Stoc k Code: 2428

==> picture [125 x 81] intentionally omitted <==

THINKING EL E CTRONIC INDUSTRIA L CO., LTD.

2 0 22 Annual Report

==> picture [49 x 257] intentionally omitted <==

==> picture [216 x 176] intentionally omitted <==

==> picture [14 x 257] intentionally omitted <==

==> picture [216 x 81] intentionally omitted <==

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 8, 2023

I. Spokesperson and Acting Spokesperson

Name of spokesperson : Chung, Shih-Ying 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 Liu, Yu-Hsiang Name of Firm : Deloitte & Touche Address : 3F, No. 88, Chenggong 2nd Road, Qianzhen District, Kaohsiung City Website : http://www.deloitte.com.tw 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 ...................................................................................................................... 285 7.1 Review and Analysis of Financial Status ............................................................................ 285 7.2 Review and Analysis of Operating Results ......................................................................... 286 7.3 Review and Analysis of Cash Flow .................................................................................... 287 7.4 Impacts of Major Capital Expenditure for the Most Recent Fiscal Year on Financial Operation ............................................................................................................................. 287 7.5 Investment Policy for the Most Recent Fiscal Year, Reasons for Profit (Loss), Improvement Plan and the Investment Plan for the Coming Year ..................................... 288 7.6 Review and Analysis of Risk Management ........................................................................ 288 7.7 Other Material Items ........................................................................................................... 291 VIII.Special Disclosure .......................................................................................................... 292 8.1 Summary of Affiliated Companies ..................................................................................... 292 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 ........................... 301 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 ..................................................................................................................... 301 8.4 Other Matters Requiring Supplementary Information ........................................................ 301 IX.Matters with Important Impacts on Shareholders’ Equity or Prices of Securities 302

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 revenue for the year was NT$ 7,463,135 thousand, a decrease of 0.5% from the previous year; the consolidated net profit after tax was NT$ 1,389,978 thousand, a decrease of 12.61% from the previous year, and the earnings per share (EPS) after tax was NT$10.72.

ii. Execution of budget: N/A.

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

==> picture [446 x 277] intentionally omitted <==

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

Unit: NT$ Thousand
Year
2022 2021
Item
Financial Operating revenue, net 7,463,135 7,500,455
receipts and Gross profit 2,633,376 3,239,431
expenditures Current net profit 1,389,978 1,590,623
ROA 10.62% 13.50%
ROE 16.14% 20.23%
Operating income to paid-in capital ratio 109.29% 165.85%
Profitability
EBT to paid-in capital ratio 140.24% 168.54%
Net profit margin 18.62% 21.20%
EPS after tax (NT$) 10.72 12.31
----- End of picture text -----

1 -
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 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 car market share by taking advantage of the trend toward electric-powered vehicles, and continue our efforts in new markets including communications, industrial, and healthcare, as well as penetrating new markets for renewable energy and energy storage.
2 -
(2) We rebuild the business team to focus on target markets and major customers, link the complex processes of IC design, solution integration, ODM and OEM in the electronics industry to develop more international target customers, enhance the service capability by adding a subsidiary in the U.S. and offices in Northeast and Southeast Asia, develop markets and perform local services nearby, expanding the Company's overseas business territory.
(3) 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.
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 automation, intelligent industrial applications and infrastructure markets, as well as the emerging new markets for renewable energy and energy storage, are all drivers of growth. However, in 2022, the electronics industry upstream, midstream and downstream each hold high inventories, as well as the United States and China confrontation is increasingly intense, resulting in the global electronics industry began to fragmentation to various geographical regions of the current situation, but also to put more variables for economic growth. In consolidating key customers' estimates for the new year, the Company’s estimated sales in 2023 will be significantly higher than the actual business results in 2022, showing a significant growth trend.

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, and plan to increase the number of manufacturing bases outside Mainland China in the hope of reducing the risk of geopolitical disruptions to customers and the demand for closer delivery to the market.
3 -
(b)In response to the unsealing of COVID-19, the inventory management of each factory was reorganized to pursue the rationalization of inventory level and the maximization of inventory turnover as the target.
B. Production management:
(a)HR: Improve HR training and expertise & stabilization requirements toward key process personnel.
(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 Department supervises the operation efficiency. All factories and units within the Group work together to set and implement KPI projects.
(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. New plant is designed with green building in mind and is working towards ESG.
- e-3. 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 unsealing of COVID-19 and the drastic changes in the

market demand, the Company keeps holding production and marketing meetings for teamwork to adjust to optimize the economic scale of production. We hope that the production and marketing may stay flexible and active in order to deal with the pressure derived from changes in the market.

(2) Sales Policy:

A. Reshape the sales team to focus on the index market and major customers, and connect the complex processes of IC design, solution integration, ODM and OEM in the electronics industry to explore more international index customers.
B. Keep up with the benchmarking customers to develop new cases and keep the development pace in line with the high-end markets.
C. We deepened the market for electric vehicles and automotive electronics, and increase the development of markets such as 5G and communications, industrial control, medical electronics, renewable energy and energy storage, and sales of niche-type and customized products to increase profits.
D. Exercise the existing brand strengths, scale of economy and distribution network to practice the consolidated effects and expand the operating revenue.

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.
7 -

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.

9 -
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. December 2022 : Reinvested to establish Thinking Electronic USA, Inc.
10 -

III. Corporate Governance Report

3.1 Organizational i. Organizational Chart

==> picture [588 x 401] intentionally omitted <==

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

As of: December 31, 2022 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
----- End of picture text -----

11 -

ii. Major Corporate Functions

==> picture [479 x 682] intentionally omitted <==

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

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.
----- End of picture text -----

12 -

3.2 Information of Directors, President, Vice President, Associate Vice President, and Heads of Various Departments and Branches

i. Director Information

April 15, 2023

==> picture [780 x 397] intentionally omitted <==

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

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 71-75Male - - - - - 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
Representative of
R.O.C. Boh Chin: Male - - - - - 6,000 0.005% - - - - MBA, University of Note 2 None None None
56-60 Memphis
Chung, Shih-Ying
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
66-70
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
71-75
Chengchi University
Master of Financial
Operation, National
R.O.C. Huang, Cheng-Nan 56-60Male 6/15/2020 3 6/20/2017 - - - - - - - - Kaohsiung University of Science and Technology Note 5 None None None
Department of Law,
National Chengchi
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
46-50
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
56-60 Kaohsiung University of
Science and Technology
Director
Independent Director
----- End of picture text -----

13 -
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., Director of Greenish Co., Ltd. and Chairman of Thinking Electronic USA, Inc.

Note 2: President of Thinking Electronic Industrial 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: Director and 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 the institutional shareholders

April 15, 2023

April 15,2023	April 15,2023
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.

14 -

(3)Professional qualifications and independence analysis of directors

==> picture [486 x 709] intentionally omitted <==

----- 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:
as decision-making leadership.
Sui, Tai-Chung
Mr. Chung has rich
management experience and
Boh Chin
enjoys great reputation in
Investment Co.,
passive component industry
Ltd. -
because of his business
Representative:
management skills, industry
Chung, Shih-Ying
knowledge, and vision of Neither the directors nor
international markets. independent directors of
He is the person in charge of the Company are subject to
Chen, Yen-Hui Yongxin Bookkeeper and Land any of the provisions of -
Administrator Firm. Article 30 of the Company
He is the person in charge of Act.
EnWise CPAs & Co. and has All the independent
Chang, Shan-Hui -
rich experience in finance and directors comply with the
taxation. provisions of Article 3 of
He is a practicing lawyer in the Regulations Governing
Dinghe Law Firm and provides Appointment of
Huang, Cheng-Nan -
various legal professional Independent Directors and
advice for the Company. Compliance Matter for
She acts as the Public Companies.
executive/financial vice
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.
----- End of picture text -----

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 15, 2023

==> picture [766 x 409] intentionally omitted <==

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

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
President R.O.C. Chung, Shih-Ying Male 12/19/2022 6,000 0.005% - - - - MBA, University None None None None
of Memphis
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 1 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 2 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
Master of National
Vice President at the
R.O.C. Sung, Hsing-Jang Male 2/1/2023 - - - - - - Chiao Tung None None None None
Operational Department
University
Providence
Head of Plant R.O.C. Chang, Mei-Hui Female 2/10/2014 - - 8,000 0.006% - - None None None None
University
Master of National
Head of Plant R.O.C. Chan, Chia-Hao Male 7/14/2022 - - - - - - Cheng Kung None None None None
University
----- End of picture text -----

17 -

==> picture [766 x 356] intentionally omitted <==

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

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
National
President at the
Domestic Market R.O.C. Su, Shu-Li Female 7/4/2014 - - - - - - Kaohsiung None None None None
University of
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
----- End of picture text -----

Note 1: 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 Thinking (Yichang) Electronic 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.

Note 2: Refer to “i. Director Information” of this Annual Report.

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, 2022 Unit: NTD thousands

==> picture [802 x 347] intentionally omitted <==

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

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 Employee Compensation (G) the net profit after tax
Base Compensation (A) Pension (B) Allowances (D) Severance Pay (F)
Compensation(C) Allowances (E) ( Note 1) Remuneration
from ventures
Companies in the other than
Title Name consolidated
The Company financial subsidiaries or
The Companies in 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
Representative of Boh Chin:
Director Ho, Yi-Sheng (Note 2) - - - - 22,442 22,442 - - 22,442 22,442 15,014 15,014 47 47 5,752 - 5,752 - 43,255 43,255 None
1.63% 1.63% 3.15% 3.15%
Representative of Boh Chin:
Chung, Shih-Ying (Note 2)
Chen, Yen-Hui
Chang, Shan-Hui
Huang, Cheng-Nan
Independent Director Chen, Hsiu-Yen - - - - 800 800 - - 0.06%800 0.06% 800 - - - - - - - - 0.06%800 0.06% 800 None
Chou, Chi-Wen
----- End of picture text -----

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

==> picture [731 x 408] intentionally omitted <==

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

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 Ho, Yi-Sheng Ho, Yi-Sheng
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 Chung, Shih-Ying Chung, Shih-Ying
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
NT$50,000,000 ~ NT$99,999,999
Greater than or equal to NT$100,000,000
Total 6 6 9 9
----- End of picture text -----

Note 1: The remuneration to directors approved by the Board of Directors prior to the shareholders’ meeting as part of the Earnings Distribution Proposal for 2022.

Note 2: On December 19, 2022, the institutional director of Boh Chin Investment Co., Ltd., re-appointed representative. Director Ho, Yi-Sheng retired and director Chung, Shih-Ying took over as director.

21 -

ii. Remuneration Paid to President and Vice President

==> picture [790 x 444] intentionally omitted <==

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

December 31, 2022 Unit: NTD thousands
Total amount of A, B, C and D
Bonuses and Allowances Employee Compensation (D)
Salary(A) Pension (B) and a % of the net profit after Remuneration
(C) ( Note 1)
tax from ventures
Companies in other than
Companies Companies Companies
Title Name the Companies in the subsidiaries or
in the in the in the
The consolidated The consolidated The consolidated The company consolidated The company consolidated from the parent
company financial company financial company financial financial financial company
statements statements
statements statements statements
Cash Stock Cash Stock
Ho, Yi-Sheng
President
(Note 2)
Chung,
15,668 15,668
President Shih-Ying 3,058 3,058 91 91 7,519 7,519 5,000 - 5,000 - None
1.14% 1.14%
(Note 2)
Vice Hsiao,
President Fu-Chang
Remuneration bracket table
Name of President and Vice President
Range of Remuneration
Companies in the consolidated
The Company
financial statements
Less than NT$ 1,000,000 Hsiao, Fu-Chang Hsiao, Fu-Chang
NT$1,000,000 ~ NT$1,999,999
NT$2,000,000 ~ NT$3,499,999 Ho, Yi-Sheng Ho, Yi-Sheng
NT$3,500,000 ~ NT$4,999,999
NT$5,000,000 ~ NT$9,999,999
NT$10,000,000 ~ NT$14,999,999 Chung, Shih-Ying Chung, Shih-Ying
NT$15,000,000 ~ NT$29,999,999
NT$30,000,000 ~ NT$49,999,999
NT$50,000,000 ~ NT$99,999,999
Greater than or equal to NT$100,000,000
Total 3 3
----- End of picture text -----

Note 1: The employee bonus approved by the Board of Directors prior to the shareholders’ meeting as part of the Earnings Distribution Proposal for 2022. Note 2: President Ho, Yi-Sheng retired on December 19, 2022; Chung, Shih-Ying was promoted to President on December 19, 2022.

22 -

iii. Employees’ Profit Sharing Bonus Paid to Management Team

==> picture [486 x 570] intentionally omitted <==

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

December 31, 2022 Unit: NTD thousands
Ratio of Total
Title Name Stock Cash Total Amount to Net
Profit (%)
President Chung, Shih-Ying
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
Head of Plant Chan, Chia-Hao
Associate Vice
President at the Second
Chiu, Chung-Chi
Division of R&D
Department
Manager - 13,152 13,152 0.96%
Associate Vice
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
----- End of picture text -----

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	2022		2021
	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements
Director	1.69%	1.69%	1.70%	1.70%
President and VicePresident	1.14%	1.14%	2.70%	2.70%

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 6 (A) meetings of the Board of Directors were held in 2022. The attendances of

directors were as follows:

==> picture [471 x 560] intentionally omitted <==

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

Attendance Attendance
Remarks
Title Name in person By Proxy Rate (%)
(Note 2)
(B) (B/A) (Note 1)
Boh Chin
Investment Co., Ltd.
Chairman 6 - 100.00%
Representative:
Sui, Tai-Chung
Boh Chin Resigned
Investment Co., Ltd. on
Director 6 - 100.00%
Representative: December
Ho, Yi-Sheng 19, 2022
Newly
Boh Chin
appointed
Investment Co., Ltd.
Director - - -% on
Representative:
December
Chung, Shih-Ying
19, 2022
Director Chen, Yen-Hui 6 - 100.00%
Director Chang, Shan-Hui 6 - 100.00%
Independent
Chen, Hsiu-Yen 6 - 100.00%
Director
Independent
Huang, Cheng-Nan 6 - 100.00%
Director
Independent
Chou, Chi-Wen 6 - 100.00%
Director
----- End of picture text -----

Note 1: 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.

Note 2: On December 19, 2022, the institutional director of Boh Chin Investment Co., Ltd., re-appointed

representative. Director Ho, Yi-Sheng retired and director Chung, Shih-Ying took over as director.

25 -

(IV) December 19, 2022:

Director Ho, Yi-Sheng sidestepped from the discussion and voting of the resolution on the distribution of pension to President Ho Yi-Sheng of the Company due to conflicts of interests.
26 -
Director Sui Tai-Chung sidestepped from the discussion and voting of the resolution for the distribution of year-end bonus to managers of the Company in 2022 due to conflicts of interests.
Director Sui Tai-chung sidestepped from the discussion and voting of the proposal for the monthly salary structure, amount of payment, and estimated pension for managerial officers of the Company in 2023 due to conflicts of interests.

III. Implementation Status of Board Evaluations:

2. Director Sui Tai-Chung sidestepped from the discussion and voting of the resolution for the distribution of year-end bonus to managers of the Company in 2022 due to conflicts of interests. 3. Director Sui Tai-chung sidestepped from the discussion and voting of the proposal for the monthly salary structure, amount of payment, and estimated pension for managerial officers of the Company in 2023 due to conflicts of interests.	2. Director Sui Tai-Chung sidestepped from the discussion and voting of the resolution for the distribution of year-end bonus to managers of the Company in 2022 due to conflicts of interests. 3. Director Sui Tai-chung sidestepped from the discussion and voting of the proposal for the monthly salary structure, amount of payment, and estimated pension for managerial officers of the Company in 2023 due to conflicts of interests.	2. Director Sui Tai-Chung sidestepped from the discussion and voting of the resolution for the distribution of year-end bonus to managers of the Company in 2022 due to conflicts of interests. 3. Director Sui Tai-chung sidestepped from the discussion and voting of the proposal for the monthly salary structure, amount of payment, and estimated pension for managerial officers of the Company in 2023 due to conflicts of interests.	2. Director Sui Tai-Chung sidestepped from the discussion and voting of the resolution for the distribution of year-end bonus to managers of the Company in 2022 due to conflicts of interests. 3. Director Sui Tai-chung sidestepped from the discussion and voting of the proposal for the monthly salary structure, amount of payment, and estimated pension for managerial officers of the Company in 2023 due to conflicts of interests.	2. Director Sui Tai-Chung sidestepped from the discussion and voting of the resolution for the distribution of year-end bonus to managers of the Company in 2022 due to conflicts of interests. 3. Director Sui Tai-chung sidestepped from the discussion and voting of the proposal for the monthly salary structure, amount of payment, and estimated pension for managerial officers of the Company in 2023 due to conflicts of interests.
III.ImplementationStatus of BoardEvaluations: Evaluation cycle Evaluated period Scope of evaluation Evaluation method Evaluation Content Once a year 1/1/2022- 12/31/2022 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 cycle	Evaluated period	Scope of evaluation	Evaluation method	Evaluation Content
Once a year	1/1/2022- 12/31/2022	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

27 -

The Company has completed the self-evaluation of the performance of the Board of Directors for 2022, and the evaluation results were submitted to the Board of Directors for review and improvement on March 22, 2023. The overall average score of the internal self-evaluation of the board of directors' performance is 97.78 (out of 100); the overall average score of the self-evaluation of individual board members' performance is 99.22 (out of 100); the overall average score of the internal self-evaluation of the functional committees’ performance is 98.91 (out of 100), indicating that the overall board of directors is operating well.

IV. Reinforced assessments of functional objectives of the Board of Directors and implementation status of the objectives of the specific year and the most recent year:
(I) The Company has set up the Compensation and Remuneration Committee and the Audit Committee to effectively make the best off and consolidate the governance system, normalize its supervisory function, improve information transparency, and reinforce the management feature.
(II) The Company has set up a chief corporate governance officer to assist directors in executing business and strengthen the effective operation of the board of directors and compliance with laws and regulations.

ii. Operations of the Audit Committee:

(1)The Company’s Audit Committee consists of all independent directors and aims to help the Board of Directors fulfill its duties in supervising the quality and integrity of the Company in accounting, auditing, the financial reporting procedure, and financial control. The Committee is in charge of the following:
A. Preparation or revision of the internal control system as required by Article 14-1 of the Securities and Exchange Act.
B. Evaluation of the effectiveness of the internal control system.
C. Revision or amendment of the procedures for acquiring or disposing of assets, trading derivatives, lending funds to others, providing endorsements or guarantees to others, among other major financial operations as required by Article 36-1 of the Securities and Exchange Act.
D. Matters involving the interests of the Board directors.
E. Trading of major assets or derivatives.
F. Major lending of assets, endorsements, or guarantees.
G. Raising, issuance, or private placement of equity securities.
H. Delegation, dismissal of CPAs or their compensation.
I. Appointment or dismissal of the head of finance, accounting, or internal audit.
J. Review of financial statements.
K. Other important matters as specified by the Company or the competent authority.
(2)Professional qualifications and experience of members: Please refer to the “Professional qualifications and independence analysis of directors” of this Annual Report.
28 -
(3)Highlights of Tasks Performed by the Committee throughout the year:
A. Review of financial statements: The Business Report, Financial Statements, and Distribution of Earnings. The Financial Statements, in particular, were completely audited by Deloitte Taiwan. The above-mentioned Business Report, Financial Statements, and Proposal on Distribution of Earnings have been reviewed and approved by the Audit Committee.
B. Evaluation of the effectiveness of the internal control system: The Audit Committee reviewed the internal audits of the Company and the periodic reports from the delegated CPAs and the management that cover internal control policies and measures regarding finance, operation, risk management, and compliance for their effectiveness. It is believed that the Company has established and enforced the effective control mechanism for supervision and correction.
C. Appointment and compensation of CPAs: The Committee reviewed the independence, suitability, and professionalism of CPAs according to applicable laws and regulations such as the Certified Public Accountant Act to make sure absence of other financial interests and business relationships between the CPAs and the Company except for the fees paid for certification and finance and taxation assignments.
(4)Operation of the Audit Committee:

A total of 6 (A) Audit Committee meetings were held in 2022. The attendances of the independent directors were as follows:

Title	Name	Attendance in person (B)	By Proxy	Attendance Rate (%) (B/A)
Independent Director	Chen, Hsiu-Yen	6	-	100.00%
Independent Director	Huang, Cheng-Nan	6	-	100.00%
Independent Director	Chou, Chi-Wen	6	-	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.

29 -

Audit Committee Board of directors	Contents of the proposal
Second meeting of 2022 3/21/2022 Second meeting of 2022 3/21/2022	1. 2021 Internal Control System Declaration
	2. 2021 Financial Statements
	3. 2021 Business Report
	4. Earnings distributionproposal for 2021
	5. Independence and suitability assessment of CPAs and delegation and rewards of CPAs for 2022 financial statements and tax reporting
	6. Revision of the Regulations Governing the Acquisition and Disposal of Assets
	7. Revision of the Financial Derivatives Transaction Procedure
Third meeting of 2022 5/10/2022 Third meeting of 2022 5/10/2022	1. Consolidated financial statements of the first quarter of 2022 and CPAs' Review Report
	2. Revision of the Financial Derivatives Transaction Procedure
Fourth meeting of 2022 8/9/2022 Fourth meeting of 2022 8/9/2022	1. Consolidated financial statements of the second quarter of 2022 and CPAs' Review Report
	2. Investing in the establishment of a subsidiary in the United States
Fifth meeting of 2022 11/8/2022 Fifth meeting of 2022 11/8/2022	1. 2023 Audit Plan
	2. Consolidated financial statements of the third quarter of 2022 and CPAs' Review Report
	3. The application for change of derivative trading limits of financial institutions
Sixth meeting of 2022 12/19/2022 Sixth meeting of 2022 12/19/2022	1. Financial Derivatives Trading Quotas of Financial Institutions
Independent directors’ objections, reservations or major suggestions: None. Resolution of the Audit Committee and the Company’s response to the Audit Committee’s Opinion: The members of the Audit Committee unanimously approved all the resolutions, and the Board of Directors approved all such resolutionsrecommended bytheAuditCommittee.

30 -

	(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 2022.
II.	Recusal of independent directors upon conflicts of interest in proposals being discussed:
	statement: None.
III.	Communication between independent directors and internal audit heads and CPAs:
	(I) Communication policies between independent directors and internal audit heads and
	CPAs:
	1. The Head of Internal Audit communicates the audit report results with the
	members of the Audit Committee on a regular basis, and makes the internal audit
	report at the quarterly Audit Committee meeting. On weekdays, the internal
	audit director may communicate with the members by e-mail, telephone, or
	face-to-face meetings. Under special circumstances, an immediate report will be
	made to the members of the Audit Committee.
	2.During the planning and completion stages, the CPAs shall report to the
	Independent Directors on the review or audit results of the financial statements
	of the Company and its subsidiaries at home and abroad, the impact of internal
	control audits, the amendments and issuance impact of IFRSs on the Company,
	and other relevant legal requirements. Communicate whether there are adjusting
	entries in the financial statements or amendments to laws and regulations that
	affect the way of accounting.
	(II) Summary of Communications between Independent Directors and Head of Internal
	Audit in 2022:
	Implementation of audits by independent directors: The communications went well.
	Primary matters communicated are summarized as follows:
	Date Communicationpoints
	1/18/2022 1. Implementation of the Internal Audit Plan during October and December 2021
	3/21/2022 1. Implementation of the Internal Audit Plan in January 2022 2. 2021 Internal Control System Declaration
	5/10/2022 1. Implementation of the Internal Audit Plan during February and March 2022
	8/9/2022 1. Implementation of the Internal Audit Plan during April and June 2022

31 -

==> picture [478 x 514] intentionally omitted <==

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

Date Communication points
1. Implementation of the Internal Audit Plan during July and September
11/8/2022 2022
2. 2023 Audit Plan
All of the above matters were reviewed and/or approved by the Audit Committee
whereupon independent directors raised no objection.
(III) Summary of Communications between Independent Directors and Certified Public
Accountants in 2022:
Communication between independent directors and CPAs: The communications
went well. Primary matters communicated are summarized as follows:
Date Communication points
1. Audit result report presented by accountants regarding the financial
report and the consolidated financial statements of 2021.
2. Identify significant risks and describe the implementation procedures
3/21/2022
and audit results.
3. Assessment and response procedures for the key audit matters.
4. Accountant's responsibility and independence report.
1. Report on the Group's audit scope, methods, and work schedule.
2. Identify significant risks and explain the implementation procedures.
12/13/2022 3. Assessment of key audit matters and risk response procedures.
4. Report on the five major aspects of the CPAs’ Audit Quality
Indicators (AQI).
----- End of picture text -----

32 -

iii. Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

==> picture [792 x 429] intentionally omitted <==

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

Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
I. Does the company establish and disclose the  The Company, in compliance with the Corporate Governance None
Corporate Governance Best-Practice Best-Practice Principles for TWSE/TPEx Listed Companies, established
Principles based on “Corporate Governance the Corporate Governance Best-Practice Principles, which were duly
Best-Practice Principles for TWSE/TPEx approved and issued by the board of directors and disclosed in the Market
Listed Companies”? Observation Post System and the Company’s website – Investor Relations.
II. Shareholding structure & shareholders’ rights
(I)Does the company establish an internal  (I) The Company has formulated the “SOP for Spokespersons and Acting None
operating procedure to deal with Spokespersons”, and has set up a section for stakeholders on the
shareholders’ suggestions, doubts, disputes Company's website to respond to shareholders' feedback and handle
and litigations, and implement based on the their suggestions, doubts, disputes and litigation matters.
procedure?
(II) Does Company possess a list of major  (II) The Company has a list of the major shareholders and beneficial
shareholders and beneficial owners of these owners of these major shareholders at any time.
major shareholders?
(III)Does the company establish and execute the  (III)The Company has established the Operating Procedure for Transactions
risk management and firewall system within with Related Parties and Affiliates to control the risks associated with
its conglomerate structure? affiliates.
----- End of picture text -----

33 -

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 2022, 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 May 12, 2022 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

34 -

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 “Implementation Status of Board Evaluations” 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?	

35 -

	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 Company obtains the Declaration of Independence and the Audit Quality Indicators (AQIs) issued by the CPAs in accordance with the independent laws and regulations of the Accountant Act. The Company evaluates the audit quality of the firm as a whole and the audit team with reference to five major aspects, and evaluates the independence, adaptability, and professionalism of the CPAs. The CPAs' independence assessment was conducted this year and submitted to the Audit Committee and the Board of Directors for resolution on March 22, 2023. The audit and non-audit services provided by the CPAs this year have been reviewed by the Audit Committee in advance to ensure that the non-audit services will not affect the audit results.		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

36 -

==> picture [792 x 89] intentionally omitted <==

(I) Help directors perform their function and arrange continuing education for them: 1. Assist directors in complying with the latest laws and regulations, and maintain the exchange of information and opinions between directors and departmental heads. 2. Help arrange related meetings when it is necessary for the independent directors to separately meet with the head of internal audit or the CPAs in compliance with the Corporate Governance Best-Practice Principles. 3. Help the preparation of the annual continuing education program and arrange courses reflective of the characteristics of the industry that the Company is in and the education and experience of the directors. (II) Help prepare Board of Directors’ meetings and shareholders’ meetings: 1. Confirm that the shareholders’ meeting and Board of Directors’ meeting are called for in compliance with the requirements of applicable laws and the Corporate Governance Best-Practice Principles. 2. Enclose the resolutions made and release news after the meetings to ensure the legitimacy and accuracy of important information and to protect equal access of investors to trading information. 3. Help and remind directors of the laws and regulations that they should follow while performing duties or making official resolutions of the Board of Directors.

