reasons for Profit (Loss), Improvement Plan and the Investment Plan for the Coming Year ..................................... 279 7.6 Review and Analysis of Risk Management ........................................................................ 279 7.7 Other Material Items ........................................................................................................... 282 VIII.Special Disclosure .......................................................................................................... 283 8.1 Summary of Affiliated Companies ..................................................................................... 283 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 ........................... 292 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 ..................................................................................................................... 292 8.4 Other Matters Requiring Supplementary Information ........................................................ 292 IX.Matters with Important Impacts on Shareholders’ Equity or Prices of Securities 293

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$7,500,455 thousand, growing by 26.69% from the previous year. The consolidated net profit after tax was NT$1,590,623 thousand, growing by 15.21% from the previous year. The EPS was NT$12.31.

ii. Execution of budget: N/A.

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

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Unit: NT$ Thousand
Year
2021 2020
Item
Financial Operating revenue, net 7,500,455 5,920,258
receipts and Gross profit 3,239,431 2,714,605
expenditures Current net profit 1,590,623 1,380,603
ROA 13.50% 14.03%
ROE 20.23% 19.77%
Operating income to paid-in capital ratio 165.85% 143.86%
Profitability
EBT to paid-in capital ratio 168.54% 145.75%
Net profit margin 21.20% 23.31%
EPS after tax (NT$) 12.31 10.81
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iv. Research and development:
(1) Complete the TSM 0201 small-size NTC Thermistor model development in the soft
- cutting process.
(2) Complete the TPM 0201 small-size PTC Thermistor model development.
(3) Complete the development of chips for high-precision medical treatment devices with
- zero gain, including nucleic acid detection, infrared temperature sensors, and
- thermometers, etc.
(4) Complete the development of model of PPTC for automotive grade.
(5) Complete the development of PPTC High 125 degree temperature model.
(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 silver electrodes 4B 6B series 5G high-pass Varistors.
(10) Complete the development of certain models of SMD silver electrodes 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 silver electrodes 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 2022 business plan:
i. Business policy
(1) We continued to apply the management philosophy, “New Concept, New Management, New Technology and New Market”, and aimed to expand our market share by taking advantage of the trend toward electric-powered vehicles, and continue our efforts in new markets including communications, industrial, and healthcare.
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(2) We invested in corresponding equipment and technology to keep up our competitiveness in the market and to secure the market. We also accelerated the new product development and production to increase sales.
(3) We have recruited more sales staff and expanded the scope of business to increase the sales for new products.
ii. Expected sales volume and basis thereof

Electric vehicles, which replace fuel vehicles, and electronization of car controls are currently the vital force driving the electronics industry. The Company has made significant achievements in working in this market. The 5G communication system continues to grow and will become the main message and control platform. The demand for protective components is increasing. There is a great opportunity for the future; the automated and intellectualized industrial application and infrastructure market will drive economic growth in the post-epidemic period. These factors bring an optimistic vision for the business. However, the US-China and global political conflicts are still uncertain factors for economic growth. Based on the major customer's estimates for the new year integrated by the Company, the sales forecast for 2022 is still expected to be higher than the sales in 2021. Apparently, the sales will keep growing in the new year.

iii. Key production and sales policies

(1) Production policy:
A. Supply management:
- (a)Improve the Group’s diversified and multi-point supply chain model and practice multi-source production in five locations on both sides of the Taiwan Strait, hoping to mitigate the risk of 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.
- (b)Improve the SAP system in all factories, connect the information flow of the production execution system, MES, and strengthen the inventory management at various factories in response to the COVID-19 preventive measures to optimize the inventory level and maximize the product turnover.
B. Production management:
- (a)HR: Improve HR training and expertise & stabilization requirements toward key process personnel.
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(b)Machine: Continue to improve the production automation and retire equipment

that consumes high energy and is less efficient.

(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 System-based management, form-based system, and computer-based form to

make the IT-based management for the entire operation.

d-2 Continue to pursue lean production, minimize or 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 COVID-19 and 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.

(2) Sales Policy:
A. Deepen the markets of electric vehicles and automotive electronics, strengthen the development of the 5G and communications, industrial controls, and medical electronics, etc., and increase the sale of niche-type and customized products to generate more profit.
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B. Keep up with the benchmarking customers to develop new cases and keep the development pace in line with the high-end markets.
C. Exercise the existing brand strengths, scale of economy and distribution network to practice the consolidated effects and expand the operating revenue.
D. Continue and expand the digital marketing channels to respond to the new marketing demands in the post-epidemic era.

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.
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.
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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, 2021 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 Safety
勞安室 Office
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 18, 2022

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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/ Gender Date Term Date First Experience Other
Title Place of Name
Age 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 71-80Male - - - - - 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 Male Pingtung University of
R.O.C. Boh Chin: 61-70 - - - - - - - - - - - Science and Technology Note 2 None None None
Ho, Yi-Sheng Manager at the Electronic
Business Department of
Thinking
Department of
R.O.C. Chen, Yen-Hui Male 6/15/2020 3 4/12/1999 37,443 0.03% 37,443 0.03% - - - - Transportation and Communication Note 3 None None None
61-70
Management Science,
Feng Chia University
R.O.C. Chang, Shan-Hui Male 6/15/2020 3 4/12/1999 20,051 0.02% 20,051 0.02% - - - - Department of Business Administration, National Note 4 None None None
61-70
Chengchi University
R.O.C. Huang, Cheng-Nan 51-60Male 6/15/2020 3 6/20/2017 - - - - - - - - Department of Law, National Chengchi Note 5 None None None
University
Female Department of Finance
R.O.C. Chen, Hsiu-Yen 6/15/2020 3 6/20/2017 - - - - - - - - and Taxation, National Note 6 None None None
41-50
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
51-60 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. and Supervisor of Yenyo Technology Co., Ltd.
Note 4: Person in charge of EnWise CPAs & Co., Supervisor of Panbiotic Laboratories Co., Ltd. and Supervisor of Jin Lian Cheng Resources and Technology Co., Ltd.
Note 5: Attorney at Dinghe Law Firm, Director 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.
(1)Major shareholders of institutional shareholders

(1)Major shareholders of institutional shareholders	(1)Major shareholders of institutional shareholders
April 18,2022
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.

(2)Major shareholders of the Company’s major institutional shareholders: None.
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(3)Professional qualifications and independence analysis of directors

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

Number of Other
Criteria Public Companies
in Which the
Professional qualifications and Individual is
Status of independence
experience Concurrently
Serving as an
Name Independent
Director
Boh Chin
Have many years of experience
Investment Co.,
in the management of the
Ltd. -
electronic parts industry, as well
Representative: Sui,
as decision-making leadership.
Tai-Chung
Boh Chin He served as the manager of the
Investment Co., Company's Sales Department,
Ltd. with business and industry -
Representative: Ho, knowledge and international
Yi-Sheng market outlook.
Neither the directors nor
He is the person in charge of
independent directors of
Chen, Yen-Hui Yongxin Bookkeeper and Land -
the Company are subject to
Administrator Firm.
any of the provisions of
He is the person in charge of
Article 30 of the Company
EnWise CPAs & Co. and has
Chang, Shan-Hui Act. -
rich experience in finance and
All the independent
taxation. directors comply with the
He is a practicing lawyer in
provisions of Article 3 of
Dinghe Law Firm and provides
Huang, Cheng-Nan the Regulations Governing -
various legal professional
Appointment of
advice for the Company.
Independent Directors and
She acts as the
Compliance Matter for
executive/financial vice
Public Companies.
president of an emerging
market company and has an
Chen, Hsiu-Yen -
accountant qualification
certificate. She is a financial
expert in the field of accounting
and strategic management.
He has more than ten years of
experience in the banking
Chou, Chi-Wen -
industry, with a complete
financial background.
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15 -

(4) Board diversity and Independence:

A. Diversification Policy Regarding Composition of Board of Directors:

The “Corporate Governance Best Practice Principles” of the Company incorporate the concept of diversity and clearly stipulate the election and appointment of directors of the Company, including but not limited to the basic conditions and values (gender, age, nationality and culture, etc.) and professional background (e.g., law, accounting, industry, finance, marketing, or technology), professional skills, industrial experience and so on. Directors shall generally have the knowledge, skills and quality necessary to perform their duties.

B. Substantial Management Goals:

In order to achieve the ideal goal of corporate governance, the overall capabilities of the board of directors shall include: 1) operational judgment; 2) accounting and financial analysis; 3) operation and management; 4) crisis handling; 5) industry expertise; 6) international market outlook; 7) leadership; and 8) decision-making. There is one female director on the board of directors. In the future, the number of female directors will be gradually increased under the principle of gender equality. Moreover, for the future business development of the Company, at least one member of the board of directors shall have a professional background in finance and accounting, or the experience in related management positions in the electronic parts industry, and shall provide diversified opinions to promote sustainable development for the Company's overall operations.

C. Implementation:

The members of the board of directors of the Company have diverse backgrounds, including professional backgrounds in different industries such as accounting, law and banking. Among them, there are 5 directors who do not hold the position of corporate manager, and their number exceeds half of the seats on the board of directors. They implement the specific goal of the diversified composition of the board members. All the independent directors comply with the provisions of the “Regulations Governing Appointment of Independent Directors and Compliance Matter for Public Companies”. In addition to the director position in the Company, each independent director concurrently serves as an independent director of no more than 3 public entities with no more than 3 consecutive terms of office.

D. Independence of the Board of Directors:

There are 7 current directors, including 3 independent directors (accounting for 42.9% of all the directors). Among them, all the independent directors comply with the regulations of the Securities and Futures Bureau of the Financial Supervisory Commission regarding independent directors. No director is a spouse or relative within the second degree of kinship of another director. All the directors comply with the principle of the independence of the board of directors for corporate governance.

16 -

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

April 18, 2022

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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” of this Annual Report.

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, 2021 Unit: NTD thousands

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Remuneration Relevant Remuneration Received by Directors Who are Also Employees
Total amount of A, B, C Total amount of A, B, C,
and D and a % of the D, E, F and G and a % of
Directors net profit after tax Salary, Bonuses, and the net profit after tax
Base Compensation (A) Pension (B) Allowances (D) Severance Pay (F) Employee Compensation (G)
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
Director Representative of Boh Chin: - - - - 26,000 26,000 - - 26,0001.65% 26,000 1.65% 30,519 30,519 44 44 17,768 - 17,768 - 74,3314.71% 74,331 4.71% None
Ho, Yi-Sheng
Chen, Yen-Hui
Chang, Shan-Hui
Huang, Cheng-Nan
Independent Director Chen, Hsiu-Yen - - - - 800 800 - - 0.05%800 0.05% 800 - - - - - - - - 0.05%800 0.05% 800 None
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 (E.g., serving as a consultant for those other than employees of the parent company/all companies in the financial report/an investee, etc.)to all companies covered in the financial statement: NTD 130 thousand
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
NT$2,000,000 ~ NT$3,499,999
NT$3,500,000 ~ NT$4,999,999
NT$5,000,000 ~ NT$9,999,999 Sui, Tai-Chung Sui, Tai-Chung
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 8 8
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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 2021.

21 -

ii. Remuneration Paid to President and Vice President

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December 31, 2021 Unit: NTD thousands
Total amount of A, B, C and D
Bonuses and Allowances
Salary(A) Pension (B) Employee Compensation (D) and a % of the net profit after Remuneration
(C)
tax from ventures
Companies in other than
Title Name Companies Companies Companies the Companies in the subsidiaries or
The in the The in the The in the The company consolidated consolidated from the parent
company consolidated company consolidated company consolidated financial The company financial company
financial financial financial
statements statements
statements statements statements
Cash Stock Cash Stock
President Ho, Yi-Sheng
46,090 46,090
Vice Hsiao, 3,712 3,712 139 139 24,039 24,039 18,200 - 18,200 - None
2.92% 2.92%
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 2021.

22 -

iii. Employees’ Profit Sharing Bonus Paid to Management Team

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

December 31, 2021 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 - 27,763 27,763 1.76%
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	2021		2020
	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements
Director	1.70%	1.70%	1.69%	1.69%
President and VicePresident	2.92%	2.92%	2.64%	2.64%

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

A total of 7 (A) meetings of the Board of Directors were held in 2021. 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
Investment Co., Ltd.
Chairman 7 - 100.00%
Representative:
Sui, Tai-Chung
Boh Chin
Investment Co., Ltd.
Director 7 - 100.00%
Representative:
Ho, Yi-Sheng
Director Chen, Yen-Hui 7 - 100.00%
Director Chang, Shan-Hui 7 - 100.00%
Independent
Chen, Hsiu-Yen 6 1 85.71%
Director
Independent
Huang, Cheng-Nan 7 - 100.00%
Director
Independent
Chou, Chi-Wen 7 - 100.00%
Director
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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 -

Title	Name	Attendance in person (B)	By Proxy	Attendance Rate (%) (B/A)
Independent Director	Chen, Hsiu-Yen	6	1	85.71%
Independent Director	Huang, Cheng-Nan	7	-	100.00%
Independent Director	Chou, Chi-Wen	7	-	100.00%
Note: The actual attendance rate (%) is calculated by the number of Audit Committee meetings held during the
term in office and the attendance in person.

	Audit Committee Board of directors	Contents of the proposal Independent directors' dissenting opinions, reservations or significant proposals Resolution of the Audit Committee Company’s Response to the Opinion of the Audit Committee
	Fourth meeting of 2021 7/7/2021 Fourth meeting of 2021 7/7/2021	1. Buyback presentation and endorsement of the equity transferred by the Company to the investment company None Approved by all members present It was submitted to the Board of Directors and was approved by all attendingdirectors.
	Fifth meeting of 2021 8/10/2021 Fifth meeting of 2021 8/10/2021	1. Distribution of earnings transferred by the Company to the investment company None Approved by all members present It was submitted to the Board of Directors and was approved by all attendingdirectors.
		2. Cash capital increase from the Company to the investment company, and subscription by original shareholders based on their shareholding (%) None Approved by all members present It was submitted to the Board of Directors and was approved by all attending directors.
		3. Proposed increase in investment subsidiaries from the Company to the investment company None Approved by all members present It was submitted to the Board of Directors and was approved by all attendingdirectors.
	Sixth meeting of 2021 11/9/2021 Sixth meeting of 2021 11/9/2021	1.2022 Audit Plan of the Company None Approved by all members present It was submitted to the Board of Directors and was approved by all attendingdirectors.
	(II) There were no other resolutions that were not approved by the Audit Committee but were approved by two thirds or more of all directors in 2021.

Date	Communicationpoints
1/18/2021	1. Implementation of the Internal Audit Plan during September and December 2020.
3/22/2021	1. Implementation of the Internal Audit Plan in January 2021. 2.2020InternalControlSystem Declaration.
5/11/2021	1.Implementationof theInternal Audit PlanduringFebruaryandMarch 2021.
8/10/2021	1.Implementationof theInternal Audit PlanduringApril and June2021.
11/9/2021	1. Implementation of the Internal Audit Plan during July and September 2021. 2. 2022 Audit Plan.

Evaluation Item	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes No Abstract Explanation
(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 2021, the Company already arranged for directors and managers of the current intake to attend related programs on the compliance with the laws regarding the insider equity trading and on the education for prevention of insider trading and so on, and such information has been declared through the Market Observation Post System as required. Employees are educated according to the policy goal of RBA Responsible Business Alliance Code of Conduct and were tested randomly on March 29, 2021 to help know the communication and implementation results.		None
III. Composition and Responsibilities of the Board of Directors (I) Does the Board of Directors formulated and implemented a diversity policy on membership?		(I) For the educational background, gender, professional qualifications, work experience and diversity of the directors of the Company, please refer to “i. Director Information - III. Corporate Governance Report” of this Annual Report.	None

Evaluation Item	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes No Abstract Explanation
(II)Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?	(II) Besides the Compensation and Remuneration Committee and the Audit Committee that are established as required by laws, the other corporate governance operations are taken care of respective departments according to their function. No other functional committees are set up. In the future, they will be set up as needed.  (III) The Company has established the “Board of Directors' Performance Evaluation Measures”, and conducts performance evaluations on a yearly basis. For the evaluation methods and results, please refer to the “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” of this Annual Report. The performance evaluation results of the board of directors will be used as a reference basis for the selection or nomination of directors. The performance evaluation results of individual directors will be regarded as a reference basis for determining their individual remuneration.	In the future, it will be handled as needed for the developments of the Company and as required by applicable laws and regulations. None
(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?	

	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 regularly evaluate the independence of CPAs?	 (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 21, 2022 to be finalized.		None
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:	None

	ImplementationStatus	ImplementationStatus	Deviations from “the
Evaluation Item	Yes No Abstract Explanation		Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
(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 time limit?	 (III) The Company’s monthly operations, quarterly and annual financial reports are announced and reported in advance of the specified deadline. For the relevant information, please visit the Market Observation Post System and the Company's website.		None
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 “Implementation status of the promotion of sustainable development” 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.	None

Evaluation Item	ImplementationStatus Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation
	(V) The Company has purchased the liabilities insurance for the directors since 2019 and submitted the latest report of the directors after renewing the insurance in 2022.
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) Strengthen the functions of the board of directors and enhance the sustainable value of the enterprise. Gradually increase the number of independent directors and the proportion of female directors. (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. Currently, the English meeting notification, the Handbook, the annual report on the shareholders’ meeting and the annual financial report of 2021 have been available. In the future, efforts will be made to release important news and information and the quarterly interim financial report.

iv. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Membership of Compensation and Remuneration Committee:

(1) Membership of Compensation and Remuneration	(1) Membership of Compensation and Remuneration	(1) Membership of Compensation and Remuneration	Committee:	Committee:
			December31,2021
Criteria Title Name Professional qualifications and experience			Status of independence	Number of other public companies in which the individual is concurrently serving as a Compensation and Remuneration Committee member
Convener Independent Director	Huang, Cheng-Nan	Please refer to the “Professional qualifications and independence analysis of directors” of this Annual Report.	None of the Company’s remuneration committee members has been in or is under any circumstances stated in Article 30 of the Company Act. All the remuneration committee members comply with Article 6 of the “Regulations Governing the Appointment and Exercise of Powers by the Compensation and Remuneration of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange.”	-
Independent Director	Chou, Chi-Wen			-
Other	Tseng, Su-Hui	Master of Business Administration from National Sun Yat-Sen University; former financial manager of Sunfar Computer Co., Ltd. and former vice president of Global Prosperity Fishery Co., Ltd.; accounting and financial analysis and leadership capabilities		-

(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.
45 -

While performing the functions mentioned in the preceding paragraph, 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.
(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
- A total of 3 (A) meetings of the Compensation and Remuneration Committee were held in 2021. The attendances of member s were as follows:

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Attendance Attendance
Title Name in person By Proxy Rate (%) Remarks
(B) (B/A)
Convener Huang, Cheng-Nan 3 - 100.00%
Member Chou, Chi-Wen 3 - 100.00%
Member Tseng, Su-Hui 3 - 100.00%
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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.

46 -

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

How the Company
addressed opinions
Compensation and
from the
Remuneration Contents of the proposal Decisions made
Compensation and
Committee
Remuneration
Committee
Second meeting of 1. Discussion of regulations relevant to the It was approved It was submitted to
the fourth intake compensation and rewards policy, system, as is all attending the Board of
1/18/2021 criteria, and structure of 2021. members. Directors and was
2. The amount of the year-end-bonus for managers approved by all
for 2020. attending directors.
3. 2021 Compensation and Rewards Proposal for
managers.
Third meeting of 1. 2020 remuneration to directors and that to It was approved It was submitted to
the fourth intake employees. as is all attending the Board of
3/22/2021 members. Directors and was
approved by all
attending directors.
Fourth meeting of 1. Distribution of the remuneration to directors for It was approved It was submitted to
the fourth intake 2020. as is all attending the Board of
8/10/2021 2. Distribution of employee remuneration to members. Directors and was
managers for 2020. approved by all
attending directors.
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 Sustainable Development Organizational Structure

The Company’s Corporate Sustainable Development 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 Sustainable Development.

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

Corporate Sustainable
企業社會
Development 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 Sustainable Development Committee

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

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 Sustainable Development. The head of the management center
Group is in 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. Implementation status of the promotion of sustainable development, the differences from the Sustainable Development Best Practice Principles for TWSE/TPEx listed Companies and the reasons therefor:

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I. Does the Company established a governance structure to promote sustainable development, and set up a dedicated (or concurrently) position to promote sustainable development, which is authorized by the Board of Directors to be handled by senior management, and the supervision situation of the Board of Directors?			(I) Based on the Company's vision and mission, the “Corporate Social Responsibility Committee” was established in 2017 and was renamed the “Corporate Sustainable Development Committee” in 2022. It is the highest-level sustainable development decision-making center within the Company, and is dominated by the general manager. It reviews the Company's core operating capabilities together with a number of senior executives in different fields and formulates medium and long-term sustainable development plans. (II) The “Corporate Sustainability Development Committee” serves as a cross-departmental communication platform that integrates superiors and subordinates and promotes cross-departmental communication. The task group identifies sustainability issues related to the Company’s operations and stakeholders, formulates corresponding strategies and work guidelines, prepares relevant budgets and plans for organizational and sustainability matters, and implements annual plans. It also tracks the implementation results to ensure that the sustainable development strategy is fully implemented in the Company's dailyoperations.	None

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(III) The Corporate Sustainability Development Committee takes charge of also promoting and integrating content 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. On March 21, 2022, the Company reported the implementation status of 2021 to the board of directors. The motion content includes: 1) identifying sustainability issues that need attention, and formulating the action plans to deal with them; 2) modifying the goals and policy for sustainability-related issues; and 3) supervising the implementation of sustainable operation matters, and evaluating the implementation status. (IV) The board of directors of the Company regularly listens to the reports of the management team. The management team must propose and submit the corporate strategies to the board of directors. The board of directors must evaluate the feasibility of such strategies, frequently review their progress, and urge the management team to make improvements when necessary.

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II. 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 disclosed information covers the sustainable development performance of the Company in key locations from January 2021 to December 2021. The risk assessment boundary is mainly the Company, including the bases in Taiwan and mainland China. Based on the relevance and degree of influence on major subjects, the subsidiaries Thinking (Changzhou) Electronic Co., Ltd. and Dong Guan Welkin Electronic Co., Ltd. are included in the scope. (II) The Company has formulated the Corporate Sustainable Development Practice Principles, which are published on the Company's website. It is expressly stated that the policy of corporate sustainable development aims to implement and promote corporate governance, develop a sustainable environment, participate in the promotion of social welfare, and strengthen the information disclosure of corporate sustainable development. In addition, the Company received the RBA Responsible Business Alliance Code of Conduct medal in 2019 and called for the management review meeting on January 18, 2022 to discuss the implementation of achievements in 2021.	None

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	Implementationstatus	Implementationstatus	Deviations from “the
Promotion items	Yes No Abstract Explanation		Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	(III)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 ensuring compliance and control over identified risks. For relevant instructions, please refer to “(VIII) Risk Assessment - VII. Other important information that is helpful to understand and promote the implementation of corporate sustainable development” of this Annual Report
III. Environmental Issues (I) Does the company establish proper environmental management systems based on the characteristics of their industries?		(I) The Company has established a complete environmental management system based on the industrial characteristics of netcom; the Company and its subsidiaries, according to the operational needs, have passed ISO 14001 (latest effective period: 2/4/2022 - 2/4/2025) and IECQ QC 080000 (effective period: 2/25/2021 - 2/24/2024) certifications, has conducted the annual greenhouse gas inventory in accordance with ISO 14064-1, tracked and publicly disclosed the emission reduction results on the Company's website.	None

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(II) Does the Company committed to improving the efficiency of resource utilization and using recycled materials with low impact on the environment?			(II)The Company has actively promoted various energy reduction measures, selected the equipment with high energy efficiency and energy-saving design, reduced the energy consumption of enterprises and products, and expanded the use of renewable energy to optimize the energy utilization efficiency. The target in 2021 is to reduce the electricity consumption per unit product by 7% compared with that in 2020. The additional electricity consumption this year is reduced by 1,023,226 KWh (7.1%). In the future (from 2022 to 2026), the target will be to reduce the electricity consumption per unit product by 10% (2026) compared with that in 2021. Renewable energy power generation equipment will be installed and green power will be purchased to improve the utilization efficiency of renewable energy year by year. 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 Company bans the use of hazardous substances in itsproducts. Product	None

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(III) Does the company evaluate the potential risk and oppertunities of climate change on its operations and take actions? (IV) Does the company conduct inspections about greenhouse gas, water consumption, and total weight of waste for last two years, as well as establish company strategies for carbon reduction, management of water consumption, and total weight of waste?	 		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) The Company has evaluated the potential risks and opportunities now and in the future brought about by climate change for enterprises. For relevant instructions, please refer to “(VII) Response to Climate-related Risks and Opportunities: - VII. Other important information that is helpful to understand and promote the implementation of corporate sustainable development” of this Annual Report. (IV) All the factories and subsidiaries of the Company have completed the emissions inventory of ISO 14064 Category I (direct greenhouse gas emissions) and Category II (indirect energy emissions) in 2020.	None None

55 -

		Implementationstatus	Implementationstatus	Implementationstatus	Implementationstatus	Deviations from “the
Promotion items	Yes No	Abstract Explanation				Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Greenhouse gas emissions in the latest two years: Unit: metric ton,CO2e Year Category I Category II Emissions per unit product (kgCO2e /KPCS) 2021 141.477 6,065.285 1.42 2020 130.175 5,412.216 1.55 The greenhouse gas emissions of Category I and Category II totaled 6,206.762 metric tons of CO2e in 2021, mainly from the use of electricity in the manufacturing process of Category II, accounting for 97.72% of the previous emissions. The greenhouse gas emissions per unit product in 2021 was 1.42 kg CO2e/KPCS, which was lower than 1.55 kg CO2e/KPCS in 2020. The main emission reduction plans and measures include the replacement of IE4 energy-saving inverter air compressors and dryers and improvement of the main air compressor pipelines in the manufacturing process to achieve energy saving and carbon reduction performance. Furthermore, in response to climate change and to promote sustainable corporate operation, the Company will continue to negotiate the purchase of renewable energy and invest in the development of energy-saving products in the future. It is expected to achieve the target of “100% green electricity at office bases and renewable energy as 20% of the production plants' electricity consumption.”