37 -

ImplementationStatus	ImplementationStatus	ImplementationStatus	ImplementationStatus	ImplementationStatus
Yes No Abstract Explanation
	(III) Continuing education completed by the head of corporate this year isasfollows: Provider Course title Duration Taiwan Stock Exchange International Twin Summit 5/4/2022 Securities and Futures Institute 2022 Education for Prevention of Insider Trading 6/10/2022 Accounting Research and Development Foundation Continuing training course for accounting supervisors of issuers, securities dealers and stockexchanges 12/22/2022- 12/23/2022				governance Hours involved 2.0 3.0 12.0
		Provider			Hours
			Course title	Duration
					involved

		Taiwan Stock Exchange	International Twin Summit	5/4/2022	2.0
		Securities and Futures Institute	2022 Education for Prevention of Insider Trading	6/10/2022	3.0
		Accounting Research and Development Foundation	Continuing training course for accounting supervisors of issuers, securities dealers and stockexchanges	12/22/2022- 12/23/2022	12.0

38 -

==> picture [792 x 508] intentionally omitted <==

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

Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
V. Does the company establish a communication  In order to achieve sustainable development and respect the rights and None
channel and build a designated section on its interests of stakeholders, the Company communicates with stakeholders
website for stakeholders (including but not through diverse channels, understands their issues and needs of
limited to shareholders, employees, importance, and appropriately responds and announces important
customers, and suppliers), as well as handle sustainable development issues of concern to them. This will enhance the
all the issues they care for in terms of content of information disclosure. The actual result of stakeholder
corporate social responsibilities? communication in 2022 was reported to the Board of Directors on
December 19, 2022. For the issues about communications of the Company
with stakeholders and the channels of communications, refer to the table
below:
Communication method
Stakeholder Issue involved Response method
or channel
1. Employee Welfare 1. Compensation and 1. Periodic meetings of the
Committee Member benefits Compensation and
2.Labor-Management 2. Employee health Remuneration Committee
Meeting and workplace 2. Announcement of annual
3. Employee feedback safety educational training schedule
mailbox on the 3. Employee 3. Periodic labor-management
Intranet continuing meetings and announcement of
4. Announcement on the education and meeting minutes
Intranet training 4. Annual employee satisfaction
4. Labor rights survey
1. Customer satisfaction 1. Product quality and 1. Cooperation in customer audit
survey certification and response to questionnaires
2. Customer visit and 2. Delivery, quotation, 2. Response to supplier
audit and after-sales satisfaction survey
3. Company website service of products 3. Management of related
1. Supplier site audit 3. Management of systems according to
and questionnaire hazardous international regulations
2. Supplier meeting substances banned
3. Company website under the RoHS
- 39 -
Employees
Customers
Suppliers
----- End of picture text -----

==> picture [792 x 483] intentionally omitted <==

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

Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
Communication method
Stakeholder Issue involved Response method
or channel
1. Annual Report and 1. Corporate 1. Calling for the general
Company website governance and shareholders’ meeting and
2. Release of important operational status distribution of the Annual
news 2. Management Report
3. Visits by performance 2. (Acting) Spokesperson
institutional 3. Future development available to speak to the public
shareholders strategy 3. Cooperation for visits by
4. Shareholders’ institutional shareholders
meeting and investor 4. Press release
conference
1. Annual Report and 1. Environmental 1. Compliance with laws and
Company website protection and regulations and international
2. Foundation sustainable standards
development 2. Acquisition of related
2. Donations to certifications
minority groups and 3. Acceptance and periodic
educational announcement of donations
institutions 4. Communication on
3. Participated in volunteering campaigns and
charity auctions involvement
held by public
welfare
organizations
The Company has a section devoted to stakeholders on its website
(http://www.thinking.com.tw) to facilitate communications with stakeholders.
Investors
Other
----- End of picture text -----

40 -

==> picture [792 x 138] intentionally omitted <==

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

Implementation Status Deviations from “the
Corporate Governance
Evaluation Item Best-Practice Principles
Yes No Abstract Explanation
for TWSE/TPEx Listed
Companies” and Reasons
VI. Does the company appoint a professional  The Company authorizes the Registrar of President Securities Corporation None
shareholder service agency to deal with to be its professional shareholder service agency.
shareholder affairs?
----- End of picture text -----

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

41 -

	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

42 -

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 has submitted the report of the most recent Board of Directors after renewingthe insurance in 2023.
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 The Company aims to improve the quality of information disclosure and the transparency of the Company's information, so that foreign investors or institutional institutions can access relevant information of the Company and strengthen the relationship between the Company and investors. The Company prepares English-language information in stages in support of its corporate governance evaluation project. English versions of meeting notices, Handbook, annual reports for shareholders' meetings, and annual financial reports have been implemented, and material information has been disseminated in English simultaneously since 2023. In the future, efforts will be made to release quarterly financial reports in English.

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 has submitted the report of the most recent Board of
Directors after renewingthe insurance in 2023.

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
The Company aims to improve the quality of information disclosure and the transparency of the Company's information, so that foreign investors
or institutional institutions can access relevant information of the Company and strengthen the relationship between the Company and investors. The
Company prepares English-language information in stages in support of its corporate governance evaluation project. English versions of meeting
notices, Handbook, annual reports for shareholders' meetings, and annual financial reports have been implemented, and material information has been
disseminated in English simultaneously since 2023. In the future, efforts will be made to release quarterly financial reports in English.

43 -

iv. Composition, Responsibilities and Operations of the Remuneration Committee

(1) Membership of Compensation and Remuneration Committee:

			December31,2022	December31,2022
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.
44 -

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 4 (A) meetings of the Compensation and Remuneration Committee were held in 2022. The attendances of member s were as follows:

==> picture [463 x 149] intentionally omitted <==

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

Attendance Attendance
Title Name in person By Proxy Rate (%) Remarks
(B) (B/A)
Convener Huang, Cheng-Nan 4 - 100.00%
Member Chou, Chi-Wen 4 - 100.00%
Member Tseng, Su-Hui 4 - 100.00%
----- End of picture text -----

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.

45 -

(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:

==> picture [502 x 650] intentionally omitted <==

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

How the Company
addressed opinions
Compensation
from the
and Remuneration Contents of the proposal Decisions made
Compensation and
Committee
Remuneration
Committee
Fifth 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 the Board of
1/18/2022 criteria, and structure of 2022 attending Directors and was
2. The amount of the year-end-bonus for members. approved by all
managers for 2021 attending directors.
3. 2022 Compensation and Rewards Proposal
for managers
Sixth meeting of 1. 2021 remuneration to employees and that to It was approved It was submitted to
the fourth intake directors as is all the Board of
3/21/2022 attending Directors and was
members. approved by all
attending directors.
Seventh meeting 1. Distribution of the remuneration to directors It was approved It was submitted to
of the fourth for 2021 as is all the Board of
intake 2. Distribution of employee remuneration to attending Directors and was
8/9/2022 managers for 2021 members. approved by all
3. Propose of hiring senior executives, their attending directors.
monthly salary structure, payment amount,
and estimated pension contribution
Eighth 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 the Board of
12/19/2022 criteria, and structure of 2023 attending Directors and was
2. Payment of pension to the President. members. approved by all
3. Compensation and remuneration for attending directors.
promoted manager
4. The amount of the year-end-bonus for
managers for 2022
5. 2023 Compensation and Rewards Proposal
for managers
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.
----- End of picture text -----

46 -

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.

==> picture [708 x 236] intentionally omitted <==

----- 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
----- End of picture text -----

47 -

Responsibilities of the Corporate Sustainable Development Committee

==> picture [753 x 451] intentionally omitted <==

----- 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.
----- End of picture text -----

48 -

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:

==> picture [755 x 85] intentionally omitted <==

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

49 -

==> picture [755 x 86] intentionally omitted <==

(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 22, 2023, the Company reported the implementation status of 2022 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.

50 -

==> picture [755 x 86] intentionally omitted <==

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 2022 to December 2022. 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 Yenyo Technology Co., Ltd., Thinking (Changzhou) Electronic Co., Ltd., Dong Guan Welkin Electronic Co., Ltd., Thinking (Yichang) Electronic Co., Ltd. and Jiang Xi Thinking 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 31, 2023 to discuss the implementation of achievements in 2022.	None

51 -

	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

52 -

	Implementationstatus	Implementationstatus	Implementationstatus	Deviations from “the
Promotion items	Yes No Abstract Explanation			Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
(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. Total electricity consumption in the past 2 years: Unit:thousand degrees/year Year Total electricity consumption 2022 89,892.52 2021 97,282.54 The total electricity consumption of the Company and its subsidiaries in 2022 was reduced by 7,390.02 thousand degrees or 7.6% compared to 2021, achieving the 7% target in the power-saving plan in 2022. In 2023, the target is to reduce by more than 8% compared with that in 2022, and set up solar power generation equipment utilizing renewable energy, so as to improve energy efficiency year by year and reduce the impact on environmental loads. 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 recyclingand reutilization,environmentalprotection	None

53 -

==> picture [755 x 86] intentionally omitted <==

(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?	 		regulations and requirements are strictly followed for each of the said stages. In addition, the Company bans the use of hazardous substances in its products. Product development meets the EU RoHS, REACH, and WEEE regulations, the EuP Directive, and the halogen-free requirement, among other international laws and regulations. Business waste that is generated is strictly managed and processed and cleared periodically to reduce environmental impacts to a minimum. (III) 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 plants of the Company and its subsidiaries, Yenyo Technology Co., Ltd., Thinking (Changzhou) Electronic Co., Ltd., Dong Guan Welkin Electronic Co., Ltd., Thinking (Yichang) Electronic Co., Ltd. and Jiang Xi Thinking Electronic Co., Ltd. all implemented statistics on greenhouse gas emission, water consumption, and total wastes, and reviewed the results of the past two years in a tabular manner. The Companyattachesgreat	None None

54 -

			Implementationstatus	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


		Year		Category 1	Category 2	Category 3	Total emissions
		2022		1,145.64	51,839.59	2,767.98	55,753.21
		2021		1,169.77	54,968.78	2,767.05	58,905.60

55 -

				Implementationstatus	Deviations from “the
Promotion items	Yes No			Abstract Explanation	Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
				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.” Water consumption in the past 2 years: Unit: metric ton/year Year Total water consumption 2022 393,410 2021 412,656 The Company and its subsidiaries 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. Other water-saving measures are also conducted. The total water consumption in 2022 was 393,410 metric tons, which reduced by 19,246 metric tons with an effect of 4.7% compared with the total water consumption of 412,656 metric tons in 2021. In 2023, the relevant waste water recovery equipment will be replaced and improved,and the target recoveryrate is over 7%.

56 -

	Implementationstatus	Implementationstatus	Implementationstatus	Implementationstatus
Yes No	Abstract Explanation
	Waste output in the past 2 years: Unit: metric ton/year Year Hazardous waste Non-hazardous waste Total waste 2022 376.35 218,690.81 219,067.16 2021 349.45 277,673.23 278,022.68 In order to achieve sustainable resource reuse, the Company's waste treatment principle gives priority to the reuse in the factory to reduce the consumption of raw materials, followed by recycling, and finally delivered to the incineration site or landfill. The total wastes of the Company and its subsidiaries in 2022 was 219,067.16 metric tons, which reduced by 58,955.52 metric tons or 21.2% compared with 278,022.68 metric tons in 2021. In order to improve the effective utilization of resources, the waste reduction management measures were continuously taken to reduce hazardous industrial wastes and improve the reuse of recyclable wastes. It is expected that the recycling rate in 2023 will increase by more than 1%.

	Year	Hazardous waste	Non-hazardous waste	Total waste
	2022	376.35	218,690.81	219,067.16
	2021	349.45	277,673.23	278,022.68

57 -

==> picture [755 x 86] intentionally omitted <==

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

58 -

==> picture [755 x 491] intentionally omitted <==

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

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 Measures
environment. 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
2022 was up to 100%.
----- End of picture text -----

59 -

==> picture [755 x 86] intentionally omitted <==

(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 of the Company’s profits. 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

60 -

==> picture [755 x 86] intentionally omitted <==

Welfare Measures for Employees: The Company has set up an Employee Welfare Committee. The Company 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 promote sustainable and joint economic growth. In 2022, the average proportion of female

61 -

==> picture [755 x 86] intentionally omitted <==

employees was approximately 50%, and that of female senior executives was 47%. 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 2022, the annual average salary adjustment rate of the Company's supervisory and non-supervisory positions in Taiwan was 3.5%.

62 -

==> picture [755 x 86] intentionally omitted <==

(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

63 -

==> picture [755 x 86] intentionally omitted <==

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.

64 -

				Implementationstatus Deviations from “the	Implementationstatus Deviations from “the
Promotion items	Yes No			Sustainable Development Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Explanation
(IV) Does the company provide its employees with career development and training sessions?			There were no cases of occupational disasters occurring in 2022. 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: Year Shift Number of trainees Training hours 2022 25 1,658 5,223h 2021 35 1,096 3,254h (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		None

65 -

==> picture [755 x 86] intentionally omitted <==

(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?			corporate ethics and belief development to cultivate colleagues' key capabilities. In 2022, a total of 3,872 employees completed the career training, with total training hours of 9,479. 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.

66 -

==> picture [755 x 86] intentionally omitted <==

(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 2022. 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 2022.	None

67 -

		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.

68 -

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.”

69 -

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.

2022 Thinking Education Fund's charity events: 1. Sponsored the "Children with Pandemic, Train Your Heart" charity party organized by the Family Welfare Center in Qianzhen District, Kaohsiung, to support the work of helping children and care for the poor, the families who have lost family members, and the children living in poverty 2. Sponsored the "Umbrellas for Fairy Limbo" Meinong Pheasant Conservation Event to continue to do our best for the habitats of Taiwan's pheasants; 3. Sponsored the Taiwan Soloist Symphony Orchestra to inspire young people to explore new fields of study and to have a channel for listening to music, so that they can relax their minds after busy work, and awaken the boundless love and enthusiasm for the future buried in their hearts ; 4. Call on colleagues of the Company to actively participate in the charity sale fair held by Genesis Social Welfare Foundation, and donate all the proceeds to the foundation; 5. Beach cleaning activities. Thinking has always participated in the practical actions of cleaning the ocean and protecting life, so that plastic garbage can reduce the hazard to rivers and oceans, and garbage is not discarded at will. Protect life, embrace the ocean with love, and continue corporate practice, 6. Tree planting activities. Thinking continues to focus on "community development". In order to make this beautiful land full of vitality again, we will work together to plant trees and change the future. 10 years later, The trees form a forest, flocks of birds come and go freely, and shrimps, crabs, and fish swim freely.

(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.

70 -

(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 2022 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

71 -

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 2022, 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.

72 -

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.

73 -

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.

==> picture [417 x 258] intentionally omitted <==

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

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
----- End of picture text -----

74 -

vi. Fulfillment of Ethical Corporate Management and Deviations from the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies" and Reasons

==> picture [762 x 68] intentionally omitted <==

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

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

75 -

	Implementation Status Deviations from “the Ethical	Implementation Status Deviations from “the Ethical	Implementation Status Deviations from “the Ethical
Evaluation Item	Corporate Management Best-Practice Principles for TWSE/TPExListed Companies” andReasons Yes No Abstract Explanation
(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 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 2022 implementation status on March 22,2023.	None

76 -

==> picture [762 x 80] intentionally omitted <==

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, 31 sessions in total, in 2022 and 2,173 of its people attended self-organized or outsourced educational trainings totaling 5,884 hours.

77 -

==> picture [762 x 69] intentionally omitted <==

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

78 -

	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: None.
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.

79 -
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.

80 -
ix. Implementation of Internal Control System: The following information shall be disclosed.
(1) Statement of Internal Control System

Thinking Electronic Industrial Co., Ltd.

Statement of Internal Control System

Date: March 22, 2023

For the Company's internal control system of 2022, 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.
81 -
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, 2022 (including its supervision and management of subsidiaries), including its awareness of the extent by which the operating effects and efficiency goals are fulfilled, reliability of reports, and compliance with relevant laws and regulations, are such that it is effective and capable of reasonably ensuring that the aforementioned goals can be achieved.
VI. This declaration constitutes a major part of the Company's Annual Report and the Company's Prospectus that are made available to the public. In case of falsification or concealment, among other illegal conditions, with the above-mentioned released contents, liabilities under Articles 20, 32, 171, and 174 of the Securities and Exchange Act will be sought.
VII. This Declaration was approved at the meeting of the Company's Board of Directors on March 22, 2023 with no directors expressing dissent out of the 7 Directors in attendance.

Thinking Electronic Industrial Co., Ltd.

Chairman of Board: Sui, Tai-Chung

President: Chung, Shih-Ying

(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.
82 -
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 2022 Regular Shareholders’ Meeting of the Company was held on June 16, 2022 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 2021 Business Report and Financial Statements
  - B. Approval of distribution of earnings for 2021
    - Implementation: August 30, 2022 was set to be the ex-dividend record date and September 16, 2022 the payment date. (NTD 6.3 as cash dividends per share)
  - C. Approval of the revision to the Regulations Governing the Acquisition and Disposal of Assets
    - Implementation: Announced on the Company's website and implemented in accordance with the amended regulations.
  - D. Approval of the Financial Derivatives Transaction Procedure Implementation: Announced on the Company's website and implemented in accordance with the amended regulations.
- (2) Important decisions of the Board of Directors:
Item No. Date Important decision 1 1/18/2022 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 2022
1. 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

2 3/21/2022 1. 2021 Internal Control System Declaration 2. 2021 remuneration to employees and that to directors 3. 2021 Financial Statements 4. 2021 Business Report 5. Earnings distribution proposal for 2021 6. 2022 Operational Plan

       7. Independence and suitability assessment of CPAs and delegation and rewards of CPAs for 2022 financial statements and tax reporting

       8. Assignment of directors for the subsidiary, Yenyo Technology Co., Ltd.

       9. Revision of the Regulations Governing the Acquisition and Disposal of Assets

83 -

Important decision

Item No.

Date

Revision of the Financial Derivatives Transaction Procedure
Convening of shareholders’ meeting

3 5/10/2022 1. Consolidated financial statements of the first quarter of 2022 and CPAs' Review Report

Revision of the Financial Derivatives Transaction Procedure 3. Assignment of directors for the subsidiary, Thinking (Yichang) Electronic Co., Ltd.

4 8/9/2022 1. Distribution of dividends in cash 2. Distribution of remuneration to directors (including independent directors) for 2021

Distribution of employee remuneration to managers for 2021 4. Propose of hiring senior executives, their monthly salary structure, payment amount, and estimated pension contribution
Consolidated financial statements of the second quarter of 2022 and CPAs' Review Report
Investing in the establishment of a subsidiary in the United States

5 11/8/2022 1. 2023 Audit Plan 2. Consolidated financial statements of the third quarter of 2022 and CPAs' Review Report

The application for change of derivative trading limits of financial institutions
Signing agreements on medium-term financing facilities with financial institutions
Remuneration to members of the Compensation and Remuneration Committee for 2022

6 12/19/2022 1. Financial Derivatives Trading Quotas of Financial Institutions 2. Financing facilities limits of financial institutions 3. Revision of the Procedures for Handling Material Inside Information

Discussion of regulations relevant to the compensation and rewards policy, system, criteria, and structure of 2023
Payment of pension to the President
Compensation and remuneration for promoted manager
The amount of the year-end-bonus for managers for 2022 8. Monthly salary structure, amount paid, and expected pension appropriation for managers for 2023
Appointment of spokesman
Assignment of directors and supervisor for the subsidiary, Thinking (Changzhou) Electronic Co., Ltd.
Assignment of directors and supervisor for the subsidiary, Guangdong Welkin Thinking Electronic Co., Ltd.
84 -

Important decision

Item No.

Date

  12. Assignment of directors and supervisor for the subsidiary, Jiang Xi Thinking Electronic Co., Ltd.

Assignment of directors and supervisor for the subsidiary, Dong Guan Welkin Electronic Co., Ltd.

7 2/8/2023 1. Investing in the establishment of a subsidiary in Vietnam 8 3/22/2023 1. 2022 Internal Control System Declaration

  2. 2022 remuneration to employees and that to directors

  3. 2022 Financial Statements

  4. 2022 Business Report

  5. Earnings distribution proposal for 2022

  6. 2023 Operational Plan

  7. Rotation of CPAs and evaluation of independence and suitability

  8. Appointment of CPAs and their remuneration for 2023

  9. Compensation and remuneration for promoted manager

  10. Revision of the Procedure for Board of Directors Meetings

  11. Financial Derivatives Transaction Quotas of Financial Institutions

  12. Re-election of directors by the shareholders' meeting

  13. Duration, number of open seats, and locations for nomination of directors (including independent directors) candidates

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

  15. 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:

				December 31,2022
Title	Name	Date of Appointment	Date of Termination	Reasons for Resignation or Dismissal
President	Ho, Yi-Sheng	1/1/2013	12/19/2022	Retirement

85 -

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	1/1/2022 -12/31/2022	4,600	559	5,159	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 69 thousand, direct deductions worth NTD 55 thousand and assistance in Investment Commission affairs worth NTD 35 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

==> picture [435 x 608] intentionally omitted <==

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

2022 2023 (as of April 15)
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) Chung, Shih-Ying
Representative of
Director and
Manager at the Sui, Tai-Chung - - - -
branch office in
Nanzi
Representative of
Ho, Yi-Sheng
Director and - - - -
(Note 2、Note 3)
President
Representative of
Chung, Shih-Ying
Director and - - - -
(Note 2、Note 4)
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
----- End of picture text -----

87 -

==> picture [435 x 531] intentionally omitted <==

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

2022 2023 (as of April 15)
Pledged Pledged
Holding Holding
Title Name Holding Holding
Increase Increase
Increase Increase
(Decrease) (Decrease)
(Decrease) (Decrease)
Vice President at
Sung, Hsing-Jang
the Operational - - - -
(Note 5)
Department
Head of Plant Chang, Mei-Hui - - - -
Chan, Chia-Hao
Head of Plant - - - -
(Note 6)
Associate Vice
President at the
Second Division Chiu, Chung-Chi - - - -
of R&D
Department
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: On December 19, 2022, the institutional director of Boh Chin Investment Co., Ltd.,

re-appointed representative. Director Ho, Yi-Sheng retired and director Chung, Shih-Ying took over as director.

Note 3: Mr. Ho, Yi-Sheng retired on December 19, 2022. His shareholding is no longer required to disclose.
Note 4: Mr. Chung, Shih-Ying was promoted to President, effective December 19, 2022. His shareholdings were disclosed starting from that date.
Note 5: Mr. Sung, Hsing-Jang was promoted to Vice President, effective February 1, 2023. His shareholdings were disclosed starting from that date.
Note 6: Mr. Chan, Chia-Hao was promoted to Head of Plant, effective July 14, 2022. His shareholdings were disclosed starting from that date.
88 -

3.9 Relationship among the Top Ten Shareholders

April 15, 2023

==> picture [566 x 701] intentionally omitted <==

----- 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
Boh Chin Investment Co., Ltd. Relatives within
Investment Co., Sui, Tai-Chung second degree of
Ltd. 27,178,247 21.21% - - - - Chen, Su-Ai kinship of the
Representative: Sui, Wan-Ni representative of
Boh Chin
Sui, Tai-Chung Sui, Chieh-Heng Investment Co., Ltd.
Sui, Chung-Hua
Boh Chin Relatives within
Yih Chin
Investment Co., Investment Co., Ltd. second degree of
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 5,654,000 4.41% - - - - None None
Standard
Chartered Bank
Hosting the
Fidelity Puritan. 4,124,000 3.22% - - - - None None
Trust: Fidelity
Low-Priced
Stocks Fund
Boh Chin
Investment Co., Ltd.
Yih Chin Relatives within
Investment Co., Ltd. second degree of
Sui, Tai-Chung 4,080,862 3.19% 1,474,733 1.15% - - Sui, Wan-Ni kinship
Sui, Chieh-Heng
Sui, Chung-Hua
Chen, Su-Ai Spouses
Boh Chin
Investment Co.,
Relatives within
Ltd.
Sui, Wan-Ni 3,465,829 2.71% - - - - Sui, Tai-Chung second degree of
kinship
Chen, Su-Ai
Sui, Chieh-Heng
Boh Chin
Investment Co.,
Relatives within
Ltd.
Sui, Chieh-Heng 2,484,469 1.94% - - - - Sui, Tai-Chung second degree of
kinship
Chen, Su-Ai
Sui, Wan-Ni
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
LGT in the
trusteeship of
1,640,000 1.28% - - - - None None
Standard
Chartered Bank
Boh Chin
Investment Co., Ltd. Relatives within
Chen, Su-Ai 1,474,733 1.15% 4,080,862 3.19% - - Sui, Wan-Ni second degree of kinship
Sui, Chieh-Heng
Sui, Tai-Chung Spouses
----- 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:

==> picture [508 x 653] intentionally omitted <==

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

Date: December 31, 2022 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 1,413,430 3.50 27,145,938 67.26
Co., Ltd.
Greenish Co., Ltd. 7,374,997 100.00 - - 7,374,997 100.00
Thinking Holding
25,176,302 100.00 - - 25,176,302 100.00
(Cayman) Co., Ltd.
Thinking Electronic
1,000,000 100.00 - - 1,000,000 100.00
USA, Inc.
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
- - 3,864,354 100.00 3,864,354 100.00
(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.
----- End of picture text -----

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
----- End of picture text -----

91 -

==> picture [552 x 733] 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
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
11/2004 10 120,000,000 1,200,000,000 95,447,433 954,474,330 corporate None No. 0930118845
bonds-converted
NTD 479,380
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I) No.
2/2005 10 120,000,000 1,200,000,000 95,487,548 954,875,480 corporate None No. 0930118845
bonds-converted
NTD 401,150
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
5/2005 10 120,000,000 1,200,000,000 97,667,290 976,672,900 corporate None No. 0930118845
bonds-converted
NTD 21,797,420
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
1/2006 10 120,000,000 1,200,000,000 97,748,021 977,480,210 corporate None No. 0930118845
bonds-converted
NTD 807,310
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
5/2006 10 120,000,000 1,200,000,000 101,257,137 1,012,571,370 corporate None No. 0930118845
bonds-converted
NTD 35,091,160
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
7/2006 10 120,000,000 1,200,000,000 101,574,680 1,015,746,800 corporate None No. 0930118845
bonds-converted
NTD 3,175,430
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
11/2006 10 120,000,000 1,200,000,000 101,617,736 1,016,177,360 corporate None No. 0930118845
bonds-converted
NTD 430,560
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
1/2007 10 120,000,000 1,200,000,000 105,347,544 1,053,475,440 corporate None No. 0930118845
bonds-converted
NTD 37,298,080
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
4/2007 10 120,000,000 1,200,000,000 106,090,277 1,060,902,770 corporate None No. 0930118845
bonds-converted
NTD 7,427,330
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
7/2007 10 120,000,000 1,200,000,000 106,138,715 1,061,387,150 corporate None No. 0930118845
bonds-converted
NTD 484,380
Earnings transferred 7/5/2007
9/2007 10 140,000,000 1,400,000,000 117,007,808 1,170,078,080 capital increase None FSC (I)
NTD 108,690,930 No. 0960034307
Domestic 5/19/2004
convertible Tai-Cai-Zheng (I)
1/2008 10 140,000,000 1,400,000,000 117,025,611 1,170,256,110 corporate None No. 0930118845
bonds-converted
NTD 178,030
9/26/2008
FSC (III)
Write-off of treasury
No. 0970051455
12/2008 10 140,000,000 1,400,000,000 113,867,611 1,138,676,110 stock shares None
11/26/2008
NTD 31,580,000
FSC (III)
No. 0970064758
----- End of picture text -----

92 -

==> picture [552 x 387] intentionally omitted <==

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 15,2023	April 15,2023	April 15,2023	April 15,2023	April 15,2023	April 15,2023	April 15,2023
Item Government Agencies Financial Institutions Other Juridical Persons Natural Persons Foreign Institutions & Natural Persons Total
Number of Shareholders - - 84 10,521 129 10,734
Shareholding (shares) - - 48,632,271 59,409,120 20,071,335 128,112,726
Ratio(%)	-	-	37.96	46.37	15.67	100.00

iii. Shareholding Distribution Status

(1) Common shares:

Denomination per share: NTD 10; April 15, 2023

==> picture [465 x 349] intentionally omitted <==

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

Number of Shareholding
Class of Shareholding Ratio (%)
Shareholders (Shares)
1 ～ 999 2,997 474,115 0.37
1,000 ～ 5,000 6,536 11,809,161 9.22
5,001 ～ 10,000 604 4,811,986 3.76
10,001 ～ 15,000 193 2,471,073 1.93
15,001 ～ 20,000 91 1,701,959 1.33
20,001 ～ 30,000 83 2,147,383 1.68
30,001 ～ 40,000 39 1,397,787 1.09
40,001 ～ 50,000 29 1,312,337 1.02
50,001 ～ 100,000 65 4,588,613 3.58
100,001 ～ 200,000 34 4,955,980 3.87
200,001 ～ 400,000 27 7,498,428 5.85
400,001 ～ 600,000 15 7,230,622 5.64
600,001 ～ 800,000 6 3,970,270 3.10
800,001 ～ 1,000,000 - - -
1,000,001 or over 15 73,743,012 57.56
Total 10,734 128,112,726 100.00
----- End of picture text -----

(2) Preferred shares: None.