		Year	Category I	Category II	Emissions per unit product (kgCO2e /KPCS)
		2021	141.477	6,065.285	1.42
		2020	130.175	5,412.216	1.55

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		Implementationstatus	Implementationstatus	Implementationstatus	Implementationstatus	Deviations from “the
Promotion items	Yes No	Abstract Explanation				Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Water consumption in the latest two years: Unit: metric ton Year Total water consumption Total tap water consumption Total water recovery volume 2021 56,870 35,524 21,346 2020 58,613 34,679 23,934 The Company recycled the water discharged from the pure water RO system to the cooling water tower of the air conditioner. The cooling water used in the manufacturing process for RO cutting was collected and treated by the newly added UF/RO pure water equipment and recycled back to the manufacturing process for further utilization. The amount of water recovered in 2020 was 23,934 tons, with a recovery rate of 40.8%. The amount of water recovered in 2021 was 21,346 tons, with a recovery rate of 37.5%. The decrease in the recovery rate in 2021 was mainly due to the undesirable efficiency of UF/RO membranes. The Company has replaced related equipment in 2022. It is expected that the annual recovery rate of 2022 can be upto 42%.

		Year	Total water consumption	Total tap water consumption	Total water recovery volume
		2021	56,870	35,524	21,346
		2020	58,613	34,679	23,934

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	Implementationstatus	Implementationstatus	Implementationstatus
Yes No	Abstract Explanation
	Waste output in the last two years:

	Year	Hazardous waste	Non-hazardous waste	Output per unit product (KG/PCS)
	2021	20.05	30.15	11.47
	2020	16.98	32.80	13.91

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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 recognizes and voluntarily follows the internationally recognized human rights standards such as the “United Nations Guiding Principles on Business and Human Rights”, the International Labor Organization's “Declaration of Fundamental Principles and Rights at Work” and the “Universal Declaration of Human Rights”, and abides by relevant labor laws and regulations. The Company has established the “RBA Responsible Business Alliance Code of Conduct Manual” and always respects the guarantees set forth in the human rights convention. The Company has won the RBA Code of Conduct medal since 2019, implemented the RBA Responsible Business Alliance Code of Conduct Manual, and regularly held labor-management meetings on a quarterly basis. Please visit the company's website for relevant information and certificates. The Company's human rights management policy and specific plans are summarized as follows:	None

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Implementation status Deviations from “the
Sustainable Development
Promotion items Best-Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed
Companies” and Reasons
Human Rights
Specific Plans
Management Policy
1. Provide a safe and 1. According to the relevant
sound work instructions of E3-G341
environment. Measures for Safety and
Occupational Health
Protection Management,
provide protective
measures for the work
environment and personal
safety of employees.
2. Help employees 2. There was a 70min break
maintain physical and at noon. There was a
mental health and 10min break within the
work-life balance. factory respectively at
10:00 am and 3:00 pm.
Colleagues were given
adequate rest time.
3. Implement the policy 3. Reward and bonus system
of high salary, for employees
high-speed 4. Complete and smooth
development and promotion channels
delicate care.
Prohibiting any forced Implementing the vacation
labor and abiding by system and encouraging
labor laws and colleagues to focus on the
regulations promulgated work-life balance
by local governments
Investigating whether the Raw material suppliers filled
suppliers have in the self-assessment form
implemented the human attached to the RBA
rights policy Responsible Business
Alliance Code of Conduct
Manual; the recycling rate in
2021 was up to 100%.
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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?			(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. Employees’ Remuneration: The Company's year-end bonus system was on the basis that its EPS should not be lower than 30%. After considering employees’ seniority and annual performance assessment, the compensation was allocated to all colleagues, motivating them to work together for the Company's goals. For the remuneration system for employees, please refer to (vii) Employees’ and Directors’ Compensation - “IV. Capital Overview” of this Annual Report.	None

61 -

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Welfare Measures for Employees: The Company has set up an Employee Welfare Committee. The Company allocates about NT$10 million as employee welfare every year to plan and provide various excellent benefits for employees, such as: employee travel subsidies, professional functional course subsidies, birthday gift certificates, marriage allowances and funerals allowances, etc. In addition, the Company also provides colleagues with free physical examination plans, employee family days and other benefits. For the vacation system, there are two days off per week; special vacations are granted in accordance with the Labor Standards Act . If a colleague needs a longer vacation in case of childcare, serious injury/illness, severe accident, etc., he/she can also apply for leave without pay to meet the needs for personal purposes and family care. Workplace Diversity and Equity: To realize that male and female employees have equal pay for the same jobs and equal opportunities for promotion, and maintain more than 40% of female

62 -

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executive positions to promote sustainable and joint economic growth; In 2021, the average proportion of female employees was approximately 50%, and that of female senior executives was 43%. The Company attaches great importance to the rights and benefits of employees, shares profit and earnings with them, and maintains a good work environment, including comprehensive physical and psychological care for all ethnic groups. It also employs the disabled and ensures that employees of all genders can work with peace of mind. Overall Remuneration Policy: The Company has participated in market salary surveys every year and adjusted salaries according to the market salary levels, economic trends and personal performance to maintain the overall salary competitiveness. In 2021, the annual average salary adjustment rate of the Company's supervisory and non-supervisory positions in Taiwan was 2.2%, and the maximum rate for individuals was up to 20%.

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(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?			(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 training are implemented periodically. 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. 6. All the plants and subsidiaries of the Company have obtained ISO 45001 certification. (latest effective period: 2/25/2022 - 2/25/2025)	None

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Occupational Safety and Health Policy: The Company formulates policies in accordance with the Occupational Safety and Health Act and the regulations of customers and related groups, and respects the requirements of relevant stakeholders for occupational safety and health, so as to create a healthy and agreeable workplace. The Company takes disaster protection and prevention as the core concept, uses appropriate management tools, mature technology and available resources to integrate occupational safety and health issues within the factory, propose effective countermeasures, persistently improve and promote the occupational safety culture, and strengthen the protection management of operation staff. It also invests resources to strengthen occupational disease prevention and create a zero-hazard environment. In addition, the Company has established quantitative indicators to expand occupational safety and health activities to products and related services, improve the overall occupational safety and health performance, and effectively control risks.

65 -

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Implementation status Deviations from “the
Sustainable Development
Promotion items Best-Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed
Companies” and Reasons
In 2021, there was one occupational accident, with 1
person, accounting for 0.196% of the total number of
employees at the end of 2021. The zero-accident target
was not achieved. After thorough review and
improvement measures, the Company immediately
modified the automatic inspection items, the inspection
of interlocking components for machine safety, restated
its safety and life-saving terms, and urged the
supervisors to pay attention to the physical and mental
states of colleagues, so as to ensure their safety at work
Labor Working Environment Monitoring:
In order to protect workers from the hazards of harmful
substances in the workplace and provide them with a
healthy and comfortable work environment, the work
environment monitoring is carried out twice per year to
gradually understand the actual exposure of workers.
Education, Training and Communication for
Labor Safety:
Number of
Year Shift Training hours
trainees
2021 35 1,096 3,254h
2020 27 886 3,043h
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(IV) Does the company provide its employees with career development and training sessions? (V) Does the Company comply with relevant laws and regulations and international standards regarding such matters as customer health and safety, customer privacy, marketing and labeling of products and services, and establish relevant consumer or customer rights protection policies and complaint procedures?	 		(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. Including new employees training, professional advanced training, supervisor training and the like, assistance to the colleagues in persistently learning and growing through multiple learning methods, the introduction of relevant training courses on corporate ethics and belief development to cultivate colleagues' key capabilities. In 2021, a total of 500 employees completed the career training, with total training hours of 6,142. During annual performance interviews, supervisors and employees discuss and set up their own annual competence development plans. Through regular review and feedback, the employees are enabled to create the best 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-filing access is provided.	None

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(VI) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights? If so, describe the results.			(VI) Supplier Relations: The Company performs supplier evaluations periodically. According to the RBA Responsible Business Alliance Code of Conduct, suppliers are required to sign the “Social Responsibility Questionnaire” and the “Supplier Social Responsibility (SA8000)/RBA/Integrity Commitment.” The Company determines the supplier selection criteria regarding environmental protection, human rights, safety, health and sustainable development, as well as its requirements and expectations for suppliers in terms of environmental, safety and health risks, prohibition of child labor, labor management, basic rights of labors for zero hazards, ethical codes and integrity management, so as to facilitate joint improvement of corporate sustainable development. In the event that major suppliers of the Company violate its corporate sustainable development 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 such case and none occurred in 2021. The Company has established a supplier coaching project. Through supplier selection, audit coaching, performance evaluation and training, and based on cooperation, the sustainable requirements have been implemented in the daily management of the supply chain. All the key raw material suppliers of the Company have met the following conditions in 2021.	None

68 -

		Implementationstatus	Implementationstatus	Deviations from “the
Promotion items	Yes No		Abstract Explanation	Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Supplier Evaluation	All the suppliers must pass the supplier assessment and comply with the Supplier Code of Conduct.
			The suppliers of raw materials related to the manufacturing process must pass the ISO 9001 quality management system certification.
			Factory and related operation contractors must obtain the ISO 45001 occupational safety and health management system certification.
			Suppliers shall obtain valid factory registration certificates and the ISO 14001 environmental management certifications issued by the government based on their business categories.
		Supplier Audit	The Company has established an audit team and a coaching team to track and improve the progress of suppliers' defects, jointly improve quality and technology, strengthen the environmental protection, safety and health performance, and introduce the automation technique to increase the production capacity.

69 -

Promotion items	Implementationstatus Deviations from “the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Explanation
V. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as Sustainable Development reports? Do the reports above obtain assurance from a thirdpartyverification unit?	 The Company is currently not within the scope of application for preparing the Sustainable Development Report defined in laws and regulations and hence has not prepared such a report. In the future, it will be handled as needed for the developments of the Company and as required by applicable laws and regulations.
VI. If the Company has established its own Sustainable Development principles according to the Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies, how are operations different from the established principles? The Company has formulated the “Corporate Sustainable Development Practice Principles” and disclosed them on the Company's website – Investor Relations. There is no significant difference between the relevant corporate sustainable operation and the “Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies.”

Promotion items

Implementationstatus
Deviations from “the
Sustainable Development
Best-Practice Principles for
TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation

V. Does the company reference internationally
accepted reporting standards or guidelines,
and prepare reports that disclose
non-financial information of the company,
such as Sustainable Development reports?
Do the reports above obtain assurance from
a thirdpartyverification unit?


The Company is currently not within the scope of
application for preparing the Sustainable Development
Report defined in laws and regulations and hence has not
prepared such a report.
In the future, it will be handled
as needed for the developments
of the Company and as
required by applicable laws and
regulations.

VI. If the Company has established its own Sustainable Development principles according to the Sustainable Development Best-Practice Principles for
TWSE/TPEx Listed Companies, how are operations different from the established principles?
The Company has formulated the “Corporate Sustainable Development Practice Principles” and disclosed them on the Company's website –
Investor Relations. There is no significant difference between the relevant corporate sustainable operation and the “Sustainable Development
Best-Practice Principles for TWSE/TPEx Listed Companies.”

70 -

VII. Other Important Information that is helpful to understand and promote the implementation of corporate sustainable development: (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.

Public Welfare Activities of Thinking Education Foundation in 2021: Adopting the visually impaired students of HUEI-MING SCHOOL FOR BLIND CHILDREN; sponsoring the purchase of new digital teaching equipment for XinXing Elementary School in Kaohsiung City; providing the resources that schools and school-children really need, and participating in the public welfare program titled “Sowing the Seeds of Reading - Building a Bright Future for Children” sponsored by Global Views Educational Foundation; donating juveniles/children's magazines to the elementary schools in rural areas; offering related funds for disadvantaged students of Tainan National University of the Arts; sponsoring the Taiwan Soloist Concert and 2021 New Year's Concert - Swan Lake, etc.; sponsoring the local Teacher Chang Youth Guidance Center in Kaohsiung (“Teacher Chang Youth Guidance Center” has developed in Kaohsiung for more than 40 years and has persistently promoted the importance of mental health education.); Other activities include: sponsoring the Wild Bird Society's Program of Jacanas Return to the Meinong Lake wetlands for bird restoration; sponsoring Kaohsiung Public Library’s “Southeast Asia Mobile Book Car Activity Plan” targeting the vast number of international migrant workers in Kaohsiung and aiming to cultural accessibility and promoting understanding and integration of ethnic groups; calling on the colleagues in the Company to actively participate in the charity fair held by the Genesis Social Welfare Foundation, denote all the proceeds to this foundation, and enthusiastically participate in other public welfare activities.

(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.

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(V) Safety and health:	(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.
(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:
	Climate risks Unstable water and electricity supply	Potential financial impacts Production was impacted and the operating cost increased	Climate opportunities Construction of green buildings To improve water resource efficiency and utilization	Potential financial impacts To reduce the operating water and electricity costs To reinforce climate resilience and to reduce impacts of a disaster on the production		Response in 2021 Solar power generation facilities planned for the new factory and replacement with energy-saving air compressors Recycling of process wastewater, with a recovery rate of >45%
	Cost of developing water-saving processes	Increased cost of developing water-saving processes	Reduced use of water resource	To reduce the cost of operational water resource and to streamline the manufacturing procedure for increased profits		Manufacturing process design changes to increase the soft cutting process ratio and reduce water consumption
	Typhoons, floods Drought	Production suffering impacts to result in financial losses and a decline in revenue	To improve resistance against natural disasters	To reinforce climate resilience and to reduce chances of interrupted operations and possible losses		The foundation of the new factory was raised by 50 cm, and all the facilities were within the factory building, reducing the chance of exposure to disasters. Rainwater recycling and water status monitoring mechanism for new plants
	Rising temperature	Increased electricity consumption, costs, and carbon emissions	Promoting green, energy conservation, and carbon reduction	To conserve electricity and reduce cost		Mean electricity saving rate of >1% a year for the energy conservation project

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Major issue	Risk assessment item	Explanation
Environment	Environmental Impact and Management	1. Through the implementation of process safety management and institutionalized management cycle, the Company has effectively reduced pollution emissions and impacts on the environment. 2. The Company has obtained the “ISO 14001” environmental management system certification and regularly maintains certification. 3. The Company's climate risk identification process, through the inter-departmental discussion on climate risks and opportunities, identified a total of 5 opportunities and 5 risks. 4. According to ISO 14064-1, the Company regularly checks the greenhouse gas emissions, reviews the impact on its operations, and continuously takes carbon reduction measures according to the results of the carbon inventory to effectively reduce the emission risk of Scope 1 and the indirect greenhouse gas emissions of Scope 2 due to the use of electricity. 5. The annual internal audit plan has been made regarding the Company's compliance with various relevant environmental laws and regulations, and the audit result indicates that each operating process complies with regulations.
Society	Occupational safety	1. In 2021, all the factories and subsidiaries of the Company have completed the “ISO 45001 Occupational Health and Safety Management System” certification. 2. Fire drills and labor safety education and training are held on a yearly basis to develop employees' abilityto respond to emergencies and self-safetymanagement.
	Product safety	1. The Company's products comply with government regulations, decrees and the EU RoHS regulations, and do not contain any hazardous substances. Meanwhile, in order to ensure the quality of customer service, the Company has set up a customer service line and communication website. It actively conducts customer service satisfaction surveys on a yearly basis to strengthen the cooperative relationship with customers. 2. In order to transfer the risk of commodity liability, reduce property losses and improve product safety, the Companyhas covered theproduct liabilityinsurance of USD 5 million.

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Major issue	Risk assessment item	Explanation
Corporate governance	Socioeconomic and compliance	1. 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. 2. The applications for patents have been filed regarding the products developed by the Company accordingto the Patent Law toprotect the rights and interests of the Company.
	Strengthening the Functions of Directors	1. Plan relevant training subjects for directors, and provide directors with the latest regulations, system developments and policies every year. 2. Purchase the directors’ liabilities insurance for directors to protect them from any lawsuits or claims.
	Communication with Stakeholders	1. In order to prevent such case that stakeholders’ positions are different from the Company's position, resulting in misunderstandings and risks of business operations or lawsuits, the Company analyzes key stakeholders and important issues every year. 2. Establish various communication channels, actively communicate, and reduce conflicts and misunderstandings. Set up an investor mailbox, which will be handled and responded to by the spokesperson.

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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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Implementation Status Deviations from “the Ethical
Corporate Management
Evaluation Item Best-Practice Principles for
Yes No Abstract Explanation
TWSE/TPEx Listed Companies”
and Reasons
----- End of picture text -----

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.	None

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	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.		None
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 2021 implementation status on March 21,2022.	None

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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	None
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 Regulations 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, 47 sessions in total, in 2021 and 1,549 of its people attended self-organized or outsourced educational trainings totaling 4,201 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.	None

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	Implementation Status Deviations from “the Ethical
Evaluation Item	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 Sustainable Development on the company website. None
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.

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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 Sustainable Development Best-Practice Principles, and the Ethical Corporate Management Best-Practice Principles, among others. To make inquiries, visit the exclusive section for “Corporate Governance” on the company website

(https://www.thinking.com.tw/tw/investor.php?id=13).

viii. Other important information that is sufficient to boost knowledge of corporate governance:

None.

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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 21, 2022

For the Company's internal control system of 2021, 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.
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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 December 31, 2021 (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 21, 2022 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.
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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) The 2021 Regular Shareholders’ Meeting of the Company was held on July 29, 2021 at Zhuang Jing Hall, No. 600, JiaChang Rd., Nanzi Dist., Kaohsiung City. The resolutions and implementation status of the shareholders attending the meeting are as follows:
  - A. Approval of 2020 Business Report and Financial Statements.
  - B. Approval of distribution of earnings for 2020.
    - Implementation: September 2, 2021 was set to be the ex-dividend record date and September 17, 2021 the payment date. (NTD 5.5 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 Auguest 5, 2021 and it was announced on the company website.
- (2) Important decisions of the Board of Directors:
Item No. Date Important decision 1 1/18/2021 1. Assignment of directors and supervisors for the subsidiary, Jiang Xi Thinking Electronic Co., Ltd.
1. Extension of lines of credit for financing with financial institutions and trading of derivatives
1. Discussion of regulations relevant to the compensation and rewards policy, system, criteria, and structure of 2021
1. The amount of the year-end-bonus for managers for 2020 5. Monthly salary structure, amount paid, and expected pension appropriation for managers for 2021
1. Extension of liability insurance coverage for directors (including independent directors)
1. Amendment to the budget for the investment in building new facilities in Nanzi Export Processing Zone
1. Revision of the Rules of Procedure for Board of Directors’ Meetings
1. Revision of the Scope of Responsibilities and Rules for Independent Directors, the Audit Committee Organic Rules, and the Board of Directors Performance Evaluation Guidelines
2 3/22/2021 1. 2020 Internal Control System Declaration 2. 2020 remuneration to employees and that to directors 3. 2020 Financial Report 4. 2020 Business Report
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Important decision

Item No.

Date

Earnings distribution proposal for 2020
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

		6. 7. 8.	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
		9.	Convening of shareholders’ meeting
3	7/7/2021	1.	Buyback presentation and endorsement of the equity transferred
			by the Company to the investment company (Yenyo Technology
			Co., Ltd.)
		2.	Application for an increase in the bank financing facilities
		3.	Change in the cause for convening the shareholders’ meeting
4	8/10/2021	1.	Distribution of dividends in cash
		2.	Distribution of remuneration to directors (including independent
			directors) for 2020
		3.	Distribution of employee remuneration to managers for 2020
		4.	Earnings distribution of the investee (Guangdong Welkin
			Thinking Electronic Co., Ltd.)
		5.	Cash capital increase of the investee (Dong Guan Welkin
			Electronic Co., Ltd.), and subscription by original shareholders
			based on their shareholding (%)
		6.	Investment increase proposal of the investee (Dong Guan
			Welkin Electronic Co., Ltd.)
5	11/9/2021	1.	2022 Audit Plan
		2.	Remuneration to members of the Compensation and
			Remuneration Committee for 2021
6	1/18/2022	1.	Extension of lines of credit for financing with financial
			institutions and trading of derivatives
		2.	Discussion of regulations relevant to the compensation and
			rewards policy, system, criteria, and structure of 2022
		3.	The amount of the year-end-bonus for managers for 2021
		4.	Monthly salary structure, amount paid, and expected pension
			appropriation for managers for 2022
7	3/21/2022	1.	2021 Internal Control System Declaration
		2.	2021 remuneration to employees and that to directors
		3.	2021 Financial Report
		4.	2021 Business Report
		5.	Earnings distribution proposal for 2021
		6.	2022 Operational Plan

85 -

Important decision

Item No. Date

Independence and suitability assessment of CPAs and delegation and rewards of CPAs for 2022 financial statements and tax reporting.
Assignment of directors for the subsidiary, Yenyo Technology Co., Ltd.
Revision of the Procedures for Acquisition or Disposal of Assets
Revision of the Procedures for Engaging in Derivates Trading
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.
3.5 Information on CPAs’ professional fee:

					Unit:NT$thousands	Unit:NT$thousands
Accounting Firm	Name of CPA	Period Covered by CPA’s Audit	Audit Fee	Non-audit Fee	Total	Remarks
Deloitte & Touche	Chiang, Jia-Ling	1/1/2021 -12/31/2021	4,520	668	5,188	Note
	Wu, Chiu-Yen

Note: The scope of non-audit professional paid service includes the transfer of pricing worth NTD 400 thousand, disbursement fees worth NTD 153 thousand, assistance in Investment Commission affairs worth NTD 60 thousand, and direct deductions worth NTD 55 thousand.
- i. 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.
- ii. 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.
86 -
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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2021 2022 (as of April 18)
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 - - - -
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----- Start of picture text -----

2021 2022 (as of April 18)
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 2)
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
----- End of picture text -----

Note 1: Major shareholders are those holding more than 10% of the overall shares of the Company. Note 2: Dismissed on March 31, 2021

Note 3: 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

88 -

3.9 Relationship among the Top Ten Shareholders

April 18, 2022

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

Shareholding Name and Relationship Between the
Spouse’s/minor’s
Current Shareholding by Nominee Company’s Top Ten Shareholders, or
Shareholding
Name Arrangement Spouses or Relatives Within Two Degrees Remarks
Shares % Shares % Shares % Name Relation
Yih Chin
Relatives within
Boh Chin Investment Co., Ltd.
second degree of
Investment Co., Ltd. 27,178,247 21.21% - - - - SuSuii,, T Wan-Niai-Chung kinship of the representative of
Representative: Sui, Chieh-Heng Boh Chin
Sui, Tai-Chung
Sui, Chung-Hua Investment Co., Ltd.
Boh Chin Relatives within
Yih Chin
Investment Co., Ltd. second degree of
Investment Co.,
Ltd. 15,871,153 12.39% - - - - Sui, Tai-Chung kinship of the
Chairman of Yih
Person in charge:
Chin Investment
Sui, Chung-Hua Sui, Chung-Hua
Co., Ltd.
Chang, Jui-Min 8,417,000 6.57% - - - - None None
Boh Chin
Investment Co., Ltd.
Yih Chin Relatives within
Sui, Tai-Chung 4,080,862 3.19% 1,474,733 1.15% - - Investment Co., Ltd. second degree of
Sui, Wan-Ni kinship
Sui, Chieh-Heng
Sui, Chung-Hua
Boh Chin
Investment Co., Relatives within
Sui, Wan-Ni 3,465,829 2.71% - - - - Ltd. second degree of
Sui, Tai-Chung kinship
Sui, Chieh-Heng
Boh Chin
Investment Co., Relatives within
Sui, Chieh-Heng 2,484,469 1.94% - - - - Ltd. second degree of
Sui, Tai-Chung kinship
Sui, Wan-Ni
FPA Global
Opportunity
Fund
Investment 2,034,000 1.59% - - - - None None
Account in the
trusteeship of
CitiBank
Boh Chin
Investment Co., Ltd. Relatives within
Sui, Chung-Hua 1,763,719 1.38% - - - - Yih Chin second degree of
Investment Co., Ltd. kinship
Sui, Tai-Chung
Standard
Chartered Bank
Hosting the
Fidelity Puritan. 1,754,000 1.37% - - - - None None
Trust: Fidelity
Low-Priced
Stocks Fund
LGT in the
trusteeship of 1,640,000 1.28% - - - - None None
Standard
Chartered Bank
----- End of picture text -----

89 -

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

Date: December 31, 2021 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
25,732,508 63.76 647,012 1.60 26,379,520 65.36
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
- - 3,244,188 100.00 3,244,188 100.00
(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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90 -

IV. Capital Overview

4.1 Capital and Shares

i. Source of Capital

Unit: Share; NTD

==> picture [552 x 638] intentionally omitted <==

----- 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
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
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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
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
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92 -

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93 -

Unit: Share

				Unit: Share
Share Type		Authorized Capital		Remarks
	Issued Shares	Un-issued Shares	Total Shares
Common shares	128,112,726	71,887,274	200,000,000	TWSE-listed

Information for shelf registration: None.

ii. Status of Shareholders

April 18,2022	April 18,2022	April 18,2022	April 18,2022	April 18,2022	April 18,2022	April 18,2022
Item Government Agencies Financial Institutions Other Juridical Persons Natural Persons Foreign Institutions & Natural Persons Total
Number of Shareholders - - 53 10,674 126 10,853
Shareholding (shares) - - 45,638,533 64,888,626 17,585,567 128,112,726
Ratio (%)	-	-	35.62	50.65	13.73	100.00

iii. Shareholding Distribution Status

(1) Common shares:

Denomination per share: NTD 10; April 18, 2022

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Number of Shareholding
Class of Shareholding Ratio (%)
Shareholders (Shares)
1 ～ 999 2,800 478,362 0.37
1,000 ～ 5,000 6,871 12,619,539 9.85
5,001 ～ 10,000 608 4,873,235 3.80
10,001 ～ 15,000 164 2,064,885 1.61
15,001 ～ 20,000 99 1,832,303 1.43
20,001 ～ 30,000 82 2,113,904 1.65
30,001 ～ 40,000 46 1,620,838 1.26
40,001 ～ 50,000 23 1,055,651 0.82
50,001 ～ 100,000 67 4,639,143 3.62
100,001 ～ 200,000 31 4,491,754 3.51
200,001 ～ 400,000 31 8,116,871 6.34
400,001 ～ 600,000 10 4,811,959 3.76
600,001 ～ 800,000 5 3,520,169 2.75
800,001 ～ 1,000,000 1 819,101 0.64
1,000,001 or over 15 75,055,012 58.59
Total 10,853 128,112,726 100.00
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(2) Preferred shares: None.

94 -

iv. List of Major Shareholders:

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

April 18, 2022
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
2,034,000 1.59
Account in the trusteeship of CitiBank
Sui, Chung-Hua 1,763,719 1.38
Standard Chartered Bank Hosting the
Fidelity Puritan. Trust: Fidelity Low-Priced 1,754,000 1.37
Stocks Fund
LGT in the trusteeship of Standard Chartered
1,640,000 1.28
Bank
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Note: Major shareholders are those holding 5% or more of the Company’s equity or Top 10 shareholders.

95 -

v. Market Price, Net Worth, Earnings, and Dividends per Common Share

Unit: NTD$

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2022
Items 2020 2021 (as of
March 31)
Highest 164.50 257.00 162.00
Market Price per
Lowest 59.30 141.00 122.50
Share (Note 1)
Average 101.56 181.47 143.22
Net Worth per Before Distribution 57.02 63.68 68.35
Share (Note 2) After Distribution 51.52 57.38 (Note 6) Undistributed
Weighted Average Shares
Earnings per 128,113 128,113 128,113
(thousand shares)
Share
Earnings Per Share 10.81 12.31 3.10
Cash Dividends 5.50 6.30 (Note 6) -
Dividends per - - - -
Share Dividends
Share - - - -
Accumulated Undistributed Dividends - - -
Price / Earnings Ratio (Note3) 9.40 14.74 -
Return on
Price / Dividend Ratio (Note 4) 18.47 28.80 -
Investment
Cash Dividend Yield (Note 5) 5.42 3.47 -
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Note 1: The annual mean market price of each year is calculated by the trading value and trading volume each year. The information is from the website of Taiwan Stock Exchange Corporation (TWSE).

Note 2: Based on the number of shares already issued at the end of the year and information provided according to the distribution decided by the board of directors or through the shareholders’ meeting in the 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 2021 are NTD 6.30 per share in cash yet it is pending approval through the 2022 General Shareholders’ Meeting.

96 -
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 807,110,174 is intended to be set aside as shareholder bonus from the distributable earnings of 2021, that is, NTD 6.30 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.

97 -
(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 2021 earnings are as follows:
- (a) Distribution of the remuneration to employees in cash worth NTD 91,100 thousand.
- (b) Distribution of the remuneration to directors worth NTD 26,800 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 21, 2022
- 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 2021 Financial Statements" of this Annual Report.

98 -

ix. Buy-back of Treasury Share: None.

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.

99 -

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
E. CC01080 Electronic Parts and Components Manufacturing
F. CC01110 Computer and Peripheral Equipment Manufacturing
G. CC01990 Other Electrical Engineering and Electronic Machinery Equipment Manufacturing
H. CD01030 Motor Vehicles and Parts Manufacturing
I. CE01010 General Instrument Manufacturing
J. F401010 International Trade
K. ZZ99999 All business items that are not prohibited or restricted by law, except those subject to special approval
(2) Revenue Distribution:

evenue Distribution:	evenue Distribution:	evenue Distribution:
December 31,2021
Major Divisions Total Sales in Year (%)of Total Sales
Protection Element 7,201,871 96.02
Other 298,584 3.98
Total	7,500,455	100.00

(3) Main products:
A. Thermistor
B. Varistor
C. Temperature sensor
(4) New products and services planned to be developed:
A. Development of automobile high-temperature SMD thermistors and varistors in varying specifications
B. Development of certain models of SMD high-pass varistors with internal silver electrodes for 5G applications
C. Development of Internal Silver Electrode 1206 and SMD 1210 high-voltage and high-pass varistors
D. SMD 0603 ultra-low capacity electrostatic discharge protector specifications for automobiles
E. SMD 0201 small-size NTC thermistors
F. High-temp glass seal type NTC thermistors for automobiles resistant to temperatures up to 300°C
G. Development of anti-metal migration SMD thermistors
H. Development of low-B and high-resistance NTC thermistors
100 -
I. Certain models of SMD high-frequency thermistors for 5G applications
J. Micro high-responding speed glass seal type NTC thermistors
K. Micro, highly stable, high-precision medical NTC thermistors
L. Automobile sensors
M. Development of SMD PTC ultra-low resistance thermistors in the BME process
N. SMD PTC thermistor over-current protectors for automobiles
O. Development of SMD 0201 PTC thermistor over-current protectors in the soft cutting process
P. Glass seal type NTC thermistors resistant to temperatures up to 350°C for automobile
Q. Nano materials for SMD varistors of special specifications
R. Protective coatings for nano materials of SMD thermistors
S. Development of PPTC product series for automotive grade
T. Development of PPTC product series resistant to temperatures up to 125 °C

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 application scenarios in the population of passive electronic components and may be also called “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 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 (telecommunication base stations, machine room equipment, optic fiber networks, mobile phones and customer premise equipment, 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, etc.), illumination equipment (LED indoor/outdoor and roadside illumination, street lamp controllers, etc.), industrial products (lightning protection products, inverters, servomotors, industrial controllers, contactors, actuators, digital meters, energy storage equipment, etc.), emerging electric vehicles (battery packs, electric motors, on-board chargers, etc.), and internal combustion engine 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 lamps, travel information and instruments, and automatic driving, etc.), medical care (PCR biochemical testing equipment, thermometers, blood glucose machines, medicine storage cabinets, etc.). They are the main markets.

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.

101 -

(2) Correlation among Upstream, Mid-stream, and Downstream of the Industry Primary products of the Company include NTC thermistors, PTC thermistors, and zinc oxide varistors (MOV and MLV), and temperature sensor with a thermistor as the core. 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 thermistors, and zinc oxide varistors (Varistor) as well as ESD protectors. Given the effort to constantly reinforce product specifications, the demand of a majority of customers can be fulfilled. The surface mount NTC thermistor, whose resistance gradually decreases as temperature rises, in electronic products where heat treatment is increasingly important, can quickly and accurately respond to temperature changes in

102 -

the system. Moreover, the surface mount PTC thermistor can provide more diversified circuit control methods for customers' circuit design. Meanwhile, the miniaturized and high-performance varistor and electrostatic protector can provide protection before surge overvoltage or static electricity results in any damage.

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 Resistance, 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, Customers’ product models with protection elements should also have the safety certification. 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 2021: NTD 298,071 thousand.

R&D expenses spent as of the first quarter of 2022: NTD 79,785 thousand.

103 -
(2)Successfully developed technologies or products
A. Complete the SMD 0201 small-size NTC Thermistor model development in the soft cutting process
B. Complete the SMD 0201 small-size PTC Thermistor model development in the soft cutting process
C. Complete the development of chips for high-precision medical treatment devices with zero gain, 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. Complete the development of certain TVM Silver Electrode SMD 4B 6B series 5G high-pass varistors
J. Complete the development of certain models of SMD silver electrodes 1206 high-pass varistors
K. Complete the development of silver electrodes 1210 SMD high-pass varistors for LED
L. Complete silver electrode 2220 varistors resistant to 5000V 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.

Improvement of Serviceability, 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.

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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:

Unit: NTD Thousand

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

Year
2021
Net sales %
Sales Area
Asia 5,678,699 75.71
Europe 767,009 10.23
Export
sales
Other 506,413 6.75
Subtotal 6,952,121 92.69
Domestic sales 548,334 7.31
Total 7,500,455 100.00
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(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. In the same way of estimation, the share of Thinking's plug-in varistors is also among the best in the world. In terms of thermistor and varistor manufacturers in Asia, the Company is firmly in the position of the leading supplier 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

Governments all over the world have adopted relevant policies to encourage electric vehicles/ban the sale of fuel vehicles to reduce the resulting environmental pollution. Therefore, both advanced and developing countries have set 2035 as an important milestone for stopping the production of fuel vehicles. The critical moment for the electric vehicle market to become the mainstream technology is coming.

105 -

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 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 and other equipment. While the 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, with the development of satellite communication, the whole prospect of the communication industry is flourishing. It is also the information platform of the next generation. Over the long term, in 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 growth 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

With the process of industrialization, the demand for smart manufacturing will bring various new industrial electronic applications, which will bloom, and the market of smart manufacturing is expected to grow continuously. Meanwhile, the epidemic has promoted medical electronics, from biochemical detection, and body temperature detection, to respiratory treatment and remote care, all of which are highlights of industry growth.

(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, Perfect Serviceability 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.

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(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. Have sufficient economic scale and cost advantages to cope with the competition from other peers.

(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, sound financial capabilities support the Company's investment in automation equipment and maintain its cost competitiveness.

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 a relatively 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’s popularity still needs improvement.

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 customer and to increase the revenue.
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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. Applications to electronic products such as instruments. D. Over-current protection: When abnormal current occurs in the circuit, the circuit will be overheated. At this moment, the resistance of the PTC thermistor will increase, so protecting the back-end circuit from the impact of high current. Such products are used in home appliances, transformers,automotive electronics and consumer electronics.
Varistor	A. Surge absorption: The resistance of a varistor will change according to the voltage applied onto it to absorb the surge current. They are used to protect power supplies, ICs, consumer electronics, communications, industrial controllers, etc. B. Static absorption: Use the sensitivity of the surface mount varistors to the voltage values in the circuit to remove static electricity from fragile electronic circuits. They are used in electronic products such as mobile phones,laptops,TVports,etc.
Temperature Sensor	The temperature of the object to be measured is measured and becomes the input information of the control loop. In this way, the operation mode of electronic products can be adjusted to achieve the following purposes: A. Avoid any damage due to overheating, life-threatening or equipment hazards, such as preventing the battery from damage due to overheating, or even explosion and 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. Reduce energy consumption and improve system performance, such as activating cooling devices, or reducing input power to reduce unnecessary energyconsumption.

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

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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2020 2021
Year
Output
Capacity Quantity Amount Capacity Quantity Amount
Major Products
Protection Element 12,293,874 11,111,634 4,607,417 15,501,700 12,991,132 6,120,106
Other 73,202 65,827 152,809 181,202 166,931 262,133
Total 12,367,076 11,177,461 4,760,226 15,682,902 13,158,063 6,382,239
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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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2020 2021
Year
Local Export Local Export
Shipments
& Sales
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Major Products
Protection Element 708,049 398,028 6,472,953 5,344,078 648,431 394,626 7,286,598 6,807,245
Other 50,262 74,192 63,163 103,960 152,473 153,708 138,436 144,876
Total 758,311 472,220 6,536,116 5,448,038 800,904 548,334 7,425,034 6,952,121
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5.3 Human Resources

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2022
Year 2020 2021
(as of March 31)
Direct employees 2,504 2,478 2,770
Number of
Indirect employees 1,651 1,569 1,615
Employees
Total 4,155 4,047 4,385
Average Age 35.27 36.00 35.34
Average Years of Service 4.54 4.94 4.58
Masters 2.02% 2.27% 2.12%
University and College 23.45% 25.28% 24.13%
Education Senior High School 27.66% 29.13% 30.12%
Below Senior High
46.87% 43.32% 43.63%
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 2021, the budget devoted for related improvements came to NTD 10,557 thousand and in 2022, the expected budget to be devoted will be NTD 6,500 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) Employee proposal bonus and patent bonus;
(2) New Year's Day gift vouchers, birthday gift vouchers, and subsidies for weddings and funerals;
(3) Outstanding employees of the current year and the May 1st model worker commendation and reward;
(4) On-the-job training allowances;
(5) Staff travel at home and abroad, staff family days and unscheduled staff dinners;
(6) Annual year-end banquet and lottery event;
(7) Annual free health check;
(8) Physicians/nursers are regularly stationed in the factory to provide healthcare consultation and services;
(9) Adequate condolences upon occupational injuries or casualties and emergency aids;
(10) Uniforms, personal locker rooms, and pantry room equipped with food steamers, refrigerators, and other appliances for employees; and
(11) Special resort hotel or hotel contract discount

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.
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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 Cyber Security Management
i. Risk Management Framework For Cyber Security:

The cyber security of the Company is under the responsibility of the group’s Information Department, which formulates internal cyber security specifications, rules and systems, plans and performs cyber security operations, policies promotion and implementation, and makes appropriate responses based on practical situations. The internal auditors are responsible for checking the implementation of the internal cyber security policy. An audit will be carried out once a year.

ii. Cyber Security Management:
(1) Formulate corporate regulations and human-machine operation procedures to ensure the normal operation of information equipment and systems related to group operations.
(2) Enhance the intellectual property preservation and protection management practices, and strengthen the confidentiality operation mechanism to protect the group's important intellectual properties from disclosure.
(3) Provide cyber security education and training to promote employees' awareness of information security and strengthen their awareness of related responsibilities.
(4) Regular internal audits are carried out to ensure that all the relevant operations are performed.
(5) Ensure that the Company's key core systems maintain certain system availability.
iii. Specific management programs, and investments in resources for cyber security management: (1) Firewall protection

Establish the group’s firewall connection management rules. In case of any

special connection requirements, a separate application for access should be filed.

(2) Endpoint behavior monitoring and protection software

The endpoint behavior monitoring software is used to detect any abnormal

network behaviors in the Company's network domain, and protect important system hosts, critical leaders, external operators, and computers of production-related machines.

(3) Email security control
A. Set up an email threat protection scanning mechanism to prevent and remove unsafe senders, attached files, phishing and spam emails, and expand the scope of protection against malicious links before users receive emails.
B. After the PC receives an email, the antivirus software will scan it for unsafe attached files.
(4) Data backup mechanism
A. All the important information system databases should be set with daily backup.
B. The important files of the user should be uploaded to the server. The important files of each department within the Company should be stored on the server and backed up and saved by the Information Department.
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(5) Relevant regulations that employees shall abide by:
A. After the Information Department receives the account application form, it will create a "user ID" before visiting the Company’s website to use the system.
B. The use of non-copyright software is prohibited to prevent malicious software such as viruses and Trojans.
C. After entering the host computer, if the operation is over or the machine has not been used for a long period of time, you shall actively exit the machine or system to avoid the disclosure of confidential data or the trouble of malicious sabotage.
D. In case of resignation or handover of any new or old position, the information entity shall determine whether data backup, transfer or other appropriate disposal is necessary.

iv.Emergency Reporting Procedure:

During this year, up to the date of printing and release of this Annual Report, the Company has had no major cyber security incidents. In case of a cyber security incident, the related entity will notify the cyber security handling team, determine the type of incident, identify and deal with the trouble immediately and notify the competent authority.

5.7 Material Contracts

Contract Type	Counterparty	Period	Major Contents	Restrictions
Lease	Administration of Export Processing Zones under the Ministry of EconomicAffairs	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	-

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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
2017 2018 2019 2020 2021(Note) March 31,2022
Current assets 5,414,274 5,699,845 6,067,809 8,084,389 8,850,782 8,766,662
Property, plant and
1,790,075 2,023,901 2,031,402 2,174,967 2,619,638 2,789,906
equipment
Intangible assets 19,183 34,354 44,884 43,982 48,075 47,175
Other assets 433,685 487,847 606,420 727,322 1,151,390 1,287,120
Total assets 7,657,217 8,245,947 8,750,515 11,030,660 12,669,885 12,890,863
Before
1,329,133 1,341,602 1,254,736 2,051,426 2,309,372 1,736,893
Current distribution
liabilities After
1,841,584 1,828,430 1,792,809 2,756,046 3,116,482 Undistributed
distribution
Non-current liabilities 672,611 844,587 980,796 1,534,447 2,084,160 2,276,868
Before
2,001,744 2,186,189 2,235,532 3,585,873 4,393,532 4,013,761
Total distribution
liabilities After
2,514,195 2,673,017 2,773,605 4,290,493 5,200,642 Undistributed
distribution
Equity attributable
5,515,746 5,915,834 6,371,393 7,305,365 8,158,633 8,757,048
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 348,263 348,263 348,263 348,263 352,907 352,907
Before
3,924,721 4,394,071 5,026,658 5,877,411 6,746,977 7,143,955
Retained distribution
earnings After
3,412,270 3,907,243 4,488,585 5,172,791 5,939,867 Undistributed
distribution
Other equities (38,365) (107,627) (284,655) (201,436) (222,378) (20,941)
Treasury shares - - - - - -
Non-controlling
139,727 143,924 143,590 139,422 117,720 120,054
interests
Before
5,655,473 6,059,758 6,514,983 7,444,787 8,276,353 8,877,102
Total distribution
equity After
5,143,022 5,572,930 5,976,910 6,740,167 7,469,243 Undistributed
distribution
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Note: The distribution of earnings from 2021 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 2017 2018 2019 2020 2021 March 31,2022
Operating revenue,
5,826,763 6,019,949 5,814,232 5,920,258 7,500,455 1,799,959
net
Gross profit 2,052,348 2,241,160 2,340,329 2,714,605 3,239,431 707,063
Profit from
1,238,998 1,385,035 1,448,901 1,843,142 2,124,835 424,897
operations
Non-operating
income and 247,988 124,043 64,786 24,191 34,499 96,199
expenses
Profit before
1,486,986 1,509,078 1,513,687 1,867,333 2,159,334 521,096
income tax
Net profit 1,080,491 988,628 1,115,265 1,380,603 1,590,623 399,312
Other
comprehensive
(38,170) (70,745) (173,212) 87,274 (25,187) 201,437
income (loss),
net of tax
Total
comprehensive 1,042,321 917,883 942,053 1,467,877 1,565,436 600,749
income
Net profit
attributable to:
Owners of the
1,084,535 982,766 1,115,990 1,385,016 1,577,307 396,978
company
Non-controlling
(4,044) 5,862 (725) (4,413) 13,316 2,334
interests
Total
comprehensive
income (loss)
attributable to:
Owners of the
1,046,620 912,539 942,387 1,472,045 1,553,244 598,415
company
Non-controlling
(4,299) 5,344 (334) (4,168) 12,192 2,334
interests
Earnings per Share 8.47 7.67 8.71 10.81 12.31 3.10
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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
2017 2018 2019 2020 2021(Note)
Item
Current assets 2,044,408 2,375,389 2,202,968 2,943,972 3,206,025
Investments accounted
for using the equity 4,288,588 4,920,689 5,397,746 6,434,738 7,490,254
method
Property, plant and
470,524 527,117 544,596 613,528 936,977
equipment
Intangible Assets 18,566 33,924 30,795 28,359 33,652
Other assets 74,124 103,441 240,433 286,537 308,393
Total assets 6,896,210 7,960,560 8,416,538 10,307,134 11,975,301
Before
735,244 1,231,766 1,134,157 1,555,581 1,806,160
Current distribution
liabilities After
1,247,695 1,718,594 1,672,230 2,260,201 2,613,270
distribution
Non-current liabilities 645,220 812,960 910,988 1,446,188 2,010,508
Before
1,380,464 2,044,726 2,045,145 3,001,769 3,816,668
Total distribution
liabilities After
1,892,915 2,531,554 2,583,218 3,706,389 4,623,778
distribution
Ordinary shares 1,281,127 1,281,127 1,281,127 1,281,127 1,281,127
Capital surplus 348,263 348,263 348,263 348,263 352,907
Before
3,924,721 4,394,071 5,026,658 5,877,411 6,746,977
Retained distribution
earnings After
3,412,270 3,907,243 4,488,585 5,172,791 5,939,867
distribution
Other equities (38,365) (107,627) (284,655) (201,436) (222,378)
Treasury shares - - - - -
Before
5,515,746 5,915,834 6,371,393 7,305,365 8,158,633
Total distribution
equity After
5,003,295 5,429,006 5,833,320 6,600,745 7,351,523
distribution
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Note: The distribution of earnings from 2021 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
2017 2018 2019 2020 2021
Item
Operating revenue, net 3,322,054 3,356,678 3,137,848 3,219,942 3,775,517
Gross profit (Note) 963,437 1,040,704 1,052,791 1,178,182 1,464,528
Profit from operations 630,077 687,231 703,425 789,521 952,159
Non-operating income
707,914 687,936 697,022 933,245 1,036,297
and expenses
Profit before income tax 1,337,991 1,375,167 1,400,447 1,722,766 1,988,456
Net profit 1,084,535 982,766 1,115,990 1,385,016 1,577,307
Other comprehensive
(37,915) (70,227) (173,603) 87,029 (24,063)
income (loss), net of tax
Total comprehensive
1,046,620 912,539 942,387 1,472,045 1,553,244
income
Earnings per Share 8.47 7.67 8.71 10.81 12.31
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Note: The operating gross profit does not include realized (unrealized) gross profit from sales.

ii. Auditors’ Opinions from 2017 to 2021

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Year Accounting Firm CPA Audit Opinion
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
2021 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.

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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) 2017 2018 2019 2020 2021 31,2022
Debt Ratio 26.14 26.51 25.54 32.50 34.67 31.13
Financial
structure (%) Ratio of long-term funds to 353.50 340.98 368.99 412.84 395.49 399.79
property, plant and equipment
Current ratio 407.35 423.83 483.59 394.08 383.25 504.73
Solvency (%) Quick ratio 325.90 345.05 412.38 328.68 292.34 379.54
Time interest earned 523.85 383.33 300.14 206.17 187.71 170.35
Accounts receivable turnover
3.02 2.93 2.82 2.64 3.23 3.24
(times)
Average collection period 120.86 124.57 129.43 138.25 113.00 112.65
Inventory turnover (times) 3.78 3.89 3.89 3.06 2.65 2.19
Accounts payable turnover
Operating 6.08 6.01 5.94 5.43 6.80 8.00
(times)
performance
Average sales days 96.56 93.83 93.83 119.28 137.73 166.66
Property, plant and equipment
3.34 3.15 2.86 2.81 3.12 2.66
turnover (times)
Total assets turnover (times) 0.77 0.75 0.68 0.59 0.63 0.56
Return on assets (%) 14.44 12.47 13.17 14.03 13.50 12.57
Return on equity (%) 20.21 16.87 17.73 19.77 20.23 18.62
Profit before income tax to
Profitability 116.06 117.79 118.15 145.75 168.54 162.69
paid-in capital (%)
Net profit ratio (%) 18.54 16.42 19.18 23.31 21.20 22.18
Earnings per share ($) 8.47 7.67 8.71 10.81 12.31 3.10
Cash flow ratio (%) 82.78 99.93 131.23 65.46 68.16 53.45
Cash flows Cash flow adequacy ratio (%) 114.74 111.12 126.22 114.99 100.03 100.15
Cash flow reinvestment ratio
7.61 10.01 12.88 7.53 7.08 1.76
(%)
Operating leverage 1.82 1.76 1.78 1.59 1.65 2.01
Leverage
Financial leverage 1.00 1.00 1.00 1.00 1.00 1.00
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Reasons for the changes in respective financial ratios over the past two years (with a change rate of 20% and above)

Increase in the turnover rates of receivables and payables: mainly because of the strong demand from customers’ orders, as well as the significant growth of the sales revenue and the cost of sales this year.