94 -

April 15, 2023

iv. List of Major Shareholders:

==> picture [463 x 398] intentionally omitted <==

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

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 5,654,000 4.41
Standard Chartered Bank Hosting the
Fidelity Puritan. Trust: Fidelity Low-Priced 4,124,000 3.22
Stocks Fund
Sui, Tai-Chung 4,080,862 3.19
Sui, Wan-Ni 3,465,829 2.71
Sui, Chieh-Heng 2,484,469 1.94
Sui, Chung-Hua 1,763,719 1.38
LGT in the trusteeship of Standard Chartered
1,640,000 1.28
Bank
Chen, Su-Ai 1,474,733 1.15
----- End of picture text -----

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$

==> picture [517 x 369] intentionally omitted <==

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

2023
Items 2021 2022 (as of
March 31)
Highest 257.00 162.00 160.00
Market Price per
Lowest 141.00 100.00 121.00
Share (Note 1)
Average 181.47 132.12 145.32
Net Worth per Before Distribution 63.68 68.76 71.31
Share (Note 2) After Distribution 57.38 63.36 (Note 6) Undistributed
Weighted Average Shares
Earnings per 128,113 128,113 128,113
(thousand shares)
Share
Earnings Per Share 12.31 10.72 2.34
Cash Dividends 6.30 5.40 (Note 6) -
Dividends per - - - -
Share Dividends
Share - - - -
Accumulated Undistributed Dividends - - -
Price / Earnings Ratio (Note3) 14.74 12.32 -
Return on
Price / Dividend Ratio (Note 4) 28.80 24.47 -
Investment
Cash Dividend Yield (Note 5) 3.47 4.09 -
----- End of picture text -----

Note 1: The annual mean market price of each year is calculated by the trading value and trading volume each year. 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 2022 are NTD 5.40 per share in cash yet it is pending approval through the 2023 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: According to the Company's Articles of Incorporation, the dividend policy is based on the Company's current and future development plans, the investment environment, capital needs, domestic and international competition, and shareholders' interests. The bonus to shareholders shall be distributed from the accumulated distributable earnings, which shall be no less than 30% of distributable earnings for the current 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. Amount and type of dividends distributed: The cash dividends distributed by the Company shall not be less than 20% of the total dividends.
(2) Distribution of dividends intended to be proposed and discussed during the current shareholders’ meeting:

NTD 691,808,721 is intended to be set aside as shareholder bonus from the distributable earnings of 2022, that is, NTD 5.40 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: If there is any change in the amount after the publication of the annual
financial statements, it will be handled as a change in accounting estimate and the adjustment will be posted in the next year.
(4) Approval of distribution of remuneration by the Board of Directors:
A.The proposals approved by the Board of Directors regarding 2022 earnings are as follows:
- (a) Distribution of the remuneration to employees in cash worth NTD 68,812 thousand.
- (b) Distribution of the remuneration to directors worth NTD 23,242 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: Not applicable.
(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 2022 Financial Statements" of this Annual Report.

ix. Buy-back of Treasury Share: None.

98 -

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 31,2022/NTD thousand
Major Divisions Total Sales in Year (%)of Total Sales
Protection Element 7,066,980 94.69
Other 396,155 5.31
Total	7,463,135	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 2022: NTD 326,395 thousand.

R&D expenses spent as of the first quarter of 2023: NTD 87,225 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

Reshape the sales organization and process, focus on the index market and major customers, connect the complex processes of IC design, solution integration, ODM and OEM in the electronics industry, and explore more international index customers.

To improve service capabilities. In addition to providing direct services to existing A-grade customers, we have added the subsidiary in the United States and offices in Northeast Asia and Southeast Asia to explore markets in the nearby areas and provide local services to expand the Company's overseas business territory.

Leverage economic scale and product advantages to consolidate the existing market; adjust the sales product portfolio, increase the sales weight of competitive products, and simultaneously increase gross profit and profitability.

(2) Mid-to-long-term Development

With a complete product portfolio, excellent quality and service, the brand image created, and the global layout through the complete sales channels; invest more business resources in new application fields to maintain the Company's profits; establish long-term stable supply-chain relationship with major customers and continue to expand the market share of the Company's products.

104 -

5.2 Overview of Market, Production, and Sales

i. Market Analysis

(1)Sales Area

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

==> picture [383 x 217] intentionally omitted <==

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

Unit: NTD Thousand
Year
2022
Net sales %
Sales Area
Asia 5,671,459 75.99
Europe 753,417 10.10
Export
sales
Other 514,829 6.90
Subtotal 6,939,705 92.99
Domestic sales 523,430 7.01
Total 7,463,135 100.00
----- End of picture text -----

(2)Market share

Based on the market survey information published by the US -based Paumanok, an authority on the market of passive components, and after comparing the NTC shipments of the Company, it is estimated that the market share of the power type NTC of the Company is absolutely in the leading position in the world; with the same estimation, the Company has also ranked first in the world in terms of market share of plug-in varistors. In terms of the thermistor and varistor manufacturers in Asia, the Company is firmly in the main supplier position in the market. In addition, the report ranked the Company and the two major PTC manufacturers in Japan as the top three suppliers in the world, indicating that the Company's PTC status has leapt onto the international arena.

(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. Energy Storage System

Under the global trend of climate change and carbon emission control, the use of renewable energy has become the main countermeasure. However, the output of renewable energy is more unstable than the existing biomass energy power generation system. An energy storage system is required to balance the gap between supply and demand. At present, the most widely used energy storage system uses a large number of lithium batteries as the main technology, which also brings about huge business opportunities in temperature detection and control.

D. 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.

106 -
(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.

(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.

With independent technology and excellent R&D capabilities, we can provide corresponding products or solutions in a timely manner to meet the changing needs of customers; coupled with highly automated production capabilities, and deep customer relationships, we use high-end technology to support quality services.

(d) 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) Insufficient reputation in Europe and America

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. High-end markets such as automobiles, communications, and medical care have long been dominated by European, American, and Japanese brands. The Company's reputation still needs to be improved.

(b) Price-cutting race remains

International peers are also actively adjusting the quotation strategies for SMD products in order to expand the economic scale of SMD, which caused pressure on the Company. In addition, although the products and technologies of peers in Greater China are still different from those of the Company, the rise of the red supply chain has significantly affected the reasonableness of market prices.

Although the Company's product lines cover the three major fields of over-current, over-voltage, and over-temperature detection and protection, not all of the product lines are developed in a balanced manner. There is still considerable room for growth in the revenue of product lines in the DC application environment.

107 -
C. Countermeasures:
- (a) The subsidiary in the United States and offices in Northeast Asia and Southeast Asia were opened to execute market exploration, provide local services in the nearest place, raise awareness and increase the proportion of sales.
- (b) Reinforce automated product and enhance product yield rate to bring down the cost.
- (c) Develop new international customers and increase the proportion of revenue in the high-end application market; increase the number of orders for miniaturized SMD products, achieve greater economies of scale with flexible pricing, and reduce the impact of price competition on revenue.
- (d) Increase the sales activities of DC application product lines for balanced development; use business synergies to expand the scope of business to customers and increase revenue.
ii. Production Procedures of Main Products
(1) Major Products and Their Main Uses

Main Item product 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. Thermistor 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. 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. Varistor 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, TV ports, etc.

108 -

==> picture [455 x 37] intentionally omitted <==

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

Main
Item
product
----- End of picture text -----

Main
product
Item

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.

(2) Major Products and Their Production Processes

Manufacturing process flowchart for plug-in resistors

==> picture [431 x 171] intentionally omitted <==

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

Powder
Batching Forming Sintering
blending
Testing and Encapsulation External
stamping and coating Wire bonding electrode
Packaging
----- End of picture text -----

Manufacturing process flowchart for SMD resistors

==> picture [434 x 96] intentionally omitted <==

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

Rolling Tape Casting Sintering Cutting
Terminal
Electrode Plating Testing Packaging
----- End of picture text -----

109 -

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

==> picture [510 x 191] intentionally omitted <==

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

2021 2022
Year
Output
Capacity Quantity Amount Capacity Quantity Amount
Major Products
Protection Element 15,501,700 12,991,132 6,120,106 16,045,800 10,330,022 5,657,775
Other 181,202 166,931 262,133 192,065 174,765 407,699
Total 15,682,902 13,158,063 6,382,239 16,237,865 10,504,787 6,065,474
----- End of picture text -----

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

==> picture [510 x 212] intentionally omitted <==

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

2021 2022
Year
Local Export Local Export
Shipments
& Sales
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Major Products
Protection Element 648,431 394,626 7,286,598 6,807,245 495,067 348,896 5,579,585 6,718,084
Other 152,473 153,708 138,436 144,876 88,828 173,022 177,289 223,133
Total 800,904 548,334 7,425,034 6,952,121 583,895 521,918 5,756,874 6,941,217
----- End of picture text -----

110 -

5.3 Human Resources

==> picture [455 x 244] intentionally omitted <==

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

2023
Year 2021 2022
(as of March 31)
Direct employees 2,478 2,360 2,731
Number of
Indirect employees 1,569 1,720 1,779
Employees
Total 4,047 4,080 4,510
Average Age 36.00 33.42 34.45
Average Years of Service 4.94 5.10 4.48
Masters 2.27% 2.42% 2.37%
University and College 25.28% 26.60% 25.15%
Education Senior High School 29.13% 28.21% 27.76%
Below Senior High
43.32% 42.77% 44.72%
School
----- End of picture text -----

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, the budget will be increased to add and improve related equipment gradually if it can be overcome technically. Wastewater, waste, and air pollution permits will be changed in a timely manner to comply with laws and regulations. The related improvement funds invested in 2022 was NT 7,589 thousand. For continuing improvements in 2023, including the recovery, process and re-use of effluents, the reduction of waste water and water resources, it is estimated that NT 22,500 thousand will be spent on improvements and new equipment purchase.

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.

111 -
(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.
112 -

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.
113 -
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.
114 -
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.
115 -
(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	-

116 -

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

==> picture [539 x 563] intentionally omitted <==

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

Year Financial Summary for the Past Five Fiscal Years Financial
summary as of
Item 2018 2019 2020 2021 2022 (Note) March 31, 2023
Current assets 5,699,845 6,067,809 8,084,389 8,850,782 9,136,066 8,322,088
Property, plant and
2,023,901 2,031,402 2,174,967 2,619,638 3,219,260 3,420,638
equipment
Intangible assets 34,354 44,884 43,982 48,075 42,449 48,644
Other assets 487,847 606,420 727,322 1,151,390 1,360,041 1,507,376
Total assets 8,245,947 8,750,515 11,030,660 12,669,885 13,757,816 13,298,746
Before
1,341,602 1,254,736 2,051,426 2,309,372 2,299,113 1,469,093
Current distribution
liabilities After
1,828,430 1,792,809 2,756,046 3,116,482 2,990,922 Undistributed
distribution
Non-current liabilities 844,587 980,796 1,534,447 2,084,160 2,515,256 2,555,546
Before
2,186,189 2,235,532 3,585,873 4,393,532 4,814,369 4,024,639
Total distribution
liabilities After
2,673,017 2,773,605 4,290,493 5,200,642 5,506,178 Undistributed
distribution
Equity attributable
5,915,834 6,371,393 7,305,365 8,158,633 8,809,079 9,135,217
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 348,263 348,263 348,263 352,907 352,907 352,907
Before
4,394,071 5,026,658 5,877,411 6,746,977 7,315,672 7,615,405
Retained distribution
earnings After
3,907,243 4,488,585 5,172,791 5,939,867 6,623,863 Undistributed
distribution
Other equities (107,627) (284,655) (201,436) (222,378) (140,627) (114,222)
Treasury shares - - - - - -
Non-controlling
143,924 143,590 139,422 117,720 134,368 138,890
interests
Before
6,059,758 6,514,983 7,444,787 8,276,353 8,943,447 9,274,107
Total distribution
equity After
5,572,930 5,976,910 6,740,167 7,469,243 8,251,638 Undistributed
distribution
----- End of picture text -----

Note: The distribution of earnings from 2022 is yet to be decided during the shareholders’ meeting.

117 -

B. Condensed Statements of Comprehensive Income

Unit: NTD Thousand

==> picture [520 x 594] intentionally omitted <==

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

Year Financial Summary for the Past Five Fiscal Years Financial
summary as of
Item 2018 2019 2020 2021 2022 March 31, 2023
Operating revenue,
6,019,949 5,814,232 5,920,258 7,500,455 7,463,135 1,719,103
net
Gross profit 2,241,160 2,340,329 2,714,605 3,239,431 2,633,376 651,332
Profit from
1,385,035 1,448,901 1,843,142 2,124,835 1,400,177 393,852
operations
Non-operating
income and 124,043 64,786 24,191 34,499 396,567 13,433
expenses
Profit before
1,509,078 1,513,687 1,867,333 2,159,334 1,796,744 407,285
income tax
Net profit 988,628 1,115,265 1,380,603 1,590,623 1,389,978 304,255
Other
comprehensive
(70,745) (173,212) 87,274 (25,187) 84,226 26,405
income (loss),
net of tax
Total
comprehensive 917,883 942,053 1,467,877 1,565,436 1,474,204 330,660
income
Net profit
attributable to:
Owners of the
982,766 1,115,990 1,385,016 1,577,307 1,373,833 299,733
company
Non-controlling
5,862 (725) (4,413) 13,316 16,145 4,522
interests
Total
comprehensive
income (loss)
attributable to:
Owners of the
912,539 942,387 1,472,045 1,553,244 1,457,556 326,138
company
Non-controlling
5,344 (334) (4,168) 12,192 16,648 4,522
interests
Earnings per Share 7.67 8.71 10.81 12.31 10.72 2.34
----- End of picture text -----

118 -

(2) Parent company only financial information

A. Condensed Balance Sheet

Unit: NTD Thousand

==> picture [474 x 577] intentionally omitted <==

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

Year Financial Summary for the Past Five Fiscal Years
2018 2019 2020 2021 2022 (Note)
Item
Current assets 2,375,389 2,202,968 2,943,972 3,206,025 3,422,794
Investments accounted
for using the equity 4,920,689 5,397,746 6,434,738 7,490,254 7,955,007
method
Property, plant and
527,117 544,596 613,528 936,977 1,368,831
equipment
Intangible Assets 33,924 30,795 28,359 33,652 29,015
Other assets 103,441 240,433 286,537 308,393 237,147
Total assets 7,960,560 8,416,538 10,307,134 11,975,301 13,012,794
Before
1,231,766 1,134,157 1,555,581 1,806,160 1,785,012
Current distribution
liabilities After
1,718,594 1,672,230 2,260,201 2,613,270 2,476,821
distribution
Non-current liabilities 812,960 910,988 1,446,188 2,010,508 2,418,703
Before
2,044,726 2,045,145 3,001,769 3,816,668 4,203,715
Total distribution
liabilities After
2,531,554 2,583,218 3,706,389 4,623,778 4,895,524
distribution
Ordinary shares 1,281,127 1,281,127 1,281,127 1,281,127 1,281,127
Capital surplus 348,263 348,263 348,263 352,907 352,907
Before
4,394,071 5,026,658 5,877,411 6,746,977 7,315,672
Retained distribution
earnings After
3,907,243 4,488,585 5,172,791 5,939,867 6,623,863
distribution
Other equities (107,627) (284,655) (201,436) (222,378) (140,627)
Treasury shares - - - - -
Before
5,915,834 6,371,393 7,305,365 8,158,633 8,809,079
Total distribution
equity After
5,429,006 5,833,320 6,600,745 7,351,523 8,117,270
distribution
----- End of picture text -----

Note: The distribution of earnings from 2022 is yet to be decided during the shareholders’ meeting.

119 -

B. Condensed Statements of Comprehensive Income

Unit: NTD Thousand

==> picture [478 x 292] intentionally omitted <==

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

Year
Financial Summary for the Past Five Fiscal Years
2018 2019 2020 2021 2022
Item
Operating revenue, net 3,356,678 3,137,848 3,219,942 3,775,517 3,619,285
Gross profit (Note) 1,040,704 1,052,791 1,178,182 1,464,528 1,153,128
Profit from operations 687,231 703,425 789,521 952,159 694,967
Non-operating income
687,936 697,022 933,245 1,036,297 995,847
and expenses
Profit before income tax 1,375,167 1,400,447 1,722,766 1,988,456 1,690,814
Net profit 982,766 1,115,990 1,385,016 1,577,307 1,373,833
Other comprehensive
(70,227) (173,603) 87,029 (24,063) 83,723
income (loss), net of tax
Total comprehensive
912,539 942,387 1,472,045 1,553,244 1,457,556
income
Earnings per Share 7.67 8.71 10.81 12.31 10.72
----- End of picture text -----

Note: The operating gross profit does not include realized (unrealized) gross profit from sales.

ii. Auditors’ Opinions from 2017 to 2021

==> picture [481 x 158] intentionally omitted <==

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

Year Accounting Firm CPA Audit 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
2022 Deloitte & Touche Chiang Jia-Ling, Wu Chiu-Yen Unqualified opinion
----- End of picture text -----

Note: The CPAs were replaced to go with the internal adjustment of the accounting firm to meet business demand.

120 -

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

==> picture [513 x 694] intentionally omitted <==

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

Financial Analysis for the Past Five Fiscal Years
Year As of
March 31,
Analytical item (Note 1) 2018 2019 2020 2021 2022 2023
Debt Ratio 26.51 25.54 32.50 34.67 34.99 30.26
Financial
structure (%) Ratio of long-term funds to 340.98 368.99 412.84 395.49 355.94 345.83
property, plant and equipment
Current ratio 423.83 483.59 394.08 383.25 397.37 566.47
Solvency (%) Quick ratio 345.05 412.38 328.68 292.34 316.30 449.59
Time interest earned 383.33 300.14 206.17 187.71 105.61 83.76
Accounts receivable turnover
2.93 2.82 2.64 3.23 3.34 3.12
(times)
Average collection period 124.57 129.43 138.25 113.00 109.28 116.98
Inventory turnover (times) 3.89 3.89 3.06 2.65 2.67 2.67
Accounts payable turnover
Operating 6.01 5.94 5.43 6.80 9.10 10.40
(times)
performance
Average sales days 93.83 93.83 119.28 137.73 136.70 136.70
Property, plant and equipment
3.15 2.86 2.81 3.12 2.55 2.07
turnover (times)
Total assets turnover (times) 0.75 0.68 0.59 0.63 0.56 0.50
Return on assets (%) 12.47 13.17 14.03 13.50 10.62 9.11
Return on equity (%) 16.87 17.73 19.77 20.23 16.14 13.36
Profit before income tax to
Profitability 117.79 118.15 145.75 168.54 140.24 127.16
paid-in capital (%)
Net profit ratio (%) 16.42 19.18 23.31 21.20 18.62 17.69
Earnings per share ($) 7.67 8.71 10.81 12.31 10.72 2.34
Cash flow ratio (%) 99.93 131.23 65.46 68.16 81.25 122.71
Cash flows Cash flow adequacy ratio (%) 111.12 126.22 114.99 100.03 101.34 108.20
Cash flow reinvestment ratio
10.01 12.88 7.53 7.08 7.82 3.22
(%)
Operating leverage 1.76 1.78 1.59 1.65 2.10 2.09
Leverage
Financial leverage 1.00 1.00 1.00 1.00 1.01 1.01
----- End of picture text -----

121 -

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

Decrease in the time interest earned: mainly due to the increase in new borrowings, resulting in an increase in the amount of interest expenses.
Increase in accounts payable turnove: mainly due to the decrease in payables at the end of the period.
Decrease in return on assets and return on equity: mainly due to the decrease in after-tax profit.
Increase in operating leverage: mainly due to the decrease in operating profit.
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)

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)
122 -

6. 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)

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.
123 -

ii. Parent Company only Financial Analysis – Based on IFRS

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

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

Year Financial Analysis for the Past Five Fiscal Years
2018 2019 2020 2021 2022
Analytical item (Note 1)
Debt Ratio 25.68 24.29 29.12 31.87 32.30
Financial
structure (%) Ratio of long-term funds to
1,276.50 1,337.20 1,426.43 1,085.31 820.24
property, plant and equipment
Current ratio 192.82 194.23 189.25 177.50 191.75
Solvency (%) Quick ratio 158.58 163.08 174.75 152.62 169.18
Time interest earned 770.10 810.97 793.44 276.40 142.62
Accounts receivable turnover
3.27 3.18 3.12 3.53 3.51
(times)
Average collection period 111.62 114.77 116.98 103.39 103.98
Inventory turnover (times) 7.21 5.72 7.71 7.47 6.48
Operating Accounts payable turnover
5.15 4.41 4.00 4.24 5.59
performance (times)
Average sales days 50.62 63.81 47.34 48.86 56.32
Property, plant and equipment
6.72 5.85 5.56 4.87 3.13
turnover (times)
Total assets turnover (times) 0.45 0.38 0.34 0.33 0.28
Return on assets (%) 13.24 13.64 14.81 14.20 11.07
Return on equity (%) 17.19 18.16 20.25 20.39 16.19
Profit before income tax to
Profitability 107.34 109.31 134.47 155.21 131.97
paid-in capital (%)
Net profit ratio (%) 29.27 35.56 43.01 41.77 37.95
Earnings per share ($) 7.67 8.71 10.81 12.31 10.72
Cash flow ratio (%) 75.21 50.29 52.08 28.83 37.82
Cash flow adequacy ratio (%) 111.14 106.02 108.09 83.48 73.99
Cash flows
Cash flow reinvestment ratio
5.72 1.06 2.90 (1.69) (1.10)
(%)
Operating leverage 1.46 1.43 1.34 1.33 1.45
Leverage
Financial leverage 1.00 1.00 1.00 1.00 1.01
----- End of picture text -----

124 -

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 due to the increase of property, plant, and equipment.
Decrease in the time interest earned: mainly due to the increase in new borrowings, resulting in an increase in the amount of interest expenses.
Increase in accounts payable turnove: mainly due to the decrease in payables at the end of the period.
Decrease in property, plant and equipment turnover : mainly due to the increase of property, plant, and equipment.
Decrease in return on assets and return on equity: mainly due to the decrease in after-tax profit.
Increase in cash flow ratio and cash flow reinvestment ratio: mainly due to the increase in 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)
125 -

5. 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)
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.
126 -

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 2022 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 2023

Thinking Electronic Industrial Co., Ltd.

Convener of Audit Committee: Chen, Hsiu-Yen

March 22, 2023

127 -
6.4 Financial Statements for the Most Recent Fiscal Year: Refer to Pages 129-201 through for details.
6.5 Parent Company Only Financial Statements Audited by Independent Auditors for the Most Recent Fiscal Year: Refer to Pages 202-284 through for details.
6.6 The Impact of Financial Difficulties of the Company and its Affiliates: None.
128 -

Thinking Electronic Industrial Company Limited and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2022 and 2021 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, 2022, 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 its subsidiaries did not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

Thinking Electronic Industrial Co., Ltd.

Sui, Tai-Zhong Chairman

March 22, 2023

-�130 -

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, 2022 and 2021, 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, 2022 and 2021, 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 the Standards on Auditing of 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, 2022. 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, 2022 is described as follows:

-�131 -

Recognition of revenue from export sales

The Group’s principal business is the manufacturing and selling of passive components. The consolidated revenue mainly comes from export sales. Since the sales locations include Asian and European markets, the recognition of its export sales requires more control mechanisms; therefore, we have considered the authenticity of the recognized export sales of specific customers 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-mentioned key audit matter included the following:

We understood and tested the effectiveness of the management’s internal control process that is related to the authenticity of the recognized export sales.
We selected samples from the sales details from export sales and examined the shipping documents and receipt certificates to confirm the authenticity of the export sales.
We verified that the revenue amounts recognized in the export sales ledger were the same as the 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, 2022 and 2021, 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 Standards on Auditing of 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 Standards on Auditing of 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, 2022 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 22, 2023

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, 2022 AND 2021 (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 , 7 and 29) Financial assets at amortized cost - current (Notes 4 and 8 ) 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 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 property, net (Notes 4 and 16) Computer software, net (Note 4) Deferred tax assets (Notes 4 and 25) Prepayments for equipment Net defined benefit assets - non-current (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) Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 29) 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) Current portion of long-term borrowings (Notes 4 and 17) Refund liabilities - current (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) Long-term 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, 2022 Amount % $ 3,573,120 26 1,007,201 7 88,058 1 323,739 2 1,924,152 14 55,915 - - - 7,883 - 1,664,792 12 285,739 2 205,467 2 9,136,066 66 25,723 - 484,318 4 3,219,260 24 381,309 3 40,176 - 42,449 - 183,472 1 185,714 2 9,530 - 20,974 - 28,825 - 4,621,750 34 $ 13,757,816 100 $ 708,000 5 92,340 1 69,827 1 384,807 3 1 - 727,311 5 4,113 - 152,139 1 41,563 - 14,458 - 84,696 1 19,858 - 2,299,113 17 1,022,218 7 1,367,671 10 85,285 1 33,228 - 1,679 - 5,175 - 2,515,256 18 4,814,369 35 1,281,127 9 352,907 3 1,316,508 9 222,378 2 5,776,786 42 7,315,672 53 (140,627 ) (1 ) 8,809,079 64 134,368 1 8,943,447 65 $ 13,757,816 100		December 31, 2021	December 31, 2021
		Amount $ 3,573,120 1,007,201 88,058 323,739 1,924,152 55,915 - 7,883 1,664,792 285,739 205,467 9,136,066 25,723 484,318 3,219,260 381,309 40,176 42,449 183,472 185,714 9,530 20,974 28,825 4,621,750 $ 13,757,816 $ 708,000 92,340 69,827 384,807 1 727,311 4,113 152,139 41,563 14,458 84,696 19,858 2,299,113 1,022,218 1,367,671 85,285 33,228 1,679 5,175 2,515,256 4,814,369 1,281,127 352,907 1,316,508 222,378 5,776,786 7,315,672 (140,627 ) 8,809,079 134,368 8,943,447 $ 13,757,816		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	% 20 13 - 3 15 - - - 15 3 1 70 - 3 21 2 - - 1 2 - 1 - 30 100 6 - 1 4 - 5 - 1 - - 1 - 18 6 10 - - - - 16 34 10 3 9 2 43 54 (2 ) 65 1 66 100

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, 2022 AND 2021 (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 (LOSS) (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		2022 Amount % $ 7,463,135 100 4,829,759 65 2,633,376 35 298,181 4 603,989 8 326,395 4 4,634 - 1,233,199 16 1,400,177 19 100,827 1 69,808 1 243,107 3 (17,175 ) - 396,567 5 1,796,744 24 406,766 5 1,389,978 19 3,093 - (10,550) - (618 ) - (8,075 ) -		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 ) - (Continued)

136 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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 foreign operations 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 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			2022 Amount % 115,376 1 (23,075 ) - 92,301 1 84,226 1 1,474,204 20 1,373,833 19 16,145 - 1,389,978 19 1,457,556 20 16,648 - 1,474,204 20 $ 10.72 $ 10.66		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


		$
		$
		$
		$
		$

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

(Concluded)

137 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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 - - - - - - - - - - - - - - - 4,644 1,281,127 352,907 - - - - - - - - - - - - - - $ 1,281,127 $ 352,907	Retained Earnings	Total Retained Earnings $ 5,877,411 - (704,620) - (704,620 ) 1,577,307 (3,121 ) 1,574,186 - 6,746,977 - - (807,110 ) (807,110 ) 1,373,833 1,972 1,375,805 $ 7,315,672	Other Equity	Total Other Equity $ (201,436 ) - - - - - (20,942 ) (20,942 ) - (222,378 ) - - - - - 81,751 81,751 $ (140,627 )
			Exchange Differences on Translation of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (206,975 ) $ 5,539 - - - - - - - - - - (17,734 ) (3,208 ) (17,734 ) (3,208 ) - - (224,709 ) 2,331 - - - - - - - - - - 92,301 (10,550 ) 92,301 (10,550 ) $ (132,408 ) $ (8,219 )
	Legal Reserve Special Reserve Unappropriated Earnings $ 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 5,386,452 157,419 - (157,419) - 20,942 (20,942) - - (807,110 ) 157,419 20,942 (985,471 ) - - 1,373,833 - - 1,972 - - 1,375,805 $ 1,316,508 $ 222,378 $ 5,776,786

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

138 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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) Net loss on financial assets or liabilities at fair value through profit or loss Finance costs Interest income Dividend income Gain on disposal of property, plant and equipment Loss on inventories Reversal of refund liabilities Amortization of grants income Other non-cash items Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss 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 taxes 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	2022 $ 1,796,744 370,789 10,690 4,634 2,165 17,175 (100,827) (988) (13,785) 318,331 - (1,084) (16) (2,075) 3,396 (44,166) 866 145 (39,607) (40,175) (1,543) (61,299) (89,777) (44) 27,457 (560) (5,720) (7,973 ) 2,142,753 89,035 (12,132) (351,557 ) 1,868,099 (306,511) 93,967 (4,208,837) 4,837,254	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 (Continued)

139 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Acquisition of right-of-use assets Increase in other financial assets Decrease in other financial assets Increase in other non-current assets Dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in short-term borrowings Proceeds from long-term borrowings Increase in guarantee deposits received Repayments of the principal portion of lease liabilities Cash dividends paid Acquisition of subsidiary Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 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	2022 $ (874,188) 59,635 (4,874) (95,320) - 104,660 (108) 988 (393,334 ) 742,100 (783,730) 351,240 331 (48,971) (807,110) - (546,140 ) 65,522 994,147 2,578,973 $ 3,573,120	2021 $ (852,859) 26,246 (12,684) - (258,978) - (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

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

(Concluded)

140 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

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

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

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

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 22, 2023.