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)
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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.
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ii. Parent Company only Financial Analysis – Based on IFRS

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Year Financial Analysis for the Past Five Fiscal Years
2017 2018 2019 2020 2021
Analytical item (Note 1)
Debt Ratio 20.01 25.68 24.29 29.12 31.87
Financial
structure (%) Ratio of long-term funds to
1,309.38 1,276.50 1,337.20 1,426.43 1,085.31
property, plant and equipment
Current ratio 278.05 192.82 194.23 189.25 177.50
Solvency (%) Quick ratio 242.21 158.58 163.08 174.75 152.62
Time interest earned 513.05 770.10 810.97 793.44 276.40
Accounts receivable turnover
3.27 3.27 3.18 3.12 3.53
(times)
Average collection period 111.62 111.62 114.77 116.98 103.39
Inventory turnover (times) 8.12 7.21 5.72 7.71 7.47
Operating Accounts payable turnover
5.60 5.15 4.41 4.00 4.24
performance (times)
Average sales days 44.95 50.62 63.81 47.34 48.86
Property, plant and equipment
7.67 6.72 5.85 5.56 4.87
turnover (times)
Total assets turnover (times) 0.49 0.45 0.38 0.34 0.33
Return on assets (%) 16.33 13.24 13.64 14.81 14.20
Return on equity (%) 20.84 17.19 18.16 20.25 20.39
Profit before income tax to
Profitability 104.43 107.34 109.31 134.47 155.21
paid-in capital (%)
Net profit ratio (%) 32.64 29.27 35.56 43.01 41.77
Earnings per share ($) 8.47 7.67 8.71 10.81 12.31
Cash flow ratio (%) 66.34 75.21 50.29 52.08 28.83
Cash flow adequacy ratio (%) 98.21 111.14 106.02 108.09 83.48
Cash flows
Cash flow reinvestment ratio
0.98 5.72 1.06 2.90 (1.69)
(%)
Operating leverage 1.37 1.46 1.43 1.34 1.33
Leverage
Financial leverage 1.00 1.00 1.00 1.00 1.00
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Reasons for the changes in respective financial ratios over the past two years (with a change rate of 20% and above)

Decrease in the ratio of long-term funds to property, plant and equipment: mainly because the Company built new plants and the real estate property, plant and equipment increased.
Time interest earned dropped mainly because of the increase in borrowings; the interest expense hence increased.
Decrease in the cash flow ratio, cash flow adequacy ratio and cash flow reinvestment ratio: mainly because of the decrease in the net cash flow from operating activities.
Note 1: Calculations for this table are provided below
1. Financial structure
2. (1) Debt ratio = total liabilities / total assets
3. (2) Ratio of long-term funds to property, plant and equipment = (total equities + non-current liabilities) / net value of property, plant and equipment
4. Solvency
5. (1) Current ratio = current assets / current liabilities
6. (2) Quick ratio = (current assets-inventory-prepaid expense) / current liabilities
7. (3) Time interest earned = profit before interest and tax / interest expenses
8. Operating performance
9. (1) Accounts receivable (including accounts receivable and receivable notes from operations) turnover = net sales / average receivables (including accounts receivable and receivable notes from operations)
10. (2) Average collection period = 365 / accounts receivable turnover
11. (3) Inventory turnover = cost of goods sold / average inventory
12. (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)
13. (5) Average sales days = 365 / inventory turnover
14. (6) Property, plant and equipment turnover = net sales / average net property, plant and equipment
15. (7) Total asset turnover = net sales / average total assets
16. Profitability
17. (1) Return on assets = [net profit + interest expenses (1- tax rate)] / average total assets
18. (2) Return on equity = net profit / average net shareholder's equity
19. (3) Net profit ratio = net profit / net sales
20. －
21. (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)
22. Cash flow
23. (1) Cash flow ratio = net cash flow from operating activities / current liabilities
24. (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.
25. (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)
26. Leverage
27. (1) Operating leverage = (net operating revenue - variable operating costs and expenses)/Operating profit (Note 4)
28. (2) Financial leverage = operating profit/(operating profit - interest expenses)
125 -
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.
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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 2021 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 2022

Thinking Electronic Industrial Co., Ltd.

Convener of Audit Committee: Chen, Hsiu-Yen

March 21, 2022

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6.4 Financial Statements for the Most Recent Fiscal Year: Refer to Pages 129-196 through for details.
6.5 Parent Company Only Financial Statements Audited by Independent Auditors for the Most Recent Fiscal Year: Refer to Pages 197-275 through for details.
6.6 The Impact of Financial Difficulties of the Company and its Affiliates: None.
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Thinking Electronic Industrial Company Limited and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

129 -

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, 2021, 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 Standard No. 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 the 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-Zhong Chairman

March 21, 2022

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders 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, 2021 and 2020, 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, 2021 and 2020, 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, 2021. 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, 2021 is discussed as follows:

131 -

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$ 7,500,274 thousand for the year ended December 31, 2021, and revenue from specific productss increased significantly than the previous year. Therefore, the occurrence of sales of specific products is considered as a key audit matter. For the accounting policy on revenue recognition, refer to Note 4 (l) to the 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 products.
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 as of and for the years ended December 31, 2021 and 2020, 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 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.

132 -

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, 2021 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.

133 -

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 21, 2022

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.

134 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (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) Notes receivable (Notes 10 and 31) Accounts receivable, net (Notes 4 and 10) Other receivables Other receivables from related parties (Note 30) Current tax assets (Notes 4 and 25) Inventories (Notes 4 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) Accounts payable to related parties (Note 30) 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 13 and 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, 13 and 22) Total equity TOTAL		December 31, 2021 Amount % $ 2,578,973 20 1,525,486 13 327,135 3 1,884,670 15 44,989 - 145 - 11,137 - 1,945,627 15 367,328 3 165,292 1 8,850,782 70 36,273 - 347,661 3 2,619,638 21 237,535 2 46,060 - 48,075 - 141,304 1 220,855 2 4,894 - 88,091 1 28,717 - 3,819,103 30 $ 12,669,885 100 $ 749,630 6 131,126 1 474,584 4 45 - 679,232 5 4,673 - 114,694 1 37,141 - 92,669 1 25,578 - 2,309,372 18 688,100 6 1,287,305 10 75,234 - 26,998 - 1,348 - 5,175 - 2,084,160 16 4,393,532 34 1,281,127 10 352,907 3 1,159,089 9 201,436 2 5,386,452 43 6,746,977 54 (222,378 ) (2 ) 8,158,633 65 117,720 1 8,276,353 66 $ 12,669,885 100		December 31, 2020	December 31, 2020
		Amount $ 2,578,973 1,525,486 327,135 1,884,670 44,989 145 11,137 1,945,627 367,328 165,292 8,850,782 36,273 347,661 2,619,638 237,535 46,060 48,075 141,304 220,855 4,894 88,091 28,717 3,819,103 $ 12,669,885 $ 749,630 131,126 474,584 45 679,232 4,673 114,694 37,141 92,669 25,578 2,309,372 688,100 1,287,305 75,234 26,998 1,348 5,175 2,084,160 4,393,532 1,281,127 352,907 1,159,089 201,436 5,386,452 6,746,977 (222,378 ) 8,158,633 117,720 8,276,353 $ 12,669,885		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	% 23 14 5 17 - - - 12 1 1 73 - 1 20 2 1 1 1 1 - - - 27 100 5 2 4 - 5 - 1 - 2 - 19 3 10 1 - - - 14 33 12 3 9 3 41 53 (2 ) 66 1 67 100

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

135 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4 and 23) 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 (gain) 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 (Notes 4, 22 and 25) 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 Income tax related to items that will not be reclassified subsequently to profit or loss		2021 Amount % $ 7,500,455 100 4,261,024 57 3,239,431 43 282,129 4 536,436 7 298,071 4 (2,040 ) - 1,114,596 15 2,124,835 28 88,523 1 34,309 1 (76,768) (1) (11,565 ) - 34,499 1 2,159,334 29 568,711 8 1,590,623 21 (4,465) - (3,208) - 220 - (7,453 ) -		2020
				Amount % $ 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 - 12,563 - (1,015 ) - 16,618 - (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

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 Other comprehensive income (loss) for the year, net 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			2021 Amount % (22,168) - 4,434 - (17,734 ) - (25,187 ) - 1,565,436 21 1,577,307 21 13,316 - 1,590,623 21 1,553,244 21 12,192 - 1,565,436 21 $ 12.31 $ 12.25		2020
		$			Amount % $ 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


		$
		$
		$
		$
		$

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

(Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (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 - - - - - - - - - - - - - - - 4,644 $ 1,281,127 $ 352,907	Retained Earnings	Total Retained Earnings $ 5,026,658 - - (538,073 ) (538,073 ) 1,385,016 3,810 1,388,826 5,877,411 - (704,620) - (704,620 ) 1,577,307 (3,121 ) 1,574,186 - $ 6,746,977	Other Equity	Total Other Equity $ (284,655 ) - - - - - 83,219 83,219 (201,436 ) - - - - - (20,942 ) (20,942 ) - $ (222,378 )
			Exchange Differences on Translation of the Financial Statements of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (277,631 ) $ (7,024 ) - - - - - - - - - - 70,656 12,563 70,656 12,563 (206,975 ) 5,539 - - - - - - - - - - (17,734 ) (3,208 ) (17,734 ) (3,208 ) - - $ (224,709 ) $ 2,331
	Legal Reserve Special Reserve Unappropriated Earnings $ 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 4,572,550 138,883 - (138,883) - - (704,620) - (83,219 ) 83,219 138,883 (83,219 ) (760,284 ) - - 1,577,307 - - (3,121 ) - - 1,574,186 - - - $ 1,159,089 $ 201,436 $ 5,386,452

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, 2021 AND 2020 (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 (gain) Finance costs Interest income Loss (gain) on disposal of property, plant and equipment, net Loss on inventories Recognition (reversal) of provisions Amortization of grants income Other non-cash items Changes in operating assets and liabilities Notes receivable Accounts receivable Other receivables Other receivables from related parties Inventories Other current assets Net defined benefit asset Notes payable Accounts payable Accounts payable to related parties 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	2021 $ 2,159,334 313,331 8,536 (2,040) 11,565 (88,523) (5,476) 143,275 (47,912) (1,080) (256) 261,148 (38,580) (664) (145) (822,303) (82,094) (1,429) (64,739) 24,663 45 114,213 4,188 14,129 (30,398 ) 1,868,788 77,068 (9,098) (362,684 ) 1,574,074 (346,514) 83,366 (6,614,943) 6,666,177 (852,859) 26,246 (12,684) (258,978)	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) (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Increase in other non-current 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 Proceed from guarantee deposits received Refund of guarantee deposits received Repayments of the principal portion of lease liabilities Cash dividends paid Acquisition of subsidiary 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 IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT THE END OF YEAR	2021 $ (11,697 ) (1,321,886 ) 4,480,200 (4,236,540) 353,540 257 - (32,375) (704,620) (29,250 ) (168,788 ) (9,775 ) 73,625 2,505,348 $ 2,578,973	2020 $ (225 ) (849,838 ) 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

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, 2021 AND 2020 (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 21, 2022.

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)

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”):

b. The IFRSs endorsed by the FSC for application starting from 2022

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Effective Date
New IFRSs Announced by IASB
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New IFRSs	Effective Date Announced by IASB
“Annual Improvements to IFRS Standards 2018-2020”	January 1, 2022 (Note 1)
Amendments to IFRS 3 “Reference to the Conceptual Framework”	January 1, 2022 (Note 2)
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds	January 1, 2022 (Note 3)
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a	January 1, 2022 (Note 4)
Contract”

Note 1: 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 2: 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.
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Note 3: 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 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the consolidated financial statements were authorized for issue, the Group assessed that the application of other standards and interpretations will not have significant impact on the Group’s financial position and financial performance.

c. New IFRSs in issue by IASB 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)
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 IFRS 17 “Initial Application of IFRS 9 and IFRS 17 -	January 1, 2023
Comparative Information”
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 2)
Amendments to IAS 8 “Definition of Accounting Estimates”	January 1, 2023 (Note 3)
Amendments to IAS 12 “Deferred Tax related to Assets and	January 1, 2023 (Note 4)
Liabilities arising from a Single Transaction”

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 will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: 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 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

1) 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:

a) Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
b) 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
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c) 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:

a) 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;
b) The Group chose the accounting policy from options permitted by the standards;
c) 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;
d) 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
e) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.
2) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Group may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Group uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact of the application of other standards and interpretations 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.

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:

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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 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).

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e. Foreign currencies

In preparing the financial statements of each individual entity in the group, 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 when completed and ready for intended use.

Freehold land is not depreciated.

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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 or loss.

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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:

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.

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.
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.
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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 terms.

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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.

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

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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 Act 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.

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

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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.

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 on 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.

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
		2021 $ 4,542 74 1,881,201 693,156 $ 2,578,973	2020 $ 1,086 74 1,333,420 1,170,768 $ 2,505,348

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

Time deposits (%)	December 31
	2021 2020 0.62-3.00 0.41-2.85

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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
		2021 $ 1,525,486	2020 $ 1,582,073

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 - NON-CURRENT

Time deposits with original maturities of more than 3 months Interest rate (%)		December 31	December 31
		2021 $ 347.661 4.05-4.18	2020 $ 87,206 4.13

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

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2021 $ 36,273	2020 $ 39,481

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

Notesreceivable At amortized cost Gross carrying amount - operating		December 31	December 31
		2021 $ 327,135	2020 $ 588,283 (Continued)

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Accountsreceivable- non-related parties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss		December 31	December 31
		2021 $ 1,909,195 24,525 $ 1,884,670	2020 $ 1,870,615 26,595 $ 1,844,020 (Concluded)

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.

December 31, 2021

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0-0.05 $ 1,760,170 (987 ) $ 1,759,183	Past Due 1to 30 Days 0.5 $ 53,111 (265 ) $ 52,846	Past Due 31 to 60 Days 1 $ 63,609 (636 ) $ 62,973	Past Due 61 to 90 Days 30 $ 11,916 (3,575 ) $ 8,341	Past Due 91 to 180 Days 50 $ 2,666 (1,339 ) $ 1,327	Past Due Over 180 Days 100 $ 17,723 (17,723 ) $ -	Total $ 1,909,195 (24,525 ) $ 1,884,670

December 31, 2020

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	Past Due 1to 30 Days 0.5 $ 58,604 (293 ) $ 58,311	Past Due 31 to 60 Days 1 $ 50,298 (503 ) $ 49,795	Past Due 61 to 90 Days 30 $ 5,205 (1,562 ) $ 3,643	Past Due 91 to 180 Days 50 $ 10,721 (5,361 ) $ 5,360	Past Due Over 180 Days 100 $ 17,765 (17,765 ) $ -	Total $ 1,870,615 (26,595 ) $ 1,844,020

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

Balance at January 1 Net remeasurement (reversal) of loss allowance 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
		2021 $ 26,595 (2,040) - (30 ) $ 24,525	2020 $ 24,898 1,869 (332) 160 $ 26,595

11. INVENTORIES

Finished goods Work-in-process Raw materials Supplies Inventory in transit		December 31	December 31
		2021 $ 911,822 615,026 380,018 26,468 12,293 $ 1,945,627	2020 $ 579,429 384,948 276,612 18,955 6,168 $ 1,266,112

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2021 and 2020 was $4,261,024 thousand and $3,205,653 thousand, respectively, which included the following items:

Write-off obsolete inventories Inventory write-downs Unallocated manufacturing overhead	For the Year Ended	For the Year Ended	December 31
		2021 $ 66,997 76,278 - $ 143,275	2020 $ 68,061 2,425 25,436 $ 95,922

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 demand deposits Pledge time deposits Deposits of banker’s acceptance Refundable deposits		December 31	December 31
		2021 $ 86,811 305,600 2,608 60,400 $ 455,419	2020 $ - 163,969 23,180 9,292 $ 196,441

(Continued)

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Current Non-current Interest rate of pledge time deposits (%)		December 31	December 31
		2021 $ 367,328 88,091 $ 455,419 0.35-0.57	2020 $ 158,349 38,092 $ 196,441 0.57-3.15 (Concluded)

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)
Notes 1 and 7
Greenish Co., Ltd.
(Greenish)
Note 2
Thinking (Changzhou) Electronic Co., Ltd.
(Thinking Changzhou)
Note 3
Thinking Holding (Cayman) Co., Ltd.
(Thinking Holding)
Note 2
Greenish
Thinking Changzhou
Note 3
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
Dong Guan Welkin Electronic Co., Ltd.
(Dongguan Welkin)
Note 6
Thinking Samoa
Dongguan Welkin
Note 6
Thinking Changzhou
Dongguan Welkin
Note 6
Dongguan Welkin
Welkin Electronic Co., Ltd.
(Zhongshan Welkin)
Notes 4 and 8

Percentage of Ownership (%)

December 31,
2021
December 31,
2020
63.76
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
58.34
58.34
10.42
10.42
31.24
31.24
100.00
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 selling thermistors, varistors, sensors and equipment.

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Note 7: In July 2021, the Company acquired 4,500,000 shares of its subsidiary Yenyo from non-controlling interests for $29,250 thousand, and the difference between the amount of consideration and the carrying amount of subsidiaries’ net assets acquired was included in the capital reserve of $4,644 thousand; as a result, its shareholding increased from the original 52.61% to 63.76%. Since the preceding transaction did not change the Company's control over the subsidiary, the Company recognized such transaction as an equity transaction.
Note 8: In order to combine manufacturing and sales in the factory, the board of directors of Dongguan Welkin decided to establish Zhongshan Welkin, which was registered in December 2020.

14. PROPERTY, PLANT, AND EQUIPMENT

a. Changes in costs and accumulated depreciation

For the Year ended December 31, 2021

Cost Balance at January 1, 2021 Additions Disposals Effect of foreign currency exchange differences Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Disposals Effect of foreign currency exchange differences Balance at December 31, 2021 Carrying amount at December 31, 2021	Land $ 195,719 - - - $ 195,719 $ - - - - $ - $ 195,719	Buildings Machinery and Equipment Leasehold Improvements $ 943,625 $ 2,009,737 $ 141,503 39,033 312,645 1,881 (1,905 ) (81,228 ) - (1,889 ) (4,339 ) (465 ) $ 978,864 $ 2,236,815 $ 142,919 $ 271,747 $ 1,103,534 $ 77,716 39,336 159,380 28,158 (1,905 ) (60,657 ) - (428 ) (2,236 ) (203 ) $ 308,750 $ 1,200,021 $ 105,671 $ 670,114 $ 1,036,794 $ 37,248	Others Property under Construction $ 384,268 $ 210,310 61,996 324,575 (7,116 ) - (349 ) (206 ) $ 438,799 $ 534,679 $ 257,198 $ - 43,746 - (6,917 ) - (312 ) - $ 293,715 $ - $ 145,084 $ 534,679	Total $ 3,885,162 740,130 (90,249 ) (7,248 ) $ 4,527,795 $ 1,710,195 270,620 (69,479 ) (3,179 ) $ 1,908,157 $ 2,619,638

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 Depreciation expense Disposals Reclassified Effect of foreign currency exchange differences Balance at December 31, 2020 Carrying amount 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 35,456 134,551 27,258 (10,961 ) (25,133 ) - - - - (1,292 ) 10,059 1,164 $ 271,747 $ 1,103,534 $ 77,716 $ 671,878 $ 906,203 $ 63,787	Others Property under Construction $ 376,584 $ 95,963 18,133 112,078 (8,814 ) - (3,939 ) - 2,304 2,269 $ 384,268 $ 210,310 $ 223,196 $ - 41,095 - (7,579 ) - (858 ) - 1,344 - $ 257,198 $ - $ 127,070 $ 210,310	Total $ 3,536,493 373,068 (51,387 ) (3,939 ) 30,927 $ 3,885,162 $ 1,505,091 238,360 (43,673 ) (858 ) 11,275 $ 1,710,195 $ 2,174,967

In January 2019, the board of directors of the Company approved the investment plan for the Nanzih Plant in Kaohsiung, and the estimated investment amount increased to 1,000,000 thousand in January 2021, which had not been completed and accepted as of the reporting date, and the actual project contract request was included in the property under construction.

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A reconciliation of the above-mentioned increase in property, plant and equipment and the amount paid in the consolidated statements of cash flows is as follows:

Investing activities that affected both cash and non-cash items Additions to property, plant, and equipment Increase in payables for equipment (in other payables) Increase in prepayments for equipment Capitalization of depreciation Payments of acquisition of property, plant and equipment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 740,130 (14,595) 127,908 (584) $ 852,859	2020 $ 373,068 (21,167) 17,216 (586) $ 368,531

b. Useful lives

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	20-60 years
Improvement engineering	2-60 years
Machinery and equipment	3-12 years
Leasehold improvements	10 years
Others	2-10 years

c. 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 Decrease in right-of-use assets Depreciation charge for right-of-use assets Land Buildings		December 31	December 31
	2021 $ 183,220 54,315 $ 237,535 For the Year Ended		2020 $ 188,773 64,971 $ 253,744 December 31
		2021 $ 21,598 $ 422 $ 5,103 31,530 $ 36,633	2020 $ 38,588 $ - $ 5,065 28,172 $ 33,237

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Except for the recognized depreciation, additions and reduction, the Group did not have impairment or subleasing of right-of-use assets for the years ended December 31, 2021 and 2020.

b. Lease liabilities

Carrying amount Current Non-current Range of discount rates for lease liabilities was as follows:		December	31
		2021 $ 37,141 $ 75,234	2020 $ 31,487 $ 92,661

Land Buildings	December 31
	2021 2020 0.75-1.38 0.75-1.38 5.10-6.04 5.13-6.04

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 the remaining useful life of 4 to 8 years. The government reserves the right to adjust rent according to the assessed land value.

The right-of-use land is located in mainland China with the remaining useful life of 33 to 45 years.

2) Buildings

The building is located in mainland China with the remaining useful life of 1 to 3 years. The lease payments will be adjusted every 3 years based on the 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 period. 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
		2021 $ 1,758 $ 580 $ 38,770	2020 $ 453 $ 452 $ 20,099

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
		2021 $ 114,077 (380 ) $ 113,697 $ 61,167 6,662 (192 ) $ 67,637 $ 46,060	2020 $ 112,544 1,533 $ 114,077 $ 53,740 6,572 855 $ 61,167 $ 52,910

Depreciation is provided on a straight-line basis over the estimated useful lives of 5-22 years.

The Group has buildings located in Beijing, Suzhou, and Nanchang, China with fair values that are not evaluated by an independent valuer but valued by the management using the valuation model that market participants would use in determining the fair value, and the fair value was measured using Level 3 inputs. The valuation was arrived at by reference to market evidence of transaction prices for similar properties. The calculated fair value was $107,995 thousand as of December 31, 2021.

17. BORROWINGS

a. Short-term borrowings

Secured loans(Note 31) Credit loans The annual interest rate (%) Secured loans Credit loans		December 31	December 31
		2021 $ 249,630 500,000 $ 749,630 0.34 0.68-0.72	2020 $ 130,809 375,000 $ 505,809 2.6 0.75-0.77

b. Long-term borrowings

Credit loans Less: Government grants discount The annual interest rate (%)		December 31	December 31
		2021 $ 700,540 12,440 $ 688,100 0.35	2020 $ 347,000 7,329 $ 339,671 0.35

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Borrowings under the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” have interest at prime rate and are used for capital expenditures and operating turnovers. The details of relevant loan contract are as follows:

1) Credit period: The credit period is from October 2020 to October 2027, and the credit line is $1,264,000 thousand, which is a revolving loan allowing separate drawdowns, and all credits will expire in October 2027.
2) Borrowing interest rate: For the first 5 years from the date of initial drawdown, the annual interest rate of prime rate loan is 0.35% after the reduction of the variable interest rate of 0.495% based on the two-year fixed deposit interest rate of Chunghwa Post Co., Ltd. On the sixth year, when variable interest rate increases by 0.005% based on the two-year fixed deposit interest rate of Chunghwa Post Co., Ltd., the loan interest rate will be 0.85%. The Company calculates its fair value with an annual interest rate of 0.845% based on general condition.
3) Repayment method: Monthly installments start on the fourth year from the date of initial drawdown until October 2027.
4) Each annual repayment plan drawdown is as follows:

Repayment year 2023 (November-December) 2024 2025 2026 2027 (January-October)		Amounts of Repayment
		2020 $ 14,458 138,710 193,190 193,190 160,992 $ 700,540

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 purchase of equipment Payable for employees’ compensation Payable for remuneration of directors Others		December 31	December 31
		2021 $ 342,391 59,965 91,100 26,800 158,976 $ 679,232	2020 $ 279,432 45,370 64,300 23,400 137,856 $ 550,358

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20. REFUND LIABILITIES

Balance at January 1 Recognized (reversed) Usage Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2021 $ 170,979 (47,912) (30,398 ) $ 92,669	2020 $ 47,717 125,250 (1,988 ) $ 170,979

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 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
		2021 $ 102,739 (107,633 ) $ (4,894 )	2020 $ 97,584 (105,514) $ (7,930 )

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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, 2020	$ 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 )
Service cost
Current service cost	104	-		104
Net interest expense (income)	759	(827 )		(68 )
Recognized in profit or loss	863	(827 )		36
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(1,058)		(1,058)
Actuarial loss - changes in financial
assumptions	1,346	-		1,346
Actuarial gain - experience adjustments	4,177	-		4,177
Recognized in other comprehensive income	5,523	(1,058 )		4,465
Contributions from the employer	-	(1,465 )		(1,465 )
Benefits paid	(1,231 )	1,231		-
Balance at December 31, 2021	$ 102,739	$ (107,633 )	$	(4,894 )

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.

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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
	2021 2020 0.50-0.65 0.80-0.85 2.00-3.00 2.00-3.00

If possible reasonable changes in each of the significant actuarial assumptions occur and all other assumptions 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
		2021 $ (1,571 ) $ 1,622 $ 6,654 $ (5,982 )	2020 $ (1,665 ) $ 1,723 $ 7,098 $ (6,324 )

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
		2021 $ 1,440 9-12	2020 $ 1,440 9-13

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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
		2021 200,000 $ 2,000,000 128,113 $ 1,281,127	2020 200,000 $ 2,000,000 128,113 $ 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 Difference between consideration and carrying amount of the subsidiaries acquired		December 31	December 31
		2021 $ 265,446 59,168 23,649 4,644 $ 352,907	2020 $ 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 shareholders.

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.

Items referred to under Rule No. 1090150022 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated

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to or reversed from a special reserve by the Company. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and thereafter 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 2020 and 2019 were approved in the shareholders’ meeting on July 29, 2021 and June 15, 2020, respectively. The appropriations of earnings for 2020 and 2019 were as follows:

Legal reserve Special reserve Cash dividends		Appropriation of Earnings For the Year Ended 2020 2019 $ 138,883 $ 111,942 (83,219) 177,028 704,620 538,073 $ 760,284 $ 827,043	Dividend Per Share (NT$)
		For the Year	For the Year Ended
		2020 $ 138,883 (83,219) 704,620 $ 760,284	2020 2019 $ 5.5 $ 4.2

The appropriations of earnings for 2021 were proposed by the Company’s board of directors on March 21, 2022. The appropriation and dividends per share were as follows:

	Appropriation	Dividend Per
	of Earnings	Share (NT$)
Legal reserve	$ 157,419
Special reserve	20,942
Cash dividends	807,110	$ 6.3
	$ 985,471

The appropriations of earnings for 2021 are subject to the resolution of the shareholders’ meeting to be held on June 16, 2022.

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
		2021 $ (206,975) (22,168) 4,434 $ (224,709 )	2020 $ (277,631) 88,320 (17,664 ) $ (206,975 )

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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 Non-controlling interests Balance at January 1 Share in gain (loss) for the year Other comprehensive income during the year Acquisition of ownership interests in subsidiaries (Note 13) Balance at December 31	For the Year Ended	For the Year Ended	December 31
	2021 $ 5.539 (3,208 ) $ 2,331 For the Year Ended		2020 $ (7,024) 12,563 $ 5.539 December 31
		2021 $ 139,422 13,316 (1,124) (33,894 ) $ 117,720	2020 $ 143,590 (4,413) 245 - $ 139,422

e. Non-controlling interests

23. OPERATING REVENUE

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
		2021 $ 7,500,274 181 $ 7,500,455	2020 $ 5,920,085 173 $ 5,920,258

a. Refer to Note 4 (l) for information related to contracts with customers.
b. Contract balances

December 31, 2021 December 31, 2020 Notes and accounts receivable (Note 10) $ 2,211,805 $ 2,432,303	January 1, 2020 $ 2,046,553

c. Disaggregation of revenue

For the year ended December 31, 2021

Reportable Segments Thinking Yenyo	Type of revenue
	Revenue from Sale of Passive Components Service Revenue Total $ 3,230,807 $ 181 $ 3,230,988 298,403 - 298,403 (Continued)

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Reportable Segments Thinking Changzhou Guangdong Welkin Thinking Others	Type of revenue	Type of revenue
	Revenue from Sale of Passive Components $ 1,770,357 1,695,602 505,105 $ 7,500,274	Service Revenue $ - - - $ 181	Total $ 1,770,357 1,695,602 505,105 $ 7,500,455 (Concluded)

For the year ended December 31, 2020

Reportable Segments Thinking Yenyo Thinking Changzhou Guangdong Welkin Thinking Others	Type of revenue	Type of revenue
	Revenue from Sale of Passive Components $ 2,691,961 177,979 1,334,599 1,458,539 257,007 $ 5,920,085	Service Revenue $ 173 - - - - $ 173	Total $ 2,692,134 177,979 1,334,599 1,458,539 257,007 $ 5,920,258

24. CONSOLIDATED NET PROFIT

Consolidated net profit included following items:

a. Interest income

Bank deposits Financial assets at fair value through profit or loss Financial assets at amortized cost Others (Note 30 (e))	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 22,881 52,951 10,328 2,363 $ 88,523	2020 $ 19,288 48,464 4,017 6,945 $ 78,714

b. Other income

Grants Rental income Reimbursement income Others (Note 30 (e))	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 10,371 5,382 6,583 11,973 $ 34,309	2020 $ 33,231 5,734 3,983 26,313 $ 69,261

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c. Other gains and losses

For the Year Ended	For the Year Ended	December 31
2021 $ (71,405) 5,476 (10,839 ) $ (76,768 ) For the Year Ended		2020 $ (99,940) (3,221) (11,522 ) $ (114,683 ) December 31
2021 $ 4,057 8,797 12,854 1,289 $ 11,565 For the Year Ended		2020 $ 5,181 4,441 9,622 521 $ 9,101 December 31
2021 $ 1,289 0.35-1.23 For the Year Ended		2020 $ 521 0.35-1.23 December 31
	2021 $ 270,620 36,633 6,662 8,536 322,451 584 $ 321,867 $ 241,372 65,297 6,662 $ 313,331	2020 $ 238,360 33,237 6,572 6,393 284,562 586 $ 283,976 $ 214,678 56,333 6,572 $ 277,583

(Continued)

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An analysis of amortization by function Operating costs Operating expenses 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	For the Year Ended	For the Year Ended	December 31
	2021 $ 3,347 5,189 $ 8,536 For the Year Ended			2020 $ 2,599 3,794 $ 6,393 (Concluded) December 31
		2021 $ 1,742,833 186,472 1,929,305 85,426 36 85,462 $ 2,014,767 $ 1,340,682 674,085 $ 2,014,767	2020 $ 1,220,699 154,774 1,375,473 19,804 107 19,911 $ 1,395,384 $ 882,549 512,835 $ 1,395,384

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, 2021 and 2020, which were approved by the Company’s board of directors on March 21, 2022 and March 22, 2021, respectively, were as follows:

Accrual rate Employees’ compensation (%) Remuneration of directors (%) Amounts Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2021 2020 4.3 3.6 1.3 1.3 $ 91,100 $ 64,300 26,800 23,400

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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, 2020 and 2019.

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.

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 Adjustments for prior years Effect of change in tax rate Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2021 $ 320,105 31,427 3,444 354,976 211,099 2,636 - 213,735 $ 568,711	2020 $ 335,263 8,319 (36,913 ) 306,669 177,250 3,717 (906 ) 180,061 $ 486,730

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 loss carryforwards Unrecognized deductible temporary differences Effect of change in tax rate Usage of investment credit 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
		2021 $ 2,159,334 $ 608,247 (14,521) 31,427 3,896 (6,585) - (59,833) 6,080 $ 568,711	2020 $ 1,867,333 $ 557,705 (20,403) 8,319 - 16,686 (906) (41,475) (33,196 ) $ 486,730

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%.

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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.

b. Income tax recognized in other comprehensive income

Deferred income tax expense (benefit) 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
		2021 $ (4,434) (220 ) $ (4,654 )	2020 $ 17,664 1,015 $ 18,679

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2021 $ 11,137 $ 114,694	2020 $ 24,136 $ 135,401

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, 2021

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	Balance, Beginning of Year $ 28,502 4,068 34,196 51,743 19,483 $ 137,992	Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 15,093 $ - 2,460 - (15,662 ) - - 4,434 (3,134 ) 220 $ (1,243 ) $ 4,654	Exchange Differences $ (76 ) - - - (23 ) $ (99 )	Balance, End of Year $ 43,519 6,528 18,534 56,177 16,546
				$ 141,304

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Balance, Beginning of Year Deferred Tax Liabilities Temporary differences Foreign investment income $ 1,041,545 Others 33,362 $1,074,907 For the Year ended December 31, 2020 Balance, Beginning of Year Deferred Tax Assets Temporary differences Unrealized loss on inventories $ 32,871 Unrealized gross profits 3,863 Unrealized refund liabilities 9,543 Exchange differences on translation of the financial statements of foreign operations 69,407 Others 16,564 $ 132,248 Balance, Beginning of Year Deferred Tax Liabilities Temporary differences Foreign investment income $ 850,691 Others 19,888 $ 870,579	Recognized in Profit or Loss Exchange Differences $ 209,939 $ - 2,553 (94 ) $ 212,492 $ (94 ) Recognized in Profit or Loss Recognized in Other Comprehensive Income Exchange Differences $ (4,680 ) $ - $ 311 205 - - 24,653 - - - (17,664 ) - 3,853 (1,015 ) 81 $ 24,031 $ (18,679 ) $ 392 Recognized in Profit or Loss Exchange Differences $ 190,854 $ - 13,238 236 $ 204,092 $ 236	Balance, End of Year $ 1,251,484 35,821	Balance, End of Year $ 1,251,484 35,821
		$	1,287,305
		Balance, End of Year $ 28,502 4,068 34,196 51,743 19,483 $ 137,992 Balance, End of Year $ 1,041,545 33,362
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
	$

		$ 1,074,907

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
		2021 $ - 5,232 13,252 4,987 11,976 $ 35,447 $ 23,916	2020 $ 15,282 7,333 13,252 4,987 13,330 $ 54,184 $ 39,357

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f. Information on unused loss carryforwards of Yenyo as of December 31, 2021:

Fiscal Year	Expiry Year	Unused	Amount
2015	2025	$	1,047
2016	2026		2,650
2017	2027		997
2020	2030		2,395
		$	7,089

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 2019 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
		2021 $ 1,577,307	2020 $ 1,385,016

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
		2021 128,113 652 128,765	2020 128,113 402 128,515

The Group may settle the compensation of employees in cash or shares; therefore, the Group assumes that the entire amount of the compensation will be settled in shares, and the resulting potential shares will be 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 under the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” which have interest at prime rate and are used for capital

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expenditures and operating turnovers. The Company calculated its fair value with annual interest rate based on general condition. The difference between the acquisition amount borrowed and the fair value was classified as government’s low interest grants and recognized as deferred revenue.

Balance at January 1 Deferred revenue in the reporting period Realized revenue in the reporting period (in other income) Effect of foreign currency exchange differences Balance at December 31 Carryingamount of deferred revenue Current (in other current liabilities) Non-current	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 21,694 7,512 (1,080) (48 ) $ 28,078 December	2020 $ 14,341 7,605 (449) 197 $ 21,694 31
		2021 $ 1,080 26,998 $ 28,078	2020 $ 752 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, 2021

		Level 1			Level 2			Level 3		Total
Financial assets at FVTPL
Structured deposit	$		-	$		-	$	1,525,486	$	1,525,486

(Continued)

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Financial assetsat FVTOCI Domestic unlisted shares December 31, 2020 Financial assetsat FVTPL Structured deposit Financial assetsat FVTOCI Domestic unlisted shares	Level 1 $ - $ - Level 1 $ - - $ -	Level 2 $ - $ - Level 2 $ - - $ -	Level 3 $ 36,273 $ 1,561,759 Level 3 $ 1,582,073 39,481 $ 1,621,554	Total $ 36,273 $ 1,561,759 (Concluded) Total $ 1,582,073 39,481 $ 1,621,554

There were no transfers between Level 1 and Level 2 in 2021 and 2020.

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

For the year ended December 31, 2021

Financial assets Balance at January 1, 2021 Purchases Disposals Recognized in other comprehensive income Foreign currency exchange differences Balanced at December 31, 2021	Debt Instruments Financial Assets at FVTPL $ 1,582,073 6,614,943 (6,666,177) - (5,353 ) $ 1,525,486	Equity Instruments Financial Assets at FVTOCI $ 39,481 - - (3,208) - $ 36,273	Total $ 1,621,554 6,614,943 (6,666,177) (3,208) (5,353 ) $ 1,561,759

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For the year ended December 31, 2020

Financial assets Balance at January 1, 2020 Purchases Disposals Recognized in other comprehensive income Foreign currency exchange differences Balanced at December 31, 2020	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

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	December 31
	2021 2020 $ 1,525,486 $ 1,582,073 5,636,151 5,251,058 36,273 39,481 2,728,738 2,043,200
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)

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable, accounts receivable, other receivables (including related parties and 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 (including related parties), other payables (including related parties), long-term borrowings 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.

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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.

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 number below indicates an increase 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 2021 2020 $ 20,105 $ 21,265	For the Year Ended December 31
		2021 2020 $ 10,416 $ 7,908

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	December 31
	2021 2020 $ 1,496,236 $ 1,454,415 862,005 629,957 (Continued)

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Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31
	2021 2020 $ 3,406,687 $ 2,915,493 688,100 339,671 (Concluded)

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, 2021 and 2020 would have been higher/lower by $27,186 thousand and by $25,758 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.

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, 2021 and 2020, the face amounts of these unsettled bills receivable were $317,115 thousand and $185,181 thousand, respectively. The unsettled bills receivable will be due in 9 months and 9 months, respectively after December 31, 2021 and 2020. Taking into consideration the credit risk of these derecognized bills receivable, the Group estimates that the fair values of its continuing

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involvement are not significant.

During the years ended December 31, 2021 and 2020, 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 Honungxin Technology Co., Ltd. (Honungxiu Technology) Related party in substance

b. Purchases of goods

For	For	the Year Ended December 31	the Year Ended December 31
		2021 2020 $ 43 $ - December 31
For		2021 2020 $ 145 $ - the Year Ended December 31
	2021 $ 45 $ 4,466 207 $ 4,673		2020 $ - $ 485 - $ 485

c. Receivables from related parties
d. Payables from related parties
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e. Other transactions with related parties

1) Consigned processing

Related Party Category Line Item /Name Related party in substance Processing expense Pingtung Welkin Related party in substance Honungxin Technology		For the Year Ended December 31	For the Year Ended December 31
		2021 $ 15,909 28 $ 15,937	2020 $ 731 - $ 731

The price and payment terms with substance related parties were not compared because the Group did not have other consigned processing business with non-related parties. The payment term was 60 days from invoice date.

2) Consigned processing

December 31	December 31	December 31
2021 2020 $ 147 $ - For the Year Ended December 31

	2021 $ 480	2020 $ 480

3) Lease arrangements

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

4) 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 was received on October 19, 2020, and recognized $3,844 thousand and $17,341 thousand as interest income and other income, respectively.

f. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2021 $ 109,298 1,081 $ 110,379	2020 $ 91,696 1,240 $ 92,936

181 -

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.

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:

Notes receivable Pledged demand deposits (classified as other financial assets) Pledged time deposits (classified as other financial assets) Deposits of banker’s acceptance (classified as oher financial assets) Properties, plant and equipment Land Buildings		December 31	December 31
		2021 $ 179,860 86,811 305,600 2,608 - - $ 574,879	2020 $ 184,340 - 163,969 23,180 51,034 47,995 $ 470,518

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
		2021 $ 226,524	2020 $ 114,874

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 Currency (In Thousand) Exchange Rate December31,2021 Financial assets Monetary items USD $ 36,897 6.3674 (USD:RMB) USD 51,915 27.68 (USD:NTD) RMB 234,702 4.3471 (RMB:NTD) RMB 12,240 0.1570 (RMB:USD)	Carrying Amount (In Thousand) $ 1,021,309 1,437,007 1,020,273 53,209 $ 3,531,798 (Continued)

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Foreign
Currency (In
Thousand)
Exchange Rate
Financial liabilities
Monetary items
USD
$ 885
6.3674
(USD:RMB)

USD
15,296
27.68
(USD:NTD)
RMB
7,333
4.3471
(RMB:NTD)

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)

Financial liabilities
Monetary items
USD
621
6.5325
(USD:RMB)

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

Carrying
Amount (In
Thousand)
$ 24,497
423,393

31,877
$ 479,767
$ 863,058
1,869,598
285
723,483

85,494
$ 3,541,918
$ 17,686
588,767

18,193
$ 624,646

(Concluded)

Refers to Note 24 (c) for the imformational related to realized and unrealized net foreign exchange loss. 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 on 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.
183 -
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:

184 -
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 and sensors as principle business.
d. Guangdong Welkin Thinking: Wholesale of 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 31,2021 Revenues from external customers Inter-segment revenue Segment revenue Segment income Interest income Other income Other gains and losses Finance costs Consolidated profit before income tax Income tax Consolidated net income December 31,2021 Total segment assets Total segment liabilities 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	Thinking $ 3,230,988 544,529 $ 3,775,517 $ 952,159 $ 4,485,047 $ 3,816,668 $ 2,692,134 527,808 $ 3,219,942 $ 789,521 $ 3,872,396 $ 3,001,769	Yenyo $ 298,403 8,524 $ 306,927 $ 34,020 $ 404,145 $ 79,119 $ 177,979 2,373 $ 180,352 $ (12,418 ) $ 325,886 $ 31,539	Thinking Changzhou $ 1,770,357 1,348,673 $ 3,119,030 $ 448,494 $ 4,415,636 $ 583,185 $ 1,334,599 1,271,144 $ 2,605,743 $ 362,628 $ 4,055,374 $ 586,433	Guangdong Welkin Thinking $ 1,695,602 105,455 $ 1,801,057 $ 168,720 $ 798,145 $ 487,107 $ 1,458,539 33,494 $ 1,492,033 $ 216,677 $ 1,181,814 $ 794,974	Others $ 505,105 4,121,408 $ 4,626,513 $ 491,434 $ 4,309,390 $ 1,030,495 $ 257,007 2,634,563 $ 2,891,570 $ 553,231 $ 3,734,124 $ 1,167,612	Adjustment and Elimination $ - (6,128,589 ) $ (6,128,589 ) $ 30,008 $ (1,742,478 ) $ (1,603,042 ) $ - (4,469,382 ) $ (4,469,382 ) $ (66,497 ) $ (2,138,934 ) $ (1,996,454 )	Consolidated Amount $ 7,500,455 - $ 7,500,455 $ 2,124,835 88,523 34,309 (76,768 ) (11,565 ) 2,159,334 568,711 $ 1,590,623 $ 12,669,885 $ 4,393,532 $ 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

Segment profit represents the profit (loss) 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.

a. Revenue from major products

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

185 -

Passive components Others	For the Year Ended December 31 2021 2020 $ 7,201,871 $ 5,742,106 298,584 178,152 $ 7,500,455 $ 5,920,258	For the Year Ended December 31 2021 2020 $ 7,201,871 $ 5,742,106 298,584 178,152 $ 7,500,455 $ 5,920,258	For the Year Ended December 31 2021 2020 $ 7,201,871 $ 5,742,106 298,584 178,152 $ 7,500,455 $ 5,920,258
		2021 $ 7,201,871 298,584 $ 7,500,455	2020 $ 5,742,106 178,152 $ 5,920,258

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 on 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
		2021 $ 5,678,699 767,009 548,334 506,413 $ 7,500,455	2020 $ 4,481,839 610,590 472,220 355,609 $ 5,920,258

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

China Taiwan		Non-current Assets	Non-current Assets
		December 31
		2021 $ 1,955,478 1,245,402 $ 3,200,880	2020 $ 1,768,295 867,275 $ 2,635,570

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

c. Information on major customers

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

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TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2021 (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 $ 109,575 $ - $ - - Note 1 $ - Operating $ - - $ - $ 1,274,418 $ 1,699,224
Thinking - related (CNY 25,000 (CNY - (CNY - 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.

187 -

TABLE 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2021

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

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December 31, 2021
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 Share
ACPA TECHNOLOGY CO., LTD. - Financial assets at FVTOCI - non-current 2,469,130 $ 36,273 11 $ 36,273
Thinking Changzhou RMB financial products
Wishful Life V- Industrial and Commercial Bank - Financial assets at FVTPL - current - CNY 60,000 thousand - CNY 60,000 thousand
of China
“Tian Libao” net worth type - Industrial and - Financial assets at FVTPL - current - CNY 193 thousand - CNY 193 thousand
Commercial Bank of China
Accumulate every day - Bank of China - Financial assets at FVTPL - current - CNY 14,500 thousand - CNY 14,500 thousand
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 120,000 thousand - CNY 120,000 thousand
(China)
Thinking Yichang RMB financial products
Ziqi Donlai - Xinchen series - Hubei Bank - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
“Tian Libao” Net Worth Type - Industrial and - Financial assets at FVTPL - current - CNY 6,000 thousand - CNY 6,000 thousand
Commercial Bank of China
“Wenfu” fixed profit increase - Bank of China - Financial assets at FVTPL - current - CNY 25,000 thousand - CNY 25,000 thousand
Wishful Life V - Industrial and Comercial Bank of - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
China
Jiangxin Lingdong 360 days fixed profit increase - - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
Agricultural Bank of China
Jiangxi Thinking RMB financial products
Qingkui series half year open end - China - Financial assets at FVTPL - current - CNY 4,000 thousand - CNY 4,000 thousand
Merchants Bank
Stable Financial Management Plan-Wisdom Series - Financial assets at FVTPL - current - CNY 11,040 thousand - CNY 11,040 thousand
- Bank of China
Accumulate every day-daily plan - Bank of China - Financial assets at FVTPL - current - CNY 220 thousand - CNY 220 thousand
Qianyuan Huizhong (subscript daily and redeem - Financial assets at FVTPL - current - CNY 14,010 thousand - CNY 14,010 thousand
monthly) - China Construction Bank
Dongguan Welkin RMB financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 40,000 thousand - CNY 40,000 thousand
Merchants Bank
Zhouzhoufa - China Merchants Banks - Financial assets at FVTPL - current - CNY 20,000 thousand - CNY 20,000 thousand
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 6,060 thousand - CNY 6,060 thousand
(China)
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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, 2021

(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
“E-Lingtong” net worth type Financial assets at FVTPL - Industrial and - CNY 26,223 thousand - CNY 558,181 thousand - CNY 585,249 thousand CNY 584,404 thousand CNY 845 thousand - -
current Commercial
Bank of
China
Wishful Life V Financial assets at FVTPL - Industrial and - CNY 120,000 thousand - CNY 200,000 thousand - CNY 264,254 thousand CNY 260,000 thousand CNY 4,254 thousand - CNY 60,000 thousand
current Commercial
Bank of
China
“Tian Libal” net month type Financial assets at FVTPL - Industrial and - - - CNY 102,293 thousand - CNY 102,291 thousand CNY 102,000 thousand CNY 191 thousand - CNY 193 thousand
current Commercial
Bank of
China
Accumulate every day Financial assets at FVTPL - Bank of China - - - CNY 76,500 thousand - CNY 62,038 thousand CNY 62,000 thousand CNY 38 thousand - CNY 14,500 thousand
current
Structured Deposit Monthly Profit Financial assets at FVTPL - Fubon Bank - CNY 80,000 thousand - CNY 120,000 thousand - CNY 82,416 thousand CNY 80,000 thousand CNY 2,416 thousand - CNY 120,000 thousand
current (China)
Jiangxi Thinking RMB financial products
7007 Financial assets at FVTPL - China - - - CNY 60,240 thousand - CNY 60,314 thousand CNY 60,240 thousand CNY 74 thousand - -
current Merchants
Bank
Dongguan Welkin RMB financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY 15,000 thousand - CNY 119,000 thousand - CNY 94,555 thousand CNY 94,000 thousand CNY 555 thousand - CNY 40,000 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, 2021

(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 Terms Payment Ending Balance
Purchases/Sales Amount % of Total Unit Price % of Total Note
(Note 1) Term (Note 2)
The Company Thinking Changzhou Subsidiary Sales $ (249,647 ) (7 ) 60 days from the end of $ - - $ (86,544 ) (8 )
the month
Thinking Changzhou Subsidiary Purchases 889,632 36 60 days from the end of - - 186,048 22
the month
Thinking Yichang Subsidiary Purchases 119,569 5 60 days from the end of - - 15,176 2
the month
Dongguan Welkin Subsidiary Sales (291,876 ) (8 ) 60 days from the end of - - (124,614 ) (12 )
the month
Dongguan Welkin Subsidiary Purchases 1,250,129 50 60 days from the end of - - 224,869 26
the month
Thinking Changzhou Thinking Yichang Associate Purchases 115,300 6 60 days from the end of - - 41,961 8
the month
Jiangxi Thinking Associate Sales (132,255 ) (4 ) 60 days from the end of - - (38,452 ) (4 )
the month
Guangdong Welkin Thinking Associate Sales (110,277 ) (4 ) 60 days from the end of - - (15,134 ) (1 )
the month
Dongguan Welkin Associate Sales (153,325 ) (5 ) 60 days from the end of - - (55,058 ) (5 )
the month
Thinking Yichang Jiangxi Thinking Associate Purchases 199,814 32 60 days from the end of - - 49,895 31
the month
Guangdong Welkin Thinking Associate Sales (461,357 ) (44 ) 60 days from the end of - - (75,222 ) (32 )
the month
Jiangxi Thinking Dongguan Welkin Associate Sales (379,212 ) (51 ) 60 days from the end of - - (57,388 ) (34 )
the month
Guangdong Welkin Dongguan Welkin Associate Purchases 974,200 63 60 days from the end of - - 229,704 62
Thinking the month
Dongguan Welkin Zhongshan Welkin Subsidiary Purchases 220,537 11 60 days from the end of - - 42,616 6
the month
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Note 1: In April 2021, the Company cooperated with the Group’s policy, the credit period for group transactions was changed from 90 days to 60 days from the invoice date.