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

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

The initial application of 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 2023

==> picture [463 x 26] intentionally omitted <==

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

Effective Date
New IFRSs Announced by IASB
----- End of picture text -----

New IFRSs	Effective Date Announced by IASB
Amendments to IAS 1 “Disclosure of Accounting Policies”	January 1, 2023 (Note 1)
Amendments to IAS 8 “Definition of Accounting Estimates”	January 1, 2023 (Note 2)
Amendments to IAS 12 “Deferred Tax related to Assets and	January 1, 2023 (Note 3)
Liabilities arising from a Single Transaction”

Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: The amendments will be applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 3: Except for deferred taxes that were recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments were applied prospectively to transactions that occur on or after January 1, 2022.
141 -
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:

Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
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
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 judgements or assumptions in applying an accounting policy, and the Group discloses those judgements 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.

3) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

The amendments clarify that the initial recognition exemption under IAS 12 does not apply to transactions in which equal taxable and deductible temporary differences arise on initial recognition. The Group shall recognize a deferred tax asset (to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized) and a deferred tax liability for all deductible and taxable temporary differences associated with leases and decommissioning obligations on January 1, 2022, and the Group shall recognize the cumulative effect of initial application in retained earnings at that date. The Group shall apply the

142 -

amendments prospectively to transactions other than leases and decommissioning obligations that occur on or after January 1, 2022. The Group shall restate its comparative information when it initially applies the aforementioned amendments.

Upon initial application of the aforementioned amendments, the anticipated impact on the current year is set out below:

Impacton assets,liabilitiesand equity December 31, 2022 Deferred tax assets Total effect on assets Deferred tax liabilities Total effect on liabilities Retained earnings Total effect on equity January 1, 2022 Deferred tax assets Total effect on assets Deferred tax liabilities Total effect on liabilities Retained earnings Total effect on equity Impact on total comprehensive income for the yearendedDecember31,2022 Income tax expense Total effect on net profit for the year Total effect on total comprehensive income for the year	Carrying Amount $ 183,472 $ 13,757,816 $ 1,367,671 $ 4,814,369 $ 7,315,672 $ 8,943,447 $ 141,304 $ 12,669,885 $ 1,287,305 $ 4,393,532 $ 6,746,977 $ 8,276,353 $ 406,766 1,389,978 $ 1,474,204	Adjustments Arising from Initial Application $ 10,740 $ 10,740 $ 10,216 $ 10,216 $ 524 $ 524 $ 10,945 $ 10,945 $ 10,618 $ 10,618 $ 327 $ 327 $ (197 ) 197 $ 197	Adjusted Carrying Amount $ 194,212
			$ 13,768,556
			$ 1,377,887
			$ 4,824,585
			$ 7,316,196
			$ 8,943,971
			$ 152,249
			$ 12,680,830
			$ 1,297,923
			$ 4,404,150
			$ 6,747,304
			$ 8,276,680
			$ 406,569
			1,390,175
			$ 1,474,401

(Continued)

143 -

Impact on net profit attributable to: Owners of the Company Non-controlling interests Impact on total comprehensive income attributable to: Owners of the Company Non-controlling interests	Carrying Amount $ 1,373,833 16,145 $ 1,389,978 $ 1,457,556 16,648 $ 1,474,204	Adjustments Arising from Initial Application $ 197 - $ 197 $ 197 - $ 197	Adjusted Carrying Amount $ 1,374,030 16,145 $ 1,390,175 $ 1,457,753 16,648 $ 1,474,401 (Concluded)

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group has assessed that the application of other standards and interpretations will not have a material impact on the Group’s financial position and financial performance.

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

==> picture [461 x 26] intentionally omitted <==

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

Effective Date
New IFRSs Announced by IASB (Note 1)
----- End of picture text -----

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”
Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback”	January 1, 2024 (Note 2)
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, 2024
Non-current”
Amendments to IAS 1 “Non-current Liabilities with Covenants”	January 1, 2024

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: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” (referred to as the “2020 amendments”) and “Non-current Liabilities with Covenants” (referred to as the “2022 amendments”)

The 2020 amendments clarify that for a liability to be classified as non-current, the Group shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Group will exercise that right.

The 2020 amendments also stipulate that, if the right to defer settlement is subject to compliance with specified conditions, the Group must comply with those conditions at the end of the reporting period

144 -

even if the lender does not test compliance until a later date. The 2022 amendments further clarify that only covenants with which an entity is required to comply on or before the reporting date should affect the classification of a liability as current or non-current. Although the covenants to be complied with within twelve months after the reporting period do not affect the classification of a liability, the Group shall disclose information that enables users of financial statements to understand the risk of the Group that may have difficulty complying with the covenants and repay its liabilities within twelve months after the reporting period.

The 2020 amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Group’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Group’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32 “Financial Instruments: Presentation”, the aforementioned terms would not affect the classification of the liability.

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 that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of Compliance

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

b. Basis of preparation

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

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

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

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
145 -
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. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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 5 and 6 for detailed information on subsidiaries (including percentages of ownership and main businesses).

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.

146 -

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 the 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.

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.

147 -

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 assets, investment properties 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 assets, investment properties 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.

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.

148 -
1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a settlement 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 instruments and derivative financial 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 dividends and interest earned on such financial assets are recognized in other income and interest income, respectively; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. 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;

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

149 -

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.

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.

150 -

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

Except financial liabilities at FVTPL, all financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities at FVTPL including financial liabilities held for trading are stated at fair value, and any gains or losses on such financial liabilities are recognized in other gains or losses.

Fair value is determined in the manner described in Note 29.

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.

3) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including forward exchange contracts and interest rate swaps contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts, and the host contracts are not measured at FVTPL.

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.

151 -

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

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease. For a contract that contains a lease component and non-lease components, the Group allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

The Group as lessee, 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.

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.

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.

152 -

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 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.

153 -

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 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	December 31
	2022 2021 $ 4,563 $ 4,542 74 74 2,490,333 1,881,201 (Continued)

154 -

Cash equivalents Time deposits with original maturities of 3 months or less The annual interest rate of time deposits (%)		December 31	December 31
		2022 $ 1,078,150 $ 3,573,120 2.00-2.74	2021 $ 693,156 $ 2,578,973 0.62-3.00 (Concluded)

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 INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets-current Financial assets mandatorily classified as at FVTPL Hybrid financial assets Structured deposits (a) Derivative instruments (non-designated hedges) Swap contracts (c) Financial liabilities-current Financial assets mandatorily classified as at FVTPL Derivative instruments (non-designated hedges) Swap contracts (c) Forward exchange contracts (b)		December 31	December 31
		2022 $ 914,951 92,250 $ 1,007,201 $ 92,273 67 $ 92,340	2021 $ 1,525,486 - $ 1,525,486 $ - - $ -

a. 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.
b. At the end of the year, outstanding forward exchange contracts not under hedge accounting were as follows:

December 31, 2022

			Notional Amount
	Currency	Maturity Date	(In Thousands)
Buy	USD/CNY	2023.01	USD3,718/CNY25,901

155 -
c. At the end of the year, outstanding swap contracts not under hedge accounting were as follows:

December 31, 2022

		Notional Amount
Currency	Maturity Date	(In Thousands)
USD/NTD	2023.01	USD3,000/NTD92,122

The Group entered into forward exchange contracts and swap contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

Details of profit and loss of financial instruments at FVTPL for the year 2022 and 2021 list on Note 24.

8. FINANCIAL ASSETS AT AMORTIZED COST

Time deposits with original maturities of more than 3 months Current Non-current The annual interest rate (%)		December 31	December 31
		2022 $ 572,376 $ 88,058 484,318 $ 572,376 3.40-4.18	2021 $ 347,661 $ - 347,661 $ 347,661 4.05-4.18

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

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2022 $ 25,723	2021 $ 36,273

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

10. NOTES AND ACCOUNTS RECEIVABLE

Notes receivable At amortized cost Gross carrying amount - operating		December 31	December 31
		2022 $ 323,739	2021 $ 327,135 (Continued)

156 -

Accountsreceivable- non-related parties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss		December 31	December 31
		2022 $ 1,953,361 29,209 $ 1,924,152	2021 $ 1,909,195 24,525 $ 1,884,670 (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 records of the debtor and an analysis of the debtor’s current financial position, adjusted for economic conditions of the industry in which the debtor operates 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, 2022

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0-0.05 $ 1,807,561 (972 ) $ 1,806,589	Past Due 1to 30 Days 0.5 $ 32,562 (164 ) $ 32,398	Past Due 31 to 60 Days 1 $ 73,420 (734 ) $ 72,686	Past Due 61 to 90 Days 30 $ 12,540 (3,762 ) $ 8,778	Past Due 91 to 180 Days 50 $ 7,402 (3,701 ) $ 3,701	Past Due Over 180 Days 100 $ 19,876 (19,876 ) $ -	Total $ 1,953,361 (29,209 ) $ 1,924,152

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

157 -

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

Balance at January 1 Net remeasurement (reversal) of loss allowance 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
		2022 $ 24,525 4,634 50 $ 29,209	2021 $ 26,595 (2,040) (30 ) $ 24,525

11. INVENTORIES

December 31 2022 2021 Finished goods $ 749,101 $ 911,822 Work-in-process 293,862 356,743 Semi-finished 276,647 258,283 Raw materials 311,356 380,018 Supplies 27,761 26,468 Inventory in transit 6,065 12,293 $ 1,664,792 $ 1,945,627 The cost of inventories recognized as cost of goods sold were as follows: For the Year Ended December 31 2022 2021 Cost of goods sold $ 4,829,759 $ 4,261,024 Write-off obsolete inventories $ 77,397 66,997 Inventory write-downs 240,934 76,278 Unallocated manufacturing overhead 205 - $ 318,536 $ 143,275		December 31	December 31
		2022 $ 4,829,759 $ 77,397 240,934 205 $ 318,536	2021 $ 4,261,024 66,997 76,278 - $ 143,275

As the actual production capacity was lower than the normal production capacity, unallocated manufacturing overhead was recognized as cost of goods sold in the current year.

12. OTHER FINANCIAL ASSETS

Pledge demand deposits Pledge time deposits Deposits of banker’s acceptance Refundable deposits		December 31	December 31
		2022 $ 100,153 151,700 33,886 20,974 $ 306,713	2021 $ 86,811 305,600 2,608 60,400 $ 455,419

(Continued)

158 -

Current Non-current Interest rate of pledge time deposits (%)		December 31	December 31
		2022 $ 285,739 20,974 $ 306,713 1.195-4.15	2021 $ 367,328 88,091 $ 455,419 0.35-0.57 (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)
Note 1
Greenish Co., Ltd. (Greenish)
Note 2
Thinking (Changzhou) Electronic Co., Ltd.
(Thinking Changzhou)
Note 3
Thinking Holding (Cayman) Co., Ltd.
(Thinking Holding)
Note 2
Thinking Electronic USA, Inc.
(Thinking USA)
Note 4
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 5
View Full Samoa
Guangdong Welkin Thinking Electronic Co., Ltd.
(Guangdong Welkin Thinking)
Note 6
Dong Guan Welkin Electronic Co., Ltd.
(Dongguan Welkin)
Note 7
Thinking Samoa
Dongguan Welkin
Note 7
Thinking Changzhou
Dongguan Welkin
Note 7
Dongguan Welkin
Welkin Electronic Co., Ltd.
(Zhongshan Welkin)
Note 3

Percentage of Ownership (%)
December 31,
2022
December 31,
2021
Description
63.76
63.76
Note 8
100.00
100.00
47.39
47.39
100.00
100.00
100.00
-
Note 9
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: Electronic product design and marketing.

Note 5: Manufacturing and selling thermistors and varistors.

Note 6: Wholesale of thermistors, varistors, sensors and equipment.

Note 7: Manufacturing and selling thermistors, varistors, sensors and equipment.

159 -
Note 8: 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 9: In order to implement the Group’s global layout plan, the board of directors resolved to set up a new subsidiary in the USA on August 9, 2022, and the total investment amount is expected to be US$3 million. As of December 31, 2022, the Company had invested US$1 million in the subsidiary.

14. PROPERTY, PLANT, AND EQUIPMENT

a. Changes in costs and accumulated depreciation

For the Year ended December 31, 2022

Cost Balance at January 1, 2022 Additions Disposals Effect of foreign currency exchange differences Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expense Disposals Effect of foreign currency exchange differences Balance at December 31, 2022 Carrying amount at December 31, 2022	Land $ 195,719 - - - $ 195,719 $ - - - - $ - $ 195,719	Buildings Machinery and Equipment Leasehold Improvements $ 978,864 $ 2,236,815 $ 142,919 17,208 424,705 4,976 (9,569 ) (130,203 ) (23,925 ) 8,728 19,413 2,070 $ 995,231 $ 2,550,730 $ 126,040 $ 308,750 $ 1,200,021 $ 105,671 41,935 192,438 26,249 (9,540 ) (85,433 ) (23,925 ) 2,154 9,947 1,478 $ 343,299 $ 1,316,973 $ 109,473 $ 651,932 $ 1,233,757 $ 16,567	Others Property under Construction $ 438,799 $ 534,679 40,594 442,481 (14,000 ) - 2,644 1,781 $ 468,037 $ 978,941 $ 293,715 $ - 43,515 - (12,949 ) - 1,412 - $ 325,693 $ - $ 142,344 $ 978,941	Total $ 4,527,795 929,964 (177,697 ) 34,636 $ 5,314,698 $ 1,908,157 304,137 (131,847 ) 14,991 $ 2,095,438 $ 3,219,260

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

160 -

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 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 (decrease) 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
		2022 $ 929,964 (20,050) (35,141) (585 ) $ 874,188	2021 $ 740,130 (14,595) 127,908 (584 ) $ 852,859

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. As of December 31, 2022 and 2021, the Group didn’t provide property, plant and equipment as guarantee.

15. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Buildings Additions to right-of-use assets Decrease in right-of-use assets		December 31	December 31
	2022 $ 316,304 65,005 $ 381,309 For the Year Ended		2021 $ 183,220 54,315 $ 237,535 December 31
		2022 $ 204,268 $ 2,387	2021 $ 21,598 $ 422 (Continued)

161 -

Depreciation charge for right-of-use assets Land Buildings	For the Year Ended	For the Year Ended	December 31
		2022 $ 7,962 52,758 $ 60,720	2021 $ 5,103 31,530 $ 36,633 (Concluded)

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, 2022 and 2021.

b. Lease liabilities

Carrying amount Current Non-current Range of discount rates for lease liabilities was as follows:		December	31
		2022 $ 41,563 $ 85,285	2021 $ 37,141 $ 75,234

Land Buildings	December 31
	2022 2021 0.75-1.38 0.75-1.38 4.70-6.04 5.10-6.04

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 3 to 7 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 32 to 50 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.

162 -

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	For the Year Ended	December 31
		2022 $ 5,012 $ 608 $ 155,638	2021 $ 5,265 $ 580 $ 42,277

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

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
		2022 $ 113,697 1,492 $ 115,189 $ 67,637 6,517 859 $ 75,013 $ 40,176	2021 $ 114,077 (380 ) $ 113,697 $ 61,167 6,662 (192 ) $ 67,637 $ 46,060

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 $96,440 thousand and $107,995 thousand as of December 31, 2022 and 2021, respectively.

17. BORROWINGS

a. Short-term borrowings

Secured loans (Note 31) Credit loans		December 31	December 31
		2022 $ 108,000 600,000 $ 708,000	2021 $ 249,630 500,000 $ 749,630 (Continued)

163 -

The annual interest rate (%) Secured loans Credit loans b. Long-term borrowings Credit loans Less: Government grants discount Current portion of long-term borrowings The annual interest rate (%)		December 31	December 31
		2022 2021 1.5 0.34 1.09-1.80 0.68-0.72 (Concluded) December 31
		2022 $ 1,051,780 15,104 14,458 $ 1,022,218 0.975	2021 $ 700,540 12,440 - $ 688,100 0.35

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, 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 Company calculates its fair value with an annual interest rate of general condition which was 1.47% and 0.845% as of December 31, 2022 and 2021, respectively.
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
		$ 14,458 131,589 286,741 331,610 287,382 $ 1,051,780

164 -

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
		2022 $ 392,695 80,015 79,543 23,242 151,816 $ 727,311	2021 $ 342,391 59,965 91,100 26,800 158,976 $ 679,232

20. REFUND LIABILITIES

Balance at January 1 Reversed Usage Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ 92,669 - (7,973 ) $ 84,696	2021 $ 170,979 (47,912) (30,398 ) $ 92,669

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, Guangdong Welkin Thinking and Zhongshan Welkin 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.
165 -

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
		2022 $ 104,610 (114,140 ) $ (9,530 )	2021 $ 102,739 (107,633 ) $ (4,894 )

Movements in net defined benefit assets were as follows:

	Present Value	Present Value
	of the Defined
		Benefit	Fair Value of	Net Defined
	Obligation		the Plan Assets	Benefit Assets
Balance at January 1, 2021	$	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 loss - 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 )
					(Continued)

166 -

	Present Value	Present Value
	of the Defined
		Benefit	Fair Value of		Net Defined
	Obligation		the Plan Assets		Benefit Assets
Service cost
Current service cost	$	102	$	-	$	102
Net interest expense (income)		623		(669 )		(46 )
Recognized in profit or loss		725		(669 )		56
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(8,381)		(8,381)
Actuarial loss - changes in financial
assumptions		(3,434)		-		(3,434)
Actuarial loss - experience adjustments		8,722		-		8,722
Recognized in other comprehensive income		5,288		(8,381 )		(3,093 )
Contributions from the employer		-		(1,599 )		(1,599 )
Benefits paid		(4,142 )		4,142		-
Balance at December 31, 2022	$	104,610	$ (114,140 )		$	(9,530 )
						(Concluded)

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.

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:

167 -

Discount rate (%) Expected rate of salary increase (%)	December 31
	2022 2021 1.25 0.50-0.65 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 (decrease) 1% increase 1% decrease		December	31
		2022 $ (1,248 ) $ 1,285 $ 5,290 $ (4,797 )	2021 $ (1,571 ) $ 1,622 $ 6,654 $ (5,982 )

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
		2022 $ 2,130 8-10	2021 $ 1,440 9-12

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
		2022 200,000 $ 2,000,000 128,113 $ 1,281,127	2021 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.

168 -

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
		2022 $ 265,446 59,168 23,649 4,644 $ 352,907	2021 $ 265,446 59,168 23,649 4,644 $ 352,907

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 dividend policy in the Articles, where the Company made a 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 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 2021 and 2020 were approved in the shareholders’ meeting on June 16, 2022 and July 29, 2021, respectively. The appropriations of earnings for 2021 and 2020 were as follows:

169 -

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended 2021 2020 $ 157,419 $ 138,883 20,942 (83,219) 807,110 704,620 $ 985,471 $ 760,284	Appropriation of Earnings For the Year Ended 2021 2020 $ 157,419 $ 138,883 20,942 (83,219) 807,110 704,620 $ 985,471 $ 760,284	Dividend Per Share (NT$)
		For the Year	For the Year Ended
		2021 $ 157,419 20,942 807,110 $ 985,471	2021 2020 $ 6.3 $ 5.5

The appropriations of earnings for 2022 were proposed by the Company’s board of directors on March 22, 2023. The appropriation and dividends per share were as follows:

	Appropriation	Dividend Per
	of Earnings	Share (NT$)
Legal reserve	$ 137,581
Special reserve	(81,751)
Cash dividends	691,809	$ 5.4
	$ 747,639

The appropriations of earnings for 2022 are subject to the resolution of the shareholders in their meeting to be held on June 13, 2023.

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 Unrealized valuation gain (loss) on financial assets at FVTOCI Balance at January 1 Unrealized valuation loss on financial assets at FVTOCI Balance at December 31	For the Year Ended	For the Year Ended	December 31
	2022 $ (224,709) 115,376 (23,075 ) $ (132,408 ) For the Year Ended		2021 $ (206,975) (22,168) 4,434 $ (224,709 ) December 31
		2022 $ 2,331 (10,550 ) $ (8,219 )	2021 $ 5,539 (3,208 ) $ 2,331

2) Unrealized valuation gain (loss) on financial assets at FVTOCI
170 -

e. Non-controlling interests

Balance at January 1 Share in gain 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
		2022 $ 117,720 16,145 503 - $ 134,368	2021 $ 139,422 13,316 (1,124) (33,894 ) $ 117,720

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
		2022 $ 7,462,925 210 $ 7,463,135	2021 $ 7,500,274 181 $ 7,500,455

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

December 31, 2022 December 31, 2021 Notes and accounts receivable (Note 10) $ 2,247,891 $ 2,211,805	January 1, 2021 $ 2,432,303

c. Disaggregation of revenue

For the year ended December 31, 2022

Reportable Segments Thinking Yenyo Thinking Changzhou Guangdong Welkin Thinking Dongguan Welkin Others	Type of revenue	Type of revenue
	Revenue from Sale of Passive Components $ 3,116,111 395,945 1,812,397 638,022 1,193,541 306,909 $ 7,462,925	Service Revenue $ 210 - - - - - $ 210	Total $ 3,116,321 395,945 1,812,397 638,022 1,193,541 306,909 $ 7,463,135

171 -

For the year ended December 31, 2021

Reportable Segments Thinking Yenyo Thinking Changzhou Guangdong Welkin Thinking Others	Type of revenue	Type of revenue
	Revenue from Sale of Passive Components $ 3,230,807 298,403 1,770,357 1,695,602 505,105 $ 7,500,274	Service Revenue $ 181 - - - - $ 181	Total $ 3,230,988 298,403 1,770,357 1,695,602 505,105 $ 7,500,455

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	For the Year Ended	For the Year Ended	December 31
		2022 $ 44,611 37,794 17,555 867 $ 100,827	2021 $ 22,881 52,951 10,328 2,363 $ 88,523

b. Other income

Grants Rental income Dividend income Overpayment Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 35,647 5,111 988 10,937 17,125 $ 69,808	2021 $ 10,371 5,382 - - 18,556 $ 34,309

c. Other gains and losses

Loss on financial assets at fair value through profit or loss Foreign exchange gains (losses), net Gain on disposal of property, plant and equipment, net Others	For the Year Ended	For the Year Ended	December 31
		2022 $ (2,165) 240,666 13,785 (9,179 ) $ 243,107	2021 $ - $ (71,405) 5,476 (10,839 ) $ (76,768 )

172 -

d. Finance costs

For the Year Ended	For the Year Ended	December 31
2022 $ 5,727 16,417 22,144 4,969 $ 17,175 For the Year Ended		2021 $ 4,057 8,797 12,854 1,289 $ 11,565 December 31
2022 $ 4,969 0.35-1.23 For the Year Ended		2021 $ 1,289 0.35-1.23 December 31
	2022 $ 304,137 60,720 6,517 10,690 382,064 585 $ 381,479 $ 288,222 76,050 6,517 $ 370,789 $ 3,988 6,702 $ 10,690	2021 $ 270,620 36,633 6,662 8,536 322,451 584 $ 321,867 $ 241,372 65,297 6,662 $ 313,331 $ 3,347 5,189 $ 8,536

173 -

f. Employee benefits expense

Short-term employee benefits Salary Others Retirement benefits Defined contribution plans Defined benefit plans (Note 21) An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,778,707 192,197 1,970,904 101,462 56 101,518 $ 2,072,422 $ 1,315,225 757,197 $ 2,072,422	2021 $ 1,742,833 182,784 1,925,617 85,426 36 85,462 $ 2,011,079 $ 1,338,525 672,554 $ 2,011,079

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, 2022 and 2021, which were approved by the Company’s board of directors on March 22, 2023 and March 21, 2022, respectively, were as follows:

Accrual rate Employees’ compensation (%) Remuneration of directors (%) Amounts Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2022 2021 3.9 4.3 1.3 1.3 $ 68,812 $ 91,100 23,242 26,800

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, 2021 and 2020.

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.

174 -

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 Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2022 $ 383,742 29,504 (20,990 ) 392,256 33,514 (19,004 ) 14,510 $ 406,766	2021 $ 320,105 31,427 3,444 354,976 211,099 2,636 213,735 $ 568,711

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 Nondeductible expenses and tax-exempt income Income tax on unappropriated earnings Unrecognized loss carryforwards Unrecognized deductible temporary differences 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
		2022 $ 1,796,744 $ 489,062 (198) (11,443) 29,504 (6,729) 5 (53,441) (39,994 ) $ 406,766	2021 $ 2,159,334 $ 608,247 - (14,521) 31,427 3,896 (6,585) (59,833) 6,080 $ 568,711

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 15% and 25%.