Note 2: All intercompany transactions have been eliminated upon consolidation.

190 -

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, 2021

(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 (Note) Turnover Rate in Subsequent
Amount Actions Taken Doubtful Accounts
Period
The Company Dongguan Welkin Subsidiary $ 124,614 2.29 $ - - $ 98,716 $ -
Thinking Changzhou The Company Parent company 186,048 4.36 - - 179,232 -
Dongguan Welkin The Company Parent company 224,869 4.44 - - 205,284 -
Guangdong Welkin Associate 229,704 3.57 - - 161,954 -
Thinking
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Note: All intercompany transactions have been eliminated upon consolidation.

191 -

TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021 (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
2021 2020 shares of ownership Carrying Amount (Loss) of the Investee Share of profit (Loss)
(%)
The Company Yenyo Yilan Processing, sales and manufacturing of diodes $ 304,410 $ 275,160 25,732,508 63.76 $ 202,130 $ 33,780 $ 20,464 Note 1
Greenish British Virgin Investment holding and international trading 242,300 242,300 7,374,997 100 2,172,842 264,013 267,412 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 3,064,495 507,495 531,047 Note 1
( US$ 24,729 thousand ) ( US$ 24,729 thousand )
Thinking Holding Thinking International Mauritius Investment holding and international trading 196,512 196,512 6,075,000 100 1,056,600 104,697 104,697
( US$ 6,075 thousand ) ( US$ 6,075 thousand )
Thinking HK Hong Kong Investment holding and international trading 311,109 311,109 10,020,000 100 709,858 85,823 85,823
( 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 1,230,598 288,305 288,305
( US$ 5,055 thousand ) ( US$ 5,055 thousand )
Thinking Samoa Samoa Investment holding and international trading 94,465 76,294 3,244,188 100 146,426 28,456 28,456
( US$ 3,244 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.

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TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021 (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, 2021 December 31, 2021 Investment December 31, 2020
Thinking Changzhou Manufacturing and selling thermistors, US$ 21,260 thousand Note 1 $ 452,725 $ - $ - $ 452,725 $ 523,644 100 $ 530,106 $ 4,185,054 $ 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 - - 194,170 104,945 100 104,945 1,055,309 - Note 11
varistors and sensors
Jiangxi Thinking Manufacturing and selling thermistors US$ 10,000 thousand Note 3 310,330 - - 310,330 85,848 100 85,848 709,615 - Note 11
and varistors
Guangdong Welkin Thinking Wholesale of thermistors, varistors, US$ 5,000 thousand Note 4 153,547 - - 153,547 127,632 100 127,632 311,038 - Note 11
sensors and equipment
Dongguan Welkin Manufacturing and selling thermistors, CNY$123,955 thousand Note 5 75,535 18,171 - 93,706 273,424 100 273,424 1,415,769 - Note 11
varistors, sensors and equipment
Zhongshan Welkin Manufacturing and selling thermistors CNY$ 60,000 thousand Note 6 - - - - (16,728 ) 100 (16,728 ) 243,982 - Note 11
and varistors
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Accumulated Outward Remittance for Investment Investment Amounts Authorized by the Upper Limit on the Amount of Investments
in Mainland China as of December 31, 2021 Investment Commission, MOEA Stipulated by the Investment Commission, MOEA
$1,217,639 $1,196,496 $4,895,180
(US$38,136 thousand) (US$43,226 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: Indirectly investment in mainland China through subsidiary (Dongguan Welkin).
Note 7: The financial statements have been audited by the ultimate parent company’s certified public accountant.
Note 8: The amount of US$5,090 thousand was the difference between the MOEA approved investment amount of US$43,226 thousand and the amount of accumulated outflow of investment from Taiwan of US$38,136 thousand. Such difference was the result of deducting the capital increase of US$22,024 thousand from the subsidiary in mainland China, and the deducted amount of US$465 thousand has been approved but not yet remitted. The added surplus of the subsidiary in mainland China which was approximately US$17,399 thousand was repatriated. The balance amount as of December 31, 2021 was based on the US$1=NT$27.68 exchange rate.
Note 9: The upper limit on investment in mainland China is determined by 60% of the Company’s consolidated net worth.
Note 10: The Company recognized share of profits of Thinking Changzhou was $251,232 thousand, and Greenish recognized share of profits of Thinking Changzhou was $278,874 thousand. Total amount of share of profits was $530,106 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 intercompany transactions have been eliminated upon consolidation.
193 -

TABLE 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INTERCOMPANY BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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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 $ 249,647 Pricing by cost-plus practice 3
Thinking Changzhou 1 Purchases 889,632 Pricing by cost-plus practice 12
Thinking Changzhou 1 Accounts receivable 86,544 60 days from the end of the month 1
Thinking Changzhou 1 Accounts payable 186,048 60 days from the end of the month 1
Thinking Changzhou 1 Other accounts payable 1,151 60 days from the end of the month -
Thinking Yichang 1 Sales 3,006 Pricing by cost-plus practice -
Thinking Yichang 1 Purchases 119,569 Pricing by cost-plus practice 2
Thinking Yichang 1 Accounts receivable 1,255 60 days from the end of the month -
Thinking Yichang 1 Accounts payable 15,176 60 days from the end of the month -
Dongguan Welkin 1 Sales 291,876 Pricing by cost-plus practice 4
Dongguan Welkin 1 Purchases 1,250,129 Pricing by cost-plus practice 17
Dongguan Welkin 1 Accounts receivable 124,614 60 days from the end of the month 1
Dongguan Welkin 1 Accounts payable 224,869 60 days from the end of the month 2
Dongguan Welkin 1 Prepayment 766 60 days from the end of the month -
Yenyo 1 Purchases 8,498 Pricing by cost-plus practice -
Yenyo 1 Accounts payable 2,000 60 days from the end of the month -
1 Thinking Changzhou Thinking Yichang 2 Sales 63,106 Pricing by cost-plus practice 1
Thinking Yichang 2 Purchases 115,300 Pricing by cost-plus practice 2
Thinking Yichang 2 Accounts receivable 11,223 60 days from the end of the month -
Thinking Yichang 2 Accounts payable 41,961 60 days from the end of the month -
Thinking Yichang 2 Prepayment 1,407 60 days from the end of the month -
Jiangxi Thinking 2 Sales 132,255 Pricing by cost-plus practice 2
Jiangxi Thinking 2 Purchases 70,192 Pricing by cost-plus practice 1
Jiangxi Thinking 2 Accounts receivable 38,452 60 days from the end of the month -
Jiangxi Thinking 2 Other accounts receivable 2,706 60 days from the end of the month -
Jiangxi Thinking 2 Accounts payable 34,608 60 days from the end of the month -
Guangdong Welkin Thinking 2 Sales 110,277 Pricing by cost-plus practice 1
Guangdong Welkin Thinking 2 Purchases 534 Pricing by cost-plus practice -
Guangdong Welkin Thinking 2 Interest income 570 For one year financing provided -
Guangdong Welkin Thinking 2 Accounts receivable 15,134 60 days from the end of the month -
Dongguan Welkin 2 Sales 153,325 Pricing by cost-plus practice 2
Dongguan Welkin 2 Purchases 82,311 Pricing by cost-plus practice 1
Dongguan Welkin 2 Accounts receivable 55,058 60 days from the end of the month -
Dongguan Welkin 2 Accounts payable 13,103 60 days from the end of the month -
Dongguan Welkin 2 Other accounts payable 5,220 60 days from the end of the month -
Dongguan Welkin 2 Prepayment 2,283 60 days from the end of the month -
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(Continued)

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Intercompany Transactions
Percentage of
Nature of Relationship
No. Company Name Counterparty Amount Consolidated
(Note 1) Financial Statement Item Terms
Total Sales or
Total Assets
2 Thinking Yichang Jiangxi Thinking 2 Sales $ 721 Pricing by cost-plus practice -
Jiangxi Thinking 2 Purchases 199,814 Pricing by cost-plus practice 3
Jiangxi Thinking 2 Accounts payable 49,895 60 days from the end of the month -
Guangdong Welkin Thinking 2 Sales 461,357 Pricing by cost-plus practice 6
Guangdong Welkin Thinking 2 Accounts receivable 75,222 60 days from the end of the month 1
Dongguan Welkin 2 Sales 90,514 Pricing by cost-plus practice 1
Dongguan Welkin 2 Purchases 42,578 Pricing by cost-plus practice 1
Dongguan Welkin 2 Accounts receivable 47,440 60 days from the end of the month -
Dongguan Welkin 2 Accounts payable 5,924 60 days from the end of the month -
Dongguan Welkin 2 Prepayment 7,505 60 days from the end of the month -
Zhongshan Welkin 2 Sales 817 Pricing by cost-plus practice -
Zhongshan Welkin 2 Advanced receipts 2,666 60 days from the end of the month -
3 Jiangxi Thinking Guangdong Welkin Thinking 2 Sales 2,084 Pricing by cost-plus practice -
Dongguan Welkin 2 Sales 379,212 Pricing by cost-plus practice 5
Dongguan Welkin 2 Purchases 3,711 Pricing by cost-plus practice -
Dongguan Welkin 2 Accounts receivable 57,388 60 days from the end of the month -
Dongguan Welkin 2 Other accounts payable 1,426 60 days from the end of the month -
Dongguan Welkin 2 Prepayment 961 60 days from the end of the month -
Zhongshan Welkin 2 Sales 87,255 Pricing by cost-plus practice 1
Zhongshan Welkin 2 Accounts receivable 20,727 60 days from the end of the month -
4 Guangdong Welkin Thinking Dongguan Welkin 2 Sales 31,045 Pricing by cost-plus practice -
Dongguan Welkin 2 Purchases 974,200 Pricing by cost-plus practice 13
Dongguan Welkin 2 Accounts receivable 3,331 60 days from the end of the month -
Dongguan Welkin 2 Accounts payable 229,704 60 days from the end of the month 2
Zhongshan Welkin 2 Sales 73,750 Pricing by cost-plus practice 1
5 Dongguan Welkin Zhongshan Welkin 1 Sales 21,107 Pricing by cost-plus practice -
Zhongshan Welkin 1 Purchase 220,537 Pricing by cost-plus practice 3
Zhongshan Welkin 1 Accounts receivable 5,986 60 days from the end of the month -
Zhongshan Welkin 1 Advanced receipts 3,205 60 days from the end of the month -
Zhongshan Welkin 1 Accounts payable 42,616 60 days from the end of the month -
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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: In April 2021, the Company cooperated with the Group’s policy, and the credit period for group transactions was changed from 90 days to 60 days from the invoice date.

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TABLE 9

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2021

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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 8,417,000 6.56
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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.

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Thinking Electronic Industrial Company Limited

Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

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INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying financial statements of Thinking Electronic Industrial Co., Ltd. (the “Company”), which comprise the balance sheets as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statement”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and 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 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 financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the 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 financial statements for the year ended December 31, 2021 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$3,775,336 thousand for the year ended December 31, 2021, and revenue from specific products increased significantly than the previous year. Therefore, the occurrence of sales of specific products is considered as a key audit matter. For the accounting policy on revenue recognition, refer to Note 4 (k) to the 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 products.
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 Financial Statements

Management is responsible for the preparation and fair presentation of the 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 financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the 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 Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

Identify and assess the risks of material misstatement of the 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 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
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may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the 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 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 financial statements for the year ended December 31, 2021 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 21, 2022

Notice to Readers

The accompanying 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 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.

BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Notes receivable (Note 8) Accounts receivable, net (Notes 4 and 8) Accounts receivable - related parties (Notes 8 and 27) Other receivables Other receivables - related parties (Note 27) Inventories (Notes 4 and 9) Other financial assets - current (Notes 10 and 28) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 7) Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 4, 12, 27 and 29) Right-of-use assets (Notes 4 and 13) Other intangible assets (Note 4) Deferred tax assets (Notes 4 and 22) Prepayments for equipment (Note 27) Net defined benefit assets - non-current (Notes 4 and 18) Other financial assets - non-current (Notes 10 and 28) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 4 and 14) Accounts payable (Note 15) Accounts payable - related parties (Notes 15 and 27) Other payables (Note 16) Other payables - related parties (Note 27) Current tax liabilities (Notes 4 and 22) Lease liabilities - current (Notes 4 and 13) Refund liabilities (Notes 4 and 17) Other current liabilities (Notes 4 and 24) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 4 and 14) Deferred tax liabilities (Notes 4 and 22) Lease liabilities - non-current (Notes 4 and 13) Deferred revenue non-current (Notes 4 and 24) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 11 and 19) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		December 31, 2021 Amount % $ 1,428,034 12 3,879 - 829,581 7 212,413 2 5,245 - 266 - 410,995 4 276,800 2 38,812 - 3,206,025 27 36,273 - 7,490,254 63 936,977 8 53,092 - 33,652 - 99,007 1 77,806 1 11,100 - 31,115 - 8,769,276 73 $ 11,975,301 100 $ 749,630 6 47,752 - 428,093 4 382,554 3 5,599 - 96,076 1 1,023 - 92,669 1 2,764 - 1,806,160 15 688,100 6 1,255,099 10 53,700 1 13,489 - 120 - 2,010,508 17 3,816,668 32 1,281,127 11 352,907 3 1,159,089 10 201,436 1 5,386,452 45 6,746,977 56 (222,378 ) (2 ) 8,158,633 68 $ 11,975,301 100		December 31, 2020	December 31, 2020
		Amount $ 1,428,034 3,879 829,581 212,413 5,245 266 410,995 276,800 38,812 3,206,025 36,273 7,490,254 936,977 53,092 33,652 99,007 77,806 11,100 31,115 8,769,276 $ 11,975,301 $ 749,630 47,752 428,093 382,554 5,599 96,076 1,023 92,669 2,764 1,806,160 688,100 1,255,099 53,700 13,489 120 2,010,508 3,816,668 1,281,127 352,907 1,159,089 201,436 5,386,452 6,746,977 (222,378 ) 8,158,633 $ 11,975,301		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	% 16 - 8 3 - - 2 - - 29 - 63 6 1 - 1 - - - 71 100 3 - 6 3 - 1 - 2 - 15 3 10 1 - - 14 29 13 3 10 3 44 57 (2 ) 71 100

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

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 20 and 27) OPERATING COSTS (Notes 9, 21 and 27) GROSS PROFIT UNREALIZED GAINS FROM SALES (Notes 4 and 27) REALIZED GAINS FROM SALES (Note 4) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4, 8, 21 and 27) 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 11, 21, 24 and 27) 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 22) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 19 and 22)		2021 Amount % $ 3,775,517 100 2,310,989 61 1,464,528 39 (29,161) (1) 4,773 - 1,440,140 38 127,963 3 224,462 6 134,925 4 631 - 487,981 13 952,159 25 15,999 1 2,272 - (44,909) (1) (7,220) - 1,070,155 28 1,036,297 28 1,988,456 53 411,149 11 1,577,307 42		2020
				Amount % $ 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 (Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

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 TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 23) Basic Diluted			2021 Amount % (1,430) - (3,208) - (1,977) - 286 - (6,329 ) - (139,598) (4) 117,430 3 4,434 - (17,734 ) (1 ) (24,063 ) (1 ) 1,553,244 41 $ 12.31 $ 12.25		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




		$

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

(Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2020 Appropriation of 2019 earnings (Note 19) 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 Total comprehensive income (loss) for the year ended December 31, 2020 BALANCE AT DECEMBER 31, 2020 Appropriation of 2020 earnings (Note 19) Legal reserve Cash dividends distributed by the Company Reversal of special reserve Net profit for the year ended December 31, 2021 Other comprehensive income (loss) for the year ended December 31, 2021 Total comprehensive income (loss) for the year ended December 31, 2021 Difference between consideration and carrying amount of subsidiaries acquired (Notes 11 and 19) BALANCE AT DECEMBER 31, 2021	Share Capital Capital Surplus $ 1,281,127 $ 348,263 - - - - - - - - - - - - - - 1,281,127 348,263 - - - - - - - - - - - - - - - 4,644 $ 1,281,127 $ 352,907		Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings Total Retained Earnings $ 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 5,877,411 138,883 - (138,883) - - - (704,620) (704,620) - (83,219 ) 83,219 - 138,883 (83,219 ) (760,284 ) (704,620 ) - - 1,577,307 1,577,307 - - (3,121 ) (3,121 ) - - 1,574,186 1,574,186 - - - - $ 1,159,089 $ 201,436 $ 5,386,452 $ 6,746,977	Other Equity	Total Other Equity $ (284,655 ) - - - - - 83,219 83,219 (201,436 ) - - - - - (20,942 ) (20,942 ) - $ (222,378 )	Total Equity $ 6,371,393 - - (538,073 ) (538,073 ) 1,385,016 87,029 1,472,045 7,305,365 - (704,620) - (704,620 ) 1,577,307 (24,063 ) 1,553,244 4,644 $ 8,158,633
				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 $ (277,631 ) $ (7,024 ) - - - - - - - - - - 70,656 12,563 70,656 12,563 (206,975 ) 5,539 - - - - - - - - - - (17,734 ) (3,208 ) (17,734 ) (3,208 ) - - $ (224,709 ) $ 2,331

The accompanying notes are an integral company only financial statements.

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expense Amortization expense Expected credit loss (gain) 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 (reversal) 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 Proceeds from disposal of financial assets at amortized cost Acquisition of investment accounted for using equity method Acquisition of property, plant and equipment Payment for intangible assets Increase in other financial assets	2021 $ 1,988,456 74,808 5,559 631 7,220 (15,999) (1,070,155) 1 9,418 29,161 (4,773) (47,912) (752) - 1,445 (29,372) 73,314 (271) (169) (212,700) (20,048) (1,123) 27,404 (163,900) 83,798 4,014 306 (30,398 ) 707,963 14,137 (4,753) (196,554 ) 520,793 - (29,250) (420,863) (10,852) (276,800 )	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) (1,566) (2,262 )

(Continued)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

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 Refund of guarantee deposits received Repayments of the principal portion of lease Cash dividends paid Net cash generated from 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 The accompanying notes are an integral part of the financial statements.	2021 $ (737,765 ) 4,450,200 (4,075,570) 353,540 (10) (929) (704,620 ) 22,611 (194,361) 1,622,395 $ 1,428,034	2020 $ (121,485 ) 1,709,000 (1,434,000) 347,000 - (1,393) (538,073 ) 82,534 771,300 851,095 $ 1,622,395 (Concluded)

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THINKING ELECTRONIC INDUSTRIAL CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (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 21, 2022.

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)

b. The IFRSs endorsed by the FSC for application starting from 2022

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Effective Date
New IFRSs Announced by IASB
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New IFRSs	Effective Date Announced by IASB
“Annual Improvements to IFRS Standards 2018-2020”	January 1, 2022 (Note 1)
Amendments to IFRS 3 “Reference to the Conceptual Framework”	January 1, 2022 (Note 2)
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds	January 1, 2022 (Note 3)
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a	January 1, 2022 (Note 4)
Contract”

Note 1: 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 2: 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 3: 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
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by management on or after January 1, 2021.

Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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 by IASB but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1) 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 IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - January 1, 2023 Comparative Information” 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 2) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 3) Amendments to IAS 12 “Deferred Tax related to Assets and January 1, 2023 (Note 4) Liabilities arising from a Single Transaction”

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 will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: 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 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.
1) 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:

a) Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
b) 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
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c) Not all accounting policy information relating to material transactions, other events or conditions is itself material.

a) 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;
b) The Company chose the accounting policy from options permitted by the standards;
c) 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;
d) 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
e) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.
2) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Company may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Company uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

Except for the above impact, as of the date the parent company only financial statements were authorized for issue, the Company is continuously assessing the possible impact of the application of other standards and interpretations 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;
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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.

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.

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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 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. Differences between the carrying amounts of the investment and the fair value of the consideration paid or received are directly recognized in equity.

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

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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 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

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cash-generating units or the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

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.

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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;
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):

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i Internal or external information show that the debtor is unlikely to pay its creditors.
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.

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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 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

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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.

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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Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, except where the Company 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.

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 on 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.

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
		2021 $ 549 74 925,234 502,177 $ 1,428,034	2020 $ 578 74 999,525 622,218 $ 1,622,395

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

Time deposits (%)	December 31
	2021 2020 2.71-3.00 0.41-2.85

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 FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2021 $ 36,273	2020 $ 39,481

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.

8. NOTES AND ACCOUNTS RECEIVABLE

Notesreceivable At amortized cost Gross carrying amount - operating Accounts receivable - non-relatedparties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss Accountsreceivable- related parties At amortized cost Gross carrying amount - operating (Note 27)		December 31	December 31
		2021 $ 3,879 $ 845,234 15,653 $ 829,581 $ 212,413	2020 $ 5,324 $ 815,862 15,022 $ 800,840 $ 285,727

The Company’s notes receivable and accounts receivable have been measured by amortized cost. Refer to Note 26 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.

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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, 2021

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0-0.05 $ 1,009,054 (443 ) $ 1,008,611	Past Due 1to 30 Days 0.5 $ 3,040 (15 ) $ 3,025	Past Due 31 to 60 Days 1 $ 28,139 (281 ) $ 27,858	Past Due 61 to 90 Days 30 $ 3,496 (1,049 ) $ 2,447	Past Due 91 to 180 Days 50 $ 117 (64 ) $ 53	Past Due Over 180 Days 100 $ 13,801 (13,801 ) $ -	Total $ 1,057,647 (15,653 ) $ 1,041,994

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

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

Balance at January 1 Net remeasurement (reversal) of loss allowance Amounts written off Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 15,022 631 - $ 15,653	2020 $ 16,934 (1,856) (56 ) $ 15,022

9. INVENTORIES

Finished goods Work-in-process Raw materials Supplies Inventory in transit		December 31	December 31
		2021 $ 219,022 72,994 100,242 6,444 12,293 $ 410,995	2020 $ 118,656 37,102 42,734 3,053 6,168 $ 207,713

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The cost of inventories recognized as cost of goods sold for the years ended December 31, 2021 and 2020 was $2,310,989 thousand and $2,041,760 thousand, respectively, which included the following inventory losses (gains):

Write-off obsolete inventories Inventory write-downs (reversed)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 7,084 2,334 $ 9,418	2020 $ 27,658 (12,438 ) $ 15,220

10. OTHER FINANCIAL ASSETS

Pledged time deposits Refundable deposits Current Non-current Interest rate (%)		December 31	December 31
		2021 $ 305,600 2,315 $ 307,915 $ 276,800 31,115 $ 307,915 0.35-0.57	2020 $ 28,800 2,315 $ 31,115 $ - 31,115 $ 31,115 0.57

For information on other financial assets pledged, refer to Note 28.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Not listed company Yenyo Technology Co., Ltd. (Yenyo) Greenish Co., Ltd. (Greenish) Thinking (Changzhou) Electronic Co., Ltd. (Thinking Changzhou) Thinking Holding (Cayman) Co., Ltd. (Thinking Holding) Yenyo Greenish Thinking Changzhou Thinking Holding		December 31
		2021 2020 $ 202,130 $ 149,749 2,172,842 1,918,837 2,050,787 1,814,089 3,064,495 2,552,063 $ 7,490,254 $ 6,434,738 Proportion of Ownership and Voting Rights
		December 31
		2021 2020 63.76% 52.61% 100.00% 100.00% 47.39% 47.39% 100.00% 100.00%

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In July 2021, the Company acquired 4,500,000 shares of its subsidiary Yenyo from non-controlling interests for $29,250 thousand, and the difference between the amount of consideration and the carrying amount of subsidiarie’s net assets acquired was included in the capital reserve of $4,644 thousand; as a result, its shareholding increased from the original 52.61% to 63.76%. Since the preceding transaction did not change the Company's control over the subsidiary, the Company recognized such transaction as an equity transaction.

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, 2021 and 2020 were recognized based on the subsidiaries’ financial statements which have been audited.