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
		2022 $ 23,075 618 $ 23,693	2021 $ (4,434) (220 ) $ (4,654 )

175 -

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2022 $ 7,883 $ 152,139	2021 $ 11,137 $ 114,694

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, 2022

Recognized in Profit or Loss Recognized in Other Comprehensive Income Exchange Differences $ 44,270 $ - $ 366 9,259 - - (1,595 ) - - 6,971 - (19 ) - (23,075 ) - 6,532 (618 ) 77 $ 65,437 $ (23,693 ) $ 424 Recognized in Profit or Loss Exchange Differences $ 54,820 $ - 25,127 419 $ 79,947 $ 419	Balance, End of Year $ 88,155 15,787 16,939 6,952 33,102 22,537 $ 183,472 Balance, End of Year $ 1,306,304 61,367	Balance, End of Year $ 88,155 15,787 16,939 6,952 33,102 22,537
$		$ 183,472

	$ 1,367,671

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

176 -

Deferred Tax Liabilities Temporary differences Foreign investment income Others	Balance, Beginning of Year $ 1,041,545 33,362 $ 1,074,907	Recognized in Profit or Loss $ 209,939 2,553 $ 212,492	Exchange Differences $ - (94 ) $ (94 )	Balance, End of Year $ 1,251,484 35,821
				$ 1,287,305

e. Income tax assessments

The tax returns of the Company and Yenyo through 2020 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

	For the Year Ended December 31	For the Year Ended December 31
	2022	2021
Profit for the year attributable to owners of the Company	$ 1,373,833	$ 1,577,307
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
		2022 128,113 706 128,819	2021 128,113 652 128,765

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

177 -

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 Carryingamountofdeferredrevenue 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
		2022 $ 28,078 7,135 (1,084) 179 $ 34,308 December	2021 $ 21,694 7,512 (1,080) (48 ) $ 28,078 31
		2022 $ 1,080 33,228 $ 34,308	2021 $ 1,080 26,998 $ 28,078

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, 2022

Financial assetsat FVTPL Structured deposit Derivative financial assets Total	Level 1 $ - - $ -	Level 2 $ - 92,250 $ 92,250	Level 3 $ 914,951 - $ 914,951	Total $ 914,951 92,250 $ 1,007,201 (Continued)

178 -

Financial assetsat FVTOCI Domestic unlisted shares Financial liabilities at FVTPL Derivative financial liabilities December 31, 2021 Financial assets at FVTPL Structured deposit Financial assetsat FVTOCI Domestic unlisted shares	Level 1 $ - $ - Level 1 $ - $ -	Level 2 $ - $ 92,340 Level 2 $ - $ -	Level 3 $ 25,723 $ - Level 3 $ 1,525,486 $ 36,273	Total $ 25,723 $ 92,340 (Concluded) Total $ 1,525,486 $ 36,273

There were no transfers between Level 1 and Level 2 in 2022 and 2021.

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

For the year ended December 31, 2022

Financial assets Balance at January 1, 2022 Purchases Disposals Recognized in other comprehensive income Foreign currency exchange differences Balanced at December 31, 2022	Debt Instruments Financial Assets at FVTPL $ 1,525,486 4,208,837 (4,837,254) - 17,882 $ 914,951	Equity Instruments Financial Assets at FVTOCI $ 36,273 - - (10,550) - $ 25,723	Total $ 1,561,759 4,208,837 (4,837,254) (10,550) 17,882 $ 940,674

179 -

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

3) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instrument

Valuation Technique and Inputs

  - Derivatives - swap contracts Discounted cash flow: future cash flows are estimated based on and forward exchange observable forward exchange rates at the end of the year and contracts contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

4) 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
	2022 2021 $ 1,007,201 $ 1,525,486 6,753,447 5,636,151 25,723 36,273 $ 92,340 $ - 2,932,414 2,728,738
FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Equity instruments Financial liabilities
FVTPL Mandatorily classified as at FVTPL 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.
180 -
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 (including current portion) and guarantee deposits received.
d. Financial risk management objectives and policies

Financial risks associated with the management and operations of the Group included market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The Group seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provided written principles on foreign currency risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

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. The Group engaged in derivative financial instruments within the scope of the policy, including forward exchange contracts and swap contracts, to mitigate the risk exposures to exchange rates that may arise from non-functional currency denominated assets and liabilities and certain anticipated transactions, but the impact of foreign currency exchange rate changes cannot be completely ruled out.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities exposed to foreign currency risk at the end of the year are set out in Note 34.

Sensitivity analysis

The Group is mainly exposed to the risk from the fluctuations of the USD and the CNY, and the sensitivity rate used when reporting foreign currency risk internally to key management personnel in foreign exchange rates is 1%. 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.

181 -

==> picture [428 x 13] intentionally omitted <==

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

USD Impact CNY Impact
----- End of picture text -----

	USD Impact	CNY Impact
Profit or loss	For the Year Ended December 31 2022 2021 $ 12,574 $ 20,105	For the Year Ended December 31
		2022 2021 $ 13,323 $ 10,416

b) Interest rate risk

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

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31
	2022 2021 $ 1,928,439 $ 1,496,236 714,848 862,005 3,434,084 3,406,687 1,156,676 688,100

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, 2022 and 2021 would have been higher/lower by $22,774 thousand and by $27,186 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 a counterparty will default on its contractual obligations resulting in a 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.

182 -

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.

Bank loans are a major source of liquidity risk for the Group. As of December 31, 2022 and 2021, the Group had available unutilized short-term bank loan facilities set out in (c) below.

a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

To the extent that interest flows are at floating rates, the undiscounted amount was derived from the interest rate curve at the end of the year.

December 31, 2022

On Demand or Less than 1 Month Non-interest bearing $ 335,844 Lease liabilities 6,096 Variable interest rate liabilities 120,864 Fixed interest rate liabilities 76,392 $ 539,196	1-3 Months $ 538,763 12,191 1,709 198,911 $ 751,574	3 Months to 1 Year $ 310,611 47,472 22,144 315,568 $ 695,795	1-5 Years $ - 83,140 1,062,026 - $ 1,145,166	5+ Years $ - 60,883 - -
				$ 60,883

Further information on the maturity analysis of the above financial liabilities was as follows:

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 65,759 144,717 $ 210,476	1-5 Years $ 83,140 1,062,026 $1,145,166	5-10 Years 10-15 Years 15-20 Years $ 7,321 $ 7,321 $ 7,321 - - - $ 7,321 $ 7,321 $ 7,321	20+ Years $ 38,920 -
				$ 38,920

December 31, 2021

On Demand or Less than 1 Month Non-interest bearing $ 287,699 Lease liabilities 3,347 Variable interest rate liabilities 204 Fixed interest rate liabilities 150,525 $ 441,775	1-3 Months $ 670,392 6,695 409 599,953 $ 1,277,449	3 Months to 1 Year $ 331,569 30,227 1,839 - $ 363,635	1-5 Years $ - 30,824 547,749 - $ 578,573	5+ Years $ - 62,347 161,619 -
				$ 223,966

183 -

Further information on the maturity analysis of the above financial liabilities was as follows:

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 40,269 2,452 $ 42,721	1-5 Years $ 30,824 547,749 $ 578,573	5-10 Years 10-15 Years 15-20 Years $ 7,321 $ 7,321 $ 7,321 161,619 - - $ 168,940 $ 7,321 $ 7,321	20+ Years $ 40,384 -
				$ 40,384

b) Liquidity and interest rate risk table for derivative financial liabilities

The following table details the Group’s liquidity analysis of its derivative financial instruments. The table is based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed is determined by reference to the projected interest rates as illustrated by the yield curves at the end of the year.

December 31, 2022

		On	Demand or
		Less than1
			Month
	Gross settled
Forward exchange contracts
Inflows		$	113,924
Outflows			(113,991 )
		$	(67 )
Swap contracts
Inflows		$	92,122
Outflows			(92,145 )
		$	(23 )

c) Financing facilities

Bank loan facilities Amount used Amount unused		December 31	December 31
		2022 $ 1,759,780 3,314,799 $ 5,074,579	2021 $ 1,450,170 2,372,830 $ 3,823,000

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.

184 -

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, 2022 and 2021, the face amounts of these unsettled bills receivable were $263,156 thousand and $317,115 thousand, respectively. The unsettled bills receivable will be due in 10 months and 9 months, respectively after December 31, 2022 and 2021. Taking into consideration the credit risk of these derecognized bills receivable, the Group estimates that the fair values of its continuing involvement are not significant.

During the years ended December 31, 2022 and 2021, 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

==> picture [463 x 151] intentionally omitted <==

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

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 the Year Ended December 31
Related Party Category / Name 2022 2021
Related party in substance- Honungxin Technology $ 888 $ 43
----- End of picture text -----

b. Purchases of goods

The purchase prices and terms between the Group and its related parties were not significantly different from those of ordinary transactions.

c. Receivables from related parties

Related Party Line Item Category/Name Other receivables - related parties Related party in substance Pingtung Welkin		December 31	December 31
		2022 $ -	2021 $ 145

The payment terms between the Group and the related parties were 60 days after monthly closing, and the outstanding payment receivables from related parties were unsecured. For the years ended December 31, 2022 and 2021, no impairment losses were recognized for trade receivables from related parties.

185 -

d. Payables to related parties

Related Party Line Item Category/Name Accounts payable - related parties Related party in substance Honungxin Technology Other payables - related parties Related party in substance Pingtung Welkin Honungxin Technology	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1 $ 4,079 34 $ 4,113	2021 $ 45 $ 4,466 207 $ 4,673

The Group and its related parties have monthly payment terms of 30 to 60 days, and the outstanding amounts due to related parties are not guaranteed.

e. Acquisition of property, plant and equipment

Related Party Category/Name Related party in substance Pingtung Welkin Honungxin Technology	Purchase Price	Purchase Price	Purchase Price
	For the Year Ended December 31
		2022 $ 400 1,850 $ 2,250	2021 $ - - $ -

f. Other transactions with related parties
1) Consigned processing

Related Party Line Item Category/Name Processing expense Related party in substance Pingtung Welkin Honungxin Technology	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 11,061 374 $ 11,435	2021 $ 15,909 28 $ 15,937

The prices and payment terms with substantial related parties were not comparable because the Group did not have other consigned processing businesses with non-related parties. The payment term was 30-60 days from the invoice date.

2) Consigned processing

Related Party Category/Name Related parties Subsidiaries -Pingtung Welkin		December 31	December 31
		2022 $ -	2021 $ 147

186 -

3) Lease arrangements

Related Party Line Item Category/Name Lease expense Related party in substance Boh Chin Investment	For	the Year Ended December 31	the Year Ended December 31
		2022 $ 480	2021 $ 480

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

g. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2022 $ 73,852 1,081 $ 74,933	2021 $ 109,298 1,081 $ 110,379

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 other financial assets)		December 31	December 31
		2022 $ 83,956 100,153 151,700 33,886 $ 369,695	2021 $ 179,860 86,811 305,600 2,608 $ 574,879

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
		2022 $ 550,321	2021 $ 556,646

33. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

In order to implement the Group’s global layout plan, the board of directors resolved to set up a subsidiary in Vietnam on February 8, 2023, and the total investment amount is expected to be US$27 million.

187 -

34. 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
December 31,2022
Financial assets
Monetary items
USD
$ 19,120
6.9793
(USD:CNY)

USD
34,301
30.725
(USD:NTD)

CNY
298,380
4.4023
(CNY:NTD)

CNY
9,756
0.1433
(CNY:USD)

Financial liabilities
Monetary items
USD
174
6.9793
(USD:CNY)

USD
12,322
30.725
(USD:NTD)
CNY
5,492
4.4023
(CNY:NTD)

December 31,2021
Financial assets
Monetary items
USD
36,897
6.3674
(USD:CNY)

USD
51,915
27.68
(USD:NTD)

CNY
234,702
4.3471
(CNY:NTD)

CNY
12,240
0.1570
(CNY:USD)

Financial liabilities
Monetary items
USD
885
6.3674
(USD:CNY)

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

Carrying
Amount (In
Thousand)
$ 587,462
1,053,898
1,313,558

42,949
$ 2,997,867
$ 5,346
378,593

24,177
$ 408,116
$ 1,021,309
1,437,007
1,020,273

53,209
$ 3,531,798
$ 24,497
423,393

31,877
$ 479,767

Refers to Note 24 (c) for the informational 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.

188 -

35. ADDITIONAL DISCLOSURES

a. Information on significant transactions and b. investees
1) Financing provided to others: None.
2) Endorsement/guarantee provided: None.
3) Marketable securities held (excluding investment in subsidiaries): Table 1.
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 2.
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 3.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.
9) Information on investees: Table 5.
10) Trading in derivative instruments: Note 7.
11) Intercompany relationships and significant intercompany transaction: Table 7.
c. 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 6.
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 3.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year: Table 3.
- 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: None.
189 -
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.
d. Information of major shareholder: Shareholding ratio of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: Table 8.

36. 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:

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 and selling thermistors, varistors and sensors as principle business.
d. Guangdong Welkin Thinking: Wholesale of thermistors, varistors, sensors and equipment as principle business.
e. Dongguan Welkin: Manufacturing and selling thermistors, varistors, sensors and equipment as principle business.

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

For the Year ended December 31,2022 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 31,2022 Total segment assets Total segment liabilities	Thinking $ 3,116,321 502,964 $ 3,619,285 $ 694,967 $ 5,057,787 $ 4,203,715	Yenyo $ 395,945 641 $ 396,586 $ 33,408 $ 484,435 $ 113,472	Thinking Changzhou $ 1,812,397 1,387,031 $ 3,199,428 $ 375,138 $ 4,278,902 $ 531,024	Guangdong Welkin Thinking $ 638,022 178,837 $ 816,859 $ 61,650 $ 377,012 $ 13,279	Dongguan Welkin $ 1,193,541 1,599,951 $ 2,793,492 $ 161,571 $ 1,990,065 $ 795,920	Others $ 306,909 1,707,908 $ 2,014,817 $ 27,858 $ 2,971,328 $ 461,865	Adjustment and Elimination $ - (5,377,332 ) $(5,377,332 ) $ 45,585 $(1,401,713 ) $(1,304,906 )	Consolidated Amount $ 7,463,135 -
								$ 7,463,135 $ 1,400,177 100,827 69,808 243,107 (17,175
								1,796,744 406,766
								$ 1,389,978
								$ 13,757,816
								$ 4,814,369

190 -

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	Thinking $ 3,230,988 544,529 $ 3,775,517 $ 952,159 $ 4,485,047 $ 3,816,668	Yenyo $ 298,403 8,524 $ 306,927 $ 34,020 $ 404,145 $ 79,119	Thinking Changzhou $ 1,770,357 1,348,673 $ 3,119,030 $ 448,494 $ 4,415,636 $ 583,185	Guangdong Welkin Thinking $ 1,695,602 105,455 $ 1,801,057 $ 168,720 $ 798,145 $ 487,107	Others $ 505,105 4,121,408 $ 4,626,513 $ 491,434 $ 4,309,390 $ 1,030,495	Adjustment and Elimination $ - (6,128,589 ) $ (6,128,589 ) $ 30,008 $ (1,742,478 ) $ (1,603,042 )	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

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

a. Other segment information

Thinking Yenyo Thinking Changzhou Guangdong Welkin Thinking Dongguan Welkin Others	Depreciation and amortization	Depreciation and amortization	Depreciation and amortization
		December 31
		2022 $ 88,861 12,763 120,416 646 56,392 102,401 $ 381,479	2021 $ 80,367 9,943 115,745 809 - 115,003 $ 321,867

b. Revenue from major products

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

Passive components Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 7,066,980 396,155 $ 7,463,135	2021 $ 7,201,871 298,584 $ 7,500,455

c. Geographical information
1) The Group operates in two principal geographical areas - China and Taiwan.
191 -
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
		2022 $ 5,671,459 753,417 523,430 514,829 $ 7,463,135	2021 $ 5,678,699 767,009 548,334 506,413 $ 7,500,455

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

China Taiwan		Non-current Assets	Non-current Assets
		December 31
		2022 $ 2,230,596 1,667,137 $ 3,897,733	2021 $ 1,955,478 1,245,402 $ 3,200,880

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

d. Information on major customers

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

192 -

TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2022

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

==> picture [1037 x 553] intentionally omitted <==

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

December 31, 2022
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 2,543,203 $ 25,723 11 $ 25,723
Thinking Changzhou CNY financial products
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 20,000 thousand CNY 20,000 thousand
(China)
Thinking Yichang CNY financial products
“Tian Libao” Net Worth Type - Industrial and - Financial assets at FVTPL - current CNY 6,000 thousand CNY 6,000 thousand
Commercial Bank of China
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 15,000 thousand CNY 15,000 thousand
(China)
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 5,000 thousand CNY 5,000 thousand
(China)
Structured Deposits - Bank Of China - Financial assets at FVTPL - current CNY 45,000 thousand CNY 45,000 thousand
Jiangxi Thinking CNY financial products
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 22,000 thousand CNY 22,000 thousand
(China)
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 9,810 thousand CNY 9,810 thousand
(China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current CNY 20,000 thousand CNY 20,000 thousand
Merchants Bank
Structured Deposits - E.SUN Bank - Financial assets at FVTPL - current CNY 20,000 thousand CNY 20,000 thousand
Guangdong Welkin Thinking CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current CNY 30,000 thousand CNY 30,000 thousand
Merchants Bank
Zhongshan Welkin CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current CNY 15,000 thousand CNY 15,000 thousand
Merchants Bank
----- End of picture text -----

193 -

TABLE 2

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, 2022

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

==> picture [1039 x 429] intentionally omitted <==

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

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 CNY financial products
Wishful Life V Financial assets at FVTPL - Industrial and - CNY 60,000 thousand - CNY - thousand - CNY 60,989 thousand CNY 60,000 thousand CNY 989 thousand - CNY - thousand
current Commercial
Bank of
China
“Tian Libal” net month type Financial assets at FVTPL - Industrial and - CNY 193 thousand - CNY 123,460 thousand - CNY 123,763 thousand CNY 123,653 thousand CNY 110 thousand - CNY - thousand
current Commercial
Bank of
China
Accumulate every day Financial assets at FVTPL - Bank of China - CNY 14,500 thousand - CNY 110,650 thousand - CNY 125,224 thousand CNY 125,150 thousand CNY 74 thousand - CNY - thousand
current
Qianyuan-An Xin daily cash Financial assets at FVTPL - China - CNY - thousand - CNY 161,430 thousand - CNY 161,613 thousand CNY 161,430 thousand CNY 183 thousand - CNY - thousand
management Open-end current Construction
Fund CNY interest. rate Bank
structured products
CNY Structured Time Deposit Financial assets at FVTPL - Fubon Bank - CNY 120,000 thousand - CNY 20,000 thousand - CNY 124,500 thousand CNY 120,000 thousand CNY 4,500 thousand - CNY 20,000 thousand
Monthly Profit current (China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY 40,000 thousand - CNY 67,000 thousand - CNY 87,285 thousand CNY 87,000 thousand CNY 285 thousand - CNY 20,000 thousand
Deposit current Merchants
Bank
Zhongshan Welkin CNY financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY - thousand - CNY 67,000 thousand - CNY 52,094 thousand CNY 52,000 thousand CNY 94 thousand - CNY 15,000 thousand
Deposit current Merchants
Bank
Thinking Yichang CNY financial products
Structured Deposits Financial assets at FVTPL - Bank of China - CNY - thousand - CNY 60,000 thousand - CNY 15,222 thousand CNY 15,000 thousand CNY 222 thousand - CNY 45,000 thousand
current
----- End of picture text -----

==> picture [1039 x 113] intentionally omitted <==

194 -

TABLE 3

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, 2022

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

==> picture [1036 x 464] intentionally omitted <==

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

Notes/Accounts (Receivable)
Transaction Details Abnormal Transaction
Payable
Buyer Related Party Relationship
Payment Ending Balance
Purchases/Sales Amount % of Total Payment Terms Unit Price % of Total Note
Term (Note)
The Company Thinking Changzhou Subsidiary Sales $ (256,764 ) (7 ) 60 days from the end of $ - - $ (108,871 ) (11 )
the month
Thinking Changzhou Subsidiary Purchases 982,797 41 60 days from the end of - - 160,381 21
the month
Dongguan Welkin Subsidiary Sales (242,658 ) (7 ) 60 days from the end of - - (70,435 ) (7 )
the month
Dongguan Welkin Subsidiary Purchases 1,117,170 47 60 days from the end of - - 204,929 27
the month
Thinking Changzhou Jiangxi Thinking Associate Sales (100,888 ) (3 ) 60 days from the end of - - (13,038 ) (1 )
the month
Jiangxi Thinking Associate Purchases 125,087 8 60 days from the end of - - 24,661 5
the month
Dongguan Welkin Associate Sales (154,684 ) (5 ) 60 days from the end of - - (25,086 ) (3 )
the month
Thinking Yichang Jiangxi Thinking Associate Purchases 165,077 30 60 days from the end of - - 39,701 22
the month
Guangdong Welkin Thinking Associate Sales (145,953 ) (16 ) 60 days from the end of - - (4,327 ) (2 )
the month
Dongguan Welkin Associate Sales (270,754 ) (30 ) 60 days from the end of - - (73,146 ) (29 )
the month
Jiangxi Thinking Dongguan Welkin Associate Sales (241,340 ) (34 ) 60 days from the end of - - (37,096 ) (24 )
the month
Zhongshan Welkin Associate Sales (145,581 ) (20 ) 60 days from the end of - - (29,164 ) (19 )
the month
Guangdong Welkin Dongguan Welkin Associate Sales (178,709 ) (22 ) 60 days from the end of - - (18,958 ) (15 )
Thinking the month
Dongguan Welkin Associate Purchases 312,016 62 60 days from the end of - - 2,434 21
the month
Dongguan Welkin Zhongshan Welkin Subsidiary Purchases 406,599 20 60 days from the end of - - 121,339 16
the month
----- End of picture text -----

==> picture [1036 x 58] intentionally omitted <==

Note: All intercompany transactions have been eliminated upon consolidation.

195 -

TABLE 4

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, 2022

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

==> picture [1096 x 229] intentionally omitted <==

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

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 Thinking Changzhou Subsidiary $ 108,871 2.63 $ - - $ 64,086 $ -
Thinking Changzhou The Company Parent company 160,381 5.67 - - 8,689 -
Dongguan Welkin The Company Parent company 204,929 5.20 - - 193,019 -
Zhongshan Welkin Dongguan Welkin Parent company 121,339 4.96 - - 70,502 -
----- End of picture text -----

==> picture [1096 x 304] intentionally omitted <==

Note: All intercompany transactions have been eliminated upon consolidation.

196 -

TABLE 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1036 x 520] intentionally omitted <==

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

Original Investment Amount Balance as of December 31, 2022
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, Number of Percentage Net Income Note
2022 2021 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 $ 304,410 25,732,508 63.76 $ 231,421 $ 44,551 $ 28,407 Note 1
Greenish British Virgin Investment holding and international trading 242,300 242,300 7,374,997 100 2,463,106 251,749 254,508 Note 1
Island ( US$ 7,375 thousand ) ( US$ 7,375 thousand )
Thinking Holding Cayman Investment holding and international trading 783,237 770,212 25,176,302 100 3,437,858 272,422 309,834 Note 1
( US$ 25,176 thousand ) ( US$ 24,729 thousand )
Thinking USA USA Electronic product design and marketing 30,715 - 1,000,000 100 28,350 (2,426 ) (2,426 )
( US$ 1,000 thousand )
Thinking Holding Thinking International Mauritius Investment holding and international trading 196,512 196,512 6,075,000 100 1,121,385 51,130 51,130
( US$ 6,075 thousand ) ( US$ 6,075 thousand )
Thinking HK Hong Kong Investment holding and international trading 311,109 311,109 10,020,000 100 771,145 52,368 52,368
( 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 1,401,729 150,409 150,409
( US$ 5,055 thousand ) ( US$ 5,055 thousand )
Thinking Samoa Samoa Investment holding and international trading 112,518 94,465 3,864,354 100 185,611 19,028 19,028
( US$ 3,864 thousand ) ( US$ 3,244 thousand )
----- End of picture text -----

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

Note 2: Information of investees which located in mainland China, refer to Table 6.