12. PROPERTY, PLANT, AND EQUIPMENT

a. Changes in cost and accumulated depreciation ：

For the Year ended December 31, 2021

Cost Balance at January 1, 2021 Additions Disposals Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Disposals Balance at December 31, 2021 Carrying amount at December 31, 2021	Land $ 144,685 - - $ 144,685 $ - - - $ - $ 144,685	Buildings Machinery and Equipment Leasehold Improvements $ 208,664 $ 568,489 $ 1,514 972 106,011 - - (4,330 ) - $ 209,636 $ 670,170 $ 1,514 $ 83,594 $ 374,541 $ 1,421 5,311 45,899 27 - (4,329 ) - $ 88,905 $ 416,111 $ 1,448 $ 120,731 $ 254,059 $ 66	Others Property under Construction $ 197,763 $ 104,013 8,641 281,205 (1,050 ) - $ 205,354 $ 385,218 $ 152,044 $ - 22,142 - (1,050 ) - $ 173,136 $ - $ 32,218 $ 385,218	Total $ 1,225,128 396,829 (5,380 ) $ 1,616,577 $ 611,600 73,379 (5,379 ) $ 679,600 $ 936,977

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 Property under Construction $ 191,567 $ 22,685 6,339 81,328 (143 ) - $ 197,763 $ 104,013 $ 129,957 $ - 22,230 - (143 ) - $ 152,044 $ - $ 45,719 $ 104,013	Total $ 1,094,916 136,704 (6,492 ) $ 1,225,128 $ 550,320 67,123 (5,843 ) $ 611,600 $ 613,528

In January 2019, the board of directors of the Company approved the investment plan for the Nanzih Plant in Kaohsiung, and the estimated investment amount increased to $1,000,000 thousand in January 2021, which had not been completed and accepted as of the reporting date, and the actual project contract request was included in the property under construction.

A reconciliation of the above-mentioned increase in property, plant and equipment and the amount paid in the cash flow statement is as follows:

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Investing activities that affected both cash and non-cash items Additions to property, plant, and equipment Increase in payables for equipment(in other payables) Increase in payables for equipment-related parties (in other payables-related parties) Increase in prepayments for equipment Capitalization of depreciation Payments of acquisition of property, plant, and equipment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 396,829 (12,397) (1,151) 38,166 (584 ) $ 420,863	2019 $ 136,704 (16,437) - 22,976 (586 ) $ 142,657

b. Useful lives

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

13. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Depreciation charge for right-of-use assets - land		December	31
	2021 2020 $ 53,092 $ 55,105 For the Year Ended December 31
		2021 $ 2,013	2020 $ 2,018

Except for the recognized depreciation, the Company did not have impairment or subleasing of right-of-use assets for the year ended December 31, 2021 and 2020.

b. Lease liabilities

Carrying amount Current Non-current		December	31
		2021 $ 1,023 $ 53,700	2020 $ 929 $ 54,723

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Range of discount rates for lease liabilities was as follows:

Land	December 31
	2021 2020 0.75-1.38 0.75-1.38

c. Material leasing activities and terms

The Company leases land located at Nanzih Export Processing Zone for the use of plants with the remaining useful life of 4 to 8 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 at the end of the lease period. 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
		2021 $ 821 $ 357 $ 2,795	2020 $ 442 $ 412 $ 2,947

14. BORROWINGS

a. Short - term borrowings

Secured loans (Note 28) Credit loans The annual interest rate (%) Secured loans Credit loans Long - term borrowings Credit Loans Less: Government grants discount The annual interest rate (%)		December 31	December 31
		2021 2020 $ 249,630 $ - 500,000 375,000 $ 749,630 $ 375,000 0.34 - 0.68-0.72 0.75-0.77 December 31
		2021 $ 700,540 12,440 $ 688,100 0.35	2020 $ 347,000 7,329 $ 339,671 0.35

b. Long - term borrowings

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1) Credit period: The credit period is from October 2020 to October 2027, and the credit is $1,264,000 thousand, which is a revolving loan allowing separate drawdowns, and all credits will expire in October 2027.
2) Borrowing interest rate: For the first 5 years from the date of initial drawdown, the annual interest rate of prime rate loan is 0.35% after the reduction of the variable interest rate of 0.495% based on the two-year fixed deposit interest rate of Chunghwa Post Co., Ltd. On the sixth year, when variable interest rate increases by 0.005% based on the two-year fixed deposit interest rate of Chunghwa Post Co., Ltd., the loan interest rate will be 0.85%. The Company calculates its fair value with an annual interest rate of 0.845% based on general condition.
3) Repayment method: Monthly installments start on the fourth year from the date of initial drawdown until October 2027.
4) Each annual repayment plan drawdown is as follows:

Repayment year 2023 (November-December) 2024 2025 2026 2027 (January-October)		Amounts of Repayment
		2020 $ 14,458 138,710 193,190 193,190 160,992 $ 700,540

15. 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.

16. 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
		2021 $ 165,627 91,100 40,127 26,800 58,900 $ 382,554	2020 $ 128,237 64,300 27,730 23,400 42,626 $ 286,293

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17. REFUND LIABILITIES

Balance at January 1 Recognized (reversed) Usage Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2021 $ 170,979 (47,912) (30,398 ) $ 92,669	2020 $ 47,717 125,250 (1,988 ) $ 170,979

18. 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 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		December	31
		2021 $ 83,126 (94,226 ) $ (11,100 )	2020 $ 81,262 (92,669 ) $ (11,407 )

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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, 2020	$ 86,681	$ (92,565 )	$ (5,884 )
Service cost
Current service cost	136	-	136
Net interest expense (income)	857	(933 )	(76 )
Recognized in profit or loss	993	(933 )	60
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(2,764)	(2,764)
Actuarial loss-change in financial
assumptions	935	-	935
Actuarial gain - experience adjustments	(2,594 )	-	(2,594 )
Recognized in other comprehensive income	(1,659 )	(2,764 )	(4,423 )
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 )
Service cost
Current service cost	104	-	104
Net interest expense (income)	631	(727 )	(96 )
Recognized in profit or loss	735	(727 )	8
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(930)	(930)
Actuarial loss-change in financial
assumptions	637	-	637
Actuarial loss - experience adjustments	1,723	-	1,723
Recognized in other comprehensive income	2,360	(930 )	1,430
Contributions from the employer	-	(1,131 )	(1,131 )
Benefits paid	(1,231 )	1,231	-
Balance at December 31, 2021	$ 83,126	$ (94,226 )	$ (11,100 )

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

1) Investment risk

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2) Interest risk

3) Salary risk

Discount rate (%) Expected rate of salary increase (%)	December 31
	2021 2020 0.65 0.80 2.00 2.00

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 1% increase 1% decrease		December	31
		2021 $ (1,056 ) $ 1,088 $ 4,454 $ (4,026 )	2020 $ (1,165 ) $ 1,203 $ 4,941 $ (4,440 )

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
		2021 $ 1,130 9	2020 $ 1,150 9

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19. 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
		2021 200,000 $ 2,000,000 128,113 $ 1,281,127	2020 200,000 $ 2,000,000 128,113 $ 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 The difference between consideration and the carrying amount of subsidiaries acquired		December 31	December 31
		2021 $ 265,446 59,168 23,649 4,644 $ 352,907	2020 $ 265,446 59,168 23,649 - $ 348,263

c. Retained earnings and dividend policy

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to or reversed from a special reserve by the Company. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and thereafter distributed.

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended 2020 2019 $ 138,883 $ 111,942 (83,219) 177,028 704,620 538,073 $ 760,284 $ 827,043	Appropriation of Earnings For the Year Ended 2020 2019 $ 138,883 $ 111,942 (83,219) 177,028 704,620 538,073 $ 760,284 $ 827,043	Dividend Per Share (NT$)
		For the Year	For the Year Ended
		2020 $ 138,883 (83,219) 704,620 $ 760,284	2020 2019 $ 5.5 $ 4.2

The appropriations of earnings for 2021 had been proposed by the Company’s board of directors on March 21, 2022. The appropriation and dividends per share were as follows:

	Appropriation	Dividend Per
	of Earnings	Share (NT$)
Legal reserve	$ 157,419
Special reserve	20,942
Cash dividends	807,110	$ 6.3
	$ 985,471

The appropriations of earnings for 2021 are subject to the resolution of the shareholders’ meeting to be held on June 16, 2022.

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 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
		2021 $ (206,975) (139,598) 27,920 117,430 (23,486 ) $ (224,709 )	2020 $ (277,631) (200,966) 40,193 289,286 (57,857 ) $ (206,975 )

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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	For the Year Ended	For the Year Ended	December 31
		2021 $ 5,539 (3,208 ) $ 2,331	2020 $ (7,024) 12,563 $ 5,539

20. OPERATING REVENUE

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
		2021 $ 3,775,336 181 $ 3,775,517	2020 $ 3,219,769 173 $ 3,219,942

a. Refer to Note 4 (k) for information related to contracts with customers.

b. Contract balances

December 31, 2021 December 31, 2020 Notes and accounts receivable (Note 8) $ 1,045,873 $ 1,091,891	January 1, 2020 $ 969,290

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
		2021 $ 3,775,336 181 $ 3,775,517	2020 $ 3,219,769 173 $ 3,219,942

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21. 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
2021 2020 $ 14,285 $ 7,260 102 - - 97 1,612 3,930 $ 15,999 $ 11,287 For the Year Ended December 31
2021 2020 $ 894 $ 12,024 700 693 678 17,688 $ 2,272 $ 30,405 For the Year Ended December 31
2021 2020 $ (44,908) $ (55,013) (1 ) (634 ) $ (44,909 ) $ (55,647 ) For the Year Ended December 31
	2021 $ 7,821 688 8,509 1,289 $ 7,220	2020 $ 1,995 700 2,695 521 $ 2,174

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Information on capitalized interest is as follows:

For	For	December 31
2021 $ 1,289 0.35-1.23 For the Year Ended		2020 $ 521 0.35-1.23 December 31
2021 $ 73,379 2,013 5,559 80,951 584 $ 80,367 $ 59,787 15,021 $ 74,808 $ 2,100 3,459 $ 5,559 For the Year Ended		2020 $ 67,123 2,018 4,002 73,143 586 $ 72,557 $ 54,063 14,492 $ 68,555 $ 1,647 2,355 $ 4,002 December 31
	2021 $ 458,613 83,206 541,819 17,901 8 17,909 $ 559,728 $ 208,653 351,075 $ 559,728	2020 $ 369,734 70,090 439,824 12,723 60 12,783 $ 452,607 $ 172,891 279,716 $ 452,607

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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
	2021 2020 4.3 3.6 1.3 1.3 $ 91,100 $ 64,300 26,800 23,400

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, 2020 and 2019.

22. 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 Adjustments for prior years Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2021 $ 156,571 31,427 (2,514 ) 185,484 223,029 2,636 225,665 $ 411,149	2020 $ 168,716 8,319 (5,784 ) 171,251 162,782 3,717 166,499 $ 337,750

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

Profit before income tax Income tax expense calculated at the statutory rate Tax-exempt income Income tax on unappropriated earnings Usage of investment credit 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
		2021 $ 1,988,456 $ 397,691 (4,091) 31,427 (14,000) 122 $ 411,149	2020 $ 1,722,766 $ 344,553 (3,190) 8,319 (9,865) (2,067 ) $ 337,750

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

Deferred income tax expense (benefit) The difference in 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 Current tax assets and liabilities Current tax liabilities Income tax payable	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ (27,920) (286) 23,486 $ (4,720 ) December	2020 $ (40,193) 885 57,857 $ 18,549 31
		2021 $ 96,076	2020 $ 107,146

c. Current tax assets and liabilities

d. Deferred tax assets and liabilities

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

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For the Year ended December 31, 2021

Balance, Beginning of Year Deferred Tax Assets Temporary differences Unrealized loss on inventories $ 7,629 Unrealized gross profits 4,068 Unrealized refund liabilities 34,196 Share of other comprehensive income (loss) of subsidiaries for using the equity method (42,778) Exchange differences on translation of the financial statements of foreign operations 94,521 Others 12,153 $ 109,789 Deferred Tax Liabilities Temporary differences Foreign investment income $ 1,041,545 Others 3,391 $ 1,044,936 For the Year ended December 31, 2020 Balance, Beginning of Year Deferred Tax Assets Temporary differences Unrealized loss on inventories $ 9,372 Unrealized gross profits 3,863 Unrealized refund liabilities 9,543 Share of other comprehensive income (loss) of subsidiaries for using the equity method 15,079 Exchange differences on translation of the financial statements of foreign operations 54,328 Others 11,578 $ 103,763	Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 715 $ - 2,460 - (15,662) - - (23,486) - 27,920 (3,015 ) 286 $ (15,502 ) $ 4,720 $ 209,939 $ - 224 - $ 210,163 $ - Recognized in Profit or Loss Recognized in Other Comprehensive Income $ (1,743) $ - 205 - 24,653 - - (57,857) - 40,193 1,460 (885 ) $ 24,575 $ (18,549 )	Balance, End of Year $ 8,344 6,528 18,534 (66,264) 122,441 9,424 $ 99,007 $ 1,251,484 3,615 $ 1,255,099 Balance, End of Year $ 7,629 4,068 34,196 (42,778) 94,521 12,153 $ 109,789 (Continued)
Deferred Tax Assets Temporary differences Unrealized loss on inventories Unrealized gross profits Unrealized refund liabilities Share of other comprehensive income (loss) of subsidiaries for using the equity method Exchange differences on translation of the financial statements of foreign operations Others

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Deferred Tax Liabilities Temporary differences Foreign investment income Others	Balance, Beginning of Year $ 850,691 3,171 $ 853,862	Recognized in Profit or Loss Recognized in Other Comprehensive Income $ 190,854 $ - 220 - $ 191,074 $ -	Balance, End of Year $ 1,041,545 3,391
			$ 1,044,936

(Concluded)

e. Income tax assessments

The tax returns of the Company through 2019 have been assessed by the tax authorities.

23. 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

Net profit used in the computation of earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 1,577,307	2020 $ 1,385,016

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
		2021 128,113 652 128,765	2020 128,113 402 128,515

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

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24. GOVERNMENT GRANTS

The Company obtained government loans under the “Action Plan for Welcoming Overseas Taiwanese Businesses to Return to Invest in Taiwan” which have interest at prime rate and are used for capital expenditures and operating turnovers. The Company calculated its fair value with annual interest rate based on general condition. The difference between the acquisition amount borrowed and the fair value was classified as government’s low interest grants and recognized as deferred revenue.

Balance at January 1 Deferred revenue in the reporting period Realized revenue in the reporting period (in other income) Balance at December 31 Carryingamount of deferred revenue Current (in other current liabilities) Non-current	For the Year Ended December 31,	For the Year Ended December 31,	For the Year Ended December 31,
		2021 $ 7,480 7,512 (752 ) $ 14,240 December	2020 $ - 7,605 (125 ) $ 7,480 31,
		2021 $ 751 13,489 $ 14,240	2020 $ 752 6,728 $ 7,480

25. 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.

26. 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.

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

December 31, 2021

Financial assetsat FVTOCI Domestic unlisted shares	Level 1 $ -	Level 2 $ -	Level 3 $ 36,273	Total $ 36,273

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December 31, 2020

Financial assets at FVTOCI Domestic unlisted shares	Level 1 $ -	Level 2 $ -	Level 3 $ 39,481	Total $ 39,481

There were no transfers between Level 1 and Level 2 in 2021 and 2020.

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

For the year ended December 31, 2021

Financial assets Balance at January 1, 2021 Recognized in other comprehensive income Balanced at December 31, 2021 For the year ended December 31, 2020 Financial assets Balance at January 1, 2020 Recognized in other comprehensive income Balanced at December 31, 2020	Equity Instruments
	Financial Assets at FVTOCI $ 39,481 (3,208 ) $ 36,273 Equity Instruments
	Financial Assets at FVTOCI $ 26,918 12,563 $ 39,481

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.

c. Categories of financial instruments

Financial assets Amortized cost (Note 1) FVTOCI	December 31
	2021 2020 $ 2,784,492 $ 2,745,949 36,273 39,481 (Continued)

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Financial liabilities Amortized cost (Note 2)	December 31
	2021 2020 $ 2,301,848 $ 1,613,869 (Concluded)

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 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 30.

Sensitivity analysis

The Company is mainly exposed to the risk from the fluctuation of USD, RMB and EUR.

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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USD Impact RMB Impact EUR Impact
----- End of picture text -----

	USD Impact	RMB Impact	EUR Impact
Profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2021 2020 $ 10,097 $ 12,558	2021 2020 $ 9,236 $ 6,171	2021 2020 $ 1,348 $ 1,188

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
	2021 2020 $ 810,092 $ 653,333 804,353 430,652 925,234 999,525 688,100 339,671

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, 2021 and 2020 would have been higher/lower by $2,371 thousand and by $6,599 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.

27. TRANSACTIONS WITH RELATED PARTIES

a. Related party name and its relationship with the Company

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Related Party Name Related Party Category
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Related Party Name	Related Party Category
Yenyo	Subsidiary
Thinking Changzhou	Subsidiary
Thinking Yichang	Subsidiary
Jiangxi Thinking	Subsidiary
Dongguan Welkin	Subsidiary
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 revenue

Related Party Line Item Category/Name Sales of goods Subsidiaries Thinking Changzhou Dongguan Welkin Others	For the Year Ended	For the Year Ended	December 31
		2021 $ 249,647 291,876 3,006 $ 544,529	2020 $ 289,174 195,989 42,645 $ 527,808

The price of goods sold to related parties is calculated at cost plus gross profit. Since April 2021, the term of collection was changed from 90 days to 60 days from the invoice date, which was the same as those with non-related parties.

The amounts of unrealized gain on transactions with subsidiaries were $29,161 thousand and $4,773 thousand as of December 31, 2021 and 2020, respectively, which were recognized as the deduction of investments accounted for using the equity method.

c. Purchases of goods

Related Party Line Item Category/Name Purchases of goods Subsidiaries Thinking Changzhou Dongguan Welkin Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 889,632 1,250,129 128,067 $ 2,267,828	2020 $ 821,846 403,759 244,474 $ 1,470,079

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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. Since in April 2021, the term of collection was changed from 90 days to 60 days from the invoice date.

d. Receivables from related parties

Related Party Line Item Category/Name Accounts receivable - related parties Subsidiaries Thinking Changzhou Dongguan Welkin Others Other receivables - related parties Subsidiaries Thinking Yichang Related party in substance Pingtung Welkin		December 31	December 31
		2021 $ 86,544 124,614 1,255 $ 212,413 $ 121 145 $ 266	2020 $ 155,073 129,816 838 $ 285,727 $ 97 - $ 97

e. Payables from related parties

Related Party Line Item Category/Name Accounts payable - related parties Subsidiaries Thinking Changzhou Dongguan Welkin Others Other payables - related parties Subsidiaries Thinking Changzhou Related party in substance Pingtung Welkin		December 31	December 31
		2021 $ 186,048 224,869 17,176 $ 428,093 $ 1,151 4,448 $ 5,599	2020 $ 221,925 337,910 32,158 $ 591,993 $ - 434 $ 434

The nature of other payable - related parties (Thinking Changzhou) was payables for equipment.

f. Prepayments

Related Party Line Item Category/Name Prepayments for equipment Subsidiaries Dongguan Welkin		December 31	December 31
		2021 $ 766	2020 $ -

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g. Acquisition of property, plant and equipment

Related Party Category/Name Subsidiaries Thinking Changzhou Dongguan Welkin	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 2,010 3,760 $ 5,770	2020 $ - - $ -

h. 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
		2021 $ - 15,859 $ 15,859	2020 $ 169,718 574 $ 170,292

The price and payment terms with substance related parties were not comparable because the Company did not have other consigned processing business with non-related parties. The payment term was 60 days from the invoice date.

2) Consigned purchases and transaction of property

Related Party Category/Name Subsidiaries Thinking Yichang Related party in substance Pingtung Welkin	For	the Year Ended December 31	the Year Ended December 31
		2021 $ 314 147 $ 461	2020 $ 193 - $ 193

The unrealized gains on consigned purchases from subsidiaries were $0 for the years ended December 31, 2021 and 2020.

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
		2021 $ 480	2020 $ 480

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

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4) 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.

i. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2021 $ 105,770 865 $ 106,635	2020 $ 88,018 1,028 $ 89,046

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.

28. ASSETS PLEDGED AS COLLATERAL FOR SECURITY

The Company provided the following assets as collateral for bank borrowing and deposits of construction contract:

Pledged deposits (classified as other financial assets)		December 31	December 31
		2021 $ 305,600	2020 $ 28,800

29. 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
		2021 $ 64,942	2020 $ 68,675

245 -

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant assets and liabilities denominated in foreign currencies were as follows:

		Foreign			Carrying
		Currency			Amount
	(In Thousand)		Exchange Rate		(In Thousand)
December 31,2021
Financial assets
Monetary items
USD	$	51,362	27.6800	(USD:NTD)	$ 1,421,700
RMB		219,785	4.3471	(RMB:NTD)	955,427
EUR		4,356	31.3200	(EUR:NTD)	136,430
Non-monetary items
Investment accounted for using
the equity method
USD		189,210	27.6800	(USD:NTD)	5,237,337
RMB		471,760	4.3471	(RMB:NTD)	2,050,787
Financial liabilities
Monetary items
USD		14,884	27.6800	(USD:NTD)	411,989
RMB		7,333	4.3471	(RMB:NTD)	31,877
EUR		52	31.3200	(EUR:NTD)	1,629
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
EUR		3,461	34.9400	(EUR:NTD)	120,927
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
EUR		61	34.9400	(EUR:NTD)	2,131

246 -

The significant unrealized foreign exchange gains (losses) were as follows:

			Net Foreign
			Exchange Gains
Foreign Currency	Exchange Rate		(Losses)
For the year ended December 31, 2021
USD	27.6800	(USD:NTD)	$ (3,783)
RMB	4.3471	(RMB:NTD)	1,500
EUR	31.32	(EUR:NTD)	(1,099 )
			$ (3,382 )
For the year ended December 31, 2020
USD	28.4800	(USD:NTD)	$ (19,978)
RMB	4.3597	(RMB:NTD)	2,394
EUR	34.94	(EUR:NTD)	2,905
			$ (14,679 )

31. ADDITIONAL DISCLOSURES

a. Information on 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
247 -

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: Refer to Note 27.
- 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

32. 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.

248 -

TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: Short-term financing.

249 -

TABLE 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2021

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

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December 31, 2021
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 Shares
ACPA TECHNOLOGY CO., LTD. - Financial assets at FVTOCI - non-current 2,469,130 $ 36,273 11 $ 36,273
Thinking Changzhou RMB financial products
Wishful Life V- Industrial and Commercial Bank - Financial assets at FVTPL - current - CNY 60,000 thousand - CNY 60,000 thousand
of China
“Tian Libao” net worth type - Industrial and - Financial assets at FVTPL - current - CNY 193 thousand - CNY 193 thousand
Commercial Bank of China
Accumulate every day - Bank of China - Financial assets at FVTPL - current - CNY 14,500 thousand - CNY 14,500 thousand
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 120,000 thousand - CNY 120,000 thousand
(China)
Thinking Yichang RMB financial products
Ziqi Donglai - Xinchen series - Hubei Bank - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
“Tian Libao” Net Worth Type - Industrial and - Financial assets at FVTPL - current - CNY 6,000 thousand - CNY 6,000 thousand
Commercial Bank of China
“Wenfu” fixed profit increase - Bank of China - Financial assets at FVTPL - current - CNY 25,000 thousand - CNY 25,000 thousand
Wishful Life V - Industrial and Comercial Bank of - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
China
Jiangxin Lingdong 360 days fixed profit increase - - Financial assets at FVTPL - current - CNY 10,000 thousand - CNY 10,000 thousand
Agricultural Bank of China
Jiangxi Thinking RMB financial products
Qingkui series half year open end - China - Financial assets at FVTPL - current - CNY 4,000 thousand - CNY 4,000 thousand
Merchants Bank
Stable Financial Management Plan-Wisdom Series - Financial assets at FVTPL - current - CNY 11,040 thousand - CNY 11,040 thousand
- Bank of China
Accumulate every day-daily plan - Bank of China - Financial assets at FVTPL - current - CNY 220 thousand - CNY 220 thousand
Qianyuan Huizhong (subscript daily and redeem - Financial assets at FVTPL - current - CNY 14,010 thousand - CNY 14,010 thousand
monthly) - China Construction Bank
Dongguan Welkin RMB financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current - CNY 40,000 thousand - CNY 40,000 thousand
Merchants Bank
Zhouzhoufa - China Merchants Banks - Financial assets at FVTPL - current - CNY 20,000 thousand - CNY 20,000 thousand
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current - CNY 6,060 thousand - CNY 6,060 thousand
(China)
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250 -

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, 2021

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

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251 -

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, 2021

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

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

Notes/Accounts (Receivable)
Transaction Details Abnormal Transaction
Payable
Buyer Related Party Relationship
Payment Terms Payment
Purchases/Sales Amount % of Total Unit Price Ending Balance % of Total Note
(Note) Term
The Company Thinking Changzhou Subsidiary Sales $ (249,647 ) (7 ) 60 days from the end of $ - - $ (86,544 ) (8 )
the month
Thinking Changzhou Subsidiary Purchases 889,632 36 60 days from the end of - - 186,048 22
the month
Thinking Yichang Subsidiary Purchases 119,569 5 60 days from the end of - - 15,176 2
the month
Dongguan Welkin Subsidiary Sales (291,876 ) (8 ) 60 days from the end of - - (124,614 ) (12 )
the month
Dongguan Welkin Subsidiary Purchases 1,250,129 50 60 days from the end of - - 224,869 26
the month
Thinking Changzhou Thinking Yichang Associate Purchases 115,300 6 60 days from the end of - - 41,961 8
the month
Jiangxi Thinking Associate Sales (132,255 ) (4 ) 60 days from the end of - - (38,452 ) (4 )
the month
Guangdong Welkin Thinking Associate Sales (110,277 ) (4 ) 60 days from the end of - - (15,134 ) (1 )
the month
Dongguan Welkin Associate Sales (153,325 ) (5 ) 60 days from the end of - - (55,058 ) (5 )
the month
Thinking Yichang Jiangxi Thinking Associate Purchases 199,814 32 60 days from the end of - - 49,895 31
the month
Guangdong Welkin Thinking Associate Sales (461,357 ) (44 ) 60 days from the end of - - (75,222 ) (32 )
the month
Jiangxi Thinking Dongguan Welkin Associate Sales (379,212 ) (51 ) 60 days from the end of - - (57,388 ) (34 )
the month
Guangdong Welkin Dongguan Welkin Associate Purchases 974,200 63 60 days from the end of - - 229,704 62
Thinking the month
Dongguan Welkin Zhongshan Welkin Subsidiary Purchases 220,537 11 60 days from the end of - - 42,616 6
the month
----- End of picture text -----

Note: In April 2021, the Company cooperated with the Group’s policy, and the credit period for group transactions was changed from 90 days to 60 days from the invoice date.