197 -

TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1038 x 286] intentionally omitted <==

----- 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, 2022(Note 7) Income as of Investment Note
January 1, 2022 December 31, 2022 Investment December 31, 2022
Thinking Changzhou Manufacturing and selling thermistors, US$ 31,260 thousand Note 1 $ 452,725 $ - $ - $ 452,725 $ 516,533 100 $ 521,779 $ 3,628,440 $ 1,868,287 Notes 10 and 11
varistors and sensors ( US$ 61,686 )
Thinking Yichang Manufacturing and selling thermistors, US$ 6,000 thousand Note 2 194,170 - - 194,170 51,221 100 51,221 1,120,042 - Note 11
varistors and sensors
Jiangxi Thinking Manufacturing and selling thermistors US$ 10,000 thousand Note 3 310,330 - - 310,330 52,395 100 52,395 770,904 - Note 11
and varistors
Guangdong Welkin Thinking Wholesale of thermistors, varistors, US$ 5,000 thousand Note 4 153,547 - - 153,547 48,851 100 48,851 363,733 - Note 11
sensors and equipment
Dongguan Welkin Manufacturing and selling thermistors, CNY$163,859 thousand Note 5 93,706 18,053 - 111,759 183,337 100 183,337 1,789,678 - Note 11
varistors, sensors and equipment
Zhongshan Welkin Manufacturing and selling thermistors, CNY$140,000 thousand Note 6 - - - - (17,027 ) 100 (17,027 ) 582,482 - Note 11
varistors and sensors
Accumulated Outward Remittance for Investment Investment Amounts Authorized by the Upper Limit on the Amount of Investments
in Mainland China as of December 31, 2022 Investment Commission, MOEA Stipulated by the Investment Commission, MOEA
$ 1,222,531 $ 949,372 $ 5,285,447
(US$38,474 thousand) (US$30,899 thousand) (Note 9)
(Note 8)
----- End of picture text -----

Note 1: Indirectly investment in mainland China through Greenish which was registered in the third area. The Company increased the amount of indirect investments in mainland China through Greenish since 2003.
Note 2: Indirectly investment in mainland China through companies registered in the third area (Thinking International).
Note 3: Indirectly investment in mainland China through companies registered in the third area (Thinking HK).
Note 4: Indirectly investment in mainland China through companies registered in the third area (View Full Samoa).
Note 5: Indirectly investment in mainland China through companies registered in the third area, View Full Samoa and Thinking Samoa and the subsidiary, Thinking Changzhou.
Note 6: 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$30,899 thousand was the difference between the MOEA approved investment amount of US$38,474 thousand and the amount of accumulated outflow of investment from Taiwan of US$7,575 thousand. Such difference was the result of deducting the capital increase of US$22,024 thousand from the subsidiary in mainland China, deductions of US$176 thousand for remittance of liquidation proceeds to third parties not yet approved. The added surplus of the subsidiary in mainland China, which was approximately US$29,726 thousand, was repatriated, and the difference between the exchange rate of the remitted funds and US$49 thousand. The balance as of December 31, 2022 was based on the exchange rate of US$1=NT$30.725.
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 $247,286 thousand, and Greenish recognized share of profits of Thinking Changzhou was $274,493 thousand. Total amount of share of profits was $521,779 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.
198 -

TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INTERCOMPANY BUSINESS RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1039 x 496] intentionally omitted <==

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

Intercompany Transactions
Percentage of
Nature of Relationship
No. Company Name Counterparty Amount Consolidated
(Note 1) Financial Statement Item Terms
Total Sales or
Total Assets
0 The Company Thinking Changzhou 1 Sales $ 256,764 Pricing by cost-plus practice 3
Thinking Changzhou 1 Purchases 982,797 Pricing by cost-plus practice 13
Thinking Changzhou 1 Accounts receivable 108,871 60 days from the end of the month 1
Thinking Changzhou 1 Other accounts receivable 937 60 days from the end of the month -
Thinking Changzhou 1 Accounts payable 160,381 60 days from the end of the month 1
Thinking Yichang 1 Sales 3,542 Pricing by cost-plus practice -
Thinking Yichang 1 Purchases 87,178 Pricing by cost-plus practice 1
Thinking Yichang 1 Accounts payable 13,108 60 days from the end of the month -
Dongguan Welkin 1 Sales 242,658 Pricing by cost-plus practice 3
Dongguan Welkin 1 Purchases 1,117,170 Pricing by cost-plus practice 15
Dongguan Welkin 1 Accounts receivable 70,435 60 days from the end of the month 1
Dongguan Welkin 1 Accounts payable 204,929 60 days from the end of the month 1
Yenyo 1 Purchases 533 Pricing by cost-plus practice -
Yenyo 1 Accounts payable 559 60 days from the end of the month -
1 Thinking Changzhou Thinking Yichang 2 Sales 80,238 Pricing by cost-plus practice 1
Thinking Yichang 2 Purchases 96,723 Pricing by cost-plus practice 1
Thinking Yichang 2 Accounts receivable 35,857 60 days from the end of the month -
Thinking Yichang 2 Accounts payable 16,865 60 days from the end of the month -
Thinking Yichang 2 Other accounts payable 4,752 60 days from the end of the month -
Jiangxi Thinking 2 Sales 100,888 Pricing by cost-plus practice 1
Jiangxi Thinking 2 Purchases 125,087 Pricing by cost-plus practice 2
Jiangxi Thinking 2 Accounts receivable 13,038 60 days from the end of the month -
Jiangxi Thinking 2 Other accounts receivable 3,416 60 days from the end of the month -
Jiangxi Thinking 2 Accounts payable 24,661 60 days from the end of the month -
Guangdong Welkin Thinking 2 Sales 48,791 Pricing by cost-plus practice 1
Dongguan Welkin 2 Sales 154,684 Pricing by cost-plus practice 2
Dongguan Welkin 2 Purchases 51,902 Pricing by cost-plus practice 1
Dongguan Welkin 2 Accounts receivable 25,086 60 days from the end of the month -
Dongguan Welkin 2 Accounts payable 5,088 60 days from the end of the month -
Zhongshan Welkin 2 Sales 19,597 Pricing by cost-plus practice -
Zhongshan Welkin 2 Accounts receivable 8,540 60 days from the end of the month -
(Continued)
----- End of picture text -----

199 -

==> picture [1037 x 584] intentionally omitted <==

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

Intercompany Transactions
Percentage of
Nature of Relationship
No. Company Name Counterparty Amount Consolidated
(Note) Financial Statement Item Terms
Total Sales or
Total Assets
2 Thinking Yichang Jiangxi Thinking 2 Sales $ 15,406 Pricing by cost-plus practice -
Jiangxi Thinking 2 Purchases 165,077 Pricing by cost-plus practice 2
Jiangxi Thinking 2 Accounts receivable 5,588 60 days from the end of the month -
Jiangxi Thinking 2 Accounts payable 39,701 60 days from the end of the month -
Guangdong Welkin Thinking 2 Sales 145,953 Pricing by cost-plus practice 2
Guangdong Welkin Thinking 2 Accounts receivable 4,327 60 days from the end of the month -
Dongguan Welkin 2 Sales 270,754 Pricing by cost-plus practice 4
Dongguan Welkin 2 Purchases 42,825 Pricing by cost-plus practice 1
Dongguan Welkin 2 Accounts receivable 73,146 60 days from the end of the month 1
Dongguan Welkin 2 Accounts payable 6,923 60 days from the end of the month -
Dongguan Welkin 2 Other accounts payable 3,441 60 days from the end of the month -
Zhongshan Welkin 2 Sales 8,210 Pricing by cost-plus practice -
Zhongshan Welkin 2 Accounts receivable 2,751 60 days from the end of the month -
Zhongshan Welkin 2 Other accounts receivable 872 60 days from the end of the month -
3 Jiangxi Thinking Dongguan Welkin 2 Sales 241,340 Pricing by cost-plus practice 3
Dongguan Welkin 2 Purchases 8,167 Pricing by cost-plus practice -
Dongguan Welkin 2 Accounts receivable 37,096 60 days from the end of the month -
Dongguan Welkin 2 Other accounts payable 1,812 60 days from the end of the month -
Zhongshan Welkin 2 Sales 145,581 Pricing by cost-plus practice 2
Zhongshan Welkin 2 Accounts receivable 29,164 60 days from the end of the month -
4 Guangdong Welkin Thinking Dongguan Welkin 2 Sales 178,709 Pricing by cost-plus practice 2
Dongguan Welkin 2 Purchases 312,016 Pricing by cost-plus practice 4
Dongguan Welkin 2 Accounts receivable 18,958 60 days from the end of the month -
Dongguan Welkin 2 Other accounts receivable 968 60 days from the end of the month -
Dongguan Welkin 2 Accounts payable 2,434 60 days from the end of the month -
5 Dongguan Welkin Zhongshan Welkin 1 Sales 67,871 Pricing by cost-plus practice 1
Zhongshan Welkin 1 Purchase 406,599 Pricing by cost-plus practice 5
Zhongshan Welkin 1 Accounts receivable 43,044 60 days from the end of the month -
Zhongshan Welkin 1 Advanced receipts 20,743 T/T days from the end of the -
month
Zhongshan Welkin 1 Accounts payable 121,339 60 days from the end of the month 1
Zhongshan Welkin 1 Other accounts payable 1,358 60 days from the end of the month -
----- End of picture text -----

(Concluded)

Note : Transactions are categorized as follows:

1) Transactions from parent company to subsidiaries.
2) Transactions between subsidiaries.
200 -

TABLE 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2022

==> picture [498 x 116] intentionally omitted <==

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

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
----- End of picture text -----

==> picture [498 x 367] intentionally omitted <==

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.

201 -

Thinking Electronic Industrial Company Limited

Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

202 -

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, 2022 and 2021, 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, 2022 and 2021, 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 the Standards on Auditing of 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, 2022. 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, 2022 is described as follows:

Recognition of revenue from export sales

The Company’s principal business is the manufacturing and selling of passive components. The consolidated revenue mainly comes from export sales. Since the sales locations include Asian and European markets, the recognition of its export sales requires more control mechanisms; therefore, we have considered the authenticity of the recognized export sales of specific customers as a key audit matter. For the accounting policy on revenue recognition, refer to Note 4 (l) to the financial statements.

203 -

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

We understood and tested the effectiveness of the management’s internal control process that is related to the authenticity of the recognized export sales.
We selected samples from the sales details from export sales and examined the shipping documents and receipt certificates to confirm the authenticity of the export sales.
We verified that the revenue amounts recognized in the export sales ledger were the same as the 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 Standards on Auditing of 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.

As part of an audit in accordance with the Standards on Auditing of 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 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
204 -

on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the 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, 2022 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

Deloitte & Touche Taipei, Taiwan Republic of China March 22, 2023

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.

205 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

BALANCE SHEETS DECEMBER 31, 2022 AND 2021 (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, 7 and 27) Notes receivable (Note 9) Accounts receivable, net (Notes 4 and 9) Accounts receivable - related parties (Notes 9 and 28) Other receivables Other receivables - related parties (Note 28) Inventories (Notes 4 and 10) Other financial assets - current (Notes 11 and 29) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8) Investments accounted for using the equity method (Notes 4 and 12) Property, plant and equipment (Notes 4, 13, 28 and 30) Right-of-use assets (Notes 4 and 14) Computer software, net (Note 4) Deferred tax assets (Notes 4 and 23) Prepayments for equipment (Note 28) Net defined benefit assets - non-current (Notes 4 and 19) Other financial assets - non-current (Notes 11 and 29) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 4 and 15) Financial liabilities at fair value through profit or loss- current (Notes 4,7 and 27) Accounts payable (Note 16) Accounts payable - related parties (Notes 16 and 28) Other payables (Note 17) Other payables - related parties (Note 28) Current tax liabilities (Notes 4 and 23) Lease liabilities - current (Notes 4 and 14) Current portion of long-term borrowings (Notes 4 and 15) Refund liabilities - current (Notes 4 and 18) Other current liabilities (Notes 4 and 25) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 4 and 15) Deferred tax liabilities (Notes 4 and 23) Lease liabilities - non-current (Notes 4 and 14) Long-term deferred revenue (Notes 4 and 25) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 12 and 20) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		December 31, 2022 Amount % $ 1,752,733 13 92,250 1 2,557 - 833,552 7 179,793 1 5,822 - 1,058 - 350,148 3 151,700 1 53,181 - 3,422,794 26 25,723 - 7,955,007 61 1,368,831 11 51,078 1 29,015 - 94,791 1 49,726 - 13,514 - 2,315 - 9,590,000 74 $ 13,012,794 100 $ 678,000 5 92,340 1 26,974 - 378,977 3 356,036 3 3,999 - 144,994 1 1,465 - 14,458 - 84,696 1 3,073 - 1,785,012 14 1,022,218 8 1,324,251 10 52,235 - 19,879 - 120 - 2,418,703 18 4,203,715 32 1,281,127 10 352,907 3 1,316,508 10 222,378 2 5,776,786 44 7,315,672 56 (140,627 ) (1 ) 8,809,079 68 $ 13,012,794 100		December 31, 2021	December 31, 2021
		Amount $ 1,752,733 92,250 2,557 833,552 179,793 5,822 1,058 350,148 151,700 53,181 3,422,794 25,723 7,955,007 1,368,831 51,078 29,015 94,791 49,726 13,514 2,315 9,590,000 $ 13,012,794 $ 678,000 92,340 26,974 378,977 356,036 3,999 144,994 1,465 14,458 84,696 3,073 1,785,012 1,022,218 1,324,251 52,235 19,879 120 2,418,703 4,203,715 1,281,127 352,907 1,316,508 222,378 5,776,786 7,315,672 (140,627 ) 8,809,079 $ 13,012,794		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	% 12 - - 7 2 - - 4 2 - 27 - 63 8 - - 1 1 - - 73 100 6 - - 4 3 - 1 - - 1 - 15 6 10 1 - - 17 32 11 3 10 1 45 56 (2 ) 68 100

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

206 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 21 and 28) OPERATING COSTS (Notes 10, 22 and 28) GROSS PROFIT UNREALIZED GAINS FROM SALES (Notes 4 and 28) REALIZED GAINS FROM SALES (Note 4) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4, 10, 22 and 28) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss (gain) Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 12, 22, 25 and 28) Interest income Other income Other gains and losses Finance costs Share of profit of subsidiaries Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET PROFIT FOR THE YEAR		2022 Amount % $ 3,619,285 100 2,466,157 68 1,153,128 32 (26,915) (1) 29,161 1 1,155,374 32 122,438 3 198,016 6 140,083 4 (130 ) - 460,407 13 694,967 19 25,666 1 3,474 - 141,037 4 (11,939) - 837,609 23 995,847 28 1,690,814 47 316,981 9 1,373,833 38		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 - 2,272 - (44,909) (1) (7,220) - 1,070,155 28 1,036,297 27 1,988,456 53 411,149 11 1,577,307 42 (Continued)

207 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 20 and 23) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income of subsidiaries accounted for using the equity method Income tax related to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of 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 24) Basic Diluted			2022 Amount % 1,360 - (10,550) - 884 - (272 ) - (8,578 ) - 611,730 17 (496,354) (14) (23,075 ) (1 ) 92,301 2 83,723 2 1,457,556 40 $ 10.72 $ 10.66		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




		$

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

(Concluded)

208 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

BALANCE, JANUARY 1, 2021 Appropriation of 2020 earnings (Note 20) 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 12 and 20) BALANCE AT DECEMBER 31, 2021 Appropriation of 2021 earnings (Note 20) Legal reserve Special reserve Cash dividends distributed by the Company Net profit for the year ended December 31, 2022 Other comprehensive income (loss) for the year ended December 31, 2022 Total comprehensive income (loss) for the year ended December 31, 2022 BALANCE AT DECEMBER 31, 2022	Share Capital Capital Surplus $ 1,281,127 $ 348,263 - - - - - - - - - - - - - - - 4,644 1,281,127 352,907 - - - - - - - - - - - - - - $ 1,281,127 $ 352,907		Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings Total Retained Earnings $ 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 6,746,977 157,419 - (157,419) - - 20,942 (20,942) - - - (807,110 ) (807,110 ) 157,419 20,942 (985,471 ) (807,110 ) - - 1,373,833 1,373,833 - - 1,972 1,972 - - 1,375,805 1,375,805 $ 1,316,508 $ 222,378 $ 5,776,786 $ 7,315,672	Other Equity	Total Other Equity $ (201,436 ) - - - - - (20,942 ) (20,942 ) - (222,378 ) - - - - - 81,751 81,751 $ (140,627 )	Total Equity $ 7,305,365 - (704,620) - (704,620 ) 1,577,307 (24,063 ) 1,553,244 4,644 8,158,633 - - (807,110 ) (807,110 ) 1,373,833 83,723 1,457,556 $ 8,809,079
				Exchange Differences on Translation of Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations Comprehensive Income $ (206,975 ) $ 5,539 - - - - - - - - - - (17,734 ) (3,208 ) (17,734 ) (3,208 ) - - (224,709 ) 2,331 - - - - - - - - - - 92,301 (10,550 ) 92,301 (10,550 ) $ (132,408 ) $ (8,219 )

The accompanying notes are an integral company only financial statements.

209 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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) Net loss on financial assets or liabilities at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of subsidiaries Gain (loss) on disposal of property, plant and equipment, net Loss on inventories Unrealized gain on transactions with subsidiaries Realized gain on transactions with subsidiaries Reversal of provisions Amortization of grants income Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss 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 taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investment accounted for using equity method Acquisition of property, plant and equipment	2022 $ 1,690,814 81,398 7,463 (130) 2,165 11,939 (25,666) (988) (837,609) (404) 86,781 26,915 (29,161) - (749) (2,075) 1,322 (3,841) 32,620 357 (792) (25,934) (14,369) (1,054) (20,778) (49,116) (45,631) (449) 313 (7,973 ) 875,368 24,732 (6,896) (218,042 ) 675,162 (43,740) (467,337)	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) (Continued)

210 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in other financial assets Decrease in other financial assets Dividends received Net cash generate from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in short-term borrowings Proceeds from long-term borrowings Decrease in guarantee deposits received Repayments of the principal portion of lease Cash dividends paid Net cash (used in) 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	2022 $ 1,973 (2,826) - 153,900 536,090 178,060 678,000 (749,630) 351,240 - (1,023) (807,110 ) (528,523 ) 324,699 1,428,034 $ 1,752,733	2021 $ - (10,852) (276,800 ) - - (737,765 ) 4,450,200 (4,075,570) 353,540 (10) (929) (704,620 ) 22,611 (194,361) 1,622,395 $ 1,428,034

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

(Concluded)

211 -

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (Amounts in Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

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

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

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

2. APPROVAL OF FINANCIAL STATEMENTS

The parent company only financial statements were approved by the board of directors on March 22 , 2023.

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

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

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies.

b. The IFRSs endorsed by the FSC for application starting from 2023

==> picture [463 x 26] intentionally omitted <==

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

Effective Date
New IFRSs Announced by IASB
----- End of picture text -----

New IFRSs	Effective Date Announced by IASB
Amendments to IAS 1 “Disclosure of Accounting Policies”	January 1, 2023 (Note 1)
Amendments to IAS 8 “Definition of Accounting Estimates”	January 1, 2023 (Note 2)
Amendments to IAS 12 “Deferred Tax related to Assets and	January 1, 2023 (Note 3)
Liabilities arising from a Single Transaction”

Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: The amendments will be applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 3: Except for deferred taxes that were recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments were applied prospectively to transactions that occur on or after January 1, 2022.
212 -
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:

Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
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
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 judgements or assumptions in applying an accounting policy, and the Company discloses those judgements 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.

3) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

The amendments clarify that the initial recognition exemption under IAS 12 does not apply to transactions in which equal taxable and deductible temporary differences arise on initial recognition. The Company shall recognize a deferred tax asset (to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized) and a deferred tax liability for all deductible and taxable temporary differences associated with leases and decommissioning obligations on January 1, 2022, and the Company shall recognize the cumulative effect of initial application in retained earnings at that date. The Company shall apply the

213 -

amendments prospectively to transactions other than leases and decommissioning obligations that occur on or after January 1, 2022. The Company shall restate its comparative information when it initially applies the aforementioned amendments.

Upon initial application of the aforementioned amendments, the anticipated impact on the current year is set out below:

Impacton assets,liabilitiesand equity December 31, 2022 Deferred tax assets Total effect on assets Deferred tax liabilities Total effect on liabilities Retained earnings Total effect on equity January 1, 2022 Deferred tax assets Total effect on assets Deferred tax liabilities Total effect on liabilities Retained earnings Total effect on equity Impact on total comprehensive income for the yearendedDecember31,2022 Income tax expense Total effect on net profit for the year Total effect on total comprehensive income for the year		Carrying Amount $ 94,791 $ 13,012,794 $ 1,324,251 $ 4,203,715 $ 7,315,672 $ 8,809,079 $ 99,007 $ 11,975,301 $ 1,255,099 $ 3,816,668 $ 6,746,977 $ 8,158,633 $ 316,981 1,373,833 $ 1,457,556		Adjustments Arising from Initial Application $ 10,740 $ 10,740 $ 10,216 $ 10,216 $ 524 $ 524 $ 10,945 $ 10,945 $ 10,618 $ 10,618 $ 327 $ 327 $ (197 ) 197 $ 197		Adjusted Carrying Amount
						$ 105,531 $ 13,023,534 $ 1,334,467 $ 4,213,931 $ 7,316,196 $ 8,809,603 $ 109,952 $ 11,986,246 $ 1,265,717 $ 3,827,286 $ 6,747,304 $ 8,158,960 $ 316,784 1,374,030 $ 1,457,753

Except for the above impact, as of the date the parent company only financial statements were authorized for issue, the Company has assessed that the application of other standards and interpretations will not have a material impact on the Company’s financial position and financial performance.

214 -

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

==> picture [461 x 26] intentionally omitted <==

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

Effective Date
New IFRSs Announced by IASB (Note 1)
----- End of picture text -----

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”
Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback”	January 1, 2024 (Note 2)
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, 2024
Non-current”
Amendments to IAS 1 “Non-current Liabilities with Covenants”	January 1, 2024

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: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

The 2020 amendments clarify that for a liability to be classified as non-current, the Company shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Company will exercise that right.

The 2020 amendments also stipulate that, if the right to defer settlement is subject to compliance with specified conditions, the Company must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date. The 2022 amendments further clarify that only covenants with which an entity is required to comply on or before the reporting date should affect the classification of a liability as current or non-current. Although the covenants to be complied with within twelve months after the reporting period do not affect the classification of a liability, the Company shall disclose information that enables users of financial statements to understand the risk of the Company that may have difficulty complying with the covenants and repay its liabilities within twelve months after the reporting period.

The 2020 amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Company’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Company’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32 “Financial Instruments: Presentation”, the aforementioned terms would not affect the classification of the liability.

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

215 -

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of Compliance

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

b. Basis of preparation

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

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

216 -

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 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 the 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.

217 -

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

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

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

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the 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.

218 -

h. Intangible assets

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

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

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

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

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 settlement date basis.

a) Measurement category

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

219 -
i Financial asset at FVTPL

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;
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 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.

220 -

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

b) Impairment of financial assets

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

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

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

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

221 -

2) Financial liabilities

a) Subsequent measurement

Fair value is determined in the manner described in Note 27.

b) Derecognition of financial liabilities

3) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including forward exchange contracts and interest rate swaps contracts.

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.

222 -

l. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. For a contract that contains a lease component and non-lease components, the Company allocates the consideration in the contract to each component on the basis of the relative stand-alone price and accounts for each component separately.

The Company as lessee, 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.

m. Borrowing costs

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

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

n. Government grants

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

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

223 -

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

224 -

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 of 3 months or less The annual interest rate of time deposits (%)		December 31	December 31
		2022 $ 631 74 1,138,435 613,593 $ 1,752,733 2.60-2.74	2021 $ 549 74 925,234 502,177 $ 1,428,034 2.71-3.00

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

225 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

	December 31,	December 31,
		2022
Financial assets at fair value thoughprofit or loss(FVTPL)- current
Financial assets mandatorily classified as at FVTPL
Derivative instruments (non-designated hedges)
Swap contracts (b)	$ 92,250
Financial liabilitiesat FVTPL-current
Financial assets mandatorily classified as at FVTPL
Derivative instruments (non-designated hedges)
Swap contracts (b)	$ 92,273
Forward exchange contracts (a)		67
	$ 92,340

a. At the end of the year, outstanding forward exchange contracts not under hedge accounting were as follows:

December 31, 2022

			Notional Amount
	Currency	Maturity Date	(In Thousands)
Buy	USD/CNY	2023.01	USD3,718/CNY25,901

b. At the end of the year, outstanding swap contracts not under hedge accounting were as follows:

December 31, 2022

		Notional Amount
Currency	Maturity Date	(In Thousands)
USD/NTD	2023.01	USD3,000/NTD92,122

The Company entered into forward exchange contracts and swap contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

Details of profit and loss of financial instruments at FVTPL for the year 2022 and 2021 list on Note 22.

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

Investments in equity instruments at FVTOCI Domestic unlisted shares		December	31
		2022 $ 25,723	2021 $ 36,273

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.

226 -

9. NOTES AND ACCOUNTS RECEIVABLE

Notes receivable At amortized cost Gross carrying amount - operating Accountsreceivable- non-related parties At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss Accountsreceivable- related parties At amortized cost Gross carrying amount - operating (Note 28)		December 31	December 31
		2022 $ 2,557 $ 849,075 15,523 $ 833,552 $ 179,793	2021 $ 3,879 $ 845,234 15,653 $ 829,581 $ 212,413

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

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

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

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

The following table details the loss allowance of accounts receivable (including related parties) based on the Company’s provision matrix:

December 31, 2022

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due 0-0.05 $ 980,321 (470 ) $ 979,851	Past Due 1to 30 Days 0.5 $ 5,068 (26 ) $ 5,042	Past Due 31 to 60 Days 1 $ 26,531 (266 ) $ 26,265	Past Due 61 to 90 Days 30 $ 3,100 (930 ) $ 2,170	Past Due 91 to 180 Days 50 $ 34 (17 ) $ 17	Past Due Over 180 Days 100 $ 13,814 (13,814 ) $ -	Total $ 1,028,868 (15,523 ) $ 1,013,345

227 -

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

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

Balance at January 1 Net remeasurement (reversal) of loss allowance Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 15,653 (130 ) $ 15,523	2021 $ 15,022 631 $ 15,653

10. INVENTORIES

Finished goods Semi-finished Work-in-process Raw materials Supplies Inventory in transit		December 31	December 31
		2022 $ 175,797 59,087 69,908 36,348 2,943 6,065 $ 350,148	2021 $ 219,022 20,099 52,895 100,242 6,444 12,293 $ 410,995

The cost of inventories recognized as cost of goods sold and recognized under cost of goods sold, which included the following items:

Cost of goods sold Write-off obsolete inventories Inventory write-downs	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 2,466,157 12,416 74,365 $ 86,781	2021 $ 2,310,989 7,084 2,334 $ 9,418

228 -

11. OTHER FINANCIAL ASSETS

Pledged time deposits Refundable deposits Current Non-current Interest rate of pledge time deposits (%)		December 31	December 31
		2022 $ 151,700 2,315 $ 154,015 $ 151,700 2,315 $ 154,015 1.195-4.15	2021 $ 305,600 2,315 $ 307,915 $ 276,800 31,115 $ 307,915 0.35-0.57

For information on other financial assets pledged, refer to Note 29.

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries

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) Thinking Electronic USA, Inc. (Thinking USA)		December 31	December 31
		2022 $ 231,421 2,463,106 1,794,272 3,437,858 28,350 $ 7,955,007	2021 $ 202,130 2,172,842 2,050,787 3,064,495 - $ 7,490,254

At the end of the reporting period, the percentages of owners’ voting rights in subsidiaries held by the Company were as follows:

Yenyo Greenish Thinking Changzhou Thinking Holding Thinking USA	Proportion of Ownership and Voting Rights
	December 31
	2022 2021 63.76% 63.76% 100.00% 100.00% 47.39% 47.39% 100.00% 100.00% 100.00% -

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.

229 -

In order to implement the Group’s global layout plan, the board of directors resolved to set up a new subsidiary in the USA on August 9, 2022, and the total investment amount is expected to be US$3 million. As of December 31, 2022, the Company had invested US$1 million in the subsidiary.

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, 2022 and 2021 were recognized based on the subsidiaries’ financial statements which have been audited.

13. PROPERTY, PLANT, AND EQUIPMENT

a. Changes in cost and accumulated depreciation:

For the Year ended December 31, 2022

Cost Balance at January 1, 2022 Additions Disposals Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expense Disposals Balance at December 31, 2022 Carrying amount at December 31, 2022	Land $ 144,685 - - $ 144,685 $ - - - $ - $ 144,685	Buildings Machinery and Equipment Leasehold Improvements $ 209,636 $ 670,170 $ 1,514 635 116,642 - - (4,532 ) - $ 210,271 $ 782,280 $ 1,514 $ 88,905 $ 416,111 $ 1,448 5,302 58,021 26 - (3,003 ) - $ 94,207 $ 471,129 $ 1,474 $ 116,064 $ 311,151 $ 40	Others Property under Construction $ 205,354 $ 385,218 9,159 386,956 (2,808 ) - $ 211,705 $ 772,174 $ 173,136 $ - 16,620 - (2,768 ) - $ 186,988 $ - $ 24,717 $ 772,174	Total $ 1,616,577 513,392 (7,340 ) $ 2,122,629 $ 679,600 79,969 (5,771 ) $ 753,798 $ 1,368,831

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

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:

230 -

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 (decrease) in payables for equipment-related parties (in other payables-related parties) Increase (decrease) 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
		2022 $ 513,392 (18,541) 1,151 (28,080) (585 ) $ 467,337	2021 $ 396,829 (12,397) (1,151) 38,166 (584 ) $ 420,863

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

c. As of December 31, 2022 and 2021, the Company has not provided property, plant and equipment as guarantee.

14. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Depreciation charge for right-of-use assets - land		December	31
	2022 2021 $ 51,078 $ 53,092 For the Year Ended December 31
		2022 $ 2,014	2021 $ 2,013

Except for the recognized depreciation, the Company did not have impairment or subleasing of right-of-use assets for the year ended December 31, 2022 and 2021.

b. Lease liabilities

Carrying amount Current Non-current		December	31
		2022 $ 1,465 $ 52,235	2021 $ 1,023 $ 53,700

231 -

Range of discount rates for lease liabilities was as follows:

Land	December 31
	2022 2021 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 3 to 7 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
		2022 $ 812 $ 402 $ 2,917	2021 $ 821 $ 357 $ 2,795

15. BORROWINGS

a. Short - term borrowings

Secured loans (Note 29) Credit loans The annual interest rate (%) Secured loans Credit loans Long - term borrowings Credit Loans Less: Government grants discount Current portion of long-term borrowings The annual interest rate (%)			December 31	December 31
			2022 2021 $ 108,000 $ 249,630 570,000 500,000 $ 678,000 $ 749,630 1.5 0.34 1.09-1.655 0.68-0.72 December 31
		2022 $ 1,051,780 15,104 14,458 $ 1,022,218 0.975		2021 $ 700,540 12,440 - $ 688,100 0.35

b. Long - term borrowings

232 -

The details of the relevant loan contract are as follows:

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, 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 Company calculates its fair value with an annual interest rate of general condition. As of December 31, 2022 and 2021, which was 1.47% and 0.845% , respectively.
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
		$ 14,458 131,589 286,741 331,610 287,382 $ 1,051,780

16. ACCOUNTS PAYABLE

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

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

17. OTHER PAYABLES

Payable for salaries and bonuses Payable for employees’ compensation Payable for purchase of equipment Payable for remuneration of directors Others		December 31	December 31
		2022 $ 141,859 79,543 58,668 23,242 52,724 $ 356,036	2021 $ 165,627 91,100 40,127 26,800 58,900 $ 382,554

233 -

18. REFUND LIABILITIES

Balance at January 1 Reversed Usage Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ 92,669 - (7,973 ) $ 84,696	2021 $ 170,979 (47,912) (30,398 ) $ 92,669

19. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute specific percentage of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one 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
		2022 $ 85,577 (99,091 ) $ (13,514 )	2021 $ 83,126 (94,226 ) $ (11,100 )

234 -

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, 2021	$ 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 )
Service cost
Current service cost	102	-	102
Net interest expense (income)	536	(612 )	(76 )
Recognized in profit or loss	638	(612 )	26
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(7,315)	(7,315)
Actuarial loss-change in financial
assumptions	(2,060)	-	(2,060)
Actuarial loss - experience adjustments	8,015	-	8,015
Recognized in other comprehensive income	5,955	(7,315 )	(1,360 )
Contributions from the employer	-	(1,080 )	(1,080 )
Benefits paid	(4,142 )	4,142	-
Balance at December 31, 2022	$ 85,577	$ (99,091 )	$ (13,514 )

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

1) Investment risk

235 -

2) Interest risk

3) Salary risk

Discount rate (%) Expected rate of salary increase (%)	December 31
	2022 2021 1.25 0.65 2.00 2.00

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase (decrease) 1% increase 1% decrease		December	31
		2022 $ (816 ) $ 841 $ 3,454 $ (3,135 )	2021 $ (1,056 ) $ 1,088 $ 4,454 $ (4,026 )

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
		2022 $ 1,130 8	2021 $ 1,130 9

236 -

20. EQUITY

a. Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2022 200,000 $ 2,000,000 128,113 $ 1,281,127	2021 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
		2022 $ 265,446 59,168 23,649 4,644 $ 352,907	2021 $ 265,446 59,168 23,649 4,644 $ 352,907

c. Retained earnings and dividend policy

237 -

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended 2021 2020 $ 157,419 $ 138,883 20,942 (83,219) 807,110 704,620 $ 985,471 $ 760,284	Appropriation of Earnings For the Year Ended 2021 2020 $ 157,419 $ 138,883 20,942 (83,219) 807,110 704,620 $ 985,471 $ 760,284	Dividend Per Share (NT$)
		For the Year	For the Year Ended
		2021 $ 157,419 20,942 807,110 $ 985,471	2021 2020 $ 6.3 $ 5.5

The appropriations of earnings for 2021 had been proposed by the Company’s board of directors on March 22, 2022. The appropriation and dividends per share were as follows:

	Appropriation	Dividend Per
	of Earnings	Share (NT$)
Legal reserve	$ 137,581
Special reserve	(81,751)
Cash dividends	691,809	$ 5.4
	$ 747,639

The appropriations of earnings for 2022 are subject to the resolution of the shareholders in their meeting to be held on June 13, 2023.

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 Share from subsidiaries accounted for using the equity method Income tax (expenses) benefit relating to exchange differences arising on translation of foreign operations Income tax benefit (expenses) relating to share from subsidiaries accounted for using the equity method Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ (224,709) 611,730 (496,354) (122,346) 99,271 $ (132,408 )	2021 $ (206,975) (139,598) 117,430 27,920 (23,486 ) $ (224,709 )

238 -

2) Unrealized valuation gain (loss) on financial assets at FVTOCI

Balance at January 1 Recognized for the year Unrealized loss on financial assets at FVTOCI Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2022 $ 2,331 (10,550 ) $ (8,219 )	2021 $ 5,539 (3,208 ) $ 2,331

21. 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
		2022 $ 3,619,075 210 $ 3,619,285	2021 $ 3,775,336 181 $ 3,775,517

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

b. Contract balances

December 31, 2022 Notes and accounts receivable (Note 9) $ 1,015,902 Disaggregation of revenue Type of revenue Passive components Service revenue	December 31, 2021 January 1, 2021 $ 1,045,873 $ 1,091,891 For the Year Ended December 31	December 31, 2021 January 1, 2021 $ 1,045,873 $ 1,091,891 For the Year Ended December 31	December 31, 2021 January 1, 2021 $ 1,045,873 $ 1,091,891 For the Year Ended December 31
		2022 $ 3,619,075 210 $ 3,619,285	2021 $ 3,775,336 181 $ 3,775,517
Passive components Service revenue

c. Disaggregation of revenue

239 -

22. NET PROFIT

Net profit included following items:

a. Interest income

Bank deposits Financial assets at fair value through income Others Other income Grants Rental income Dividend income Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2022 2021 $ 25,076 $ 14,285 - 102 590 1,612 $ 25,666 $ 15,999 For the Year Ended December 31
		2022 $ 1,343 717 988 426 $ 3,474	2021 $ 894 700 - 678 $ 2,272

b. Other income

c. Other gains and losses

Loss on financial assets at fair value through profit or loss Foreign exchange gains (losses), net Others	For the Year Ended	For the Year Ended	December 31
		2022 $ (2,165) 142,798 404 $ 141,037	2021 $ - (44,908) (1 ) $ (44,909 )

d. Finance costs

Interest expense of borrowings Interest on lease liabilities Less: Amounts included in the cost of qualifying assets	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 16,228 680 16,908 4,969 $ 11,939	2021 $ 7,821 688 8,509 1,289 $ 7,220

240 -

Information on capitalized interest is as follows:

For	For	December 31
2022 $ 4,969 0.35-1.23 For the Year Ended		2021 $ 1,289 0.35-1.23 December 31
2022 $ 79,969 2,014 7,463 89,446 585 $ 88,861 $ 67,280 14,118 $ 81,398 $ 2,712 4,751 $ 7,463 For the Year Ended		2021 $ 73,379 2,013 5,559 80,951 584 $ 80,367 $ 59,787 15,021 $ 74,808 $ 2,100 3,459 $ 5,559 December 31
	2022 $ 427,425 83,266 510,691 $ 17,987 26 18,013 $ 528,704 $ 203,040 325,664 $ 528,704	2021 $ 458,613 83,206 541,819 $ 17,901 8 17,909 $ 559,728 $ 208,653 351,075 $ 559,728

241 -

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
	2022 2021 3.9 4.3 1.3 1.3 $ 68,812 $ 91,100 23,242 26,800

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, 2021 and 2020.

23. INCOME TAX

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

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments for prior years Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2022 $ 259,460 29,436 (21,936 ) 266,960 59,813 (9,792 ) 50,021 $ 316,981	2021 $ 156,571 31,427 (2,514 ) 185,484 223,029 2,636 225,665 $ 411,149

242 -

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

Profit before income tax Income tax expense calculated at the statutory rate Deductible income in determining taxable income 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
		2022 $ 1,690,814 $ 338,163 (5,682) (198) 29,436 (13,010) (31,728) $ 316,981	2021 $ 1,988,456 $ 397,691 (4,091) - 31,427 (14,000) 122 $ 411,149

The applicable tax rate of the Company is 20%.

b. Income tax recognized in other comprehensive income

Deferred income tax expense (benefit) Remeasurement on defined benefit plans The difference in translation of foreign operations Share of other comprehensive income (loss) of subsidiaries by using equity method Income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 272 122,346 (99,271 ) $ 23,347	2021 $ (286) (27,920) 23,486 $ (4,720 )

c. Current tax assets and liabilities

Current tax liabilities Income tax payable		December 31	December 31
		2022 $ 144,994	2021 $ 96,076

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, 2022

					Recognized in	Recognized in
		Balance,				Other
	Beginning of		Recognized in		Comprehensive		Balance, End
		Year	Profit	or Loss		Income		of Year
Deferred Tax Assets
Temporary differences
Unrealized loss on inventories	$	8,344	$	15,413	$	-	$	23,757
Unrealized gross profits		6,528		9,259		-		15,787
Unrealized refund liabilities		18,534		(1,595)		-		16,939
								(Continued)

243 -

					Recognized in	Recognized in
		Balance,				Other
	Beginning of		Recognized in		Comprehensive		Balance, End
		Year	Profit	or Loss		Income		of Year
Exchange differences on
translation of the financial
statements of foreign
operations	$	122,441	$	-	$	(122,346)	$	95
Share of other comprehensive
income (loss) of subsidiaries
for using the equity method		(66,264)		-		99,271		33,007
Others		9,424		(3,946)		(272 )		5,206
	$	99,007	$	19,131	$	(23,347 )	$	94,791
Deferred Tax Liabilities
Temporary differences
Foreign investment income	$	1,251,484	$	54,820	$	-	$	1,306,304
Others		3,615		14,332		-		17,947
	$	1,255,099	$	69,152	$	-	$	1,324,251
							(Concluded)

For the Year ended December 31, 2021

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

e. Income tax assessments

The tax returns of the Company through 2020 have been assessed by the tax authorities.

244 -

24. EARNINGS PER SHARE

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

Net profit for the year

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
		2022 $ 1,373,833	2021 $ 1,577,307

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
		2022 128,113 706 128,819	2021 128,113 652 128,765

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.

25. 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	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 14,240 7,135 (749 ) $ 20,626	2021 $ 7,480 7,512 (752 ) $ 14,240

245 -

Carryingamount of deferred revenue Current (in other current liabilities) Non-current		December	31
		2022 $ 747 19,879 $ 20,626	2021 $ 751 13,489 $ 14,240

26. CAPITAL MANAGEMENT

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

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

27. FINANCIAL INSTRUMENTS

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

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

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

December 31, 2022 Financial assets at FVTPL Derivative financial assets Financial assets at FVTOCI Domestic unlisted shares Financial liabilitiesat FVTPL Derivative financial liabilities December 31, 2021 Financial assets at FVTOCI Domestic unlisted shares	Level 1 $ - $ - $ - Level 1 $ -	Level 2 $ 92,250 $ - $ 92,340 Level 2 $ -	Level 3 $ - $25,723 $ - Level 3 $ 36,273	Total $ 92,250
				$25,723
				$ 92,340
				Total $ 36,273

There were no transfers between Level 1 and Level 2 in 2022 and 2021.

246 -
2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2022

Financial assets Balance at January 1, 2022 Recognized in other comprehensive income Balanced at December 31, 2022 For the year ended December 31, 2021 Financial assets Balance at January 1, 2021 Recognized in other comprehensive income Balanced at December 31, 2021	Equity Instruments
	Financial Assets at FVTOCI $ 36,273 (10,550 ) $ 25,723 Equity Instruments
	Financial Assets at FVTOCI $ 39,481 (3,208 ) $ 36,273

3) Valuation techniques and assumptions used to measure the fair value of the Company

Valuation techniques and inputs applied for Level 2 fair value measurement

==> picture [446 x 14] intentionally omitted <==

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

Financial Instrument Valuation Technique and Inputs
----- End of picture text -----

Financial Instrument	Valuation Technique and Inputs
Derivatives - swap contracts	Discounted cash flow: Future cash flows are estimated based on
and forward exchange	observable forward exchange rates at the end of the year and
contracts	contract forward rates, discounted at a rate that reflects the
	credit risk of various counterparties.

4) 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.

247 -

c. Categories of financial instruments

Financial assets FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (Note 1) Financial assets at FVTOCI Equity instruments Financial liabilities FVTPL Mandatorily classified as at FVTPL Amortized cost (Note 2)	December 31
	2022 2021 $ 92,250 $ - 2,926,962 2,784,492 25,723 36,273 $ 92,340 $ - 2,480,782 2,301,848

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

Financial risks associated with the management and operations of the Company included market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of directors, which provided written principles on foreign currency risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

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. The Company engaged in derivative financial instruments within the scope of the policy, including forward exchange contracts and swap contracts, to mitigate the risk exposures to exchange rates that may arise from non-functional currency denominated assets and liabilities and certain anticipated transactions, but the impact of foreign currency exchange rate changes cannot be completely ruled out.

248 -

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 32.

Sensitivity analysis

The Company is mainly exposed to the risk from the fluctuations of the USD, CNY and EUR, and the sensitivity rate used when reporting foreign currency risk internally to key management personnel in foreign exchange rates is 1%. 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.

Profit or loss		USD Impact	USD Impact		CNY Impact	CNY Impact		EUR Impact	EUR Impact
		For the Year Ended December 31			For the Year Ended December 31			For the Year Ended December 31
		2022 $ 6,635	2021 $ 10,097		2022 $ 12,221	2021 $ 9,236		2022 $ 2,839	2021 $ 1,348

b) Interest rate risk

The interest rate risk of the Company is primarily related to its fixed interest rates and variable rate of borrowing funds. 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
	2022 2021 $ 738,808 $ 810,092 611,700 804,353 1,167,235 925,234 1,156,676 688,100

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, 2022 and 2021 would have been higher/lower by $106 thousand and by $2,371 thousand, respectively, which was mainly a result of the changes in the floating interest rate financial instrument.

249 -

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a 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.

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.

Bank loans are a major source of liquidity risk for the Company. As of December 31, 2022 and 2021, the Company had available unutilized short-term bank loan facilities set out in c) below.

a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following table details the Company’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

To the extent that interest flows are at floating rates, the undiscounted amount was derived from the interest rate curve at the end of the year.

December 31, 2022

On Demand or Less than 1 Month Non-interest bearing $ 75,004 Lease liabilities 178 Variable interest rate liabilities 120,864 Fixed interest rate liabilities 76,340 $ 272,386	1-3 Months $ 468,617 356 1,709 183,829 $ 654,511	3 Months to 1 Year $ 221,523 1,600 22,144 300,554 $ 545,821	1-5 Years $ - 7,677 1,062,026 - $ 1,069,703	5+ Years $ - 60,883 - -
				$ 60,883

Further information on the maturity analysis of the above financial liabilities was as follows:

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 2,134 144,717 $ 146,851	1-5 Years $ 7,677 1,062,026 $ 1,069,703	5-10 Years 10-15 Years 15-20 Years $ 7,321 $ 7,321 $ 7,321 - - - $ 7,321 $ 7,321 $ 7,321	20+ Years $ 38,920 -
				$ 38,920

250 -

December 31, 2021

On Demand or Less than 1 Month Non-interest bearing $ 80,062 Lease liabilities 135 Variable interest rate liabilities 204 Fixed interest rate liabilities 150,525 $ 230,926	1-3 Months 3 Months to 1 Year $ 521,570 $ 262,366 269 1,299 409 1,839 599,953 - $ 1,122,201 $ 265,504	1-5 Years $ - 8,347 547,749 - $ 556,096	5+ Years $ - 62,347 161,619 -
			$ 223,966

Further information on the maturity analysis of the above financial liabilities was as follows:

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 1,703 2,452 $ 4,155	1-5 Years $ 8,347 547,749 $ 556,096	5-10 Years 10-15 Years 15-20 Years $ 7,321 $ 7,321 $ 7,321 161,619 - - $ 168,940 $ 7,321 $ 7,321	20+ Years $ 40,384 -
				$ 40,384

b) Liquidity and interest rate risk table for derivative financial liabilities

The following table details the Company’s liquidity analysis of its derivative financial instruments. The table is based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed is determined by reference to the projected interest rates as illustrated by the yield curves at the end of the year.

December 31, 2022

December 31, 2022
		On	Demand or
		Less than 1
			Month
	Gross settled
Forward exchange contracts
Inflows		$	113,924
Outflows			(113,991 )
		$	(67 )
Swap contracts
Inflows		$	92,122
Outflows			(92,145 )
		$	(23 )

c) Financing facilities

Bank loan facilities Amount used Amount unused		December 31	December 31
		2022 $ 1,729,780 2,204,220 $ 3,934,000	2021 $ 1,450,170 2,372,830 $ 3,823,000

251 -

28. TRANSACTIONS WITH RELATED PARTIES

a. Related party name and its relationship with the Company

==> picture [463 x 13] intentionally omitted <==

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

Related Party Name Related Party Category
----- End of picture text -----

Related Party Name	Related Party Category
Yenyo	Subsidiary
Thinking Changzhou	Subsidiary
Thinking Yichang	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
		2022 $ 256,764 242,658 3,542 $ 502,964	2021 $ 249,647 291,876 3,006 $ 544,529

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 $26,915 thousand and $29,161 thousand as of December 31, 2022 and 2021, 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
		2022 $ 982,797 1,117,170 87,711 $ 2,187,678	2021 $ 889,632 1,250,129 128,067 $ 2,267,828

The purchase price with related parties was based on cost plus gross profit. The prices were not comparable as the Company has no other similar category of purchases with non-related parties. The term of collection was 60 days from the invoice date.

252 -

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 Changzhou Yenyo Thinking Yichang Related party in substance Pingtung Welkin		December 31	December 31
		2022 $ 108,871 70,435 487 $ 179,793 $ 937 121 - - $ 1,058	2021 $ 86,544 124,614 1,255 $ 212,413 $ - - 121 145 $ 266

The payment terms between the Company and the related parties were 60 days after monthly closing, and the outstanding payment receivables from related parties were unsecured. For the years ended December 31, 2022 and 2021, no impairment losses were recognized for trade receivables from related parties.

e. Payables to 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
		2022 $ 160,381 204,929 13,667 $ 378,977 $ - 3,999 $ 3,999	2021 $ 186,048 224,869 17,176 $ 428,093 $ 1,151 4,448 $ 5,599

Other payables - related parties (Thinking Changzhou) were classified under payables for equipment. The Company and its related parties have monthly payment terms of 60 days, and the outstanding amounts due to related parties are not guaranteed.

f. Prepayments

Related Party Line Item Category/Name Prepayments for equipment Subsidiaries Dongguan Welkin		December 31	December 31
		2022 $ -	2021 $ 766

253 -

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
		2022 $ 1,427 3,830 $ 5,257	2021 $ 2,010 3,760 $ 5,770

h. Disposal of property, plant and equipment

For the Year Ended December 31, 2022

Related Party Category/Name Subsidiaries Thinking Changzhou Yenyo	Proceeds Gain (Loss) on Disposal $ 1,493 $ 251 115 74 $ 1,608 $ 325

i. Other transactions with related parties

1) Consigned processing

Related Party Category/Name Related party in substance - Pingtung Welkin	For the Year Ended	For the Year Ended	December 31
		2022 $ 10,918	2021 $ 15,859

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

2) Consigned purchases

Related Party Category/Name Subsidiaries Thinking Yichang Others Related party in substance Pingtung Welkin	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,381 37 - $ 1,418	2021 $ 314 - 147 $ 461

254 -

3) Lease arrangements

Related Party Line Item Category/Name Lease expense Related Party in Substance Boh Chin Investment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 480	2021 $ 480

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

j. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2022 $ 69,419 853 $ 70,272	2021 $ 105,770 865 $ 106,635

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.

29. 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
		2022 $ 151,700	2021 $ 305,600

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

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

Acquisition of property, plant and equipment		December 31	December 31
		2022 $ 390,034	2021 $ 395,064

31. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

255 -

32. 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 31,2022
Financial assets
Monetary items
USD	$	33,412	30.725	(USD:NTD)	$ 1,026,584
CNY		283,097	4.4023	(CNY:NTD)	1,246,278
EUR		8,804	32.65	(EUR:NTD)	287,451
Non-monetary items
Investment accounted for using
the equity method
USD		192,980	30.725	(USD:NTD)	5,929,314
CNY		408,258	4.4023	(CNY:NTD)	1,797,272
Financial liabilities
Monetary items
USD		11,818	30.725	(USD:NTD)	363,108
CNY		5,492	4.4023	(CNY:NTD)	24,177
EUR		110	32.65	(EUR:NTD)	3,592
December 31,2021
Financial assets
Monetary items
USD	$	51,362	27.6800	(USD:NTD)	$ 1,421,700
CNY		219,785	4.3471	(CNY: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
CNY		471,760	4.3471	(CNY:NTD)	2,050,787
Financial liabilities
Monetary items
USD		14,884	27.6800	(USD:NTD)	411,989
CNY		7,333	4.3471	(CNY:NTD)	31,877
EUR		52	31.3200	(EUR:NTD)	1,629

256 -

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, 2022
USD		30.725	(USD:NTD)	$	5,257
CNY		4.4023	(CNY:NTD)		1,523
EUR		32.65	(EUR:NTD)		(8,618 )
				$	(1,838 )
For the year ended December 31, 2021
USD		27.6800	(USD:NTD)	$	(3,783)
CNY		4.3471	(CNY:NTD)		1,500
EUR		31.32	(EUR:NTD)		(1,099 )
				$	(3,382 )

33. ADDITIONAL DISCLOSURES

a. Information on significant transactions and b. investees
1) Financing provided to others: None.
2) Endorsement/guarantee provided: None.
3) Marketable securities held (excluding investment in subsidiaries): Table 1.
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 2.
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 3.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4.
9) Trading in derivative instruments: Note 7.
10) Information on investees: Table 5.
c. 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
257 -

investment in the mainland China areas: Table 6.

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 3.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year: Table 3.
- c) The amount of property transactions and the amount of the resultant gains or losses: Refer to Note 28.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes: None.
- e) The highest balance, the end of year balance, the interest rates range, and total current year interest with respect to financing of funds: None.
- 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.
d. Information of major shareholders

Information of major shareholder: Shareholding ratio of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: Table 7

34. 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.

258 -

TABLE 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2022

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

==> picture [1037 x 510] intentionally omitted <==

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

December 31, 2022
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 2,543,203 $ 25,723 11 $ 25,723
Thinking Changzhou CNY financial products
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 20,000 thousand CNY 20,000 thousand
(China)
Thinking Yichang CNY financial products
“Tian Libao” Net Worth Type - Industrial and - Financial assets at FVTPL - current CNY 6,000 thousand CNY 6,000 thousand
Commercial Bank of China
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 15,000 thousand CNY 15,000 thousand
(China)
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 5,000 thousand CNY 5,000 thousand
(China)
Structured Deposits - Bank of China - Financial assets at FVTPL - current CNY 45,000 thousand CNY 45,000 thousand
Jiangxi Thinking CNY financial products
Structured Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 22,000 thousand CNY 22,000 thousand
(China)
Time Deposit Monthly Profit - Fubon Bank - Financial assets at FVTPL - current CNY 9,810 thousand CNY 9,810 thousand
(China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current CNY 20,000 thousand CNY 20,000 thousand
Merchants Bank
Structured deposits - E.SUN Bank - Financial assets at FVTPL - current CNY 20,000 thousand CNY 20,000 thousand
Guangdong Welkin Thinking CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current CNY 30,000 thousand CNY 30,000 thousand
Merchants Bank
Zhongshan Welkin CNY financial products
Point Gold Series Structured Deposit - China - Financial assets at FVTPL - current CNY 15,000 thousand CNY 15,000 thousand
Merchants Bank
----- End of picture text -----

==> picture [1037 x 42] intentionally omitted <==

259 -

TABLE 2

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, 2022

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

==> picture [1039 x 429] intentionally omitted <==

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

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 CNY financial products
Wishful Life V Financial assets at FVTPL - Industrial and - CNY 60,000 thousand - CNY - thousand - CNY 60,989 thousand CNY 60,000 thousand CNY 989 thousand - CNY - thousand
current Commercial
Bank of
China
“Tian Libal” net month type Financial assets at FVTPL - Industrial and - CNY 193 thousand - CNY 123,460 thousand - CNY 123,763 thousand CNY 123,653 thousand CNY 110 thousand - CNY - thousand
current Commercial
Bank of
China
Accumulate every day Financial assets at FVTPL - Bank of China - CNY 14,500 thousand - CNY 110,650 thousand - CNY 125,224 thousand CNY 125,150 thousand CNY 74 thousand - CNY - thousand
current
Qianyuan-An Xin daily cash Financial assets at FVTPL - China - CNY - thousand - CNY 161,430 thousand - CNY 161,613 thousand CNY 161,430 thousand CNY 183 thousand - CNY - thousand
management Open-end current Construction
Fund CNY interest. rate Bank
structured products
CNY Structured Time Deposit Financial assets at FVTPL - Fubon Bank - CNY 120,000 thousand - CNY 20,000 thousand - CNY 124,500 thousand CNY 120,000 thousand CNY 4,500 thousand - CNY 20,000 thousand
Monthly Profit current (China)
Dongguan Welkin CNY financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY 40,000 thousand - CNY 67,000 thousand - CNY 87,285 thousand CNY 87,000 thousand CNY 285 thousand - CNY 20,000 thousand
Deposit current Merchants
Bank
Zhongshan Welkin CNY financial products
Point Gold Series Structured Financial assets at FVTPL - China - CNY - thousand - CNY 67,000 thousand - CNY 52,094 thousand CNY 52,000 thousand CNY 94 thousand - CNY 15,000 thousand
Deposit current Merchants
Bank
Thinking Yichang CNY financial products
Structured deposits Financial assets at FVTPL - Bank of China - CNY - thousand - CNY 60,000 thousand - CNY 15,222 thousand CNY 15,000 thousand CNY 222 thousand - CNY 45,000 thousand
current
----- End of picture text -----

==> picture [1039 x 105] intentionally omitted <==

260 -

TABLE 3

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, 2022

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

==> picture [1036 x 499] intentionally omitted <==

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

Notes/Accounts (Receivable)
Transaction Details Abnormal Transaction
Payable
Buyer Related Party Relationship
Payment
Purchases/Sales Amount % of Total Payment Terms Unit Price Ending Balance % of Total Note
Term
The Company Thinking Changzhou Subsidiary Sales $ (256,764 ) (7 ) 60 days from the end of $ - - $ (108,871 ) (11 )
the month
Thinking Changzhou Subsidiary Purchases 982,797 41 60 days from the end of - - 160,381 21
the month
Dongguan Welkin Subsidiary Sales (242,658 ) (7 ) 60 days from the end of - - (70,435 ) (7 )
the month
Dongguan Welkin Subsidiary Purchases 1,117,170 47 60 days from the end of - - 204,929 27
the month
Thinking Changzhou Jiangxi Thinking Associate Sales (100,888 ) (3 ) 60 days from the end of - - (13,038 ) (1 )
the month
Jiangxi Thinking Associate Purchases 125,087 8 60 days from the end of - - 24,661 5
the month
Dongguan Welkin Associate Sales (154,684 ) (5 ) 60 days from the end of - - (25,086 ) (3 )
the month
Thinking Yichang Jiangxi Thinking Associate Purchases 165,077 30 60 days from the end of - - 39,701 22
the month
Guangdong Welkin Thinking Associate Sales (145,953 ) (16 ) 60 days from the end of - - (4,327 ) (2 )
the month
Dongguan Welkin Associate Sales (270,754 ) (30 ) 60 days from the end of - - (73,146 ) (29 )
the month
Jiangxi Thinking Dongguan Welkin Associate Sales (241,340 ) (34 ) 60 days from the end of - - (37,096 ) (24 )
the month
Zhongshan Welkin Associate Sales (145,581 ) (20 ) 60 days from the end of - - (29,164 ) (19 )
the month
Guangdong Welkin Dongguan Welkin Associate Sales (178,709 ) (22 ) 60 days from the end of - - (18,958 ) (15 )
Thinking the month
Dongguan Welkin Associate Purchases 312,016 62 60 days from the end of - - 2,434 21
the month
Dongguan Welkin Zhongshan Welkin Subsidiary Purchases 406,599 20 60 days from the end of - - 121,339 16
the month
----- End of picture text -----

==> picture [1036 x 69] intentionally omitted <==

261 -

TABLE 4

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, 2022

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

==> picture [1039 x 141] intentionally omitted <==

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

Overdue Amounts Received
Allowance for
Company Name Related Party Relationship Ending Balance Turnover Rate in Subsequent
Amount Actions Taken Doubtful Accounts
Period
The Company Thinking Changzhou Subsidiary $ 108,871 2.63 $ - - $ 64,086 $ -
Thinking Changzhou The Company Parent company 160,381 5.67 - - 8,689 -
Dongguan Welkin The Company Parent company 204,929 5.20 - - 193,019 -
Zhongshan Welkin Dongguan Welkin Parent company 121,339 4.96 - - 70,502 -
----- End of picture text -----

==> picture [1039 x 405] intentionally omitted <==

262 -

TABLE 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION OF INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1036 x 252] intentionally omitted <==

==> picture [1036 x 251] intentionally omitted <==

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 6.