252 -

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, 2021

(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 Dongguan Welkin Subsidiary $ 124,614 2.29 $ - - $ 98,716 $ -
Thinking Changzhou The Company Parent company 186,048 4.36 - - 179,232 -
Dongguan Welkin The Company Parent company 224,869 4.44 - - 205,284 -
Guangdong Welkin Associate 229,704 3.57 - - 161,954 -
Thinking
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253 -

TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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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.

254 -

TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

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, 2021 December 31, 2021 Investment December 31, 2020
Thinking Changzhou Manufacturing and selling thermistors, US$ 21,260 thousand Note 1 $ 452,725 $ - $ - $ 452,725 $ 523,644 100 $ 530,106 $ 4,185,054 $ 739,210 Notes 10
varistors and sensors ( US$ 24,148 )
Thinking Yichang Manufacturing and selling thermistors, US$ 6,000 thousand Note 2 194,170 - - 194,170 104,945 100 104,945 1,055,309 - -
varistors and sensors
Jiangxi Thinking Manufacturing and selling thermistors US$ 10,000 thousand Note 3 310,330 - - 310,330 85,848 100 85,848 709,615 - -
and varistors
Guangdong Welkin Thinking Wholesale of thermistors, varistors, US$ 5,000 thousand Note 4 153,547 - - 153,547 127,632 100 127,632 311,038 - -
sensors and equipment
Dongguan Welkin Manufacturing and selling thermistors, CNY$123,955 thousand Note 5 75,535 18,171 - 93,706 273,424 100 273,424 1,415,769 - -
varistors, sensors and equipment
Zhongshan Welkin Manufacturing and selling thermistors CNY$ 60,000 thousand Note 6 - - - - (16,728 ) 100 (16,728 ) 243,982 - -
and varistors
----- End of picture text -----

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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: Indirectly investment in mainland China through subsidiary (Dongguan Welkin).
Note 7: Financial report had been audited by ultimate parent company’s certified public accountant.
Note 8: The amount of US$5,090 thousand was the difference between the MOEA approved investment of US$43,226 thousand and the amount of accumulated outflow of investment from Taiwan amount of US$38,136 thousand. Such difference was the result of deducting the capital increase of US$22,024 thousand from the subsidiary in mainland china, and the deducted amount of US$465 thousand has been approved but not yet remitted. The added surplus of the subsidiary in mainland China which was approximately US$17,399 thousand was repatirated. The balance amount as of December 31, 2021 was based on the US$1=NT$27.68 exchange rate .
Note 9: The upper limit on investment in mainland China is determined by 60% of the Company’s consolidated net worth.
Note 10: The Company recognized share of profits of Thinking Changzhou was $251,232 thousand, and Greenish recognized share of profits of Thinking Changzhou was $278,874 thousand. Total amount of share of profits was $530,106 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.
255 -

TABLE 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2021

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256 -

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

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ITEM STATEMENT INDEX
----- End of picture text -----

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 12
EQUIPMENT
STATEMENT OF CHANGES IN ACCUMULATED	Note 12
DEPRECIATION OF PROPERTY, PLANT AND
EQUIPMENT
STATEMENT OF RIGHT-OF-USE ASSETS	9
STATEMENT OF DEFERRED INCOME TAX ASSETS	Note 22
STATEMENT OF SHORT-TERM BORROWINGS	10
STATEMENT OF LONG-TERM BORROWINGS	Note 14
STATEMENT OF ACCOUNTS PAYABLE	11
STATEMENT OF OTHER PAYABLES	Note 16
STATEMENT OF OTHER CURRENT LIABILITIES	12
STATEMENT OF LEASE LIABILITIES	13
STATEMENT OF DEFERRED TAX LIABILITIES	Note 22
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 21
STATEMENT OF LABOR, DEPRECIATION AND	17
AMORTIZATION BY FUNCTION

257 -

STATEMENT 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2021 (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
(Note)
Demand deposits
USD 14,989 thousand
RMB 43,142 thousand
EUR 1,780 thousand
JPY 22,728 thousand
HKD 1,789 thousand
Cash equivalents
Time deposits with original
maturities less than 3
months
Deposit of NTD
Foreign currency deposits
RMB115,520 thousand, with
annual interest rate of
2.71%-3% The expiry date
of foreign currency deposits
is March 2021.

Amount
$ 549
74
255,230
414,886
187,540
55,763
5,466
6,349
502,177
$ 1,428,034

Note: Foreign currency exchange rates of USD, RMB, EUR, JPY and HKD were as follows: USD:NTD=1:27.68 RMB:NTD=1:4.3471 EUR:NTD=1:31.32 JPY:NTD=1:0.2405 HKD:NTD=1:3.549

258 -

STATEMENT 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

	Description	Amount	Amount
Company A	Sale of goods	$	986
Company B	Sale of goods		561
Company C	Sale of goods		360
Company D	Sale of goods		268
Others (Note)	Sale of goods		1,704
		$	3,879

Note: The amounts of individual clients that are included in others does not exceed 5% of the account balance.

259 -

STATEMENT 3

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Client Name Related parties Thinking Changzhou Thinking Yichang Dongguan Welkin Non-related parties (Note) Less: Loss allowance	Amount Over a Year Remark $ 86,544 $ - Sale of goods 1,255 - Sale of goods 124,614 - Sale of goods 212,413 845,234 13,801 Sale of goods 15,653 $ 13,801 829,581 $ 1,041,994

Note: The amount of individual clients that are included in others does not exceed 5% of the account balance.

260 -

STATEMENT 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER RECEIVABLES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Amount Remark Related parties Thinking Yichang $ 121 Transaction of consigned purchases Pingtung Welkin 145 Transaction of property 266 Non-related parties Income tax refund receivable 2,841 Business tax Earned revenue receivable 2,312 Others 92 5,245 $ 5,511

261 -

STATEMENT 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Finished goods Work-in-process Raw materials Supplies Inventory in transit	Cost Net Realizable Value (Note) $ 219,022 $ 287,177 72,994 130,897 100,242 100,391 6,444 6,592 12,293 12,293 $ 410,995 $ 537,350

Note: Refer to Note 4 for accounting policy of net realizable value.

262 -

STATEMENT 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT ASSETS DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Prepayment for purchases Prepaid expenses Office supplies Offsets against business tax payable Others	Amount $ 12,297 10,618 2,942 12,404 551 $ 38,812

263 -

STATEMENT 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021

(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 $ 149,749 7,374,997 1,918,837 10,075,514 1,814,089 24,728,858 2,552,063 $ 6,434,738	Additions in Investment Shares Amount 4,500,000 $ 54,358 - 269,908 - 253,480 - 531,076 $ 1,108,822 (Note 1)	Decrease	in Investment Amount $ 1,977 15,903 16,782 18,644 $ 53,306 (Note 2)	Balance, December	31, 2020 Amount $ 202,130 2,172,842 2,050,787 3,064,495 $ 7,490,254	Market Value or Net Assets Value Unit Price Total Amount Collateral Note $ 8.05 $ 207,238 None 299.18 2,206,476 None 199.76 2,012,658 None 127.48 3,152,388 None $ 7,578,760
					% of Shares Ownership 25,732,508 63.76 7,374,997 100 10,075,514 47.39 24,728,858 100
	Shares 21,232,508 7,374,997 10,075,514 24,728,858	Shares 4,500,000 - - -	Shares - - - -

Note 1: Share of profits using the equity method, realized gain on transactions in the beginning of year, acquired investment funds using the equity method and recognized capital surplus of the difference between consideration and the carry amount of subsidiaries acquired amounted to $1,070,155 thousand, $4,773 thousand, $29,250 thousand and $4,644 thousand.
Note 2: Financial statements translation differences of foreign operations, remeasurement on defined benefit plans and unrealized gain on transactions at the end of the year amounted to $22,168 thousand, $1,977 thousand and $29,161 thousand.
264 -

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, 2021

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

Investees Non-listed company’s shares ACPA TECHNOLOGY CO., LTD.	Balance, January 1, 2021 Shares Fair Value 2,469,130 $ 39,481	Additions in Investment Amount Shares (Note 1) - $ -	Decrease in Investment Shares Amount - $ 3,208	MarketValue orNet AssetsValue Fair Value Accumulated Shares (Note 2) Impairment Collateral 2,469,130 $ 36,273 $ - 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 26 for fair value measurement.

265 -

STATEMENT 9

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

	Balance at	Balance at						Balance at	Balance at
	January 1,							December 31,
	2021		Additions			Deductions		2021
Cost
Land	$ 58,682		$	-		$	-	$ 58,682
Accumulated depreciation
Land	(3,577	)		(2,013	)		-	(5,590	)
	$ 55,105		$	(2,013	)	$	-	$ 53,092

266 -

STATEMENT 10

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2021

(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, 2021
Secured loans
King’s Town Bank	2021/12/13-2022/03/13	0.34	$ 249,630
Credit Loans
E. SUN Bank	2021/12/30-2022/01/18	0.68	150,000
Yuanta Bank	2021/11/08-2022/03/07	0.70-0.72	150,000
CTBC Bank	2021/12/08-2022/03/08	0.72	100,000
Bank of Taiwan	2021/12/23-2022/03/23	0.70	100,000
			500,000
			$ 749,630

Note: At the end of December 31, 2021, the amount of unused short-term borrowings was approximately $1,660,370 thousand.

267 -

STATEMENT 11

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Vendor Name Related parties Dongguan Welkin Thinking Changzhou Thinking Yichang Yenyo Non-related parties Company E Company F Company G Company H Company I Others (Note)	Amount $ 224,869 186,048 15,176 2,000 428,093 9,859 5,352 4,780 2,663 2,627 22,471 47,752 $ 475,845

Note: The amount of individual vendor that are included in others does not exceed 5% of the account balance.

268 -

STATEMENT 12

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT LIABILITIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

	Amount	Amount
Temporary receipts	$	360
Withholding		1,653
Deferred revenue		751
	$	2,764

269 -

STATEMENT 13

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2021

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

			Discount Rate	Balance of
	Item	Lease Term	(%)	December 31, 2021
Land		2016.06-2029.10	0.75-1.38	$ 54,723
Less:	Lease liabilities -			1,023
	current
Lease	liabilities - non-current			$ 53,700

270 -

STATEMENT 14

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING REVENUE FOR THE YEARS ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Shipments (Thousand PCS) Revenue from sale of goods Passive components 7,522,047 Service revenue	Amount $ 3,775,336 181 $ 3,775,517

271 -

TATEMENT 15

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING COSTS FOR THE YEARS ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item
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
Inventory write-downs
Income from sale of scraps
Loss on obsolete inventory
Others

Amount
$ 42,734
208,004
(100,242 )
15,218

165,714
22,890
148,226
260,635
597,465
37,102
4,279
(72,994 )
17,761
583,613
118,656
2,249,384
(219,022 )
(383,059
)
2,349,572
2,334
(5,401 )
7,084
(42,600
)
(38,583
)
$ 2,310,989

272 -

TATEMENT 16

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING EXPENSES FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Item Salaries Labor cost (Note) Export expense Professional service fees Commission expense Depreciation and amortization expense Utilities expense Remuneration of directors Consumption supplies Shipping expense Others Expected credit loss	Selling and Marketing Expenses General and Administrative Expenses Research and Development Expenses $ 49,067 $ 152,558 $ 84,368 7,138 17,117 14,027 18,750 53 - 13,121 6,580 1,956 8,016 - - 1,748 5,788 10,944 102 1,015 3,812 - 26,800 - 2 65 10,304 15,040 1,606 110 14,979 12,880 9,404 $ 127,963 $ 224,462 $ 134,925	Total $ 285,993 38,282 18,803 21,657 8,016 18,480 4,929 26,800 10,371 16,756 37,263
		487,350 631
		$ 487,981

Note: The labor cost includes labor and health insurance, pension, food stipend and others.

273 -

TATEMENT 17

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (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
	2021	Total $ 458,613 33,594 17,909 26,800 22,812 $ 559,728 $ 74,808 5,559	2020
	Operating Costs Operating Expenses $ 172,620 $ 285,993 15,677 17,917 7,322 10,587 - 26,800 13,034 9,778 $ 208,653 $ 351,075 $ 59,787 $ 15,021 2,100 3,459		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	Total $ 369,734 26,872 12,783 23,400 19,818 $ 452,607 $ 68,555 4,002

Note: a. As of December 31, 2021 and 2021, the Company had 498 and 439 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, 2021 and 2021 was $1,081 thousand and $989 thousand, respectively.
c. The average employee salary and bonuses for the years ended December 31, 2021 and 2021 was $930 thousand and $852 thousand, respectively.
d. Change in the average employee salary and bonuses was 9%.
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 21 (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)

274 -

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 21 (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)

275 -

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
2021 2020
Entry Amount %
Current asset 8,850,782 8,084,389 766,393 9
Property, plant and
2,619,638 2,174,967 444,671 20
equipment
Other assets 1,199,465 771,304 428,161 56
Total assets 12,669,885 11,030,660 1,639,225 15
Current liabilities 2,309,372 2,051,426 257,946 13
Non-current liabilities 2,084,160 1,534,447 549,713 36
Total liabilities 4,393,532 3,585,873 807,659 23
Equity attributable owners of
8,158,633 7,305,365 853,268 12
the company
Ordinary shares 1,281,127 1,281,127 - -
Capital surplus 352,907 348,263 4,644 1
Retained earnings 6,746,977 5,877,411 869,566 15
Other equities (222,378) (201,436) (20,942) (10)
Non-controlling interest 117,720 139,422 (21,702) (16)
Total shareholders' equities 8,276,353 7,444,787 831,566 11
----- End of picture text -----

i. Analysis of increases/decreases over 20%:
(1) Increase in property, plant and equipment: Mainly due to the increase in construction of new plants, unfinished work, and related equipment.
(2) Increase in other assets: Mainly due to the increase in financial assets measured at amortized cost - non-current and advance payments for equipment for the year.
(3) Increase in liabilities: Mainly due to the increase in long-term borrowings.
276 -

7.2 Review and Analysis of Operating Results

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

Unit: NTD Thousand
Year Difference
2021 2020
Entry Amount %
Operating revenue, net 7,500,455 5,920,258 1,580,197 27
Gross profit 3,239,431 2,714,605 524,826 19
Profit from operations 2,124,835 1,843,142 281,693 15
Non-operating income and
34,499 24,191 10,308 43
expenses
Profit before income tax 2,159,334 1,867,333 292,001 16
Income tax expense 568,711 486,730 81,981 17
Net profit 1,590,623 1,380,603 210,020 15
Other comprehensive income
(25,187) 87,274 (112,461) (129)
(loss), net of tax
Total comprehensive income 1,565,436 1,467,877 97,559 7
----- End of picture text -----

i. Analysis of increases/decreases over 20%:
(1) Increase in the operating revenue: mainly because of the strong demand from customers’ orders, as well as the growth of the sales revenue this year.
(2) Non-operating income and expenses increased mainly because of the increase in exchange interest caused by fluctuating exchange rates.
(3) Other comprehensive income (loss), net of tax decreased for the current term mainly because of the difference in exchange from the exchange differences on translation of the financial statements of foreign operations.
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.
277 -

7.3 Review and Analysis of Cash Flow

i. Cash Flow Analysis for the Current Year

Unit: NTD Thousand

==> picture [467 x 117] intentionally omitted <==

----- 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
2,505,348 1,574,074 (1,500,449) 2,578,973 - -
----- End of picture text -----

(1) Analysis of change in cash flows of the current year:
A. Operating activities: mainly the accounts receivable/payable, 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

ash Flow Analysis for the Coming Year
	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
2,578,973 1,458,535 (1,204,110) 2,833,398	- -
(1) Analysis of change in cash flows: A. Operating activities: mainly the accounts receivable/payable, 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.
278 -
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 2021 is worth NTD 1,070,155 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

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

Item 2021 (NTD thousand; %)
Net interest income (expenses) 76,958
Net (loss) profit from exchange (71,405)
Ratio of net interest income/ expenses to net sales 1.03%
Ratio of net interest income/ expenses to pre-tax net profit 3.56%
Ratio of net loss/profit from exchange to net sales (0.95)%
Ratio of net loss/profit from exchange to pre-tax net profit (3.31)%
----- End of picture text -----

279 -

Changes in interest rate:

The net interest income of the Company for 2021 was NTD 76,958 thousand, accounting for only 1.03% 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 2021 were NTD 71,405 thousand, accounting for 0.95% 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 2021 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.

280 -

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” of this Annual Report. 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 2022.

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 (Including the cyber security risk) and the Industry Relating to Corporate Finance and Sales:
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 by importing from various cyber security levels such as email filtering protection/terminal behavior detection/system snapshot. Throughout 2021 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 financial business and operation undesirably and had not been involved in any relevant legal case or regulatory investigation.
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:
281 -
(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.
(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: None.

7.7 Other Material Items: None.
282 -

VIII. Special Disclosure

8.1 Summary of Affiliated Companies

i. Consolidated Business Report of Affiliates (1) Overview of Affiliates

==> picture [682 x 386] 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%
63.76% 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 -----

Note: The Company and Greenish Co., Ltd.’s joint investment, holding 100% of its interests.

283 -

B.Profile of respective affiliates:

December 31, 2021 ; Unit: Respective Currencies in Thousands

==> picture [766 x 463] 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, selling and
Township, Yilan County manufacturing 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 3,244 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 123,955 Manufacturing and selling
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, CNY 60,000 Manufacturing and selling
Zhongshan City, Guangdong Province (One license with thermistors and varistors
multiple registered addresses)
----- End of picture text -----

284 -

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 452] 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, selling and manufacturing 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 products and
sells them and then sells the products
of the Company
Jiang Xi Thinking Electronic Co., Ltd. Manufacturing and selling thermistors and varistors The Company purchases semi-finished
products and then sells the products of
the Company
Guangdong Welkin Thinking Electronic Wholesale of thermistors, varistors, sensors and equipment -
Co., Ltd.
Dong Guan Welkin Electronic Co., Ltd. Manufacturing and selling thermistors, varistors, sensors and The Company purchases products 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 -----

285 -

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) 25,732,508 63.76%
Director Tseng, Lung-Ji (Representative of Thinking) 25,732,508 63.76%
Director/President Ho, Yi-Sheng (Representative of Thinking) 25,732,508 63.76%
Yenyo Technology Co., Ltd. Director Chu, You-Mei (Representative of Thinking) 25,732,508 63.76%
Director Cheng, Chien-Ming 109,432 0.27%
Supervisor Fang, Hsiao-Hua (Representative of Boh Chin) 597,402 1.48%
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 3,244,188 100.00%
Ltd. Director Chen, Su-Ai (Representative of Thinking Holding (Cayman))
----- End of picture text -----

286 -

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----- 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 Chen, Su-Ai (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 123,954,643 100.00%
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. CNY 60,000,000 100.00%
Director Sui, Chieh-Heng (Representative of Dongguan Welkin)
Supervisor Ting, Si-Nan (Representative of Dongguan Welkin)
----- End of picture text -----

287 -

(2) Operational overview of respective affiliates

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

December 31, 2021; 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. 403,580 404,145 79,119 325,026 306,927 33,960 33,780 0.84
Thinking (Changzhou) Electronic Co., Ltd. 692,633 4,818,870 572,121 4,246,749 3,120,708 462,774 523,644 (Note)
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Greenish Co., Ltd. 242,300 2,217,540 11,064 2,206,476 (13,775) 264,013 (Note)
- -
Thinking Holding (Cayman) Co., Ltd. 770,212 3,152,388 3,152,388 (268) 507,495 (Note)
- -
Thinking International Co., Ltd. 196,512 1,056,600 1,056,600 (248) 104,697 (Note)
- -
Thinking (HK) Enterprises Limited 311,109 709,858 709,858 (27) 85,823 (Note)
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View Full (Samoa) Ltd. 155,108 1,230,598 1,230,598 (20) 288,305 (Note)
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Thinking Electronic (Samoa) Ltd. 94,465 146,426 146,426 (20) 28,456 (Note)
Thinking (Yichang) Electronic Co., Ltd. 194,170 1,222,809 167,500 1,055,309 1,038,264 104,672 104,945 (Note)
Jiang Xi Thinking Electronic Co., Ltd. 310,330 835,295 125,680 709,615 745,461 92,404 85,848 (Note)
Guangdong Welkin Thinking Electronic Co., Ltd. 153,547 798,145 487,107 311,038 1,801,467 168,686 127,632 (Note)
Dong Guan Welkin Electronic Co., Ltd. 541,840 2,188,879 788,438 1,400,441 2,623,729 312,729 273,424 (Note)
Welkin Electronic Co., Ltd. 262,150 294,032 50,050 243,982 220,670 (17,627) (16,728) (Note)
----- End of picture text -----

Note : The company is a company limited.

288 -

ii. Consolidated Financial Statement of Affiliates

Declaration

The entities that are required to be included in the consolidated financial statements of affiliates as of and for the year ended December 31, 2021, 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.

By Sui, Tai-Chung Chairman

March 21, 2022

289 -

iii. Affiliation Report

Declaration

The Affiliation Report of the Company for 2021 (from January 1 to December 31, 2021) 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 21, 2022

290 -

Thinking Electronic Industrial Co., Ltd.

Affiliation Report

2021

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 2021 for renting buildings and land from Boh Chin Investment Co., Ltd.

III. Endorsements/guarantees: None

291 -
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
292 -

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.

293 -

Evaluation cycle	Evaluated period	Scope of evaluation	Evaluation method	Evaluation Content
Once a year	1/1/2021- 12/31/2021	Evaluation of the performance of Board of Directors, individual directors, and functional committees.	Internal self-evaluation by the board of directors, self-evaluation by the board members, and internal self-evaluation by functional committees	(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
				(III) The assessment items for the performance evaluation of functional committees (including the Audit Committee and the Compensation and Remuneration Committee) cover the following aspects: 1. Involvement in corporate operations 2. Perception of functional committees’ responsibilities 3. Improvement in the quality of functional committees’ decision-making 4. Composition and member election/appointment of functional committees 5. Internal control

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. None

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)?	 	(I) The Company has set up a website in both Chinese and English to update and disclose information on the financial business and corporate governance at any time for investors' reference. For the relevant information, please visit the Company’s website: https://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. 4. The information on investor conference and related materials is available on the Company’s website.	None

AI assistant

THINKING — Annual Report 2022

52076_rns_2022-06-16_deab4a58-f60d-4fb6-ad91-d4b15c0f17a9.pdf

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

2 0 21 Annual Report

Contents

I. Letter to Shareholders

Dear Shareholders,

1.1 Business report:

i. Results:

(d)Methods:

1.3 Future development strategies:

Chairman of Board: Sui, Tai-Chung

II. Company Profile

2.1 Date of Incorporation July 16, 1979

2.2 Company History

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

(3)Professional qualifications and independence analysis of directors

(4) Board diversity and Independence:

A. Diversification Policy Regarding Composition of Board 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

i. Operations of the Board of Directors

Other details to be documented:

iv. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Membership of Compensation and Remuneration Committee:

(2) Compensation and Remuneration Committee Responsibilities:

(4) Matters being discussed by the Compensation and Remuneration Committee and the decisions

Corporate Sustainable Development Organizational Structure

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

(III) Consumer rights:

(IV) Human rights:

Ethical Corporate Management Structure

Thinking Electronic Industrial Co., Ltd.

Statement of Internal Control System

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:

v. Market Price, Net Worth, Earnings, and Dividends per Common Share

ix. Buy-back of Treasury Share: None.

V. Operational Highlights

5.1 Business Activities

ii. Industrial Overview

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

(2)Market share

(c) Sound Financial Standing

B. Unfavorable factors:

C. Countermeasures:

ii. Production Procedures of Main Products

(1) Major Products and Their Main Uses

Manufacturing process flowchart for plug-in resistors

Manufacturing process flowchart for SMD resistors

iii. Supply Status of Main Materials

v. Production in the Last Two Years

vi. Shipments and Sales in the Last Two Years

5.4 Environmental Protection Expenditure

i. Total Losses

5.5 Labor Relations

i. Employee Welfare

iii. Retirement System and Its Implementation

vi. Rewards and penalties for employees

THINKING Annual Report 2022

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