263 -

TABLE 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1038 x 285] intentionally omitted <==

----- 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, 2022(Note 7) Income as of Investment Note
January 1, 2022 December 31, 2022 Investment December 31, 2022
Thinking Changzhou Manufacturing and selling thermistors, US$ 31,260 thousand Note 1 $ 452,725 $ - $ - $ 452,725 $ 516,533 100 $ 521,779 $ 3,628,440 $ 1,868,287 Note 10
varistors and sensors ( US$ 61,686 )
Thinking Yichang Manufacturing and selling thermistors, US$ 6,000 thousand Note 2 194,170 - - 194,170 51,221 100 51,221 1,120,042 -
varistors and sensors
Jiangxi Thinking Manufacturing and selling thermistors US$ 10,000 thousand Note 3 310,330 - - 310,330 52,395 100 52,395 770,904 -
and varistors
Guangdong Welkin Thinking Wholesale of thermistors, varistors, US$ 5,000 thousand Note 4 153,547 - - 153,547 48,851 100 48,851 363,733 -
sensors and equipment
Dongguan Welkin Manufacturing and selling thermistors, CNY$163,859 thousand Note 5 93,706 18,053 - 111,759 183,337 100 183,337 1,789,678 -
varistors, sensors and equipment
Zhongshan Welkin Manufacturing and selling thermistors, CNY$140,000 thousand Note 6 - - - - (17,027 ) 100 (17,027 ) 582,482 -
varistors and sensors
Accumulated Outward Remittance for Investment Investment Amounts Authorized by the Upper Limit on the Amount of Investments
in Mainland China as of December 31, 2022 Investment Commission, MOEA Stipulated by the Investment Commission, MOEA
$ 1,222,531 $ 949,372 $ 5,285,447
(US$38,474 thousand) (US$30,899 thousand) (Note 9)
(Note 8)
----- End of picture text -----

Note 1: Indirectly investment in mainland China through Greenish which was registered in the third area. The Company increased the amount of indirect investments in mainland China through Greenish since 2003.
Note 2: Indirectly investment in mainland China through companies registered in the third area (Thinking International).
Note 3: Indirectly investment in mainland China through companies registered in the third area (Thinking HK).
Note 4: Indirectly investment in mainland China through companies registered in the third area (View Full Samoa).
Note 5: Indirectly investment in mainland China through companies registered in the third area, View Full Samoa and Thinking Samoa and the subsidiary, Thinking Changzhou.
Note 6: 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$30,899 thousand was the difference between the MOEA approved investment amount of US$38,474 thousand and the amount of accumulated outflow of investment from Taiwan amount of US$7,575 thousand. Such difference was the result of deducting the capital increase of US$22,024 thousand from the subsidiary in mainland China, deductions of US$176 thousand for remittance of liquidation proceeds to third parties not yet approved. The added surplus of the subsidiary in mainland China, which was approximately US$29,726 thousand, was repatriated, and the difference between the exchange rate of the remitted funds and US$49 thousand. The balance as of December 31, 2022 was based on the exchange rate of US$1=NT$30.725.
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 $247,286 thousand, and Greenish recognized share of profits of Thinking Changzhou was $274,493 thousand. Total amount of share of profits was $521,779 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.
264 -

TABLE 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2022

==> picture [498 x 116] intentionally omitted <==

==> picture [498 x 367] intentionally omitted <==

265 -

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

==> picture [469 x 13] intentionally omitted <==

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

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 FINANCIAL ASSETS AT FAIR VALUE	Note 7
THROUGH PROFIT OR LOSS - CURRENT
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 CHANGES IN FINANCIAL ASSETS AT	8
FAIR VALUE THROUGH OTHER COMPREHENSIVE
INCOME - NON-CURRENT
STATEMENT OF CHANGES IN PROPERTY, PLANT AND	Note 13
EQUIPMENT
STATEMENT OF CHANGES IN ACCUMULATED	Note 13
DEPRECIATION OF PROPERTY, PLANT AND
EQUIPMENT
STATEMENT OF RIGHT-OF-USE ASSETS	9
STATEMENT OF DEFERRED INCOME TAX ASSETS	Note 23
STATEMENT OF SHORT-TERM BORROWINGS	10
STATEMENT OF LONG-TERM BORROWINGS	Note 15
STATEMENT OF ACCOUNTS PAYABLE	11
STATEMENT OF OTHER PAYABLES	Note 17
STATEMENT OF OTHER CURRENT LIABILITIES	12
STATEMENT OF LEASE LIABILITIES	13
STATEMENT OF DEFERRED TAX LIABILITIES	Note 23
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF OPERATING REVENUE	14
STATEMENT OF OPERATING COSTS	15
STATEMENT OF OPERATING EXPENSES	16
STATEMENT OF OTHER GAINS AND LOSSES	Note 22
STATEMENT OF LABOR, DEPRECIATION AND	17
AMORTIZATION BY FUNCTION

266 -

STATEMENT 1

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2022 (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 5,278 thousand
CNY 91,043 thousand
EUR 6,122 thousand
JPY 620 thousand
HKD 4,562 thousand
Cash equivalents
Time deposits with original
maturities of 3 months or
less
Deposit of NTD
Foreign currency deposits
CNY 139,380 thousand, with
annual interest rate of
2.60%-2.74%. The expiry
date of foreign currency
deposits is February 2023.

Amount
$ 631
74
357,439
162,177
400,797
199,897
142
17,983
613,593
$ 1,752,733

Note: Foreign currency exchange rates of USD, CNY, EUR, JPY and HKD were as follows: USD:NTD=1: 30.725. CNY:NTD=1: 4.4023. EUR:NTD=1: 32.65. JPY:NTD=1: 0.2297. HKD:NTD=1: 3.942.

267 -

STATEMENT 2

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

	Description	Amount	Amount
Company A	Sale of goods	$	733
Company B	Sale of goods		378
Company C	Sale of goods		269
Company D	Sale of goods		208
Others (Note)	Sale of goods		969
		$	2,557

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

268 -

STATEMENT 3

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Client Name Related parties Thinking Changzhou Thinking Yichang Dongguan Welkin Non-related parties E Company Others (Note) Less: Loss allowance	Amount Over a Year Remark $ 108,871 $ - Sale of goods 487 - Sale of goods 70,435 - Sale of goods 179,793 - 52,093 - Sale of goods 796,982 13,814 Sale of goods 849,075 13,814 (15,523 ) (13,814 ) 833,552 - $ 1,013,345 $ -

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

269 -

STATEMENT 4

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER RECEIVABLES DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Item	Amount	Amount
Related parties
Thinking Changzhou	$	937
Yenyo		121
		1,058
Non-related parties
Income tax refund receivable		2,568
Earned revenue receivable		3,247
Others		7
		5,822
	$	6,880

Remark

Transaction of property Transaction of property

Business tax

270 -

STATEMENT 5

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Item Finished goods Semi-finished Work-in-process Raw materials Supplies Inventory in transit	Cost Net Realizable Value (Note) $ 175,797 $ 228,522 59,087 118,532 69,908 122,541 36,348 55,989 2,943 3,124 6,065 6,065 $ 350,148 $ 534,773

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

271 -

STATEMENT 6

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT ASSETS DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Item Prepayment for purchases Prepaid expenses Office supplies Offsets against business tax payable Others	Amount $ 9,507 9,677 3,234 30,217 546 $ 53,181

272 -

STATEMENT 7

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2022

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

Investees Non-listed company Yenyo Greenish Thinking Changzhou Thinking Holding Thinking USA	Balance, January 1, 2022 Shares Amount 25,732,508 $ 202,130 7,374,997 2,172,842 10,075,514 2,050,787 24,728,858 3,064,495 - - $ 7,490,254	Additions in Investment Shares Amount - $ 29,291 - 302,037 4,739,290 438,680 447,444 377,898 1,000,000 30,776 $ 1,178,682 (Note 1)	Decrease	in Investment Amount $ - 11,773 695,195 4,535 2,426 $ 713,929 (Note 2)	Balance, December	31, 2022 Amount $ 231,421 2,463,106 1,794,272 3,437,858 28,350 $ 7,955,007	Market Value or Net Assets Value Unit Price Total Amount Collateral Note $ 9.19 $ 236,528 None 338.32 2,495,127 None 117.95 1,747,409 None 138.38 3,483,913 None 28.35 28,350 None $ 7,991,327
					% of Shares Ownership 25,732,508 63.76 7,374,997 100 14,814,804 47.39 25,176,302 100 1,000,000 100
	Shares 25,732,508 7,374,997 10,075,514 24,728,858 -	Shares - - 4,739,290 447,444 1,000,000	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, exchange differences on the translation of the financial statements of foreign operations, remeasurement of defined benefit plans and Thinking Changzhou transferred surplus to capital during the year to $840,035 thousand, $29,161 thousand, $43,740 thousand, $115,376 thousand, $884 thousand and $149,486thousand.
Note 2: Share of loss using the equity method, unrealized gain on transactions in the beginning of year, Thinking Changzhouu surplus remittance and transferred surplus to capital to$2,426 thousand, $26,915 thousand, $535,102 thousand and $149,486 thousand.
273 -

STATEMENT 8

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, NON-CURRENT FOR THE YEAR ENDED DECEMBER 31, 2022

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

Investees Non-listed company’s shares ACPA TECHNOLOGY CO., LTD.	Balance, January 1, 2022 Shares Fair Value 2,469,130 $ 36,273	Additions in Investment Shares (Note 1) Amount 74,073 $ -	Decrease in Investment Amount Shares (Note 2) - $ 10,550	MarketValue orNet AssetsValue Fair Value Accumulated Shares (Note 3) Impairment Collateral 2,543,203 $ 25,723 $ - None
		Shares (Note 1) 74,073	Shares -	Shares 2,543,203
	Shares 2,469,130

Note 1: ACPA TECHNOLOGY CO., LTD. transferred surplus to capital during the year, stock dividends allocated to the Company.

Note 2: Recognized as unrealized other comprehensive gain of financial assets at fair value.

Note 3: Refer to Note 27 for fair value measurement.

274 -

STATEMENT 9

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

	Balance at	Balance at						Balance of	Balance of
	January 1,							December 31,
	2022		Additions			Deductions		2022
Cost
Land	$ 58,682		$	-		$	-	$ 58,682
Accumulated depreciation
Land	(5,590	)		(2,014	)		-	(7,604	)
	$ 53,092		$	(2,014	)	$	-	$ 51,078

275 -

STATEMENT 10

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2022

(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, 2022
Secured loans
E. SUN Bank	2022.12.09-2023.03.09	1.5	$ 108,000
Credit Loans
Bank SinoPac	2022.12.30-2023.01.03	1.655	120,000
Yuanta Bank	2022.10.13-2023.03.16	1.35-1.41	150,000
CTBC Bank	2022.06.06-2023.05.31	1.09	300,000
			570,000
			$ 678,000

Note: At the end of December 31, 2022, the amount of unused short-term borrowings was approximately $2,204,220 thousand.

276 -

STATEMENT 11

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Vendor Name Related parties Dongguan Welkin Thinking Changzhou Thinking Yichang Yenyo Non-related parties Company F Company G Company H Company I Others (Note)	Amount $ 204,929 160,381 13,108 559 378,977 5,583 5,166 2,469 1,360 12,396 26,974 $ 405,951

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

277 -

STATEMENT 12

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OTHER CURRENT LIABILITIES DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

	Amount	Amount
Temporary receipts	$	455
Withholding		1,871
Deferred revenue		747
	$	3,073

278 -

STATEMENT 13

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2022

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

			Discount Rate	Balance of
	Item	Lease Term	(%)	December 31, 2022
Land		2016.06-2029.10	0.75-1.38	$ 53,700
Less:	Lease liabilities -			1,465
	current
Lease	liabilities - non-current			$ 52,235

279 -

STATEMENT 14

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING REVENUE FOR THE YEARS ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars)

Item Shipments (Thousand PCS) Revenue from sale of goods Passive components 5,854,078 Service revenue	Amount $ 3,619,075 210 $ 3,619,285

280 -

TATEMENT 15

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING COSTS FOR THE YEARS ENDED DECEMBER 31, 2022 (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
Write-downs of inventories
Income from sale of scraps
Loss on obsolete inventory
Others

Amount
$ 100,242
145,624
(36,348 )
(42,572
)
166,946
20,779
142,039
253,896
583,660
72,994
8,475
(128,995 )
(8,425
)
527,709
219,022
2,189,795
(175,797 )
(367,235
)
2,393,494
74,365
(4,419 )
12,416
(9,699
)
72,663
$ 2,466,157

281 -

TATEMENT 16

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING EXPENSES FOR THE YEARS ENDED DECEMBER 31, 2022 (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 reversed on trade receivables	Selling and Marketing Expenses General and Administrative Expenses Research and Development Expenses $ 52,735 $ 124,239 $ 85,160 7,939 18,345 14,004 15,545 45 - 3,728 6,393 2,823 8,406 - - 2,314 6,564 9,991 124 689 4,023 - 23,242 - 12 53 14,884 13,554 485 133 18,081 17,961 9,065 $ 122,438 $ 198,016 $ 140,083	Total $ 262,134 40,288 15,590 12,944 8,406 18,869 4,836 23,242 14,949 14,172 45,107
		460,537 130
		$ 460,407

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

282 -

TATEMENT 17

THINKING ELECTRONIC INDUSTRIAL CO., LTD.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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
	2022	Total $ 427,425 36,918 18,013 23,242 23,106 $ 528,704 $ 81,398 7,463	2021
	Operating Costs Operating Expenses $ 165,291 $ 262,134 16,783 20,135 7,842 10,171 - 23,242 13,124 9,982 $ 203,040 $ 325,664 $ 67,280 $ 14,118 2,712 4,751		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	Total $ 458,613 33,594 17,909 26,800 22,812 $ 559,728 $ 74,808 5,559

Note: a. As of December 31, 2022 and 2021, the Company had 525 and 498 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, 2022 and 2021 was $972 thousand and $1,081 thousand, respectively.
c. The average employee salary and bonuses for the years ended December 31, 2022 and 2021 was $822 thousand and $930 thousand, respectively.
d. Change in the average employee salary and bonuses was 12%.
e. The Company has established an audit committee to replace the role of supervisor, so it has no remuneration for supervisor.
f. The Company’s salary and remuneration policy (including directors, supervisors, managers and employees).

1) Director

The Company’s remuneration of directors are distributed in accordance with the Articles of Incorporation. Please refer to Note 22 (g) for related regulations. The remuneration will be adjusted based on the Company’s operating conditions and the related regulations. In consideration of the Company’s sustainable development, the remuneration of directors will be submitted to the compensation committee and the board of directors for approval.

(Continued)

283 -

2) Manager

Based on the “Rules for Distribution of Compensation to Managers”, the Company’s compensation committee will take the manager’s services provided and standards of the industry into consideration.

Monthly salary: Depending on the manager’s job tenure and the value of job title. Salary movement should not exceed 150% of the industry standards.

Variable salary: Depending on the Company’s operating condition, including bonuses and employee remuneration.

3) Employee

The principle of the Company’s employee salary system stands on fairness and competitiveness. Employee salary includes monthly salary and variable salary. For the total amount of remuneration of employees, please refer to Note 22 (g). Salary of employee is distributed according to the “Regulation of Salary” and according to the employee’s duties and professional skills. Remuneration of employee is also distributed according to the “Regulation of Distribution of Cash and Shares Dividends” and according to the employee’s performance and contribution to the Company.

(Concluded)

284 -

VII. Review and Analysis of Financial Conditions, Operating Results, and Risk Management

7.1 Review and Analysis of Financial Status

Unit: NTD Thousand

==> picture [485 x 351] intentionally omitted <==

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

Year Difference
2022 2021
Entry Amount %
Current asset 9,136,066 8,850,782 285,284 3
Property, plant and
3,219,260 2,619,638 599,622 23
equipment
Other assets 1,402,490 1,199,465 203,025 17
Total assets 13,757,816 12,669,885 1,087,931 9
Current liabilities 2,299,113 2,309,372 (10,259) -
Non-current liabilities 2,515,256 2,084,160 431,096 21
Total liabilities 4,814,369 4,393,532 420,837 10
Equity attributable owners of
8,809,079 8,158,633 650,446 8
the company
Ordinary shares 1,281,127 1,281,127 - -
Capital surplus 352,907 352,907 - -
Retained earnings 7,315,672 6,746,977 568,695 8
Other equities (140,627) (222,378) 81,751 37
Non-controlling interest 134,368 117,720 16,648 14
Total shareholders' equities 8,943,447 8,276,353 667,094 8
----- 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 non-current liabilities: mainly due to the increase in long-term borrowings.
(3) Increase in other equities: mainly due to the exchange differences on translation of foreign operations caused by fluctuating exchange rates.
285 -

7.2 Review and Analysis of Operating Results

==> picture [484 x 265] intentionally omitted <==

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

Unit: NTD Thousand
Year Difference
2022 2021
Entry Amount %
Operating revenue, net 7,463,135 7,500,455 (37,320) -
Gross profit 2,633,376 3,239,431 (606,055) (19)
Profit from operations 1,400,177 2,124,835 (724,658) (34)
Non-operating income and
396,567 34,499 362,068 1,050
expenses
Profit before income tax 1,796,744 2,159,334 (362,590) (17)
Income tax expense 406,766 568,711 (161,945) (28)
Net profit 1,389,978 1,590,623 (200,645) (13)
Other comprehensive income
84,226 (25,187) 109,413 434
(loss), net of tax
Total comprehensive income 1,474,204 1,565,436 (91,232) (6)
----- End of picture text -----

i. Analysis of increases/decreases over 20%:
(1) Decrease in profit from operations: mainly due to the increase in raw materials and related utilities expenses.
(2) Increase in non-operating income and expenses: mainly due to the increase in exchange profit caused by fluctuating exchange rates.
(3) Decrease in income tax expenses: mainly due to the decrease in operating profit.
(4) Increase in other comprehensive income (loss), net of tax: mainly due to the increase in exchange differences on translation of foreign operation.
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.
286 -

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
2,578,973 1,868,099 (873,952) 3,573,120 - -
----- 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
3,573,120 1,601,741 (1,758,099) 3,416,762	- -
(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.
287 -
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's investment income recognized under the equity method in 2022 was NT 837,609 thousand. The investment gains in recent years are mainly due to the increase in profits of subsidiaries with good operating conditions.

iii. Investment plan for the coming year:

The Company will carefully evaluate respective investment plans in order to cope with demand on the market and environmental changes and challenges in the future and to ensure overall steady operational growths, which will hopefully create optimal investment gains.

7.6 Review and Analysis of Risk Management

i. Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

Impacts on profits or losses

==> picture [429 x 145] intentionally omitted <==

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

Item 2022 (NTD thousand; %)
Net interest income (expenses) 83,652
Net (loss) profit from exchange 240,666
Ratio of net interest income/ expenses to net sales 1.12%
Ratio of net interest income/ expenses to pre-tax net profit 4.66%
Ratio of net loss/profit from exchange to net sales 3.22%
Ratio of net loss/profit from exchange to pre-tax net profit 13.39%
----- End of picture text -----

288 -

Changes in interest rate:

The net interest income of the Company for 2022 was NTD 83,652 thousand, accounting for only 1.12% 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 2022 were NTD 240,666 thousand, accounting for 3.22% 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 does not engage in high-risk or highly leveraged investments; the lending of funds and endorsements and guarantees are processed in accordance with the Company's "Operating Procedure for Lending Funds to Others" and "Regulations on Endorsements and Guarantees", and the objects are all subsidiaries of the Company; Derivatives are traded on the basis of risk avoidance, with receivables/payables or assets/liabilities arising or expected to be incurred as a result of the Company's business activities for hedging and in accordance with the Company's "Financial Derivatives Transaction Procedure."

289 -

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 2023.

iv. Impacts of important domestic and international policies and regulatory changes on the Company's financial performance and the countermeasures

The Company's business activities are conducted in compliance with national policies and regulations, and the Company will always pay attention to the updates of various policies and regulations in order to carry out risk control and formulate countermeasures. In 2022 and up to the publication date of this annual report, no changes in policies and laws have had a material impact on the Company's financial operations.

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 2022 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.
290 -
viii. Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans: None.
ix. Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration:
(1) Purchases: Individual suppliers of the Company are not monopolies that cannot be replaced. The sources of supply are sufficient, without concerns over shortage. In honor of its decentralized purchase principle, the Company inquires about prices with more than two suppliers and makes purchases accordingly most of the time for the same raw material and maintains long-term steady partnerships with them to avoid the risk of shortage in supply due to force majeure or individual factors and the purchase contracts are often signed in advance. The supply has been steady and minimally impacted by fluctuating prices internationally. The source of supply is not impacted. Since it was established, the Company has not experienced shortage in or interruption of supply.
(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.
291 -

VIII. Special Disclosure

8.1 Summary of Affiliated Companies

i. Consolidated Business Report of Affiliates
(1) Overview of Affiliates
- A. Organizational Chart of Affiliates

==> picture [697 x 406] intentionally omitted <==

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

Thinking Electronic
Industrial Co., Ltd.
Holding ratio Holding ratio Holding ratio Holding ratio Holding ratio
63.76% 47.39% 100% 100% 100%
Yenyo Technology Thinking (Changzhou) Greenish Co., Thinking Electronic Thinking Holding
Co., Ltd. Electronic Co., Ltd. Ltd. USA, Inc. (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 -----

292 -

B.Profile of respective affiliates:

December 31, 2022 ; Unit: Respective Currencies in Thousands

==> picture [766 x 462] 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 31,260 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 25,176 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 3,864 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 163,859 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 140,000 Manufacturing and selling
Zhongshan City, Guangdong Province (One license with thermistors, varistors and
multiple registered addresses) sensors
Thinking Electronic USA, Inc. 12/21/2022 1300 E Main Street Unit 109D Alhambra, CA 91801 USD 1,000 Electronic product design and
marketing
----- End of picture text -----

293 -

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 436] 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, varistors and sensors
Thinking Electronic USA, Inc. Electronic product design and marketing -
----- End of picture text -----

294 -

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/President Ho, Yi-Sheng (Representative of Thinking) 25,732,508 63.76%
Director Tseng, Lung-Ji (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 Ting, Si-Nan - -
Supervisor Chen, Yen-Hui - -
Chairman Sui, Tai-Chung (Representative of Thinking)
Thinking (Changzhou) Director Chen, Su-Ai (Representative of Thinking)
USD 31,260,000 100.00%
Electronic Co., Ltd. Director Sui, Wan-Ni (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 25,176,302 100.00%
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 3,864,354 100.00%
Ltd. Director Chen, Su-Ai (Representative of Thinking Holding (Cayman))
----- End of picture text -----

295 -

==> picture [789 x 443] intentionally omitted <==

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

Shareholding
Name of affiliate Position Name or Representative Shares Shareholding
ratio
Chairman Sui, Tai-Chung (Representative of Thinking International)
Thinking (Yichang)
Director Sui, Chung-Hua (Representative of Thinking International) USD 6,000,000 100.00%
Electronic Co., Ltd.
Director 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 Sui, Wan-Ni (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 Sui, Wan-Ni (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 163,859,218 100.00%
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 140,000,000 100.00%
Director Sui, Chieh-Heng (Representative of Dongguan Welkin)
Supervisor Ting, Si-Nan (Representative of Dongguan Welkin)
Thinking Electronic USA, Inc. Chairman Sui, Tai-Chung (Representative of Thinking) USD 1,000,000 100.00%
----- End of picture text -----

296 -

(2) Operational overview of respective affiliates

==> picture [777 x 403] intentionally omitted <==

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

December 31, 2022; 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. 403,580 484,435 113,472 370,963 396,586 33,408 44,551 1.10
Thinking (Changzhou) Electronic Co., Ltd. 1,008,050 4,209,646 522,577 3,687,069 3,198,946 396,901 516,533 (Note)
-
Greenish Co., Ltd. 242,300 2,503,575 8,448 2,495,127 (21,656) 251,749 (Note)
- -
Thinking Holding (Cayman) Co., Ltd. 783,237 3,483,913 3,483,913 (19) 272,422 (Note)
- -
Thinking International Co., Ltd. 196,512 1,121,385 1,121,385 (91) 51,130 (Note)
- -
Thinking (HK) Enterprises Limited 311,109 771,145 771,145 (29) 52,368 (Note)
- -
View Full (Samoa) Ltd. 155,108 1,401,729 1,401,729 (21) 150,409 (Note)
- -
Thinking Electronic (Samoa) Ltd. 112,518 185,611 185,611 (21) 19,028 (Note)
Thinking (Yichang) Electronic Co., Ltd. 194,170 1,300,385 180,343 1,120,042 889,978 6,497 51,221 (Note)
Jiang Xi Thinking Electronic Co., Ltd. 310,330 872,440 102,477 769,963 718,281 49,432 52,395 (Note)
Guangdong Welkin Thinking Electronic Co., Ltd. 153,547 377,012 13,279 363,733 816,263 61,598 48,851 (Note)
Dong Guan Welkin Electronic Co., Ltd. 715,093 2,572,547 795,921 1,776,626 2,792,990 161,284 183,337 (Note)
Welkin Electronic Co., Ltd. 613,645 759,152 176,670 582,482 406,522 (26,573) (17,027) (Note)
Thinking Electronic USA, Inc. 30,715 30,725 2,375 28,350 - (2,303) (2,426) (Note)
----- End of picture text -----

Note : The company is a company limited.

297 -

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, 2022, 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 22, 2023

298 -

iii. Affiliation Report

Declaration

The Affiliation Report of the Company for 2022 (from January 1 to December 31, 2022) is prepared in accordance with the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises and the information disclosed does not show significant discrepancies from related information disclosed in the notes to financial statements during the above-mentioned period.

Thinking Electronic Industrial Co., Ltd.

By Sui, Tai-Chung Chairman

March 22, 2023

299 -

Thinking Electronic Industrial Co., Ltd.

Affiliation Report

2022

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/Chung, Shih-Ying

II. Current Transaction:

(I) Purchases/Sales: None

(II) Properties: None

(III) Capital financing: None

(IV) Asset lease: The Company spent NTD 480 thousand in 2022 for renting buildings and land from Boh Chin Investment Co., Ltd.

III. Endorsements/guarantees: None

300 -
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
301 -

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.

302 -

AI assistant

THINKING — Annual Report 2023

52076_rns_2023-06-13_9ad77d04-84c3-417a-81dd-44f50f1fc7d7.pdf

THINKING EL E CTRONIC INDUSTRIA L CO., LTD.

2 0 22 Annual Report

Notice to readers

Contents

I. Letter to Shareholders

Dear Shareholders,

1.1 Business report:

i. Results:

ii. Execution of budget: N/A.

1.2 Summary of business plan:

iii. Key production and sales policies

(2) Sales Policy:

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:

B. Substantial Management Goals:

C. Implementation:

D. Independence of the 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

iii. Employees’ Profit Sharing Bonus Paid to Management Team

3.4. Implementation of Corporate Governance

i. Operations of the Board of Directors

(IV) December 19, 2022:

ii. Operations of the Audit Committee:

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

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

(1)Sales Area

(2)Market share

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

B. Telecommunications

(2) Major Products and Their Production Processes

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

THINKING Annual Report 2023